ÿWPCÈ# …# VUNa %¯ 0 (µw@Ý4 1 0l@ 0D¬ 0Jð 0T: 0^Ž 0hì 0rT 0|Æ 0†B 0È 1uX U,Í 0dù U,]U>‰B)ÇDCð AM3U*€ªƒªò-a€´œ D3P Bƒò  0@’v~ÒvÓP AO#"Ær" 0D8# D/|# B«#˜HP LaserJet 4Si/4SiMX PS 600dpiPSCRIPTÀÌÀääÀÀÌ0 (ÖÃ9 Z ‹6Times New Roman RegularX($¡¡ Už£Ÿ  ¡ ¢ £ ¤¥Ó€±}B!ìì3|x±((3üÝ$¤¤Ý ƒ!ÝÝ  Ýà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô  ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)< Œ 9p`(ModernP ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(Monaco< Œ 9p`(&Times New Roman% Line 7 d 7Border 1dd€-!Cþÿ << Gÿÿ< Œ 9p`(Arial öÝ ƒ!ÝÔ€ÔÔ€ÔÝ  ÝÔ€#ÔÔ€#ÔÓ  ÓÔ YYY ÔFILEDÔ€#XÔÌÌò òAugust€26,€1996ÌÌCecil€Crowson,€Jr.ÌÔ€#ôÔAppellate€Court€Clerkó ó yÝ ƒ!ÝÔ€ÔÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝThe€complaint€was€amended€to€add€Mr.€Eady€as€a€third€party€defendant.€€The€recordÏindicates€that€Mr.€Roark€filed€a€Chapter€7€bankruptcy€and€suit€as€to€him€was€subsequentlyÏdismissed€without€prejudice€after€the€entry€of€judgment€in€this€matter.€€Ì èÝ ƒ!ÝÔ€ÔÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝWe€find€the€trial€courtððs€judgment€in€this€respect€somewhat€inconsistent€as€it€is€only€theÏð ðunauthorizedðð€acts€of€the€agent€that€the€principal€has€opportunity€to€repudiate.€€òòò òE.g.,€IntersparexÏLeddin€KG€v.€Al„Haddadóóó ó,€852€S.W.2d€245,€247€(Tenn.€App.€1992);€òòò òCorim,€Inc.€v.€Sam€BlairÏCo.óóó ó,€721€S.W.2d€256,€259€(Tenn.€App.€1986).Ì WÝ ƒ!ÝÔ€ÔÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝUpon€motion,€the€trial€court€amended€the€judgment€to,€òòò òinter€aliaóóó ó,€award€a€judgment€inÏfavor€of€Jackson€Centre€as€against€Modelink€and€Eady€to€the€extent€of€the€Corporationððs€liability€toÏthe€Bank.Ì Ý ƒ!ÝÔ€ÔÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝAccording€to€Smithððs€testimony,€and€as€further€evidenced€in€the€minutes€of€a€board€ofÏdirectorððs€meeting,€Roark€admitted€to€the€Board€that€he€had€no€authority€to€execute€the€corporateÏguaranty,€but€that€he€felt€the€action€was€necessary€and€in€the€best€interests€of€Jackson€Centre;€ifÏModelink€had€performed,€Roark€believed€the€Board€would€not€have€been€upset.€€The€BoardÏdisagreed,€however.€€Ì ªÝ ƒ!ÝÔ€ÔÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝThe€record€indicates€that€Roark€on€several€occasions€encouraged€the€Board€to€employÏEady€for€the€rendering€of€certain€services€and,€in€fact,€the€Board€ultimately€paid€Eady€severalÏthousand€dollars€for€his€services.€€These€transactions€are€unrelated€to€the€purported€agreementÏherein€referenced.Ì++++'ÿÿdxd d èÝ ƒ!ÝÔ€ÔÔ€ÔÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝThe€proof€also€shows€that€Roark€himself€paid€the€interest€payments€that€were€in€arrears€onÏthe€note.Ì("ÿÿ$££Ò  ÒÒ  ÒPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'@Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑMonacoÑÑ ÑÒ  BA Op Monaco ÒÒ  BA Op Monaco Ò€-‚ƒCþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5($$””ò òÚ  Ú1Ú  Úó ó„„'÷ÿ dxdüÿP PdÝ ƒ!ÝÔ . ÔÔ€ÔÓ&€X„d&ÓÑ#€Xd#ÑÔ€ÔÝ  ÝÑ\R AØ'\ÑÓ` Ü` p”XÓÑ\R AØ'\Ñà@ àò òIN€THE€COURT€OF€APPEALS€OF€TENNESSEE,€WESTERN€SECTIONÌà@ àAT€JACKSONÌà@ à_______________________________________________________ÌÌó óà à)ò òÌBELLS€BANKING€COMPANY,ó óà à)à àCrockett€County€Chancery€CourtÌà à)à àNo.€6015Ì€€€€€Plaintiff/Appellee.à à)Ìà à)ÌVS.à à)à àC.€A.€NO.