## Facts

- General Overseas Films, Ltd. (GOF), controlled by Robert Haggiag, agreed to lend Robin International, Inc. (Robin), controlled by Nicholas Reisini, $500,000 to help settle claims connected to construction of the Soviet Union’s U.N. Mission project.
- The repayment terms included 6% interest and an additional share of savings from settling claims; the parties later discussed broader, related financing and transaction concepts.
- GOF alleged that The Anaconda Company (Anaconda), through its vice president and treasurer, Charles H. Kraft, guaranteed repayment of GOF’s loans to Robin and Robin’s obligations tied to related transactions.
- To support Kraft’s asserted authority, GOF relied on Kraft’s corporate titles and on corporate materials he provided, including bylaws authorizing the treasurer to sign “checks, notes, drafts, bills of exchange and other evidences of indebtedness.”
- Robin did not repay as promised; GOF sued to hold Anaconda liable on the alleged guaranty.
- Anaconda denied liability, contending Kraft lacked authority to bind Anaconda to a guaranty of Robin’s obligations; GOF conceded no actual authority and proceeded on apparent authority.
- The case was decided on an agreed record without trial.

## Issues

1. Whether Anaconda’s conduct reasonably created apparent authority for Kraft to bind Anaconda to a guaranty of Robin’s obligations.
2. Whether the transaction’s unusual nature imposed a duty on GOF to inquire into Kraft’s actual authority, and whether GOF satisfied that duty.

## Decision

- Judgment was entered for Anaconda on GOF’s claim to enforce the alleged guaranty.
- The court held Kraft lacked apparent authority to bind Anaconda to guarantee Robin’s debts and related obligations.
- The court found the purported guaranty was an extraordinary corporate act that required heightened verification; GOF did not make adequate inquiry beyond Kraft’s own assurances and general corporate documents.

## Legal Principles

- Apparent authority must be based on manifestations by the principal; an agent’s representations alone cannot create authority to bind the principal.
- A third party’s reliance on apparent authority must be reasonable under the circumstances.
- When a transaction is unusual or suggests risk of fraud, New York law requires the counterparty to inquire into the agent’s actual authority; failure to do so defeats an apparent-authority claim.
- A large corporation’s guaranty of an unrelated third party’s debts is not ordinarily within an officer’s implied or apparent authority absent clear authorization; general authority to execute “evidences of indebtedness” is typically understood to concern the corporation’s own debt, not third-party guarantees.

## Conclusion

The court refused to enforce an alleged corporate guaranty because the officer’s status and general signing authority did not reasonably indicate power to guarantee an unrelated company’s obligations, and the lender’s failure to obtain independent confirmation of authorization barred recovery under apparent authority.


Gen. Overseas Films, Ltd. v. Robin Int’l, Inc., 542 F. Supp. 684 (S.D.N.Y. 1982)