Carey Hodges Associates, Inc. v. Continental Fidelity Corp.

• Decision Date: 26 June 1972
• Docket Number: No. 8891,8891
• Citation: 264 So.2d 734
• Parties: CAREY HODGES ASSOCIATES, INC. v. CONTINENTAL FIDELITY CORPORATION.
• Court: Court of Appeal of Louisiana — District of US

Page 734

264 So.2d 734

CAREY HODGES ASSOCIATES, INC. v. CONTINENTAL FIDELITY CORPORATION.

No. 8891.

Court of Appeal of Louisiana, First Circuit.

June 26, 1972.

William Brown, Baton Rouge, for appellant.

M. Aubrey McCleary, Jr., McCollister, Belcher, McCleary & Fazio, Baton Rouge, for appellee.

Before LANDRY, BLANCHE and TUCKER, JJ.

TUCKER, Judge.

Plaintiff, Carey Hodges Associates, Inc., instituted suit against defendant Continental Fidelity Corporation for Fifty-seven Thousand, Two Hundred Sixty-one and 36/100 ($57,261.36) Dollars, the balance allegedly due on an indebtedness resulting from services rendered on an alleged written agreement between the parties entered into September 5, 1969. Prior to that date defendant had agreed to purchase certain property near Prairieville, Louisiana, which it considered suitable for a racetrack, and had retained Richard E. Cheek as its manager, agent, employee, or representative to obtain the services of an engineer for survey purposes, which Mr. Cheek did by hiring plaintiff. Plaintiff prepared the necessary surveys upon which defendant obtained title to the property in question. Plaintiff was paid Five Thousand and no/100 ($5,000.00) Dollars for its services, which Mr. McDonald Lynch, president of defendant corporation, testified constituted payment in full for the services contracted for and rendered at the time of payment.

Subsequently Lynch asked Cheek to prepare a financing package in order that defendant might borrow money with which to promote the track. In accordance with these instructions, Cheek hired the services of appraisers, a construction engineer, Mr. Lloyd Rockhold, for estimates, and plaintiff as an engineering firm for preparation of plans, specifications, and designs. Defendant used plaintiff's work in its preliminary construction and for submission to lending agencies. Rockhold estimated construction costs at $889,488.00. Plaintiff alleges the figure agreed upon between the parties herein was seven (7%) per cent of that total, or $62,261.36, less the $5,000.00 already paid. The agreement upon which plaintiff sued is as follows in part:

'Accordingly, we will prepare and furnish construction plans and/or specifications as may be requested by either you or Mr. Loyd Rockhold, the construction cost estimator retained by your project appraiser, for a lump sum fee of seven percent of the total project estimate; which estimate will include, but will not be limited to, all site building, electrical, stands, fencing and other work but will not include land cost whether detailed design and/or layout of all these items be specifically requested by you or Mr. Rockhold or not.

Although this total lump sum fee will technically not be due and payable until completion of the plan and specification work which may be requested, we must nonetheless reserve the right to submit periodic statements in amounts representing our estimated proportionate project progress.'

The foregoing terms were accepted and commencement of work authorized by Richard E. Cheek, as the agent for Continental Fidelity Corporation.

Plaintiff later presented a bill to Cheek for $57,261.36, which he considered the balance due, and Cheek expressed great surprise at the amount of this bill. When it was presented subsequently to Mr. Lynch, president of defendant corporation, he, too, questioned the amount of the bill, but did not reject it. Only later did Lynch, as president of defendant corporation, deny that Cheek had the authority to sign any such contract for defendant corporation.

Plaintiff filed an affidavit and a lien against defendant shortly after Mr. Lynch expressed surprise at the amount of the bill. Upon trial in the lower court defendant denied any liability and reconvened for $25,000.00 damages as a result of injuries allegedly caused defendant by the filing of plaintiff's lien.

The trial judge dismissed plaintiff's suit and also defendant's reconventional demand without any written reasons for judgment. Plaintiff has appealed, contending that Mr. Cheek did have the authority to contract with plaintiff, and that, in the alternative, if the court should find him lacking in express authority, that he was clothed with apparent authority to contract with plaintiff in the name of defendant corporation. Defendant asserts vigorously that Mr. Cheek had neither express nor implied authority to sign any contract with plaintiff for the defendant corporation.

Although the plaintiff-appellant had dealt almost exclusively with Richard Cheek in its negotiations concerning work for defendant corporation and believed him to be acting as an agent for defendant, the record is devoid of any evidence which would justify appellant in relying upon Mr. Cheek as being properly authorized to contract with the plaintiff concern in regard to the plans and specifications and designs submitted on or about September 5, 1969. Cheek may have been acting within his general mandate from defendant corporation in asking plaintiff for its plans and designs, but, under the terms of La. Civil Code Article 2997, an express or special authorization is required before a principal can be bound by the contracts of its agent or mandatary acknowledging debts. Defendant corporation cannot be bound by the letter of September 5, 1969, signed by its...