Jack B. Siegel on Adler School of Professional Psychology v. Page
Incorporators, officers, directors, and employees of business entities should always clearly indicate when they are acting on behalf of an organization. Adler Sch. of Prof'l Psychology, Inc. v. Page, 2009 U.S. Dist. LEXIS 70206 (N.D. Ill. Aug. 10, 2009) illustrates the disastrous consequences that can result when individuals fail to clearly indicate the capacity in which they are executing documents. In this Emerging Issues Analysis, Jack B. Siegel examines Adler and discusses the best practices for those acting on behalf of an existing corporation. He writes:
Background. Adler School of Professional Psychology (Adler Chicago) is an Illinois nonprofit corporation that offers doctoral and master's programs in psychology and behavioral sciences. Linda Page is a Canadian citizen and resident of Toronto. In 1993, the Adler School of Professional Psychology, Ontario (Adler Ontario) was incorporated as a Canadian nonprofit corporation. Page was not listed as one of the original incorporators.
Two years later, Page entered into an agreement with Adler Chicago. The agreement permitted Adler Ontario to operate as a satellite school for Adler Chicago in exchange for payments to be made to Adler Chicago. The agreement provided that "Adler Ontario will collect and remit to Adler Chicago a fee of CDN$60.00 per student credit hour transferred (payable, however, in U.S. dollars rounded to the next higher even dollar amount)."
No reason is provided in the district court's opinion, but for some reason the payments from Adler Ontario to Adler Chicago went into arrears, or at least that was Adler Chicago's position. In its suit, Adler Chicago sought approximately $180,000 in past due student credit hour remittances. In filing the lawsuit, Adler Chicago named "Linda Page d/b/a Adler School of Professional Psychology, Ontario" as defendants. In her summary judgment motion before the court, Page asked that the suit be dismissed against her in her personal capacity because she executed the contract on behalf of Adler Ontario, a distinct corporate entity.
The court recognized the ambiguity created by the signature line. The body of the agreement states that it is "between the Adler School of Professional Psychology, an Illinois Not-For-Profit Corporation (Adler Chicago'), and the Adler School of Professional Psychology, Ontario (Adler Ontario'), but fails to specify whether Adler Ontario is an incorporated entity." The signature line to the agreement creates the ambiguity, providing:
ACCEPTED:
By: s/ Linda Page
Linda Page, d/b/a Adler School of Professional Psychology, Ontario
There is an important distinction between "doing business as" and "signing on behalf of." "Doing business as" is a designation for a fictitious name, but it does not necessarily reflect the existence of a separate entity.
Holding. The court refused to grant summary judgment to Page for a number of reasons. First, nothing in the agreement referred to Adler Ontario as a corporation, but Adler Chicago was specifically referred to as a corporation. Second, the d/b/a notation is a common abbreviation for the phrase "doing business as." The court recognized that individuals sometimes use the d/b/a designation when referring to a sole proprietorship. Third, in the absence of an ambiguity, Illinois law does not permit the introduction of extrinsic evidence to establish that the person is signing as an agent. The court noted that there was "an arguable ambiguity," but the evidence offered by Page did not resolve the ambiguity.