€02A01„9506„CH„00124ÌÙ€€ÙÙ€€ÙßL€"$!;+'h|¿` Å `€€Lßà à)Ìò òJACKSON€CENTRE,€INC.€,ó óà à)Ìà à)Ì€€€€€Defendant/Appellant€à à)Ìà à)Ìò òJACKSON€CENTRE,€INC.ó ó,à à)Ìà à)Ì€€€€€Defendant/Third„Party€Plaintiffà à)Ìà à)ÌVS.à à)Ìà à)Ìò òMODELINK€CORPORATION,ó óà à)Ìò òROBERT€E.€ROARK€and€BILL€EADY,ó óà à)Ìà à)Ì€€€€€Third„Party€Defendants.à à)Ìà à)Ì______________________________________________________________________________ÌÌFrom€the€Chancery€Court€of€Crockett€County€at€Alamo.Ìò òHonorable€George€R.€Ellis,€Chancellor€ó óÌÌÌÌò òThomas€F.€Tayloró ó,ÌWALDROP€AND€HALL,€P.€A.,€Jackson,€TennesseeÌAttorney€for€Defendant/Third„Party€Plaintiff/Appellant.ÌÌÌÌò ò€S.€Jasper€Tayloró ó,€Bells,€TennesseeÌAttorney€for€Plaintiff/Appellee.ÌÌÌÌOPINION€FILED:ÌÌò òREVERSED€AND€REMANDEDÌÌÌà àFARMER,€J.ÌÌÌÌCRAWFORD,€P.J.,€W.S.€ó ó:€(Concurs)Ìò òHIGHERS,€J.€ó ó:€(Concurs)ÌÌÌÌÌÌÓÓÓ  ÓÓ` Ü` ˜XÓà àThis€case€comes€before€us€for€a€determination€of€whether€the€trial€court€correctlyÏadjudged€the€appellant,€Jackson€Centre,€Inc.€(ð ðJackson€Centreðð€or€ð ðCorporationðð),€liable€to€theÏappellee,€Bells€Banking€Company€(ð ðBells€Bankingðð€or€ð ðBankðð),€under€a€corporate€guarantyÏagreement,€executed€by€the€then€president€and€C.E.O.€of€the€Corporation,€Robert€Roark.€€TheÏagreement€guarantees€payment€to€the€Bank€of€a€line€of€credit€(up€to€the€principal€amount€ofÏ$120,000)€extended€to€Modelink€Corporation€(Modelink),€whose€president€was€a€Mr.€B.€G.€Eady.€ÏA€loan€to€Modelink€in€the€principal€amount€of€$80,175.38€is€evidenced€by€a€promissory€noteÏsigned€by€Mr.€Eady€on€behalf€of€Modelink,€dated€October€12,€1989.€€The€guaranty€also€bears€thisÏdate.€ÌÌà àThis€lawsuit€was€initiated€by€Bells€Banking€against€Jackson€Centre€on€NovemberÏ21,€1990€after€Modelink€defaulted€on€the€note.€€It€was€alleged,€òòò òinter€aliaóóó ó,€that€Mr.€Roark€had€theÏauthority€to€bind€the€Corporation,€as€its€president.€€Jackson€Centre€answered,€denying€anyÏauthority€by€Roark€to€enter€into€the€guaranty€on€its€behalf€and€asserting€that€Roark€ð ðknowinglyÏacted€outside€the€scope€of€his€authority€in€executing€any€documents€[obligating€the€Corporation]€toÏ[the€Bank]€in€any€way€.€.€.€.ðð€€Jackson€Centre€pursued€a€third€party€complaint€against€ModelinkÏand€Roark× ƒ% ××  ×€for€reimbursement€and€contribution€in€the€event€it€was€adjudged€liable€to€BellsÏBanking.€€ÌÌà àAfter€a€bench€trial,€the€following€findings€of€fact€were€made:ÌÌÓÓà8 àà à[Jackson€Centre]€was€formed€in€1988€for€the€purpose€ofÏpurchasing,€refurbishing,€developing,€leasing€and€managing€realÏestate€in€downtown€Jackson,€Tennessee.€[Roark]€served€as€theÏPresident,€Chief€Executive€Officer€and,€Chairman€of€the€Board€OfÏDirectors€of€the€corporation€from€its€inception€until€1990.€€TheÏdirectors€were€Clark€Shaw,€Robert€E.€Roark,€Lloyd€Privett,€JeanÏSmith€and€Gary€Deaton.ÌÌà8 àà àIn€1989€Lloyd€Privett€came€to€[Bells€Banking]€andÏintroduced€[Roark],€as€the€President€and€Chief€Executive€Officer€ofÏ[Jackson€Centre],€to€Ben€Mehr,€the€Chief€Executive€Officer€of€theÏ[Bank].€€Lloyd€Privett€informed€Mehr€of€the€purpose€of€theÏcorporation€and€that€they€would€like€to€obtain€financing€from€theÏbank€to€accomplish€their€goal.