Court Opinion

ID: 9883718
Source: CourtListenerOpinion
Date Created: 2023-10-06 02:14:25.456372+00
Date Added: 2024-06-11T07:48:29.655046
License: Public Domain

CRIPPEN, Judge,
concurring specially.
In a very credible analysis of apparent authority law, the trial court viewed the topic in two parts. First, the court examined the sufficiency of manifestations by respondents to support the existence of apparent authority. Second, the court con*815sidered whether the manifestations were consequential, that is, whether appellant acted prudently in concluding that Charles Moerke had authority to incur debt for respondents Jones, Jones and Bunn.
This analysis coincides with the rule of law recognized by the supreme court. On the one hand a principal may be bound if it
acts or conducts his business, either intentionally or through negligence, or fails to disapprove of the agent’s acts or course of action so as to lead the public to believe that his agent possesses authority to act or contract in the name of the principal * * *.
McGee v. Breezy Point Estates, 283 Minn. 10, 22, 166 N.W.2d 81, 89 (1969). Moreover:
[T]he scope of apparent authority is determined not only by what the principal knows and acquiesces in, but also by what the principal should, in the exercise of ordinary care and prudence, know his agent is doing.

Id.

Nevertheless, apparent authority binds the principal only “as to persons who have reasonable grounds to believe that the agent has such authority and in good faith deal with him.” Id. Justification to assume evident authority exists only for “a person of ordinary prudence.” Id. at 22, 166 N.W.2d at 90.
Applying these legal principles, the trial court concluded 1) “that Moerke did not have apparent authority” and 2) “that the facts gave [appellant] Lyman sufficient notice that further inquiry should be made into Moerke’s authority.”
The findings and evidence support the ultimate finding by the trial court that appellant did not reasonably and prudently act on manifestations of Moerke’s authority. I disagree, however, with the conclusion that the findings or the evidence support a conclusion that manifestations of Moerke’s authority were otherwise inadequate to permit application of apparent authority law for appellant in the circumstances here. I agree with the observation of the trial court that “neither party has acted with business acumen.”
At the same time, I do not subscribe to the conclusion of the majority that appellant was “clearly” negligent. I would confine our decision by the scope of our review, deciding only that the trial court did not clearly err in its decision on lack of appellant’s prudence.
The fault of appellant is well summarized by the trial court:
(1) Moerke was known to Lyman and credit would not have been extended to him on his own behalf;
(2) The credit application in Lyman’s possession did not include Moerke’s name;
(3) The phone call from the defendant to plaintiff informing it that they were not going forward with the partnership;
(4) The monthly statements sent out by Lyman were paid by check which bore the corporate name Three Rivers Company, Inc., the corporate address, (which was different from defendants’ business address) and were signed by Moerke as president.
On the other hand, I would enlarge on the trial court’s view as to manifestations of Moerke’s authority by respondents. Absent appellant’s imprudence, these manifestations by respondents would justify recognition of Moerke’s authority to incur debt chargeable to Jones, Jones and Bunn:
1. Moerke was an agent of an entity, Accent, that was the alter ego of respondents. The three respondents were president, vice-president and secretary of Accent. Appellant knew of this relationship of respondents and Moerke.
2. Respondents represented to appellant that they intended to act not only as Accent but also as Three Rivers Company, which they represented would be a division of Accent. In addition, Jones, Jones and Bunn personally guaranteed to appellant the credit extended to Three Rivers.
3. Respondents expressly and imprudently permitted Moerke to do business as *816Three Rivers Company. The trial court found, correctly, that respondents “failed to reasonably notify Lyman that the partnership (Three Rivers), under whose name they applied for credit, was nonexistent.” In addition, when respondent Bunn called Lyman in June or July 1983 to say the new venture was being held up, he specifically asked that the Three Rivers credit application be kept on file.
4. Appellant sent monthly bills to Three Rivers at the Accent address. In the words of a trial court finding, supported by the evidence, “the individual defendants [Jones, Jones and Bunn] never informed plaintiff [Lyman] that the statements were to be sent to Moerke, or that Moerke was not authorized to charge on the Three Rivers Company account.”
I would affirm on this analysis of the case. Further, as the trial court observed, a proper analysis of apparent authority law is broad enough to make duplicative any further consideration of the case on the basis of sometimes independent principles of estoppel or ratification.