I am delighted and honored to report that I have been selected to be the next Dean of the Creighton University School of Law, effective next July.
Here is the Creighton University press release
The Delaware Court of Chancery has held that a shareholder may inspect books and records related to acts occurring before the shareholder owned shares where the purpose is to assemble facts showing demand futility rather than to investigate misdeeds the stockholder would have no standing to assert. In Melzer v. CNET Networks, Inc., plaintiff filed a derivative complaint in federal court. The District Court dismissed without prejudice for failure to plead demand futility and stayed the proceedings to allow a books and records request under DGCL § 220. Mr. Melzer filed an action in the Court of Chancery when CNET resisted his demand as to documents related to facts that pre-date Mr. Meltzer’s share ownership. CNET’s primary argument against inspection is that plaintiff would not have standing to assert any claims uncovered by documents predating his share ownership.
Chancellor Chandler permitted inspection. He premised his
decision on the idea that, “A
stockholder must be given sufficient access to books and records to effectively
address the problem of backdating through derivative litigation.” Under Stone
v. Ritter, one way to show demand futility is to allege a Caremark
claim. The standard of review for such a claim is a sustained or systematic
failure to exercise oversight. To allow plaintiff to effectively address that
claim, he is entitled to inspect documents that pre-date his stock ownership.
This opinion is
noteworthy because it’s a nice synopsis of the Delaware Court of Chancery’s
approach to books and records requests. It’s a good applied example of the
Supreme Court’s recent Seinfeld decision, which was primarily
theoretical. It also suggests that Caremark claims may be more useful
that one might think at first blush. In Caremark and Stone, and
perhaps other opinions, the Delaware courts have observed that a failure to
monitor claim is extraordinarily difficult to maintain, in large part because
the standard of review is so high. The board is liable only if it intentionally
engaged in a sustained or systematic failure to monitor. However, this opinion
suggests that plaintiff might be able to use a colorable Caremark claim
to inspect books and records beyond those the plaintiff might ordinarily
inspect because those broader records are germane to whether the board exhibited
a sustained or systematic failure to monitor. Obviously the real effect of this
opinion will depend on how the Court of Chancery bench shape their orders
permitting inspection. I suspect this will be a subject of warm contention for
a while until an aesthetic of inspection for Caremark claims emerges.
The Chancellor was clearly annoyed with CNET’s resistance. He began the opinion by observing, “This should have been a very easy case.” With wonderful symmetry, he ends with another pithy statement: “It is about time defendant … gets ‘going, going / back,
back / to Cali, Cali,’ ” citing, of course, to The Notorious B.I.G.
This case could be taught in Chapter 15 along with Seinfeld. Francis Pileggi was kind enough to send me this case and, as ever, had a good post here.
The Supreme Court of Missouri has erroneously held that put options may be exercised even after the underlying shares have been cancelled. In Weinstein v. KLT Telecom, Inc., Weinstein obtained an option in December 2000 to put shares of DTI Holdings, Inc. to KLT Telecom, Inc. at $15 million. The option was exercisable beginning September 1, 2003. Weinstein gave the share certificates to an escrow agent to hold. DTI entered bankruptcy in 2001 and in June 2003 the bankruptcy court cancelled all DTI equity securities. On September 2, 2003 (September 1 was Labor Day), Weinstein sought to exercise the option. KLT refused and Weinstein filed suit. KLT’s primary defense was failure of consideration because the shares had ceased to exist at the time of exercise.
Judge Limbaugh held that the consideration should be measured when the option contract was entered into and thus the option was supported by consideration, even though the shares later became worthless. To the extent KLT was arguing failure of performance by Weinstein, Judge Limbaugh held that
The shares, though worthless, do in fact exist, and they were tendered to [KLT] through the escrow agent.
Judge White, in dissent, pointed out the distinction between worthless shares and nonexistent shares. If the value of the DTI shares had simply been zero, the option could be exercised. However, the shares were cancelled; they ceased to exist. Thus there was a failure of consideration.
Judge White must be correct in this interpretation. Missouri’s corporations statute does not contain a cognate to MBCA § 6.03(a): “Shares that are issued are outstanding shares until they are reacquired, redeemed, converted, or cancelled.” Nonetheless, the common law concept of cancelling shares is that the shares cease to exist. Obviously the certificates for cancelled shares simply represent nothing. This case could be taught in Chapter 6 at page 197 in connection with the concept of “outstanding”.
