Environmental Engineering Chapter 16 Who owned the house that the Dickinsons

12 Unit 3 Agency and Employment Law

Charter admitted that Carol had not personally given permission for the landscaping work, but

claimed it had relied on Hal’s apparent authority. The jury returned a verdict for Charter on Carol’s

trespass and damage to vegetation claims and Carol appealed.

Issue: Did Hal Dickinson have apparent authority to make decisions about Carol Snowdon’s property?

Holding: Judgment for Charter Oaks affirmed. A husband and wife are not necessarily agents for each

other. However, in this case, Hal worked frequently in the Dickinson yard, both alone and with his wife.

He also dealt with contractors, including a tree service Carol hired. No one ever told the Snowdons that

Hal was not authorized to make decisions about landscaping. Therefore, it was reasonable for the

Snowdons to assume that Hal did have authority on landscaping matters.

Question: Who owned the house that the Dickinsons lived in?

Question: Did Hal have actual authority to make decisions on landscaping?

Question: Did Carol tell Charter Oaks that Hal had authority?

Question: Did Carol give approval to Charter Oaks for the work they did?

Answer: No.

Question: Do all spouses have apparent authority for each other.

Question: Then why does Hal have apparent authority?

Answer: He did landscaping work himself and he supervised contractors who worked in the yard.

Question: The fact remains, though, that this was Carol’s property and she did not approve Charter

Oak’s work. Is the result in this case fair?

Answer: Carol was is in a better position to prevent the harm than either the Snowdons, who drew

Example

This letter appeared in the legal advice column of the Chicago Tribune:

I signed a lease and lived with a roommate. He had financial trouble and, as a result, we didn’t

pay the rent for the past month. One night I went back to my apartment and found the locks

This is a good example of an instance where there is not apparent authority. After two cases in which an

employee had apparent authority, it is also useful to give students an example of the alternative.

Question: Did the roommate who left town have apparent authority in this case?

Answer: Probably not. Under apparent authority, the third party must reasonably believe that the

13Robert A. Boron, “Double Cross; Lies and Fast Exit Leave Roommate Out in the Cold,” Chicago Tribune, June 24, 1994,

p. 34.

Chapter 16 Agency Law 13

mained in the apartment, he no longer had reasonable grounds to believe that the tenant was telling

the truth about both roommates having moved out.

Writing Exercise: Apparent Authority

If students prepared the apparent authority writing exercise, ask them to share examples of apparent

Ratification

If a person accepts the benefit of an unauthorized transaction or fails to repudiate it, then he is as bound

by the act as if he had originally authorized it. He has ratified the act.

Agent’s Liability for Contracts

Fully Disclosed Principal

An agent is not liable for any contracts she makes on behalf of a fully disclosed principal.

Unidentified Principal

In the case of an unidentified principal, the third party can recover from either the agent or the principal.

(An unidentified principal is also sometimes called a “partially disclosed principal.”)

Undisclosed Principal

The text describes instances in which both William Zeckendorf and Harvard University, assembled large

parcels of land as undisclosed principals. Students who completed the research assignment on straw

Unauthorized Agent

• Thus far in this section, we have been discussing an agent’s liability to a third party for a

Additional Case: Van Damme v. Gelber14,

Facts: Alexandre Van Damme was eager to buy a painting by the artist Gerhard Richter. Nahum Gelber

was willing to sell his Richter entitled “A.B. Diffus”. Van Damme hired Christophe Van De Weghe to

14 2008 N.Y. Misc. LEXIS 203, Supreme Court of New York, 2008.

14 Unit 3 Agency and Employment Law

Between the time the contract was signed and Van Damme wired the purchase price to Gasiunasen, a

different Richter painting has sold at auction for $5.55 million. Believing he had made a bad deal, Gelber

refused to accept Van Damme’s payment.

Van Damme sued Gasiunasen for breach of contract. Gasiunasen moved to dismiss on the grounds

that he was an agent for a fully disclosed principal.

Issue: Was Gasiunasen liable under the contract?

Holding: Yes, Gasiunasen was liable under the contract; his motion to dismiss was denied. According to

the court, an agent of a fully disclosed principal cannot be personally liable under a contract. Van De

According to the court, a principal whose identity has not been disclosed, although the agency

relationship is known is referred to “partially disclosed.” The agent for a partially disclosed principal will

be liable on any contract that he makes on behalf of his principal, unless the parties to the contract

expressly agree that the agent will not be liable. An agent who enters into a contract on behalf of a

partially disclosed principal is jointly and severally liable with the principal.

Question: Who signed the contract?

Question: Did Van Damme know that Gelber owned the painting?

Question: If Van Damme knew that Gelber was the owner of the painting, then why does the court

consider Gelber a partially disclosed principal?

