Lynch v. Helm Plumbing and Electrical, WD 60472.

• Decision Date: 01 October 2002
• Docket Number: No. WD 60472.,WD 60472.
• Citation: 108 S.W.3d 657
• Parties: Kathleen LYNCH, Appellant, v. HELM PLUMBING AND ELECTRICAL CONTRACTORS, INC., Respondent.
• Court: Missouri Court of Appeals

Page 657

108 S.W.3d 657

Kathleen LYNCH, Appellant, v. HELM PLUMBING AND ELECTRICAL CONTRACTORS, INC., Respondent.

No. WD 60472.

Missouri Court of Appeals, Western District.

October 1, 2002.

Rehearing Denied November 26, 2002.

Dennis J. Owens, Kansas City, for Appellant.

James Charles Johns, Clinton, for Respondent.

PAUL M. SPINDEN, Judge.

This case concerns an agent's authority to bind his principal. Kathleen Lynch appeals the circuit court's judgment ordering her to pay $19,566 in damages to Helm Plumbing and Electrical Contractors, Inc. The damages were to compensate Helm for the loss caused by Lynch's demand that it relocate a water pipe. Helm originally placed the pipeline outside the city's easement and across Lynch's property, in a location authorized by Lynch's agent. Because Lynch's agent possessed authority sufficient to bind Lynch, we affirm the circuit court's judgment.

The dispute involves Lynch's motel in Windsor. Lynch employed Edward Smiles primarily as the motel's gardener and housekeeper, but he occasionally served in other capacities.

Helm laid the pipeline in fulfillment of its contract with Windsor's municipal government. City officials gave Helm engineering drawings that indicated that the pipeline was to run between Lynch's motel sign and the roadway alongside a gas pipeline. This area between the sign and the road was south of the sign and north of the road.

Before laying the pipe across Lynch's property, Helm met with Lynch and Smiles to discuss where to put the line. Helm was concerned that the gas line and the motel sign would interfere with Helm's putting the line in the proposed location. Lynch and Smiles wanted to protect the sign, which sat on a concrete base that extended into the ground, so they discussed alternative locations for the pipeline. Smiles, in Lynch's presence and with her acquiescence, actively participated in the discussion by voicing opinions and suggestions.

Helm later met with representatives from the city and the project engineer's office at Lynch's motel to discuss where to put the water line. They discussed removing the sign and going around it. Smiles saw them and joined in their discussion. Lynch was not present.

During the meeting, Smiles produced two maps, one of which indicated that the city's easement was approximately 19½ feet wider than Helm had believed it was. Smiles allowed the others to copy the maps. Smiles claimed that, despite his producing the maps, he never gave permission to place the water line in an area between the sign and the motel — that is, north of the sign. He admitted that during this meeting he authorized Helm to put the pipeline underneath the motel's paved driveway, but maintained that he insisted that the pipeline be no closer to the motel than the sign's northernmost edge. Helm presented contradicting evidence.

After the meeting, Helm bored under the surface and across Lynch's property. The hole for the pipeline was within the additional 19½ foot area indicated on the maps produced by Smiles, specifically about four feet north of the motel sign — between the sign and the motel and underneath the paved driveway. Neither Lynch nor Smiles objected to this location until Helm began installing the pipe and a portion of the motel's driveway heaved up several feet north of the motel sign, and a brown, gooey substance percolated to the surface.

The damage to the driveway and trees and plantings upset Lynch. She ordered Helm to remove the line and to place it according to original plans. Helm complied at the loss of $19,566 that had already been expended.

Lynch sued Helm, seeking recovery for damage done to her land by Helm's alleged trespass.¹ Helm counterclaimed and sought recovery of its costs and expenses on the grounds of promissory estoppel, negligent misrepresentation, and breach of contract. After hearing the matter, the circuit court entered judgment for Helm on both the petition and Helm's counterclaims.

In this appeal, Lynch raises two points. First, she contends that the circuit court's judgment is contrary to agency law in that Smiles did not possess authority to represent her in negotiations with Helm. Second, she claims that the circuit court erred in granting damages on all three counts of Helm's counterclaim.

In reviewing the circuit court's judgment, entered without benefit of a jury, we will affirm it unless it is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We give the prevailing party the benefit of all favorable inferences to be drawn from the evidence and disregard evidence and inferences to the contrary. Ewing-Cage v. Quality Productions, Inc., 18 S.W.3d 147, 149-50 (Mo.App.2000). When the circuit court does not make findings of fact, we deem it to have found all facts in accordance with the result. Rule 73.01(c); Weaks v. Rupp, 966 S.W.2d 387, 392 (Mo. App.1998).

Viewing the facts in accord with the circuit court's judgment, we conclude that the circuit court found that Lynch was holding Smiles out as her agent, and that Smiles granted Helm permission to install the line in the 19½-foot area extending north of the motel sign.

Lynch does not challenge the circuit court's finding that Smiles was her agent. She contends, however, that she is not responsible for Smiles' acts because he acted without authority.

She is correct that Smiles' status as an agent does not, of itself, vest Smiles with the power to bind Lynch. A principal is responsible for the acts and agreements of her agent, but only if the agent acts with actual authority — which may be express or implied — or with apparent authority. Nichols v. Prudential Insurance Company of America, 851 S.W.2d 657, 661 (Mo.App.1993). In addition to expressed terms, actual authority can be created by the principal's conduct in those instances in which a reasonable person would interpret the principal to have desired the agent to act on the principal's behalf. See Cook v. Polineni, 967 S.W.2d 687, 691 (Mo. App.1998); RESTATEMENT (SECOND) OF AGENCY § 26 (1957).

Even in the absence of actual authority, an agent's acts may be binding on the principal if performed with apparent authority. "Apparent authority is authority which a principal, by its acts or representations, has led third persons to believe has been conferred upon an agent[.]" Stitt v. Raytown Sports Association, Inc., 961 S.W2d 927, 932 (Mo.App. 1998) (quoting Link v. Kroenke, 909 S.W.2d 740, 745 (Mo.App.1995)). To establish apparent authority a party must show: "(1) the principal manifested his consent to the exercise of such authority or knowingly permitted the agent to assume the exercise of such authority; (2) the person relying on this exercise of authority knew of the facts and, acting in good faith, had reason to believe, and actually believed, the agent possessed such authority; and (3) the person relying on the appearance of authority changed his position and will be injured or suffer loss if the transaction executed by the agent does not bind the principal." Link, 909 S.W.2d at 745. Any reliance by the third party must be reasonable. Graue v. Missouri Property Insurance Placement Facility, 847 S.W.2d 779, 783 (Mo. banc 1993).

Helm changed its position and will be injured or suffer loss if Smile's actions are not deemed to be binding on Lynch. Helm had to relocate the line at significant added expense. Likewise, it is clear that Helm relied on Smile's exercise of authority and actually believed he possessed such authority; he structured his own conduct in accordance with such reliance and belief. Thus, we need only determine whether Lynch manifested her consent to or permitted Smiles to exercise authority, and whether Helms, acting in good faith, reasonably had reason to believe that Smiles possessed such authority.

Generally, any conduct by the principal which, if reasonably interpreted, would cause a third person to believe that the principal consents to the acts of the agent is sufficient to create apparent authority. Century Financial Services Group, Ltd. v. First Bank, 996 S.W.2d 92, 94 (Mo.App.1999); Earl v....