Opinion ID: 889153
Heading Depth: 1
Heading Rank: 5

Heading: Ratification Generally

Text: ¶ 25 The doctrine of ratification has a robust history within our state's jurisprudence, its application checkered only by two decisions, discussed hereinafter. Ratification appeared even before statehood, in Schnepel v. Mellen (1878), 3 Mont. 118, where the Court explained that one can be bound by the authorized acts of another or by the ratification of unauthorized acts. Schnepel, 3 Mont. at 128. In Koerner v. Northern P. Ry. Co. (1919), 56 Mont. 511, 186 P. 337, we noted that ratification is defined to be the confirmation of a previous act done either by the party himself or by another. Koerner, 56 Mont. at 520, 186 P. 337. We provided a fuller analysis in Larson v. Marcy, 61 Mont. 1, 201 P. 685 (1921): Ratification may be effected by express declaration or by implication, and it may be implied from any acts or conduct on the part of the principal which reasonably tends to show an intention on his part to make the act of the agent his own. And where the agency is shown to exist, the facts will be construed liberally in favor of the approval of the principal, and very slight circumstances and small matters will suffice to raise the presumption of ratification in favor of a third party who has dealt with the agent upon the assumption that he possessed the authority and has surrendered a substantial right upon the faith of such assumed power. While mere acquiescence on the part of the principal is not necessarily conclusive, it is to be considered as evidence of ratification upon the theory that it is the duty of the principal to repudiate the unauthorized act of his agent within a reasonable time after discovery unless he intends to be bound by it, and such repudiation must be brought home to the party beneficially affected. The numerous authorities supporting these propositions need not be cited. Larson, 61 Mont. at 8-9, 201 P. at 687. We thereafter regularly cited and employed the doctrine in a variety of contexts. See Arnold v. Genzberger, 96 Mont. 358, 31 P.2d 296 (1934); White v. Sorenson, 141 Mont. 318, 377 P.2d 364 (1963); Audit Servs. Inc. v. Francis Tindall Constr., 183 Mont. 474, 600 P.2d 811 (1979); Safeco Ins. Co. v. Lovely Agency, 200 Mont. 447, 652 P.2d 1160 (1982); Wyman v. Wyman, 208 Mont. 57, 676 P.2d 181 (1984); Moore v. Adolph, 242 Mont. 221, 789 P.2d 1239 (1990); Daniels v. Dean, 253 Mont. 465, 833 P.2d 1078 (1992); and Stowers v. Community Med Ctr. Inc., 2007 MT 309, 340 Mont. 116, 172 P.3d 1252. ¶ 26 In Audit Services, a contract case, we said that [r]atification may occur in either an express oral manner or solely by means of personal conduct, and explained that: Ratification is a form of equitable estoppel and ordinarily is applied strictly in an agency context, whereby a principal approves the unauthorized act of an agent. See Larson v. Marcy (1921), 61 Mont. 1, 201 P. 685. However, it is also applied in varying classes of cases including contracts. Generally, contract ratification is the adoption of a previously formed contract, notwithstanding a quality that rendered it relatively void and by the very act of ratification the party affirming becomes bound by it and entitled to all the proper benefits from it. S[c]hagun v. Scott Mfg. Co. (8th Cir.1908), 162 F. 209, 219. The contract is obligatory from its inception and may be signified from the commission or omission of acts. East Cent. Okl. Elec. Co[-]op., Inc. v. Oklahoma G. & E. Co. (Okl.1977 [1973]), 505 P.2d 1324, 1329.    It is the manifestation of the ratifying party which controls. Audit Servs., 183 Mont. at 477-78, 600 P.2d 811 (emphasis added). ¶ 27 In Safeco, we further refined the doctrine's application by delineating the elements to be satisfied for ratification to occur: [R]atification exists upon the concurrence of three elements: (1) acceptance by the principal of the benefits of the agent's act, (2) with full knowledge of the facts and, (3) circumstances or an affirmative election indicating an intention to adopt the unauthorized arrangement.... A requisite to the existence of ratification is good faith on the part of the person who asserts that the principal ratified the alleged agent's unauthorized act. Safeco, 200 Mont. at 453, 652 P.2d 1160 (quoting 2A C.J.S. Agency § 71). We have cited these standards in the cases following Safeco. ¶ 28 Further, ratification can include situations where a prior agency relationship did not exist, because a subsequent ratification of an unauthorized act may likewise create the agency relationship. Section 28-10-201, MCA; see also Arnold, 96 Mont. at 375, 31 P.2d 296 (The ratification ... operates upon the act ratified precisely as though authority to do the act had been previously given.).