## Facts

- Jenkins Brothers (Jenkins) purchased a business formerly operated by Crane Company.
- Bernard J. Lee was Crane’s business manager and was a valued employee whom Jenkins wanted to keep after the acquisition.
- Jenkins’s president and substantial stockholder, Farnham Yardley, and Jenkins’s vice president met with Lee to persuade him to join Jenkins.
- Lee testified that, during that meeting, Yardley orally agreed on Jenkins’s behalf that Lee would receive a pension when he reached age 60, in an amount not to exceed $1,500 per year, payable even if Lee was not then employed by Jenkins.
- The pension promise was not reduced to writing.
- Lee joined Jenkins and worked there for approximately 25 years.
- Jenkins discharged Lee when he was 55 years old, before he reached pension age.
- Lee sued Jenkins to enforce the alleged oral pension agreement.
- Jenkins defended on the ground that Yardley lacked authority to bind the corporation to such a pension commitment.
- The trial court ruled as a matter of law that the alleged pension contract was “extraordinary” and that Yardley lacked authority to make it on Jenkins’s behalf, taking the case from the jury.

## Issues

1. Was it proper to take the case from the jury on the ground that the alleged pension agreement was an “extraordinary” corporate contract that the president lacked authority to make?
2. Could a reasonable jury find, based on the circumstances, that Jenkins’s president had apparent authority to bind the corporation to an oral pension promise made to recruit an executive employee?
3. Did the Connecticut Statute of Frauds bar enforcement of the alleged oral pension agreement as a matter of law?

## Decision

- The Second Circuit reversed the judgment for Jenkins and remanded for further proceedings.
- The court held that the trial court erred in concluding, as a matter of law, that the pension agreement was so unusual that the president could not bind the corporation.
- The court held that, on this record, the existence and scope of Yardley’s apparent authority presented a question for the jury rather than a basis for a directed verdict.
- The court also held that the Statute of Frauds did not defeat the claim as a matter of law on the record presented, leaving any Statute of Frauds questions to be resolved consistently with the facts found at trial.

## Legal Principles

- A corporate president has apparent authority to bind the corporation in transactions that, given the corporation’s business and the officer’s position, a reasonable person would understand to be within the president’s usual powers.
- Whether a particular agreement falls within an officer’s apparent authority commonly depends on context and is typically a jury question unless only one conclusion is possible.
- In assessing apparent authority, the factfinder may consider the nature and size of the business, customary executive compensation practices, the employee’s role, and whether the alleged agreement is consistent with reasonable efforts to recruit or retain key personnel.
- A pension promise used as part of an executive’s compensation package is not automatically “extraordinary” in a way that removes it from a president’s apparent authority as a matter of law.
- Statute of Frauds defenses (including claims that an agreement cannot be performed within one year) may turn on how the agreement is characterized and on the facts concerning performance; they are not always grounds for judgment as a matter of law at the close of the plaintiff’s proof.

## Conclusion

Lee v. Jenkins Bros. holds that a trial court should not remove an oral pension claim from the jury merely by labeling it an “extraordinary” contract beyond a president’s power; instead, whether the corporate president had apparent authority to make the pension promise, and whether any Statute of Frauds defense applies on the facts, are ordinarily matters for the factfinder, requiring reversal of a directed verdict for the corporation.


Lee v. Jenkins Bros., 268 F.2d 357 (1959)