Opinion ID: 158844
Heading Depth: 3
Heading Rank: 3

Heading: Seelman’s Authority to Bind DMJM

Text: DMJM next argues that, even if Townsend’s offer was renewed and accepted by Seelman, Seelman did not have authority to bind DMJM. The existence of an agency relationship is generally a question of fact. See Stortroen v. Beneficial Fin. Co., 736 P.2d 391, 395 (Colo. 1987). An agent may have actual or apparent authority. Seelman was the corporate vice-president at DMJM and, as such, was second in command only to the president. The jury could have found that, by virtue of his position and his involvement in the matter, Seelman had implied - 11 - negotiating authority. Merely because Cavanagh had express actual authority to negotiate with Townsend at one level does not necessarily imply that Steelman lacked any implied authority at another level. The jury certainly could have found that when Townsend was met by Cavanagh’s rejection, Townsend simply went over Cavanagh’s head to the second-in-command at the company and got the desired result. The jury also could have found that Seelman possessed apparent authority based upon the company’s entrusting him with second-in-command responsibilities and his superior position vis-a-vis Cavanagh and Townsend. Apparent authority is “that authority which the agent appears to third parties to have.” Life Investors Ins. Co. of America v. Smith, 833 P.2d 864, 868 (Colo. Ct. App. 1992). Under the concept of apparent authority, “a principal who by his words or conduct has caused another reasonably to believe that the principal has authorized his agent to take some action, is liable as if that action were authorized.” Nation v. City & County of Denver, 685 P.2d 227, 229 (Colo. Ct. App. 1984). DMJM argues against apparent authority because the principal did not engage in any conduct that could cause Townsend to believe Seelman was authorized. However, “apparent authority can be created by appointing a person to a position, such as that of manager…,which carries with it generally recognized duties.” Restatement (Second) of Agency § 27 cmt. a (1958). “[T]o those who - 12 - know of the appointment there is apparent authority to do the things ordinarily entrusted to one occupying such a position, regardless of unknown limitations which are imposed upon the particular agent.” Id. In fact, Seelman admitted at trial that it would be reasonable for Townsend to rely on him when he told him something in a work-related context. Aplt. App. at 1166. Apparent authority does not exist unless the third party actually believes the agent is authorized. DMJM claims that Townsend admitted that he did not believe Seelman to be DMJM’s authorized agent in the negotiations. In his deposition, Townsend testified that he did not think that Seelman would have authority to approve the disability arrangement, but at trial Townsend said that he “felt like either [the president of the company or Seelman] as officers of the company” could approve the arrangement. Aplt. App. at 506. Apparently, the jury chose to accord more weight to Townsend’s trial testimony than to his deposition testimony. Finally, DMJM argues that, as a matter of law, no apparent authority could exist because Townsend, as a vice president of DMJM with access to company policies, could not be a third-party entitled to rely upon the doctrine of apparent authority. No cases are cited for this proposition; regardless, it lacks factual support. Townsend was a subordinate of Seelman. As the corporate vice president and a member of the management committee of DMJM’s parent - 13 - company, Seelman was in a position to have superior information to Townsend about the authorized duties of officers, especially once Townsend was no longer invited to high-level meetings (as he testified happened shortly before he began his negotiations).