Answer: Because Van De Weghe did not officially know that Gelber was the owner, nor did he

Question: But Van De Weghe knows that Gasiunasen is not the owner, right?

Answer: True, but the court stated that a partially disclosed principal is one whose identity is not

Question: What is joint and several liability?

group or any one of them can be sued for the full amount.

Principal’s Liability for Torts

An employer is liable for a tort committed by its employee acting within the scope of employment or

acting with apparent authority.

Respondeat Superior

A master is liable for physical harm caused by the negligent conduct of servants within the scope of

employment.

Question: What is a master?

Question: What is a servant?

Question: Are all agents servants?

Chapter 16 Agency Law 15

Question: What kind of agent is an employee?

Question: Why do we care whether an agent is a servant or an independent contractor?

Question: You said “generally not liable for the torts of an independent contractor.” When is a

principal liable for these torts?

Scope of Employment

An act is within the scope of employment, even if expressly forbidden, if it is of the same general nature

as that authorized or if it is incidental to the conduct authorized.

Additional Case: You Be the Judge: Kashin v. Kent15

Facts: Douglas Kent was the Consul General of the United States in Vladivostok, Russia. One evening,

he drove from his office to a gym and then home. On the way home, he was involved in an accident that

left Aleksandr Kashin severely injured. Kashin sued the United States government, claiming that Kent

was within the scope of his employment at the time of the accident.

You Be The Judge: Was Kent acting within the scope of his employment while driving home from the

gym?

Holding: Kent was not acting within the scope of his employment at the time of the accident.

Question: Why would Kashin care if Kent was acting within his scope of employment?

liable for his actions.

Question: Was he involved in any diplomatic activity at the time of the accident?

Answer: No, he had left work for the day.

Answer: So that he could pass the medical exam required by his job.

Question: Was he going to do any more work that day?

Question: Who leased his apartment?

Question: Was he acting within the scope of employment?

Abandonment

The principal is liable for the actions of the employee that occur while the employee is at work, but not

for actions that occur after the employee has abandoned the principal’s business. The McDonald’s case is

perhaps the high-water mark for employer liability.

You Be the Judge: Zankel v. United States of America16

16 Unit 3 Agency and Employment Law

Facts: Staff Sergeant William E. Dreyer was a recruiter for the United States Marine Corps. Driving to

work one morning at 6:40 a.m., in a government owned car, he struck and killed 12 year old Justin

Zankel. The child’s parents sued the federal government, claiming that it was liable for Dreyer’s actions

because he had been acting within the scope of his employment at the time of the accident.

On the day before the accident, Dreyer left home at 6:30 a.m., driving his own car. At the office, he

switched to a government car and worked until 10:45 p.m. He then discovered that his personal car would

not start. He did not want to call Sherman that late, so he drove his government car home without

permission. He believed that, had he called, Sherman would have said it was ok.

Dreyer arrived home at midnight. He was under orders to attend an early morning training session the

Moreover, even if Dreyer was not authorized to drive the Marine Corps car, the government is still liable

because his activity was of the same general nature as that authorized and it was incidental to the conduct

authorized. Driving the car was part of Dreyer’s work. Indeed he could not perform his job without it. In

addition, Dreyer was on the road early so that he could attend a required training session. He was

exhausted from trying to reach impossible goals. The Marine Corps must bear responsibility for this

tragic accident.

Argument for United States: The government had a clear policy stating that recruiters were not

authorized to drive a government car without first requesting permission. Dreyer had not done so.

Therefore, he was not authorized to drive the government car at the time of the accident.

Holding: After considering and weighing all the evidence presented by the parties and applying the

controlling law to the court’s factual findings, this court finds, although it is a close question, that

Dreyer was acting within the scope of his employment with the Marine Corps at the time of the

15 333 F. Supp. 2d 926; 2004 U.S. Dist. LEXIS 17381 United States District Court for the Southern District of

California, 2004

16 2008 U.S. Dist. LEXIS 23655, United States District Court for the Western District of Pennsylvania, 2006

Chapter 16 Agency Law 17

Question: Would the outcome have been different if Dreyer had not previously received permission

to borrow the government car to drive home?

Answer: Possibly. The court may have found that Dreyer was acting outside the scope of his

employment.

Intentional Torts

A principal is not liable for the intentional torts of an employee unless (1) the employee intended to serve

some purpose of the employer; or (2) the employer was negligent in hiring or supervising this employee.

Case: Doe v. Liberatore17

Facts: The Rev. Albert Liberatore was a priest who worked in a seminary in Scranton, Pennsylvania. A

Fourteen year-old John Doe was a member of Sacred Heart. Liberatore befriended Doe, taking him

to movies and buying him expensive gifts. The two went on trips together and Doe routinely slept in

Liberatore’s bed at the Rectory. Liberatore also counseled Doe and his mother when Doe’s father died.

