Sunday, September 9, 2012

Learning Agency Law from the Digital Commons

Erich C. Stern, A Problem in the Law of Agency, 4 Marq. L. Rev. 6 (1919) is an excellent starting point for lawyers confronted with secret instructions by which a principal seeks to disclaim authority which it is known that the agent is exercising.

Stern believed:

Liability in both cases should frankly be rested, not upon false
appearances as to the extent of the agent's authority, but upon
the general proposition that when a man appoints an agent to
make a certain class of contracts, the law will not allow him to
limit that authority so as to exclude any of the reasonably necessary,
convenient, or customary ways of executing that authority.
The consequence would be to render it immaterial whether the
third party knows of any attempted limitations upon the authority
or not. The law would then be expressed by changing the above
quotation from Justice Holmes to read as follows: "It is true
that in determining how far authority extends, the question is of
ostensible authority. This illustrates the general rule which governs
a man's responsibility for his acts throughout the law. If
the principal knowingly employs the agent to exercise a certain
power, he ipso facto gives the agent all- those powers which, in
the majority of the same or similar cases, are usually connected
with the power expressly given."

Saturday, August 25, 2012

Missouri courts may determine whether and non-compete agreement is reasonable and modify the agreement in accord with intent of the parties, when an agreement is found to be unreasonable


WHELAN SECURITY Co. v. KENNEBREW

A factor in Missouri's lagging economic performance and low wages is that it tends to enforce overly broad non-compete agreements. Regional Disadvantage? Non-Compete Agreements and Brain DrainGive Me Equity or Give Me Death - The Role of Competition and Compensation in Building Silicon Valley

This direction may have been reversed in Whelan

Whelan Security's business model of providing security guard services nationwide  is to vigorously enforce such agreements so as to preclude competition. 

In this case a Whelan employee who worked in Dallas, Texas, and a Whelan employee who worked in Nashville, Tennessee, started a security business in Houston, Texas. Whelan filed suite when the former employees solicited a Whelan customer in Houston, Texas.






Monday, July 23, 2012

The importance of acquiensce and practice

Eisenstein, Lois Peel (1980) "CPLR 311(1): Secretary's Practice of Accepting Process Deemed Authorization by Appointment of Agent for Service Upon Corporation," St. John's Law Review: Vol. 54: Iss. 2, Article 6.
Available at:http://scholarship.law.stjohns.edu/lawreview/vol54/iss2/6

Saturday, June 23, 2012

MAI Civil ---new edition

has been published and has changes applicable to Agency submissions

Friday, May 4, 2012

Disclaiming the agent's implied warranty of workmanlike services

On June 12, 2012 the Eastern District will hear oral argument in Abengoa Bioenergy U.S. Holding, Inc. v. Chicago Title Insurance Company, ED97555, which presents an important question about a disclaimer of the implied in fact warranty of workmanlike service and any stricter assumed in fact duties by a service provider.

Chicago Title is seeking to reverse a $48 million dollar jury verdict for damages arising from a improperly prepared letter report. Chicago Title relies on a disclaimer limiting damages to $800.00 that accompanied its invoice for its flawed services.

Abengoa asks a simple question. In a service contract, entered into on the basis of anterior warranties, is an attempt to disclaim effective?  We know the answer is “No” in contracts for the sale of goods:

Where, as in the case at bar, sales transactions are entered into on the basis of anterior warranties, it is universally held that an attempt to disclaim the binding effect of such warranties upon or after delivery of the goods, by means of language on an invoice, receipt or similar notice, is ineffectual unless the buyer assents or he is charged with knowledge of nonwarranty as to the transactions. (Keller v. Flynn, 346 Ill. App. 499 [105 N.E.2d 532, 535]; Diepeveen v. Larry Vogt, Inc., supra; Manglesdorf Seed Co. v. Busby, 118 Okla. 255 [247 P. 410, 411]; Moorhead v. Minneapolis Seed Co., 139 Minn. 117 [165 N.W. 484, 485, Ann.Cas. 1918E 481, L.R.A. 1918C 391]; Ward v. Valker, 44 N.D. 598 [176 N.W. 129, 131]; Longino v. Thompson, (Tex.Civ.App.) 209 S.W. 202, 205; Ingraham v. Associated Oil Co., 166 Wash. 305 [6 P.2d 645]; Edgar v. Joseph Breck & Sons Corp., 172 Mass. 581 [52 N.E. 1083]; Reliance Varnish Co. v. Mullins Lbr. Co., 213 S.C. 84 [48 S.E.2d 653, 659]; Gray v. Gurney Seed & Nursery Co., 62 S.D. 97 [252 N.W. 3, 6]; Davis v. Ferguson Seed Farms, (Tex.Civ.App.) 255 S.W. 655, 662.) In each of the last cited cases the courts were confronted 609*609 with the question of whether the existence of an alleged warranty was extinguished by nonwarranty statements or disclaimers of warranty printed on letters, invoices, or other literature sent with or after the shipment of goods. In each case it was held that where goods are sold subject to a warranty, the purchaser is entitled to rely upon this warranty despite the printed statements on the seller's invoices, at least until he has actual knowledge of the disclaimer, or because of the facts and circumstances surrounding the transaction he should be charged with such knowledge. The following language from Ward v. Valker, 44 N.D. 598 [176 N.W. 129, 131], epitomizes the prevailing view: "If the circumstances anterior to the invoices indicated the existence of a warranty, we cannot say the printed statement (of disclaimer) on the invoice operated to extinguish it as a matter of law." The rule is also succinctly expressed in Gray v. Gurney Seed & Nursery Co., supra, that "when the seller expressly warrants the goods, the purchaser is entitled to rely upon this warranty at least until he has actual knowledge of the disclaimer or because of the facts and circumstances surrounding the transaction should be charged with such knowledge." The evidence fully demonstrates that the sales were made pursuant to express warranties and that United had no knowledge of the disclaimer and limitation statements.

