This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C8-00-1594

 

 

Winthrop Resources Corporation,

d/b/a WINR Business Credit,

as successor in interest to WINR

Credit Corporation,

Respondent,

 

vs.

 

Patrick Demorji, individual,

d/b/a Effort Enterprises,

Appellant.

 

 

Filed April 10, 2001

Reversed and remanded
Klaphake, Judge

 

Hennepin County District Court

File No. CT001341

 

Richard A. Glassman, Glassman Law Firm, 701 4th Avenue South, Suite 500, Minneapolis, MN 55415 (for respondent)


Lawson A. Waturuocha, Lawson Wats & Associates, P.A., 1575 University Avenue W., St. Paul, MN 55104 (for appellant)

 

            Considered and decided by Willis, Presiding Judge, Klaphake, Judge, and Amundson, Judge.

U N P U B L I S H E D   O P I N I O N

KLAPHAKE, Judge

Respondent Winthrop Resources Corporation, d/b/a WINR Business Credit, as successor in interest to WINR Business Credit Corporation (WINR), brought this action against appellant Patrick Demorji, individually and d/b/a Effort Enterprises (Demorji).  WINR’s complaint sought damages based on Demorji’s default under the terms of an agreement to finance the leasing of vending machines.  Soon after Demorji served his answer and prior to any discovery taking place, WINR moved for summary judgment.

            Demorji argued that he was no longer obligated under the lease because he assigned it to a third party, William Barraco, who he believed was WINR’s agent, and because Barraco took possession of the vending machines and collected the proceeds from those machines.  Demorji further argued that WINR accepted lease payments from Barraco for about one year and only sought to sue Demorji after Barraco defaulted on the lease.

In granting summary judgment to WINR, the district court determined that although there is evidence to suggest that WINR may have accepted the assignment, there is insufficient evidence of any clear intent on the part of WINR to accept a novation or to release Demorji from his obligations under the lease.  See Vetter v. Security Continental Ins. Co., 567 N.W.2d 516, 521 (Minn. 1997) (proof of consent to release original party from liability under contract, or novation, must be shown by “clearly defined expression of consent”).  A judgment in the amount of $38,820.65 was entered against Demorji, which represented accelerated lease payments, the cost of the equipment, and attorney fees awardable under the lease.

Because genuine issues of fact exist as to whether Barraco was acting as WINR’s agent when he accepted assignment of the lease from Demorji, we reverse the grant of summary judgment to WINR and remand for further proceedings.

D E C I S I O N

            Summary judgment is appropriate if there are no genuine issues of material fact and either party is entitled to judgment as a matter of law.  Minn. R. Civ. P. 56.03.  On appeal, the evidence is viewed in the light most favorable to the party against whom summary judgment was granted, and “[a]ll doubts and factual inferences must be resolved against the moving party.”  Nord v. Herreid, 305 N.W.2d 337, 339 (Minn. 1981).  While the purpose of summary judgment is to secure a “just, speedy, and inexpensive determination of an action,” courts have warned that summary judgment is a “blunt instrument” and should be employed “only where it is perfectly clear that no issue of fact is involved.” DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (citation omitted); Nord, 305 N.W.2d at 339 (quotation omitted).

            Paragraph 14 of the lease provides that a lessee “may not move or give up possession of the equipment without prior written consent except to our agent.”  Demorji claimed that he gave up possession of the equipment to Barraco, who assumed the lease payments and took all of the profits from the vending route.

            Although WINR insists that Barraco was not its agent, Demorji’s purported belief that Barraco was its agent may not be unreasonable.  Barraco approached Demorji in Texas, provided him with a copy of WINR’s lease agreement, and sent the agreement to WINR’s offices in Minnesota after Demorji signed it.  After Demorji told WINR that he had to return to his native Nigeria for a family emergency and could no longer make lease payments, WINR instructed him to contact Barraco.  And when Demorji told WINR that Barraco had agreed to assume all rights and responsibilities under the lease, WINR instructed Demorji to submit this agreement to it in writing.  Demorji thereafter sent such a written agreement to WINR, which he and Barracco signed, and WINR accepted lease payments from Barracco for more than a year.  WINR did not initiate this suit against Demorji until after Barracco defaulted on the lease payments.

Where one has reasonably and in good faith been led to believe from the appearance of authority which a principal permits an agent to have, and because of such belief has in good faith dealt with the agent, the principal will not be allowed to deny the agency to the prejudice of the one so dealing.

 

Sauber v. Northland Ins. Co., 251 Minn. 237, 245, 87 N.W.2d 591, 598 (1958) (quotation omitted).

            The issue of whether Barraco held himself out to be WINR’s agent and whether WINR, by its actions, ratified Barraco’s representations, is a fact issue making summary judgment inappropriate at this time.  See Smith v. Woodwind Homes, Inc., 605 N.W.2d 418, 423 (Minn. App. 2000) (whether agency relationship exists is generally fact issue unless evidence is conclusive one way or the other).  Apparent authority to act as an agent, while usually based on an affirmative act of the principal, can be found when the agent “has regularly exercised some power not expressly given to it and the principal, knowing of the practice, tacitly sanctions its continuance.”  Vacura v. Haar’s Equip., Inc., 364 N.W.2d 387, 391 (Minn. 1985).  Summary judgment “should be employed only where it is perfectly clear that no issue of fact is involved, and that it is not desirable nor necessary to inquire into facts which might clarify the application of the law.”  Donnay v. Boulware, 275 Minn. 37, 45, 144 N.W.2d 711, 716 (1966) (citation omitted).

            We therefore reverse the grant of summary judgment to WINR and remand for further proceedings on the issue of whether Barracco was WINR’s agent.

            Reversed and remanded.