B-171802, MAR 2, 1971

B-171802, MAR 2, 1971

AGENCY - BINDING AGREEMENT - RENTAL RATES AUTHORIZING PAYMENT OF CLAIM REPRESENTING THE DIFFERENCE BETWEEN $50 AND $100 PER DAY FOR THE RENTAL OF TWO REFRIGERATED TRUCKS BY THE FOREST SERVICE DISPATCHED TO THE SCENE OF A FOREST FIRE. ALTHOUGH THE DRIVERS OF THE TRUCKS SIGNED RENTAL AGREEMENTS ESTABLISHING A RENTAL RATE OF $50 PER DAY, THEIR ACTS AS AGENTS COULD NOT BIND UNITED BUCKINGHAM TRUCKING COMPANY UNLESS THESE DRIVERS WERE CLOTHED WITH AUTHORITY, IMPLIED OR APPARENT, TO MAKE SUCH CONTRACTS. TRUCK DRIVERS ARE NOT USUALLY AUTHORIZED TO ENTER INTO CONTRACTS AND THERE WERE NO MANIFESTATIONS BY THE PRINCIPAL TO THE THIRD PARTY THAT COULD ESTABLISH AN APPARENT AUTHORITY. THEREFORE, BUCKINGHAM IS NOT BOUND BY THE RENTAL AGREEMENTS AND ITS CLAIM FOR A HIGHER RATE SHOULD BE ALLOWED IF REASONABLE UNDER ALL THE FACTS.

TO MR. KARL J. KELLNER:

YOUR LETTER OF JANUARY 15, 1971 (YOUR REFERENCE 6540), REQUESTS, IN EFFECT, AN ADVANCE DECISION AS TO WHETHER YOU MAY CERTIFY FOR PAYMENT A CLAIM (BILL) IN THE AMOUNT OF $625 FROM THE UNITED BUCKINGHAM TRUCKING COMPANY (UNITED BUCKINGHAM) COVERING SERVICES RENDERED THE FOREST SERVICE, DEPARTMENT OF AGRICULTURE. THE CLAIM REPRESENTS THE DIFFERENCE BETWEEN $50 AND $100 PER DAY FOR THE RENTAL OF TWO REFRIGERATED TRUCKS.

IN CONNECTION WITH THE MATTER, THERE IS FOR CONSIDERATION THE QUESTION OF WHETHER THE GOVERNMENT HAS BINDING CONTRACTS WITH UNITED BUCKINGHAM IN LIGHT OF THE FACTS AND CIRCUMSTANCES HEREINAFTER SET FORTH.

IN AUGUST, 1970 THE FOREST SERVICE REQUESTED THAT UNITED BUCKINGHAM DISPATCH TWO REFRIGERATED TRUCKS TO THE SCENE OF A FOREST FIRE. WHEN THE REFRIGERATED TRUCKS ARRIVED, A RENTAL AGREEMENT WAS SIGNED BY EACH DRIVER, ESTABLISHING THE RENTAL RATE FOR THE TRUCK AT $50 PER DAY. SEVERAL WEEKS LATER, A DISPUTE AROSE AS TO THE AMOUNT OF PAYMENT DUE. THE FOREST SERVICE THEN AGREED TO A DIFFERENT RATE OF PAYMENT, SUBJECT TO FINAL APPROVAL BY HIGHER OFFICIALS OF UNITED BUCKINGHAM. HOWEVER, THESE OFFICIALS REFUSED TO APPROVE THIS AGREEMENT, AND INSISTED UPON A RATE OF $100 PER DAY PER TRUCK - ACCORDING TO UNITED BUCKINGHAM, ITS NORMAL RATE FOR RENTAL OF A REFRIGERATED TRUCK. THE FOREST SERVICE NOW CLAIMS THAT THE RATE OF $50 PER DAY MUST BE APPLIED BECAUSE THE DRIVERS, AS AGENTS, HAD THE AUTHORITY TO BIND UNITED BUCKINGHAM WHEN THEY SIGNED THE AFORESAID RENTAL AGREEMENTS.

AN AGENT'S AUTHORITY TO BIND HIS PRINCIPAL MAY BE EITHER EXPRESS OR IMPLIED. SINCE UNITED BUCKINGHAM CLEARLY CONFERRED NO EXPRESS AUTHORITY UPON ITS DRIVERS TO SIGN THE RENTAL AGREEMENTS, A BINDING CONTRACT CAN ONLY BE FOUND UPON A SHOWING THAT THESE DRIVERS WERE CLOTHED WITH SOME IMPLIED, OR APPARENT AUTHORITY TO MAKE SUCH CONTRACTS. SEE IN THIS CONNECTION RESTATEMENT, SECOND, AGENCY, SECTION 49(B) (1958).

