Court Opinion

ID: 9548032
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:56:31.405118+00
Date Added: 2024-06-11T15:18:23.772109
License: Public Domain

SHEPARD, Chief Justice,
dissenting.
For the reasons that follow, I would reverse the decision of the trial court and order a new trial.
APPARENT AUTHORITY
The Co-Op ought to be held liable to Carpenter on the theory of apparent authority. “[A]pparent authority to do an act is created as to a third person [Carpenter] by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.” Restatement (Second) of Agency § 27 (1958). The majority argues that Carpenter dealt with Collinsworth at his risk if he did not demand of Collinsworth evidence supporting the claim of authority to act as the Co-Op’s manager and agent in financial affairs. Killinger v. Iest, 91 Idaho 571, 428 P.2d 490 (1967). It is not disputed, however, that in fact the CoOp had given Collinsworth authority to bind the Co-Op in financial transactions with two banks and a credit concern. Carpenter was aware of Collinsworth’s prior conduct on behalf of the Co-Op in financial affairs. The proper test of whether Collinsworth had apparent authority to bind the Co-Op in a financial transaction with Carpenter is set forth in comment d to Section 27 of the Restatement. It states:
“The position of those who do not know of the prior conduct or reputation of the agent is to be distinguished from those who know of this but are not familiar with the extent of the powers of the kind of agent he appears to be. As to these the agent has apparent authority. Thus, a manager has apparent authority to do those things which managers in that business at that time and place customarily do, as to persons who know that he is a manager, although they do not know what powers managers in such a business have. In such cases the manifestation is interpreted as meaning that the agent has the powers which such managers have, and those dealing with him are entitled to rely upon this as to the extent of the agent’s authority, even though they do not know the powers of such managers. * * * ”
See also Restatement (Second) of Agency §§ 49, comment d, and 159. That is the law in Idaho. Clark v. Gneiting, 95 Idaho 10, 501 P.2d 278 (1972); Gore v. Richard Allen Mining Co., 61 Idaho 622, 105 P.2d 735 (1940). The position in which the Co-Op had placed Collinsworth regarding the management of its financial affairs clothed him with apparent authority to bind the Co-Op in the kind of transaction he engineered with Carpenter and Browne. Chamberlain v. The Amalgamated Sugar Co., 42 Idaho 604, 247 P. 12 (1926). It was error, therefore, not to find the Co-Op had vested Collinsworth with apparent authority to enter a surety agreement. See generally Intermountain Ass’n of Credit Men v. Pierce, 43 Idaho 279, 251 P. 615 (1926).
RETENTION OF BENEFITS AS AFFIRMANCE
In affirming the judgment below, the majority rejects appellant’s contention that *151the Co-Op ratified Collinsworth’s actions. To reach this result the majority relies upon the Co-Op’s repudiation of Collinsworth’s actions, a repudiation I might add that was remarkably Janus-faced. There is no doubt that the Co-Op dispatched to Carpenter its notice of repudiation with all the necessary expedition required by the law of agency. It is also free from doubt that the Co-Op kept the benefits of Collinsworth’s transaction, namely at least $6,953.55 of Carpenter’s money. Section 99 of the Restatement (Second) of Agency clearly states that notwithstanding a principal’s repudiation of the unauthorized acts of his agent, the law will find an affirmance if the principal retains the benefits of the agent’s conduct after the principal becomes aware of the unauthorized conduct. Killinger v. Iest, 91 Idaho 571, 428 P.2d 490 (1967).
The majority finds no affirmance even though the Co-Op kept the benefit of Collinsworth’s bargain by observing that the Co-Op, in any event, had an independent claim against Browne for the amount of the set-off. The majority states that the Co-Op is entitled to keep the money if it had an independent claim to it. As authority for its conclusion the majority relies upon obiter dictum in T. W. & L. O. Naylor Co. v. Bowman, 39 Idaho 764, 230 P. 347 (1924). I am unpersuaded by this dictum, particularly since the principle it states, while well sounding, is unrelated to the factual setting in the case before us now. The question in Naylor was whether a payment by A on behalf of C to B on a debt owed to B by C related to an independent obligation. The case was then decided on a different basis. In any event the situation here is different since no one suggests that Carpenter gave the money to the Co-Op to discharge Browne’s debt to the Co-Op. The money was given to the Co-Op as a convenient way of getting the money to Browne. The fact that the Co-Op set-off the debt owed to it by Browne when it received the money from Carpenter on Browne’s account does not mean, vis-a-vis Carpenter, that the CoOp had an independent right to the money it obtained from Carpenter. Having acquired control of money from Carpenter solely by reason of the unauthorized acts of its agent Collinsworth, an effective repudiation of those unauthorized acts required not merely a notice of repudiation but a return of the benefits acquired by those acts. Failure to return that money constitutes an affirmance of the agent’s acts, notwithstanding notice of repudiation. Hammitt v. Virginia Mining Co., 32 Idaho 245, 181 P. 336 (1919); Blackwell v. Kercheval, 211 Idaho 537, 149 P. 1060 (1915). Where the principal seeks to both repudiate the unauthorized acts of his agent yet also retain the benefits thereof, equity will not suffer the wrong to go without a remedy and will even go so far as to impose a constructive trust upon the property held by the principal. Davenport v. Burke, 30 Idaho 599, 167 P. 481 (1917). I would, therefore, reverse the judgment of the district court and since other issues remain undecided by the trial court, I would order a new trial.