India Paint and Lacquer Co. v. United Steel Prod. Corp., 267 P. 2d 408 - Cal: Court of Appeal, 2nd Appellate Dist., 2nd Div. 1954

Why should the result be any different in a contract for the sale of services?

Missouri seems to have already ruled against Chicago Title. The case, Belt Seed Co. v. Mitchelhill Seed, Co., 153 S.W.2d 106 (Mo. App. 1941), discusses the Moorhead case from Minnesota but is not mentioned by any of parties, leaving the heavy lifting in this case to the clerks for the court of appeals.

Further Discussion.

In Missouri, all service providers, including every agent, make several express warranties, implied from facts and circumstances, including an express implied in fact warranty to perform the service in a workmanlike manner.  "The performer of services has a duty to perform in a workmanlike manner and to exercise reasonable skill." See generally (1956) "Extension of Warranty Concept to Service-Sales Contracts,"Indiana Law Journal: Vol. 31: Iss. 3, Article 3.Available at: http://www.repository.law.indiana.edu/ilj/vol31/iss3/3; Timothy Davis, The Elusive Warranty of Workmanlike Performance, 72 Neb. L. Rev. 981 (1993). (good collection of cases and authorities) (Davis mistakenly views the warranty as a "gap filler," failing to consider the stricter duties arising from facts and circumstances, such as the warranties for a specific result in found in the Missouri cases of McCallum and Bowling, discussed below).

Further, a service provider has a duty to exercise reasonable care. As to the distinction between reasonable skill and reasonable care see Prosser, Torts § 32, at 161 n. 31 (4th ed. 1971).

A part of this duty includes the "duty of the affirmative action which would be taken by a reasonable man in their position" to discover information, a duty to find out. Prosser, Torts § 32, at 160 (4th ed. 1971).

Express warranties implied in fact from the facts and circumstances of the sale. These warranties are implied in fact warranties. Cases and commentators frequently confuse implied in fact and implied in law warranties. Disregard this confusion. The warranty to preform a service in a workmanlike manner with reasonable skill and care, for example, is an implied in fact warranty arising from the facts and circumstances of the hiring and is a positive warranty. A warranty is positive affirmation of fact by the seller made to induce a buyer to make a purchase and constitutes an express warranty. Charles F. Curry & Co. v. Hedrick, 378 S.W.2d 522 (Mo.1964); Turner v. Central Hardware Co., 353 Mo. 1182, 186 S.W.2d 603 (1945). Positive affirmations arise from conduct. Banks, for example, warrant and represent they are solvent by accepting deposits.

Because the warranty is implied from facts, it can be changed or modified by express agreement, in either of two ways.

First, an additional express implied in fact warranty of a specific result arises "when a specific result can reasonably be expected and is a basis of the bargain." (1956) "Extension of Warranty Concept to Service-Sales Contracts,"Indiana Law Journal: Vol. 31: Iss. 3, Article 3.Available at: http://www.repository.law.indiana.edu/ilj/vol31/iss3/3

Thus, in McCallum v. Executive Aircraft Co., 291 S.W.2d 650, 657 (Mo.App. 1956) , the express implied warranty to repair a propellar for private aircraft in a workmanlike manner was modified by the facts and circumstances to be an express implied in fact "warranty that the propeller was safe and airworthy."

Or, if a dentist contracts to fabricate a denture for a patient, a denture is contemplated which fits the patient's mouth and serves the normal purposes of eating and talking. Samuels v. Davis, [1943] 1 K.B. 526 discussed here.

A good further discussion of the English cases can be found here. The English view is that there is a "stricter duty" … "implied as matter of fact based on the actual intention of the parties as distinct from being implied by law based on the presumed intention of the parties."

Missouri has long held this view. Kennedy v. Bowling, 319 Mo. 401, 4 S.W.2d 438 (banc 1928) (holding that a design-builder of a warehouse impliedly warranted that the warehouse was sufficiently suited for the purposes intended).

Second, if there is an express warranty as to the duty of skill and care, it trumps the implied in fact express warranty. Korte Constr. Co. v. Deaconess Manor Ass'n, 927 S.W.2d 395, 405 (Mo.App. E.D.1996) (stating that "where the contract contains an express provision governing the degree of skill and competence with which the work will be performed" such express provision controls).

Parol Evidence and disclaimer of warranties. The parole evidence rule and the disclaimer of warranties is discussed in Parole Evidence Rule In Warranties of Sales of Goods- Contractual Disclaimers , 7 Fordham L. Rev. 238 (1938), http://ir.lawnet.fordham.edu/flr/vol7/iss2/6

Update: The Court of Appeals, Eastern District, has affirmed without opinion.


