Opinion ID: 1784615
Heading Depth: 2
Heading Rank: 1

Heading: Agency-Apparent Authority

Text: ¶ 23. Enis argued to the trial court and on appeal that Patriot's suit lacked personal jurisdiction as Magnolia was not Enis's agent, had no express or contractual authority to bind Enis to the software lease as its agent, nor did Magnolia have apparent authority to bind Enis. Enis maintained that no principal-agent relationship of any kind existed. As such, Enis claims the wrong party was named in the lawsuit. ¶ 24. Enis contended that on June 3, 2002, Lemons and Magnolia entered into a management agreement with Enis to undertake the management of Enis's dealership upon the terms and conditions stated in the management agreement. The actual contract or agreement specified that Magnolia-Lemons was only authorized to use Enis's dealership number to purchase vehicles and parts from GM until it obtained its own dealership number. This was done to facilitate the sale of the dealership. Pursuant to the terms of the agreement, Magnolia-Lemons was obligated to pay any and all operational expenses of the dealership incurred on or after June 3, 2002, of whatever nature, including but not limited to, leases on equipment and property, which are incurred by Magnolia-Lemons. Enis exercised no authority over Magnolia-Lemons's operations. ¶ 25. On February 14, 2003, Enis and Magnolia entered into a closing agreement to finalize the sale of Enis's assets to Magnolia. Magnolia had obtained its own GM dealership number. The agreement allowing use of Enis's dealership number terminated on February 14, 2003. On August 18, 2003, Patriot served Wayne Lemons with process in Patriot Commercial Leasing Co. v. Jerry Enis Motors, Inc., d/b/a Magnolia Chevrolet-Buick-Pontiac, case number 03-14790, in the Court of Common Pleas in Montgomery County, Pennsylvania. ¶ 26. Patriot argued at trial and on appeal that Magnolia had apparent authority as Enis's agent to bind Enis, the principal, to the software lease agreement. Patriot argued it relied, to its detriment, on Magnolia's apparent authority to bind Enis to the software lease agreement. As such, Patriot contends personal jurisdiction existed and the trial court erred in finding lack of personal jurisdiction. ¶ 27. The trial court in its bench opinion did not specifically address agency. However, Patriot made its agency argument in support of jurisdiction to the trial court, and Enis defended the assertion. The trial court determined Patriot did not have personal jurisdiction over the Defendant, Enis, and, therefore, the judgment of the foreign court was not entitled to full faith and credit in this State. ¶ 28. On appeal, Patriot correctly contends that Pennsylvania's use of apparent authority is consistent with the laws of Mississippi regarding apparent authority under a theory of agency. In Basile v. H & R Block, Inc., 563 Pa. 359, 761 A.2d 1115, 1121 (2000), the Pennsylvania Supreme Court held: The special relationship arising from an agency agreement, with its concomitant heightened duty, cannot arise from any and all actions, no matter how trivial, arguably undertaken on another's behalf. Rather, the action must be a matter of consequence or trust, such as the ability to actually bind the principal or alter the principal's legal relations. Indeed, implicit in the long-standing Pennsylvania requirement that the principal manifest an intention that the agent act on the principal's behalf is the notion that the agent has authority to alter the principal's relationships with third parties, such as binding the principal to a contract. Notably, the Restatement, which we have cited with approval in this area in the past, specifically recognizes as much. See Restatement (Second) of Agency § 12 (An agent or apparent agent holds a power to alter the legal relations between the principal and third persons and between the principal and himself.). (Emphasis added). ¶ 29. An agency relationship exists and a principal is bound by the acts of the agent as against a third party where the agent had (1) express authority directly granted by the principal to bind the principal as to certain matters, (2) implied authority to bind the principal to those acts of the agent that are necessary, proper and usual in the exercise of the agent's express authority, (3) apparent authority, i.e. authority that the principal has by words or conduct held the alleged agent out as having, and (4) authority that the principal is estopped to deny. See Bolus v. United Penn Bank, 363 Pa.Super. 247, 259, 525 A.2d 1215, 1221 (1987), alloc. denied, 518 Pa. 627, 541 A.2d 1138 (1988). ¶ 30. While a third party cannot rely on the apparent authority of an agent to bind a principal where he has actual knowledge of the limits of the agent's authority, without such actual knowledge, the third party must exercise only reasonable diligence to ascertain the agent's authority. Bolus, 525 A.2d at 1222 (citing Fishman v. Davidson, 369 Pa. 39, 44, 85 A.2d 34, 37 (1951)). Apparent authority is the power to bind a principal which the principal has not actually granted but which he leads persons with whom his agent deals to believe that he has granted. Revere Press, Inc. v. Blumberg, 431 Pa. 370, 375, 246 A.2d 407, 410 (1968). ¶ 31. Likewise, in Trident Corp. v. Reliance Ins. Co., 350 Pa.Super. 