This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1994).
STATE OF MINNESOTA
IN COURT OF APPEALS
T. Rowe Price Realty Income Fund III,
a Delaware Limited Partnership,
Ambassador Moving Systems, Inc.,
d/b/a Ballard Moving and Storage Company,
Active Transport Personnel, Inc.,
Filed May 21, 1996
Ramsey County District Court
File No. C1937180
Daniel J. Biersdorf, E. Kelly Keady, Biersdorf & Cameron, P.A., 4100 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for Appellant)
D. Clay Taylor, Mackall, Crounse & Moore, P.L.C., 1400 AT&T Tower, 901 Marquette Avenue, Minneapolis, MN 55402 (for Respondent Ambassador)
Robert Novotny, 3670 Upper 143rd Street West, Rosemount, MN 55068 (Respondent Pro Se)
David Plank, 4671 Lake Avenue North, White Bear Lake, MN 55110 (Respondent Pro Se)
Considered and decided by Kalitowski, Presiding Judge, Toussaint, Chief Judge, and Foley, Judge.*
U N P U B L I S H E D O P I N I O N
Appellant T. Rowe Price Income Fund III (TRP) challenges the district court's conclusion that two commercial leases for property it owns: (1) failed to comply with the statute of frauds; and (2) were not executed by a person with authority from the named lessee, Ambassador Moving Systems, Inc. (Ambassador), d/b/a Ballard Moving & Storage. We affirm.
D E C I S I O N
Following a bench trial, the district court concluded the leases at issue violated the statute of frauds. This court reviews a district court's findings for clear error. Minn. R. Civ. P. 52.01. Questions of law, however, are reviewed without deference to the district court's conclusions. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).
Minnesota law provides that all leases for a period longer than one year are void unless subscribed by the party by whom the lease is made or by such party's lawful agent who has been authorized in writing to act on behalf of the lessee. Minn. Stat. § 513.05 (1994). Ballard Moving & Storage is the named lessee on both leases at issue here. The district court found that the leases in question were signed by David Plank who was neither a shareholder, officer, nor person authorized by Ballard in writing to execute such leases.
The record indicates and the district court found: (1) Plank acted as an independent contractor, utilizing Ambassador's courier authority to conduct his business, Ballard Courier; (2) Plank kept 98 percent of the profit from his business; (3) the agency agreement signed by Ambassador and Plank specifically required Plank to obtain written authorization to bind Ambassador to any contract; and (4) Plank did not obtain written authorization to enter the leases. Accordingly, the leases were not signed by a person with written authority to act as the agent for the named lessee and are void under the statute of frauds.
TRP argues the doctrines of equitable estoppel and ratification remove the lease agreements from the statute of frauds. Equitable estoppel requires representation or concealment of material facts known to the person to be estopped at the time of the representation or concealment. Olson v. Ronhovde, 446 N.W.2d 690, 692-93 (Minn. App. 1989). Similarly, ratification occurs when one, having full knowledge of all material facts, confirms, approves or sanctions by affirmative act or acquiescence, the originally unauthorized act of another. Id. at 693.
We conclude neither estoppel nor ratification removes these leases from the statute of frauds. The leases were signed in 1989 and 1990. The district court found Ambassador did not know it was the named lessee on the leases until its property was mistakenly posted for eviction in September of 1992. When Ambassador discovered it was named as lessee on the leases, Ballard Moving & Storage's president called and wrote TRP to deny liability under the leases and explain the relationship between Ballard Moving & Storage and Plank's business. Such findings support a determination that Ambassador did not knowingly state or conceal any facts that may have misled TRP and did not knowingly confirm or approve of being the named lessee on the leases at issue.
In reviewing a district court's conclusion that one acts or does not act as an agent for another, this court takes the facts that have support in the record as found by the district court and independently applies agency law. See Semrad v. Edina Realty, Inc., 493 N.W.2d 528, 535 (Minn. 1992) (independently applying agency law to facts found by court that are not clearly erroneous).
A principal is liable for the act of an agent committed in the course and within the scope of the agency. Id. An agency relationship is formed when there is an understanding between the parties creating a fiduciary relationship in which the agent is continuously subjected to the will of the principal. Jurek v. Thompson, 308 Minn. 1991, 198-99, 241 N.W.2d 788, 791 (1976). In addition to actual authority to act as an agent, a person may become an agent by implied authority. Hornblower & Weeks-Hemphill Noyes v. Lazere, 301 Minn. 462, 471, 222 N.W.2d 799, 805 (1974). Implied authority is actual authority which includes such powers "directly connected with and essential to the business specifically entrusted to an agent." Id. Finally, a principal may be held liable for the acts of an agent performed with apparent authority. Duluth Herald & News Tribune v. Plymouth Optical Co., 286 Minn. 495, 498, 176 N.W.2d 552, 555 (1970). Apparent authority exists only as to those third persons who learn of the manifestation of the agency relationship from words or conduct to the third person or the public for which the principal is responsible. Id. at 500, 176 N.W.2d at 556.
The district court concluded Plank did not act with actual or implied authority in executing the leases on behalf of Ambassador. Rather, the court found Plank perpetrated an intentional fraud upon TRP's leasing agent in executing the leases with the representation that he possessed authority from Ambassador. The president of Ballard Moving & Storage testified he never gave Plank permission to execute a commercial lease binding Ballard Moving & Storage or Ambassador as lessee. The leases were utilized for a business personal to Plank and were not executed with any written authority for Plank to bind Ambassador, as required by the agency agreement. Further, Ambassador introduced a letter from Plank's attorney to TRP admitting Plank knew Ballard Courier was the true lessee of the spaces and that Ballard Moving & Storage was mistakenly listed as lessee. Taking these facts as found by the district court, we conclude Plank did not have actual or implied authority to enter into the leases on behalf of Ambassador.
The district court also concluded Plank lacked apparent authority to execute the leases. The negotiations and signing of the first lease occurred in Ambassador's office space. Plank told TRP his business was a "division" of Ballard Moving & Storage. Plank provided TRP with a financial statement from Ballard Moving & Storage, and the first month's rent was written on a Ballard Moving & Storage check signed by its president. Nevertheless, TRP's leasing agent testified he recognized the inconsistency in the terms of the first lease (listing Ballard Moving & Storage as lessee but signed by Plank as president of Ballard Courier) at the time of the signing, but signed such lease anyway. Additionally, TRP's agent testified he knew Plank was not an officer of Ballard Moving & Storage, and none of TRP's advisors or agents who regularly deal in commercial leasing ever contacted Ambassador to confirm Plank's relation to Ambassador. Accordingly, we affirm the district court's conclusion that Plank lacked apparent authority to execute the leases on behalf of Ambassador.
Finally, TRP argues the district court clearly erred in finding that the "Hold Harmless Agreement" between Robert Novotny and Plank was void for lack of consideration. This court reviews findings of fact for clear error. Minn. R. Civ. P. 52.01. The district court's finding #34 states that Novotny and Plank entered into a purchase agreement in the summer of 1992, requiring Plank to deliver valid leases or lease assignments for the spaces at issue on the date of closing. Finding #37 states that although not required by the purchase agreement, Novotny signed a Hold Harmless Agreement purporting to protect Plank from personal liability on the leases in consideration for Plank providing the leases or assignments of the leases at closing. The court found Plank was already under an obligation to provide such assignments or new leases under the written purchase agreement. Testimony of Novotny and Plank differed on this issue. Put simply, the district court did not believe Plank. We conclude the district court's finding that there was no consideration for the Hold Harmless Agreement is supported by Novotny's testimony. Thus, the court did not clearly err.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.