Opinion ID: 682427
Heading Depth: 2
Heading Rank: 2

Heading: liability of thornburgh for the september contract with the committee

Text: 54 There is no dispute that Rove & Company and the Committee were the only nominate parties to the September Contract; both the language of the instrument and the intent of all parties are clear. As the district court properly concluded, and the parties do not contest on appeal, the Committee is liable for all amounts owed Rove & Company under that agreement. 55 Again, the only issue before us is whether--in addition to the Committee--Thornburgh, or in the alternative, Dimuzio, is jointly and severally liable with the Committee for its contractual debt. To answer this question, we must ascertain whether either man personally, or through his agent, authorized, assented to, or ratified the September Contract. 56 In holding Thornburgh liable, the district court found that he had assented to the September Contract. On appeal, Thornburgh proffers two arguments why this conclusion was wrong. He first argues that he was never a member of the Committee and, he contends, only members or officers of the Committee can assent to, authorize, or ratify Committee contracts. Second, Thornburgh asserts that, even if he were deemed to be a member of the Committee or otherwise had the capacity to incur personal liability for the Committee's debts, he did nothing that could rise to the level of an assent to this agreement. We address each argument in turn.
57 The district court found that the law provides for personal liability if a member or officer or candidate authorizes, assents to, or ratifies a committee transaction. 49 Thornburgh challenges this statement of the law, claiming that under the law governing unincorporated nonprofit associations only members or officers of the association have the legal capacity to incur personal liability for its debts. 58 Again, state law answers the question, who may be held responsible for the debts of an unincorporated political campaign committee? 50 In decisions addressing the liability of individuals for the debts of such committees, state courts have frequently recited the governing legal standard in terms of the actions of officers or members or both. 51 We do not read these cases, however, to exclude the capacity of the candidate qua candidate--by his own acts--to become liable for the debts of his designated principal campaign committee. To the contrary, many of these cases implicitly recognize that candidates have such capacity. 59 In Bloom v. Vauclain, 52 for example, the Pennsylvania Supreme Court drew no distinction among candidates, members, and officers in its discussion of the rule governing the liability of individuals for the debts of campaign committees: 60 The principles of law governing the responsibility of candidates and officers of such committees have been before the courts, and in all cases we have adhered to the rule laid down for voluntary associations. The mere fact that one is a candidate, an officer, or a member of a political organization does not, of itself, establish his liability, personally or otherwise, for debts incurred by that organization.... But those who make a contract, not forbidden by law, are personally liable, and all are included in such liability who assented to the undertaking. 53 61 Likewise, in Progress Printing Corp. v. Jane Byrne Political Committee, 54 Hunt v. Davis, 55 and W.H. Brewton & Sons, Inc. v. Kennedy, 56 state courts discussed the potential personal liability of the candidate in a manner reflective of the fact that those courts drew no distinction among the respective capacities of the candidate, a member, and an officer of the committee, to incur liability for a campaign committee's debts. 57 62 In fact, we have uncovered only one other case in which the question of a candidate's capacity to assent to a contract of his campaign committee was even raised. 58 The opinion in that case is unclear whether the committee in question was the candidate's principal campaign committee; and we are aware of no decision in which a court has held in favor of a candidate based on a finding that he lacked the capacity to incur liability for his principal campaign committee's debts. 63 Thornburgh offers no legal foundation to support his conclusionary assertion that courts should fashion a rule that would insulate the candidate (but not the members and officers of his committee) from personal liability for the debts incurred by the candidate's principal campaign committee. Query whether any reasonable explanation even exists, given that such a rule would appear to defy both logic and equity. To hold that candidates do not have capacity to incur liability for the debts of their principal campaign committees but that members and officers do could very well lead to perverse and anomalous results: Campaign committee officers and members could incur personal liability for campaign committee debts by assenting to or ratifying such debts but the candidate, for whose election the officers and members labor, could not. Although we recognize that Congress has constructed a somewhat analogous--and anomalous 59 --legal regime to shield candidates from liability for violations of FECA, absent express direction from that branch, we decline to extend further such an apparently inequitable rule. 64 As the district court concluded that a candidate qua candidate does have the capacity to incur personal liability, the court was not required to make--and thus did not make--a specific ruling whether Thornburgh was a member of the Committee. We agree with the district court's conclusion of law as to a candidate's capacity to incur liability, but we also are satisfied that, as a matter of fact, Thornburgh was a member of the Committee. At the very least, Thornburgh's active participation in the Committee's activities estops him from denying membership in the Committee. 