{ "id": 8527998, "name": "BELL ATLANTIC TRICON LEASING CORPORATION, Plaintiff v. DRR, INC. d/b/a CAROLINA FLEET SERVICE and MAYLON H. FOWLER, INC., Defendants", "name_abbreviation": "Bell Atlantic Tricon Leasing Corp. v. DRR, Inc.", "decision_date": "1994-05-17", "docket_number": "No. 9310DC495", "first_page": "771", "last_page": "777", "citations": [ { "type": "official", "cite": "114 N.C. App. 771" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "34 ALR2d 290", "category": "reporters:specialty", "reporter": "A.L.R. 2d", "weight": 2, "opinion_index": -1 }, { "cite": "294 S.E.2d 369", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1982, "pin_cites": [ { "parenthetical": "Citation omitted." } ], "opinion_index": 0 }, { "cite": "306 N.C. 555", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8571905, 8571842, 8571878, 8571771, 8571807 ], "year": 1982, "opinion_index": 0, "case_paths": [ "/nc/306/0555-05", "/nc/306/0555-03", "/nc/306/0555-04", "/nc/306/0555-01", "/nc/306/0555-02" ] }, { "cite": "291 S.E.2d 892", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1982, "pin_cites": [ { "page": "895" } ], "opinion_index": 0 }, { "cite": "57 N.C. App. 437", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8524761 ], "year": 1982, "pin_cites": [ { "page": "442" } ], "opinion_index": 0, "case_paths": [ "/nc-app/57/0437-01" ] }, { "cite": "116 S.E.2d 186", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1960, "pin_cites": [ { "page": "189" } ], "opinion_index": 0 }, { "cite": "253 N.C. 1", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8621694 ], "year": 1960, "pin_cites": [ { "page": "6" } ], "opinion_index": 0, "case_paths": [ "/nc/253/0001-01" ] }, { "cite": "209 S.E.2d 795", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 6, "year": 1974, "pin_cites": [ { "page": "799" }, { "page": "800" }, { "page": "800", "parenthetical": "citations omitted" } ], "opinion_index": 0 }, { "cite": "286 N.C. 24", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8563251 ], "weight": 3, "year": 1974, "pin_cites": [ { "page": "32" }, { "page": "33" } ], "opinion_index": 0, "case_paths": [ "/nc/286/0024-01" ] }, { "cite": "324 S.E.2d 889", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "pin_cites": [ { "page": "892" } ], "opinion_index": 0 }, { "cite": "72 N.C. App. 591", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527260 ], "year": 1985, "pin_cites": [ { "page": "595" } ], "opinion_index": 0, "case_paths": [ "/nc-app/72/0591-01" ] } ], "analysis": { "cardinality": 555, "char_count": 12582, "ocr_confidence": 0.739, "pagerank": { "raw": 1.0871693359511492e-07, "percentile": 0.5639417587666308 }, "sha256": "08d51916dfbafce1e7fff4f4e9a2fb0af514779e9a558307ed12cdc18b95150d", "simhash": "1:0739ccae342b5e04", "word_count": 2096 }, "last_updated": "2023-07-14T17:01:59.295429+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges EAGLES and LEWIS concur." ], "parties": [ "BELL ATLANTIC TRICON LEASING CORPORATION, Plaintiff v. DRR, INC. d/b/a CAROLINA FLEET SERVICE and MAYLON H. FOWLER, INC., Defendants" ], "opinions": [ { "text": "JOHNSON, Judge.\nDefendant corporation Maylon H. Fowler, Inc., (hereinafter, MHF), is a closely held corporation involved in the business of hauling sand, stone, and other similar materials. Christine M. Fowler is the primary stockholder and owns 236 of the 248 shares. Additionally, Mrs. Fowler is Chairperson of MHF\u2019s Board of Directors and was president of MHF until February 1990. The remainder of corporate ownership and control is vested in Mrs. Fowler\u2019s sons, Dennis, Ricky and Ronald Fowler. Ricky Fowler has been president of MHF since February 1990; Ronald Fowler has been the secretary of MHF since May 1991; and Dennis Fowler was the secretary of MHF from February 1990 to May 1991.