You can
search the entire site.
or go to the recent opinions, or the chronological or subject indices.
or subject indices. Copper
River School District v. Traw (9/29/00) sp-5316
Copper River School District v. Traw (9/29/00) sp-5316
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
COPPER RIVER SCHOOL DISTRICT, )
) Supreme Court No. S-8743
Appellant, )
) Superior Court No.
v. ) 3AN-97-3266 CI
)
DOYLE TRAW, BARBARA GOOZEN, ) O P I N I O N
BEVERLY GOAD, GARY STENBERG, )
KAREN STENBERG, STANLEY ) [No. 5316 - September 29, 2000]
WALLACE, TEACHERS' RETIREMENT )
SYSTEM, ALISON ALGEE, DEPUTY )
COMMISSIONER OF ADMINISTRATION)
and JANET PARKER, Administra- )
tor, Teachers' Retirement )
System, )
)
Appellees. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Karen L. Hunt, Judge.
Appearances: Richard B. Brown and William W.
Whitaker, Holmes Weddle & Barcott, Anchorage, for Appellant.
Robert M. Johnson, Wohlforth, Vassar, Johnson & Brecht, Anchorage,
for Appellees Doyle Traw, Barbara Goozen, Beverly Goad, Gary
Stenberg, Karen Stenberg, and Stanley Wallace.
Before: Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.
EASTAUGH, Justice.
MATTHEWS, Chief Justice, with whom BRYNER,
Justice, joins, dissenting.
I. INTRODUCTION
Soon after the Copper River School Board passed a motion
to offer retirement incentives to teachers with seniority, school
district administrators realized that they had erroneously
calculated the financial effect of the incentives. But before the
school board met again and rescinded its motion, six teachers
communicated their "acceptance" of the retirement program. The
school district refused to pay the six teachers the amounts the
motion had specified. The teachers sued for breach of contract and
won on summary judgment in the superior court. The school district
appeals. Because there are disputed issues of material fact about
whether the school board's motion was an offer and whether the
district's acts terminated the teachers' power of acceptance, we
reverse and remand.
II. FACTS AND PROCEEDINGS
In early 1996 the Alaska legislature was considering a
teachers' retirement incentive package (RIP) to ease the salary
burdens on school districts in Alaska. The Copper River School
District sought to take advantage of this proposed legislation. In
March 1996 Copper River School District Superintendent George
Maykowskyj directed the school district's business manager, Loreen
Kramer, to determine how the district could or should augment the
state's proposed retirement incentives.
Kramer presented her financial analysis to the Copper
River School Board at its April 2 meeting. She told the school
board that the district could save money by offering the teachers
a payment "equal to what I understood would be the indebtedness to
[the retirement fund] incurred by retiring teachers under the bill
being considered by the Legislature." The school board,
accordingly, voted at its April 2 meeting in favor of the following
motion:
MOTION . . . to offer a retirement incentive
equal to the employee's indebtedness for three years (8.65% of
gross wages for certified [employees] . . .) to all certified and
classified employees who are eligible to retire at the end of the
school year and/or meet the requirements as established by the
state for RIP. The employee must notify the District by April 30,
1996 if they plan to participate.
Within a few days Kramer decided that she had erred. The
retirement program the school board had approved would cost the
district more than it would save. On April 8 Kramer e-mailed the
district's school principals, urging them to
[p]lease inform your employees that may be
eligible for retirement that I am waiting for a response from our
attorneys concerning the "Longevity Bonus" offered by the school
board and possibly entering into an agreement with the Retirement
System for a "Retirement Incentive Program". It appears that there
are some additional costs to the district that I was not aware of
so we may have to "re-think" the process. I'll have an answer by
the end of the week.