ÌÌà8 àIn€October€1989,€[Bells€Banking]€was€approached€by€[Eady]ÏPresident€of€[Modelink]€and€[Roark],€who€informed€the€bank€thatÏ[Modelink]€had€been€awarded€a€contract€by€[Jackson€Centre]€toÏprovide€engineering€and€architectural€services€to€[Jackson€Centre]Ïand€in€turn€[Modelink]€would€be€paid€the€sum€of€$120,000.00€forÏthe€services€and€[Roark]€produced€letters€between€the€two€toÏevidence€the€contract.€€Roark€and€Eady€requested€the€[Bank]€toÏprovide€financing€for€[Modelink]€to€perform€under€the€contract€untilÏpayments€were€made€by€[Jackson€Centre]€to€[Modelink]€under€theÏcontract.€€The€[Bank]€required€security€for€the€loan€and€[Roark]Ïagreed€to€sign€a€guaranty€agreement€on€behalf€of€[Jackson€Centre]Ïguaranteeing€payment€of€the€indebtedness.€[Roark]€signed€theÏguaranty€agreement€on€October€12,€1989€and€the€loan€was€made€toÏ[Modelink].ÌÌà8 àà à[Jackson€Centre]€in€the€period€of€January€1989€throughÏOctober€1989€entered€into€other€financing€arrangements€solely€uponÏthe€signature€of€[Roark],€as€President.€€On€January€3,€1989,Ï[Jackson€Centre]€executed€a€Deed€of€Trust€.€.€.€to€secure€anÏindebtedness€of€$160,000.00.€[In]€January,€1989,€[Jackson€Centre]Ïexecuted€a€Deed€of€Trust€in€favor€of€Union€Planters€National€BankÏto€secure€an€indebtedness€of€$50,000.00.€€On€March€16,€1989Ï[Jackson€Centre]€executed€a€Deed€of€Trust€.€.€.€to€secure€anÏindebtedness€of€$37,500.00.€€In€June€of€the€same€year€a€Deed€ofÏTrust€was€made€.€.€.€to€secure€an€indebtedness€of€$84,000.00.€€InÏOctober€of€1989,€[Jackson€Centre]€executed€a€modificationÏagreement€modifying€the€Union€Planters€Deed€of€Trust.€€All€of€theseÏdocuments€were€signed€by€[Roark]€as€President€of€[JacksonÏCentre].ÌÌà8 àà àIn€December,€1989,€the€[Bank]€was€contacted€by€JeanÏSmith,€Secretary/Treasurer€of€[Jackson€Centre]€concerning€theÏdetails€of€[the]€guaranty.ÌÌà8 àà àIn€January,€1990,€[Roarkððs]€duties€were€limited€and€heÏcould€no€longer€negotiate€financing€on€behalf€of€[Jackson€Centre].ÌÌà8 àà àThe€[Bank]€notified€[Jackson€Centre]€in€January,€1990,€thatÏthe€interest€payments€were€in€arrears€and€that€if€they€were€not€caughtÏup,€then€collection€procedures€would€be€initiated€against€them.€€€TheÏinterest€was€paid.ÌÌà8 àà à.€.€.€.ÌÌà8 àà àSeveral€months€later,€when€interest€again€became€past€due,ÏBen€Mehr,€again,€contacted€[Jackson€Centre]€and€at€that€time€theÏcorporationððs€board€requested€a€meeting€with€the€[Bank].ÌÌà8 àà àThe€meeting€was€held€in€July€1990€at€the€[Bank].€€DirectorsÏof€[Jackson€Centre]€present€were:€Clark€Shaw,€Gary€Deaton,€JeanÏSmith€and€Lloyd€Privett.€€The€directors€requested€that€the€[Bank]Ïpursue€collection€from€[Modelink]€first€but,€did€not€give€the€[Bank]Ïany€reason€to€believe€that€the€guarant[y]€agreement€would€not€beÏhonored.ÌÌà8 àà à[Modelink]€has€defaulted€on€the€note€executed€on€OctoberÏ12,€1989€.€.€.€.€€ÌÌÌÌÓÓà àBased€upon€the€foregoing,€the€trial€court€concluded€that€Roark€had€the€authority€toÏbind€Jackson€Centre€by€signing€the€guaranty€and€that€the€Corporation€failed€to€repudiate€RoarkððsÏactions€prior€to€the€Bankððs€filing€suit.× ƒ& ××  ×€€A€judgment€in€favor€of€the€Bank€was€entered€accordingly.× ƒ' ××  ×€€Ìà àJackson€Centre€appeals€to€this€Court€presenting€the€following€issues€for€our€review:ÌÌÓÓà8 àà à1.€€Was€there€implied€authority€for€Mr.€Roark€to€enterÏ[Jackson€Centre]€into€an€agreement€with€[Bells€Banking]€toÏguarantee€Modelinkððs€debt?ÌÌà8 àà à2.