Opinion ID: 2406086
Heading Depth: 1
Heading Rank: 3

Heading: dismissal of travelers' insurance company, ina, and home insurance company as defendants

Text: Plaintiff sued these defendants alleging that the acts of negligence, wrong doing, misrepresentation and fraud on the part of Jenkins Insurance was imputable to them as principals by virtue of their authorization of Jenkins to act as their agents for the purpose of selling their insurance policies to plaintiff. The Chancellor dismissed the insurance company defendants on the equitable premise that they had no knowledge of the scheme contrived by Jenkins and Carte and on the theory that the plaintiff corporation and the Cowans had information available to them which would have prevented the loss occasioned through the fraudulent scheme which occurred. The plaintiff insists that since contributory negligence is not a defense to an intentional tort such as fraud that these defendants should not have been dismissed from the lawsuit. While we have no argument with the equitable theory upon which the Chancellor dismissed the suit against these defendants we think a further, more satisfactory reason why these defendants should not be held liable is stated more succinctly in 3 Am.Jur.2d Agency, § 80, p. 587, as follows: In order to establish that an agent had the apparent authority to do the act in question, it must be established (1) that the principal has manifested his consent to the exercise of such authority or has knowingly permitted the agent to assume the exercise of such authority; (2) that the third person knew of the facts and, acting in good faith, had reason to believe and, did actually believe, that the agent possessed such authority; and (3) that the third person, relying on such appearance of authority, has changed his position and will be injured or suffer loss if the act done or transaction executed by the agent does not bind the principal. This rule was followed in substance in Umstattd v. Metropolitan Life Insurance Co., 110 S.W.2d 342, 21 Tenn. App. 312 (1937) and we are satisfied it states the law correctly as it exists in this State. Insofar as the theory of contributory negligence is concerned it is unrefuted in the record that Mr. Cowan the principal stockholder in Knox-Tenn Rental Company had been suffering from emotional illness for some period of time. He had implicit faith and placed his trust and confidence in both Charles Carte and Ronald Jenkins. He was grooming Carte to take over the reins of Knox-Tenn Rental Company and trusted Jenkins to the extent that he left his insurance policies in his possession during the time in question that the fraudulent thievery took place. In accordance with this opinion the judgment of the trial court dismissing the suit against Traveler's Insurance Company, Insurance Company of North America, and Home Insurance Company is affirmed. The judgments dismissing the suit against all other defendants except Sandra Jenkins and Travel Management, Inc., are overruled and reversed. The case is remanded for appropriate proceedings in accordance with this opinion. The costs of this appeal are assessed against Knox-Tenn and its sureties. HARBISON, C.J., and FONES, COOPER and DROWOTA, JJ., concur.