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.



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