A number of observers, including a friend of Doe’s mother, a member of the rectory housekeeping

Only after Liberatore pleaded guilty to multiple counts of sexual abuse did the Church dismiss him.

Doe filed suit against the Diocese of Scranton, Sacred Heart Church and Bishop Timlin alleging that they

were liable for the torts committed by Liberatore. The defendants filed a motion to dismiss.

Conduct of an employee is considered within the scope of employment for purposes of vicarious

liability if: (1) it is of a kind and nature that the employee is employed to perform; (2) it occurs

substantially within the authorized time and space limits; (3) it is actuated, at least in part, by a purpose to

serve the employer; and (4) if force is intentionally used by the employee against another, the force is not

unexpected by the employer.

Here, it is clear Liberatore’s sexual molestation of Plaintiff was not within the scope or nature of his

employment as a priest. Indeed, the activity is wholly inconsistent with the role of one who is received

17 478 F.Supp. 2d 742, 2007 U.S. Dist. LEXIS 19067, United States District Court for the Middle District of

Pennsylvania, 2007.

18 Unit 3 Agency and Employment Law

employer liable, it must be shown that the employer knew or, in the exercise of ordinary care, should have

known of the necessity for exercising control of his employee.

Here, the Diocese, Sacred Heart, and Timlin may be liable if they knew or should have known that

Liberatore had a propensity for committing sexual abuse and his employment as Pastor at Sacred Heart

Question: Liberatore’s abuse of Doe happened while Liberatore was employed by Sacred Heart,

how then could the court conclude that the abuse did not happen during the scope of Liberatore’s

employment?

Answer: Although the abuse did happen while Liberatore was employed by Sacred Heart, and in fact

Question: What does the Court mean when it says “a reasonable jury could conclude that the

Diocese, Sacred Heart, and Bishop Timlin were negligent or reckless in supervising and retaining

Liberatore” and also “a reasonable jury could not find that the Diocese, Sacred Heart and Bishop

Timlin were negligent or reckless in hiring Liberatore”?

Answer: In order for the Defendants to be liable for negligence in hiring, supervising, and retaining

Question; What evidence was there that the Defendants were negligent or reckless in retaining or

supervising Liberatore?

Answer: Liberatore gave Doe expensive gifts, Doe routinely slept in Liberatore’s bed at the rectory,

Question: Do we know whether the Diocese, Sacred Heart or Timlin knew that Doe was sleeping in

Liberatore’s bed at the rectory? Does that matter?

Answer: There is no evidence that the Defendants knew of these things. However, the standard is

Agent’s Liability for Torts

The focus of this section has been on the principal’s liability for the agent’s torts. But it is important

to remember that agents are always liable for their own torts.

Multiple Choice Questions

Chapter 16 Agency Law 19

1. At Business University, semester enrollment begins at midnight on April 1. Jasper asked his

roommate Alonso as a favor to register him for an important required course. Alonso agreed to do so

but then overslept. As a result, Jasper could not enroll in the required course he needed to graduate

and had to stay in school for an additional semester. Is Alonso liable to Jasper?

(a) No, because an agency agreement is invalid unless the agent receives payment.

(b) No, because Alonso was not grossly negligent.

(c) No, because the cost of the extra semester is unreasonably high.

(d) Yes, because Alonso disobeyed his instructions.

2. Finn learns that, despite his stellar record, he is being paid less than other salespeople at Barry Co. So

he decides to start his own company. During his last month on the Barry payroll, he tells all of his

clients about his new business. He also tells them that Barry is a great company, but his fees will be

lower. After he opens the doors of his new business, most of his former clients move with him. Is

Finn liable to Barry?

(a) No, because he has not been disloyal to Barry — he praised the company.

(b) No, because Barry was underpaying him.

(c) No, because his clients have the right to hire whichever company they choose.

(d) Yes, Finn has violated his duty of loyalty to Barry.

3. Kurt asked his car mechanic, Quinn, for help in buying a used car. Quinn recommends a Ford Focus

that she has been taking care of its whole life. Quinn was working for the seller. Which of the

following statements is true?

(a) Quinn must pay Kurt the amount of money she received from the Ford’s prior owner.

(b) After buying the car, Kurt discovers it needs $1000 in repairs. He may recover that amount from

Quinn, but only if Quinn knew about the needed repairs before Kurt bought the car.

(c) Kurt cannot recover anything because Quinn had no obligation to reveal her relationship with the

car’s seller.

(d) Kurt cannot recover anything because he had not paid Quinn for her help

4. Figgins is the dean of a college. He appointed Sue acting dean while he was out of the country and

posted an announcement on the college website announcing that she was authorized to act in his

place. He also told Sue privately that she did not have the right to make admissions decisions. While

Figgins was gone, Sue overruled the admissions committee to admit the child of a wealthy alumnus.

