2003 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit
10-8-2003 

# PXRE C or p v

. T e r r a N o va I ns C o P r e c e de n t i al or N on-P r e c e de n t i al : N on-P r e c e de n t i al D ocke t N o . 02-3426

F o l lo w thi s a nd a dd it ion al w ork s at : h tt p://d i g it alc ommon s .l a w . v i l l a no va . e du/thir dc ir c uit_2003

Thi s de c i sion i s br ou gh t t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i l l a no va U nive r sit y S choo l of L a

w Di g it al Re posit or y

. It h as be e n a c c e pt e d for inclusion in 2003 D e c i sion s b y a n author i z e d a dmini s tr at or of V i l l a no va U nive r sit y S choo l of L a

w Di g it al Re posit or y

. F or mor e infor m at ion, p le as e c on t a ct Be n j a min . C a rl s on@l a

w . v i l l a no va . e du . Re c omme nde d C it at ion

" PX R E C or p v . T e r r a N o va I n s C o " (2003). 2003 D e cisio n s . P ape r 215. h tt p://d i g it alc ommon s .l a

w . v i l l a no va . e du/thir dc ir c uit_2003/215NOT PRE CEDENT IAL

UNITED STATES COURT OF APPEALS FO R T HE TH IRD CIR CU IT
NO. 02-3426
PXRE C ORPORAT ION

v. TE RR A N OV A I NS UR AN CE CO M PA NY LT D.,

Appellant

On A ppeal Fro m the U nited States D istrict Court Fo r th e D ist ric t o f N ew Je rse y (D.C. Civi l Action No. 00-cv-05314) Distri ct Judge: Honorable JoelA. Pisano

Argued June 3, 2003 BE FO RE : AL ITO , RO TH and ST AP LE TO N, Circuit Judges (Opinion Fi led October 6, 2003)

Arnold C. Lakind Szaferman, Laki nd, Blumste in, Watter & Blader 101 Grovers Mill Road Quakerbridge Execut

ive Center

- Suit e 104 Lawrencevill e, NJ 08648 and2 Sandor Frankel M. Breeze McM ennamin (Argued) Fra nke l & Abr ams 230 Park Avenue - Suit e 3330 New Y ork, NY 10169 Attorney s for Appell ee John M. Aerni Michael Lesch (Argued) LeBoeuf, Lamb, Greene & MacRae 125 West 55th Street New Y ork, NY 10019 and Donna L. Gordon LeBoeuf, Lamb, Greene & MacRae One Riverfront

Plaza Newark, NJ 07102 Attorney s for Appell ant

OPINI ON OF THE COURT

ST AP LE TO N, Circuit

Judge :
I. Terra Nova Insur ance Company (“Ter ra Nova”) appeal s the j udgment of the United States District Court for the Dis tri ct of New Jersey . A juryverdict awarded Appellee, PXRE Corporati on, $9,791, 779.24, f inding t hat Terr a Nova’s agent ha d apparent authori ty to is sue to PXRE two insurance pol icie s on Terra Nova’s behalf, totali ng $10 m illi on. The District Court denied Appellant’s motions for judgment as a3

matter of law or for a new trial. Terra Nova asserts that it i s entitl ed to judgment as a matter of law because t

he Appellee fai led to s atis fy a dut y of i nquiryregardi ng the scope of the agent ’s authority. Alternat ively , Terra

Nova assert s that

a new tria l is warranted bec aus e the Dis trict C our t faile d to instr uct th e jur y that P XR E h ad s uch a du ty. II. Harold Mollin owned Customi zed Worldwide Weather I nsurance Agency (“Customized”). From 1995-200 0, Mollin was an agent for Terra N ova, an English company. Mollin was authorized byTerra Nova to i ssue poli cies for up to $500,000 pe r risk. Customized spec iali zed in writ ing weather

insura nce. Weather

insura nce provide s protect ion for t hose having i nsurabl e inte rest s in weather -rel ated contingenci es. For example, acity

may get weather i nsurance aga inst excess snowfal l lea ding to unexpe cted
snow remov al expense s, or a pow er plant could g et insurance a gainst an un usually warm win ter, le adin g to less h eatin g re ven ue.

