Corporate agents may be personally liable

A corporation is, of course, an artificial entity created by the Missouri statutes. Since a corporation is not a natural person, it may not act on its own, but only through its agents. The most common agents of a corporation are its officers and employees. The corporation that the agent acts on behalf of is called "the principal."

If the agent does not disclose the fact that it is acting as an agent, it may be held personally liable for the corporation's debts and obligations.

Consider, for example, the president of a small trucking company who routinely enters into agreements with suppliers for trucks and equipment. The entity has incorporated by filing articles with the Secretary of State, but it also made a fictitious name registration, sometimes called a "dba" or "doing business as" name.

The corporation owns the fictitious name, and the owners thus feel that the corporate entity will shield their personal assets from creditors.

As a result of having the dba on file, the corporation's name, Smith and Jones Trucking Inc., is not used. Instead, the company does business as S&T Truck-ing. The fictitious name appears on all the corporation's trucks, letterhead, business cards, invoices, shipping orders and signs.

Even the business checks and the listing in the phone book contain only the fictitious name of S&T Trucking. When the owners sign a contract, they sign on behalf of "S&T Trucking." Such a course of conduct may, however, subject the agents to personal liability for the corporate obligations.

Under Missouri law, a corporation must have a designation that clearly identifies it as a corporation. Thus, a corporate name must contain the word "corporation," "company," "incorporated," or "limited," or end with an abbreviation of one of these words.

The purpose of the statute is to give notice to those dealing with the company that they are dealing with a corporation and may only look to that entity for fulfillment of its promises.

When a corporate agent gives no no-tice to creditors that it is acting on behalf of a corporation by failing to disclose its principal, courts will not provide the agent with liability protection for corporate obligations.

In fact, the Southern District of Mis-souri has held that mere disclosure of a trade name is not enough to identify the principal. The other party must have ac-tual knowledge of the fact that a party is acting on behalf of a corporation.

Current Missouri law would tend to indicate that corporate owners should take special care to inform others that they are acting as an agent for a corporation, and that the corporation will be solely responsible for the debts and obligations entered into.

Otherwise, the corporate owner or officer may find their personal assets to be at risk if the corporation does not meet its obligations.

(Stephen F. Aton is a Springfield at-torney practicing in the areas of corporate law and taxation, and estate planning.)