Does the child have the right to attend this college?

(a) No, because Sue was not authorized to admit him.

(b) No, because Figgins did not ratify Sue’s decision.

(c) Yes, because Figgins was a fully disclosed principal.

(d) Yes, because Sue had apparent authority.

5. CPA QUESTION A principal will not be liable to a third party for a tort committed by an agent:

(a) Unless the principal instructed the agent to commit the tort

(b) Unless the tort was committed within the scope of the agency relationship

(c) If the agency agreement limits the principal’s liability for the agent’s tort

(d) If the tort is also regarded as a criminal act

20 Unit 3 Agency and Employment Law

6. CPA QUESTION Cox engaged Datz as her agent. It was mutually agreed that Datz would not

disclose that he was acting as Cox’s agent. Instead he was to deal with prospective customers as if he

were a principal acting on his own behalf. This he did and made several contracts for Cox.

Assuming Cox, Datz, or the customer seeks to avoid liability on one of the contracts involved, which

of the following statements is correct?

(a) Cox must ratify the Datz contracts in order to be held liable.

(b) Datz has no liability once he discloses that Cox was the real principal.

(c) The third party can avoid liability because he believed he was dealing with Datz as a principal.

(d) The third party may choose to hold either Datz or Cox liable.

Essay Questions

1. An elementary school custodian hit a child who wrote graffiti on the wall. Is the school district liable

for this intentional tort by its employee?

2. What if the custodian hit one of the schoolchildren for calling him a name? Is the school district

liable?

3. A soldier was drinking at a training seminar. Although he was told to leave his car at the seminar, he

disobeyed orders and drove to a military club. On the way to the club, he was in an accident. Is the

military liable for the damage he caused?

4. One afternoon while visiting friends, tennis star Vitas Gerulaitis fell asleep in their pool house. A

mechanic had improperly installed the swimming pool heater, which leaked carbon monoxide fumes

into the house where he slept, killing him. His mother filed suit against the owners of the estate. On

what theory would they be liable?

5. You Be the Judge: WRITING PROBLEM Sarah went to an auction at Christie’s to bid on a

tapestry for her employer, Fine Arts Gallery. The good news is that she purchased a Dufy tapestry for

$77,000. The bad news is that it was not the one her employer had told her to buy. In the excitement

of the auction, she forgot her instructions. Fine Art refused to pay, and Christie’s file suit. Is Fine Arts

liable for the unauthorized act of its agent? Argument for Christie’s: Christie’s cannot possibly

ascertain in each case the exact nature of a bidder’s authority. Whether or not Sarah had actual

authority, she certainly had apparent authority and Fine Arts is liable. Argument for Fine Arts: Sarah

was not authorized to purchase the Dufy tapestry, and therefore Christie’s must recover from her not

Fine Arts.

Chapter 16 Agency Law 21

Discussion Questions

1. ETHICS Mercedes has just begun work at Photobook.com. What a great place to work! Although the

salary is not high, the company has fabulous perks. The dining room provides great food from 7am to

midnight, five days a week. There is also a free laundry and dry cleaning service. Mercedes’s social

life has never been better. She invites her friends over to Photobook for meals, and has their laundry

done for free. And because her job requires her to be online all the time, she has plenty of opportunity

to stay in touch with her friends by g-chatting, tweeting and checking Facebook updates. She is,

however, shocked that one of her colleagues takes paper home from the office for his children to use

at home. Are these employees behaving ethically?

2. Kevin was the manager of a radio station, WABC. A competing station lured him away. In his last

month on the job at WABC, he notified two key on-air personalities that if they were to leave the

station, he would not hold them to their noncompete agreements. What can WABC do?

3. Jesse worked as a buyer for the Vegetable Co. Rachel offered to sell Jesse 10 tons of tomatoes for the

account of Vegetable. Jesse accepted the offer. Later, Jesse discovered that Rachel was an agent for

Sylvester Co. Who is liable on this contract?

Answer: Because Vegetable Co. was a fully disclosed principal, Vegetable Co. is liable but Jesse is

4. The Pharmaceutical Association holds an annual convention. At the convention, Brittany, who was

president of the Association, told Luke that Research Corp. had a promising new cancer vaccine.

Luke was so excited that he chartered a plane to fly to Research’s headquarters. On the way, the plane

crashed and Luke was killed. Is the Pharmaceutical Association liable for Luke’s death?

5. Betsy has a two-year contract as a producer at Jackson Movie Studios. She produces a remake of the

movie Footloose. Unfortunately, it bombs and Jackson is so furious, he fires her on the weekend the

movie opens. Does he have the power to do this?

Answer: Yes, he has the power. He does not, however, have the right, because she has a two-year