Summary of Facts

Y (defendant, koso appellant, jokoku appellant) and nonparty B planned to establish A Company for the purpose of manufacturing and selling refined textiles and all business related thereto. The completed the establishment procedures on September 12, 1955. In reality, Y, referring to himself as the representative director of A Company, had begun substantial operations in the company name around January of 1955, prior to completion of the procedures. Hoping to take advantage of the fact that B's son had joined X baseball team (plaintiff, koso appellee, jokoku appellee) to get publicity for a new company, a plan was conceived to invite the team to participate in an exhibition game in X City, under the auspices of A Company. Y entrusted to B the entire responsibility for negotiating with X baseball team on behalf of A Company. On March 12, 1955, X, believing that A Company was already in existence and that Y was its representative director, entered into a contract with Y as the representative director of A Company for the playing of an exhibition match and the game was played in K City on March 21 against the Tombow Unions. On that occasion, posters and other advertisements showing the name of A Company as the main sponsor of the even were displayed and Y himself gave the opening remarks reiterating that fact.

After that, since it did not receive the contractual compensation or any reimbursement of costs from Y, X commenced this action, claiming that since Y had contracted with X as the representative of a juridical person, even though that judical person did not yet exist, his action was the same as an unauthorized agent under Civil Code Art. 117, Para. 2 and, by analogy to that provision, X was entitled to payment of the above costs and compensation.

Both the court of first instance and the court of second instance allowed X's claim and Y has appealed, arguing that the provisions of Art. 177, Para. 2 are premised on thee existence of the juridical person being confirmed at the time the contract is made, and since A Company did not exist when the contract was made, that provision cannot be said to analogically apply.

Gist

Appeal dismissed.

"Because the contract, as adjudged in the original decision, cannot be said to depend on the establishment of the company, its effect cannot necessarily be imputed to the company after it has been established; rather, in the final analysis, the above contract can be said to be like a transaction effected with Y as an unauthorized agent. While it is true that Civil Code Art. 117 was originally intended to cover cases of representation of actually existing entities and the entry into a contract in representation of a not-yet existing company by Y does not come under action by an unauthorized representative, because the intent of that Article was to protect parties entering into a contract in the belief that they are dealing with a representative, it is proper to hold that in the instant case, Y, who entered into a contract as representative of the above company, should be responsible."

(translation by Vicki L. Beyer)

Temple University Japan