Hoddeson v. Koos Bros.

Superior Court of New Jersey, Appellate Division · 1957 · Corporations

CorporationsAgencyApparent AuthorityEstoppelMerchant Liabilityagencyapparent authorityagency by estoppel

Facts

Mrs. Hoddeson went to defendant's furniture store to buy bedroom furniture and a mirror and was assisted for 30 to 40 minutes by a man who acted like a salesman, knew the location and prices of the items, and took $168.50 in cash without giving a receipt. Defendant's records later showed no sale to her and no receipt of the money, and defendant contended the man was an impostor rather than its employee. Mrs. Hoddeson and her aunt could not positively identify the man among defendant's regular salesmen, though they thought one salesman resembled him; defendant's records indicated that salesman was on vacation. The jury found for plaintiffs on the theory that the money had been paid to an employee of defendant.

Issue

Was there sufficient evidence to support liability against defendant on plaintiffs' contract theory by proving that the man who received the money was defendant's agent or employee, either actually or through apparent authority? If not, should the case nevertheless be remanded for a new trial so plaintiffs may pursue a different theory based on defendant's failure to prevent an impostor from posing as its salesman?

Rule

A party seeking to impose contractual liability on an alleged principal for the act of an alleged agent bears the burden of proving the agency relationship. Agency may be shown by express authority, implied authority, or apparent authority, but apparent authority must arise from the manifestations of the alleged principal, not solely from the acts or representations of the supposed agent. Separately, where a proprietor's lack of reasonable surveillance and supervision enables a non-agent conspicuously to act as an agent in the proprietor's place of business, and the appearance would lead a person of ordinary prudence to believe the impostor is the proprietor's agent, the proprietor may not deny liability for the customer's resulting loss.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In a cookware showroom in Columbus, Nora Levin was approached by a man in plain clothes who said he could help her place an order. He led her directly to the models she wanted, quoted the correct prices, accepted cash, and disappeared; the store later denied he worked there. Nora sues the store on a contract theory, relying only on his confident sales conduct.

Which is the strongest argument for the store under the governing rule?

Explanation. On a contract claim against an alleged principal, the plaintiff bears the burden of proving agency. Apparent authority must be created by the principal’s words, conduct, or other manifestations, not solely by the supposed agent’s behavior. The man’s knowledge of inventory and prices is not enough by itself.