Opinion ID: 2391724
Heading Depth: 1
Heading Rank: 5

Heading: Claims Regarding Agency

Text: The last two issues confronting this Court pertain to plaintiffs' agency related claims in this case. As previously stated, certified questions three and four are as follows: 3. Are the contractual agency disclaimers in the refund anticipation loan applications enforceable under West Virginia law? 4. Is a tax preparer who helps a customer obtain a refund anticipation loan in exchange for compensation an agent under West Virginia law? This Court has previously held that [a]n agent in the restricted and proper sense is a representative of his principal in business or contractual relations with third persons; while a servant or employee is one engaged, not in creating contractual obligations, but in rendering service, chiefly with reference to things but sometimes with reference to persons when no contractual obligation is to result.' Syl. Pt. 3, State ex rel. Key v. Bond, 94 W.Va. 255, 118 S.E. 276 (1923). Syl. Pt. 2, Teter v. Old Colony Co., 190 W.Va. 711, 441 S.E.2d 728 (1994). Accord, Syl. Pt. 3, Thomson v. McGinnis, 195 W.Va. 465, 465 S.E.2d 922 (1995). `One of the essential elements of an agency relationship is the existence of some degree of control by the principal over the conduct and activities of the agent.' Syl. Pt. 3, Teter v. Old Colony, 190 W.Va. 711, 441 S.E.2d 728 (1994). Syl. Pt. 2, Thomson v. McGinnis, 195 W.Va. 465, 465 S.E.2d 922. In State ex rel. Clark v. Blue Cross Blue Shield of West Virginia, Inc., 203 W.Va. 690, 714, 510 S.E.2d 764, 788 (1998), we offered the following additional authorities on the subject of agency: 3 Am.Jur.2d Agency § 1, at 509-10 (1986) (The term `agency' means a fiduciary relationship by which a party confides to another the management of some business to be transacted in the former's name or on his account, and by which such other assumes to do the business and render an account of it. It has also been defined as the fiduciary relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act. Thus, the term `agency,' in its legal sense, always imports commercial or contractual dealings between two parties by and through the medium of another. In an agency relationship,... the one who acts for and represents the principal, and acquires his authority from him, is known and referred to as an `agent.' (footnotes omitted)); 2A C.J.S. Agency § 4, at 552, 554-55 (1972) (stating that [a]gency is succinctly defined as a relation created by an agreement between the parties; relationship between a principal and his agent; the representation of one called the principal by another called the agent in dealing with third persons; the relation resulting where one person authorizes another to act for him in business dealings with others, and defining agent as one who acts for or in the place of another by authority from him; a person having express or implied authority to represent or act on behalf of another person who is called his principal; a person employed or authorized by another to act for him, or to transact business for him.... (footnotes omitted)); 1A Michie's Jurisprudence Agency § 2, at 666 (1993) (An agent is one who represents another, called the principal, in dealings with third persons. He is one who undertakes some business or to manage some affair for another by authority of or on account of the latter and to render an account of it. (footnotes omitted)). Id. at 714, 510 S.E.2d at 788. In Arnold v. United Companies Lending Corp., 204 W.Va. 229, 511 S.E.2d 854, a case involving a lawsuit filed by borrowers against a lender and loan broker seeking declaratory judgment that an arbitration agreement that was signed as part of a loan transaction was void and unenforceable, this Court was similarly asked to determine by way of certified question whether a loan broker acts as an agent of prospective borrowers. Therein, we concluded that [l]ike the duty of disclosure, the answer to this question is fact dependent; one must examine the facts of a particular case to determine whether an agency relationship exists. Id. at 240, 511 S.E.2d at 865. In answering the certified question, we stated that `[p]roof of an express contract of agency is not essential to the establishment of the relation. It may be inferred from facts and circumstances, including conduct.' General Elec. Credit Corp. v. Fields, 148 W.Va. 176, 181, 133 S.E.2d 780, 783 (1963). In Syllabus Point 2 of Thomson v. McGinnis, 195 W.Va. 465, 465 S.E.2d 922 (1995), this Court stated: One of the essential elements of an agency relationship is the existence of some degree of control by the principal over the conduct and activities of the agent. Syl. Pt. 3, Teter v. Old Colony Co., 190 W.Va. 711, 441 S.E.2d 728 (1994). See Peters v. Riley, 73 W.Va. 785, 791, 81 S.E. 530, 532 (1914) (no agency found where [a]ll the essential elements of the contract remained in the sole and exclusive control of the defendant); see also Wright & Souza, Inc. v. DM Properties, 1 Neb. App. 822, 510 N.W.2d 413 (1993) (prospective borrower failed to establish that loan broker acted as borrower's agent where borrower had no control over broker). This Court further stated in Thomson that a principal denying agency must show that the principal neither controlled, nor had the right to control, the work, and where factual conflict exists regarding the degree of control exercised and the nature of the relationship thereby created, jury resolution is warranted. 195 W.Va. at 470, 465 S.E.2d at 927. Thus, in answer to the last part of certified question three, we emphasize that the existence of an agency relationship between a loan broker and prospective borrowers is fact dependent, and absent proof that the borrowers had the right to, or did, exert some degree of control over the conduct of the broker, no agency can be found to exist. Id. at 239-240, 511 S.E.2d at 864-865 (emphasis added). Guided by our longstanding principles of agency law, we find that, as it pertains to certified question four, [14] because the question of whether an agency relationship exists is generally fact dependent, the question of whether a tax preparer who helps a customer obtain a refund anticipation loan in exchange for compensation is an agent under West Virginia law is fact dependent, and absent proof that the consumer had the right to, or did, exert some degree of control over the conduct of the tax preparer, no agency can be found to exist. To the extent that the District Court's Memorandum Opinion and Order certifying the subject questions to this Court fails to contain sufficient undisputed findings of fact regarding the specific conduct of the parties which would allow this Court to determine whether an agency relationship existed in this particular case, we remand this issue back to the District Court for resolution in accordance with our existing principles of agency law and the guidance provided in this opinion. [15] Likewise, as it pertains to certified question three regarding whether the contractual agency disclaimers in the refund anticipation loan applications are enforceable under West Virginia law, we find that to the extent that West Virginia law governing the existence of an agency relationship recognizes that the underlying conduct of the parties can be reviewed to determine whether an agency relationship exists, [16] whether a relationship is characterized as agency in an agreement between parties is not necessarily controlling. See Restatement (Third) of Agency 1.02 ( citing, inter alia, MJ & Partners Rest. Ltd. P'ship v. Zadikoff, 10 F.Supp.2d 922, 932 (N.D.Ill.1998)(the existence of an agency relationship is determined on the actual practices of the parties, and not merely by reference to a written agreement.), and Prudential Ins. Co. v. Eslick, 586 F.Supp. 763, 764 (S.D.Ohio 1984)(action by insurer against former salesman alleging breach of fiduciary duty; although contract between insurance company and former salesman characterized salesman as an independent contractor, nature of parties' relationship must be determined by comprehensive factual analysis; court denied insurer's motion for summary judgment on point that former salesman was its agent)). Because the nature of the parties' relationship must be determined by a comprehensive factual analysis in order to determine whether Jackson Hewitt's agency disclaimer is enforceable, and this Court does not have before it sufficient undisputed findings of fact allowing this Court to conduct such analysis, we remand this issue back to the District Court for resolution in accordance with our existing principles of agency law and the guidance provided in this opinion.