In the early 1990s, Jesse Derr created a corporation, JCDER Inc., to operate his construction business. At some point, Derr began referring to the corporation as J.D. Construction Co. Inc., but no corporation by that name was ever created. JCDER Inc. remained the official name for purposes of organization and filing with Maine's Secretary of State. Derr never filed with the Secretary of State a statement of intention to do business under the assumed name J. D. Construction Co. Inc.

In 2003, when Leah and William Treadwell decided to build a home, they were referred to Derr. The Treadwells brought their home plans to Derr's office to get a quote and left the plans with an employee, Jane Veinot. They did not meet with Derr but received a quote from him in the mail. Soon after, the Treadwells signed a contract with J.D. Construction, with work to start in May 2003. Der signed the contract, and his signature appeared on the contract as follows:

J.D. Construction Co. Inc.

By: Jesse Derr

The name JCDER Inc. was nowhere in the contract, and the Treadwells were unaware of the existence of JCDER Inc. when they signed the agreement. None of the documents the Treadwells received from .D. Construction indicated that the company's real name was JCDER Inc.

Mr. Treadwell testified that he spoke with Derr twice at the worksite, just as they were breaking ground. The Treadwells, who visited the site almost daily, never saw Derr again, even though they tried many times to contact him. They spoke to Veinot often, but she would tell them that Derr was at another construction site. Derr had hired subcontractors to do the work on the Treadwells' property. Around Thanksgiving 2003, the Treadwells visited the site and found that Derr had abandoned the job with the house unfinished because the company was not making any money on the job. The Treadwells had paid Derr approximately 59L,000 before construction halted.

The Treadwells found many problems with the structure, including twisted studs and other lumber that had to be replaced. The Treadwells hired new contractors to fix and finish

the project, for which they paid a significant sum.

To recover the additional costs, the Treadwells sued J.D. Construction Co., JCDER, and Derr for breach of contract and other grounds. The trial court awarded the Treadwells damages against J.D. Construction Co. and JCDER but found that Derr was not personally liable for the damages. The Treadwells appealed to the Supreme Judicial Court of

Maine, asking that Derr also be held liable.

Alexander, Judge

The Treadwells argue that the trial court should have awarded damages against Derr individually since he signed the contract for a non-existent corporation. In the alternative, they contend that the trial court should have pierced the corporate veil and held Derr responsible because he failed to disclose the existence of JCDER, Inc.

The question presented to us is whether, as a matter of law, an individual who signs a contract, purporting to act on behalf of a corporate entity that he knows does not exist, becomes personally liable for damages arising from failure to properly perform under that contract.

An agent who makes a contract for an undisclosed principal or a partially disclosed principal will be liable as a party to the contract. In order for an agent to avoid personal liability on a contract negotiated in his principal's behalf, he must disclose not only that he is an agent but also the identity of the principal. The term "partially disclosed" principal is synonymous with "unidentified" principal. Restatement (Third) of Agency, S 1.04 comment b (2006). "A principal is unidentified if, when an agent and a third party interact, the third party has notice that the agent is acting for a principal but does not have notice of the principal's identity." Restatement (Third) of Agency, $ 1.04(2)(c) (2006). To avoid liability for the agent, the third party must have actual knowledge of the identity of the principal, and does not have a duty to investigate.

In Maine Farmers Exch. v. McGillicuda, 697 A.2d 1266 (Me. 1996), the son of a potato seller signed a contract with a distributor for a certain grade potato. The father/seller furnished the potatoes, which turned out to be the wrong grade. In an action by the distributor against the father and son, the trial court found them to be jointly and severally liable. They appealed the Anding of joint and several liability, arguing that the distributor should have been aware that the son was acting as an agent for his father. We affirmed that Anding because the son did not disclose that he was an agent for his father, and the distributor believed he was buying potatoes from the son.

In the present case, Derr organized a corporation called JCDER, Inc., which he used to operate his construction business. Both Derr and JCDER, Inc., acted under the assumed name J.D. Construction Co., Inc., Derr signed the contract on behalf of J.D. Construction, hired the subcontractors, and was purported to be the contact-person for the project, although he was not available to the Treadwells. Derr's use of an assumed trade name was not sufficient to disclose his agency relationship with JCDER, Inc. JCDER, Inc., was therefore an unidentified or partially disclosed principal. As a matter of law, Derr is personally liable for performance of contracts entered into as agent for the non-existent J.D. Construction, Co. Inc. or the undisclosed principal JCDER, Inc.

Judgment reversed in favor of the Treadwells.