In early April Teacher Beverly Goad called Kramer to "get
the specifics of the RIP offer." Kramer told her that the
district's lawyer had advised the school board to rescind the
incentive motion, and that the school board would be meeting to do
just that. Goad asked what would happen if the teachers accepted
the incentive prior to the rescission meeting. Kramer responded,
"You can't do that." Asked by Goad whether teachers needed to
accept the incentive before the meeting, Board President Linda
Marchini told Goad, "Please don't." Goad then apparently reported
these comments to the other teachers involved in this case.
Some teachers decided to accept the "offer" before the
meeting. On April 18 six teachers delivered letters communicating
their "acceptance" of the terms of the April 2 program. [Fn. 1]
On April 19 the school board met and rescinded the April
2 motion. It then passed a motion approving a modified retirement
incentive package.
The six teachers requested payment of retirement benefits
under the April 2 plan, but the district refused to pay more than
the April 19 plan envisioned. The six teachers then sued for
breach of contract, among other things. The teachers and the
district cross-moved for summary judgment, and the superior court
granted summary judgment to the teachers on the breach-of-contract
question. [Fn. 2] The district appeals. It argues that (1) the
board's April 2 motion was not an offer the teachers could accept,
and (2) even if it was an offer, communications from the district's
administrators prevented the teachers from accepting it.
III. DISCUSSION
A. Standard of Review
On questions of contract formation, we review grants of
summary judgment de novo. [Fn. 3] We "will affirm a grant of
summary judgment if the evidence in the record presents no genuine
issue of material fact and the moving party is entitled to judgment
as a matter of law." [Fn. 4] We will accordingly not affirm a
summary judgment if the record presents issues of material fact or
if the moving party is not entitled to judgment as a matter of law.
On questions of law, we are not bound by the lower court's
decision. [Fn. 5] Our duty is "to adopt the rule of law that is
most persuasive in light of precedent, reason, and policy." [Fn. 6]
B. Was the Motion an Offer?
The district contends that the school board did not make
an offer when it passed the April 2 motion. Rather, it argues, the
school board was instructing the superintendent and the
superintendent's staff to make an offer. Thus, there could have
been no offer subject to acceptance until the administrative staff
communicated one to the teachers. The teachers contend, and the
superior court held, that the April 2 motion was an offer, made in
accordance with the power and practice of the school board.
Was the motion an offer, or did it merely authorize
district administrators to make an offer?
1. Contract formation in the government context,
generally
Restatement (Second) of Contracts sections 24 and 26
(1981) delimit what can be considered an offer. Section 24 defines
an offer as "the manifestation of willingness to enter into a
bargain, so made as to justify another person in understanding that
his assent to that bargain is invited and will conclude it." [Fn.
7] Section 26 informs us that "[a] manifestation of willingness to
enter into a bargain is not an offer if the person to whom it is
addressed knows or has reason to know that the person making it
does not intend to conclude a bargain until he has made a further
manifestation of assent." [Fn. 8]
Two factors are relevant: the language of the motion, and
the teachers' understanding of the board-administration
relationship.
According to one leading municipal corporations treatise,
the language of a motion has the following contractual
significance: "[A]n ordinance granting a right, accepted and acted
upon by the grantee, becomes an irrevocable contract. But an
ordinance or resolution authorizing the mayor, or other officers[,]
to enter into a contract does not of itself create a contract, if
not acted upon." [Fn. 9]
The Oregon Supreme Court quoted this language in
Winklebleck v. City of Portland. [Fn. 10] That case illuminates
the issues presented here. The city condemned Winklebleck's
property in order to extend a road; Winklebleck learned from city
officials that the city needed only some of his property. [Fn. 11]
He lobbied for return of the rest of his property, and the city
council passed a motion directing the city auditor to return the
disputed land if Winklebleck filed a release. [Fn. 12] The motion
stated that "upon the execution and filing of such document with
the City Auditor [the property] shall be released." [Fn. 13] The
city then realized that it had erred, and a city attorney told
Winklebleck's attorney that Winklebleck could not reclaim the land.
