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Law School Resources

First Interstate Bank of Texas v. First National Bank of Jefferson, (1991)

1. First Interstate Bank of Texas v. First National Bank of Jefferson, (1991); pg. 385, briefed 2/24/97


2. Facts: FIB and FNJ entered into a contract for the purchase of certain bonds.  On behalf of FNJ, their senior vice president, Boyd, signed the contract.  When the deal later fell through, FNJ refused to honor the contract, claiming that Boyd did not have any authority to bind FNJ in such a manner.


3. Procedural Posture: The lower court held that as a matter of law, there was insufficient evidence to show that Boyd had sufficient authority to sign the contract, and directed a verdict for FNJ.

4.  Issue: Whether sufficient evidence existed to present an issue of fact for submission to the jury.


5.  Holding: Yes.


6.  Reasoning: There are two types of authority, actual and apparent.  There are further two types of actual authority: express and implied.  A principle can confer express actual authority by writing or orally.  There was evidence that Boyd had spoken with the board of directors, and that they had given him authority to sign this contract.  Furthermore, Boyd’s position in the company lends credence to his assertion that he was authorized to sign.  With regard to implied actual authority, an agent is vested with the implied authority to do all of those things necessary or incidental to the agency assignment.  However, a state statute requires express agency.  With regard to apparent authority, a corporation may be bound if it 1) manifests the agent’s authority to the third party, and 2) the third party reasonably relies on the agent’s purported authority as a result.  By the nature of Boyd’s position, the corporation holds him out as having authority.  Furthermore, the corporation sent Boyd specifically to close the deal.  Thus, there is sufficient evidence to create a jury question as to whether there was authority to bind the corporation.