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Keywords

contracttortplaintiffdefendantappealsummary judgmenttrust
contractplaintiffdefendantliabilityappealsummary judgmenttrustzoning

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Welch v. Bancorp Management Advisors, Inc., 296 Or. 208, 675 P.2d 172

Facts

The plaintiff, a real estate developer, entered into a contract with U.S. Bancorp Realty and Mortgage Trust for financing a development project. The Trust, advised by the Investment Committee comprised of employees from the defendant banks, rejected the developer's proposal for a zone change and subsequently refused to provide the loan. The developer claimed that the Investment Committee made misrepresentations and acted in a way that intentionally interfered with the contract between the developer and the Trust.

In 1974, plaintiff and the Trust executed a contract whereby the Trust agreed to provide financing for the purchase and rezoning of a parcel of undeveloped real property in Washington County.

Issue

The main legal issues were whether the Investment Committee's advice to the Trust constituted tortious interference with the developer's contract and whether the allegations of misrepresentation related back to the original complaint.

Two questions are presented in this appeal. The first concerns the scope of an agent's privilege to advise the principal to breach a contract where the agent's advice furthers the interests of that principal and the interests of another principal of the agent, as well.

Rule

The court applied the principle that an agent advising a principal to breach a contract is not liable for tortious interference if acting within the scope of authority and with the intent to benefit the principal, even if the agent also benefits another party.

We reaffirm that the proper test is whether the agent acts within the scope of his authority and with the intent to benefit the principal.

Analysis

The court found that the Investment Committee acted within its authority and with the intent to benefit the Trust when advising against the loan to the developer. The evidence indicated that the Committee's concerns were legitimate and focused on the Trust's financial interests, despite the potential benefits to the banks. The court concluded that the developer did not establish a genuine issue of material fact regarding the Committee's motives.

Taking plaintiff's evidence in the light most favorable to him, if the banks were not inclined to loan money from commercial paper lines of credit to the Trust because of concern for their own ratings, the most that can be said is that the banks were not inclined to loan any funds to the Trust at an interest rate which would make the development project profitable.

Conclusion

The Supreme Court affirmed in part and reversed in part the Court of Appeals' decision, ultimately upholding the summary judgment for the defendants.

The granting of the summary judgment was appropriate.

Who won?

Defendants prevailed in the case because the court found that the Investment Committee acted within its authority and with the intent to benefit the Trust, thus not liable for tortious interference.

Defendants claim that the Court of Appeals' 'primary motive test' is erroneous and, further, that disclosure of an agent's conflict of interest to the principal logically is irrelevant to the issue of the agent's liability to a third party for advice given to the principal.

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