[Fn. 14] The council repealed its earlier ordinance, but before it
did so, Winklebleck accepted the offer and delivered a declaration
of compliance with the requirements of the ordinance; he apparently
also delivered a release. [Fn. 15]
The court reasoned that the ordinance "did not
contemplate that the auditor and the plaintiff should execute some
contract before the language could be closed . . . but that the lot
owner should demonstrate his right to secure [the land] by waiving
the privilege of an appeal," and taking other actions commensurate
with ownership. [Fn. 16] The court held that the ordinance was a
valid offer, and that because Winklebleck had accepted the offer,
he was entitled to his land. [Fn. 17]
The Winklebleck court held a motion "fairly capable of
construction as an offer" to be an offer. [Fn. 18] But even if a
motion is fairly capable of being construed as an offer, the issue
is not conclusively resolved. For example, if a person had a
history of dealings with a municipality, and had reason to know
that the municipality did not intend to make an offer (whatever the
language of its ordinance), a court should apply Restatement
section 26, and should not treat the ordinance as an offer. [Fn.
19] Accordingly, when a board motion is expressed in terms of a
delegation, it should be considered a delegation and not an offer;
but when it is couched in terms of an offer, further inquiry may be
required.
When there is a continuing relationship like the
employment relationship here, the language of the motion must be
considered in context of the contracting parties' relations. [Fn.
20] The commentary to Restatement section 26 includes language to
this effect:
If the addressee of a proposal has reason to
know that no offer is intended, there is no offer even though he
understands it to be an offer. "Reason to know" depends not only
on the words or other conduct, but also on the circumstances,
including previous communications of the parties and the usages of
their community or line of business.[ [Fn. 21]]
One writer notes:
That the alleged offeree has reason to know
that no offer has been made depends not solely on the words used
but also on the circumstances surrounding the communication. Thus,
if the parties have dealt with one another before . . . or if the
custom in a particular location or trade suggests that an offer is
intended . . . an offer will be found.[ [Fn. 22]]
This leaves us with the following process. First, courts
must look to the language of the motion. If the motion is not
expressed in terms of an offer, there is no offer. If the motion
is expressed in terms of an offer, courts must look to the
underlying context. If the context suggests that the legislative
body normally acts as an offeror, there is a valid offer. But if
the context suggests that the legislative body normally delegates
the role of making the offer, a presumption arises that the motion
is not an offer, but a delegation of power to make an offer. For
a motion to be an offer, then, its language must be clear enough to
overcome this presumption.
This approach answers the district's public policy
argument that it "should not automatically be bound every time its
board passes a motion." The school board can prevent itself from
being bound merely by incorporating into its motions appropriate
delegation language, such as "the board delegates the authority to"
carry out specific tasks. We deal below with the other part of the
district's public policy question -- what happens when a school
board makes a mistake and the district's administrators realize it.
2. Contract formation in this case
The language of the motion suggests that the motion was
itself an offer. The motion's relevant language reads: "MOTION by
Turner and seconded by Kimball to offer a retirement incentive
. . . . The employee must notify the District by April 30, 1996 if
they plan to participate." The district nearly concedes this
point, noting that whether the motion was an offer "turns on
whether under the circumstances the Plaintiffs were justified in
viewing it as one."
Assessing the underlying context of the offer implicates
three circumstances: (1) whether and how the offer was conveyed to
the teachers; (2) the official structure of the school district;
and (3) the history of past dealings.
Restatement section 26 is concerned with the state of
mind of the recipient of the offer. It asks whether "the person to
whom it is addressed knows or has reason to know that the person
making it" does not intend for it to be considered an offer. [Fn.
23] The district asserts that "it was not reasonable to view the
motion as an offer."
The district contends that the offer was not conveyed to
the teachers, although it concedes that "those persons attending
the meeting, hearing of the meeting, or in possession of the
minutes could be said to have received the 'offer.'" The teachers
do not argue that the district conveyed the "offer" more clearly
after the board passed the motion. They contend that at least one
of them attended the April 2 school board meeting and heard the
board pass the motion, but it is not clear from the record how many
of the six teachers were present.
