Sennott v. Rodman & Renshaw
United States Court of Appeals for the Seventh Circuit
474 F.2d 32 (1973)
Jordan Rothbart, whose father William was a partner at securities firm Rodman & Renshaw (defendant), fraudulently sold Richard Sennott (plaintiff) $142,000 in nonexistent stock options, instructing Sennott to keep the purchase confidential and not discuss it with William or anyone else at Rodman, then deposited Sennott's payment into his own personal account rather than an actual firm account; when Rodman's managing partner later uncovered evidence of the fraud and tried to question Sennott about it, Sennott, on William and Jordan's advice, refused to cooperate. Sennott eventually sued Rodman along with the Rothbarts, and the trial court found Rodman liable for $99,600; Rodman appealed.
Whether a third party may recover from a principal on a theory of apparent authority if the third party did not specifically rely on the agent's capacity to act on the principal's behalf.