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Business Organizations
West Virginia University School of Law
Cowan, Barton Z.

Spring 2010
Prof. Cowan
Jan. 11, 13 pp. 1-41
I. Who is an agent?

Gorton v. Doty p.1
Proc. Hx
· Action commenced by father to recover medical expenses incurred.
· Action by son, with father as guardian ad litem, to recover damages for injuries due to accident.
· Actions consolidated by stipulation for trial
· Jury returned verdict of $870 for father and $5000 for son
· Separate judgments
· A motion for a new trial was made and denied in each case
· The denial of new trial and each judgment were appealed

· Gorton played for school football team.
· Doty taught at school and Garst coached the football team
· Appellant asked Garst the day before the game if he had all the cars necessary for the trip to game the next day
· Garst said he needed one more car
· Appellant told Garst he might use her car if he drove it
· Appellant was not promised, and did not receive any compensation
· The appellant testified she loaned, the car to Garst.
· The appellant did not employ Garst at any time or “direct his work or services or what he was doing”

Issue: was Garst the agent of appellant while driving appellant’s car from Soda Springs to Paris and back to the point where the accident occurred?

Holding: yes, Garst was acting as the agent of the appellant. The evidence does not support the appellant’s contention that she “loaned” her car to Garst.

· Agency: a relationship which exists where one person acts for another.
· Three principal forms: only the first form is applicable here.
1. Principal and agent.
2. Master and servant.
3. Employer/proprietor and independent contractor
Agency is a relationship, which results from the manifestation of;
a. Consent by one person to another that the other shall act on his behalf and subject to his control
b. Consent by the other so to act.
The principal is responsible for the acts of his or her agent.
· Appellant volunteered use of her car
· The purpose was to furnish additional transportation
· Instead of driving the car, appellant designated the driver.
· The appellant thereby consented that Garst asked for her and Garst thereby consented to do so.
1. The existence of authority does not require contract, compensation, or promise.
2. Ownership alone establishes a prima facie case against the owner that the driver is the agent of owner.

Dissent: p.5

· Agency means more than passive permission.
· [agency] involves request, instruction or command.
· Doty simply loaned her car to Garst . . .
· It was nothing more or less than a kindly gesture. . . The mere fact that she said to Garst that he should drive the car (v. anyone else) was a mere precaution upon her part that the car should not be driven by any one of the young boys.
· The rule would seem to be that one who borrows a car for his own use is a gratuitous bailee and not an agent of the owner. (Gochee 178 NE 553)

Jenson Farms v. Cargill p. 7

Proc. Hx:
· Individual, partnership, and corporate farmers brought action against Cargill and Warren grain and seed to recover losses sustained when Warren defaulted on contracts with plaintiff’s for sale of grain.
· Jury found in favor of plaintiffs
· Judgment entered in favor of plaintiffs.
· Cargill appealed
· Affirmed
· Warren purchase grain from local farmers, and resold, stored or reprocessed it and sold it for seed.
· Warren obtained financing from Cargill in 1964.
· Warren and Cargill became more and more enmeshed operationally and financially (Warren was shipping Cargill 90% of its grain by 1976) through1977 when Warren experienced financial collapsed with $3.6m debt to Cargill and $2m debt to plaintiffs.

Issue: did Cargill, by its course of dealing with Warren, become liable as a principal in contracts made by Warren with plaintiffs?

Holding: yes, Cargill by its control and influence over Warren became a principal with liability for transactions entered into by Warren.

· Agency is the fiduciary relationship that results from the manifestation of:
a. Consent by one person to another that the other shall act on his behalf and subject to his control
b. Consent by the other so to act
· Agency requires an agreement between the parties.
a. It is not necessary for the parties to intend for the agreement/relationship to have legal consequences
b. Agency may be proven by circumstantial evidence demonstrating a course of dealing between the parties
c. Circumstantial evidence must show that the principal consented to the agency
d. A creditor who assumes de facto control over the conduct of a debtor (vs. Merely exercising veto power over business acts) may become liable as principal for acts of the debtor in connection with the business.
· Evidence in the instant case: Cargill argued buyer-supplier vs. Agent relationship
1. Cargill m

es and contract p.14
Ø Agents authority
Mill st., Church of Christ, vs. Hogan
Proc Hx:
· Old workers compensation board found Hogan was not an employee of the church and therefore not entitled to benefits
· New workers compensation board reversed
· Church now petitions for review a decision by new workers compensation board

· Bill Hogan, member of the church, was hired to paint the church building.
· Elders discussed hiring Petty to assist with this two-man job but bill Hogan was unaware of this decision.
· Hogan discussed hiring Petty as an assistant with church elder, but was not required to do so and elder acknowledged that Petty was hard to contact.
· Hogan previously had hired his brother Sam to work at the church with church’s knowledge and approval.
· Hogan subsequently engaged his brother, Sam to assist him without knowledge of the church elders
· Sam was injured when a leg of the ladder broke and received medical treatment.
· Bill Hogan reported injury to a church elder and was told that the church had insurance.
· Bill Hogan reported the total number of hours worked, including the work done by Sam, and received payment for those hours.
· The church provided all tools and materials and was an insured employer under the workers compensation act.
· Sam Hogan filed a claim under the workers compensation.

Issue: did bill Hogan have implied authority to hire Sam Hogan?

Holding: yes. Based on circumstantial evidence, especially specific conduct by principal permitting similar powers in the past . And given the other facts outlined above, including the fact that Sam Hogan relied on bill Hogan’s representation. (n.b. See questions – latter not relevant)

· Implied authority: authority, circumstantially proven, which the principal actually intended the agent to possess. Powers practically necessary to carry out the duties actually delegated. Maybe necessary to implement express authority.