The conveyance circumstance slightly favors the district.
By publicizing the meeting's agenda in advance, the district might
be said to have taken extra steps to convey the offer. But there
are other valid reasons the district might have publicized the
agenda (e.g., to promote public comment) without intending to
convey an offer by passing a motion. And while an offer was not
directly conveyed to the teachers merely because the school board
passed the motion at a public meeting, it was indisputably made
public knowledge.
The second circumstance here is the structure of
authority in the school system. For purposes of this case, that
structure is determined by Alaska statute and board bylaws and
manuals.
Alaska Statute 14.14.090 contains an incomplete list of
school board duties. It empowers school boards, among other
things, to set total compensation levels: "In addition to other
duties, a school board shall . . . determine and disburse the total
amount to be made available for compensation of all school
employees and administrative officers . . . ." [Fn. 24]
The statute governing district bylaws provides that
"school board policies relating to management and control of the
district shall be expressed in written bylaws" adopted at board
meetings. [Fn. 25]
Alaska Statute 14.14.130 creates the position of the
chief school administrator. [Fn. 26] It empowers the administrator
to "administer" the district, and to control school personnel
decisions:
(b) [T]he [chief school] administrator shall
administer the district in accordance with the policies that the
school board prescribes by bylaw.
(c) [T]he [chief school] administrator shall
select, appoint, and otherwise control all school district
employees that serve under the chief school administrator subject
to the approval of the school board.[ [Fn. 27]]
The Copper River School District policy manual states
that "the Board has exclusive responsibility for all school policy.
The Superintendent shall have the responsibility for executing the
policy of the Board . . . ." The manual also states that
the Superintendent is the chief executive
officer of the school system and has, under the direction of the
Board, general supervision of all of the public schools and of all
the personnel . . . of the school system. The Superintendent is
responsible for management of the schools under the Board's
policies, and is accountable to the Board.
These provisions support the general conclusion that the
superintendent is charged with carrying out the district's
executive functions, while the school board acts as a legislative
policymaker. Under this scheme, board actions are more likely
delegations than offers. This circumstance strongly supports the
district.
The third circumstance concerns past dealings. There is
some dispute about whether teachers had previously negotiated
personnel issues with the superintendent and administrators, or
with the school board itself. The teachers offered inconclusive
affidavits, in which they affied that they had dealt "directly with
the school district." But these assertions do not explain whether
the negotiations were with the school board or with the district's
administrators. While there is some evidence that the teachers
negotiated with the administrators, the evidence cited by both
sides on this point is meager, particularly considering the
importance of this issue.
In sum, it is unclear to what extent the school board
normally delegates executive and negotiating authority to district
administrators. If it has been standard practice to require the
administrators to take executive action in order for the district
to enter into contracts, a statement by the board should be
considered a direct offer only if it clearly and specifically
rejects or suspends that pattern of action. In this case, the
motion "to offer" the retirement incentive was not accompanied by
any such extraordinary language. Ultimately, the relationship
between the board, the administrators, and the teachers here is a
fact question for the fact finder.
Each side cross-moved for complete summary judgment.
Each side thus certified that no genuine, material fact disputes
precluded favorable summary judgment. Although neither side
asserted that genuine fact disputes required denial of the other
side's motion, each side advanced an account of the parties' past
dealings that was irreconcilable with the other side's account.
Under these circumstances, summary judgment was inappropriate
because material questions of fact exist as to whether the context
of the April 2 motion made it unreasonable for the teachers to
consider it an offer. We remand to determine whether there was an
offer within the meaning of Restatement sections 24 and 26.
C. Did the District Terminate or Suspend the Teachers' Power
to Accept Any Offer?
An offeror, by manifesting an intention not to enter into
a proposed contract, can terminate the offeree's power of
acceptance. [Fn. 28] Invoking that principle, the district argues
that even if there was an offer, the district's communications with
the teachers revoked the offer or terminated their power to accept
it. The teachers assert that only the board had the power to
revoke the offer.
