Apparent Agency Opinions

The Tennessee Court of Appeals has released two opinions on the issue of apparent agency in a hospital setting.  One case concerns an emergency room doctor, the other a radiologist.

The law?  Both decisions contain these paragraphs: 

"Apparent agency is essentially agency by estoppel. White v. Methodist Hosp., 844 S.W.2d 642, 646 (Tenn. Ct. App. 1992). Its existence depends upon such conduct by the principal as would preclude the principal from denying another’s agency. Kelly v. Cliff Pettit Motors, 234 S.W.2d 822 (Tenn. 1950). The liability of the principal is determined in any particular case by what authority the third person, exercising reasonable care and prudence, was justified in believing that the principal had by his acts under the circumstances conferred upon his agent. Southern Ry. Co. v. Pickle, 197 S.W. 675, 677 (Tenn. 1917).

‘It is well settled that apparent authority must be established through the acts of the principal rather than those of the agent.’ Bells Banking Co. v. Jackson Centre, Inc., 938 S.W.2d 421, 425 (Tenn. Ct. App. 1996). A principal is responsible for the acts of an agent only where the principal himself by his acts or conduct has clothed the agent with the appearance of authority, and not where the agent’s own conduct has created the apparent authority. Mechanics Laundry Serv. v. Auto Glass Co. of Memphis, 98 S.W.3d 151, 157 (Tenn. Ct. App. 2002). To prove apparent authority one must establish: (1) the principal actually or negligently acquiesced in another party’s exercise of authority; (2) the third person had knowledge of the facts and a good faith belief that the apparent agent possessed such authority; and (3) the third person relied on this apparent authority to his or her detriment. Mechanics Laundry Service v. Auto Glass Co. of Memphis, Inc., 98 S.W.3d at 157."

In both cases the trial judge’s decision to deny summary judgment to the hospital was reversed.


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