Thursday, November 21, 2013

General Overseas Films, Ltd. v. Robin International, Inc. case brief

General Overseas Films, Ltd. v. Robin International, Inc. case brief summary
542 F. Supp. 684 (1982)

The partied stipulated to submit a case for judgment by the court, in lieu of trial, upon an agreed record where plaintiff film company sought to collect on a loan guarantee that it alleged was provided on behalf of defendant principal company by its agent, the principal's vice president and treasurer, to the film company's producer. The film company claimed that the principal by the agent guaranteed repayment of loans made to a bankrupt company.

The principal argued that the guarantee extended by the agent did not bind the principal because the agent lacked actual or apparent authority to engage in the transaction. The film company conceded that the agent had no actual authority but relied solely on the agent's apparent authority.


  • The court held that the agent lacked apparent authority to engage in the transactions. 
  • Under the law of New York, the circumstances of the transaction known to the film company had to be scrutinized to determine whether it fulfilled its primary "duty of inquiry." 
  • The transaction involved in this case was extraordinary and should have alerted the producer to the danger of fraud. 
  • Because the circumstances surrounding the transaction were such as to put the producer on notice of the need to inquire further into the agent's power and good faith, the principal was not bound. 
  • The evidence failed to establish that the principal through its conduct misled the film company so as to warrant a finding that the agent had "apparent authority" to bind the principal to the guarantee. 
  • The producer's negligence, not the principal's, precipitated the loss.

The court entered judgment for the principal, with costs. The case was closed without prejudice to reopening against the bankrupt company after the stay occasioned by its involuntary bankruptcy proceedings was lifted.

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