The Minnesota Court of Appeals has held that the de facto LLC doctrine does not exist in Minnesota and that the LLC-by-estoppel doctrine is inapplicable where a party’s intention to deal solely with an LLC is induced by fraud.
In Stone v. Jetmar Properties, LLC, Ortega gave Hammond an unsecured $200,000 loan to develop property that Ortega had planned to sell to Jetmar, Hammond’s LLC. The sale was not completed because Hammond could not obtain sufficient funds. Although the loan was to be repaid in three days, Hammond never repaid it. A few months later, Hammond met Stone and convinced him to invest more than $50,000 in Jetmar projects. Hammond convinced Stone to quitclaim a rented duplex to Jetmar so that Jetmar’s balance sheet would show sufficient assets to obtain further financing. Hammond promised to reconvey the property in sixty days and told Stone he could continue to keep the rent from the tenants.
Hammond recorded the deed the next day and mortgaged the duplex to Ortega the day after that in exchange for Ortega’s agreement to extend the $200,000 loan. Ortega recorded the mortgage a few days later after confirming that Jetmar had title. Ortega foreclosed on the duplex about seven months later, sending notice to the tenants who forwarded it to Stone. Relying on Hammond’s assurances that all would be well, Stone did not contact Ortega to assert his interest in the duplex. A couple of months later Ortega conducted a foreclosure sale at which he purchased the duplex in return for his $200,000 loan to Jetmar. About a week later, Hammond filed Jetmar’s articles of organization. Apparently neither Ortega nor Stone knew that Jetmar had not been formed. Stone filed suit against Jetmar, Hammond, and Ortega seeking damages and a declaratory judgment that he owned the duplex. Jetmar and Hammond defaulted.
Judge Lansing held that Stone’s quitclaim dean to Jetmar was void because Jetmar did not exist at the time. Neither the de facto entity doctrine nor the entity-by-estoppel doctrine prevented Stone from reclaiming title to the duplex. Judge Lansing held that an element of the de facto doctrine was not met because Hammond made no colorable attempt to form the LLC at the time Stone conveyed the duplex. She further held that the de facto entity doctrine cannot apply to LLCs. Minnesota’s corporations act, which is based, in pertinent part, on the MBCA of 1950, abolished the de facto corporation doctrine. The reporter’s notes to the Minnesota LLC statute state that corporate law should apply to analogous portions of the LLC statute. Because the LLC statute’s section stating that an LLC’s existence begins at filing is based on a similar corporations act section, the de facto entity doctrine cannot apply to LLCs.
The entity-by-estoppel doctrine was not abolished by statute but does not allow Ortega to retain the duplex. Although Stone intended to deal only with Jetmar, not Hammond, that intention was induced by fraud, which allows the court to decline to apply the entity-by-estoppel doctrine. Thus Stone cannot be estopped from seeking to recover the duplex.
As a policy matter, it makes sense to be consistent in applying the defective formation doctrines of de facto entity and entity-by-estoppel. The drafters of the current MBCA concluded that the 1950 MBCA’s attempt to end the de facto corporation doctrine was misguided; courts continued to provide equitable relief despite the statute. Whether the drafters were right in that conclusion is less than obvious and the survival of the 1950 MBCA provisions in a few states, such as Minnesota, suggests that the appropriate policy choice is not obvious. The entity-by-estoppel doctrine is so amorphous that perhaps the best one can say is that, if their courts are consistent, then they’ve made an appropriate choice in terms of defining the doctrine.
This case could be taught in Chapter 19 either right before or just after P.D. 2000, L.L.C. v. First Financial Planners, Inc., on casebook page 745. It would make a good contrast with P.D. 2000, L.L.C. on the entity-by-estoppel question.
One other aspect of this case caught my eye. Jetmar’s counsel was Alex W. Russell, Esq. Mr. Russell practices with, and, in fact, seems to be the only lawyer at, the firm called, “Evening & Weekend Law Offices”. This is an interesting marketing technique and I wonder whether Mr. Russell’s practice is helped or hurt on the whole by his choice of firm name.