Wednesday, April 25, 2012

The Affirmative Use of Prior Convictions in Civil Cases

Imputed Knowledge and Notice to the Principal


The "Shingle" Theory: holding out by a professional

Robert J. Eadington, Regulation of Over-the-Counter Markups: A Reappraisal of Present Policy,1 Loy. L.A. L. Rev. 128 (1968), http://digitalcommons.lmu.edu/llr/vol1/iss1/7 

Tamar Hed-Hofmann, The Maloney Act Experiment, 6 B.C.L. Rev. 187(1965), http://lawdigitalcommons.bc.edu/bclr/vol6/iss2/3 

Brokerage Firm's Liability for Salesman's Fraudulent Practices, 36 Fordham L. Rev. 95(1967), http://ir.lawnet.fordham.edu/flr/vol36/iss1/4    (warranty)

Scope of Employment, general authorities

Thomas H. Seymour, SCOPE OF EMPLOYMENT: HAVE THE RULES CHANGED IN MASSACHUSETTS?, 20 W. New Eng. L. Rev. 211(1998), http://digitalcommons.law.wne.edu/lawreview/vol20/iss1/14

Digital Commons

 A cuurent list can be found here and includes the following:


Yale

Duke 

Boston College

Loyola (LA)

Western New England


Ratification

Corbin, Arthur, "Ratification in Agency Without Knowledge of Material Fact" (1906). Faculty Scholarship Series. Paper 2924, ttp://digitalcommons.law.yale.edu/fss_papers/2924

What is the "authority of an agent?"

Corbin, Arthur, "The "Authority”of an Agent Definition" (1925). Faculty Scholarship Series. Paper 2857.http://digitalcommons.law.yale.edu/fss_papers/2857

Fowler W. Harper, The Duty to Control the Conduct of Another (with P. M. Kime), 43 Yale Law Journal 886 (1934).

Fowler W. Harper, The Basis of the Immunity of an Employer of an Independent Contractor, 10 Indiana Law Journal 494 (1935)

Assault or battery by an agent or employee

Mercer D. Tate, Insurance Company's Liability for Agent's Assault, 2 B.C.L. Rev. 333(1961), http://lawdigitalcommons.bc.edu/bclr/vol2/iss2/7

Fiduciary Duties


 Breach of Fiduciary Duty COA (targeted toward claims against accountants)
Larry E. Ribstein,Fiduciary Duty Contracts inUnincorporated Firms, 54 Wash. & Lee L. Rev. 537(1997), http://scholarlycommons.law.wlu.edu/wlulr/vol54/iss2/7
Deborah A. DeMott, Beyond Metaphor: An Analysis of Fiduciary Obligation (1988).

Deborah A. DeMott,Disloyal Agents, 58 Alabama Law Review 1049-1067(2007), http://scholarship.law.duke.edu/faculty_scholarship/1829


Douglas K. Moll, Reasonable Expectations V. Implied-In-Fact Contracts: Is the Shareholder Oppression Doctrine Needed?, 42 B.C.L. Rev. 989(2001), http://lawdigitalcommons.bc.edu/bclr/vol42/iss5/1

Victor Brudney, Contract and Fiduciary Duty in Corporate Law, 38 B.C.L. Rev. 595(1997), http://lawdigitalcommons.bc.edu/bclr/vol38/iss4/1

Tuesday, April 24, 2012

Holding Out: the shingle theory

the core concept of agency law is the application of the shingle theory 0f holding out to the principal:

Hamilton Hauling, Inc. v. GAF Corp., 719 S.W.2d 841, 846 (Mo.App.1986):

The "holding out" of the agent's authority by the principal party may be by action or inaction. The principal may directly communicate the authority to a third party or knowingly permit the agent to exercise such authority. See Continental-St. Louis Corp. v. Ray Scharf Vending Co., 400 S.W.2d 467, 470 (Mo.App.1966). The Continental-St. Louis Corp. court quotes 3 AM.JUR.2d Agency § 74 (now § 79) as saying:
[T]he rule is that if a principal acts or conducts his business, either intentionally or through negligence, or fails to disapprove of the agent's act 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, such principal is bound by the acts of the agent within the scope of his apparent authority as to any person who, upon the faith of such holding out, believes, and has reasonable ground to believe, that the agent has such authority, and in good faith deals with him.

Monday, April 23, 2012

When Professor Demott finds error in a case finding no respondeat superior liablity we know the case was badly decided.

The Case: Groob v. Keybank

DeMott's criticism: 

Breach of Fiduciary Duty: On Justifiable Expectations of Loyalty and Their Consequences

 

note 99:

Cases from other jurisdiction reach the opposite result on relatively similar facts. See Pigg v. Robertson, 549 S.W.2d 597 (Mo. Ct. App. 1977) (purchase made by person sitting in president’s office in absence of president to whom bank teller directed loan applicant and to whom loan applicant explained acquisition proposal); Djowharzadeh v. City Nat’l Bank & Trust Co., 646 P.2d 616 (Okla. Civ. App. 1982) (purchase made by spouses of bank’s chair and president). In other cases, it is less evident whether either the bank or its agents, or neither, benefitted through by revealing a loan applicant’s confidential information in a manner allegedly injurious to the applicant. See Jordan v. Shattuck Nat’l Bank, 868 F.2d 383 (10th Cir. 1989); Dolton v. Capitol Fed. Sav. & Loan Ass’n, 642 P.2d 21 (Colo. Ct. App. 1981). A bank that represents it will handle a financing for a customer to retain the customer’s loan, neglects to do so, and affirmatively misleads the customer to forestall the customer’s departure may be subject to liability on several grounds, includingbreach of a confidential relationship with the customer. See Brandriet v. Norwest Bank, N.A., 499 N.W.2d 613, 618 (S.D. 1993).