€€Was€there€apparent€authority€for€Mr.€Roark€to€enterÏ[Jackson€Centre]€into€an€agreement€with€[Bells€Banking]€toÏguarantee€Modelinkððs€debt?ÌÌà8 àà à3.€€Did€the€Board€of€Directors€of€[Jackson€Centre]€ratify€theÏguarantee€agreement€between€Mr.€Roark€and€[Bells€Banking]?ÌÌÌÌÓÓWe€review€this€case€in€accord€with€Rule€13(d)€T.R.A.P.€which€provides€for€a€òòò òde€novoóóó ó€reviewÏupon€the€record,€accompanied€by€a€presumption€of€correctness€of€the€trial€courtððs€findings€of€fact,Ïunless€a€preponderance€of€the€evidence€is€otherwise.€€òòò òSee,€e.g.,€Town€of€Bruceton€v.€Arnoldóóó ó,€818ÏS.W.2d€347,€349€(Tenn.€App.€1991).€€The€trial€courtððs€conclusions€of€law€are€also€subject€to€òòò òdeÏnovoóóó ó€review€on€appeal€but€without€any€presumption€of€correctness.€€òòò òSee€Presley€v.€Bennettóóó ó,€860ÏS.W.2d€857,€859€(Tenn.€1993).€€ÌÌà àWe€consider€first€the€issues€relating€to€Roarkððs€authority€to€bind€Jackson€Centre€toÏthe€agreement€in€question.€€As€stated€in€3€C.J.S.€òòò òAgencyóóó ó€ðð€410€(1973),€ð ð[a]€principal€is€boundÏneither€by€contracts€made€by€a€person€not€his€agent,€nor€by€those€of€his€agent€beyond€the€scope€ofÏhis€actual€and€apparent€authority,€which€he€has€not€ratified€and€is€not€estopped€to€deny.ðð€€òòò òSee€alsoÏBagley€&€Co.€V.€Union„Buffalo€Mills€Co.óóó ó,€9€Tenn.€App.€63,€67„68€(1928).€€Implied€authorityÏhas€been€defined€as:ÌÌÓÓà8 à[A]ctual€authority€given€implicitly€by€the€principal€to€his€agent;€.€.€.Ïit€is€actual€authority€circumstantially€proved,€or€evidenced€byÏconduct,€or€inferred€from€a€course€of€dealing€between€the€allegedÏprincipal€and€the€agent.€€It€differs€from€apparent€authority€in€that€it€isÏauthority€which€the€principal€intended€that€the€agent€should€have.ÌÌà8 àà à.€.€.€.ÌÌà8 àà à.€.€.€.€€Implied€powers€.€.€.€must€be€bottomed€on€some€act€orÏacquiescence€of€the€principal,€express€or€implied.ÌÌà8 àà à.€.€.€their€existence€or€nonexistence€in€any€particular€instanceÏbeing€always€determinable€by€reference€to€the€intention€of€theÏparties.€ÌÌÌÌ2A€C.J.S.€òòò òAgencyóóó ó€ðð€153€(1972).€€Apparent€authority€is€most€often€defined€as:ÌÌÌÌà8 àSuch€authority€as€the€principal€knowingly€permits€the€agent€toÏassume€or€which€he€holds€the€agent€out€as€possessing;€suchÏauthority€as€he€appears€to€have€by€reason€of€the€actual€authorityÏwhich€he€has;€such€authority€as€a€reasonably€prudent€man,€usingÏdiligence€and€discretion,€in€view€of€the€principalððs€conduct,€wouldÏnaturally€suppose€the€agent€to€possess.ÌÌÌÌÓÓòòò òRich€Printing€Co.€v.€McKellarððs€Estateóóó ó,€330€S.W.2d€361,€376€(Tenn.€App.€1959);€òòò òsee€V.€L.ÏNicholson€Co.€v.€Transcon€Inv.óóó ó,€595€S.W.2d€474,€483€(Tenn.€1980).€€ÌÌà àIt€is€well€settled€that€apparent€authority€must€be€established€through€the€acts€of€theÏprincipal€rather€than€those€of€the€agent.€€òòò òE.g.,€Franklin€Distrib.€Co.€v.€Crush€Intððlóóó ó,€726€S.W.2dÏ926,€931€(Tenn.€App.€1986).€€Such€requirement€was€adopted€by€our€state€supreme€court€inÏòòò òSouthern€Railway€Co.€v.€Pickleóóó ó,€197€S.W.€675€(1917),€when€stating:ÌÌÓÓà8 àà àThe€apparent€power€of€an€agent€is€to€be€determined€by€theÏacts€of€the€principal€and€not€by€the€acts€of€the€agent;€a€principal€isÏresponsible€for€the€acts€of€an€agent€within€his€apparent€authorityÏonly€where€the€principal€himself€by€his€acts€or€conduct€has€clothedÏthe€agent€with€the€appearance€of€authority,€and€not€where€the€agentððsÏown€conduct€has€created€the€apparent€authority.