65 The record contains no Committee membership roster or list, a fact we do not find particularly surprising in light of the nature of political campaign committees. Although the Indiana legislature enacted a provision specifically stating that a candidate is an ex officio member of his own campaign committee, 60 neither Congress nor Pennsylvania or Texas lawmakers have been so accommodating. 61 Neither are we aware of any other such legislation. 62 Finding little guidance from the Committee's documents or applicable state statutes, we next examine state common law to determine whether Thornburgh was a member of his own principal campaign Committee. 63 Under both Texas and Pennsylvania law, an unincorporated association is defined generally as a body of individuals acting together for the prosecution of a common enterprise. 64 As such entities typically are loosely organized, written formalities are not required for membership; a person joins an association when--either expressly or tacitly--he is accepted as, and agrees to become, a member. 65 The intent of both parties, the putative member and the association, is what governs. 66 Whether a person is a member of an association is a question of fact. 67 66 Thornburgh testified conclusionally that he was not a member of the Committee. Circumstantial evidence, however, may be considered to determine whether a person acted in a manner evincing membership. 68 In the instant case, we are satisfied that such evidence compels the conclusion that both Thornburgh and the Committee contemplated his membership. 67 The Committee was formed for the sole purpose of promoting Thornburgh's senatorial candidacy during Pennsylvania's 1991 special election--obviously an objective shared by Thornburgh himself. As Thornburgh and the Committee shared this common goal, the only open question remaining is what was the intent of each party, i.e., did Thornburgh intend to associate voluntarily with the Committee and did the Committee approve of his affiliation, either expressly or implicitly. Based on the record before us, we believe that the evidence strongly supports affirmative answers to both questions. 69 68 We note initially that a candidate is not necessarily a member of any committee established to promote his election. We are aware of two instances--and there are likely more--in which candidates were completely uninvolved with, and in one case even opposed to, the efforts of committees ostensibly organized to support their candidacy for federal office. 70 In both cases, however, the candidates made clear that they had no intention of affiliating with the committees. 71 This, however, is not such a case. 69 The instant record is replete with evidence that Thornburgh and the Committee voluntarily chose to associate with one another. Thornburgh designated the Committee as his one and only principal campaign committee. By doing so, Thornburgh expressly sanctioned the Committee as the only organization authorized to receive and expend contributions on his behalf. 72 He campaigned extensively in concert with employees of the Committee; spoke almost daily with Committee employees who were supporting his candidacy; and actively facilitated contracts entered into by the Committee (as noted, for example, Thornburgh reviewed and approved several vignettes appearing in fundraising letters for the September Contract, and facilitated its performance by providing a signature exemplar and his personal mailing lists). And--in the words of Mason--Thornburgh was ultimately in control of the entire campaign, including all activities undertaken by the Committee. For any reasonable finder of fact, these would establish Thornburgh's membership in the Committee beyond cavil. 70 Even absent a finding that Thornburgh's activities with the Committee were sufficient to evince his intent to affiliate with that organization as a member, based on these same interactions Thornburgh would have to be estopped from now denying his membership in the Committee. [A] person may be estopped from denying membership in an association, particularly where there has been active participation in its activities. 73 It seems clear to us that this rule applies with particular force when, as here, the candidate's sole purpose in claiming estrangement from the committee is the evasion of personal liability for the committee's debts, 74 especially where such claim is proffered post hoc. 71 As the facts of this case compel the conclusion that Thornburgh had the capacity to incur personal liability for the debts of the Committee, we next consider whether he did so. 72
