IN THE SUPREME COURT OF 'THE STATEOF MONTANA
1989

NORTHWEST POLYMERIC, INC., DEIRDRE CAUGHLAN and LAURA LEE DUNLAP, Trusteesof the Estate of NORTHWEST POLYMERIC, INC., Bankrupt; and ROBERT C. KELLY, PATRICK KELLY and SHANE KELTJY, Plaintiffsand Appellants,-vsFARMERS STATERANK and FIRSTNATIONAL MONTANA BANK OF MISSOULA, and F7.A. GROFF and RALPH G. McCOY, and JOHN DOEAnd RALPH ROE, Defendantsand Respondents.

APPEAL FROM: District Court of the Fourth Judicial District, In and for the County ofMissoula, TheHonorable DouglasG. Harkin, Judgepresidina.

COUNSEL OF RECORD:
ForAppellant:


### R. Lewis Brown, Jr. and David L. Holland, Butte, Montana
For Respondent: Larry Persson, Hamilton, Montana JamesA. Robischon,Kalispell,Montana Garlington,Lohn & Robinson; Sherman 77. Lohn,Missoula, Montana

Submitted onBriefs: Jan. 19, 1989 Decided: February 16, 1989Mr. 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, (FirstNational), holding that appellant, Northwest Polymeric, Inc.,

(Northwest), failed to come forward with facts establishing that FirstNational could be held liable for damages from the alleged breach. We affirm. Northwestbid and received a Department ofDefense (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 statingFarmers,with theparticipation of First National, would provide financing. Neither bank provided financing, and Northwest brought this suit seeking both tort and contractdamages. First National argued that the District Court should grant its motion for summary judgment because no contract existed between Northwest and FirstNational. FirstNational 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 statingFirstNational 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 thatRobert Burke, Presidentof First Nationa

### J

### , knew about the 1etter from Farmers. Rurke deposedthat 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: Ostensibleauthority defined. Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third 

### -- person tobelieve the agent topossess. 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), 175Mont. 533, 575 P.2d 77; Coover 

### v. Davis (1941), 112 Mont. 605, 121 P.2d 985; Lindblom v. Employers1 JJiability Assurance Corporation

(1930),88Mont. 488, 295 P. 1007. The facts in this case distinguish it from the case law citedby 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 themanager 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 inholding out the agent ashaving authority to contract for the principal. Coover, 121 P.2d at 988. Lindblom involved dealings between a claimant for workers' compensat.i.on, a 

### Jocal 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 notificationof the local agency estopped the carrier from claiming the defense. This Courtheld 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),95Mont. 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),216Mont. 407, 701 P.2d 1377. Generally, ostensible agency may be established by omissions aswell as by commissions. 

### 3

### Am. Jur. 2d Agency § 79 (1986)

# . However, the failure to disclaimauthority asserted by an agent usually concerns cases where an agent attempts to extend existing authority by his orher representations to a third party. 

### In such a case, theprincipal 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 statementsby Farmers. Northwest fails to demonstrateany
course ofdealing between the partieswhere Farmers acted for FirstNational. Under these circumstances,we agreewith the District Court that no facts support an inference of any grant of authority from FirstNational to Farmers. Northwest also argues that First National's silence estops it from denying that it agreed to finance Northwest. There existshere no silenceamounting 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, 678P.2d 1138. District courts properly grant motions for summary judgment where nomaterial 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 substantiveprinciples 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