at note 119:


 An agent acts with apparent authority when the third party with whom the agent interacts reasonably believes that the agent acts with actual authority on the basis of a manifestation of the principal, which may include placing the agent in a particular position or giving the agent a particular title.119See id. § 2.03 (defining apparent authority) and § 7.08 (principal’s vicarious liability for tortious conduct committed with apparent authority). For a recent application, see White v.Consolidated Planning, Inc., 603 S.E.2d 147, 157-59 (N.C. Ct. App. 2004), rev. den., 610 S.E.2d717 (N.C. 2005)(financial planning firm may be subject to liability when employee’s misappropriation of customer’s funds occurred in the course of activities employee was permitted to perform). English law recognized this basis for a principal’s liability in Lloyd v. Grace, Smith & Co., [1912] A.C. 716, in which a solicitor’s managing clerk disposed of a client’s properties for his own benefit, having been authorized by the solicitor to accept deeds to the properties from the client who wished to sell them.This well-established line of authority is ignored in Groob, see supra note 103.


Here


-

Less than clear thinking from Texas? Under what facts and circumstances can a mortgage broker be the agent of the mortgage loan wholesaler?

Foreclosure defenders ought to know that Texas has ruled that a mortgage loan wholesaler can be, dependent on the facts and circumstances, the principal of the mortgage loan broker. Tom Kirkendall forgets that agency law is the bedrock of commercial law.

SSRN has in depth treatment.

Freight Brokers as principals

An interesting warning from Utah:

FREIGHT BROKERS BEWARE: YOU MAY BE ON THE SLIPPERY SLOPE TOWARD VICARIOUS LIABILITY FOR THE ACTS OF YOUR INDEPENDENT CONTRACTORS

Friday, April 20, 2012

Mechem on Agency (1914)

Mechem wrote the last treatise on agency, available from Google Books.Story, Clark, and Reinhard are also available, as is the original treatment by Corpus Juris.

Inference from public nature of the act

Farm & Homes Savings &  Loan Ass'n of Mo. v. Stubbs, 98 S.W.2d 320, 334 (Mo. 1936) lays a sound foundation on which to build implied authority based on the principal's knowledge.

Knowledge need not be expressly shown. The act may have been so public or so closely related to the alleged principal that he could not be said to be ignorant of it. Where the acts are of such a nature and are so continuous as to justify a necessary inference that the principal knew of them if unauthorized, they become competent evidence of agency.


Course of dealing and implied authority

The authority of the agent may be implied from the course of dealing between the principal and the agent.

Meux v. Haller, 162 S.W. 688, 690 (Mo. App. 1913).

Proof of general manager being involved proves authority

Berthhold & Jennings Lumber Co., 209 S.W. 591, 595 (Mo. App. 1919):

one dealing with general manager "need not show affirmatively that the company had authorized such action before the company can be liable for the acts."

Fiduciary duties

are little understood by anyone, principally because few take an economic torts course as a part of their upper-level law school curriculum.

First, the rationale for a fiduciary duty is that, "fiduciary obligation are defined by the law because of entrustment, dependence, inequality, or other factors that can remove the limitations of contract law." 

Second, as Deborah A. DeMott likes to remind, fiduciary duties attach even before the relationship of principal and agent attaches.

Recent comment on the English and Scottish view is here: Fiduciary duties in agency

Jurors decide what warranties and representations are implied from facts and circumstances


Shippen v. Bowen, 122 U. S. 575, 581, 7 S. Ct. 1283, 30 L. Ed.1172 (1887).

And, in an action on the case for false warranty, which is an action sounding in tort, it is not necessary to allege or prove scienter. 

Useful sites and outlines

docstoc.com can be a useful site to search

Here is a helpful Agency Law outline.

Here is a use introductory chapter for law students.

Key Missouri Agency Citations/Second Ten


#11. City of Springfield v. Koch, 228 Mo.App. 511, 72 S.W.2d 191 (1934), in which Edgar, brother of appellant Victor Koch, had over a period of years, with the knowledge and consent of Victor, signed Victor's name to surety bonds similar to the one in issue. Victor took no steps to prevent it nor to give notice such acts were unauthorized. In holding that Edgar had implied authority to bind Victor, the court held authority to do a given thing may be inferred from the agent's previous conduct of like character with the principal's acquiescence therein.

#12. Wynn v. McMahon Ford Co.,414 S.W.2d 330 (Mo.App.1967), in which defendant automobile dealership gave an employee the title of used car sales manager. It was held a third person dealing with him could reasonably believe he had authority to conclude a sales contract for a boat on plaintiff's used car lot.

