to all transactions. Green "believed" that Stiles was an employee
of Flair and had the authority to bind it to the agreement at
issue. He stated that nothing done by Flair indicated that Stiles
did not have the authority to bind Flair. However, he never saw
any document or any other indication as to the relationship
between Stiles and Flair. In addition, no one at Flair ever
advised him that Stiles was authorized to act on its behalf.
Moreover, Green could not recall that Stiles ever actually
advised him that he was a consultant for Flair. Significantly,
Green also testified that "he did not recall" if Stiles told him
that he had no authority to act for Flair.
Green identified the first three purchase orders from Landis
(Def.Ex. B), dated April 17, 1989 marked "F.O.B.U.S. Port June
1989." Thereafter, the purchase orders were delivered by Fax from
Landis employee Janie Meredith. The Court notes that these three
purchase orders were dated on April 17, 1989, prior to the
initial date in the alleged "agreement," which was July 1, 1989.
As to the alleged "agreement," Green testified that the copy in
evidence (Plf.Ex.4) signed by "JGB Stiles" was the only one he
had ever seen. Green kept the "agreement" in his Flair file, and
referred to the agreement with regard to prices and the warranty
period. Although the "agreement" terminated on June 30, 1990,
Green stated that it did not end at that date, and continued at
least until he left the company in 1993. However, Green knew of
no written agreement that extended the termination date of June
The Court notes that several documents were introduced in
evidence to demonstrate the signature of John Stiles. In
documents introduced as Plf.Exs. 11 and 14 and Def.Ex. D, the
signature appears as "John Stiles," while in the alleged
"agreement" at issue, the signature appears as "JGB Stiles,"
although the signatures look somewhat similar. Furthermore, Green
testified that Stiles "normally" signed his name as "John" or
"John Stiles" and not as "JGB Stiles." There is also in evidence
a copy of the alleged "agreement" which is changed by handwriting
(Def.Ex. C). Green had no idea where this copy came from or who
changed the terms of the agreement in handwriting. Green did not
know why Landis never signed any version of the alleged
Robin Varekamp, a Dutch lawyer associated with a parent or
related company of Landis, testified with regard to the
Honeywell patent infringement claim and the reasonableness of the
settlement by Landis. As a result of the Court's determinations
in this memorandum decision, the Court need not address this
issue. However, Varekamp conceded that Flair consistently denied
responsibility for any patent infringement and refused to
participate in any settlement negotiation with Honeywell.
In the defendant's case, Rita Paleschuck testified that she is
the mother of Jamie Frank, and Vice President of Operations of
Flair in charge of sales, purchasing, shipping and marketing.
Prior to 1987, Paleschuck was Chairman and President of the
company. She testified that Stiles was a consultant to Flair, who
was employed and paid on a daily basis; he had no commission
agreement with Flair and averaged one working day per month for
Flair; Stiles was not an officer, director, or even a regular
employee of the company; his job was to introduce Flair to
potential customers; Stiles was multilingual and he was to meet
customers in the U.K. (and Europe) and "convey Flair's thoughts
to them;" Stiles "had no full knowledge of what was going on;"
and that Stiles made no decisions for Flair.
Paleschuck corresponded with Stiles on many occasions and
testified that she was familiar with his handwriting and
signature. She stated that he never signed his name as JGB
Stiles; always as John Stiles or J. Stiles. Even though she was
equivocal in a deposition, Paleschuck testified at
the trial that the "JGB Stiles" signature on the alleged
"agreement" (Plf.Ex.4) was not the signature of John Stiles. In
doing so, she did identify several documents that did contain the
genuine Stiles signature (Plf.Exs. 11 and 14, and Def.Ex. D). The
Court credits this testimony by Rita Paleschuck and finds that
the alleged "agreement" upon which the plaintiff's first cause of
action is based, was not signed by John Stiles or from anyone on
behalf of Flair.
Paleschuck attended a meeting with a Landis representative in
the United States. Landis agreed to the terms of FOB Port of New
York and FOB plaintiff's plant. She stated that these terms meant
that the customer was to take title in the United States, so that
Flair could avoid foreign laws and minimize the risks of
As to indemnification, Paleschuck testified unequivocally that
"under no condition would we agree to do that." Apparently, Flair
had a prior "costly" experience with indemnification and did not
want a similar problem. Paleschuck testified that she never saw
the alleged "agreement" prior to the time it was made a part of
the lawsuit, nor did she ever instruct Stiles to sign the alleged
"agreement." Paleschuck maintained a "contract file" in her
office, which contained copies of all Flair agreements. There was
no Landis agreement in her file; there was no reference to a
written "agreement" in the Flair records; nor were there any
conversations concerning such a written agreement. Further,
according to Paleschuck, there were no discussions or
correspondence concerning a renewal or extension of any written
After several meetings Flair prepared a price "quotation" for
Landis, which appeared as a "schedule" in the alleged
"agreement." Although Flair referred to an "agreement" in several
documents, the use of that term is unclear, and the Court finds
that the plaintiff failed to prove that this reference was to the
alleged written "agreement," which is the basis of the
plaintiff's first cause of action.
As to the whereabouts of Stiles, Paleschuck testified that she
"thinks" he resides in Australia. However, she conceded that she
did not make any efforts to locate or contact him.
Susan Nicoletti was an employee of Flair for 17 years. During
the years at issue in this case, she was the Accounting Manager
and Office Manager. Her duties included complete supervision of
the Flair books and records, the handling of money and signing
checks. Nicoletti testified that Stiles was paid on a per diem
plus expenses basis. She stated that she knew little about his
responsibilities but that he was in the "sales area." Further,
she was not aware of any decision that Stiles made for Flair.
