Blaisdell Lumber Co., Inc. v. Horton

• Decision Date: 26 June 1990
• Citation: 575 A.2d 1386,242 N.J.Super. 98
• Parties: BLAISDELL LUMBER COMPANY, INC., Plaintiff-Respondent, v. Karen Lyn HORTON, Defendant-Appellant and Daniel Calvin, Defendant.
• Court: New Jersey Superior Court — Appellate Division

Page 98

242 N.J.Super. 98

575 A.2d 1386

BLAISDELL LUMBER COMPANY, INC., Plaintiff-Respondent, v. Karen Lyn HORTON, Defendant-Appellant and Daniel Calvin, Defendant.

Superior Court of New Jersey Appellate Division.

Submitted Feb. 22, 1990.

Decided June 26, 1990.

Richard D. Forest, attorney for defendant-appellant (Richard D. Forest, Island Heights, on the brief).

No brief filed on behalf of plaintiff-respondent.

Before Judges KING, SHEBELL and KEEFE.

The opinion of the court was delivered by

KING, P.J.A.D.

This is an appeal from a judgment of $925.25 entered in the Small Claims Division of the Special Civil Part in favor of the operator of a hardware store. The judgment was entered after a contested hearing in which defendant Karen Lyn Horton disputed that she was responsible for certain purchases made on her credit card by her acquaintance, Daniel Calvin, who had not been served and did not appear. The issue is whether Horton is legally responsible under common-law agency principles to Blaisdell Lumber Company, the owner of the hardware store. We conclude that she is not.

Plaintiff brought this action in April 1989 to recover payment for purchases made at its hardware store with defendant Karen Horton's American Express (AMEX) credit card in June and July 1987. Defendant alleged that her former male friend, Daniel Calvin, made the purchases without her permission or authority. She said that he was never permitted to use her AMEX card but stole it from her.

Bruce Blaisdell, vice-president of Blaisdell Lumber Company of Red Bank, testified that seven transactions, resulting in AMEX credit card charges totalling $925.25, were made at his store from June 18 to July 18, 1987. He handled the first transaction personally on June 18. He was the only witness for plaintiff. He said that during the June 18 transaction Calvin signed only his name on the two charge slips for that date after "a woman" handed the credit card to Calvin. Only Karen Horton's name and signature appeared on the credit card itself. Blaisdell did not ask the woman either to sign the charge slips or to identify herself. At trial Blaisdell could not identify defendant Horton as the woman with Calvin on the day of the first purchase. The other six purchases were made by Calvin from other clerks in the hardware store on separate dates continuing through July 18, 1987. There was no proof offered at trial concerning the circumstances surrounding those purchases other than the credit card slips also signed by Calvin only in his own name.

Blaisdell said that in August 1987 American Express refused to reimburse Blaisdell Lumber because Horton had "denied the signature" in early August by notifying AMEX that it was not her signature on the card slips. Blaisdell then telephoned Horton. He claimed that she said that the signature was not valid, that she had never reported her card stolen, and that "the bill" was Daniel Calvin's. Blaisdell testified that Horton also said that Calvin was out but that he would return soon and call him, suggesting to Blaisdell that the two were still living together. At the close of plaintiff's case, the defendant's motion to dismiss for failure to prove agency was denied.

Karen Horton then testified. She said that she had first met Daniel Calvin around Christmas 1986. He had moved into her apartment in Long Branch in January 1987. She testified that their "romance" abruptly ended in early March 1987 when Calvin stole her car, changed the bill of sale to his name, and drove off to Mississippi. At that time, on March 4, 1987, Horton signed a complaint in the Long Branch Municipal Court alleging that Calvin had stolen her car, a gasoline credit card, a brief case, and had obtained $4,000 from her by misrepresentation.

Calvin soon returned to Horton's New Jersey apartment and continued living there, although not on the same friendly and "romantic" terms as before. On August 11, 1987 Calvin pled guilty in the Long Branch Municipal Court to the offenses involving the March thefts. He was fined, received a suspended sentence and was ordered to make restitution.

Horton testified that in August 1987 she was at a gas station and realized that she could not pay for her gas as she was unable to find her AMEX card in her wallet. The attendant who knew Horton then told her that he had seen Calvin with the credit card that morning. Horton said that she immediately called AMEX and reported her card missing. She did not know for how long it had been gone. She said that a Ms. Douglas of AMEX's fraud control department told her and confirmed in writing that the balance due was $5,496 of which only $218 was Horton's legitimate charges. See Evid.R. 2(2). An AMEX memo to Horton, dated August 13, 1987, placed in evidence, corroborates Horton's testimony regarding her conversation with Douglas. Horton said that she then signed a criminal complaint against Calvin based on the AMEX fraud.