ÌÌÌÌòòò òÓÓSouthern€Railwayóóó ó,€197€S.W.€at€677;€òòò òsee€also€Franklin€Distribóóó ó.,€726€S.W.2d€at€931.ÌÌà àWith€the€foregoing€legal€principles€in€mind,€we€consider€the€record€before€us.€€AsÏfound€by€the€trial€court,€the€proof€shows€that€various€lease€agreements,€deeds€of€trust€and€aÏð ðModification€and€Extension€of€Trust€Deedðð€agreement€were€executed€by€Roark€as€president€ofÏJackson€Centre.€€However,€the€record€also€evidences€the€Board€of€Directorððs€prior€approval€ofÏRoarkððs€actions€in€these€matters:€first,€in€the€form€of€two€corporate€resolutions,€signed€by€theÏBoard€of€Directors,€allowing€ð ðany€officer€of€the€Companyðð€to€execute€any€and€all€agreementsÏnecessary€to€effectuate€the€Corporationððs€borrowing€of€certain€funds€(these€resolutions€pertainÏspecifically€to€two€of€the€trust€deeds€introduced€at€trial€on€which€only€the€signature€of€RoarkÍappears€and€were€adopted€prior€to€Roarkððs€execution€of€the€latter)€and,€secondly,€in€the€unrefutedÏtestimony€of€board€member,€Jean€Smith.€€When€questioned€about€Roarkððs€duties€toward€theÏCorporation€(prior€to€his€execution€of€the€guaranty),€Smith€replied:ÌÌÓÓà8 àAà à[Roark]€.€.€.€chaired€the€board.€€Because€we€were€small,€theÏboard€felt€that€they€needed€to€be€very€active€because€we€had€to€take€.Ï.€.€other€peopleððs€investment€dollars.€€Therefore,€[Roark]€workedÏfairly€closely€with€the€board.ÌÌà8 àà à.€.€.€He€was€evaluating€the€downtown€as€far€as€properties,Ïtheir€potential€uses€and€their€assessment.€.€.€.ÌÌà8 àà à.€.€.€he€oversaw€the€maintenance€of€the€buildings,€he€initiatedÏcontacts€as€far€as€leases,€he€helped€oversee€the€restoration€of€someÏof€the€buildings.€€And€on€all€of€this,€he€was€reporting€back€andÏworking€with€the€board.ÌÌà8 àQà à.€.€.€.€What€was€the€boardððs€policy€in€regard€to€[Roarkððs]Ïauthority€to€execute€leases€with€other€people?ÌÌà8 àAà àHe€presented€to€the€board€the€leases€prior€to€the€actual€„„€TheÏleases€that€are€exhibits€are€actually€the€final€copy€after€it€was€written.€ÏHe€would€present€a€penciled„in€copy€with€the€amounts€to€the€boardÏfor€us€to€approve.ÌÌà8 àQà àWas€that€done€every€time€that€there€was€a€potential€tenant?ÌÌà8 àAà àI€believe,€in€fact,€I€still€have€some€of€the€penciled„in€copies.ÌÌà8 àQà à.€.€.€you€mentioned€that€there€was€one€time€that,€I€believe,Ï[Roark]€did€sign€a€lease€without€prior€approval.ÌÌà8 àAà àThat€is€correct.€€And€the€board€was€not€pleased.€.€.€.€€HeÏwas€not€given€the€authority€to€lease€the€buildings€without€gettingÏapproval€from€the€board.ÌÌà8 àà à.€.€.€.€ÌÌà8 àQà àBut€each€particular€tenant€was€approved€ahead€of€time€by€theÏboard€with€that€one€exception€you€mentioned.ÌÌà8 àAà àThat€is€all€I€can€recall,€that€one€exception.€€ÌÌÌÌÓÓSmith€confirmed€that€in€January€1990,€Roarkððs€duties€were€limited€and€that€ð ð[a]ll€authority€wasÏtaken€away€from€him.ðð€€She€explained,€however,€that€ð ð[a]nything€as€far€as€rentals,€not€only€inÏJanuary€but€prior€to€January,€was€supposed€to€be€approved€by€the€board.ðð€€ÌÌà àSmith€further€related€that€Roark€had€no€authority€to€execute€promissory€notes,Ïguaranty€agreements€or€trust€deeds€on€behalf€of€the€Corporation€without€prior€board€approval.