Potomac Leasing Co. v. Thrasher

• Decision Date: 26 February 1987
• Docket Number: No. 73520,73520
• Citation: Potomac Leasing Co. v. Thrasher, 354 S.E.2d 210, 181 Ga.App. 883 (Ga. App. 1987)
• Parties: POTOMAC LEASING COMPANY v. THRASHER.
• Court: Georgia Court of Appeals

Page 210

354 S.E.2d 210

181 Ga.App. 883

POTOMAC LEASING COMPANY v. THRASHER.

No. 73520.

Court of Appeals of Georgia.

Feb. 26, 1987.

Gary D. Stokes, Carter L. Stout, Atlanta, for appellant.

Howard T. Scott, Bradley S. Wolff, Athens, for appellee.

CARLEY, Judge.

Appellant-plaintiff Potomac Leasing Company is in the equipment leasing business. It does not, however, directly employ any leasing agents. Instead, appellant operates in the following manner: Salesmen, who are themselves actually employed by manufacturers or distributors of products, are provided with blank copies of appellant's leasing documents and are instructed with regard to how those documents are to be filled out. When a salesman visits a potential customer for his particular product, in addition to being authorized by his employer to negotiate a direct purchase, he is also authorized by appellant to negotiate a lease of the product to the customer. In connection with the customer's lease of a product, the salesman will fill in appellant's documents with the relevant information, secure the customer's signature, and send the completed documents to appellant. If appellant accepts the lease as negotiated by the salesman of the product, appellant will purchase the product from the salesman's manufacturer or distributor. Appellant then receives the stipulated monthly rental from the customer.

Appellee-defendant was visited by a salesman who was directly employed by Omni Specialty Equipment Company (Omni). As the result of this visit, appellee did not purchase any equipment from Omni, but he did sign one of appellant's lease contracts, whereby he agreed to rent an Omni ice cream machine. The lease of the equipment that Omni's salesman negotiated with appellee was sent to and accepted by appellant. Appellant then purchased the equipment from Omni and began to receive monthly rental payments from appellee. Shortly thereafter, appellee, asserting that the equipment had failed to perform as it had been represented by the Omni salesman, ceased to make rental payments and attempted the tender of the equipment back to appellant. Appellant refused the tender of the equipment and initiated this action to recover the balance due under the terms of the written lease agreement negotiated by the Omni salesman. Appellee answered and included among his defenses fraud in the inducement of the lease.

The case came on for trial before a jury and, after appellant's motion for a directed verdict was denied, a jury verdict in favor of appellee was returned. Appellant appeals, its sole enumeration being that the trial court erred in denying its motion for a directed verdict.

1. "A principal who accepts a contract procured by fraudulent conduct of an agent, regardless of such agent's authority, is bound by such fraudulent conduct of the agent in procuring such contract." W.T. Rawleigh Co. v. Kelly, 78 Ga.App. 10(2b), 50 S.E.2d 113 (1948). One ground of appellant's motion for directed verdict in the trial court was that no misrepresentations made by the Omni salesman concerning the ice cream machine could be attributed to it because, as a matter of law, the salesman was not its agent. In this regard, appellant relied upon its witness' denial of the existence of such a relationship and upon the following provision of its written lease agreement: "Neither [the] Vendor[, Omni,] nor any salesman is an agent of [appellant] nor are they authorized to waive or alter the terms of this lease. Their representations shall in no way affect [appellee's] or [appellant's] rights or obligations as herein set forth."

The denial by appellant's witness of an agency relationship and the language in appellant's lease document that the Omni salesman did not occupy the status of its agent are not necessarily conclusive as to the non-existence of such a relationship. The applicable legal principle is merely that such denials on the part of appellant "must be received as evidence of a fact which [can]not be overcome by bare assertions by a third party not supported by facts. [Cits.]" Stewart v. Ga. Mut. Ins. Co., 159 Ga.App. 91, 93(1), 282 S.E.2d 728 (1981). As proof of the existence of an agency relationship in the case sub judice, appellee did not merely rely upon bare assertions unsupported by facts. Here, as in ADBE Distrib. Co. v. Hun. East Credit Corp., 156 Ga.App. 787, 788-789(1), 275 S.E.2d 347 (1980), the evidence that an agency relationship existed between appellant, as the lessor, and the Omni salesman, as its leasing agent, was sufficient, notwithstanding any assertion by appellant to the contrary.

Appellant attempts to analogize the existing circumstances to that wherein a car salesman, who is directly employed by a dealership and who has misrepresented an automobile to a prospective purchaser, also assists the customer to secure the necessary financing for the purchase through the extension of credit by an entity other than the dealership. In those circumstances, the alleged fraudulent conduct of the salesman occurred in connection with the initial sale of the product itself, not the subsequent financing. The defrauded customer's legal remedies are thus assertable only against the car dealership, as the salesman's principal in the underlying sale, rather than against the financing entity, whom the salesman may have represented in the subsequent extension of credit to the customer. In this case, however, there was no sale of equipment to appellee by Omni and no extension of credit by appellant to appellee. Rather than the two-step process involved in a credit sale, the Omni salesman was authorized either to sell his employer's product to a customer or to negotiate a lease from appellant. Appellee was not privy to appellant's purchase of the equipment from Omni. Appellee merely entered into a lease of Omni equipment directly with appellant. In these circumstances, appellee's legal remedies with regard to fraudulent inducement of the lease are assertable against appellant, as the...