Recognizing the calculation error, administrators and an
individual school board member tried to prevent teachers from
accepting the incentive. Their communications, discussed above,
did not use words that expressly revoked the offer. We think the
issue of the effect of the district's communications raises
questions that should not be resolved in this appeal as a matter of
law.
First, because the meaning of the words in the district's
communications was not adequately litigated in the superior court,
we decline to hold that those words are fairly susceptible to only
one interpretation. The district gave the issue of their meaning
only cursory attention in the superior court. The teachers did not
address the issue there, nor have they on appeal. In holding that
the district's statements did not revoke the April 2 offer, the
superior court did not discuss or rely on the meaning of the
statements. It relied instead on the proposition that only the
board had authority to revoke a board offer.
The absence of express words of revocation is not
necessarily controlling. [Fn. 29] The history of past dealings --
also relevant to whether the board's motion was an offer -- is
relevant to interpreting the words of the administrators and
individual board members. It therefore appears that there may be
genuine, material fact disputes about the meaning and effect of
these communications. We consequently cannot decide as a matter of
law whether these communications revoked any offer or otherwise
terminated the teachers' power to accept a board-made offer.
Second, we cannot hold as a matter of law that only board
action could terminate or suspend offerees' ability to accept a
board-made offer.
The teachers point out that the school board could only
act as a collective body. Board bylaws state that "[b]oard members
have authority only when acting as a body in regular or special
sessions." The bylaws also state that "[t]he Board shall not be
bound in any way by any statement or action on the part of any
individual Board member or employee of the District except when
such statement or action is in pursuance of special instructions by
the Board or under specified delegation of responsibility."
Corporate and municipal organizations, by their nature,
require executive actors to make just this sort of decision. The
district has such executive actors, consisting of the
superintendent and his staff; the school board endows them with the
authority and powers necessary for carrying out board decisions, as
noted above.
This case does not turn exclusively on whether only the
school board could revoke a board-made offer. Instead, the
question is whether the administrators could permissibly do things
short of revocation that nonetheless had the legal effect of
suspending the offer until the board could act or could otherwise
terminate the teachers' power to accept the offer. The bylaws did
not explicitly grant the superintendent the power to revoke a board
offer upon learning it was based on erroneous information. Rather,
the superintendent had the "responsibility of executing the policy
of the Board." It could be argued that powers of "general
supervision" and "policy interpretation to school staff" encompass
the authority to revoke a school board offer or hold it in
abeyance. While the superintendent does not have the authority to
bind the board, he may have the authority to "unbind" it pending
further consideration. This is an issue to be resolved on remand.
The dissent would reverse and remand with directions to
enter judgment for the school district. The dissent reasons that
communications received by the teachers suspended their power to
accept any offer here. Absent a valid acceptance, of course, no
contract was formed.
Although we agree with the dissent's legal analysis, we
decline to rule on this question as a matter of law. The dissent
relies heavily on the principles discussed in the Restatement
(Second) of Agency (1958). [Fn. 30] The parties did not discuss
these propositions in their appellate briefs except in the most
cursory fashion and did not cite the provisions the dissent finds
persuasive. We prefer not to reverse for entry of judgment for the
appellant in this circumstance. Moreover, we decline to hold as a
matter of law that the language used or the representatives'
ostensible or inferred authority was necessarily sufficient to
deprive the teachers (and each teacher individually) of any power
to accept the alleged offer. We leave it to the parties on remand
to assert any argument, not made to date, that the representatives'
words were susceptible to more than one meaning or that one or more
of the teachers should have realized that no offer could be
accepted pending further school board action.
Finally, the district contends that, in accordance with
comment d to Restatement section 43, "[t]he basic standard to which
the offeree is held is that of a reasonable person acting in good
faith." We agree with that principle. On remand the conduct of
the teachers in accepting the offer should be considered in light
of that standard.
