Saturday, May 17, 2014

Rowen & Blair Elec. Co. v. Flushing Operating Corp. case brief summary

Rowen & Blair Elec. Co. v. Flushing Operating Corp. (Mich. 1976) [Special Agent]
o   Facts
§  Flushing leased DT property and agreed to expend the sum of $45k for improvements thereon (which I guess DT was free to spend as a “special agent”)
§  DT then hired plaintiff to perform work (and eventually went bankrupt and couldn’t pay). So, plaintiff went after Flushing (the principal)
§  At some point Flushing sent DT its final check (b/c it hit the $45k limit) and it wasn’t until after this point that DT started incurring debts to plaintiff.
·         Plaintiff did not know of Flushing (the principal) was the owner of the building until it asserted a lien on the property later
o   Holding
§  The agency was limited to an expenditure of $45k for all improvements, alterations, and additions. Thus, the mechanic’s lien asserted by Plaintiff against Flushing (the principal) was limited to such and since the debts claimed by plaintiff arose after this limit was reached per the contract, PLAINTIFF CANNOT RECOVER FROM FLUSHING.
§  As principal and lessor, Flushing lien liability on the contract between DT and plaintiff is limited to the portion made by DT within the scope of its agency.
o   Reasoning
§  In this case Dutch was acting as a special agent to an undisclosed principal.
·         A special agent can bind an undisclosed principal only with contracts made within the scope of his authority. Restatement (Second) of Agency § 195A

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