Minniti v. Cascade Emp. Ass'n, Inc.

• Decision Date: 08 November 1977
• Citation: 570 P.2d 1171,280 Or. 319
• Parties: Joseph J. MINNITI, Appellant, v. CASCADE EMPLOYERS ASSOCIATION, INC., an Oregon Corporation, and Alfred P. Blair, Respondents.
• Court: Oregon Supreme Court

Page 1171

570 P.2d 1171

280 Or. 319

Joseph J. MINNITI, Appellant, v. CASCADE EMPLOYERS ASSOCIATION, INC., an Oregon Corporation and Alfred P. Blair, Respondents.

Supreme Court of Oregon, Department 2.

Argued and Submitted Sept. 14, 1977.

Decided Nov. 8, 1977.

[280 Or. 320-A] M. Chapin Milbank, of Schlegel, Milbank, Wheeler, Jarman & Hilgemann, Salem, argued the cause and filed the brief for appellant.

William B. Wyllie, Salem, argued the cause and filed the brief for respondent Alfred P. Blair.

Edward L. Clark, Jr., of Clark, Marsh & Lindauer, Salem, argued the cause for respondent Cascade Employers Association, Inc. With him on the brief was Ronald J. Williams, Salem.

Before DENECKE, C. J., and TONGUE, BRYSON and LENT, JJ.

TONGUE, Justice.

This is an action for damages for breach of a contract entered into by plaintiff and defendant Blair, as manager of defendant Cascade Employers Association, Inc. The case was tried to the court, without a jury.

Plaintiff appeals from the granting of an involuntary nonsuit in favor of Cascade at the conclusion of plaintiff's case based upon a finding that there was not sufficient evidence that Blair had either actual or apparent authority to sign the contract. Plaintiff also appeals from a subsequent judgment in favor of defendant Blair based upon a finding that plaintiff had failed to prove his case against Blair by a preponderance of the evidence.

The evidence offered by plaintiff on issue of the authority of defendant Blair to enter into the contract with plaintiff.

Defendant Cascade Employers Association, Inc., is an association of employers organized for the purpose of handling problems of labor relations on behalf of its various employer members. Mr. Blair was the founder of the corporation and its general manager for many years. There was also evidence that Blair, as general manager, had authority to hire and fire employees of Cascade. Mr. Blair was also a recognized expert in the field of labor relations and, as such, represented the Association and its employer members in various matters. One such matter involved the making of arrangements for group life, accident and health insurance and pension plans for employees of employer members of Cascade.

As of January 1, 1961, plaintiff was engaged by defendant Cascade as its insurance broker for all such insurance programs. In a letter confirming that agreement dated January 28, 1961, it was expressly stated that "any commission contracts with any insurance company or companies are to be on a nonvested basis." That letter was signed by Mr. Blair as secretary-treasurer of Cascade.

Plaintiff testified that at that time he was told by Mr. Blair that he would not give plaintiff a vested contract because of previous problems under such a contract and "until such time as I could prove that I would add business on the books."

In August 1968, after performing since 1961 under that contract, plaintiff prepared a proposed new contract, to become effective September 1, 1968, on a one-page mimeographed form which provided, among other things, that "(c) ommissions and/or fees shall be on a vested basis." ¹ Plaintiff testified that he signed that proposed contract on August 31, 1968, and gave it to Mr. Blair for his signature.

Plaintiff testified that at that time Mr. Blair was going to a meeting of the board of directors of Cascade in Portland; that Blair "wanted to take it to the Board"; that plaintiff asked Blair if he would "like me to go to the board meeting with him," but that Blair said that "I should not be present to inhibit any discussion they might want with regard to this contract," and that he "understood it was a matter for discussion and consideration by the board."

Plaintiff also testified that on November 19, 1968, he asked Mr. Blair "what the disposition * * * of this contract had been at the previous board meeting"; that he was then told by Blair that "it was approved," and that Mr. Blair then signed the contract in his presence on that date.

Mr. Blair testified, when called by plaintiff as an adverse witness, that when he was later asked by Mr. Burke, his successor, in 1973 about the 1968 contract he had no recollection of ever signing it, but that on November 17, 1968 (the date of his signature), he had asked the office manager to bring in "any papers that may need my signature" and that "numerous papers were brought in, routine matters" which he then signed. He testified, however, that he would not have signed that contract if he had known what he was signing and if his attention had been called to its contents because there had been previous difficulty with another broker over vested commissions and that "anything pertaining to a contractual relationship of this type would have to be approved by the board," not because Mr. Blair had no such authority, but because "it was the way I elected to do it," as "the best way to do business."

