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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: October 19, 2015

Employer Liable Based on Apparent Authority of Employee

On October 14, 2015, the Second Department issued a decision in CIT Technology Financial Services, Inc. v. Franklin First Financial, Ltd., 2015 NY Slip Op. 07464, affirming a decision holding an employer liable for the actions of its employee.

In CIT Technology Financial Services, the plaintiff brought an action for breach of an equipment lease. The Second Department affirmed the trial court’s holding that the defendant was liable for the actions of its branch manager, who signed the lease, explaining:

The evidence at trial supported the Supreme Court’s conclusion that [the defendant], by its business model, had given its branch manager . . . apparent authority to execute the copier finance lease on its behalf. In any event, [the defendant] ratified the lease by making monthly payments thereon for over two years with knowledge of the material facts. The invoices approved and paid by [the defendant] clearly indicated that they were pursuant to a contract in [the defendant’s] name, and contained the model types of the copiers and the monthly payment amounts. [The defendant’s] branch accountant testified that he was aware that the invoices were addressed to [the defendant] when he authorized payment. To the extent [the defendant] was unaware of the terms of the lease, a principal cannot be willfully ignorant and avoid liability for the acts of an agent by failing to make a thorough inquiry that would reveal the pertinent facts.

(Internal quotations and citations omitted).

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