Flair never withheld any payroll taxes on Stiles' compensation
and filed no W2 forms for him.
Nicoletti was shown the alleged "agreement" (Plf.Ex.4). She
stated that she was familiar with Stiles' signature and that the
signature "doesn't look familiar at all," "looks totally
different from the others," and is not his signature. Nicoletti
testified that she has no knowledge of the alleged "agreement"
and never saw it prior to the commencement of this lawsuit. No
such document was in the Flair contract file. The Court notes
that her testimony with regard to her knowledge of the Stiles
signature was different from her deposition testimony.
The final witness at the trial was plaintiff's rebuttal witness
Janie Meredith, a former Landis employee. During the time at
issue in this case, she was a Logistics Manager and Commercial
Analyst for Landis. Surprisingly, Meredith testified that she
first saw the alleged "agreement" in April 1999. She has "no
memory that this agreement ever existed." Nor was she aware of
any express extension of the "agreement." Meredith stated that
she was not familiar with the Stiles signature. She testified
that Landis operated under the terms of the "agreement," but also
stated that she could have learned of these terms from sources
other than the "agreement." Meredith also conceded that Landis
"could have done business with Flair without an express written
agreement." There was no company rule that a written agreement
was necessary to do the kind of transactions at issue in this
case. While Meredith "presumed" that the original contract terms
continued to 1993, she admitted that the prices and quantities
and terms of payment changed and the FOB terms varied during the
period the parties did business together.
Finally, Flair placed in evidence certain Landis responses to
"Requests for Admissions," dated December 29, 1998 (Def.Ex.J).
Among the admissions by Landis were the following:
29. Landis received a hard copy invoice by mail, for
each order it placed with Flair for valves.
33. Flair invoices contained a set of terms and
conditions on the back.
As to request for admission No. 59, the following answer was
made by Landis:
59. The document attached to the plaintiff's
complaint, entitled "Agreement" was never signed
RESPONSE: Plaintiff having made a reasonable
inquiry, does not possess sufficient knowledge or
information to admit or deny this request for
The Court finds that the plaintiff Landis failed to prove, by a
preponderance of the credible evidence, that the alleged written
agreement (Plf.Ex.4) was signed by a representative of the
defendant Flair, namely John Stiles. Therefore, no valid written
agreement was entered into by the parties.
In addition to the substantial evidence adduced that Stiles did
not sign the alleged "agreement," the Court takes note that there
was no proof offered by the plaintiff that any one saw the
agreement being signed. There is no covering letter or memorandum
from Landis or Flair presenting the agreement to be signed or
delivering the signed agreement. No attorney or any
representative of Landis testified that they prepared the
agreement. Apparently, no Landis employee ever saw the signed
1989 "agreement" until 1996.
The Court also finds that the plaintiff Landis failed to prove
that, even assuming that the agreement was valid, it was extended
after June 30, 1990 by any "mutual agreement." Stated otherwise,
even if signed by an authorized representative of Flair, the
written agreement would have expired on June 30, 1990.
In addition, the Court finds that the plaintiff failed to prove
that John Stiles was authorized to enter into the alleged
"agreement." There was no proof of any express authority on his
part to do so. Nor did the plaintiff prove that Stiles had the
"apparent authority" to bind Flair by signing the agreement.
"Essential to the creation of apparent authority are words or
conduct of the principal communicated to a third party, that give
rise to the appearance and belief that the agent possesses
authority to enter into a transaction." Hallock v. State,
64 N.Y.2d 224, 231, 485 N.Y.S.2d 510, 513, 474 N.E.2d 1178 (1984);
Greene v. Hellman, 51 N.Y.2d 197, 204, 433 N.Y.S.2d 75,
412 N.E.2d 1301 (1980); Ford v. Unity Hospital, 32 N.Y.2d 464,
472-473, 346 N.Y.S.2d 238, 243-44, 299 N.E.2d 659 (1973). See
also Standard Funding Corp. v. Lewitt, 89 N.Y.2d 546, 551,
656 N.Y.S.2d 188, 191, 678 N.E.2d 874 (1997).
Stated otherwise, essential to a finding of apparent authority
is some confirmatory conduct on the part of the principal. The
agent cannot by his own acts clothe himself with apparent
authority. Reiss v. Gan S.A., 98 CV 8302(SAS), 1999 WL 553781
(S.D.N.Y. July 29, 1999). In this case, there is no evidence that
Flair, in any manner, stated, indicated or even inferred that
Stiles possessed the authority to bind it in a major agreement of
Thus, even if Stiles did sign the agreement, he had no authority
to bind Flair.
The plaintiff has failed to prove that there was a valid
written agreement between the parties. Accordingly, the first
cause of action, based on such an agreement, is dismissed.
B. Second Cause of Action — Was There Implied
Indemnification Under the Terms of the UCC?
The Court finds that as to each shipment of valves, Flair sent
documents known as "orders of acknowledgment" and invoices to
Landis. Paleschuck explained the type of forms used in the
Flair-Landis transaction. The forms consisted of (1) an order
acknowledgment, front and back; (2) a packing list, front and
back; and (3) an invoice, front and back. These types of forms
are in evidence as Def.Ex. A. The document containing the words
"order acknowledgment" has on its face, at the bottom, the
TERMS AND CONDITIONS
The prices listed here are in consideration of the
terms of this contract as stated on the reverse. Read
all terms and conditions on face and reverse side.
Only such instructions, terms and conditions shall
constitute the contract between the parties.
On the reverse side of the order acknowledgment in large and
darker type appears the following disclaimer: