
    C. I. T. FINANCIAL SERVICES CORPORATION, Plaintiff and Appellant, v. C. L. ROBINSON et al., Defendants and Appellees.
    No. 5439.
    Court of Appeal of Louisiana, Third Circuit.
    May 26, 1976.
    Rehearing Denied June 30, 1976.
    Writ Refused Oct. 1, 1976.
    Smith & Gaudin by E. Clark Gaudin, Baton Rouge, for plaintiff-appellant.
    William L. Koerber, Vidalia, for defendants-appellees.
    Before DOMENGEAUX, WATSON, and GUIDRY, JJ.
   DOMENGEAUX, Judge.

Plaintiff-appellant, C. I. T. Financial Services Corporation, brought this action for enforcement of guaranty agreements allegedly in effect between itself and the defendants-'appellees, C. L. Robinson, George Murray, and Murray’s Mobile Homes. From a judgment dismissing its suit plaintiff has appealed.

The pertinent facts are as follows:

C. L. Robinson and George Murray are partners in an enterprise known as Murray’s Mobile Homes, located in Vidalia, Concordia Parish, Louisiana. C. I. T. Financial Services Corporation is a large lending institution which also deals in commercial paper, with a branch office located in Baton Rouge, Louisiana. Treasure Mobile Homes is a mobile home dealership situated in Hammond, Tangipahoa Parish, Louisiana, and is operated by Don Miller and Dick Everett.

In late 1973 Murray’s Mobile Homes entered into an agreement with C. I. T. whereby the latter would provide certain types of financing for its (Murray’s) business operations and would also purchase certain installment sales contracts. The typical language in that portion of the installment contracts dealing with assignment indicates that the contracts were sold to C.' I. T. without recourse except as otherwise provided between the parties. Before C. I. T. purchased any contracts from Murray’s it required both Mr. Murray and Mr. Robinson to execute personal guaranty agreements relating to future sales of commercial paper. Murray’s Mobile Homes further entered into a contract entitled “Dealer Underlying Agreement” whereby the partnership agreed to repurchase any mobile home on which the original purchaser defaulted and also agreed to make whole C. I. T. for the outstanding balance on any note. The first paragraph of the “Dealer Underlying Agreement” contains the following language :

“1. This Agreement states the terms on which we shall sell and you shall buy contracts evidencing our time sales of new and used mobile homes . . .” (Emphasis added)

C. L. Robinson testified that he met with a representative of C. I. T., Russ King, in Baton Rouge, who offered him the following proposition. King wished to do business with Treasure Mobile Homes but was hampered by the fact that one of Treasure’s partners had prior adverse dealings with C. I. T. According to Robinson, King' requested that Murray’s Mobile Homes “run some of Treasure’s paper through”. He assured Robinson that neither Murray’s Mobile Homes nor its partners would assume any liability whatsoever on the paper. Robinson told King that he would discuss it with his partner, George Murray.

Murray was initially apprehensive, as he knew neither Don Miller nor Dick Everett of Treasure Mobile Homes and did not wish to incur any liability on installment sales contracts executed by another dealership. However, he was assured by Robinson that “by running Treasure’s paper through” they were performing an act merely for the convenience of C. I. T. This representation was made by Robinson to Murray in the presence of King and Dick Everett. At that time, King did not personally concur in Robinson’s assessment of potential liability, but neither did he deny Robinson’s statements. Murray and Robinson testified that they only agreed to act as “sellers” of Treasure’s mobile homes to ingratiate themselves with C. I. T.

King testified that he did not tell Robinson that Murray’s Mobile Homes would not incur liability on the paper, but he did not deny the fact that Robinson made the abovementioned statement to Murray in his presence and that he failed to challenge their interpretation of the agreement.

Apparently the trial judge accepted the factual version presented by Murray and Robinson and we find an adequate basis in the record to support his determination.

Thereafter, George Murray and C. L. Robinson signed all necessary papers, apparently in blank, to indicate that they were the sellers of a particular mobile home to Johnny and Cheryl Harrison. The chattel mortgage shows that the day of the sale was December 20, 1973, and that the seller and mortgagee is Murray’s Mobile Homes of Vidalia, Louisiana. The installment sales contract was assigned by Murray and Robinson to C. I. T. for the amount of $10,582.00. The chattel mortgage was signed in Tangipahoa Parish, where Treasure Mobile Homes is located. The purchaser of the mobile home, Cheryl Harrison, testified that the home was purchased at the Treasure Mobile Homes dealership in Hammond, Louisiana, and that she never met or talked to either Murray or Robinson (nor did she ever hear of Murray’s Mobile Homes) until some time later.

The check given by C. I. T. in consideration for the installment sales contract listed Murray’s Mobile Homes as the payee. However, the check was never delivered to Murray’s, but rather Dick Everett (of Treasure Mobile Homes) personally received the check at C. I. T.’s office in Baton Rouge. The check was endorsed “Murray’s Mobile Homes” and later “For Deposit, Treasure Mobile Homes, Don Miller”. Murray and Robinson never saw the check, nor did they ever receive any compensation whatsoever regarding the above transaction. Sometime in early 1974 Mrs. Harrison called C. I. T. complaining that she had been promised that a washer and dryer would be installed in her trailer. She was told to call George Murray who informed her that she could purchase the needed appliances at a store in Baton Rouge and charge them to his account. Murray testified that he performed this act at the request of C. I. T. who informed him that he would be reimbursed. Once again Murray testified that he was merely trying to accommodate and enhance his relationship with C. I. T.

The Harrisons defaulted on payment of the installment sales contract owned by C. I. T., and the latter then sought to enforce the personal guaranty agreements and dealer underlying agreement against Murray’s Mobile Homes and its two partners.

The issue presented by this litigation is simply this: Are Murray’s Mobile Homes, George Murray, and C. L. Robinson, obligated, under the general agreements executed between them and C. I. T., to guarantee this particular installment sales contract sold to the latter?

We think not.

In our opinion there are several individual contracts involved in this transaction. First, there was the initial sale of the mobile home by Murray’s (Treasure) to the Harrisons. Secondly, there was the sale of the installment sales contract by Murray’s (Treasure) to C. I. T. Finally, there is the alleged contract between Murray’s (and its partners) applying the personal guarantees and dealer underlying agreement to the transaction in question. Obviously, it is this third and final contract with which we are concerned.

Civil Code Article 1779 sets forth the four requisites for contractual validity:

“Art. 1779. Four requisites are necessary to the validity of a contract:
1. Parties légally capable of contracting.
2. Their consent legally given.
3. A certain object, which forms the matter of agreement.
4. A lawful purpose.”

With regard to the second requisite for the validity of a contract, consent, Civil Code Article 1819 provides:

“Art. 1819. Consent being the concurrence of intention in two or more persons, with regard to a matter understood by all, reciprocally communicated, and resulting in each party from a free and deliberate exercise of the will, it follows that there is no consent, not only where the intent has not been mutually communicated or implied, as is provided in the preceding paragraph, but also where it has been produced by—
Error;
Fraud;
Violence;
Threats.”

While it is generally true that parol evidence is inadmissible to vary or modify the terms of a written agreement, the jurisprudential rule is well established that when misrepresentation is alleged such evidence may be considered. Defendants herein specifically pleaded the issue of misrepresentation, and thus we are free, as was the trial judge, to consider the parol evidence adduced at trial in making a determination of the validity of the contract in question.

We find that the evidence supports defendant’s contention that they never intended to apply the general personal guarantees and dealer underlying agreement to this particular sale. The dealer underlying agreement itself, as abovementioned, indicates that its applicability is limited to sales actually made by Murray’s. Since Murray’s did not, in fact, sell the mobile home in question, nor did they receive any payment therefor, said portion of the dealer underlying agreement is consistent with their position of non-liability on the installment sales contract. While the dealer assignment agreement relative to this particular transaction contained language to the effect that the assignment of the installment sales contract to C. I. T. would be governed by other agreements executed by the parties (dealer underlying agreement and personal guarantees) we are of the opinion that the inclusion of such language in the contract was made upon C. I. T.’s oral representation that the defendants would incur no liability whatsoever on the contract.

Thus, we find that any consent on the defendant’s part concerning the application of the personal guarantees and dealer underlying agreement to this particular sale was vitiated by the misrepresentation made by C. I. T.’s agent as to effect of the language in the dealer assignment portion of the installment sales contract. Hence, consent lacking, the dealer underlying agreement and personal guarantee agreements must, of necessity, be inapplicable to the instant sale.

For the above and foregoing reasons the judgment of the district court is affirmed in all respects. Costs of this appeal shall be assessed against the plaintiff-appellant.

AFFIRMED.

GUIDRY, J., dissents and assigns written reasons.

GUIDRY, Judge

(dissenting).

My brethren of the majority determine that defendants should prevail because their “Dealer Underlying Agreement” and agreements of personal guaranty executed in favor of plaintiff do not apply to the Harrison transaction. The majority reasons that as a result of certain representations made to defendants by a Mr. Russ King, C.I.T. District Sales Manager, the agreements were, in effect, amended so as to exclude the Harrison sale from coverage thereby. I can agree that there is a reasonable basis on which to found the conclusion that there was a representation made, or at least participated in, by Mr. King to the effect that defendants would not be responsible under their agreements with C.I.T. in the event of default by the Harrisons; however, I differ with my esteemed brethren as to the effect of such representation on the liability of defendants to Mr. King’s principal, C.I.T.

Mr. Robinson, in testifying concerning the representations made to him by Mr. King, stated as follows:

“Q. . . . did you discuss with Mr. King the uh — business of handling paper for a Treasure Mobile Homes?
A. Yes sir.
Q. Would you tell the court what the discussion was ? What was said between the two of you?
A. . . . Called me and asked me if I would be adverse to running some paper through Murray Mobile Homes. He said he had talked to Mr. Murray and Mr. Murray had gave him a negative uh — with the exception of my approval; that Mr. Murray didn’t know the people that handled the lot and etc. and that I would have to .
Q. Let me interrupt you Mr. Robinson, you — said ‘running some paper’, you mean Treasure Mobile Homes?
A. Yes sir, some Treasure Mobile Home paper, so I told Mr. King that I’d be — that I was having a meeting in Baton Rouge with some dealers uh— in the near future and that I’d be glad to talk with him on it, and he and I went aside at this meeting and uh — he told me he said, ‘now we have — we have been considering doing business with Treasure Mobile Homes; as of now there was uh — we haven’t gotten it approved. There is a partner that’s involved that had some adverse uh — dealing with C.I.T. before and we gonna have to get him out of the picture before we can get the — get them approved uh— but we are working on it, but we want to know if uh — we got a uh — we got a deal that we feel like that uh — we could run some paper uh — we could sell if we had somewhere to run the paper,’ and I asked him as to what our responsibilities would be and I told him that I would — did not want to be responsible for any service and that I definitely didn’t want uh — Mr. Murray involved in the transaction because I didn’t want anything to affect him adversely uh — as a local dealer and uh — that I would be willing uh — to—as long as it wasn’t a recourse deal and we all understood it, as long as we wasn’t responsible for any service or any of the (inaudible) paper, I’d be glad to process the paper work as a matter of routine . . '

There is nothing in the record to even suggest that anyone connected with C.I.T., other than Russ King, knew of the plan concocted by King, Robinson, Murray and Everett, to run sales generated by Treasure under Murray’s name in order to secure C.I.T. financing.

In his negotiations with the defendants Mr. Russ King, although an employee of C.I.T., was clearly acting on behalf of his employer-principal as the latter’s agent. It appears to be rather well established that a servant may possess the qualities of an agent and that a principal-agent status can exist within the framework of an employer-employee relationship. Allen v. Cochran, 160 La. 425, 107 So. 292, 50 A.L.R. 459; La Parie v. Totora, 62 So.2d 658, La.App.; 2A C.J.S. Agency § 16, pp. 577-580; Edgar Frank Blanchard et al. v. Sam Ogima et al., 253 La. 34, 215 So.2d 902. A third party who deals with an agent is required to determine whether or not the contract about to be consummated comes within the agency and will or will not bind the agent’s principal. R.C.C. Article 3021; Federal Insurance Co. v. C. & W. Transfer & Storage Co. Inc., 282 So.2d 563, La.App.; Carey Hodges Associates Inc. v. Continental Fidelity Corp., 264 So.2d 734, La. App.; Builders Center, Inc. v. Smith, 228 So.2d 245, La.App. There is absolutely nothing in the record to even suggest that Mr. King had the authority, from his principal, C.I.T. to abrogate or modify the previous agreements entered into between Robinson, Murray and C.I.T. I believe that it is clear that he did not have such authority and that when he undertook to except the Treasure sales run through Murray’s Mobile Homes from the guarantee agreements signed by defendants, this was clearly an act outside the scope of his agency or an act unauthorized by his principal.

It can be argued that King had apparent authority to act on behalf of C.I.T. Apparent authority is a principle of estoppel, which operates in favor of third persons seeking to bind a principal to an unauthorized act of an agent; such result is fair and equitable in such context since third persons, who are not privy to the actual terms of the agency agreement, must rely entirely on the indicia of authority with which the agent is vested. Broadway v. All Star Insurance Corp., 285 So.2d 536, La. App.; LSA-R.C.C. Arts. 1811, 1816, 1818; Ebert v. Babin, 200 So.2d 672, La.App.; International Union of Operating Engrs. Hoisting and Portable Local 406, AFL-CIO v. Guy Scrogging Inc., 168 So.2d 724, La.App., writ refused, 247 La. 258, 170 So. 2d 511.

In order for the doctrine of “apparent authority” to apply it must be established that the principal made manifestations to the third party and that the third party reasonably rely on the agent’s purported authority as a result of the manifestations of the principal. Krautkramer Ultrasonics, Inc. v. Port Allen Marine Service Inc., 248 So.2d 336, La.App.

When a third person seeks to bind a principal for the unauthorized acts of the agent under the doctrine of apparent authority, it must be established that such third person had no knowledge of or reason to believe that that agent’s acts were without authority. As set forth in 2A C.J.S. Agency § 158, p. 794:

“The question involved is no longer what authority was actually given or was intended by the parties to the agency agreement, but resolves itself instead into the determination of what powers persons of reasonable prudence, ordinarily familiar with business practices, dealing with the agent might rightfully believe him to have on the basis of conduct of principal and agent in their business relationships.”

It seems clear to me that the doctrine of apparent authority has no application in this case because defendants purported reliance on the representations of King were not reasonable but rather totally unreasonable. Defendants were aware that King’s principal did not want to do any business with Treasure Mobile Homes. The very reason for running sales generated by Treasure through Murray was to deceive the principal. Defendants along with Russ King participated in this deception. Defendants, under the circumstances, should not now escape responsibility by urging that their reliance on the representations of plaintiff’s agent was reasonable.

Under the circumstances I would determine that the “Dealer Underlying Agreement” and personal guarantees signed by defendants apply to the Harrison contract and would render judgment in favor of plaintiff.

For the above and foregoing reasons I respectfully dissent.  