Court Opinion

ID: 4485124
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:17:11.750607+00
Date Added: 2024-06-11T07:58:26.022824
License: Public Domain

Swift, J., concurring: I agree with the holding of the majority but wish to comment on their analysis of the National Carbide fifth factor as it applies to this case. I understand that factor simply to require that the corporation’s status as agent vis á vis its principal in the transaction in question must rise to the level of a relationship which stands on its own. In the language of the Supreme Court— If the corporation is a true agent, its relations with its principal must not be dependent upon the fact that it is owned by the principal. * * * [National Carbide Corp. v. Commissioner, 336 U.S. at 437.] The majority herein, the Fifth Circuit in Roccaforte v. Commissioner, 708 F.2d 986 (1983), and the Court of Claims in Harrison Property Management Co. v. United States, 475 F.2d 623 (1973), cert. denied 414 U.S. 1130 (1974), place excessive emphasis on the ownership of the corporate agent by the principal in evaluating this factor. A proper application of the National Carbide fifth factor should focus on the manner and degree the agency was represented to third parties and the degree to which third parties acted in reliance upon the agency relationship. If the agency representations and third-party reliance thereon were significant, it should be concluded that the agency relationship achieved á legal stature sufficiently independent of the control of the principals to satisfy the National Carbide fifth factor. Once the agency representations and third-party reliance thereon are established, it is not meaningful or realistic to require that the agent corporation also must have received a fee for its nominal services as agent or to require that it acted as agent for others.1  In this case, the numerous third parties who were aware of the’transaction uniformly were advised of the agency relationship. They relied and acted upon its existence and clearly would have been in a position to sue for whatever damages might have been incurred if either the corporate agency or its principals had sought to avoid the various transactions which were entered into in reliance upon that agency. A commercial bank, a savings and loan association, a real estate management company, commercial tenants, an insurance company, the District of Columbia, and various public utility companies all entered into specific contracts with the principal and/or the corporate agent in their respective capacities and thereafter could have held the principal and the agent liable for their actions in their respective capacities as principals and agent. Although the agency relationship may have been established initially, on February 5, 1970, solely because of the shareholder status of the principal, the agent’s relations with the principal and with the third parties thereafter (throughout the balance of 1970, 1971, and the first 6 months of 1972 until the agency was dissolved on June 28, 1972) were consistent with its agency status and provided a substantial, independent stature to that relationship. Accordingly, I expressly would find that the National Carbide fifth factor was satisfied along with the other five factors. Hamblen, J., agrees with this concurring opinion.   A thoughtful discussion of the National Carbide fifth factor is found in Note, ''The use of Corporations in Real Estate Transactions: Judicial Acceptance of the Agency Theory,” 8 J. Corp. L. 361 (1983).