In Desimone v. Barrows, Sycamore Networks, Inc., issued stock options to certain non-executive employees, certain officers, and the four outside directors. Desimone, a shareholder, brought a derivative suit to recover from the recipients and the two inside directors on the ground that the board breached its fiduciary duties. Vice Chancellor Strine dismissed the complaint on the grounds that plaintiff lacked standing to challenge some of the options because he was not a stockholder when some of the option grants were made, had not shown demand futility as to some claims, and did not state a claim upon which relief can be granted as to the remaining claims.
The pedagogical value of this opinion lies in Strine, VC’s discussion of the current options litigation and his discussion of the effect of Stone v. Ritter on Caremark claims. He quite lucidly describes backdating and distinguishes it from spring loading and bullet-dodging practices. But more importantly, he gives his view of Stone. I don’t read the Vice Chancellor as differing from my own interpretation of Stone (here) though he claims that my reading is not “entirely consistent” with Stone:
In this same vein, the importance and utility of the Delaware Supreme Court’s recent decision in Stone v. Ritter, reinforcing the vitality of this court’s decision in In re Caremark Int'l Inc. Deriv. Litig. should not be ignored. Some respected scholars seem to fear that Stone opens directors to new kinds of claims foreclosed by Caremark, while others read it as taking away a non-scienter based claim Caremark supposedly seemed to suggest. Neither position seems entirely consistent with the decision itself. Stone clarified one of the most difficult questions in corporate law — when directors with no motivation to injure the firm can be held responsible if the corporation incurs serious harm as a result of its failure to obey the law. What Stone makes clear is that Caremark and its progeny, such as Guttman v. Huang, are still good law. For reasons Caremark well-explained, to hold directors liable for a failure in monitoring, the directors have to have acted with a state of mind consistent with a conscious decision to breach their duty of care. Caremark itself encouraged directors to act with reasonable diligence, but plainly held that director liability for failure to monitor required a finding that the directors acted with the state of mind traditionally used to define the mindset of a disloyal director — bad faith — because their indolence was so persistent that it could not be ascribed to anything other than a knowing decision not to even try to make sure the corporation’s officers had developed and were implementing a prudent approach to ensuring law compliance. By reinforcing that a scienter-based standard applies to claims in the delicate monitoring context, Stone ensured that the protections that exculpatory charter provisions afford to independent directors against damage claims would not be eroded. Stone has obvious implications for cases like this, when a plaintiff seeks to hold directors accountable for failing to prevent backdating by corporate officers.
Professors teaching Desimone could do so at page 400 of the casebook at the end of section 4. Alternatively, one could summarize this case in the Notes and Questions following Stone, which is inserted at page 394. Both Stone and Desimone are included in the casebook Supplement.
Francis Pileggi has a characteristically good discussion of Desimone (here). Larry Ribstein also has a very good post on this case (here).
The Delaware Court of Chancery has held that being dilatory in figuring out somewhat confusing bylaws is not a ground for excusing compliance with those bylaws. In Openwave Systems Inc. v. Harbinger Capital Partners Master Fund I, Ltd., Openwave called its annual meeting of stockholders on December 1, 2006, with the meeting to be held January 17, 2007. Under Openwave’s bylaws, advance notice of nominations for directors had to be given to the corporation by the close of business on December 11th.
Harbinger, which owned about 10% of Openwave, decided to run a slate of nominees for the two open seats on Openwave’s board. Harbinger submitted its nominees to Openwave on December 28th and simultaneously changed from a 13G to a 13D filing. Openwave allowed the two nominees to appear on the ballot but reserved its right to challenge their nomination and election. The two highest vote-getters were one of Harbinger’s nominees and one of Openwave’s nominees. Hilarity (read, litigation) obviously ensued.
After a one day trial, Vice Chancellor Lamb held that Harbinger’s nominees had not been properly nominated, thus the two Openwave management nominees were the validly elected directors. The Vice Chancellor did not believe testimony that Harbinger’s principals were diligent but confused about the application of Openwave’s bylaws and so were unable to nominate candidates by December 11th. Rather, he found that Harbinger was simply lax in deciding whether to run a slate at all and, by the time it decided to do so, had missed the bylaw deadline. Although Harbinger sought legal advice about the effect of Openwave’s bylaws, it did not receive that advice before mid-December, after the December 11th deadline.
Vice Chancellor Lamb certainly decided this case correctly. Pedagogically, this case could be taught in conjunction with McKesson Corp. v. Derdiger (casebook page 546).
The bylaws in effect when this case arose are here.
As usual, Francis Pileggi has good posts on this case here and here.
