Court Opinion

ID: 9583883
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:42:52.575907+00
Date Added: 2024-06-11T15:05:09.752912
License: Public Domain

ANDERSON, Judge
(concurring in part and dissenting in part in a separate opinion):
I concur with the decision to affirm the trial judge on the issue of mitigation of damages. I dissent with that part of the majority opinion that reverses the trial judge in directing a verdict on the apparent authority issue.
THE DOCTRINE OF APPARENT AUTHORITY
(Unpaid Rent)
Tenant argues the trial court erred in granting a directed verdict to the landlords as to the amount of rent owed by *574tenant under the lease. Tenant contends Warner, as agent of the landlords, had apparent authority to release tenant from her obligations under the lease.
Tenant told Warner to ask the landlords if she could terminate the lease or sublet the property. The lease required permission of the landlords before tenant could sublet. Warner later told tenant “they’re thinking about selling the house anyway, so you can go ahead and leave, they don’t want you to sublease it.” Warner inspected the property and presented tenant with an itemized list of damages totaling $1369.54. Because tenant’s security deposit only covered $1000 of the damage, she wrote a check for the balance and “assumed that was the list of the damages I was required to pay for.” When tenant wrote this check, she assumed her liability under the lease terminated. Warner did not tell the landlords she had released tenant from her obligations under the lease nor did she ask if tenant could sublet the property.
The doctrine of apparent authority focuses on the principal’s manifestation to a third party that the agent has certain authority. Rickborn v. Liberty Life Ins. Co., 321 S.C. 291, 468 S.E.2d 292 (1996). Accordingly, the principal is bound by the acts of its agent when it places the agent in such a position that persons of ordinary prudence, reasonably knowledgeable with business usages and customs, are led to believe the agent has certain authority and they in turn deal with the agent based on that assumption. Id. Thus, the concept of apparent authority depends upon manifestations by the principal to a third party and the reasonable belief by the third party that the agent is authorized to bind the principal. Beasley v. Kerr-McGee Chem. Corp., 273 S.C. 523, 257 S.E.2d 726 (1979); Visual Graphics Leasing Corp. v. Lucia, 311 S.C. 484, 429 S.E.2d 839 (Ct.App.1993). See also Moore v. North American Van Lines, 310 S.C. 236, 423 S.E.2d 116 (1992) (basis of apparent authority is representations made by principal to third party and reliance by third party on those representations).
Apparent authority must be established based upon manifestations by the principal, not the agent. Shropshire v. Prahalis, 309 S.C. 70, 419 S.E.2d 829 (Ct.App.1992). The proper focus in determining a claim of apparent authority is *575not on the relationship between the principal and the agent, but on that between the principal and the third party. Vereen v. Liberty Life Ins. Co., 306 S.C. 423, 412 S.E.2d 425 (Ct.App.1991). Apparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe the principal consents to have the act done on his behalf by the person purporting to act for him. Frasier v. Palmetto Homes, 323 S.C. 240, 473 S.E.2d 865 (Ct.App.1996). Either the principal must intend to cause the third person to believe the agent is authorized to act for him, or he should realize his conduct is likely to create such belief. Id.
To establish apparent agency, it is not enough simply to prove the purported principal, by either affirmative conduct or conscious and voluntary inaction, has represented another to be his agent. Id. In order for a third party to recover against the principal based upon this theory, it must be shown he reasonably relied on the indicia of authority originated by the principal and such reliance must have effected a change of position by the third party. Beasley v. Kerr-McGee Chem. Corp., 273 S.C. 523, 257 S.E.2d 726 (1979). See also Graves v. Serbin Farms, Inc., 306 S.C. 60, 409 S.E.2d 769 (1991) (elements which must be proven to establish apparent agency are: (1) purported principal consciously or impliedly represented another to be his agent; (2) reliance upon representation; and (3) change of position to relying party’s detriment).
It is the duty of one dealing with an agent to use due care to ascertain the scope of the agent’s authority. Justus v. Universal Credit Co., 189 S.C. 487, 1 S.E.2d 508 (1939); Frasier, supra. Even under a theory of apparent authority, belief in the agent’s authority must be reasonable. Crim v. E.F. Hutton, Inc., 298 S.C. 448, 381 S.E.2d 492 (1989). The mere fact Warner was the landlords’ agent does not support a reasonable belief the landlords would be bound if Warner agreed to vary the lease terms.
The signatures on the lease are those of the landlords and not of Warner. The landlords approved the terms of the lease. It is reasonable to expect the landlords must also approve any variance of the lease terms.
*576Here, there is no evidence the landlords did anything to make it appear Warner had the authority to vary the terms of the lease. See Shropshire v. Prahalis, 309 S.C. 70, 419 S.E.2d 829 (Ct.App.1992) (landlord’s agent did not have apparent authority to authorize tenant to sublease premises in violation of lease provision, absent evidence landlord did anything to make it appear agent had authority to vary lease terms). Tenant presented no evidence the landlords held Warner out as having the authority to release tenant from her lease obligations. Apparent authority must be established based upon the manifestations of the principal, not the agent. Orphan Aid Soc’y v. Jenkins, 294 S.C. 106, 362 S.E.2d 885 (Ct.App.1987).
Tenant spoke to the landlords only three times during the five years she lived in their house. The landlords visited the residence (1) to discuss tenant’s dogs in late 1989 or early 1990; (2) to deliver additional furnishings; and (3) to meet with tenant, Warner, and a plumber on December 27, 1993, to inspect a ceiling leak in the living room. However, in those conversations, the parties did not discuss the lease, tenant’s decision to vacate the premises, tenant’s desire to sublet the residence, tenant’s desire to be released from the lease, or Warner’s authority as agent of the landlords.
The landlords were unable to rent the residence after tenant left in the middle of her lease. Tenant vacated the residence on January 31,1994. Rent was $1300 a month. The lease ran until September 30,1994.
Because tenant did not meet her burden of proving Warner possessed the apparent authority to forgive the rent owed by tenant, the landlords were entitled to rent from February 1, 1994, until September 30, 1994, eight months, for a total of $10,400.
I would affirm the trial judge on the direction of verdict in regard to the issue of “apparent authority.”