\nIn July of 1990, soon after Dennis, Ricky and Ronald Fowler became officers of MHF, Dennis, Ricky and Ronald formed defendant corporation DRR, Inc., d/b/a Carolina Fleet Service (hereinafter, DRR). Soon after its incorporation, DRR, by its president, Dennis Fowler, executed an equipment lease in favor of plaintiff Bell Atlantic Tricon Leasing Corporation (hereinafter, Bell Atlantic) for computer hardware, software and printers. In order for DRR to obtain the equipment, Bell Atlantic required DRR to obtain a corporate guaranty. To comply with this requirement, Ricky Fowler, in his capacity as president of MHF, signed the guaranty. Additionally, Dennis Fowler, in his capacity as secretary of MHF, executed a secretary\u2019s certificate on the second page of the guaranty which stated that on 10 July 1990, MHF\u2019s Board of Directors entered into a corporate resolution authorizing the guaranty.\nThe computer equipment was delivered and DRR made the monthly rental payments on the equipment from November 1990 until April 1991. In May of 1991, DRR ceased operations. In August of 1991, MHF made two payments to plaintiff for the equipment, the total of which approximated five months of lease payments.\nIn January of 1992, after DRR defaulted on the lease agreement, plaintiff gave notice of default and notice of the acceleration of the lease payments to both DRR and MHF. Plaintiff then filed this action against DRR and MHF on 31 March 1992, alleging DRR defaulted in payments under the equipment lease and MHF defaulted on the corporate guaranty agreement.\nPlaintiff filed a motion for summary judgment on 21 January 1993. The motion was heard before Judge Joyce A. Hamilton at the 12 February 1993 Civil Session of Wake County District Court, and Judge Hamilton granted summary judgment for plaintiff against both DRR and MHF. Defendant MHF gave notice of appeal to this Court.\nThe first assignment of error in MHF\u2019s brief was not set out in the record on appeal. As Rule 10(a) of the North Carolina Rules of Appellate Procedure provides that \u201cthe scope of review on appeal is confined to a consideration of those assignments of error set out in the record on appeal . . .\u201d we do not address the merits of MHF\u2019s first assignment of error.\nBy MHF\u2019s next assignment of error, MHF argues that the trial court erred in granting plaintiff\u2019s motion for summary judgment because Ricky and Dennis Fowler did not have the apparent authority to bind MHF.\nNorth Carolina General Statutes \u00a7 1A-1, Rule 56(c) (1990) provides that summary judgment should be granted \u201cif the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that any party is entitled to a judgment as a matter of law.\u201d\nA principal is liable upon a contract made by its agent with a third party in three instances: when the agent acts within the scope of his or her actual authority; when a contract, although unauthorized, has been ratified; or when the agent acts within the scope of his or her apparent authority. Foote & Davies, Inc. v. Arnold Craven, Inc., 72 N.C. App. 591, 595, 324 S.E.2d 889, 892 (1985).\nApparent authority is that authority which the principal has held the agent out as possessing or which he has permitted the agent to represent that he possesses. Zimmerman v. Hogg & Allen, 286 N.C. 24, 209 S.E.2d 795 (1974). \u201c[T]he determination of a principal\u2019s liability in any particular case must be determined by what authority the third person in the exercise of reasonable care was justified in believing that the principal had, under the circumstances conferred upon his agent.\u201d Id. at 31, 209 S.E.2d at 799.\nAt the time the lease guaranty was executed, Ricky Fowler was the president of MHF and allowed to represent he was responsible for the management and control of MHF. The law of this state is clear as to the apparent authority of the president of a closely held corporation to enter into contracts for the corporation. The president of the corporation is the head and general agent of the corporation and may act for it in matters that are within the corporation\u2019s ordinary course of business or incidental to it. Zimmerman, 286 N.C. at 32, 209 S.E.2d at 800. Generally, when the president acts for the corporation with respect to matters outside the corporation\u2019s ordinary course of business, in the absence of express authorization for such acts by the board of directors, the corporation is not bound. Id. In order for a contract executed by the president to be binding on the corporation, \u201cit must appear that (1) it was incidental to the business of the corporation; or (2) it was expressly authorized; and (3) it was properly executed.