142, 504 A.2d 285, 288 (1986), the Superior Court of Pennsylvania further defined apparent authority as the power to affect the legal relations of another person by transactions with third persons, professedly as agent for the other, arising from and in accordance with the other's manifestations to such third persons. See also Sauers v. Pancoast Personnel, Inc., 294 Pa.Super. 306, 309, 439 A.2d 1214, 1215 (1982) (Apparent authority exists when the principal has led a third party into believing that the licensee was the principal's agent.) ¶ 32. In Travelers Cas. & Sur. Co. v. Castegnaro, 565 Pa. 246, 772 A.2d 456, 460 (2001), the Supreme Court of Pennsylvania stated that the principal is liable to third parties for acts of his agent. The Pennsylvania Supreme Court based the premise of liability upon the theory that the principal who has placed the agent in a position of trust and confidence, rather than an innocent stranger, should be the one to suffer the wrongful act of the third party. Id. ¶ 33. Similarly in Mississippi, this Court, in Steen v. Andrews, 223 Miss. 694, 78 So.2d 881, 883 (Miss.1955), stated: The power of an agent to bind his principal is not limited to the authority actually conferred upon the agent, but the principal is bound if the conduct of the principal is such that persons of reasonable prudence, ordinarily familiar with business practices, dealing with the agent might rightfully believe the agent to have the power he assumes to have. The agent's authority as to those with whom he deals is what it reasonably appears to be. So far as third persons are concerned, the apparent powers of an agent are his real powers. 2 C.J.S., Agency, §§ 95, 96. ¶ 34. This Court stated the standard to be applied in reviewing whether apparent authority existed as follows: The finder of fact must determine whether there is sufficient evidence to meet the three-pronged test for recovery under the theory of apparent authority, which requires a showing of (1) acts or conduct of the principal indicating the agent's authority, (2) reasonable reliance upon those acts by a third person, and (3) a detrimental change in position by the third person as a result of that reliance. Christian Methodist Episcopal Church v. S & S Construction Co., Inc., 615 So.2d 568, 573 (Miss.1993); Alexander, 609 So.2d at 403; Andrew Jackson, 566 So.2d at 1181; Clow, 356 So.2d at 582. Once made, [t]his finding will not be disturbed unless clearly contrary to the overwhelming weight of credible evidence when viewed in the light most favorable to the verdict. CME Church, 615 So.2d at 573, 574; Andrew Jackson, 566 So.2d at 1181. Eaton v. Porter 645 So.2d 1323, 1325-26 (Miss.1994) (emphasis added). There can be no apparent authority to act where an agency relationship, either actual, expressed, or implied does not exist. XYOQUIP, Inc. v. Mims, 413 F.Supp. 962, 966 (N.D.Miss.1976). ¶ 35. Here, the record does not demonstrate Enis by his conduct or words held Magnolia-Lemons out to be his agent to Patriot. Neither Jerry Enis nor Jerry Enis Motors, Inc., were ever a co-owner of Magnolia Automotive Management, Inc. Enis ceased to operate the dealership on June 3, 2002, and Enis entered a management agreement with Magnolia and Lemons which allowed Magnolia to use its GM dealership number only to order new vehicles and parts until Magnolia was approved by GM as a dealership. In Lemons's deposition, he testified that Magnolia's only legitimate business use of Enis's name was to deal with GM and buy new cars and parts. ¶ 36. The software lease that would upgrade other software equipment already under lease to Magnolia was generated on January 10, 2003. According to the lease application, this lease consolidated an outstanding debt Magnolia already had with Patriot. The lease agreement was between Magnolia Chevrolet Buick Pontiac and Patriot Commercial Leasing Company, not Enis and Patriot. Enis never undertook any representation or action with Patriot to bind Enis to the lease. Likewise, Enis never represented to Patriot that Magnolia had authority to bind Enis to the software lease. On February 14, 2003, Enis and Magnolia entered into a closing agreement which finalized the sale of Enis's assets to Magnolia. On August 18, 2003, Patriot served Lemons with a complaint against Jerry Enis Motors, Inc. d/b/a Magnolia Chevrolet Buick Pontiac. ¶ 37. Based on the record, Enis undertook no conduct to represent to Patriot that it was the lessee or that Magnolia-Lemons had any authority to bind it to a lease for software. Furthermore, no documentation or correspondence was attached or produced that demonstrated that Enis had assumed the lease. Patriot appears to have blindly and unjustifiably relied upon the addendum without any follow-up. The record does not reflect that Enis, or Jerry Enis, were ever contacted regarding the lease. Likewise, Jerry Enis, owner and registered agent of Enis, was never served with process. It is undisputed that by the time Patriot served Lemons on August 18, 2003, for failure to make lease payments, Enis no longer operated a dealership at that location. Enis never at any time assumed any ownership interest in Magnolia Automotive Management, Inc., Magnolia-Lemons, or Magnolia Chevrolet Buick Pontiac. Patriot allowed the lessee to just change the name of who should be obligated for the lease. However, Patriot's bad business decision to blindly change the lessee name should not obligate Enis for Magnolia's lease agreement. We find the trial court did not err in granting Enis's motion to dismiss for lack of personal jurisdiction.