Court Opinion

ID: 9736998
Source: CourtListenerOpinion
Date Created: 2023-08-26 19:12:18.396523+00
Date Added: 2024-06-11T07:23:55.807540
License: Public Domain

MORGAN, Justice
(dissenting).
I respectfully dissent from the majority opinion. We have long had the Northwest Realty rule. “The rule is almost universal that an attorney who is clothed with no other authority than that arising from his employment in that capacity has no implied power by virtue of his general retainer to compromise and settle his client's claim or cause of action.” Northwest Realty Company v. Perez, 80 S.D. 62, 65, 119 N.W.2d 114, 115 (1963) (reaffirmed in Petersen v. Petersen, 90 S.D. 666, 673, 245 N.W.2d 285, 288 (1976)). I think that the majority opinion shreds that rule. In my opinion, the trial court was correct when it found that the defendants had not parted with any value or incurred any obligation in reliance on the alleged settlement offer. Based on the statutory provisions, SDCL 59-6-3,* the *703trial court was correct in concluding that FLB was not equitably estopped from foreclosing.
The reliance on International Telemeter Corp. v. Teleprompter Corp., 592 F.2d 49 (2d Cir.1979), is particularly inappropriate. In that case, just as here, the defendant in a patent infringement suit had initiated settlement discussions. That is about the only similarity. In Teleprompter, negotiations were carried on for a period of nine months during which time drafts and redrafts of settlement agreements were exchanged. At the eleventh hour, a third party involved in the negotiations withdrew. In an attempt to save the settlement, counsel for the defendant attempted to redraft the agreement, omitting references to the third party. Then, as the opinion specifically notes, new management for defendant corporation refused to proceed. That scenario, upon which the majority would decide this case, is obviously as different from the facts in this case as night is from day.
The total period of correspondence in this case was approximately two months. Only one month elapsed between the offer and the withdrawal. No documents were prepared, let alone exchanged. Most importantly, the offer was withdrawn, not on a change of management but apparently for the reason that Sullivans had failed to fully disclose their assets on a financial statement they had furnished to FLB.
Finally, I would point out that the Teleprompter opinion is self-limiting in that it is specifically noted therein that New York law governs the enforceability of the settlement agreement which was negotiated, consummated, and to be performed in New York and which was explicitly made subject to New York law. I think that South Dakota law, embodied in the statute above cited, should govern here. I would affirm the trial court.

 SDCL 59-6-3 provides: "A principal is bound by acts of his agent under ostensible authority, to *703those persons only who have in good faith, and without negligence, incurred a liability or parted with value upon the faith thereof.”