Menard, Inc. v. Dage-MTI, Inc. case brief

Menard, Inc. v. Dage-MTI, Inc. case brief summary
726 N.E.2d 1206 (2000)

CASE SYNOPSIS

Appellant challenged the decision Indiana Court of Appeals, which affirmed the LaPorte (Indiana) Circuit Court, which held that appellee was not bound by the actions of its president in agreeing to sell a parcel of land.

CASE FACTS
Appellant corporation offered to purchase 30 acres of land from appellee corporation. Appellee's president accepted the offer in a written agreement in which he represented that he had the authority to bind appellee to the sale. Appellee's board of directors did not approve and refused to complete the transaction. The trial court and the appellate court held in favor of appellee.

DISCUSSION

• The court reversed, holding that the trial court's conclusions of law employed principles of "actual authority" and "apparent authority" when they should have employed principles of "inherent authority." 
• This constituted clear error. 
• The president had inherent authority to bind appellee as he managed appellee's affairs with little or no board oversight, and had purchased real estate for appellee in the past. 
• Appellant reasonably believed that the president was authorized to contract for the sale and purchase of appellee, and appellant had no notice that board approval might be required.

CONCLUSION
Reversed in favor of appellant. Appellee's president had inherent authority to bind appellee, as he operated with little board oversight, and had purchased real estate for appellee in the past. Appellant reasonably believed that the president was authorized to do so, and had no notice that approval might be required.

Recommended Supplements for Corporations and Business Associations Law