dissenting.
I think today’s decision will leave most corporate lawyers wondering what the law actually is.
A board of directors authorizes the president to sell some real estate but requires that the sale be submitted to the board for approval or disapproval. The president understands that he must submit any sale to the board.1 He tells the potential buyer that he must submit it.2 The buyer knows that its offer must be submitted to the board after the president signs the sales agreement.3 The agreement is in fact submitted to the board and disapproved. Our Court holds that the agreement is binding anyway.
The majority calls this “an expansive view of apparent authority.” Op. at 1211. Facially, this seems like an understatement.
On the other hand, the Court embarks upon its discussion of “inherent authority,” which it rightfully describes as a specie of apparent authority, after endorsing the conclusions of the trial court and Court of Appeals that the corporation’s president did not possess apparent authority to sell the land without board approval.4
In the end, it is difficult to know how lawyers will advise their clients after today’s decision. Where all parties to a corporate transaction understand that board approval is required and that it may or may not be forthcoming, the black letter law cited in today’s opinion points toward a conclusion that the buyer’s offer was not accepted by the seller.
While I agree with the general legal principles laid out by the majority, those principles seem undercut by the resolution of this case.
. "Piccolo reminded Sterling of his obligation to secure Board approval of the offer.” Op. at 1209.
. "It is true, as the Court of Appeals noted, that Menard was advised early in the transaction that Sterling had to go to the Board to obtain approval. Menard, 698 N.E.2d at 1232 (citing Conclusions of Law Nos. 16-22).” Op. at 1215.
. The majority leans heavily, op. at 1210, 1215, 1216, on a recitation in the sales agreement to the effect that "The persons signing this Agreement on behalf of the Seller are duly authorized to do so and their signatures bind the Seller in accordance with the terms of this Agreement.” (R. at 1149.) This same language appeared in the first sales agreement submitted to the Board and disapproved. (R. at 1000, "The persons signing this Agreement.If this recitation plays the central legal role the majority ascribes to it, it seems that the first sales agreement is the one we should be litigating. Sensibly, no one has suggested that the earlier document constituted a binding agreement.
.As the Court of Appeals said, Sterling’s apparent authority "was vitiated by Menard's knowledge that Sterling had to go to the board to obtain approval.” Menard, 698 N.E.2d at 1232 (citing Conclusion of Law No. 22).