## Facts

- Joan Hoddeson previously visited Koos Bros.’ furniture store in Rahway, New Jersey, and selected bedroom furniture she intended to buy.
- On August 22, 1956, she returned with cash to make the purchase, accompanied by her aunt and four children.
- A man inside the store approached her as a salesperson, assisted her in selecting items, wrote an order on a pad, and stated the total was $168.50.
- Hoddeson paid the man $168.50 in cash and did not obtain a receipt.
- The man stated delivery would occur later because the items were not in stock.
- No furniture was delivered, and Koos Bros. later stated it had no record of the sale.
- When shown Koos Bros.’ actual sales personnel, Hoddeson and her companions could not identify the man; he was treated as an impostor rather than an employee.
- A jury returned a verdict for the plaintiffs; Koos Bros. appealed.

## Issues

1. Whether Koos Bros. could be held liable on an agency or apparent-authority theory for a purported sale made by an impostor when no actual agency relationship was proven.
2. Whether Koos Bros. could be liable under a negligence-based duty-of-care theory for failing to use reasonable care to prevent an impostor from posing as store sales staff and defrauding a customer.

## Decision

- The appellate court reversed the plaintiffs’ judgment and remanded for a new trial.
- The evidence was insufficient to establish that the impostor had actual authority or apparent authority to bind Koos Bros.
- The court held, however, that a retailer may have a duty to exercise reasonable care to protect customers from impostors operating on the premises under circumstances that could mislead customers.
- Because the case was tried and submitted largely on agency, a new trial was required to allow development of a negligence theory.

## Legal Principles

- Apparent authority must be based on manifestations traceable to the principal, not solely on the asserted agent’s conduct or representations.
- Mere presence in a store and salesperson-like behavior, without proof of the store’s manifestations or ratification, is insufficient to establish apparent authority.
- A business proprietor may owe customers a duty of reasonable care and vigilance to prevent unauthorized persons from posing as employees and inducing transactions.
- If a proprietor’s failure to supervise or safeguard the premises permits such deception, the proprietor may be liable in negligence and may be estopped from denying responsibility for the resulting loss.

## Conclusion

The court rejected liability based on apparent authority because the plaintiffs did not show manifestations by the store that the impostor was authorized, but it recognized a potential negligence theory grounded in the store’s duty to take reasonable precautions against in-store impostor fraud and ordered a new trial to permit that theory to be litigated.


Hoddeson v. Koos Bros., 135 A.2d 702 (N.J. Super. Ct. App. Div. 1957)