73 For Thornburgh to be held liable for the September Contract, the evidence must show that he, or his agent for him, authorized, assented to, or ratified that agreement. The district court found that Thornburgh assented to the September Contract. We agree. 74 As a general proposition in the context of the law of unincorporated nonprofit associations--and thus unincorporated political committees--assent connotes approval and is roughly equivalent to authorization. 75 Assent can be express or tacit. To manifest tacit assent to a contract through conduct, one must [intend] to engage in the conduct and know[ ] or ha[ve] reason to know that the other party may infer from his conduct that he assents. 76 A person has reason to know a fact ... if he has information from which a person of ordinary intelligence would infer that the fact in question does or will exist. 77 Absent more, however, a member's mere knowledge that his association entered into a contract is insufficient to establish that he tacitly assented to the contract. 78 Whether a principal assented to a transaction is a question of fact, 79 a finding of which will be reversed only if clearly erroneous. 75 We deem it important to remember that, when we discuss Thornburgh's assent to the September Contract, we are asking only whether Thornburgh tacitly or implicitly agreed with the Committee's decision to contract for direct mail fundraising services. Had he expressly agreed to become personally liable for the September Contract, our inquiry would be at an end; we would have no need to consider the concept of assent in the context of unincorporated nonprofit associations. But under that concept in that context, Thornburgh's liability attached by operation of law at the time he concurred with the Committee's decision to enter into the September Contract. 80 (We are aware that some state courts in New York have stated that members and officers are not liable for the debts of a campaign committee [a]s long as the members don't intend to be personally liable. 81 To the extent that this rule may correctly state the law of New York, we note simply that, regardless of whatever approval such a rule might have there or elsewhere, it is not the legal standard in either Texas or Pennsylvania, and we have no authority as an Erie court to change the settled law of either state by substituting the New York rule for those extant in Texas and Pennsylvania.) 76 We are therefore concerned here only with the question whether Thornburgh acted in a manner that evinced agreement with the Committee's decision to enter into the September Contract with Rove & Company for direct mail fundraising services. Once that question is posed properly, the answer becomes self-evident. The district court concluded that through his actions Thornburgh manifested his agreement with the Committee's decision to procure direct mail fundraising services. In particular, the court found that Thornburgh (1) knew that Dickman had hired some person or company to provide direct mail services; (2) played a direct role in the fulfillment of that contract by furnishing his signature exemplar, by reviewing, editing, and approving drafts of fundraising letters, and by supplying lists of names and addresses to which such correspondence would be sent; (3) understood that the letters were written on his behalf and that his approval meant that some contractor had the authority to mail them; (4) knew that the funds raised by these solicitations were, in fact, used for the sole purpose of promoting his election; and (5) admitted that he had the authority, if he desired, to stop such fundraising efforts at any time. 82 Based on these discrete factual findings--all of which are supported by the record, and none of which are contested by Thornburgh--the district court concluded that Thornburgh assented to the Committee's decision to retain the services of a direct mail fundraiser, Rove & Company in this instance. Whether Thornburgh knew the identity of the fundraiser selected by the Committee is irrelevant and immaterial. The record does not tell us that those facts are clearly erroneous or that the district court's conclusion based on those facts requires reversal. 77 Thornburgh nevertheless insists that the district court erred in its analysis. He objects in particular to the district court's reliance on the fact that Thornburgh provid[ed] signature exemplars, review[ed] drafts, and provid[ed] a list of contributors. He contends that, as these acts occurred for the most part well before September 18, 1991, they had no nexus with the September Contract. He insists, for the district court to rely on such attenuated acts as a basis of its finding that Thornburgh assented to that agreement is improper. As we do not agree, we do not conclude that the district court erred in relying on this evidence. 78 We first observe that all of these prior acts anticipated and directly facilitated the performance of direct mail solicitations in general and the September Contract in particular. For example, in mailings made pursuant to the September Contract, Rove & Company used the signature exemplar and excerpts previously edited and approved by Thornburgh. 83 Evidence that a member of an association actively facilitated the performance of a contract entered into by the association--even prospectively--is certainly probative of whether that member agreed with the association's decision to enter into that same agreement. 