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Northeastern Lumber & Building Supply, Inc. v. Mulligan

A-0616-03T5 (N.J. Super. App. Div. 2004) (Unpublished)

CONTRACTS; AGENCY—A joint venturer who allows charges to made against its account at a material supplier for a project that might not have been part of the joint venture’s scope will still be liable if it acts toward the supplier in such a way as to give the supplier the impression that the charges are valid.

A contractor’s employee was authorized to order materials from a supplier and charge them to the business account of a second contractor who had a joint-venture interest with the first contractor in a project. The account was not restricted to any particular project. Once this particular project was completed, the employee began ordering materials from the supplier for a second project and still charged them to the second contractor’s account. Accordingly, the supplier sent invoices and monthly billings to the second contractor. When they went unpaid, the supplier sued the second contractor. In response, the second contractor joined the first contractor and its employee, claiming that he never authorized the supplier to supply materials for the second project.

During trial, the second contractor testified that he had no interest in the second project and had complained to the supplier about the billings. He also alleged that his agreement with the supplier called for him to confirm each order placed by the employee. In opposition, the first contractor’s employee contended that the second contractor had agreed to allow charges to his account for materials being delivered to the second project in exchange for not making a cash contribution for its interest in the first project. In support of this, the supplier testified that the second contractor never complained about the charges being made or that they were unauthorized. It argued that the second contractor, in fact, had stated that he would pay the charges. Both the supplier and the employee denied that there was ever an agreement requiring each order to be confirmed by the contractor.

The lower court did not believe the second contractor’s claim that there was an agreement requiring pre-approval of orders. It also did not believe that the second contractor had no interest in the second project. The court noted that the second contractor had gone to the second project’s site to work for several weeks and found his explanation for this, “that he did so to help a friend,” to be “incredible.” Furthermore, the second contractor sent a large payment to the supplier after the first project had been completed. Although the second contractor claimed that this payment was for an unpaid balance on the first project, and not for the second project, the Court found that the payment in question was for the second project because it was sent long after the first had been completed and because there was no evidence of a remaining balance. For the same reasons, the Appellate Division affirmed that the second contractor was liable for the debt because the first contractor’s employee had acted with apparent authority.


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