IN THE SUPREME COURT OF 'THE STATE OF MONTANA 

1989 

NORTHWEST POLYMERIC, INC., DEIRDRE 

CAUGHLAN and LAURA LEE DUNLAP, 

Trustees of the Estate of NORTHWEST 

POLYMERIC, INC., Bankrupt; and ROBERT 

C. KELLY, PATRICK KELLY and SHANE KELTJY, 

Plaintiffs and Appellants, 

-vsFARMERS STATE RANK and FIRST NATIONAL 

MONTANA BANK OF MISSOULA, and F7.A. GROFF 

and RALPH G. McCOY, and JOHN DOE And RALPH 

ROE, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Fourth Judicial District, 

In and for the County of Missoula, 

The Honorable Douglas G. Harkin, Judge presidina. 

COUNSEL OF RECORD: 

For Appellant: 

R. Lewis Brown, Jr. and David L. Holland, Butte, 

Montana 

For Respondent : 

Larry Persson, Hamilton, Montana 

James A. Robischon, Kalispell, Montana 

Garlington, Lohn & Robinson; Sherman 77. Lohn, Missoula, 

Montana 

Submitted on Briefs: Jan. 19, 1989 

Decided: February 16, 1989 
Mr. Justice R. C. McDonough delivered the Opinion of the 

Court. 

This appeal from the Fourth Judicial District, Missoula 

County, involves the alleged breach of an agreement to provide financing. The lower court granted summary judgment to 

respondent, First National Bank of Missoula, (First National), holding that appellant, Northwest Polymeric, Inc., 

(Northwest), failed to come forward with facts establishing 

that First National could be held liable for damages from the 

alleged breach. We affirm. 

Northwest bid and received a Department of Defense (DOD) 

contract to manufacture combat helmets. The DOD required 

that Northwest submit a letter confirming credit for financing. Farmers State Bank of Victor, (Farmers) provided the 

DOD a letter stating Farmers, with the participation of First 

National, would provide financing. Neither bank provided 

financing, and Northwest brought this suit seeking both tort 

and contract damages. 

First National argued that the District Court should 

grant its motion for summary judgment because no contract 

existed between Northwest and First National. First National 

further argued that no agency relationship existed between 

Farmers and First National which bound First National for 

Farmers' representations. 

Northwest conceded that First National did not enter an 

explicit agreement to finance Northwest, but contended that 

Farmers acted as First National's agent when it sent the 

letter to the DOD stating First National would participate in 

financing for the contract. No evidence from discovery 

disclosed that First National authorized the representation. 

However, discovery revealed that First National had considered participating, and that Robert Burke, President of First 

Nationa J , knew about the 1 etter from Farmers. Rurke deposed 
that he phoned W. A. Groff, President of Farmers, and informed Groff that First National would make no commitment to 

participate in the loan. 

Northwest contends that the District Court erred in 

granting summary judgment for First National because: (1) 

Farmers1 letter bound First National, (2) Farmers had apparent authority to bind First National, (3) Montana law estops 

First National from denying its obligation to participate in 

the loan. 

Northwest asserts that S 28-10-403, MCA, controls this 

case and mandates the conclusion that the District Court 

erred. The statute reads: 

Ostensible authority defined. Ostensible 

authority is such as a principal, intentionally or 

by -- want of ordinary care, causes or allows a third 

person to believe the agent to possess. 

Section 28-10-403, MCA (emphasis added) . Northwest cites 

several cases where lack of ordinary care on the part of the 

principal established the agent's authority. See, Audit 

Services v. Elmo Road Corp. (1978), 175 Mont. 533, 575 P.2d 

77; Coover v. Davis (1941), 112 Mont. 605, 121 P.2d 985; 

Lindblom v. Employers1 JJiability Assurance Corporation 

(1930), 88 Mont. 488, 295 P. 1007. 

The facts in this case distinguish it from the case law 

cited by Northwest. In Audit Services the alleged principal, 

a corporation, held out the alleged agent as its corporate 

manager, and thus the party claiming agency reasonably believed authority existed for the manager to enter agreements 

on behalf of the corporation. Audit Services, 575 P. 2d at 

81. The ostensible agency in Coover also sprung from the act 

of the principal in holding out the agent as having authority 

to contract for the principal. Coover, 121 P.2d at 988. 

Lindblom involved dealings between a claimant for workers' 

compensat.i.on, a J ocal insurance agency, and an employers ' 
insurance carrier. The carrier claimed the failure of the 

claimant to notify the carrier during the period required by 

statute barred the claim. The claimant responded that notification of the local agency estopped the carrier from claiming the defense. This Court held that evidence supported the 

conclusion that the carrier clothed the local agency with 

authority for acting on the claim, and thus Montana law 

estopped the carrier from claiming lack of agency. Lindblom, 

295 P. at 1011. 

Here, Northwest can only claim that First National 

should have done more than notify Farmers they would not 

participate. The lower court concluded that the controlling 

law mandated summary judgment for First National because 

ostensible authority cannot be proved by the declarations of 

the agent whose statements are sought to be charged to the 

principal. Exchange State Bank v. Occident Elevator Co. 

(1933), 95 Mont. 78, 89, 24 P.2d 126, 130. We agree with the 

lower court's reasoning. 

Cases exist where principals failed to exercise ordinary 

care in clarifying the lack of a grant of authority to 

non-employee middlemen in continuing dealings between the 

middlemen and the third party claiming ostensible agency. 

See, Butler Manufacturing v. J & L Implement (1975), 167 

Mont. 519, 540 P.2d 962; Powers Manufacturing Leon Jacobs 

Enterprises (1985), 216 Mont. 407, 701 P.2d 1377. Generally, 

ostensible agency may be established by omissions as well as 

by commissions. 3 Am. Jur. 2d Agency § 79 (1986) . However, 

the failure to disclaim authority asserted by an agent usually concerns cases where an agent attempts to extend existing 

authority by his or her representations to a third party. In 

such a case, the principal may fail to exercise ordinary care 

in disclaiming the authority claimed by the agent. 3 Am. 

Jur. 2d -- Agency S 79 (1986). 
Northwest can claim no explicit or implicit grant of 

authority from First National to Farmers justifying reliance 

on statements by Farmers. Northwest fails to demonstrate any 

course of dealing between the parties where Farmers acted for 

First National. Under these circumstances, we agree with the 

District Court that no facts support an inference of any 

grant of authority from First National to Farmers. 

Northwest also argues that First National's silence 

estops it from denying that it agreed to finance Northwest. 

There exists here no silence amounting to a representation or 

concealment of material facts, and thus no estoppel claim. 

See, Sweet v. Colburn School Supply (1982), 196 Mont. 367, 

639 P.2d 521; Northwest Potato Sales v. Beck (1984), 208 

Mont. 310, 678 P.2d 1138. 

District courts properly grant motions for summary 

judgment where no material fact questions exist, and in light 

of the substantive principles of law involved, the established facts entitle the movant to judgment as a matter of 

law. Fleming v. Fleming Farms Inc. (Mont. 1986), 717 P.2d 

1103, 1106, 43 St.Rep. 776, 773. The substantive principles 

of law concerning establishment of an ostensible agency and 

estoppel under the agreed facts mandated the lower court's 

decision. AFFIRMED. m 

We Concur: - H