In MetCap Securities LLC v. Pearl Senior Care, Inc., NASC struck a deal to acquire Beverly Enterprises. The merger agreement contained a parenthetical requiring NASC to pay a finder’s fee to MetCap, an investment banker. NASC could not raise sufficient funds to complete the all-cash deal so it entered into an agreement with Pearl Senior Care to assume all of NASC’s obligations to purchase Beverly, including the obligation to pay MetCap’s finder’s fee.
Beverly, NASC, and Pearl negotiated a revised merger agreement and, as is typical, the final negotiating and drafting went late into the night. Around 10 p.m. on a Sunday, the two main lawyers for NASC went home, leaving one of their partners, Dickerson, to finish the work and leaving signature pages with him. Three hours later, Pearl’s counsel deleted the parenthetical and Dickerson apparently acquiesced or didn’t notice. Thus Pearl neither assumed nor was assigned NASC’s obligation to MetCap. The final version of the amended merger agreement was finalized at 4 a.m. and Dickerson attached the signature pages. Four months later the acquisition closed and MetCap discovered that NASC, not Pearl, was the only entity obligated to pay its finder’s fee. NASC was formed for the express purpose of acquiring Beverly and did not have any assets, which MetCap knew when it agreed to perform investment advisory services. MetCap and NASC sued Beverly and Pearl for reformation and damages.
Vice Chancellor Noble dismissed a fraud claim and a third party beneficiary claim. He also dismissed an unjust enrichment claim against NASC but declined to dismiss an unjust enrichment claim against Pearl. Finally, he denied MetCap’s claim for reformation but not NASC’s claim for reformation.
This case is particularly intriguing in its consideration of Dickerson’s power to bind NASC. NASC argued that Dickerson’s power to bind it was circumscribed because he was “deal counsel”, apparently suggesting a status with less power to bind the principal than a transaction lawyer would ordinarily have. The Vice Chancellor held that the scope of a deal counsel’s actual authority would, of course, be fact-specific. He rightly focused, however, on Pearl’s lawyer’s reasonable perception of Dickerson’s powers and found no evidence that suggested knowledge of any limits on Dickerson’s authority. Nonetheless, evidence suggested that Dickerson did not tell NASC that he had acquiesced to the omission of the parenthetical. Ordinarily, an agent’s knowledge binds the principal but here, said Vice Chancellor Noble, the complaint sufficiently (though weakly) alleged that Dickerson might have been conflicted in his role so that ascription of his knowledge to his principal was not appropriate.
In a footnote in a later opinion denying reargument, Vice Chancellor Noble wrote,
MetCap’s insistence that the Court look to the “circumstances” surrounding the Third Amendment and focus on MetCap’s perceived lack of any means to obtain payment of its fee, requires the Court to address an issue that it had sought to avoid. The Court, thus, turns to the allegations regarding the conduct of the attorney representing … NASC (but not MetCap) when he made the final revisions to the Third Amendment that eliminated the provision that arguably would have transferred NASC’s liability for MetCap’s fee to Pearl …. If that attorney, negligently or without authorization (and the Amended Complaint at ¶ 23 alleges that he was without authority), revised the Third Amendment to deprive NASC of its entitlement to have its $20 million obligation to MetCap paid at closing, then NASC would seem to have a claim against that attorney and his firm through which it would be able to meet its obligations (perhaps reduced by the cost of collection) to MetCap. This observation is not essential to resolution of the motion for reargument, but the Amended Complaint’s description of the obvious source of funding induces a skeptical view toward the allegation that NASC is unable to pay, an allegation that is accepted for present purposes under Court of Chancery Rule 12(b)(6). In short, NASC may not now have the funds to meet its obligation to MetCap, but the Amended Complaint, if its allegations are correct, suggests a way for NASC to recover the needed funds.
Francis Pileggi has two posts on this case (here and here) and Steven Davidoff has a terrific post on it, as well (here)
The Delaware Court of Chancery has denied stockholder inspection of three letters on the grounds that the stockholder does not have a proper purpose and that, even if the purpose were proper, the letters are confidential and the harm from disclosure would outweigh the benefits. In Pershing Square, L.P. v. Ceridian Corp., Pershing Square, Ceridian’s largest stockholder, learned that Mr. Krow, the president of one of Ceridian’s two operating units, had sold a significant amount of stock and intended to quit because he disagreed with the business plan of Ceridian’s CEO, Ms. Marinello. Ms. Marinello confirmed those business plans in a meeting with Pershing Square and other significant stockholders. Pershing Square then met with Krow who disclosed the existence of some letters to the board that, inter alia, hinted at mismanagement by the prior CEO and hinted that the board had been lax in its oversight. Pershing Square then announced its intention to run an opposition slate of directors at the Ceridian annual meeting. All these events occurred within two weeks.