€€SheÏtestified€that€Roark€had€the€prior€approval€and€specific€authority€of€the€Board€to€sign€each€of€theÏtrust€deeds€and€the€modification€agreement€that€were€submitted€into€evidence.€€Smith€announcedÏthat€Roark€had€no€ongoing€authority€to€sign€any€kind€of€financial€documents,€although€he€hadÏrequested€it.€€She€was€questioned:ÌÌÓÓà8 àQà à.€.€.€in€each€and€every€instance€when€Jackson€CentreÏobtained€financing€from€any€party,€a€private€party€or€a€lendingÏinstitution,€the€board€deliberated€concerning€that€loan€and€made€aÏspecific€decision€in€regard€to€whether€Mr.€Roark€was€to€be€given€theÏauthority€to€sign€those€documents.€€Is€that€correct?ÌÌà8 àAà àThat€is€correct.€€Because€each€of€us€guaranteed€on€a€personalÏbasis.€€So,€there€was€considerable€discussion€prior€to€any€of€thoseÏloans.€€ÌÌÌÌÓÓà àSmith€stated€that€Jackson€Centre€had€never€guaranteed€the€debts€of€others€and€thatÏat€no€time€was€Roark€given€the€authority€to€guarantee€any€loans€in€the€Corporationððs€name.€€TheÏrecord€includes€two€guaranty€agreements€(other€than€the€one€at€issue€here)€wherein€the€individualÏdirectors€guaranteed€the€payment€of€certain€loans€made€to€the€Corporation.€€Both€documents€bearÏthe€signatures€of€all€the€boardððs€directors.ÌÌà àAs€to€that€initial€meeting€of€Privett,€Roark€and€Mehr,€Privett€testified€that€heÏintroduced€Roark€to€Mehr,€using€words€to€the€effect€that€Roark€was€ð ðgeneral€managerðð€of€theÏCorporation.€€Privett€asked€Mehr€if€he€had€heard€of€Jackson€Centre€and€informed€him€that€theyÏð ðwere€trying€a€renovation,€revitalization€of€Jackson,€and€[asked]€if€he€had€any€interest€in€financingÏa€building€if€[they]€had€one€to€come€up.€€At€that€time€[they]€had€no€building€to€purchase.ðð€€MehrÏdoes€not€dispute€that€Privett€questioned€him€regarding€ð ðmoney€to€finance€some€buildings€inÏJackson€.€.€.€.ðð€€According€to€Mehr,€Privett€identified€himself€as€being€ð ðassociatedðð€with€JacksonÍCentre.€€Mehr€does€not€remember€whether€or€not€Privett€identified€himself€as€a€director.€€MehrÏstated€that€Privett€informed€him€that€Roark€ð ðwould€be€the€guy€that€was€managing€[Jackson€Centre]Ïand€looking€after€it;€that€heððd€be€the€guy€that€Iððd€be€dealing€with.ðð€€Mehr€said€that€he€had€no€otherÏcontact€with€Roark€or€any€board€member€prior€to€the€guarantyððs€execution.€€ÌÌà àAfter€careful€review,€we€find€that€the€record€fails€to€reveal€any€conduct€or€course€ofÏdealing€between€Roark€and€Jackson€Centre€which€would€evidence€the€Corporationððs€intent€thatÏRoark€have€such€authority€as€that€at€issue€here.€€Thus,€we€conclude€that€Roark€had€no€actualÏauthority€for€his€actions.€€To€determine€whether€Roarkððs€actions€were€within€the€apparent€scope€ofÏhis€authority,€we€must,€as€heretofore€noted,€look€to€the€acts€of€Jackson€Centre.€€Clearly,€the€BoardÏrequired€prior€approval€on€any€transactions€entered€into€by€Roark€which€would€bind€theÏCorporation.€€All€leases,€deeds€of€trust€and€the€one€modification€agreement€were€executed€byÏRoark€after€obtaining€board€approval,€with€the€one€exception€noted€by€Ms.€Smith.€€It€is€notÏdisputed€that€this€latter€act€met€with€the€Boardððs€strong€disapproval.€€As€to€Privettððs€introduction€ofÏRoark€to€Mehr,€Mehrððs€own€testimony€indicates€that€he€is€uncertain€as€to€whether€Privett€actuallyÏintroduced€himself€as€a€ð ðdirectorðð€of€the€Corporation,€capable€of€granting€any€authority€to€Roark€toÏact€on€Jackson€Centreððs€behalf.