Opinion
No. 74-244
Decided March 25, 1975. Rehearing denied April 15, 1975. Certiorari denied June 16, 1975.
In action for breach of contract, trial court entered judgment declaring three individual defendants jointly and severally liable, and they appealed.
Reversed
1. CONTRACTS — Enforceable — Against — Party to the Contract — Burden on Plaintiff. Generally, a contract can be enforced only against a party to that contract and in action for breach of contract against corporation and against individual defendants, plaintiff had the burden of proving that the individual defendants were parties to the contract, just as it had the burden of proving the existence and the terms of the contract.
2. Individual Defendants — Mere Participation — Activities of Company — — Not Liable — Contract of Company. In action for breach of contract, the mere participation of the individual defendants in the activities of the defendant company does not render the individual defendants liable upon contracts made by the company, and since there was no proof that appellants had any ownership interest in defendant company, nor proof of a partnership or joint adventure, nor any written contract signed by the individual defendants, they cannot be held liable on the contract entered between plaintiff and the defendant company.
Appeal from the District Court of the County of El Paso, Honorable Hunter D. Hardeman, Judge.
Walton, Tammen, Hudson Robinson, Ron J. Robinson, Edward Sheilds, for plaintiff-appellee.
Pferdsteller, Vondy, Horton Worth, Anthony L. Worth, for defendants-appellants.
The three individual defendants in this action, Churchill, Paulson, and Pollack, (the appellants) appeal from a judgment declaring them jointly and severally liable for breach of a contract. We reverse.
Plaintiff, Barbara's Lighting Center, Inc., brought this suit to recover the contract price of lighting fixtures delivered to an unincorporated association known as "P.C.P. Manufacturing Company" (the Company), which subsequently incorporated as defendant P.C.P. Manufacturing Corporation (the Corporation). The Corporation's contractual indebtedness of $4,731.26 was admitted; the principal issue at trial was whether the appellants were personally liable for the indebtedness.
[1] We agree with appellants' contention that there was insufficient evidence to support the trial court's finding that the appellants were individually liable on the contract. The only contract proved was between the plaintiff and the Company. Generally, a contract can be enforced only against a party to that contract. State v. Antoine, 82 Wash. 2d 440, 511 P.2d 1351. Plaintiff had the burden of proving that the appellants were parties to the contract, just as it had the burden of proving the existence and the terms of the contract. See generally Cardinal v. Trendel, 13 Ill. App. 3d 193, 300 N.E.2d 612.
[2] Plaintiff produced evidence that appellants participated in the Company's activities and that they were aware of the transactions between plaintiff and the Company. One witness testified that appellants "operated" the Company's business. However, this evidence fails to establish appellants' liability as principals on the contract between plaintiff and the Company, there being no proof that appellants had any ownership interest in the Company, nor was there any proof of a partnership or joint adventure. See, e.g., Agate Irrigation Land Co. v. Sigman, 83 Colo. 464, 266 P. 209; Brown v. Dye, 165 Kan. 507, 195 P.2d 607. Mere participation in the Company's activities does not render appellants liable upon contracts made by the Company. Friedlander v. National Broadcasting Co., 20 App. Div. 2d 701, 246 N.Y.S.2d 889. The record does not contain any written contract signed by appellants, and therefore they cannot be held liable on that ground. Greenlawn Sprinkler Corp. v. Forsberg, 170 Colo. 286, 461 P.2d 22; Sago v. Ashford, 145 Colo. 289, 358 P.2d 599.
Plaintiff asserts that appellant bore the burden of proving that they acted in a representative capacity, if they desired to shield themselves from liability on that ground. Even assuming that this proposition is correct, it was not necessary for appellants to shield themselves from liability, since plaintiff never established their liability in the first instance.
Judgment reversed.
JUDGE ENOCH and JUDGE STERNBERG concur.