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African Bio-Botanica Inc. v. Leiner

Decided: May 10, 1993.


On appeal from the Superior Court of New Jersey, Special Civil Part, Essex County

The opinion of the court was delivered by Brochin, J.A.D.


[264 NJSuper Page 360] Plaintiff African Bio-Botanica, Inc. sued defendant "Sally Leiner, individually and t/a Ecco Bella," in the Special Civil Part to recover $1530 as the unpaid purchase price of merchandise that it had sold and delivered to her. Ms. Leiner is the sole stockholder, director, and president of Ecco Bella Incorporated, a New Jersey

corporation that was formed October 28, 1987, and that continued in existence during all times pertinent to the law suit. Ms. Leiner defended against plaintiff's claim solely on the ground that the merchandise had been ordered by and delivered to Ecco Bella Incorporated, and that the liability was solely that of the corporation.

The case was tried to the court. The evidence showed that plaintiff began selling merchandise to Ms. Leiner or to her corporation in December 1987. African Bio-Botanica, Inc. did not conduct any credit investigation. It did not inquire or, insofar as appears from the evidence, think about, whether its customer was an individual or a corporation. It sold the first six or seven orders for cash on delivery. Plaintiff's sales manager delivered two of the early shipments to Ms. Leiner's home, where she repackaged the merchandise for resale to retail customers. Later orders were directed to "Ecco Bella" at Ms. Leiner's address and shipped on fifteen days' credit. Initially, plaintiff's records listed Sally Leiner as the customer; subsequently, Ms. Leiner's name was whited out and the name, Ecco Bella, was substituted, without any indication that it was a corporation.

The order for the merchandise that is the subject matter of this law suit was placed either by Ms. Leiner herself or by others at her direction. Plaintiff addressed its bill for the purchase price to "Ecco Bella." That bill admittedly remains unpaid. Plaintiff received payment for prior orders by checks imprinted with the name "Ecco Bella." Ms. Leiner's company's letterhead also read "Ecco Bella." Neither the checks nor the letterhead carried the name "Ecco Bella Incorporated" or otherwise indicated that Ecco Bella was a corporation. Plaintiff's sales manager testified, without contradiction, that no one had told him Ecco Bella was a corporation and he did not know that it was.

The trial Judge held that Ms. Leiner's failure to affirmatively disclose the corporate status of her company led the plaintiff to believe that it was a sole proprietorship and that, since it had not filed a trade name certificate, N.J.S.A. 14A:2-2(1)(d) required it to

indicate its corporate status on its letterhead, presumably by using its full corporate name, Ecco Bella Incorporated. For those reasons, the Judge ruled that Ms. Leiner was personally liable for plaintiff's unpaid bill, and he entered judgment for $1530, but he did not award prejudgment interest.

Ms. Leiner has appealed from the judgment. African Bio-Botanica, Inc. has cross-appealed, challenging the court's denial of pre-judgment interest. For the following reasons, we modify the judgment to award interest from the date the complaint was filed, and we otherwise affirm.

We agree with the trial Judge that for Ms. Leiner to be shielded from personal liability, she was required to affirmatively disclose to plaintiff that she was acting as agent for Ecco Bella Incorporated. She failed to make her representative capacity clear. We therefore affirm, but we prefer to offer a somewhat different rationale for our decision from that adopted by the trial court.

The statutory section on which the trial Judge relied reads as follows:

(1) The corporate name of a domestic corporation or of a foreign corporation authorized to transact business in this State

(d) Shall contain the word "corporation," "company," "incorporated," or shall contain an abbreviation of one of those words, or shall include the abbreviation Ltd. or shall contain words or abbreviations of like import in other languages, except that a foreign corporation which does not have those words or an abbreviation thereof in its name shall add ...

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