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ICSC Legal Database - CasesMonday, February 22, 1999 05:01 PM

Case Index:
00115

Citation:
Aiello v. Ed Saxe Real Estate, Inc., 508 Pa. 553, 499 A.2d 282 (1985).

Issue:
Whether a principal's scienter of his agent's misrepresentation is necessary in order for the principal to be liable

to the third party for fraudulent misrepresentations of his agent.

Facts:
Plaintiffs were referred to defendant real estate broker for the purpose of acquiring a parcel of land. Jones, a

licensed salesperson of defendant, actively supervised and trained by defendant, was assigned to the plaintiffs.

In response to questions aske d by purchasers, Jones assured them that he was familiar with the soil and the

disposal requirements, that he had reviewed a survey of the soils which had been carefully tested, and that the

results were affirmative. Purchasers then entered into an agreem ent and ultimately settled for the land. They

subsequently discovered that the soil was unsuitable and that a prior agreement, negotiated by the defendant,

had fallen through due only to the failure of the land to pass the necessary percolation tests. Pla intiffs then filed

 suit against both the

defendant broker and its salesperson, Jones. The verdict and judgment were rendered against both the broker

and the salesperson. The Superior Court ruled that, without proof of scienter on the part of the broker at the time

 of the salesperson's misrepresentations, the broker, as principal, could not be held liable in damages. The

plaintiffs filed a petition for allocatur to the Supreme Court.

Holding:
Reversed. A principal is liable to innocent third parties for the frauds, misrepresentations and other tortious acts

committed by an agent in the course of his employment, although the principal did not authorize, justify,

participate in, or know of such misconduct, or even if he forbade the acts or disapproved of them. To hold

otherwise would be to violate public policy and permit the person, who held out his agent as worthy of trust and

confidence, to escape liability. The representations of the salespe rson were made in the scope of his apparent

authority and bound his principal, regardless of whether the principal knew of the statements.

Publication:
Legal Update

Date:
Winter 1985

Classification 1:
Misrepresentation

Classification 2:

Classification 3:

00115 - Legal Update - Winter 1985