Title: O'Shea v. FIRST FEDERAL SAVINGS & L. ASS'N OF COLUMBIA
Citation: 405 S.W.2d 180
Docket Number: N/A
State: Tennessee
Issuer: Tennessee Supreme Court
Date: July 15, 1966

405 S.W.2d 180 (1966) T.J. O'SHEA et ux., Petitioners, v. FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF COLUMBIA, Respondent. Supreme Court of Tennessee. July 15, 1966. *181 Jerry Colley, Columbia, for petitioners. Shelton &amp; Shelton and T. Edward Lawwell, Columbia, for respondent. CRESON, Justice. Monetarily, this case is of comparatively small importance. Issuewise, however, it is of real significance. The petition for certiorari seeks review of the decision, by divided Court, of the Court of Appeals for the Middle Section of Tennessee. This is an action for damages resulting from an alleged breach of contract. The action was originally instituted in the General Sessions Court for Maury County, Tennessee. There, the petitioners, T.J. O'Shea, et ux, were plaintiffs, and respondent, First Federal Savings and Loan Association of Columbia, was defendant. Judgment was entered in favor of respondent in the Sessions Court. The petitioners here appealed to the Maury County Circuit Court. Upon trial in the Circuit Court, a jury verdict and judgment thereon was rendered in favor of the petitioners in the amount of $695.75. The respondent timely filed a motion for new trial. This motion was overruled and respondent perfected its appeal to the Court of Appeals. That Court, on October 29, 1965, rendered an opinion in which it concluded, inter alia, that the trial court should have directed a verdict for respondent here. Judgment was then entered reversing the judgment of the trial court and dismissing petitioners' action. This Court reviews this case, as the Court of Appeals should have, under the well established rule, The evidence contained in this case would justify the jury finding that the petitioners purchased a home in Columbia from one B.H. Pigg. The respondent financed said purchase, taking a note in the amount of $14,300.00, executed by petitioners. This note was secured by deed of trust on the property and improvements. After the loan was negotiated and committed, it was finally closed at the office of the respondent, in Columbia, Tennessee. As is usual in such cases, the petitioner, Mr. O'Shea, was asked to examine the closing statement prepared by the respondent. It is pertinent to note, *182 at this point, that Mr. Forrest Watson was the respondent's General Manager and handled all the detail of negotiation and commitment for such loan. When the time for closing loans arrived, he usually was, and was in this case, assisted by regular legal counsel of respondent. Mr. O'Shea testified that at that time he inquired of Mr. Watson if the title insurance policy, which was uniformly mentioned in the loan documents only as "title insurance", to be obtained, would protect the petitioners against any lien claims on the house. According to Mr. O'Shea's testimony, Mr. Watson answered, unconditionally, that it would. Upon reading Mr. Watson's testimony on this phase of the case, we find it somewhat contradictory. At one place in the record Mr. Watson testified that he simply did not remember being questioned as to title insurance or giving any answer in that regard. At another point during his testimony he stated that Mr. O'Shea neither asked about the title insurance nor did he tell Mr. O'Shea that he would obtain title insurance which would protect him against lien claims. Obviously, the jury chose to accept Mr. O'Shea's version of this transaction. We are impressed that there is nothing illogical or out of the ordinary with Mr. O'Shea's contention and testimony. There is no dispute but that petitioners were compelled to pay the sum of $660.00 to remove a mechanic's lien on their property. One of the parties who had provided work and labor on the improvements was not paid by the contractor and owner, Mr. Pigg, and filed a lien against the property in that amount. This is the basis for fixation of the petitioners' damage, together with the additional sum of $35.75 paid by the petitioners for title insurance which the record shows, without doubt, was never, in fact, obtained. Respondent argues here that the "title insurance" referred to in the documents was mortgagee's title insurance, and therefore of no benefit to the petitioners. Respondent also urges that even had owner's title insurance been purchased, it would not have protected the petitioners against mechanic's liens; this, for the reason that the usual form of owner's title insurance excludes coverage against mechanic's liens. The real burden of the Court of Appeals' Opinion is the conclusion that Mr. Forrest Watson was without authority to make any agreement with petitioners which would bind the respondent to procure such a title policy as would protect petitioners against the loss sustained. The record is abundantly clear that Mr. Watson was the General Manager of respondent's business in Columbia, Tennessee. As such, he not only had the authority, but the duty, to negotiate and consummate transactions of the kind involved in the present case. It is here, it seems to us, that the pivotal issue in the case is posed. Was Mr. Watson a limited or special agent, or was he rightly to be considered a general agent? If Mr. Watson was an agent, limited or special in character, then it became incumbent upon Mr. O'Shea to determine what authority he had. If the agency of Mr. Watson is rightly to be regarded as general in character, additional rules of the law of agency come into determinative play. We feel no hesitancy whatever in reaching the conclusion that Mr. Forrest Watson, under the facts of this record, is to be legally classified as a general agent of the respondent. Against this background, we now examine the law as to the legal impact on the instant case of this conclusion. In Continental Ins. Co. v. Schulman (1917) 140 Tenn. 481, 205 S.W. 315, it is aptly said: *183 It is further the settled law of this State that a general agent is authorized to act within the apparent scope of his authority, though this may be different from his actual powers; that is to say, an agent may bind his principals by acts within the general scope of his apparent authority, notwithstanding the use of powers in excess of authority actually given by the principal. See Torbett v. Jones (1935), 19 Tenn. App. 307, 86 S.W.2d 898, and D.M. Rose v. Dysart (1928), 8 Tenn. App. 325. Pointedly pertinent here is the following from 1 Restatement of Agency, 2nd, Sec. 162: The most preeminent authority on the law of agency known to us is Mechem on Agency (2d Ed.). Through the years, we have uniformly found the summations in this work of the case law of the various states to be lucid and discriminating. At Sec. 737 of this authority appears the following: At Sec. 739, the same author makes clear the distinction between general and special agents and their respective authority: As intimated before, we see nothing at all illogical or strange about Mr. O'Shea's testimony with respect to "title insurance". He did not know the distinctions made in the title insurance business; nor was he informed of them. Respondent does not deny this; it simply says, at best, no such representations were made or agreements reached. This brings us to the question as to whether or not, if the petitioners' testimony be accepted as true, does it show a lawful predicate for liability of the respondent for failure to obtain the title insurance: In our opinion, liability is thus lawfully created. In 4 Appleman, Insurance, 113 (Sec. 2261), it is said: There is no doubt in the record but that owner's title insurance broad enough to protect against mechanic's liens was obtainable. The jury appears to have found that the respondent's general agent, acting within the apparent scope of his authority, agreed to procure such insurance; and that respondent failed to do so, resulting in a loss to the petitioners. Feeling as we do, that there is material error in the majority opinion of the Court of Appeals, that judgment is reversed and that of the trial court affirmed. BURNETT, C. J., and WHITE, DYER and CHATTIN, JJ., concur.