In fact, that contract was not then approved by the Cascade board of directors. Plaintiff, however, continued to act as insurance broker for Cascade and also performed other duties as an employee of Cascade until September or October 1972, when he was terminated as an employee, and continued to receive commissions from insurance companies under arrangements previously made by plaintiff directly with them.

There was no evidence that prior to 1973 the Cascade board of directors, or any of its members, knew that plaintiff had a contract providing for commissions on a vested basis. At a directors' meeting in December 1972 reference was made to the fact that plaintiff had a contract "for all insurance matters with Cascade" with a provision for automatic renewal, but there is no evidence that the "vesting" feature of the contract was disclosed to the board or discussed by it at that time.

By that time Mr. Blair was no longer general manager of Cascade. In March 1973 Mr. Burke, the new manager, was informed by plaintiff that he had a "vested" commission contract. As previously stated, Mr. Burke then talked to Mr. Blair, who at first denied signing any such contract, but later admitted that the signature on the contract was his and said that he must have signed it with other routine papers without knowing what it was.

Mr. Blair also testified that when Mr. Burke told him in 1973 about the 1968 contract he told Mr. Burke that there should be a "Joe Minniti file in the office"; that there was such a file when Mr. Blair left Cascade, but that when they looked for that file in 1973 they could not find it. Mr. Burke also testified that he was unable to find either a signed or unsigned copy of the contract in the files of Cascade.

By letter dated April 9, 1973, plaintiff was informed by Mr. Burke that the contract "shall be terminated in accordance with the terms set forth in the agreement in connection with cancellation of the agreement," as of September 1, 1973. On May 2, 1973, Cascade notified the various insurance companies to stop payment of commissions to plaintiff, which they did. Plaintiff then brought this action for the resulting damage to him.

There was substantial evidence to support the judgment in favor of defendant Blair.

We consider first plaintiff's contention that the trial court erred in entering judgment in favor of defendant Blair.

Plaintiff's action against defendant Blair was based upon the following allegation of his complaint:

"Defendant, Alfred P. Blair, at all times material herein was manager and an officer of defendant corporation. Defendant Blair represented to plaintiff that he had the authority to execute Exhibit 'A' herein on behalf of defendant corporation and plaintiff relied upon said representation."

Plaintiff's theory of recovery against defendant Blair is stated in his brief as follows:

"An agent who misrepresented the existence of capacity of his authority may be liable to the other party to a contract made by him on account of the purported principal. * * * "

The requirements for an action against an agent for misrepresentation of his authority to make a contract on behalf of his principal are stated in Restatement of Agency 2d § 330 (1958), as follows:

"A person who tortiously misrepresents to another that he has authority to make a contract, conveyance, or representation on behalf of a principal whom he has no power to bind, is subject to liability to the other in an action of tort for loss caused by reliance upon such misrepresentation." (Emphasis added)

The trial court, after hearing testimony offered by both parties, made the following finding of fact:

" * * * (P)laintiff has failed to establish his case by a preponderance of the evidence * * *."

Plaintiff contends that there was no substantial evidence to support such a judgment based upon such a finding because the admitted signature of defendant Blair upon the 1968 contract was of itself a representation that he had authority to do so thereby raising statutory presumptions under ORS 41.350(3) and (4) which were not overcome by Blair's testimony claiming that he was acting under mistake when he signed the contract. ²

We do not believe that either ORS 41.350(3) or (4) is controlling in this case. The 1968 contract, by its terms, does not include a "recital" of any representation by Blair that he was authorized to sign that contract. Neither is the evidence conclusive that Blair "intentionally and deliberately led (plaintiff) to believe" that he had authority to do so.

It may be that Blair's signature on the 1968 contract as general manager was sufficient evidence to support a finding that he thereby represented to plaintiff that he had authority to do so, if uncontradicted. But there was also evidence from which the trial court could have properly found that Blair made no representation that he had authority to sign the contract.

Thus, plaintiff admitted that when he first asked Blair to sign the contract, he was told that Blair wanted to take it to the...