Lee v. Jenkins Bros

Brief Fact Summary. Lee, (Petitioner), brought suit against Jenkins Brothers, (Respondent) in order to enforce an oral pension agreement between Petitioner and Yardley, acting in his capacity as president of Jenkins Brothers. Petitioner appeals the trial court judgment in favor of Respondent.

Synopsis of Rule of Law. A president only has the apparent authority to bind his company by acts arising in the usual and regular course of business but not for contracts of an “extraordinary” nature. Whether apparent authority exists is a question of fact.

Facts. In 1919 the Crane Company sold one of its plants to Respondent. Respondent sought to hire Petitioner, the business manager of the Crane Company. Yardley, the President of Respondent Corporation and a substantial stockholder, met with Petitioner to persuade him to join the company. Also present at the meeting was a vice president and his wife. Petitioner was the only surviving witness to the conversation. He testified that he was offered a pension and promised that at the age of 60 he would receive the pension not to exceed $1500 regardless of his status with the company. This agreement was not recorded in writing. Petitioner accepted the position and eventually became vice president, general manager, and director. After twenty-five years with the company, he was discharged at the age of 55. Petitioner who had started out making $4,000 per year was making $33,000 plus a 10% annual bonus.

Issue. Whether as a matter of law Yardley, as the president, chairman of the board, a substantial stockholder, and trustee had no apparent authority in the presence of the company’s most interested vice president to secure for a reasonable length of time, badly needed key personnel by promising an experienced local executive a life pension.

Held. No. Reasonable men could differ as to whether or not Yardley had apparent authority to make the contract.

Discussion. Apparent authority is a question of fact. It depends on the nature of the contract, the circumstances that give rise to the contract, the reasonableness of the contract, the amounts involved, who the contracting party is, the officer negotiating it, the corporation’s usual manner of conducting business, the size of the corporation, the number of its stockholders, and other factors. Assuming there is sufficient proof of the making of the pension agreement reasonable men could differ on the subject of whether or not Yardley had apparent authority to make the contract.