Plaintiff initiated this action against defendants, the Clarence B. Feller and Georgia R. Feller Revocable Trust and its trustees (the trust), for foreclosure of a trust deed and payment on a note, both of which had been executed to secure two unpaid loans. The trust counterclaimed to quiet title in the trust property that had been used to secure one of those loans. It moved for summary judgment on all claims, arguing that the individual who had secured the loans had done so without authority to act as an agent of the trust. The trial court granted the trust’s motion for summary judgment on all claims and entered judgment dismissing plaintiff’s claims and quieting title in the trust property with the trust. Plaintiff appeals, and we affirm.
Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. ORCP 47 C;
Porter v. Oba, Inc.,
The material facts are not disputed. On June 11, 1990, Clarence and Georgia Feller created the Clarence B. Feller and Georgia R. Feller Revocable Living Trust. The trust instrument named the Fellers as primary trustees and beneficiaries and designated their daughter, Cheryl A. Kelly, as a successor trustee. The trust instrument also named Cheryl Kelly and her son, Ronald Scott Kelly (Kelly), as successor beneficiaries. Clarence Feller died in 1994, leaving Georgia Feller as the sole primary trustee. On October 18, 1995, Georgia Feller executed a durable power of attorney naming Kelly as her attorney in fact.
In 1999, Kelly obtained a loan for $400,000 from plaintiff, executing a promissory note that named the trust as maker and pledging trust property located in Benton County as security. The purpose of that loan was to provide interim financing for Kelly’s personal residence. Shortly thereafter, Kelly obtained another loan from plaintiff for $165,000 by extending a promissory note that also named the trust as maker. The purpose of that loan was to finance Kellys development of two properties for resale. Kelly eventually defaulted on both loans, and plaintiff brought this action against the trust to foreclose on the trust property that Kelly had pledged as collateral and for payment on the notes, including interest, costs, and attorney fees.
On appeal, plaintiff makes essentially the same arguments that she made to the trial court in opposition to defendant’s motion for summary judgment — that Kelly had either actual or apparent authority to act as an agent of the trust and, thereby, execute the notes in the trust’s name and pledge trust property to secure the loans made by plaintiff. Therefore, she argues, the trust property in Benton County is subject to foreclosure and the trust is obligated to pay the notes in full.
1
The trust counters that Kelly had neither
A principal may be bound by the unauthorized acts of the principal’s agent where the third party dealing with the agent reasonably believes that the agent is authorized to undertake the transaction and the agent is conducting an activity that is usually within the scope of the agent’s authority.
See Croisant v. Watrud,
“ ‘[i]t is a fundamental principle of the law of agency that the power of every agent to bind his principal rests upon the authority conferred * * * by that principal. * * * A principal will not be bound by an act of his agent in excess of his actual authority, where the third person has knowledge of the extent of the agent’s authority, or where the facts and circumstances of the case * * * put [the third person] upon inquiry as to the authority and good faith of the agent, as where a third person deals with an agent who is acting for himself as well as for his principal in the transaction, as such a person is chargeable with a knowledge of such facts as a proper inquiry as to the agent’s powers would have revealed * * ”
Barbour et al. v. Johnson et al.,
While a principal may authorize an agent to use the agency for the agent’s personal benefit, such authorization is found only when “expressed in language so plain that no other interpretation can rationally be given it.”
Fine v. Harney Co. National Bank,
Nothing in the power of attorney expressly authorized Kelly to use Georgia Feller’s property for his own purposes. The loans that he obtained from plaintiff were used to purchase a personal residence and invest in development properties for his own profit. Even assuming for the sake of argument that the durable power of attorney executed by Georgia Feller made Kelly an agent of the trust, by using trust assets for his own personal purposes without authorization, Kelly exceeded the scope of any authority, either actual or apparent, that might have been conferred upon him.
Affirmed.
Notes
On appeal, plaintiff also argues that Georgia Feller and Cheryl Kelly ratified the loans. However, because that argument was not made to the trial court, and plaintiff does not argue that it is an error apparent on the face of the record, we will not consider it on appeal. ORAP 5.45(1);
State v. Voits,