#13. Newco Land Co. v. Martin, 358 Mo. 99, 213 S.W.2d 504, 511 (Mo.1948):

It is well settled that the principal is chargeable with notice or knowledge received by his agent while acting within the scope of his authority concerning a matter within the scope of the agency. Restatement, Agency, Sec. 268, 2 Am. Jur. 286, Sec. 368; 3 C.J.S. 194, Sec. 262. There is an exception to this rule when the agent is acting adversely to the principal and entirely for his own or another's purpose. Restatement, Agency, Secs. 279, 282; 2 Am. Jur. 298, Sec. 379. But the stated exception is itself subject to an exception or qualification, which qualification, supported by the greater weight of authority, is to the effect that where the principal asserts or stands on the transaction either affirmatively or defensively, he is deprived of the benefit of the exception where the agent is his sole representative in the transaction, in which case the agents knowledge is imputed to the principal. Restatement, Agency, Sec. 282; 2 Am. Jur. 300, Sec. 380; 3 C.J.S. 202, Secs. 269, 270, and authorities infra.

#14.  E.g., Maniaci v. Interurban Express Co., 182 S.W. 981, 985  (Mo. 1916) writing that rationale of respondeat superior is implied in fact warranty by principal that agent is competent and fitted to be trusted.  "In effect … he [the principal] warrants … [the agents] fidelity and good conduct in all matters within the scope of his agency."

See also State ex rel. Matter v. Ogden,  172 S.W. 1172, 174 (1915) (citing Blackstone that one who provides services warrants he will  perform his duty with integrity, diligence, and skill).

#15. Clark's Adm'x v. Hannibal  & St. Joseph R.R. Co., 36 Mo. 202, 218 (1865), basing the rationale for respondeat superior upon the concept concept  that  benefits  and  liabilities  should  be reciprocal,  and  thus  that  those  who  hope  to  profit from  an  activity must  also  bear  its  costs.

#16. Coble v. Economy Forms Corp., 304 S.W.2d 47, 52 (Mo.App. 1957):

[O]ne of the reasons for the existence of the doctrine of respondeat superior lies in this power of the master to exercise detailed control over the manner in which the work is done.

See generally David Jacks Achtenberg, Taking History Seriously: Municipal LiabilityUnder 42 U.S.C. § 1983 and the Debate Over Respondeat Superior, 73 Fordham Law Review 2183, 2199-2000 (2005).

#17. Baker v. Aetna Casualty & Surety Co., 193 S.W.2d 363, 369 (Mo. App. 1946) approved use of a cautionary insurance on implied authority reading:

Instruction No. 2 told the jury that whenever a person has held out another as his agent authorized to act for him in a given capacity, or where his habits and course of dealing have been such as to reasonably warrant the presumption that such other was his agent authorized to act in that capacity, whether it be in a single transaction or in a series of transactions, his authority to such other to act for him in that capacity may be presumed, and the principal will not be permitted to deny that such other was his agent authorized to do the act that he assumed to do, provided that act was within the real or apparent scope of the presumed authority.

#18. J.M. v. Shell Oil Co., 922 S.W.2d 759, 764 (Mo.banc 1996) (holding that when a contract appears to be contradictory, a factual question arises as to whether the right of control exists, thereby making summary judgment inappropriate).

#19.Berthhold & Jennings Lumber Co., 209 S.W. 591, 595 (Mo. App. 1919):
one dealing with general manager "need not show affirmatively that the company had authorized such action before the company can be liable for the acts."
#20. Hamilton Hauling, Inc. v. GAF Corp., 719 S.W.2d 841, 846 (Mo.App.1986):

The "holding out" of the agent's authority by the principal party may be by action or inaction. The principal may directly communicate the authority to a third party or knowingly permit the agent to exercise such authority. See Continental-St. Louis Corp. v. Ray Scharf Vending Co., 400 S.W.2d 467, 470 (Mo.App.1966). The Continental-St. Louis Corp. court quotes 3 AM.JUR.2d Agency § 74 (now § 79) as saying:
[T]he rule is that if a principal acts or conducts his business, either intentionally or through negligence, or fails to disapprove of the agent's act 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, such principal is bound by the acts of the agent within the scope of his apparent authority as to any person who, upon the faith of such holding out, believes, and has reasonable ground to believe, that the agent has such authority, and in good faith deals with him.
Id.

The rationales of respondeat superior

  1. Francis H. Bolen, The basis of affirmative obligations in the law of tort 29 (1905)
  2. David Jacks Achtenberg , Taking History Seriously: Municipal Liability under 42 U.S.C. 1983 and the Debate over Respondeant Superior, 73 Fordham L. Rev. 2183, 2196-2201 (2005)

Thursday, April 19, 2012

Cases on knowledge worked by Principal's negligent supervision by the Principal

Banker's Utilities Co. v. Farmers' Bank of Union, 258 S.W. 17, 19 (Mo. App. 1924) (stating that principal is charged with what it should have known "by the exercise of ordinary care").

William Goessling Box Co. v. Cal Hirsch & Sons Merc. Co., 251 S.W. 438, 440 (Mo. App. 1923) (same).

Magnolia Compress & Warehouse Co. v. St. Louis Cash Register Co., 210 S.W. 125, 127 (Mo. App. 1919) (same).

Berthold & Jennings Lumber Co. v. Texas Hardwood Lumber Co., 209 S.W. 591, 594 (Mo. App. 1919) (same) (general manager).

Meux v. Haller, 162 S.W. 688, 690 (Mo. App. 1913).

Law Reporting v. Elwood Grain, 115 S.W. 475, 477 (Mo. App. 1909) (citing Kingsley v. Vitt, 51 Vt. 414).

Watkins v. Edgar, 77 Mo. App. 148 (Mo. App. 1898) (collects authorities).