IV. CONCLUSION
For these reasons, we REVERSE the teachers' summary
judgment and REMAND for further proceedings.
MATTHEWS, Chief Justice, with whom BRYNER, Justice, joins,
dissenting.
I agree with the majority opinion that there are genuine
issues of material fact as to whether the April 2 resolution was an
offer capable of acceptance or whether it merely authorized school
district administrators to make an offer. But I believe that even
if the April 2 resolution was an offer, subsequent communications
to the appellees suspended any power that the appellees may have
had to create a binding contract by accepting the offer.
The communications to which I refer are those mentioned
in the majority opinion. These are the April 8 e-mail from School
District Business Manager Loreen Kramer, the early April
conversation between appellee Beverly Goad and Kramer, and the
subsequent conversation between Goad and School Board Chairperson
Linda Marchini.
The e-mail stated:
Please inform your employees that may be
eligible for retirement that I am waiting for a response from our
attorneys concerning the 'Longevity Bonus' offered by the school
board and possibly entering into an agreement with the Retirement
System for a 'Retirement Incentive Program'. It appears that there
are some additional costs to the district that I was not aware of
so we may have to 're-think' the process. I'll have an answer by
the end of the week. Thanks.
The Goad conversations with Kramer and Marchini are
described by Goad in her answer to interrogatories. She states:
Between the dates of April 3-16, 1996, I
had a telephone conversation with Loreen Kramer, CRSD business
manager. I had called her to get the specifics of the RIP offer
that the CRSD board had made at the April 2 board meeting. During
the course of this conversation she revealed to me the following:
The school district's lawyer had advised
the school board to rescind the RIP incentive because they could
not make an offer dependent upon something that the state
legislature had not determined.
The offer was for 8.65 x 3 x wages. She
also relayed that she had made errors in her calculations and that
the district would not be saving as much money as she had initially
told the school board at the April 2, 1996, meeting.
She then said that the school board would
be meeting to rescind the April 2, 1996 RIP incentive motion.
I asked what would happen if we accepted
it prior to the rescission meeting. I received the response, "You
can't do that." I said that several of us had been discussing the
RIP incentive and intended to accept it.
Following that conversation and after
school, I went to the Copper Center Post Office where Linda
Marchini, CRSD board chairperson, is employed. I then asked her
about the information that I had received from Loreen Kramer. She
said Loreen said that the lawyer had advised them to rescind the
motion and that the school board would be doing so at the special
board meeting to be called later in the week. I asked her how she
knew they would be rescinding the motion without discussion; she
assured me that they would be definitely rescinding the motion. I
asked her if they would be discussing the rescission at the meeting
or if they intended to reconsider the motion at a later time. She
replied that would remain to be seen. Then I replied that if we
are interested in accepting the RIP incentive we needed to do that
before the special board meeting. She said, "Please don't."
It was after these two discussions that
the six of us who had previously been discussing our acceptance of
the offer decided to take definitive action by writing our
acceptance letters and delivering them prior to the special board
meeting.
Taken individually or collectively, the communications
were sufficient to convey to a reasonable person the message that
the offer of April 2, at least temporarily, could not be accepted.
The Kramer e-mail told the recipients that it appeared that the
district had made a mistake in calculating the costs of the program
and that it might have to be reconsidered. The telephone call from
Goad to Kramer clearly communicated that the April 2 resolution was
based on mistaken calculations, that a special meeting of the
school board had been scheduled to rescind the resolution, and that
the teachers could not accept the offer implicit in the resolution
before the "rescission meeting." Similarly, the conversation with
Board Chairperson Marchini confirmed that there would be a special
board meeting at which the board would rescind the April 2
resolution.
An offeror need not formally state that an offer is
withdrawn or revoked in order to terminate an offeree's power of
acceptance.
