## Facts

- Bradford White, Sr. employed Betty Simpson part-time to perform administrative and personal tasks, such as answering phones, watching his house when he traveled, typing, and helping fix up houses.
- On one prior occasion, White gave Simpson a power of attorney limited to signing closing papers for a real-estate purchase; he did not authorize her to negotiate transactions.
- White instructed Simpson to attend a land auction and bid on his behalf for the farm’s acreage other than a three-acre homesite with a residence (the remainder being about 217 acres).
- White told Simpson not to bid more than $250,000 and gave her a signed blank check to cover the 10% auction deposit; he gave no additional directions and then left for a trip to Europe.
- At the auction, Simpson bid $327,500 for the 217-acre tract, exceeding White’s limit.
- Stanley and Mary Thomas successfully bid on the separate three-acre homesite and wanted more surrounding land.
- After the auction, Simpson—concerned about having bid too high—approached the Thomases about buying approximately 45 acres from the tract she had just contracted to purchase for White.
- The Thomases asked whether Simpson had authority to sell. They later claimed Simpson said she had a power of attorney, and she signed the “offer and acceptance” as “Betty Simpson, POA, Power of Attorney for Brad White.”
- The Thomases did not contact White and did not ask to see any written power-of-attorney document before signing the contract.
- When White returned, he proceeded to close on the 217-acre purchase (financed in part by a purchase-money loan secured by a mortgage from Northwest National Bank) but, upon learning of Simpson’s resale contract, promptly told the Thomases he repudiated it.
- The Thomases sued White and Northwest National Bank seeking specific performance of the 45-acre contract and an order requiring the bank to release its mortgage lien as to that portion.
- The Washington County Chancery Court ruled for the Thomases, finding they reasonably relied on Simpson’s apparent authority and stating it would be inequitable to allow White to deny Simpson’s authority after he accepted the auction purchase.

## Issues

1. Whether Simpson had apparent authority to bind White to a contract selling approximately 45 acres to the Thomases when the Thomases relied primarily on Simpson’s claimed power of attorney and did not verify it with White.
2. Whether White’s decision to complete the closing on Simpson’s unauthorized overbid purchase ratified Simpson’s separate, unauthorized resale contract to the Thomases (or otherwise barred White from denying it on equitable grounds).
3. Whether the chancery court properly ordered specific performance against White and required Northwest National Bank to release its mortgage lien on the 45 acres.

## Decision

- The Arkansas Court of Appeals reversed the decree ordering specific performance of the 45-acre sale.
- The court reversed the order directing Northwest National Bank to release its mortgage lien on that portion of the property.
- The court held Simpson lacked apparent authority to sell the 45 acres on White’s behalf.
- The court held White’s completion of the purchase did not ratify Simpson’s separate, unauthorized contract to sell land to the Thomases, and the chancery court’s fairness rationale did not supply authority or ratification.

## Legal Principles

- Apparent authority depends on manifestations by the principal that would cause a third party to reasonably believe the agent is authorized; it cannot be created solely by the agent’s statements or by the agent signing “POA.”
- When a third party is told the agent’s authority rests on a written instrument (such as a power of attorney), reasonable reliance generally requires reasonable steps to verify the instrument and its scope; failing to inquire can defeat a claim of apparent authority.
- Ratification requires knowledge of material facts and an intent to affirm the specific unauthorized act; ratifying one transaction does not, by itself, ratify a separate transaction.
- A principal’s prompt repudiation upon learning of an unauthorized transaction is inconsistent with ratification.
- Equitable concerns do not replace the requirements of actual authority, apparent authority, or ratification in order to bind a principal to a contract for the sale of land.

## Conclusion

In *White v. Thomas*, the Arkansas Court of Appeals set aside specific performance because the Thomases did not show that White, through his own conduct, led them to reasonably believe Simpson had authority to sell his land; they relied on Simpson’s claimed “power of attorney” without verifying it. The court also held that White’s decision to proceed with closing the unauthorized overbid purchase did not ratify Simpson’s distinct, unauthorized resale contract, so neither White nor the bank could be compelled to convey the 45 acres or release the mortgage lien.


White v. Thomas, 1991 Lexis 109 (1991)