See generally Restatement (Third) Agency Sec. 2.05 (2006) (estoppel) ("The principal's failure to use care enables the agent, or an actor who purports to be an agent, to misrepresent the agent's authority or to masquerade as an agent.").

For a deeper discussion of knowledge, consider Daniel S. Kleinberger, Guilty Knowledge






SSRN offerings

Need a new insight for talking about Obamacare with your Ditto Head Uncle this weekend.  Try SSRN:

The Agency Law Origins of the Necessary and Proper Clause

Sometimes, Google Site is a better search tool!

Are these papers on point. Yes. Consider:

Breach of Fiduciary Duty: On Justifiable Expectations of Loyalty and Their Consequences?


Trouble sleeping over why there is a Restatement 3rd:

A Revised Prospectus for a Third Restatement of Agency

Saturday, April 7, 2012

Flawed Services from the Missouri Supreme Court: Emerson Electric Co. v. Marsh & McLennan Companies

This simple case was about two questions:

1) What information does an insurer broker have to provide to its customers about its financial relationship with insurers for whom it is selling policies?

2) Does the implied in fact express warranty by the broker that it services will be "performed properly or in a workmanlike manner"

3) 

Saturday, March 31, 2012

Key Missouri Agency Citations/Second Ten Cases

    #11. City of Springfield v. Koch, 228 Mo.App. 511, 72 S.W.2d 191 (1934), in which Edgar, brother of appellant Victor Koch, had over a period of years, with the knowledge and consent of Victor, signed Victor's name to surety bonds similar to the one in issue. Victor took no steps to prevent it nor to give notice such acts were unauthorized. In holding that Edgar had implied authority to bind Victor, the court held authority to do a given thing may be inferred from the agent's previous conduct of like character with the principal's acquiescence therein.

    #12. Wynn v. McMahon Ford Co.,414 S.W.2d 330 (Mo.App.1967), in which defendant automobile dealership gave an employee the title of used car sales manager. It was held a third person dealing with him could reasonably believe he had authority to conclude a sales contract for a boat on plaintiff's used car lot.

    #13. Newco Land Co. v. Martin, 358 Mo. 99, 213 S.W.2d 504, 511 (Mo.1948):


    It is well settled that the principal is chargeable with notice or knowledge received by his agent while acting within the scope of his authority concerning a matter within the scope of the agency. Restatement, Agency, Sec. 268, 2 Am. Jur. 286, Sec. 368; 3 C.J.S. 194, Sec. 262. There is an exception to this rule when the agent is acting adversely to the principal and entirely for his own or another's purpose. Restatement, Agency, Secs. 279, 282; 2 Am. Jur. 298, Sec. 379. But the stated exception is itself subject to an exception or qualification, which qualification, supported by the greater weight of authority, is to the effect that where the principal asserts or stands on the transaction either affirmatively or defensively, he is deprived of the benefit of the exception where the agent is his sole representative in the transaction, in which case the agents knowledge is imputed to the principal. Restatement, Agency, Sec. 282; 2 Am. Jur. 300, Sec. 380; 3 C.J.S. 202, Secs. 269, 270, and authorities infra.

    #14.  E.g., Maniaci v. Interurban Express Co., 182 S.W. 981, 985  (Mo. 1916) writing that rationale of respondeat superior is implied in fact warranty by principal that agent is competent and fitted to be trusted.  "In effect … he [the principal] warrants … [the agents] fidelity and good conduct in all matters within the scope of his agency."

    See also State ex rel. Matter v. Ogden172 S.W. 1172, 174 (1915) (citing Blackstone that one who provides services warrants he will  perform his duty with integrity, diligence, and skill).

    #15.  Clark's Adm'x v. Hannibal  & St. Joseph R.R. Co., 36 Mo. 202, 218 (1865), basing the rationale for respondeat superior upon the concept concept  that  benefits  and  liabilities  should  be reciprocal,  and  thus  that  those  who  hope  to  profit from  an  activity must  also  bear  its  costs.

    #16. Coble v. Economy Forms Corp., 304 S.W.2d 47, 52 (Mo.App. 1957).

    [O]ne of the reasons for the existence of the doctrine of respondeat superior lies in this power of the master to exercise detailed control over the manner in which the work is done.
    See generally David Jacks Achtenberg, Taking History Seriously: Municipal LiabilityUnder 42 U.S.C. § 1983 and the Debate Over Respondeat Superior 

    #17. Baker v. Aetna Casualty & Surety Co., 193 S.W.2d 363, 369  (Mo. App. 1946) approved use of a cautionary insurance on implied authority reading:


    Instruction No. 2 told the jury that whenever a person has held out another as his agent authorized to act for him in a given capacity, or where his habits and course of dealing have been such as to reasonably warrant the presumption that such other was his agent authorized to act in that capacity, whether it be in a single transaction or in a series of transactions, his authority to such other to act for him in that capacity may be presumed, and the principal will not be permitted to deny that such other was his agent authorized to do the act that he assumed to do, provided that act was within the real or apparent scope of the presumed authority.

      More on implied authority

      The key to authority implied from course of conduct is the knowing acquiescence of the principal in the past acts. State on Inf. of Taylor v. American Ins. Co., 355 Mo. 1053, 200 S.W.2d 1 (banc 1946). "An agent's authority may be inferred when it appears that the agent has repeatedly performed acts like the one in question which the principal has ratified and adopted." Austin-Western Road Machinery Co. v. Commercial State Bank, 255 S.W. 585, 588 (Mo.App.1923).