A month later, Pershing Square made a books and records demand under DGCL § 220 seeking the letters and a few other items. Ceridian allowed inspection of the other items but denied inspection of the letters. Pershing Square filed suit and a trial ensued.
Chancellor Chandler denied inspection. He held that Pershing Square’s ostensible purposes, to communicate with stockholders for the purpose of soliciting proxies and to investigate the suitability of directors, were not its actual purpose. Pershing Square’s actual purpose was legally to make public the information in the letters, which it could not otherwise publicize without acknowledging that it had obtained that information improperly. Chancellor Chandler also held that the letters were confidential, that their confidentiality had been maintained, and that the harm of disclosure would outweigh the benefits.
Chancellor Chandler is absolutely right here and the case is pedagogically interesting on at least three levels. First, the Chancellor sets out in wonderfully clear and concise language the Delaware rules for books and records disclosure. That is, that the burden is on the stockholder to assert a proper purpose, to prove that it has evidence warranting further investigation, and to prove that the information is necessary and essential to its stated purpose. The corporation may defeat inspection by showing that the stockholder’s ostensible purpose is not a proper purpose or, if it is proper, that it is not the stockholder’s actual, improper, purpose. A stockholder may inspect for a proper purpose even if the stockholder’s additional purposes are improper. Books and records inspection is commonly coupled with a confidentiality order.
Second, it makes a nice contrast with Seinfeld v. Verizon Communications Inc., (Casebook Supplement), which is replacing Compaq Computer Corp. v. Horton, casebook page 567. This case could be inserted at page 571. The two cases taken together would make a nice class discussion of the contours for stockholder inspection.
Finally, and perhaps most importantly, there are distinct fiduciary and professional responsibility aspects to this case. Pershing Square’s counsel and Mr. Krow’s personal counsel attended the meeting between Pershing Square and Mr. Krow. Chancellor Chandler, in his understated way, lays out the problems:
While Krow was a Ceridian fiduciary, but contemplating resignation, he formed an alliance with his employer’s largest stockholder to achieve one common goal—the replacement of the current board with a board that would spin-off Comdata and retain Krow as CEO. To further this goal, Krow participated in two secret meetings with Pershing Square. In the first, he discussed Ceridian’s strategic plans, aligned himself with Pershing Square, and schemed to unseat Ceridian’s current management and board. In the second meeting, held on one day’s notice in an airport, Krow reassured Pershing Square that he was adverse to the current board and at least allied with, if not loyal to, Pershing Square. Krow advised Pershing Square of Ceridian stockholders who were loyal to Krow and would likely support Pershing Square’s opposition slate. He also advised Pershing Square on the suitability of at least one of its nominees. Further, he disclosed confidential information written not only by himself, but also by another Ceridian executive officer.
Notably, Pershing Square and Krow were both represented by counsel, who informed them that Krow might face legal issues if he joined Pershing Square’s slate. Yet, neither party seemed concerned that Ceridian, the company that employed Krow, was not represented at this meeting. Both participants ignored all duties that Krow owed to Ceridian, including Krow’s duty to report to management elected by and responsible to all stockholders. It appears that self-interest, not the best interest of the corporation or its stockholders, drove Krow’s actions, and Pershing Square stood to benefit from Krow’s self-interested actions.
Law professors who teach this case can and should raise questions about Mr. Krow’s behavior under Agency and Corporate law, Pershing Square’s ethics, and counsel for Pershing Square and for Mr. Krow’s professional responsibility.
Francis Pileggi has a very nice discussion of this opinion here.
The North Carolina Court of Appeals has erroneously held that directors do not face conflicts of interest when they elect a family member as an officer, approve compensation for officer-family members, and approve “matters related to” those family members. The court also erroneously focused on the directors’ voting (rather than on the underlying transaction) to determine that election of a family member as an officer and compensation paid to officer-family members are not transactions “with the corporation”. The court erroneously held that those transactions are not subject to the North Carolina conflict of interest safe harbor statute.
