Court Opinion

ID: 8898531
Source: CourtListenerOpinion
Date Created: 2022-11-27 00:33:25.977715+00
Date Added: 2024-06-11T17:07:39.848562
License: Public Domain

ROSENN, Circuit Judge
(concurring and dissenting).
I fully concur with the majority in their painstaking analysis and in their imposition of liability as to the defendant R. Abbott Sinskey. I also agree that Minna Sinskey obligated herself on the note to Middlesex Corporation, and I have no difficulty in affirming the judgment against her on that obligation. In addition, the majority have properly affirmed the judgment of the district court ordering specific performance of a contract which Mrs. Sinskey executed for the sale of her stock in Colonial National Bank and imposing a constructive trust upon that stock. The point at which we diverge and where I dissent is the imposition of liability generally upon Minna Sinskey.
Although Mr. Sinskey’s conduct and machinations warrant the full weight of the judgment awarded against him by the district court, I do not believe we may properly transfer any of the onus of his misconduct to his wife without evidence of her knowing participation in the fraudulent schemes. “One who innocently . . . does an act which furthers the tortious purpose of another is not acting in concert with him.” Pros-ser, Torts 292 (4th ed. 1971).
The district court found that, although Mrs. Sinskey owned the controlling interest in Colonial National Bank and in Corpamerica, she “took no active role in either entity.” She relied upon her husband’s advice in all business matters; in that regard, she did precisely what he told her to do. It is uncontroverted that she never discussed business with him. She was neither a director nor an officer of any of the corporations.
The majority charge Mrs. Sinskey with “participation in the challenged transactions, albeit at her husband’s direction,” by guaranteeing loans her husband used to acquire banks. I do not believe that merely signing a note to accommodate her husband, guaranteeing loans, and turning over stock as collateral for the loans, without other evidence that she at least knew that the loans were to further her husband’s fraudulent plans or schemes, is sufficient to make Minna Sinskey an active participant.
The majority portray Mrs. Sinskey’s role as that of a principal who constituted her husband her general business *500agent. If that is an accurate characterization of their relationship with respect to Mrs. Sinskey’s business affairs, it nonetheless does nor per se clothe Mr. Sinskey with authority to act as her agent for all purposes, especially as to an illegal or improper purpose. Authority given to Mr. Sinskey by his wife to act as her agent in managing her business affairs does not authorize her husband to fraudulently divert corporate opportunities on his or her behalf. “[E]ven a general authority is not an unlimited one.” Arthur Jordan Piano Co. v. Lewis, 4 W.W.Harr., 423, 154 A. 467, 472 (Del.Super.1930). A principal is usually liable only for those acts of his agent which are performed within the scope of the agent’s authority. Restatement (Second) of Agency § 265 (1958).
Mr. Sinskey’s misconduct was in his personal dealings with Corpamerica and Middlesex. When he negotiated purchases of stock which rightfully belonged to Corpamerica, he was acting not as agent for Minna Sinskey but for his own individual account. It is significant that Mr. Sinskey acquired the stock in the various banks in his own name. It may be that he was able to take advantage of these opportunities with credit that was made available to him on notes signed by Minna Sinskey and on her guarantees. However, Mrs. Sinskey’s signature to notes as an accommodation for her husband does not make him her agent; on the contrary, it is evidence that Mr. Sinskey was using his wife’s credit to accomplish his own personal ends.
In Dick v. Reves, 206 A.2d 671 (Del. 1965), the Delaware Supreme Court refused to uphold the liability of a husband for misrepresentations made in the sale of his wife’s property by his wife’s father. Liability was sought on the basis that he had signed the deed with his wife in order to release his “husband’s rights” in her property in Pennsylvania. The court stated:
[The husband] never gave any actual authority to Mr. Jones [the father-in-law]. There is no proof of 'apparent authority; the plaintiffs were never told that Jones was acting for Mr. Dick. There is no evidence that he had any actual knowledge of the misrepresentation. He received no part of the consideration.
Id. at 675. The principle which emerged from the case is that a mere signature which may or may not be necessary to the execution of a fraudulent scheme is insufficient, without more, to hold the signer liable for damages. In the instant case, Mrs. Sinskey did not even sign any of the underlying agreements by which the banks were acquired. On this record, she merely served as an innocent tool by which her husband borrowed money — money, it is true, which enabled him to make the bank purchases.
I believe In re Brandywine Volkswagen Ltd., 306 A.2d 24 (Del.Super. 1973), aff’d, 312 A.2d 632 (Del.1973), which is cited by the majority, is inapposite here. As I read that case, it merely holds that a principal may be liable for the innocent misrepresentation of its agent when the principal has received information of which the agent is ignorant. In the instant case, however, the person designated as “principal” was innocent and uninformed; it was the “agent” who acted knowingly and wrongfully. I agree that if Mrs. Sinskey personally derived benefits from her husband’s wrongful acts, she may not retain the benefits thus obtained. Dick v. Reves, supra, 206 A.2d at 675.
I would therefore reverse the judgment of the district court only insofar as it imposes liability generally upon Mrs. Sinskey. In all other respects I concur with the majority.