      Agency may be implied or inferred and may be circumstantially proved by conduct of the purported agent exhibiting pretense of authority with knowledge of the alleged principal coupled with acquiescence.

      The Federal Digital System

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      Implied authority in the United States District Court for the Eastern District of Missouri Eastern Distict



      GREATER ST. LOUIS CONSTRUCTION LABORERS WELFARE FUND, v.HANCOCK DEMOLITION & EXCAVATION CO., LLC, Case No. 4:08CV509MLM (2009)

      The Eighth Circuit explained the factors relevant to actual authority under Missouri law in Essco Geometric v. Harvard Industries, 46 F.3d 718, 723-24 (8th Cir. 1995), and held as follows:
      Under Missouri law, for an agent to have actual authority, he must establish that the principal has empowered him, either expressly or impliedly, to act on the principal's behalf. Hyken v. Travelers Ins. Co., 678 S.W.2d 454, 457 (Mo. Ct. App. 1984). The principal can expressly confer authority by telling his agent what to do or by knowingly acquiescing to the agent's actions. Rosenblum v. Jacks or Better of America West, Inc., 745 S.W.2d 754, 760 (Mo. Ct. App. 1988). Implied authority flows from express authority, and "encompasses the power to act in ways reasonably necessary to accomplish the purpose for which express authority was granted." Id. Missouri case law suggests that custom and the relations of the parties establish the parameters of implied actual authority. Barton v. Snellson, 735 S.W.2d 160, 162 n. 2 (Mo. Ct. App. 1987); Molasky Enterprises, Inc. v. Carps, Inc., 615 S.W.2d 83, 87 (Mo. Ct. App.1981); Dudley v. Dumont, 526 S.W.2d 839, 844 (Mo. Ct. App. 1975). Thus, evidence that an agent historically engaged in related conduct, without limitation, would be enough to support a jury question on the issue of actual authority.
      See also IOS Capital, L.L.C. v. Allied Home Mortgage Capital Corp., 150 S.W.3d. 148, 151-52 (Mo. Ct. App. 2004) ("Implied authority is actual authority which the principal intended the agent to possess that lacks direct proof, but rather is implied from relevant facts and circumstances as reasonably necessary to accomplish the purpose or purposes of the expressly conferred authority."); Nichols v. Prudential Ins. Co.of America, 851 S.W.2d. 657, 661 (Mo. Ct. App. 1993) ("Express authority is created when the principal explicitly tells the agent what to `do'... [and] implied authority consists of those powers incidental and necessary to carry out the express authority.").
      Evidence of implied actual authority can be derived from an agent's own testimony, from his job description or from custom and practice within an industry. Essco, 46 F.3d at 724 (citing Sappington v. Miller, 821 S.W.2d 901, 904 (Mo. Ct. App. 1992); Barton v. Snellson, 735 S.W.2d 160, 162 n. 2 (Mo. Ct. App. 1987)).

      More on hide and seek: act is necessary to accomplish the purpose of the employment and is intended for such purpose, although in excess of the powers actually conferred

      In Sandman the court observed: 'It has been said an act is 'within the scope of the servant's employment' where such act is necessary to accomplish the purpose of the employment and is intended for such purpose, although in excess of the powers actually conferred on the servant by the master.' Sandman v. Hagan, supra at 117. See also, Seybold v. Eisle, 154 Iowa 128, 134 N.W. 578, 580-581 (1912); United States v. Farmer, 400 F.2d 107, 110-111 (8 Cir. 1968).

      Missouri follows this view.
      Implied authority flows from the express authority, and encompasses the power to act in ways reasonably necessary to accomplish the purpose for which express authority was granted.

      What if the agency agreement or contract has a secret limitation on the agent's authority?
      [A] contract will be treated as abandoned where the acts of one party inconsistent with its existence are acquiesced in by the other." Alropa Corp. v. Smith, 240 Mo. App. 376, 199 S.W.2d 866, 871 (1947); accord In re Estate of Reed, 414 S.W.2d 283 (Mo.1967).

      In Ticor Title Ins. Co. v. Nat'l Abstract Agency, Inc., District Judge Cleland found that title insurers routinely abandon provisions  in their agency contracts that limit the authority of agents to conduct or handle closings, escrows, or settlements.

      Independent contractors can be agents


      Our research on the role of an independent contractor as an agent has turned up a potentially misleading assertion in Missouri case law, namely that "[o]ne cannot be an independent contractor and at the same time be an agent for the same purposes."Jeff-Cole Quarries, Inc. v. Bell, 454 S.W.2d 5, 14 (Mo. 1970); Rackers & Baclesse, Inc. v. Kinstler, 497 S.W.2d 549, 552 (Mo.App.1973); Crist Sod Co. v. Bruce, 599 S.W.2d 43, 45 (Mo.App. E.D.1980). Although we presume that in those cases the court properly found that the independent contractor was not an agent, it is plain that an independent contractor can be an agent. RESTATEMENT (SECOND) OF AGENCY SECTIONS 2, 14N (1958). The Missouri cases stating a conflicting rule have been cited in secondary sources. See William R. Mureiko, Note, The Agency Theory of the Attorney-Client Relationship: An Improper Justification for Holding Clients Responsible for their Attorneys' Procedural Errors, 1988 Duke L.J. 733, 754 n. 44 (1988); 2A C.J.S. Agency Section 17 (2003).