\u201d Id.\nIn the case sub judice, MHF argues that MHF should not be bound by the corporate guaranty because Ricky and Dennis Fowler acted outside the scope of MHF\u2019s ordinary business transactions and without express authorization from the Board of Directors. We disagree.\nIn the present case, the business of MHF was transporting goods for hire. As part of that business, MHF owned and operated a fleet of trucks. DRR was established as an affiliate of MHF to solely service MHF vehicles. We do not find that guarantying an affiliate\u2019s lease agreement should put a party on notice that the officers of the corporation were acting outside the scope of their authority. We believe that the actions of Ricky and Dennis Fowler could very well be viewed as \u201cincidental\u201d to the ordinary course of MHF\u2019s business. Additionally, we note that Dennis Fowler, by signing the secretary\u2019s certificate of the guaranty, represented that the MHF Board of Directors met on 10 July 1990 and authorized the signing of the guaranty. We find nothing which put plaintiff on notice that Ricky Fowler, as president of MHF, was exceeding the scope of his authority. Moreover, the general rule\nthat a person dealing with an agent must know the extent of his authority does not apply when dealing with one who is a general agent, as the president of a corporation. In such a case the burden is upon the principal to show that the other party had notice of a restriction upon the power of the general agent.\nZimmerman, 286 N.C. at 33, 209 S.E.2d at 800 (citations omitted). MHF has not carried this burden. Therefore, we find that plaintiff\u2019s reliance on the apparent authority of Ricky Fowler and Dennis Fowler as president and secretary of MHF was justified.\nBy MHF\u2019s final argument, MHF contends that the trial court erred in granting plaintiff\u2019s motion for summary judgment because MHF cannot be bound by the terms of the guaranty on the basis of estoppel or ratification.\nOur Supreme Court has held that:\n[a] corporation which, by its voluntary act, places an officer or agent in such a position or situation that persons of ordinary prudence, conversant with business usages and the nature of the particular business, are justified in assuming that he has authority to perform the act in question and deal with him upon that assumption is estopped as against such persons from denying the officer\u2019s or agent\u2019s authority.\nMoore v. W O O W, Inc., 253 N.C. 1, 6, 116 S.E.2d 186, 189 (1960). By holding Ricky Fowler out as its president, MHF authorized Ricky Fowler to contractually bind the corporation, and control the management of the corporation. Additionally, MHF allowed other persons to rely on Ricky Fowler as having the authority to bind MHF. Therefore, MHF should be estopped from denying Ricky Fowler\u2019s authority to execute the guaranty.\n\u201cRatification is defined as \u2018the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.\u2019 \u201d American Travel Corp. v. Central Carolina Bank, 57 N.C. App. 437, 442, 291 S.E.2d 892, 895, disc. review denied, 306 N.C. 555, 294 S.E.2d 369 (1982). \u201cRatification requires intent to ratify plus full knowledge of all material facts.\u201d Id. (Citation omitted.) Ratification \u201cmay be express or implied, and intent may be inferred from failure to repudiate an unauthorized act... or from conduct on the part of the principal which is inconsistent with any other position than intent to adopt the act.\u201d Id.