Horton said she previously had hidden her credit cards in a metal box in her bedroom. After Calvin stole her car and her gas credit card in March, she began carrying her credit cards on her person in her wallet. She denied ever dealing with or going to Blaisdell Lumber. She denied any benefit from or receipt of the hardware items purchased from plaintiff. All of the Blaisdell charges (eight slips in all) were signed by Calvin in his name only.

Judgment was entered for plaintiff but, contrary to R. 1:7-4, no reasons were given. See Curtis v. Finneran, 83 N.J. 563, 569-570, 417 A.2d 15 (1980). Execution was stayed pending appeal. The failure of the trial judge to make any findings surely complicates our review of this matter. He did not tell us who he believed or why. He did not tell us what inferences he drew from the evidence. He just concluded that "she's [Horton] left with an obligation."

By way of background, in 1970 Congress enacted Title V of Public Law 91-508, part of the Truth in Lending Act, in order to regulate the credit card industry. 15 U.S.C.A. § 1602, §§ 1642-1644. This legislation limited credit card holder liability to $50 for "the unauthorized use of a credit card." 15 U.S.C.A. § 1643(a); Credit Card Service Corporation v. F.T.C., 495 F.2d 1004, 1006 (D.C.Cir.1974). The term "unauthorized use," as used in 15 U.S.C.A. § 1643(a), "means a use of a credit card by a person other than the cardholder who does not have actual, implied or apparent authority for such use and from which the cardholder receives no benefit." 15 U.S.C.A. § 1602(o ). Except as provided in 15 U.S.C.A. § 1643 (up to $50), "a cardholder incurs no liability from the unauthorized use of a credit card." Id. at (d).

Since the issuer of the card here, AMEX, did not pay the plaintiff merchant, Blaisdell Lumber attempted to establish Daniel Calvin's apparent authority, under common law principles, to use Horton's credit. "Apparent authority imposes liability, not as a result of an actual contractual relationship but because of actions by a principal which have misled a third party into believing that a relationship of authority does, in fact, exist." Wilzig v. Sisselman, 209 N.J.Super. 25, 506 A.2d 1238 (App.Div.1986), certif. den. 107 N.J. 109, 526 A.2d 181 (1987). In this respect the doctrine is closely related to estoppel. Ibid. The burden of proof is on the plaintiff to establish the apparent authority and the agency relationship. Hoddeson v. Koos Bros., 47 N.J.Super. 224, 231-232, 135 A.2d 702 (App.Div.1957). The general rule of law is "that the apparency and appearance of authority must be shown to have been created by the manifestations of the alleged principal, and not alone and solely by proof of those of the supposed agent. Assuredly the law cannot permit apparent authority to be established by the mere proof that a mountebank in fact exercised it." Id. at 232, 135 A.2d 702. See also N. Rothenberg & Son, Inc. v. Nako, 49 N.J.Super. 372, 380-383, 139 A.2d 783 (App.Div.1958). "Apparent authority will bind the purported principal only with respect to a third person to whom a manifestation of the defendant's consent to the holding out has been made known." Id. at 381, 139 A.2d 783.

In the case before us plaintiff Blaisdell Lumber proved that Calvin presented Horton's AMEX credit card on seven occasions between June 18 and July 18. On the first occasion, June 18, Blaisdell himself handled the transaction. The other six transactions took place on separate days, June 20 and 27, and July 7, 9, 18 and 30. Calvin signed the credit slip himself for each purchase. Horton never signed any of the credit slips. On June 18 Blaisdell made no effort to inquire of the woman with Calvin if she was the card owner, Karen Horton, to obtain any identification from her, or to get her signature on the credit slip. Indeed, at trial on May 12, 1989, Blaisdell could not identify the defendant Horton as the woman who accompanied Calvin on June 18, 1987. There had been no prior course of dealing between the parties such as to entitle plaintiff reasonably to presume Calvin's apparent authority to use Horton's credit card on his own signature. There is no doubt from the AMEX records that Horton reported the card stolen in early August. The AMEX records in evidence also support Horton's testimony that Calvin ran up bills of over $5,000 on her credit card without her permission.

We thus have a situation where a merchant relied on Calvin's possession of Horton's credit card to procure goods worth $925. The merchant accepted Calvin's signature alone, not the card owner's, without any course of conduct to establish reasonable reliance and without any verification of or confirmation from the card owner. The merchant simply relied on the card and did nothing to protect itself. Horton denied receiving any benefit from the transaction and there seems no reason to doubt her. She has also corroborated her claim of theft of the card with documentation from the issuer AMEX dated August 13, 1987....