around Look's actions by the SBA. It was only after suit was filed that allegations were made that Look's actions were unauthorized.
Factors are therefore present in this case that the Pennsylvania courts have used as indictees of apparent authority. Prior dealings had taken place with Roddy and Look and the SBA had approved escrow arrangements in the past. See Apex Financial Corp. v. Decker, supra. The act of agent Look in entering the agreement was not so extraordinary that would place the Plaintiff on notice of possible unauthorized action. In fact, one could reasonably infer that Look, as counsel in charge of disbursements, had authority to take the measures necessary to effectuate the loan. In East Girard Savings and Loan Association v. Houlihan, 373 Pa. 578, 97 A.2d 23 (1953) the court held that a manager of loan association had the apparent authority to enter an agreement with a mortgagor as to payment of arrearages on the basis that one is justified in inferring from a position that the person has the authority to enter the kind of action expected to be conducted by the position. In the present case, Mursor was likewise justified in assuming that an attorney in the position of Look had the authority to enter the escrow agreement. See University Marketing and Consulting, Inc. v. Hartford Life and Accident Ins. Co., 413 F. Supp. 1250 (E.D.Pa.1976); William B. Tanner Co., Inc. v. WIOO, Inc., 528 F.2d 262 (3d Cir. 1975).
Apparent authority can also be inferred from acts of the principal of affirmance. "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." Continental-Writ Electronics Corp. v. Sprague Electric Co., 329 F. Supp. 959, 963 (E.D.Pa.1971); Revere Press, Inc. v. Blumberg, 431 Pa. 370, 246 A.2d 407 (1968). In this case, the SBA was aware of the action of agent Look, if not at the time of entering the agreement, at least shortly thereafter. The failure to repudiate acts that are unauthorized is an affirmance of the transaction. University Marketing and Consulting, Inc. v. Hartford Life and Accident Ins. Co., supra at 1260; Gregory v. Fassett, 178 Pa.Super. 599, 116 A.2d 304 (1955). As noted above, the SBA never repudiated the agreement and therefore it can be construed as a ratification of the agreement as well as a manifestation of the authority of Look.
The SBA did not only acquiesce, but also, acted under the terms of the contract that they now argue was unauthorized. The mere acquiescence alone was sufficient to show consent to the acts of agent Look. Gregory v. Fassett, 178 Pa.Super. 599, 116 A.2d 304 (1955). The SBA went beyond this in that they paid the $ 250,000 in accordance with the escrow agreement and withheld the $ 38,548 as set forth in the June 11, 1973 agreement. By actually following the escrow agreement, the SBA in essence waived any objection that the agreement was unauthorized. From all these facts it seems clear that the SBA conducted itself as if Look had the authority to enter the escrow agreement and that Look had the apparent authority to bind them by it.
The apparent authority doctrine applies to the Federal Government in the same manner as it would apply to any other individual. See Pierson v. United States, 527 F.2d 459 (9th Cir. 1975); Oman v. United States, 179 F.2d 738 (10th Cir. 1950). Defendant SBA cites a number of cases for the proposition that the federal government is not bound by the representations of an agent without authority. In United States v. Zorger, 407 F. Supp. 25, 28 (W.D.Pa.) aff'd 546 F.2d 421 (3d Cir. 1976), the court stated the "United States is neither bound nor estopped by representations made by an agent without authority," but in that case there was no question that the alleged representations were well beyond the authority of the agent. Likewise the decision of West Virginia Housing Development Fund v. Sroka, 415 F. Supp. 1107 (W.D.Pa.1976) is distinguishable from the present case. In Sroka, the alleged actions were beyond the scope of authority permitted by law, but in the present case the SBA had authority to enter escrow agreements and their nonrepudiation of Look's signing of the agreement evidences the authority that he was considered to have possessed.
The SBA as escrow agent was bound to perform in accordance with the terms of the escrow agreement and their failure to carry out the duties was a breach of the duty they assumed. Under these circumstances, the Plaintiff is entitled to interest from the time the performance was due. See Oxford Manufacturing Co., Inc. v. Cliff House Building Corp., 224 Pa.Super. 387, 307 A.2d 343 (1973). The SBA, as escrow agent has no right to relitigate the amount due the Plaintiff under the escrow agreement. The escrow agreement provided that a determination by a court as to the amount due was the amount to be paid and the judgment entered by the Court of Common Pleas of Luzerne County meets this requirement. Plaintiff is therefore entitled to the $ 38,548 plus interest.
An appropriate order will be entered.
© 1992-2004 VersusLaw Inc.