Sinclair v. Town of Bow

• Decision Date: 10 August 1984
• Docket Number: No. 83-120,83-120
• Parties: Arthur SINCLAIR v. TOWN OF BOW.
• Court: New Hampshire Supreme Court

Page 173

480 A.2d 173

125 N.H. 388

Arthur SINCLAIR v. TOWN OF BOW.

No. 83-120.

Supreme Court of New Hampshire.

Aug. 10, 1984.

Tardif, Shapiro & Cassidy, Concord (R. Peter Shapiro, Concord, on the brief and orally), for plaintiff.

Upton, Sanders & Smith, Concord (Russell F. Hilliard, Concord, on the brief and orally), for defendant.

BROCK, Justice.

The plaintiff, Arthur Sinclair, brought an action for breach of contract against the defendant, the Town of Bow (town). He alleged that the town failed to carry out an agreement, entered into by the administrative assistant to the town's board of selectmen, for the sale to the plaintiff of 386 silver commemorative coins.

After a trial in Superior Court (Cann, J.), the jury awarded the plaintiff damages. The town appealed, on the stated ground that the trial court should have granted the town's motion for a directed verdict. The town argues that the evidence presented at trial could not support a finding that the administrative assistant had authority to enter into a binding contract for the sale of the coins in question. We reverse.

In 1975, the plaintiff was appointed to a committee planning the observance of the town's 250th anniversary, which was to take place in 1977. The plaintiff is a coin collector, and he proposed that the town authorize the minting of coins (actually medallions, since they are not legal tender) to commemorate both the town's anniversary and the bicentennial of the American Revolution.

The coins were minted and sold throughout 1976 and 1977 under the plaintiff's direct supervision. He arranged for the printing of articles in two newspapers, announcing that pewter, bronze, silver and gold-plated coins were available, and that orders should be sent directly to him.

The articles also announced "a limit of two per order" on the sale of silver coins. The plaintiff testified that he set this limit because he believed that the coins would be in great demand, and he wished to prevent the "possibility of a lot of people in town not being able to buy one, because somebody else could come in and hoard the market, so to speak." The silver coins were priced at $15 each.

In fact, the coins sold poorly. The plaintiff continued to sell the coins from his house, and on occasion sold as many as five silver coins to one person. In December 1977, the plaintiff accounted to the town for the coins sold up to that time, and turned over all the unsold coins. Throughout the next two years, the town's selectmen considered several proposals for disposing of the coins, but refused to sell them for less than their original list prices.

The coins were still offered for sale at the town offices. The town advertised the sale through a sign in the offices, as well as in the town's annual report. Neither of these notices contained any mention of a per-order limit on silver coins. The uncontradicted evidence indicated that in practice, however, all requests for bulk sales were referred to the selectmen.

In early 1979, the director of a non-profit organization requested the town's assurance that it would sell him coins at the original price, as long as the supply lasted, for resale through his organization. The administrative assistant referred this request to the selectmen. They agreed to sell the coins at the original prices, with no mention of a limit, but stated: "We would want to reserve the right to sell some of the medallions to local people if they ask for them at the same price." It is not clear how many coins the organization actually purchased.

Toward the end of 1979, the price of silver bullion began to increase substantially. By January 14, 1980, it had risen to more than $40 per troy ounce. The plaintiff was aware of this, and he also knew that each silver commemorative coin contained nearly a full troy ounce of pure silver.

On January 14, 1980, the plaintiff went to the town offices carrying $2,000 in cash. Because the secretary who normally handled coin sales was absent due to illness, the plaintiff dealt only with the administrative assistant, Walter Jones.

The plaintiff offered to buy the remaining silver coins for the listed price of $15 each, and asked how many were left. Mr. Jones said that he could not be certain, but that his records indicated 386 silver coins remaining. The plaintiff again offered to buy all the coins, paying $2,000 immediately and the balance on receipt of the coins.

There was conflicting evidence regarding the rest of the conversation. The plaintiff testified to this effect: Mr. Jones said he could not give the plaintiff any coins that day because they were in a safe to which he did not have access. Mr. Jones then wrote out a "bill of sale" acknowledging receipt of $2,000 from the plaintiff as a "deposit" toward the purchase of 386 silver coins, and adding: "Balance of $3,790 payable on delivery of coins." At this point, Mr. Jones telephoned the chairman of the board of selectmen and told him that he had a buyer for the silver coins at $15 each. After the call was completed, the plaintiff left the office.

Mr. Jones testified to the following effect. He could not recall telling the plaintiff that the coins were in a safe; in fact, they were in a locked closet to which he did have access. He did not give the plaintiff any coins because "I did not have that authority"; but he did not say anything to the plaintiff about his lack of authority, nor did the plaintiff ask about it. He called the chairman before writing the bill of sale, to ask if he had any objection to a bulk sale of all the remaining silver coins for $15 each. When the chairman said he had none, Jones then wrote out the bill of sale and the plaintiff left.

Within an hour of the plaintiff's departure, Sara Swenson, another member of the three-member board of selectmen, entered the office, and Mr. Jones asked her if she objected to one person's purchasing all the coins. Unlike Mr. Jones and the chairman, Mrs. Swenson knew of the recent rise in the price of silver. She did object to the sale, as later did the third member of the board.

At their regular meeting that evening, the selectmen voted to offer the coins for sale to the general public at the old price, but with a limit of five coins per order. The plaintiff's $2,000 was returned to him, over his objection.

This suit followed, with the plaintiff claiming damages in the form of lost profits from his inability to resell the coins. After denying the town's motion for a directed verdict, the trial court instructed the jury that they should find for the plaintiff if Mr. Jones had actual authority or apparent authority to sell him the coins. The jury found for the plaintiff and awarded damages based on a resale price of $40 per coin. The town appealed.

Our analysis begins with the rule that anyone dealing with an agent of a municipal corporation is "bound to ascertain the nature and extent of his authority," Smith v. Epping, 69 N.H. 558, 560, 45 A. 415, 416 (1899), and that consequently a plaintiff "who relied upon the government official's unauthorized conduct or statements cannot be deemed to have been injured by the government." City of Concord v. Tompkins, 124 N.H. 463, ---, 471 A.2d 1152, 1156 (1984); see generally 1A C. Antieau, Municipal Corporation Law § 10.26 (1984). The effect of the rule is to exclude local (and other) governments from application of the doctrine of "apparent authority."

Under that doctrine, a principal is liable for the unauthorized acts of his agent, if "the principal has either so conducted his business as to give third parties the right to believe that the act in question is one he has authorized his agent to do, or that it is one agents in that line of business are accustomed to do." Davison v. Parks, 79 N.H. 262, 263, 108 A. 288, 289 (1919). The doctrine "rests on the general principle of estoppel by which one who has given a false appearance to a situation is barred from denying the falsity." Reed v. Linscott, 87 N.H. 139, 140, 175 A. 240, 241 (1934).

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