Biggs, Adams and James Rosen, Circuit Judges.
Reading Company appeals from a non-jury verdict in favor of defendant American Dredging Company. The trial, by agreement of the parties and consent of the trial judge, was limited to issues of liability. By stipulation of counsel final judgment was entered on American's counterclaim against Reading in the amount of $12,633.39 plus taxable costs.
Reading filed a libel in rem and in personam against Dredge Delaware Valley and American for an alleged negligent breach of contract. Reading owned and controlled Pier 14 Port Richmond, Philadelphia, Pennsylvania located in the navigable waters on the west bank of the Delaware River. Dredge Delaware Valley is a dragline harbor dredge owned and operated by American. Reading alleges that on May 9, 1963 Dredge Delaware Valley operated by employees of American disregarded specifications and limits for certain dredging operations for deepening the river bottom in the vicinity of the pier and negligently caused the down river portion of the outer face of the structure where the dredge was working to fall into the river. The initial dredging, which commenced on or about April 6, 1963 was performed in accordance with oral instructions and pursuant to a general contract covering locations unrelated to Pier 14.*fn1 The chart for this dredging operation was given to the dredge captain by Alex Brunner, Reading's dredging inspector. American claimed that Brunner had apparent authority to direct dredging operations and to change dredging limits.
On June 4, 1963, over a month after collapse of the pier, Reading delivered a written change order to American specifying the work done at Pier 14.*fn2 The change order was conditionally accepted by American.*fn3
The central issue at trial was whether Alex Brunner had apparent authority to change dredging limits established by Reading's engineering department.
Judge Luongo found that "The facts are really overwhelming. They indicate clearly that Alex Brunner had apparent authority to change the dredging limits by ordering American personnel to dredge the outer face of Pier 14; and that American was justified in relying on these orders."*fn4 He also concluded that "Alex Brunner had apparent authority to change the dredging limits established by Reading's Engineering Department;" and that American was under "no duty to inquire further into the authority of Alex Brunner to change dredging limits."*fn5
Continental-Wirt Electron. Corp. v. Sprague Electric Co., 329 F. Supp. 959, 963 (E.D.Pa.1971) discusses "authority" in this fashion:
"An admitted agent is presumed to be acting within the scope of his authority where his act is legal and there is no evidence as to any limitations of his authority. In the absence of notice to the contrary, a third person dealing with a known agent may properly assume that he is acting within the scope of his authority. His authority is presumed to be co-extensive with the business entrusted to him and to embrace whatever is necessary or usual in the ordinary course of such business: 3 C.J.S. Agency § 317, p. 256.
Apparent authority is the power to bind the principal where the principal has not actually granted authority but which he leads persons with whom his agent deals to believe that he has granted. Persons with whom the agent deals can reasonably believe that the agent has power to bind his principal if the principal knowingly permits the agent to exercise such power: Revere Press, Inc. v. Blumberg, 431 Pa. 370, 375, 246 A.2d 407 (1968)."
We agree with the trial court's application of the concept of apparent authority to the evidence in this case:
"Section 27 of the Restatement of Agency, 2d, defines apparent authority as follows:
'Apparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.'
It is sufficient to create apparent authority if the principal should realize that his conduct is likely to create a belief that the agent is authorized to act for him. Restatement of Agency, 2d, § 27, Comment a, p. 104. See Revere Press, Inc. v. Blumberg, et al., 431 Pa. 370, 246 A.2d 407 (1968). Once apparent authority has been created, it does not terminate until the third person has reason to know that the principal has revoked the authority, or that the agent has renounced it, or that such time has elapsed or such events have happened after the ...