79 As the court must determine whether Thornburgh (as principal) assented to the contract entered into by the Committee (as his agent), it was not error for the district court to consider Thornburgh's actions ante-dating the September Contract. Contrary to Thornburgh's assertions, both the prior and contemporaneous actions of a principal can be relied on to ascertain whether the principal approved of a particular transaction. 84 Moreover, the fact that Thornburgh cooperated in the Committee's direct mail fundraising effort before, during, and after the Committee entered into the September Contract strongly supports the conclusion that he continuously approved of Rove & Company's work for the Committee. 85 80 Thornburgh also posits that he could not assent to a contract the terms of which he did not know. In this case, however, it is clear that Thornburgh knew the substance of the contract if not the details: he reviewed the letters to be sent; knew they were being prepared by a direct mail vendor; knew that the vendor was charging for its services; and knew (or should have known) the identity of the vendor. 86 Knowledge of these facts is sufficient for Thornburgh to be able to assent to the September Contract. 87 81 But even if Thornburgh's knowledge were insufficient, he cannot shield himself from liability merely by failing to read or otherwise familiarize himself with a contract entered into by his agent, when as here the initial proposal and the subsequent agreement were readily available. 88 Both the initial proposal and the September Contract were provided to Dickman, both an employee of the Committee and Thornburgh's longtime Man Friday. Rove sent the initial fundraising proposal to Dickman; later, Rove provided a copy of the September Contract to Mason, who, in turn, forwarded the agreement to Dickman. Thornburgh was aware that the Committee was going to obtain direct mail fundraising services and that it had subsequently entered into an agreement to obtain such services. Had Thornburgh desired, he easily could have obtained a copy of the September Contract and reviewed its terms. The fact that Thornburgh never availed himself of the opportunity--remaining deliberately ignorant--cannot now inoculate him from personal liability. It would be inequitable to hold otherwise: An affiliate of an association who (1) knowingly benefits from an association's contract, (2) directly facilitates the performance of such contract, and (3) claims the right to terminate the activities therein contracted for, cannot be permitted to escape personal liability for such association's contract merely because he remains willfully ignorant of the specific terms of the association's agreement, the existence of which is known to him. 82 Thornburgh contends finally that the acts relied on by the district court as evidencing assent constitute nothing more than ordinary interactions that any federal candidate would have with his principal campaign committee. He argues that if such actions are held to manifest assent to a contract, virtually every candidate could be held to have assented to virtually every contract entered into by his campaign committee so long as the candidate is needed to facilitate performance of the contract. 83 Like others before us, we recognize that the application of the law governing the liability of members for the debts of their unincorporated nonprofit association may sometimes lead to harsh or even subjectively unintended results. In fact, one commentator has ventured that the choice of this form of organization usually results from sheer ignorance of the possible degree of personal liability of its members. 89 Thus, although we do not join Thornburgh in speculating on the extent to which future candidates could be held liable for the debts incurred by their unincorporated campaign committees, we are constrained to note in passing that he is not the first candidate to be held liable or potentially liable for his committee's debts. The list includes many widely recognized names, including: Senator Edward Kennedy, 90 Senator James Abdnor, 91 Senator Kenneth D. McKellar, 92 Senator Vance Hartke, 93 Senator Allen J. Ellender, 94 James M. Collins (candidate for the U.S. Senate), 95 Peter Parker (candidate for the U.S. Congress), 96 Alabama gubernatorial candidate Guy Hunt, 97 Tennessee gubernatorial candidate Randy Tyree, 98 Louisiana gubernatorial candidate, William L. Clark, 99 Alabama Attorney General candidate T. Dudley Perry, 100 Chicago Mayor Jane Byrne, 101 and Gary (Indiana) Mayor Richard Hatcher. 102 84 We must reiterate, however, that regardless of how harsh or anomalous the results dictated by application of the law of unincorporated nonprofit associations may appear to some, wary candidates can easily avoid this trap--at least in states with laws like those of Texas and Pennsylvania--by either incorporating their campaign committee or specifying in all committee contracts that the purveyors of goods or services may look only to committee assets for compensation. 85 In sum, Thornburgh's actions, especially when viewed in light of his education, his experience, and his familiarity with the facts surrounding this matter, were no mere string of trivialities as Thornburgh would have this court believe. Rather, they confirm that he knew that the Committee would and did contract for direct mail fundraising services and that he approved, at least tacitly, the Committee's decision to enter into the September Contract. This is sufficient proof that Thornburgh assented to the agreement. Thus, we stand unconvinced that the district court erred by holding Thornburgh liable for the September Contract; we agree with the district court that [g]iven his knowledge of the direct fundraising campaign, his control over the substance of the fundraising letters, and his authority to refuse to allow his signature to appear on any letter or to refuse to allow any letter to be mailed, Thornburgh did effectively say 'go ahead' with the direct mail campaign. 103 86
