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Equipto Division Aurora Equipment Co. v. Yarmouth

October 18, 1996

EQUIPTO DIVISION AURORA EQUIPMENT COMPANY RESPONDENT,
v.
JERRY YARMOUTH, DBA J & R INTERIORS, INC., APPELLANT.



Superior Court of Pierce County. Superior Court Docket No. 94-2-03010-3. Date Filed In Superior Court: October 7, 1994. Superior Court Judge Signing: Hon. Grant L. Anderson.

Petition for Review Granted April 2, 1997,

Written By: Morgan, J. Concurred IN By: Seinfeld, C.j., Turner, J.

The opinion of the court was delivered by: Morgan

MORGAN, J. -- Equipto Division of Aurora Equipment Co. sued Jerry Yarmouth, claiming he was personally liable for the price of a work bench purchased in the name of his closely held corporation, J & R Interiors, Inc. Equipto then moved for summary judgment, which the trial court granted. Yarmouth appeals, but we affirm.

On May 23, 1990, the Secretary of State issued a certificate of incorporation to J & R Interiors, Inc. Yarmouth "was shown as both the president and secretary of the corporation." *fn1 He also was its sole shareholder. *fn2

J & R failed to file annual reports and pay annual fees. As a result, it was administratively dissolved by the Secretary of State, effective August 19, 1991. *fn3

In November 1992, Yarmouth bought a work bench from Equipto. *fn4 He represented that he was acting as agent for J & R. The bench was delivered but not paid for. On May 31, 1993, more than $18,000 was still owed.

In March 1994, Equipto sued Yarmouth for the unpaid amount plus interest. Yarmouth did not deny that a debt was owed. He alleged, however, that the debt was owed only by J & R, and that Equipto was claiming more than the amount actually due.

In August 1994, Equipto moved for summary judgment. Yarmouth then learned, apparently for the first time, that J & R had been administratively dissolved three years earlier. According to his affidavit, he

immediately contacted the Secretary of State's office to confirm and/or reinstate J & R Interiors, Inc. [He] was told that because more than two years had passed, [he] would have to pay a new filing fee and file new Articles to reinstate J & R Interiors, Inc. as opposed to simply paying the past due filing fees. *fn5

Yarmouth took the suggested steps on August 26, 1994. Within a short time, the Secretary of State issued a certificate of incorporation to a new corporation called J & R Interiors, Inc. Throughout our Discussion, "J & R" refers to the original J & R Interiors, Inc., unless otherwise indicated.

In September 1994, Yarmouth responded to Equipto's motion by asserting, in a responsive affidavit, that he had "reinstated J & R Interiors, Inc. by filing new Articles of Incorporation and paying the filing fee." *fn6 Additionally, he claimed that he was entitled to a credit in the amount of $1,624.58.

At a hearing on October 7, 1994, Equipto conceded a credit in the amount claimed by Yarmouth. The trial court then granted Equipto's motion for summary judgment in the total amount of $21,163.27.

On appeal, the core question is whether an agent, Yarmouth, who contracts with a third party, Equipto, in the name of a principal, J & R, can be held personally liable on the contract. *fn7 As Yarmouth correctly argues, this question is ...


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