€€Also,€Mehr€testified€that€discussion€among€the€three€concerned€theÏð ðfinanc[ing]€of€some€buildingsðð€for€Jackson€Centre.€€Nothing€was€mentioned€regarding€theÏguaranteeing€of€other€corporate€loans€or,€for€that€matter,€any€other€assistance€to€Jackson€CentreÏother€than€the€actual€purchasing€of€buildings.€€Thus,€we€find€Privettððs€comment€that€Roark€was€theÏguy€to€deal€with€insufficient€to€establish€a€holding€out€of€Roark€by€the€Corporation€as€possessingÏthe€authority€to€guarantee€third€party€loans€in€the€name€of€the€Corporation.€€ÌÌà àWe€further€do€no€find€the€record€to€indicate€any€conduct€by€Jackson€Centre€whichÏwould€have€allowed€Mehr€to€ð ðnaturally€supposeðð€that€Roark€had€authority€for€the€action€taken.€ÏClearly,€there€must€have€been€some€question€in€Mehrððs€mind€as€to€Roarkððs€authority€regardingÏexecution€of€the€guaranty€because€Mehr€initially€sought€a€corporate€resolution.€€Mehr€testified€thatÍalthough€he€gave€a€blank€corporate€resolution€to€Roark€for€the€Boardððs€completion,€he€proceededÏto€make€the€loan€to€Modelink€without€first€obtaining€the€signed€resolution€from€the€Board.€€€MehrÏfurther€testified€that€Roark€and€Eady€came€to€the€Bank€with€the€two€letters,€met€with€Mehr,Ïdiscussed€the€loan,€the€loan€papers€including€the€guaranty€agreement€were€signed€and€the€fundsÏissued€all€at€that€time.à8 àà àÌÓÓà8 àà àA€third€person,€by€undertaking€to€deal€with€a€known€orÏpurported€agent,€is€put€upon€inquiry€as€to€the€nature€and€scope€ofÏhis€powers,€and€must€use€due€care€to€discover€them€or€else€sufferÏthe€consequences€if€they€are€exceeded.ÌÌà8 àà à.€.€.€.ÌÌà8 àà àIn€applying€this€rule,€it€has€been€held€that€no€one€is€bound€toÏdeal€with€an€agent,€and,€that€where€anyone€does€so€as€to€mattersÏbeyond€the€actual€authority€conferred,€any€trust€and€confidence€as€toÏsuch€matters€is€reposed€by€him€and€not€by€the€principal,€so€that€theÏlatter€cannot€be€deemed€liable€under€the€principle€that€where€one€ofÏtwo€innocent€parties€must€suffer€from€the€wrongful€acts€of€a€thirdÏperson,€that€one€must€bear€the€loss€who€by€a€confidence€reposed€inÏthe€person€acting€wrongfully€has€made€it€possible.ÌÌÌÌÓÓ2A€C.J.S.€òòò òAgencyóóó ó€ðð€168€(1972).ÌÌà àòòò òContinental€Ins.€Co.€v.€Schulmanóóó ó,€205€S.W.€315,€317„18€(Tenn.€1918)€holdsÏthat€where€an€agent€usually€does€certain€things€respecting€his€principalððs€business€or€if€similarÏagents€in€the€same€business€usually€do€like€things,€then€the€doing€of€such€things€are€within€hisÏapparent€authority€regardless€of€his€actual€authority.€€But€if€the€agent€does€a€thing€consideredÏunusual€in€his€line€of€business,€then€such€thing€is€apparently€beyond€the€scope€of€his€authority.€ÏThe€record€includes€the€undisputed€testimony€of€Gary€Taylor€who€stated€that€he€has€been€in€theÏcontracting/development€business€since€1980.€€He€has€worked€with€other€developers€in€theÏindustry,€both€corporate€and€individual.€€Taylor€stated€that€corporate€developers€do€not€usuallyÏgive€their€officers€the€power€to€guarantee€loans€in€the€corporationððs€name€or€any€ð ðongoingðð€powerÏto€guarantee€loans.€€When€asked,€ð ð[h]ave€you€ever€known€of€an€officer€of€a€corporation€having€theÏauthority€to€guarantee€a€loan€in€the€corporate€name€without€prior€board€or€shareholder[€]€approvalÍof€that€specific€act?