Grease Monkey International, Inc. v. Montoya

Justice MULLARKEY

concurring in the result and specially concurring:

I concur in the result reached in the majority opinion but write separately because my analysis differs from that of the majority. The petitioner, Grease Monkey, argues in this case that footnote 27 in our opinion in Moses v. Diocese of Colorado, 863 P.2d 310 (Colo.1993), cert. denied, — U.S. -, 114 S.Ct. 2153 , 128 L.Ed.2d 880 (1994), precludes the court of appeals’ application of section 261 of the Restatement (Second) of Agency to hold it liable on the promissory notes issued to Nick and Aver Montoya by Arthur Sensenig. I agree with the majority that section 261 provides the appropriate framework for the present case and that the findings of the trial court support imposing liability on Grease Monkey for Sensenig’s misrepresentations and fraud pursuant to section 261. Maj. op. at 475. However, I disagree with the majority that footnote 27 of Moses is inapplicable in this case because the priest whose sexual activities were at issue in Moses was a servant to whom the master-servant doctrine applies, while Sensenig was a “non-servant agent” to whom the doctrine of apparent authority applies. Maj. op. at 474. It appears to me that the application of apparent authority analysis, as opposed to respondeat superior analysis, is triggered by the nature of the tort, not by the relationship of the agent to the principal. 1

The distinction between a servant and a non-servant agent is important for purposes *477 of determining the liability of a principal for a physical tort committed by an agent incident to the performance of the agent’s duties. See Restatement (Second) of Agency, Ch. 7, Title B “Torts of Servants” Introductory Note, §§ 220 emt. e, 250 (1958) (Restatement). As the majority points out, the relationship of “servant” “presupposes a right on the part of the master to have the [physical] work performed in such manner as he directs and a correlative duty on the part of the servant to perform in the manner directed.” Maj. op. at 472 (citation omitted). In circumstances involving negligent physical torts, we consistently have required that the servant be acting with some intent to act for the master’s purposes in order to impose liability. See Cooley v. Eskridge, 125 Colo. 102, 114 , 241 P.2d 851, 856 (1952) (holding employer not hable for damages when employee negligently allowed tractor to roll downhill because employee was not acting for employer’s purposes); Restatement § 228 (“Conduct of a servant is within the scope of employment if, but only if ... it is actuated, at least in part, by a purpose to serve the master_”).

The concept of apparent authority, however, applies to determine the liability of a principal when either a servant or non-servant agent has committed a tortious representation. See Restatement § 219 (“A master is not subject to liability for the torts of his servants acting outside the scope of employment, unless ... the servant purported to act or speak on behalf of the principal....”); § 257 (“A principal is subject to liability for loss caused to another by the other’s reliance upon a tortious representation of a servant or other agent, if the representation is: (a) authorized; (b) apparently authorized; or (e) within the power of the agent to make for the principal.”). As the majority recognizes, “[a]cts that are apparently authorized or committed within an agent’s inherent powers or where the agent’s position enables him to commit a tort exemplify the situations where a principal may be hable for the torts of servants and non-servant agents.” Maj. op. at 473. Where apparent authority has been employed to commit a tort, a principal may be held hable whether or not the servant or non-servant agent intended to further the principal’s interests.

The rationale behind this rule is that it “placets] the risk that an agent may abuse his authority for his own benefit on the principal, rather than on the [innocent third party].” Willey v. Mayer, 876 P.2d 1260, 1266 (Colo.1994). Thus, the rule provides an incentive for a principal to select rehable agents. It also recognizes that benefits accrue to a principal by employing an agent and that the principal is in a better position to supervise an agent’s conduct than a third party relying on the agent’s representations. Id. Accordingly, where an agent acts with actual or apparent authority in transacting business with a third party, we have held the principal hable even where the third party acts for his own purposes. See id. at 1266 (holding principal hable on promissory note where agent used authority under power of attorney to make promissory note from principal payable to himself and used the note as security to obtain personal loan).

Therefore, I agree with the majority that footnote 27 of Moses states master-servant principles that do not apply when determining the liability of a principal for a tortious representation where, as in this case, an agent acts with apparent authority. However, the apparent authority doctrine of section 261 apphes to this case because the Montoyas were injured when they rehed on Sen-senig’s purported authority and apparent authority to raise money and to enter into secured transactions on behalf of Grease Monkey, not because Sensenig was a “non-servant agent.” The female parishioner who became involved in sexual relations with a male Episcopal priest in Moses did not rely on the priest’s apparent or purported authority to engage in such acts. Instead, she was injured by the sexual misconduct itself. Therefore, the diocese could not be liable except to the extent that the priest acted with intent to promote the purposes of the diocese. See Moses, 863 P.2d at 329 -30 n. 27.

For these reasons, I would base the analysis of this case on apparent authority, not on the distinction between agents who are ser *478 vants and those who are not. Accordingly, I specially concur.

I am authorized to say that Justice LOHR and Justice KOURLIS join in this special concurrence.

. While I do not find the distinction between servant and non-servant agents to be relevant in this case, typically corporate executives are considered "servants” rather than “non-servant agents" for purposes of respondeat superior analysis. See, e.g., Restatement (Second) of Agency § 220 cmt. a (1958) ("managers of great corporations are normally superior servants, differing only in the dignity and importance of their positions from those working under them”).