\nIn the case sub judice, the facts indicate that the leased equipment was in the possession of MHF, and that MHF made several payments on the lease. These acts support plaintiff\u2019s position that MHF ratified the acts of its president and secretary. The acts are consistent with an intent to affirm and appear inconsistent with any other position.\nWe find that MHF is bound by the lease guaranty based upon apparent authority, estoppel and ratification. As such, we find that the trial court correctly granted plaintiffs motion for summary judgment. The decision of the trial court is affirmed.\nAffirmed.\nJudges EAGLES and LEWIS concur.", "type": "majority", "author": "JOHNSON, Judge." } ], "attorneys": [ "Smith Debnam Hibbert & Pahl, by Bettie Kelley Sousa and Byron L. Saintsing, for plaintiff-appellee.", "Manning, Fulton & Skinner, P. A., by Howard E. Manning, Michael T. Medford and Alison R. Cayton, for defendant-appellant Maylon H. Fowler, Inc." ], "corrections": "", "head_matter": "BELL ATLANTIC TRICON LEASING CORPORATION, Plaintiff v. DRR, INC. d/b/a CAROLINA FLEET SERVICE and MAYLON H. FOWLER, INC., Defendants\nNo. 9310DC495\n(Filed 17 May 1994)\n1. Appeal and Error \u00a7 443 (NCI4th)\u2014 no assignment of error in record \u2014 not addressed on appeal\nAn assignment of error in a brief which was not set out in the record on appeal was not addressed. N.C.R. App. P. 10(a).\nAm Jur 2d, Appeal and Error \u00a7\u00a7 723 et seq.\n2. Corporations \u00a7\u00a7 111, 118 (NCI4th)\u2014 leasing of equipment\u2014 president and secretary of corporation \u2014apparent authority\nThe trial court properly granted plaintiffs motion for summary judgment in an action on a guaranty of an equipment lease where defendant Maylon H. Fowler, Inc. contended that Ricky and Dennis Fowler had not had the apparent authority to bind MHF in the guaranty and had acted outside the scope of MHF\u2019s ordinary business transactions and without express authorization from the Board of Directors, but Ricky Fowler was the president of MHF and was allowed to represent that he was responsible for the management and control of MHF; Dennis Fowler, by signing the secretary\u2019s certificate of the guaranty, represented that the MHF board of directors met and authorized the signing of the guaranty; and guarantying an affiliates\u2019s lease agreement does not put a party on notice that the officers of the corporation were acting outside the scope of their authority.\nAm Jur 2d, Corporations \u00a7\u00a7 1534-1630.\nAuthority of officer or agent to bind corporation as guarantor or surety. 34 ALR2d 290.\n3. Corporations \u00a7\u00a7 102, 121 (NCI4th)\u2014 lease of equipment \u2014 estoppel and ratification by corporation\nThe trial court did not err in an action to enforce a corporate guaranty of an equipment lease by granting plaintiff\u2019s motion for summary judgment despite defendant MHF\u2019s contention that it could not be bound by the guaranty on the basis of estoppel or ratification. MHF held out Ricky Fowler, who signed the guaranty, as president and thereby authorized him to bind the corporation and allowed other persons to rely on Ricky Fowler as having the authority to bind MHF, and should therefore be estopped from denying Ricky Fowler\u2019s authority to execute the guaranty. The leased equipment was in the possession of MHF and MHF made several payments on the lease, supporting plaintiff\u2019s position that MHF ratified the acts of its president and secretary.\nAm Jur 2d, Corporations \u00a7\u00a7 1534-1630.\nAuthority of officer or agent to bind corporation as guarantor or surety. 34 ALR2d 290.\nAppeal by defendant Maylon H. Fowler, Inc. from order entered 12 February 1993 by Judge Joyce A. Hamilton in Wake County District Court. Heard in the Court of Appeals 10 February 1994.\nSmith Debnam Hibbert & Pahl, by Bettie Kelley Sousa and Byron L. Saintsing, for plaintiff-appellee.\nManning, Fulton & Skinner, P. A., by Howard E. Manning, Michael T. Medford and Alison R. Cayton, for defendant-appellant Maylon H. Fowler, Inc." }, "file_name": "0771-01", "first_page_order": 799, "last_page_order": 805 }