      General agency arising out of continuity

      A general agent is  an agent "authorized to conduct a series of transactions involving a continuity of service," RESTATEMENT (SECOND) OF AGENCY, Section 7 (1958).

      Parshall v. Buetzer, 195 S.W.3d 515, 520 (Mo.App. W.D.2006)

      Secret Limitations do not limit the authority of an admitted agent

      Sophisticated defendants, especially insurers, often play hide and seek with agent's authority, writing secret limitations into agency agreements, manuals, or other instructions. 

      Parshall v. Buetzer, 195 S.W.3d 515, 521 (Mo.App. 2006). 
      "[S]ecret" limitations may mean those the principal intends "not to be revealed." RESTATEMENT (SECOND) OF AGENCY, Section 160 (1958).
       Wynn v. McMahon Ford Co., 414 S.W.2d 330, 337 (Mo.App.1967).
      "This testimony brings the situation to the borderline for application of the elementary rule that a third person dealing with an admitted agent is not bound by secret limitations upon the power of the agent of which the third person had no notice.

      Presumptions arising from the admission of agency

      Few Missouri cases has discussed the numerous presumptions that arise, once an agency relationship of any kind is admitted. Agency is not presumed, but once agency is admitted, authority is presumed. Counsel ought to consider all of the following propositions, which should naturally flow from the admission of agency:

      Regularity


      From the presumption of regularity,  a presumption should arise that an admitted agent is acting within the scope and course of their authority.

      The presumption of regularity has two branches. First, general or continuing agents are

      Knowledge


      Principals are presumed to know what their agents know.  



      John D. Lawson, The Law of Presumptive Evidence 23 (2d. ed. St. Louis 1899) (available at Google Books)



      Principals have a duty to monitor the actions of their agents. Principals are thus imputed with knowledge



      Restatement Second


      Discussion of the Restatement (Second) Agency §  49, comment c:

      Inferences from agent's position. Acts are interpreted in the light of ordinary human experience. If a principal puts an agent into, or knowingly permits him to occupy, a position in which according to the ordinary habits of persons in the locality, trade or profession, it is usual for such an agent to have a particular kind of authority, anyone dealing with him is justified in inferring that he has such authority, in the absence of reason to know otherwise.
      Rosenblum v. Jacks or Better of America West Inc., 745 S.W.2d 754, 764 (Mo.App. E.D.1988).

      Specific application of the rule


      Missouri has a long history of talking about the presumption of authority of an attorney.
      Rosenblum v. Jacks or Better of America West Inc., 745 S.W.2d 754, 764 (Mo.App. E.D.1988).


      Principal's are not presumed to intend that the main authority shall fail, due to a lack of authority as to acts reasonably necessary to make authority necessary

      Craig v. Kansas City Terminal Ry. Co., 271 Mo. 516, 197 S.W. 141, 143 (Mo., 1917)

      "It is a fundamental principle in the law of agency that every delegation of authority, whether `general' or `special,' carries with it, unless the contrary be expressed, implied authority to do all of those acts, naturally and ordinarily done in such cases, which are reasonably necessary and proper to be done in this case in order to carry into effect the main authority conferred. This doctrine rests upon the presumed intention of the principal that the main authority shall not fail because of the lack of express authority to do the incidental acts reasonably necessary to make that authority effective, and also upon the presumption that the principal expects the business to be done in the usual and ordinary way."

      Principals are presumed to intend that their agents follow the practices, customs, and usages of the business or trade.


      Emerson v Marsh & McLennan decided

      Google Scholar reports the case

      Friday, January 6, 2012

      Senate Bill 609 SB609

      We ought to have a constitutional amendment requiring state legislators to pass a difficult test on Mark Twain, for his wisdom reminds us:


      • "All you need in this life are ignorance and confidence, and then success is sure."


      • "No man's life, liberty, or property is safe while the legislature is in session."

      • "Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." 

      Tort deformity is back at the General Assembly, in the shape of Senate Bill 609 

      While promoted as "pro business," SB609 is the most amoral, anti-business piece of legislation likely ever offered in the Missouri legislature.  Among its principal wrongs are:

      1. It may repeal vicarious liability, for its draws no distinction between the liability of a principal and an agent. If passed, I will advise my clients not to do business with agents under any circumstances.
      2. It will eliminate practical liability for both conspiracy and aiding and abetting liability
      On the plus side, we will be able to establish websites that promote the murder and worse of legislators, their friends and families, and other public officials,  for the proposed law will gut Soldier of Fortune liability.






      Apparent Authority and Ostensible Agency Are Different



      Ostensible agency in Missouri is based on the notion of estoppel, that is, a representation by the principal causing justifiable reliance and resulting harm.

      See also Armato v. Baden, 84 Cal. Rptr. 2d 294, 303 (Ca.App. 1999) (Many courts use the terms ostensible agency, apparent agency, apparent authority, and agency by estoppel interchangeably. As a practical matter, there is no distinction among them); Baptist Memorial Hospital System v. Sampson (Tex. 1998) 969 S.W.2d 945, 948, fn. 2.; Ames v. Great S. Bank, 672 S.W.2d 447, 450 (Tex.1984); RESTATEMENT (SECOND) OF AGENCY § 267; KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS § 105, at 733-34 (5th ed.1984).