In Geitner v. Mullins, a corporation was owned equally by Ms. Geitner and Ms. Mullins, two daughters of the founder. The six person board was not equally divided between the sisters. The board consisted of Ms. Geitner and her husband, on the one hand and Ms. Mullins, her husband (Mr. Mullins), her daughter (Ms. Shehan), and her son on the other hand. The Mullins branch controlled the corporation.
The board approved bonuses for Mr. Mullins, who was the president, and, after his death, voted to appoint Ms. Shehan as president and to give her a substantial raise. Mr. Mullins abstained from voting on his bonuses and Ms. Shehan abstained from voting on her appointment as president and concomitant raise. Each vote was approved by the remaining three Mullins directors (a non-family member replaced Mr. Mullins on the board and voted with the Mullins family); the two Geitner family directors voted against each transaction. The Geitners brought suit seeking a declaration that the Mullins directors’ votes were invalid and that any future votes “on matters related to” Mr. Mullins and Ms. Shehan would be invalid because they were not in conformity with the North Carolina conflict of interest statute. That statute is substantially identical to pre-1990 MBCA § 8.31, which is in effect in about a dozen states. It is comparable to Delaware’s approach in DGCL § 144.
Judge Tyson held that the family relationships, vel non, are insufficient to trigger the conflict of interest statute because the statute does not explicitly state that family relationships are conflicts of interest. He also held that the statute is not triggered because voting is not a transaction with the corporation. Thus the court affirmed entry of summary judgment for defendants.
Judge Geer, in her concurrence, disagreed with both of Judge Tyson’s assertions, and she is exactly right. She looked to both the standard treatise on North Carolina corporate law and, more pertinently, to the MBCA Official Comments for guidance. Both sources make salient the intuitive notion that a transaction between a corporation and a director’s immediate family member is a conflict of interest for the director. She then moved to a more central point, which Judge Tyson did not address at all: the operative effect of the conflict of interest statute. The statute does not invalidate director votes; it provides a safe harbor for transactions that might otherwise be voidable. Because the statute does not invalidate director votes, plaintiff’s declaratory relief request failed. Judge Geer mercifully declined to deal with Judge Tyson’s second ground. Had she done so, she doubtless would have pointed out that voting is obviously not the statute’s concern. The statute speaks to transactions with the corporation such as, oh, I don’t know, contracting with officers and agreeing to compensate them.
The Supreme Court of Washington has held that a principal is bound by an agent acting within apparent authority and that the agent’s offer to sell at a price below the authorized price was not, by itself, ground to set aside the transaction. In Udall v. T.D. Escrow Services, Inc., T.D. Escrow Services, the trustee of a deed of trust on a private residence, foreclosed the property at the direction of the lender. T.D. Escrow retained ABC Legal Services (yes, that’s the real name) to conduct the sale. T.D. Escrow advertised the property and stated the property would be sold to the highest bidder.
T.D. Escrow authorized ABC to accept a minimum bid of about $159,000. ABC distributed a sheet at the auction erroneously stating that the minimum bid was about $59,000; Udall bid one dollar more and was declared the winner.
Udall tendered full payment, T.D. Escrow Services refused to convey the property after it discovered the error, and Udall brought suit to quiet title.
Justice Fairhurst held that ABC had apparent authority to sell the property for $59,000 and so T.D. Escrow was bound by the sale contract and was required to deliver title to Udall. Relying on Restatement (Third) of Agency §§ 2.03 and 3.03, she held that the sale notice constituted a manifestation by T.D. Escrow to Udall that caused Udall to believe, reasonably, that ABC was T.D. Escrow’s agent for the sale and was authorized to accept his bid. Justice Fairhurst also found apparent authority from the fact that T.D. Escrow had engaged ABC to engage in a general class of transactions, selling foreclosure properties on its behalf. Finally, the court found that the price discrepancy did not defeat apparent authority in this instance, though the court observed that a gross disparity coupled with “circumstances indicating some additional unfairness” might be sufficient to award equitable relief from consequence of apparent authority.
This opinion is obviously absolutely correct. I have substituted this case for In re Matter of McDuffie on page 96 because the facts are easier, the discussion of Agency law is better, and so the policy discussion is probably more effective. You can find the edited version of Udall, along with Notes and Questions, in the casebook Supplement.
