Fergus v. Ross, 477 Mass. 563

Fergus sought $75,000–$100,000 in private financing for renovations; mortgage broker referred him to Bernard Laverty, Jr.
Laverty had an existing referral relationship with attorney Steven Ross, who made private loans through a law-firm-created trust (Wisconsin Avenue Lending Trust); Ross signed the trust’s commitment letter for a $260,000 loan.
Laverty told Fergus to borrow more than needed so Fergus could make a $120,000 “side loan” to Laverty, promising to secure it with a deed‑in‑lieu of the Marshfield property; Laverty never delivered title/security and later declared bankruptcy.
Fergus dealt with Ross only at closing; most communications passed through Laverty, who attended the closing and urged Fergus to sign; the loan documents drafted by Ross did not mention the side loan.
Trial judge found Ross negligent for failing to disclose that the side loan was unsecured, reasoning that Laverty was Ross’s apparent agent and Laverty’s knowledge was imputable to Ross; the Appeals Court affirmed; the Supreme Judicial Court reversed.

Issue	Fergus's Argument	Ross's Argument	Held
Whether Laverty had apparent authority to bind Ross re: the side loan	Laverty’s role as intermediary, prior referrals, and control of communications made him Ross’s apparent agent for both loans	No manifestation by Ross authorized Laverty to bind him for the side loan; apparent authority requires principal’s words/conduct	No apparent authority; facts did not show Ross manifested assent or ratified the side‑loan arrangement
Whether Ross owed a duty to disclose defects in the side loan as closing agent	Ross, as closing agent, owed a duty to Fergus; Laverty’s knowledge of the side loan can be imputed to Ross via agency	Without imputable knowledge (no apparent authority), Ross had no constructive knowledge and thus no duty breached on that theory	Because apparent authority failed and Laverty’s knowledge was not imputable, Ross could not be held negligent on that theory

Theos & Sons, Inc. v. Mack Trucks, Inc., 431 Mass. 736 (2000) (agency principles and when a factfinder may find agency)
Licata v. GGNSC Malden Dexter LLC, 466 Mass. 793 (2014) (apparent authority depends on principal’s words/conduct; agent’s conduct alone is insufficient)
DeVaux v. American Home Assur. Co., 387 Mass. 814 (1983) (circumstances where an agent’s apparent authority may bind an attorney/principal)
Haufler v. Zotos, 446 Mass. 489 (2006) (standard for reviewing factfinder’s agency determinations)
Sunrise Props., Inc. v. Bacon, Wilson, Ratner, Cohen, Salvage, Fialky & Fitzgerald, P.C., 425 Mass. 63 (1997) (imputation of agent’s knowledge to principal absent agent fraud benefiting principal)
Robertson v. Gaston Snow & Ely Bartlett, 404 Mass. 515 (1989) (circumstances where an attorney may owe a duty to nonclients who will rely on attorney’s services)
Kidder v. Greenman, 283 Mass. 601 (1933) (ratification requires knowledge of material facts)
See v. Norris, 234 Mass. 345 (1920) (principal not obligated to disavow agent’s conduct absent actual knowledge)