IN LUX ART VAN SERVICE INC. V POLLARD, 344 F. 2D 883 (1965), THE DOCTRINE OF APPARENT AUTHORITY IS THOROUGHLY DISCUSSED. IN REFUSING TO BIND THE PLAINTIFF TO AN AGREEMENT SIGNED BY HIS AGENT, WHICH WOULD HAVE PRECLUDED FULL RECOVERY, THE COURT STATED, AT PAGE 888, THAT APPARENT AUTHORITY ARISES:

" *** FROM THE PRINCIPAL'S NEGLIGENT OMISSION OR HIS ACQUIESCENCE IN THE AGENT'S ACTIVITIES. *** TO APPLY THE RULE OF APPARENT AUTHORITY, THERE MUST THEREFORE BE SOME BASIS FOR WHAT MAY BE LOOSELY TERMED AN ESTOPPEL AGAINST THE PRINCIPAL. AND THIS 'ESTOPPEL' DEPENDS UPON MANIFESTATIONS BY THE PRINCIPAL TO THE THIRD PARTY *** ." THE DOCTRINE IS FURTHER EXAMINED IN FRANK SULLIVAN COMPANY V MIDWEST SHEET METAL WORKS, 335 F. 2D 33 (1964). AT PAGE 40 THEREOF, THE COURT STATES:

"BUT APPARENT AUTHORITY MUST BE FOUNDED ON SOMETHING MORE THAN THE CONDUCT AND STATEMENTS OF THE AGENT HIMSELF. LIABILITY CAN BE IMPOSED UPON A PRINCIPAL ONLY 'FOR THAT APPEARANCE OF AUTHORITY CAUSED BY HIMSELF.' (QUOTING 2 WILLISTON ON CONTRACTS (3D ED. 1960), SEC 277A). *** OF COURSE, A DEGREE OF REASONABLENESS AND OF DILIGENCE IS REQUIRED OF ONE WHO DEALS WITH THE AGENT *** .' THE ABOVE CASE ALSO EMPHASIZES THE ACKNOWLEDGED RULE THAT THE BURDEN OF PROOF LIES WITH THE PARTY ASSERTING THE EXISTENCE OF THE AGENCY.

THE RECORD BEARS NO INDICATION WHATSOEVER THAT UNITED BUCKINGHAM EVER MANIFESTED AN INTENTION TO AUTHORIZE ITS DRIVERS TO ENTER INTO BINDING RENTAL CONTRACTS ON ITS BEHALF. WHILE TRUCK DRIVERS MAY ROUTINELY SIGN SHIPPING DOCUMENTS ACKNOWLEDGING SUCH THINGS AS RECEIPT AND DELIVERY OF GOODS, IT DOES NOT SEEM REASONABLE TO ASSUME, WITHOUT SPECIFIC VERIFICATION, THAT THEY ARE AUTHORIZED TO ENTER INTO CONTRACTS - SETTING RENTAL RATES - ON BEHALF OF THEIR EMPLOYERS. APPARENTLY, THE FOREST SERVICE DEPENDED SOLELY UPON THE REPRESENTATIONS OF UNITED BUCKINGHAM'S AGENTS, AND MADE NO ATTEMPT TO CONFIRM THEIR AUTHORITY BY CONTACTING THE PRINCIPAL. EVEN IN AN EMERGENCY SITUATION, REASONABLE DILIGENCE WOULD SEEM TO REQUIRE THAT ONE TELEPHONE CALL BE MADE UNDER SUCH CIRCUMSTANCES. TO HOLD A PRINCIPAL LIABLE FOR ACTS OF ITS AGENTS WHICH ARE BEYOND THE SCOPE OF THEIR AUTHORITY, AND NOT REASONABLY ASSOCIATED WITH THEIR REALM OF RESPONSIBILITY, WOULD BE UNJUST. FURTHERMORE, THE FACT THAT FOREST SERVICE OFFICIALS NEGOTIATED WITH UNITED BUCKINGHAM TO DECIDE UPON A PROPER RATE, AFTER THE RENTAL AGREEMENTS WERE SIGNED, INDICATES THAT THEY THEMSELVES DID NOT RECOGNIZE THE AGREEMENTS AS BINDING CONTRACTS.

IN LIGHT OF THE FOREGOING IT IS OUR VIEW THAT THE GOVERNMENT HAS NOT CARRIED ITS BURDEN OF SHOWING THAT THE ALLEGED AUTHORITY - OF THE DRIVERS TO AGREE TO THE RENTAL RATES - EXISTED. CONSEQUENTLY, UNITED BUCKINGHAM IS NOT BOUND BY THE SUBJECT RENTAL AGREEMENTS.

ACCORDINGLY, YOU MAY CERTIFY THE UNITED BUCKINGHAM CLAIM FOR PAYMENT, PROVIDED IT IS ADMINISTRATIVELY DETERMINED THAT THE RENTAL CHARGE OF $100 PER DAY FOR EACH OF THE REFRIGERATED TRUCKS IS REASONABLE UNDER ALL THE FACTS AND CIRCUMSTANCES.

THE CLAIM OF UNITED BUCKINGHAM IS RETURNED HEREWITH.