Cascade Warehouse Co. v. Dyer

• Decision Date: 21 July 1970
• Citation: 91 Or.Adv.Sh. 159,474 P.2d 325,256 Or. 377
• Parties: CASCADE WAREHOUSE CO., Inc., an Oregon corporation, Respondent, v. Harold A. DYER, dba H. A. Dyer Lumber Yard, Appellant. . On Appellant's Petition for Rehearing Filed
• Court: Oregon Supreme Court

Page 325

474 P.2d 325

256 Or. 377

CASCADE WAREHOUSE CO., Inc., an Oregon corporation, Respondent, v.Harold A. DYER, dba H. A. Dyer Lumber Yard, Appellant.

Supreme Court of Oregon, In Banc.

On Appellant's Petition for Rehearing Filed July 21, 1970Decided Sept. 11, 1970.

H. William Barlow of Allen, Stortz, Pierson & Barlow, Salem, for the petitioner.

No appearance contra.

PER CURIAM.

Defendant has petitioned for rehearing on the ground that we erred in holding that 'real authority' and 'apparent authority' are the same, and in holding that there was evidence to prove that defendant's employee acted with 'real authority.'

We recognize the distinction between real and apparent authority.Real authority exists when the agent is expressly authorized by the principal to act or when the actual authority to act can be implied from the facts.In contrast, apparent authority arises when the principal, through words or conduct, leads a third person to the reasonable belief that the agent is authorized to act when, in fact, he is not.

Defendant further contends that estoppel is a necessary element of apparent authority.Defendant recognizes that apparent authority as defined by the Restatement of Agency, §§ 8,159,292 (1933) is not based upon estoppel, ¹ but he argues that the preferable view is to the contrary, relying upon Mechem, Outlines of the Law of Agency 54, 58 (4th ed 1952).

The position taken by the Restatement is explained in the following comment:

'* * * (This position is) based upon the fundamental theoryof contracts, that is: where one manifests to another that the fundamental theory of contracts, that terms which the other accepts, there is a contract binding upon both parties.In accordance with this basic idea, when a person has made a representation that another is authorized to enter into a particular transaction with a third person and with knowledge of this representation the third person enters into the relation, the situation is precisely the same as if the principal himself had manifested to the third person that he was willing to become a party.'Restatement (Second) of Agency Appendix, Reporter's Notes to § 8, p. 42(1958).²

We find this reasoning persuasive.Accordingly, estoppel was not a necessary element of the plaintiff's case.³Defendant further contends that, because plaintiff did not expressly allege apparent authority in his pleadings, his proof of apparent authority constituted a fatal variance.Whether or not the pleadings sufficiently framed the issue of apparent authority, the conduct of the case reveals that both parties recognized it as the major issue in question.Accordingly, defendant was not prejudiced.ORS 16.360;ORS 16.660.

The petition for rehearing is denied.

1Accord, Tiffany on Agency 39 (2nd Powelled. 1925);W. W. Cook, 'Agency by Estoppel,'5 Colum.L.Rev. 36(1905);Seavey, The Rationale of Agency, 29 YaleL.J. 859, 873(1920).See alsoAnglin v. Marr Canning Co., 152 Ark. 1, 237 S.W. 440(1922);Commercial Credit Co. v. Macht, 89 Ind.App. 59, 165 N.E. 766(1929);Cox, Inc. v. Humble Oil & Refining Co., 16 S.W.2d 285(Tex.Com.App.1929).

2See also, W. W. Cook, 'Agency by Estoppel,'supra at 46:

'1.A person is always bound by his manifested intention.

'2.One may manifest his intention through another person called an agent.

'3.When, by words or acts, fairly interpreted, one has represented to another person or to the world at large that a certain person is his agent vested with certain authority, he has manifested to such other person or the world at large his intention to be bound by the acts of the agent within the scope of the authority thus represented to exist.

'4.Therefore, when the person to whom this manifestation of the intention has been made has acted upon it by coming to an agreement with the agent acting within his apparent authority, the principal is bound because a contract has been entered into between...