## Facts

- Tanner companies supplied radio stations with jingles and promotional materials under licensing/barter contracts in exchange for cash and a specified number of one-minute advertising spots for Tanner to resell.
- WIOO operated a Pennsylvania radio station; an employee, F. Eugene Waite, signed five such contracts on WIOO’s behalf.
- Tanner performed by furnishing the contracted jingles and promotions, but WIOO refused to pay/perform, asserting Waite lacked authority to bind the corporation.
- Waite was held out to Tanner and the industry as WIOO’s “general manager,” including through trade publications and industry listings.
- WIOO’s owners knew Waite used the general manager title and did not object or correct the public listings.
- The contracts stated the station signatory was authorized to execute the agreements.
- Evidence showed most comparable industry contracts were executed by station general managers.
- Tanner sued in federal district court (diversity) for unpaid obligations; the district court found WIOO liable based on Waite’s apparent authority and entered judgment for Tanner.
- WIOO appealed, challenging the finding of authority.

## Issues

1. Whether WIOO was bound under Pennsylvania law by contracts signed by Waite because WIOO’s conduct created Waite’s apparent authority to execute them.
2. Whether internal limits on Waite’s actual authority could defeat Tanner’s reliance where Tanner lacked notice of those limits.

## Decision

- The Third Circuit affirmed the judgment for Tanner.
- The court held the evidence supported the finding that Waite had apparent authority to bind WIOO on the contracts.
- The court treated apparent authority as a fact question and found no basis to disturb the district court’s findings.

## Legal Principles

- Apparent authority arises from the principal’s manifestations, not the agent’s self-asserted authority.
- A principal is responsible for an appearance of authority it knowingly permits an agent to assume or holds the agent out as possessing.
- A third party may rely on apparent authority when the principal’s conduct would lead a reasonable person, exercising ordinary prudence, to believe the agent is authorized.
- Undisclosed, internal limitations on an agent’s authority do not defeat apparent authority as to third parties without notice.
- Public identification of an employee as “general manager,” combined with customary industry practice and contractual recitals of authorization, can support reasonable reliance that the employee may execute ordinary business contracts.

## Conclusion

Because WIOO knowingly allowed Waite to be publicly presented as its general manager and the contractual and industry context made Tanner’s reliance reasonable, Waite had apparent authority and WIOO was liable for the contractual obligations.


William B. Tanner Co. v. WIOO, Inc., 528 F.2d 262 (3d Cir. 1975)