A.L. JACKSON CHEVROLET, INC. v. OXLEY

A.L. JACKSON CHEVROLET, INC. v. OXLEY
1977 OK 85
564 P.2d 633
Decided: 05/10/1977
Supreme Court of Oklahoma

A.L. JACKSON CHEVROLET, INC., A CORPORATION, APPELLEE,
v.
BILL OXLEY, D/B/A GUYMON MOTOR SALES, APPELLANT.

Appeal from the District Court of Texas County; Merle Lansden, Judge.

¶0 Appellant appeals from judgment of district court from an action to recover money on account. Affirmed.

Ogden, Ogden & Board, Guymon, for appellee.

Dale, Wright & Brooks by William K. Brooks, Guymon, for appellant.

HODGES, Chief Justice.

¶1 The question presented by this case is whether a corporate officer who signs a check on a corporate account without designating the capacity in which he signs is personally liable as the drawer of the check. This appeal involves an action for recovery on account. It arose when the appellee, A.L. Jackson Chevrolet, Inc., filed suit against the appellant, Bill Oxley, d/b/a Guymon [564 P.2d 634] Motor Sales, on open account for certain purchases of merchandise and parts in the amount of $798.52. The invoices reflect that the purchaser was Guymon Motor Sales, not Guymon Motor Sales, Inc.

¶2 The trial court after hearing the evidence found the corporate entity should be disregarded and entered judgment for A.L. Jackson Chevrolet, Inc. against Bill Oxley in his individual capacity.

¶3 Pursuant to 12A O.S. 1971 § 3-307 , when signatures are admitted or established, production of the instrument entitles a holder to recover unless the defendant establishes a defense, and unless specifically denied in the pleadings each signature is admitted. The burden of establishing the effectiveness of a signature is on the party claiming under it, but the signature is presumed to be genuine or authorized except where the action is to enforce an obligation of a purported signer who has died or become incompetent before proof is required.

¶4 Under the Uniform Commercial Code, 12A O.S. 1971 § 3-403 (2)(b),

¶5 In a similar case, American Exchange Bank v. Cessna, 386 F. Supp. 494 (W.D.Okl. 1974) it was determined that although the name, address, and telephone number of the maker's corporation appeared on checks where only the maker's personal signature appeared in the signature block without his corporate title, the maker was personally obligated on the check.

¶6 In this case the checks show only the number of the corporate bank account written in by the appellant. The signature of appellant does not show the title of his office, and there is no evidence to reflect that appellee had notice of the corporate entity. Therefore, the trial court was correct in determining appellant to be personally obligated on the checks.

¶7 AFFIRMED.

¶8 All Justices concur.

Footnotes:

1 Because the invoices were made to Guymon Motor Sales, appellee did not have the pre-suit notice that appellant had incorporated. It is required by 18 O.S. 1971 § 1.11 (a) that:

The name of any corporation formed under this Act may be in any language, but shall be expressed in letters or characters of the English language, and shall end with the word "corporation," "company," "incorporated," or "limited," or an abbreviation of one of these words.

2 Appellee's Exhibit No. 2 includes the checks drawn by Bill Oxley:

3 12 O.S. 1971 § 286 requires:

In all actions, allegations of the execution of written instruments and endorsements thereon of the existence of a corporation or partnership, or of any appointment of authority, or the correctness of any account duly verified by the affidavit of the party, his agent or attorney, shall be taken as true unless the denial of the same be verified by the affidavit of the party, his agent or attorney.

4 The burden of establishing signatures and defenses is delineated by 12A O.S. 1971 § 3-307 (1)(a), (b), (2):

(1) Unless specifically denied in the pleadings each signature on an instrument is admitted. When the effectiveness of a signature is put in issue

(a) the burden of establishing it is on the party claiming under the signature; but

(b) the signature is presumed to be genuine or authorized except where the action is to enforce the obligation of a purported signer who has died or become incompetent before proof is required.

(2) When signatures are admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defense.

5 Weagant v. Camden, 37 Okl. 508, 132 P. 487 (1913); Annot., "Personal Liability of One Who Signs or Indorses Without Qualification Commercial Paper of Corporation," 82 A.L.R.2d 424 (1962). See also Annot., "Personal Liability of Officers or Directors of Corporation on Corporate Checks Issued Against Insufficient Funds," 47 A.L.R.3d 1250 (1973).

6 It is provided by 12A O.S. 1971 § 3-403 (2)(a), (b), (3):

(2) An authorized representative who signs his own name to an instrument

(a) is personally obligated if the instrument neither names the person represented nor shows that the representative signed in a representative capacity;

(b) except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity, or if the instrument does not name the person represented but does show that the representative signed in a representative capacity.

(3) Except as otherwise established the name of an organization preceded or followed by the name and office of an authorized individual is a signature made in a representative capacity.

7 General Electric Credit Corp. v. Noblett, 268 F. Supp. 984 (W.D.Okl. 1967); Custom Equipment Co. v. Young, 47 OBJ 3091 (Dec. 21, 1976), 564 P.2d 1020 (Okl.App. 1976); See also Annot., "Construction and Effect of UCC Art. 3, Dealing with Commercial Paper, 23 A.L.R.3d 932, 966 (1969).

8 The Texas Supreme Court construed § 3-403(b) in Seale v. Nichols, 505 S.W.2d 251, 255 (Tex. 1974) and held in order for an agent to avoid liability on his signature, he must disclose his intent to sign as a representative to the other contracting party. It was also recognized prior dealings between the parties are relevant in determining whether the parties understood the signature to be in a representative capacity.

See also Fanning v. Hembree Oil Co., 245 Ark. 825, 434 S.W.2d 822, 824 (1968); Leahy v. McManus, 237 Md. 450, 206 A.2d 688 (1965).

9 Oklahoma National Bank v. Equitable Credit Finance Co., 489 P.2d 1331 (Okl. 1971); Persson v. McCormick, 412 P.2d 619, 627 (Okl. 1966).

10 See Carleton Ford, Inc. v. Oste, 1 Mass. App. 819, 295 N.E.2d 402 (1973); Star Dairy, Inc. v. Roberts, 37 A.D.2d 1038, 326 N.Y.S.2d 85 (1971); Blayton v. Ford Motor Credit Co., 118 Ga. App. 517, 164 S.E.2d 262 (1968); Fanning v. Hembree Oil Co., 245 Ark. 825, 434 S.W.2d 822, 824 (1968) for similar results under the Uniform Commercial Code.