Law School Case Brief
AAA Tire & Exp., Inc. v. Big Chief Truck Lines, Inc. - 385 So. 2d 426 (La. Ct. App. 1980)
The concept of apparent authority only comes into play when the agent has acted beyond his actual authority and has no permission whatsoever from his principal to act in such a manner. The principal will be bound for such actions if he has put his agent in such a position or has acted in such a manner as to give an innocent third person the reasonable belief that the agent has authority to act for the principal. The facts and circumstances of each case must be examined to determine the reasonableness of the third party's belief. One must look from the viewpoint of the third person to determine whether an apparent agency has been created. In transactions between businessmen, the nature of the business and the customs and the usages within the trade can be important factors to be considered.
Adam Dixon, the terminal manager for Big Chief Truck's Baton Rouge operation, purchased tires from AAA Tire and Export, Inc. The tires were shipped on credit with no down payment, and invoices were later mailed to Big Chief Truck in Baton Rouge. Payments were due in two monthly installments. About a month later, but before any payment had been made on the first shipment, a salesman at AAA, Taylor, made a second sales call to Dixon, who ordered another batch of tires and tubes. All tires were eventually delivered, but no payments were made. Plaintiff AAA brought suit against defendant Big Chief Truck. On trial, the owner and chairman of the board of Big Chief Truck, Bushong, testified that Dixon had no actual authority to buy tires on behalf of Big Chief Truck. Bushong explained that since Big Chief Truck did not own any trucks, it rarely if ever had the need for tires or tubes to use on the trucks it leased. Hence, the district court dismissed AAA’s complaint. On appeal, AAA argued that Dixon had either actual or apparent authority to buy the tires and that Big Chief Truck was therefore liable for the purchase price.
Did a terminal manager for Big Chief Truck's Baton Rouge operation have either actual or apparent authority to buy tires for Big Chief Truck from AAA Tires?
The court held that Dixon did not have actual or implied consent to purchase the tires because his duties and responsibilities did not include the purchase of tires. The evidence adduced at the trial showed that Big Chief Truck rarely owned its own trucks and, thus, had no need to purchase tires. Neither did Dixon have apparent authority to place the orders. The court noted that the references given by the employee did not pertain to Big Chief Truck. Dixon was the one that did business with the references and if AAA had contacted the references, it would have learned that the references were for Dixon himself, not Big Chief Truck. The judgment was affirmed.
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