ðð,€Taylor€replied,€ð ð[n]o,€sir.ðð€€We€conclude€that€Roark€was€acting€outside€theÏscope€of€his€apparent€authority€when€executing€the€guaranty€and€that€his€actions€were€not€bindingÏon€the€Corporation,€absent€any€subsequent€ratification€by€the€Board.ÌÌà àThe€final€issue€concerns€whether,€despite€Roarkððs€lack€of€authority€to€execute€theÏguaranty,€Jackson€Centre,€nonetheless,€ratified€his€actions.€€Ratification€is€the€express€or€impliedÏadoption€and€confirmation€by€one€person€of€an€act€or€contract€performed€or€entered€into€in€hisÏbehalf€by€another€who€assumed€to€act€as€his€agent€without€authority€to€do€so.€€Ratification€isÏconfirmation€after€conduct.€€òòò òBagley€&€Co.€v.€Union„Buffalo€Millsóóó ó,€9€Tenn.€App.€at€68.€€It€isÏfurther€stated€in€2A€C.J.S.€òòò òAgencyóóó ó€ðð€71€(1972)€that€for€a€ratification€to€exist,€there€must€be€aÏconcurrence€of€three€elements:€ð ð(1)€[a]cceptance€by€the€principal€of€the€benefits€of€the€agentððs€act,Ï(2)€with€full€knowledge€of€the€facts€and€(3)€circumstances€or€an€affirmative€election€indicating€anÏintention€to€adopt€the€unauthorized€arrangement.ðð€€ÌÌà àIt€is€obvious€in€this€case€that€no€benefit€has€been€bestowed€upon€or€accepted€byÏJackson€Centre.€€The€purported€ð ðagreementðð€between€Jackson€Centre€and€Modelink,€as€evidencedÏby€the€two€letters€shown€Mehr€prior€to€the€guarantyððs€execution,€was€just€that.€€The€recordÏindicates€that€the€letters€were€written€between€Roark,€as€president€of€Jackson€Centre,€and€Eady,Ïpurporting€to€obligate€Eady€to€perform€certain€services€for€Jackson€Centre.€€The€letters€are€datedÏthe€25th€and€26th€days€of€September€1989,€respectively.€€Smith€testified€that€the€Board€wasÏunaware€of€these€letters€prior€to€January€1990€and€that€Jackson€Centre€never€authorized€any€suchÍð ðagreement.ðð× ƒ( ××  ×€€The€record€does€not€suggest€otherwise.× ƒ) ××  ×€€The€record€further€indicates€that€JacksonÏCentre€did€not€receive€any€portion€of€the€monies€loaned€Modelink.× ƒ, ××  ×ÌÌà àThe€court€of€appeals€in€òòò òHill€v.€Hillóóó ó,€241€S.W.2d€865€(Tenn.€App.€1951)€held:ÌÌÓÓà8 àà àIn€the€absence€of€a€retention€of€benefits€with€knowledge€ofÏthe€fraud€the€principal€can€be€held€[liable]€for€the€agentððs€fraud€onlyÏif€perpetrated€while€acting€within€the€course€and€scope€of€the€agentððsÏauthority.€€It€is€not€sufficient€to€impose€liability€upon€the€principalÏthat€the€principal€might€have€benefited€by€the€agentððs€wrongful€andÏunauthorized€act.ÌÌÌÌÓÓòòò òHillóóó ó,€241€S.W.2d€at€871.€€€As€noted,€Jackson€Centre€has€in€no€way€benefited€from€any€of€RoarkððsÏactions€at€issue€here.€€Moreover,€we€have€determined€that€Roark€was€acting€outside€the€scope€ofÏhis€authority.€€We,€therefore,€hold€that€under€these€circumstances€Jackson€Centre€cannot€be€heldÏliable€under€the€corporate€guaranty.€ÌÌà àAccordingly,€the€judgment€of€the€trial€court€entered€in€favor€of€Bells€Banking€isÏreversed€and€this€cause€remanded€for€any€further€proceedings€deemed€necessary.€€Costs€areÏassessed€against€Bells€Banking€Company,€for€which€execution€may€issue€if€necessary.ÌÌÓÓÓ` Ü` È“XÓà à___________________________________Ìà àFARMER,€J.ÌÌÌÌ______________________________ÌCRAWFORD,€P.J.,€W.S.€(Concurs)ÌÌÌÌ______________________________ÌHIGHERS,€J.€(Concurs)Ì