A w eather derivative is sim ilar to weather insu rance; how ever, it differs from weather i nsurance i n that a derivat ive takes the form of a financi al ins trument, the parti es need not be lice nsed insurers, and no insur able i nteres t is requir ed to purcha se the der ivati ve. PXRE Corporati on is an i nsurance hol ding company with offi ces in Edi son, New Jersey. PXRE ’s subsi diari es writ e catas trophe and pr opertyreins urance. Stephen Goldstei n, a PXRE employee fr om 1996 to 1999, was in c harge of “exotic” transactions4

at PX RE . Go ldstein w as co ntacte d by an e nerg y broke r in M ay of 19 99, an d ask ed to “tran sfo rm” a w eath er d eriv ative
.

In a tr ansformati on trans acti on, one part y wishe s to purc hase a weather derivat ive, while another party l ooks to i ssue a weather insura nce poli cy. A middleman, the tr ansformer, acts as the li nk between the two parties . The party se eking to a cquire a weather derivati ve pays a premium to t he trans former for a weat her deri vative specifying
a recovery amount i f the spec ifie d weather contingencyoccurs. The transf ormer take s the premium and acquires weather i nsurance cove ring t he identical continge ncy. For acti ng as the go- between, t

he trans former rec eives a t ransforming fee. In the t ransformation t

ransaction suggested by t he broker, Koch Energy Trading, Inc., would purchase a weather deri vative from PXRE for $805,000 in ret urn for a pro mise to receiv e up to $6 m illion if the temp erature at the P ittsburg h airpo rt met a specifi ed conti ngency. PXRE would trans form the derivati ve and purchase weather insura nce from Terra Nova, via Customi zed, for $765,000 that would paya maximum of $6 mill ion pursua nt to t he identical continge ncy. PXRE would pocket the extra $40,000 as the t ransformation fee. Goldstei n sought ass urances t hat Customi zed had authority to is sue poli cies for T erra N ova. C ustom ized a ttemp ted to a ddre ss these conc erns b y sendin g a sa mp le policy , pri nted on a document wit h Terra Nova’s l ette rhead. PXRE also re ceived fr om Cu stom ized an in com plete cop y of th e co ver not e issu ed b y Ter ra N ova to C usto miz ed.5

Missing from the copy was t he porti on stating that

Customized coul d onlywrite i nsurance for ri sks up to $500, 000. Customiz ed explai ned the i ncomplete cove r note byassert ing that p ortio ns o f it w ere c onf iden tial.

Go ldste in to ld M ollin that h e w ante d to spe ak d irect ly to T erra No va. Customized re sponded that all c ommunications with Terra Nova must be made through Custom ized. To satisfy Go ldstein’s concern s, Mo llin asked his insuran ce broke r for Terra Nova to prepare a letter s tati ng that Cust omized had authority to bind risks as a Managing Ge ner al A gen t on beh alf o f T erra No va I nsu ran ce C o.

Goldstei n recei ved a copy of a letter s ent from the insur ance broker stating: Harold, Irefer to your

recent enquires and would advise y ou that t he worldwide bindi ng authori ty account for Terra Nova is written by Gra ham Wilso n of Terra No va, w ho is b ased in London Underwriting Cent re in London. The binding autho rity ... allows you a nd th ose o f your em ployees n ame d in the contract to bind ri sks on behal f of Terra Nova Insur ance Co . (U K)
. The risks are st

rictly limi ted to weather for t he peril s of rai n, snow, and temper ature a nd are subj ect t o the geographical limits of t

he United States. Your relationshi p with Terra Nova has exist ed over a number of years as you have a similar facility for risks that are dom iciled in C ana da. I can confi rm that Ter

ra Nova has been gi ven a copy of your current E & O arrangement s, which has policy limi ts of US $50 millio n. The Limits and terms of the bi nding authority are thos e that are co ntaine d in o ur co ver n ote w hich h as be en issu ed in6 respect of this co ver. I trus t you w ill fin d th is res um e of assis tanc e. App. 1246. A few days l ater, PXRE recei ved a copy of this letter ini tial ed by Graham Wilson a nd bea ring the Te rra Nov a seal. It is undisputed tha t the seal and the initials are auth entic
. PXRE signed t he firs t tr ansformati on contrac t on May 17, 1999, but did not relea se th e pr em ium
.

Goldstein testified tha t, during M ay and June o f 1999 , he spoke to Terra Nova represent ative s on at l east two occasions, who confirmed that Customized was Terra Nova’s agent . He also testi fied that on May 18, 1999, the day after si gning the trans formati on deal, but before relea sing the premium pay ment, he s poke with a per son he belie ved to be Graham Wilson at Terra Nova (the number he dial ed checked out to be Graham Wilson’s di rect l ine). He told thi s person t hat he had j ust t

ransformed a substant ial weather-derivati ve contra ct with Ter ra Nova through Cust omized. The per son did not ind icate that t he tr ans actio n w as u nau tho rized
.

PXRE relea sed the pr emium after t he phone conversation. The policy pro vid ed th at the con tract wa s no t can cella ble o nce the p rem ium had bee n pa id.

On June 7, 1999, PXRE entered i nto a second t ransformation cont

ract. The
sec ond con tract wa s be twe en D uke En erg y Tra din g & M ark eting LL C a nd C usto miz ed. Du ke p aid P XR E a $1,0 66,6 67 p rem ium on a der ivati ve th at w oul d pa y up to $4 m illion
.7

PXRE thought i t had purcha sed a $4 mill ion ins urance pol icyfrom Terra Nova, t hrough Customized. The premium was $1,030,000, giving PXRE a $36,667 fee. After the
seco nd tran saction , there w as testim ony that, o n Jun e 9, 19 99, P XR E em ployee G oldstein left a phone message for

Terra Nova employ ee Graham Wilson to ca ll hi m because he had just tr ans for me d a s eco nd l arg e w eath er d eriv ative . PX RE wa s ne ver calle d ba ck. Te rra N ova disp utes hav ing rece ived the c all.

Months later , PXRE sought payment on the poli cies and Moll in confess ed to having c onverted t

he premium pay ments to hi s own use. Terr a Nova refused to honor the p olici es. P XR E, o ut se ver al m illion dol lars, s ued Te rra N ova . III. At tri al, Graham Wilson of Terra Nova t esti fied that it was unusual for Terra Nova to r eceive i nquiri es about t he authori ty of one of thei r agents . When such inqu iries occ urred , Terra No va w ould conf irm tha t the ag ent w as au thorize d to w rite po lic ies fo r it b ut w ou ld no t d isc lo se th e te rm s a nd lim its of th e a ge nt s’s au th or ity, inform ation th at Te rra N ova c onsid ered c onf identia l. Wilso n testifie d that it w as up to the a gen t wh ethe r to d isclo se th e lim it to th e po tenti al ins ure d.

The judge instructed the juryas follows: He re, you m ust de termin e (1) w hethe r Terra No va en gage d in conduct that cre ated the appearance t hat Worldwide Weather [Cu stom ized] w as au thorize d to issu e insu rance contra cts such as those in di spute, (2) whether PXRE reli ed on that appearance, and (3) whether PXRE , judge d as a pers on of ordinary prudence, conver sant wit h the busi ness uses and8 nature of the part icular busine ss type in is sue, acted reasonabl y i n rely ing on that appearance of authori ty , and was justifie d in pres uming that Worldwide Weather had t he authori ty to is sue the cont ract i n questi on... . When considering whether PXRE acted re asonablyyou may consider whether a re asonable pe rson would have i nquired fur ther into Cu stom ized W orld wid e W eath er’s a uth ority. Th e jur y fou nd i n fa vor of P XR E.

Terra Nova moved for judgment as a matt er of la w, or, al ternat ively , a new tri al purs uant to Fede ral Rule s of CivilProcedure 50 and 59. Terra Nova asserted that, a s a matter of law, PXRE did not satisfyits duty of inquiry and t hat the court er

red in not inst ructi ng the jur

y on this duty. Alternat ively , Terra

Nova asked for a new tri al, clai ming that t he inst ructi ons did not

give the jurythe opport unity to consi der whether PXRE had satis fied its du ty of in qui ry. Th e D istrict Co urt d enie d bo th m otio ns.

IV
. Terra Nova argues t

hat the court er

red in r efusing t o inst

ruct t he jurythat PX RE had a d uty of inquiry once PX RE had no tice that some limitations o n Cu stomized’s authorityexisted. Terra Nova insists that PXRE failed to meet this duty of inquiry as a
ma tter o f law , and , ther efo re, w e sh oul d di rect t he e ntry of jud gm ent in its fa vor . Alternat ively , Terra

Nova contends that the e rroneous j ury inst ructi on should re sult

in a
new trial. PXRE ’s ini tialresponse i s that Terra Nova has waived i ts ri ght to have a9

judgment as a

matter of law enter ed in it s favor becaus e it f aile d to make such a moti on at the close of e vidence. P XR E also pres ents several othe r argum ents asserting that T erra Nova has waived it s right to conte st the juryinst

ructi on. We do not reach PXRE’s waiver arg um ents bec aus e w e ele ct to a ffir m th e D istrict Co urt’s jud gm ent o n its m erits. A. “Pursua nt to Rule 5 0(b) of the F ederal Ru les of Civil Pro cedure, the co urt may gra nt a ren ew ed m otion f or jud gm ent as a matte r of law if ‘there is no leg ally
su ff ici en t ev id en tia ry b as is f or a r ea so na bl e ju ry to ha ve fo un d f or ’ th e p re va ilin g p ar ty. Fed. R. Civ. Proc. 50( b). The ‘l egall y suf fici ent evi dentiary basis’ has als o been characterized a s a ‘minim um q uantum of eviden ce,’ Keith v. Truck Stops Corp. , 909 F.2d 743, 745 (3d Cir. 199 0), or even a s ‘any rational basis for the ve rdict.’ Bhaya v. Westinghouse Elec. Corp ., 832 F. 2d 258, 259 (3d Cir . 1987), cert. denied, 488 U.S. 1004, 102 L. E d. 2d 774 , 109 S. C t. 78 2 (1 989 ).” Ole fins Trading, In c. v. Han Yan g Ch em. Corp. , 9 F.3d 282, 288 (3d Cir. 1993). The evidence must be view ed in the light most fav ora ble to the n on- mo vin g pa rty. Mosely v. Wilson , 102 F.3 d 85 , 89 ( 3d C ir. 19 96)
.

We review a District Court ’s deci sion t o deny a motion for a ne w trial und er F ede ral R ule o f C ivil P roc edu re 5 9(a ) fo r an abu se o f dis creti on. Mon tgomery County v. Microvot

e Corp. , 320 F.3d 440, 445 (3d Cir. 2003). “An abuse of di scretion occurs when the di stri ct court 's de cisi on rest s upon a clearlyerroneous finding of fact, an errant conclusi on of law or an i mproper appli cati on of law to fact .” Id. (cit ations10

omitted). “The standard of review of a distri ct court' s ruling on points for charge is abuse of d iscre tion
. See United Stat es v. Fi schbach & Moore, I nc. , 750 F.2d 1183, 1195 (3d Cir. 1984) . We must ‘det ermine whether the char ge, t aken as a whole and vi ewed in the light of the evide nce, fairly and adeq uately submits the issues in the case to the jury.’ Ayoub v. Spencer , 550 F.2d 164, 167 (3d Cir. 1977). We do not i solat e parti cular language, but rat

her examine i t in t

he context

of the entire j ury charge. ” United Stat es v. Till er , 302 F.3 d 98 , 103 n.3 ( 3d C ir. 20 02)
. B. Terra Nova argues t

hat, because PXRE knew there were li mitations on Customized’s agency with Terra Nova, it had a dutyto inqui re about t he scope of that age ncy. T erra No va p oin ts to th ree f acts that, i t asse rts, ga ve P XR E th is kn ow ledg e. First , a packet

of documents re ceived byPXRE stat ed that Customized coul d bind weather ri sks “as per

our cover note.” App. 1239. Second, that package i ncluded an incomplet e copy of t

he cover not e that

did not s tate a dollar li mit on i ts aut hority t o bind Terra Nova. Third, Terra Nova, in the copy of t

he letter fr om Customized’s London bro ker , ind icate d th at C usto miz ed’ s au tho rity to b ind risks wa s su bjec t to th e co ver not e.

The Distri ct Court c oncluded that PXRE did not have an absolute duty of inqu iry, but rathe r a du ty to act reas onab ly in relying on the ap peara nce o f auth ority creat ed by Terra Nova.

Both parti es concede that Molli n and his agenc y, Customized, lacked act ual11

authori ty to is sue the pol icie s on Terra Nova’s behalf. Therefore, the rel evant quest ion bec om es w heth er C usto miz ed h ad a ppa ren t auth ority to issu e the pol icies
.

Ou r review of the Ne w Je rsey case law d ealing with appa rent au thority persu ades us tha t New Jersey law is con sistent w ith the c om mo n law princip les set fo rth in the Restate ment (Second) of Agency , which are frequent ly reli ed upon by t he New Jers ey Su pre me Co urt. See, e. g. , Sears Mortgage C orp. v. Rose , 634 A .2d 74 (N .J. 1993); Lewis v. Tr

avelers Ins. Co. , 239 A.2d 4 (N.J . 1968). We will look t o these principl es and to th e N ew Jers ey cas e law for gui dan ce in reso lvin g th e dis put e be for e us .

No thing in Ne w Je rsey case law o r the R estatem ent su gges ts to us th at a thir d partyhas an affi rmative duty to inqui re of one appearing to be a general agent regardi ng the scope of

his aut hority. Rather, what is r equired i s that the third party act
reaso nably in lig ht of th e fac ts of w hich it h as no tice. A ccord ingly, we find n o fau lt with the in struc tion giv en b y the D istrict Co urt.

The Ne w Je rsey Sup reme Co urt app lies the f ollow ing stan dard in its apparent authori ty inquiry: “‘The question in eve ry such case i s whether the principal has, by his voluntary act, placed the a gent in such a situation that a person of ordina ry prud ence , conv ersan t with b usine ss usa ges a nd th e natu re of th e partic ular bu siness, is justified in pres um ing tha t such agen t has au thority to pe rform the pa rticular a ct in questi on, and when the party rely ing upon such apparent authority pr esents evidence wh ich w ould justify a fin ding in his f avor , he is en titled to ha ve the ques tion su bm itted to12

the jur y. ’” United Stat

es Plywood Corp. v. Neidli nger , 194 A.2d 730 (N.J . 1963) ( quoting J. Wiss & Sons Co. v. H.G. Vogel Co. , 86 N.J. L. 618, 621 ( E. & A. 1914)). The Restatem ent states that “[t]he rules as to the liabilityof a principa l for authorized acts, are applic able t o unauthori zed acts which are appar ently authori zed.” Restate ment (Second) of Agency § 159. “[T]he principa l is affected by apparent authori ty only as to t

hose who rely upon cond uct of the prin cipal w hich c ause s them to belie ve tha t the ‘ag ent’ is authori zed.” Restate ment (Second) of Agency § 15 9, cm t. b.

He re, a jury co uld rea sona bly find th at, on a ccou nt of T erra N ova’ s con duct, PX RE reasonab ly relied on Custom ized’s appa rent authority to issue the policy. Terra Nov a had ap pointed M ollin and his age ncy as Terra N ova’s age nt. Terra N ova’s insura nce broker s ent, at Customi zed’s r equest, a letter t o be shown to prospec tive insure ds, i ndicating that Mollin and Customi zed were authorized t o issue pol icie s on behalf of Terr a Nova. A copy of this l ette r was lat er rece ived, bearing Ter ra Nova’s sea l and init iale d by Terr a Nova’s chief unde rwrit er for North American Business , Graham Wil son . F in al ly , b efo re re le as in g t he p ay ment on the f ir st tr ans format io n, PXRE contacted whom it beli eved to be Graham Wilson at Terra Nova (the num ber dialed was, in fact , Graham Wilson’ s dire ct li ne). PXRE indicated that it had j ust t

ransformed a substant ial weather deri vative contrac t with Ter ra Nova through Cust omized. The per son did not i ndicat e that

the dealwas unauthori zed. After the second t

ransaction, t

here was testimo ny that, on June 9, 199 9, PX RE left a p hon e me ssage for W ilson to call be caus e it13

had just tr ans for me d a s eco nd l arg e w eath er d eriv ative . PX RE wa s ne ver calle d ba ck. Te rra N ova disp utes hav ing rece ived the c all.

Section 161 of

the Restate ment (Second) sets f orth t he rule applicable here : A general agent

for a dis closed or

parti ally discl osed pri ncipal subject s his principa l to l iabil ity for act s done on his a ccount which usuall y acc ompany or are inci dentalto tr ansacti ons which the agent is auth orized to con duct if, although they are forbidden by

the pri ncipal , the other par ty reasonabl y bel ieves that t he agent i s authorized t o do them and has no notice that he is not so authorized. In thi s context , a “per son has noti ce of a fact if he knows the fa ct” or “ has reas on to know it, ” Restate ment (Second) of Agency § 9, and

A person has rea son to know of a fact if he has i nformati on from which a person of ordinaryintel ligenc e, or of s uperior intel ligenc e which such pers on may have, would infer t hat the fact i n questi on exist s or that there is suc h a substa ntial chan ce of its existen ce tha t, if exerc ising re ason able c are w ith referenc e to the matter

in question, hi s acti on would be pre dica ted u pon the a ssu mp tion of its pos sible exis tenc e. . . . A p erson of su perior intelligen ce or tra ining h as reas on to know a fact if a pe rson with hi s mental c apacity and attainm ents w ould draw such an inf erenc e from the fa cts kno wn to him . On the oth er han d, “rea son to kno w” impo rts no duty to ascer

tain f acts not to be deduced as infere nces from facts a lready

known; one has reas on to know a fact onl y i f a reasonabl e person i n his posi tion would i nfer such fac t from oth er fa cts a lread y kno wn to h im. Id. at cm t. d. Contraryto Terra Nova’s suggestion, i t is not the l aw that one havi ng reason t o belie ve that

there are some li mits t o a general agent’s authori ty is thereby14

saddled wit

h an absolute dutyto dete rmine al l undis closed l imit s that the pri ncipal has imposed. I t is suffici ent if he acts reasonably

in his reli ance on the appe arance of authori ty that t

he principal has created. The letter beari ng Terra Nova’s s eal st ated that Customi zed’s aut hority was “strictly limited to w eathe r for th e perils o f rain, sn ow , and te mp erature and a re sub ject to the geographical limi ts of the United States, ” and that the “[l ]imit s and terms of the binding aut

hority ar e those t

hat are contai ned in our cove r note. ” It i s plausible that notic e of th es e fa ct s c oul d ha ve g iv en P XRE ca usefor con cern an d t he f

act th atPXRE made further inquiries into C ustomized ’s authority may evidence th is concern. H owe ver, noth ing in th e reco rd ind icates th at it wa s unre ason able, as a ma tter of la w, fo r PX RE to assume from Terra

Nova’s conduct t

hat Customi zed was authori zed to i ssue the polici es on behalf of Terr a Nova. While Terr a Nova advised that the re were li mits on Customized’s authori ty , a j ury could rea sonablyconclude that nothi ng was discl osed that would cause a re asonable pe rson in PXRE’s posi tion t o infer t hat the liabi lit

y l imit s of the po lic ies ex ce ed ed C us to m ize d’ s a ut ho rity.

Terra Nova rel ies primaril y on Barrett Co. v. Globe I

ndemnity Co. , 1 59 A
. 709 (N .J. 1932), for the pro position that, becau se PX RE had no tice that Custom ized’s authori ty to is sue poli cies was subj ect t o limi tati ons, PXRE had a duty to inquir e about the sco pe of those limitation s. The Ne w Je rsey Sup reme Co urt there held th at “[i]t is w ell settled . . . tha t, whe re on e rece ives n otice th at he is d ealing with a spe cial ag ent, he is1 Bar rett also st ates i n dicta that “ if a third per son deali ng with a gener al agent has actualor constructi ve notic e of a li mitation upon the a gent’s authori ty he is put upon inquiry as to the s cope of the aut hority. ” Bar rett , 1 59 A . at 7 10. Unl ik e Te rr a No va , w e read this dicta as a reference to the principles st ated i n §§ 9 and 161 of the Restate ment (Second), supra
. 15 bound to inqui re the nature and e xtent of his aut hority. ” Id. at 710 . Ho we ver, su ch a d uty is l imit ed to speci al agent s. As the Bar rett court expl ained:

Those dealing w ith the agent of the defen dant here w ere bound as a matt er of la w to notice that t he purport ed bond was signed byhim as “attorneyin fact ,” and a r eading of the contra ct and the sign ature w ith the w ords “ attorne y in fact” following i t was suffi cient to put t hose deali ng with the a gent and all parti es connect ed with the trans acti on upon notice that theywere deali ng with a speci al agent , and, having constructive notice that s uch agent’ s authority was limited, they were no longer justified in acting upon th e agent’s appa rent au thority. Th e A meric an an d En glish E ncyclop edia of Law (2d Ed.) vol. 3, p. 281, defines a n attor ney i n fact as “any private or speci al agent appointe d for some particular or defini te purpos e not connected with a proc eeding at law, by formal authority, call ed a letter or power of att orney , in whic h is exp ressed the pa rticular a ct or ac ts for w hich h e is appointe d and the ext ent of hi s authority .” Black’ s Law Dictio nary, p. 10 5, def ines an attorne y in fact as “a priv ate attorney aut

horized by

another to act i n his pl ace and st ead, eithe r for some particul ar purpose , as t o do a parti cular a ct, or for the t ransaction of busi ness in ge neral not of a legal chara cter. Th e auth ority is conf erred b y an instru men t in writi ng call ed a ‘le tter

of att orney .’” I t is clear , the refore, that the words “attorneyin fact ” were noti ce that the agent

signed as a sp ecial ag ent. Bar rett , 159 A. at

710. 1 “A special agent, as dist inguis hed from a generalagent, is one employ ed for16

a parti cular pur

pose only , and i f he exceeds hi s authority the pri ncipal is not

bound.” Markow itz v. Berg , 4 A .2d 41 0 (N .J. 1939 ). “A g enera l agen t is an ag ent au thorize d to conduct a se ries of trans acti ons invol ving a continuit y of s ervice .” Restate ment (Second) of Agency § 3. “C ontinu ity of servic e rathe r than th e exte nt of d iscretion or resp onsib ility is the hall -mark of a gener al agent .” Id. at cmt. a. A generalagent “subj ects hi s princ ipal to liability for a cts do ne on his acc oun t wh ich us ually acco mp any or are incide ntal to trans acti ons which the age nt is authori zed to conduct if, a lthough t

hey are forbidde n by the pri ncipal , the other par ty reasonabl y bel ieves t hat the agent i s authorized t o do them and has no noti ce that

he is not authori zed.” Restate ment (Second) of Agency § 16 1. At the ti me of the tr ansacti on, the continui ty of servi ce between Terra Nova and Customized was l engthy , going ba ck to the beginning of 1995. Customiz ed and Mo llin were no t employed fo r a particular purpo se only. Indeed, the letter bearing Terra No va’s se al indic ates tha t Cus tomiz ed ha d auth ority to bind risks. A ccord ingly Cu stom ized wa s a g ene ral ag ent o f T erra No va’ s.

We conclude that

the Dist rict Court corr ectl y found t hat PXRE’s duty was to act reasona bly in relyi ng on th e appea rance created by Terra N ova an d that the jury should consi der the knowle dge possess ed by PXRE in determining the reasonabl eness of its cond uct. G iven th e evid ence , the jury w as en titled to co nclud e, as it did , that the f acts kno wn to PX RE wo uld n ot hav e cau sed a reaso nable , prud ent insu rance firm in its position to i nfer that Customized was not authorized to bind Terra Nova to the policies.17 V. The judgment of the District Court will be a ffirmed. TO THE C LERK:

Please fi le the foregoing Not Pr ecedenti al Opinion.

/s/ Walter K. St aplet on Circuit Judge