87 The district court also found Thornburgh liable as a result of Dickman's authorization of, and assent to, the contract. 104 Thornburgh does not contest the district court's finding that Dickman authorized or assented to the contract; rather, Thornburgh takes issue only with the court's conclusion that Dickman acted as Thornburgh's general agent with authority to enter into a contract with Rove & Company on Thornburgh's personal behalf. 88 Under Texas law, agency is a mixed question of law and fact. To the extent that the facts are undisputed, the trial court's ruling is freely reviewable on appeal. However, where ... the facts are disputed, the clearly erroneous standard applies. 105 As Thornburgh does not contest the factual findings upon which the district court based its conclusion that Dickman acted as Thornburgh's general agent, we review de novo that court's legal conclusion. 106 89 Agency is a legal relationship created by an express or implied agreement or by operation of law whereby the agent is authorized to act for the principal, subject to the principal's control. 107 As in the formation of any contract, the consent of both parties is necessary to establish an agency relationship. 108 Agency is never to be presumed; it must be shown affirmatively. 109 The party who asserts the existence of agency relationship has the burden of proving it. 110 To prove an agency relation under Texas law, there must be evidence from which the court could conclude that [t]he alleged principal [had] the right to control both the means and the details of the process by which the alleged agent [was] to accomplish the task. 111 90 Thornburgh argues that Rove failed to meet that burden. Specifically, Thornburgh contends that Dickman was the Committee's agent, not Thornburgh's; or, in the alternative, that if Dickman was Thornburgh's agent, it was for the general purposes of running the political side of the campaign--not for the purpose of imposing personal liability on Thornburgh for the debts of the Committee. Thornburgh reminds us that both he and Dickman testified that Dickman was not expressly authorized to act as Thornburgh's agent for any purpose--much less to enter into a contract for Thornburgh personally--and that there is no direct evidence in the record to refute this testimony and support the district court's findings to the contrary. 112 91
92 Although both Thornburgh and Dickman testified that Thornburgh had not constituted Dickman as Thornburgh's agent for any purpose, agency can be implied from the conduct of the parties under the circumstances. 113 In the instant case, Dickman (the person authorized to answer interrogatories on behalf of the Committee) admitted in the Committee's answers to Rove & Company's interrogatories that he was the primary point of contact between the Committee and Defendant Richard Thornburgh. Dickman also acknowledged that he was known as an intermediary to Thornburgh regarding, inter alia, the running and organizing of Thornburgh's campaign. Thornburgh solicited Dickman's opinion on a day-to-day basis about campaign activities, including broad campaign strategies, where Thornburgh should speak, and what issues Thornburgh should address. Thornburgh used Dickman as his go-between to provide mailing lists, a signature exemplar, and edited solicitation letters to the Committee to facilitate the Committee's direct mail contract with Rove & Company. Thornburgh testified that Dickman was a loyal friend, who had served as a high-level assistant to Thornburgh during several of Thornburgh's campaigns and while Thornburgh served in various government positions. 114 93 Consistent with a principal's role, Thornburgh retained the ultimate authority over Dickman and Dickman's activities within the Committee. For example, even though Dickman took part in the Committee's decision to hire Davis as the Committee's Campaign Manager, Dickman acknowledged that, had Thornburgh disapproved of this choice, another campaign manager would have been selected. In addition, although Dickman authorized and assented to the Committee's contract with Rove & Company, Thornburgh retained control over the content of the fundraising letters and whether the letters would be mailed at all. 115 Finally, Thornburgh was the only person authorized to grant the Committee (and thus its employees, one of whom was Dickman) the authority to raise and spend funds on Thornburgh's behalf. Thornburgh thus had the right to withhold his authorization of the Committee, a decision that would have halted all Committee activities--including Dickman's. Consequently, the evidence supports the district court's finding that Dickman served as Thornburgh's agent acting under Thornburgh's control. Nevertheless, we still must determine the scope of Dickman's authority. 94
