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Jennings v. Pittsburgh Mercantile Co. - 414 Pa. 641, 202 A.2d 51 (1964)

Rule:

Apparent authority is defined as that authority which, although not actually granted, the principal (1) knowingly permits the agent to exercise or (2) holds him out as possessing.

Facts:

Pittsburgh Mercantile Company (Mercantile), represented by its vice-president, Frederick A. Egmore, asked Dan R. Jennings, a Pittsburgh real estate broker, to solicit offers for a sale and leaseback of Mercantile’s property and promised a commission if an offer was accepted. Jennings presented three offers to the Mercantile, the third of which came close to the original terms. Jennings alleged that Egmore’s initial statement that the executive committee had approved the third offer, which was communicated to Jennings by the company's financial consultant, constituted acceptance of the offer, although within a week, Egmore directly told Jennings that the offer had been rejected. Mercantile refused to pay the Jenning’s bill for the commission. The lower court entered a verdict for Jennings and the investment consultant and denied the Mercantile's motion for a new trial or judgment notwithstanding the verdict (JNOV).

Issue:

Was there sufficient evidence upon which the jury could conclude that Pittsburgh Mercantile Company clothed its vice-president as its agent with the apparent authority to accept an offer for the sale and leaseback, thereby, binding it to the payment of the brokerage commission?

Answer:

No.

Conclusion:

The Court reversed the decision of the trial court and held that Mercantile was entitled to a JNOV because the evidence was insufficient to establish that the vice-president had apparent authority to accept an offer for the sale and leaseback of Mercantile's property, an extraordinary transaction. According to the Court, an agent cannot, simply by his own words, invest himself with apparent authority. Such authority would emanate from the actions of the principal and not the agent.

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