95 An agent has only as much authority as the principal has either expressly or impliedly conferred. 116 The extent of an agent's authority is determined in light of all surrounding circumstances, including, inter alia, the parties' relations to one another, the undertaking in which the parties are engaged, and the general usages and practices of those engaged in such undertakings. 117 96 The district court found that Dickman acted as Thornburgh's general agent, or, [a]t the very least, Dickman had apparent authority to act on Thornburgh's behalf with respect to the campaign and, specifically, the agreement with Rove. 118 Thornburgh counters that even if Dickman did act as Thornburgh's agent, he was authorized only to run the political side of the campaign, not to enter into contracts making Thornburgh personally liable. 97 Although we recognize that there is some evidence and authority to support the district court's conclusion that Dickman was acting as Thornburgh's general agent, authorized to enter into the September Contract for Thornburgh personally, 119 we need not go that far to hold Thornburgh liable here. The record makes clear that Dickman acted as Thornburgh's agent to the Committee and was authorized to represent Thornburgh in all Committee activities, including whether to enter into the September Contract. This finding alone is sufficient to hold Thornburgh personally liable, given Thornburgh's acknowledgement that Dickman authorized and assented to that Committee's contract with Rove & Company. 98 As discussed earlier, for Thornburgh to be liable for the September Contract, Rove & Company had only to prove that Thornburgh authorized, assented to, or ratified the Committee's decision to enter into the agreement. Thornburgh could manifest his authorization or assent personally or through an agent. In the instant case, the record is clear that Dickman, as Thornburgh's representative to the Committee, authorized or assented to the September Contract. 99 Much of the same evidence that establishes that Dickman acted as Thornburgh's agent also supports the district court's findings that Dickman was Thornburgh's primary point of contact with the Committee 120 and that Dickman's role in the Committee was obviously to assure Thornburgh's interests would best be served and to be Thornburgh's voice. 121 There is no indication that these findings by the district court were clearly erroneous. We also note that Thornburgh testified that it is customary during a political campaign for a candidate to rely on others, such as Dickman, to manage the day-to-day operations of the campaign--which operations would include such things as the purchase of services necessary to support the candidacy. As it is customary to rely on others for such services, and as the district court found that Dickman was the primary person upon whom Thornburgh relied during his senatorial campaign, we are led to but one conclusion: Dickman, as Thornburgh's representative to the Committee, had either actual or apparent authority to bestow Thornburgh's blessings on Committee activities, which included the Committee's decision to contract with Rove & Company. As Dickman had such authority, and as Thornburgh concedes (and the record substantiates with uncontroverted evidence) that Dickman authorized and assented to the September Contract, Thornburgh can also be found liable for the September Contract as a result of Dickman's authorization and assent to the Committee's decision to enter into that agreement. 122 Consequently, we need not, and do not, reach the issue whether Thornburgh also is personally liable because Dickman acted as Thornburgh's general agent vis-a-vis Rove & Company, vested with authority to enter into pacts such as the September Contract and bind Thornburgh personally.C. PERSONAL JURISDICTION OVER DIMUZIO 100 Guarding against the possibility that we might reverse the district court's decision holding Thornburgh personally liable for the September Contract, Rove & Company filed a cross appeal in the alternative, contesting the portion of the district court judgment holding that it lacked personal jurisdiction over Dimuzio. As we conclude that Thornburgh is liable on the contract, we do not reach this jurisdictional issue. 101 In addition to urging affirmance of the dismissal of the suit against him, however, Dimuzio as cross-appellee seeks double costs as a sanction against Rove & Company for filing a frivolous appeal of the district court's ruling dismissing Dimuzio for lack of personal jurisdiction. Although we agree with Dimuzio that Rove & Company provided no authority and little argument in the section of its brief designated as addressing its cross appeal, we believe that, when read in its entirety, Rove & Company's brief adequately explains the basis upon which it believed that Dimuzio could be held amenable to the district court's jurisdiction and liable for the Committee's debt. Thus, Rove & Company's cross appeal was not so baseless as to constitute frivolousness for purposes of sanctions. Accordingly, in the exercise of our discretion, we elect to consider Rove & Company's cross appeal non-frivolous in the context of the entire case and in light of the content of Rove & Company's entire brief. We thus deny Dimuzio's request for sanctions. III