Other facts besides a notice from the offeror
may make it unreasonable for the offeree to accept and rely. The
offeree should be held to the standard of a reasonable person. Any
statement by the offeror to the offeree that even implicitly states
that the offeror no longer regards the offer as a commitment
constitutes a revocation.[ [Fn. 1]]
The communications to which I have referred were, to use the terms
of the Restatement (Second) of Contracts section 42,
"manifestation[s] of an intention not to enter into the proposed
contract," "receive[d] from the offeror." As such they
"terminated" the offeree's power of acceptance.
Important to an understanding of the meaning of the
Restatement in context is Illustration 5 to section 42.
Illustration 5 states, "A makes an offer to B, and later says to B,
'Well, I don't know if we are ready. We have not decided, we might
not want to go through with it.' The offer is revoked." [Fn. 2]
If anything, the communications in the present case more strongly
manifest an intention not to enter into a contract than the facts
stated in Illustration 5. Kramer's e-mail, like Illustration 5,
indicates an unreadiness and uncertainty as to whether to go
forward with the original proposal just as Illustration 5 does.
Under the illustration, that alone is sufficient to revoke the
offer. But in the present case there is more, for in the
subsequent telephone conversation with Goad, Kramer unequivocally
stated that the offer could not be accepted prior to the special
meeting at which the question of rescission would be taken up.
("You can't do that.") In so stating, she made crystal clear that
the power to accept the offer was terminated.
With respect to these communications, the trial court
held that they did not revoke the offer encompassed in the April 2
resolution because, "[o]nly the Board, acting as a body in session,
had the authority to terminate its offer. Statements by
administrators or board members could not constitute a
'manifestation of an intention not to enter into the proposed
contract.'" I believe that this conclusion is wrong and that
applicable principles of the law of agency show that Kramer, at
least, did have the authority to suspend the power to accept the
April 2 offer. The principles on which I rely are expressed in
sections 33, 43(1), 47, and 73 of the Restatement (Second) of
Agency.
Section 33 provides:
An agent is authorized to do, and to do only,
what it is reasonable for him to infer that the principal desires
him to do in the light of the principal's manifestations and the
facts as he knows or should know them at the time he acts.
Section 47 provides:
Unless otherwise agreed, if after the author-
ization is given, an unforeseen situation
arises for which the terms of the authorization make no provision
and it is impracticable for the agent to communicate with the
principal, he is authorized to do what he reasonably believes to be
necessary in order to prevent substantial loss to the principal
with respect to the interests committed to his charge.
Section 73 provides that a manager has inferred authority to direct
the ordinary operations of an enterprise. Comment b in the first
paragraph states that authority to manage an enterprise does not
include authority to make unusual or extraordinary contracts. But
in the final paragraph of this comment the inference of authority
to make unusual or extraordinary contracts in emergencies is
described:
In all the above cases however, authority
to act may be inferred from the circumstances of the authorization
or from subsequent events, as where, in the absence of the
principal, an emergency arises which can be met only by exceeding
what is ordinarily the manager's authority.[ [Fn. 3]]
And finally, section 43(1) provides that in cases where the
authority of the agent is ambiguous, subsequent acquiescence by the
principal indicates that the conduct was authorized:
Acquiescence by the principal in conduct
of an agent whose previously conferred authorization reasonably
might include it, indicates that the conduct was authorized; if
clearly not included in the authorization, acquiescence in it
indicates affirmance.[ [Fn. 4]]
Kramer was the school district's business manager. As
such, she was authorized to do what it was reasonable for her to
infer that the school district would wish her to do in light of the
facts as she knew them at the time that she acted. [Fn. 5] When
she acted in this case, she knew that the school district had
relied on her calculations in passing the April 2 resolution and
that these calculations were substantially mistaken and would prove
to be very costly to the school district. In my view it was
unquestionably reasonable for her to infer that the district would
wish her to suspend the power to accept the April 2 offer and thus
under section 33 of the Restatement, she had authority to do so.
Her authority is underlined by sections 47 and 73 of the
Restatement which provide that an agent can take action reasonably
believed by the agent to be necessary in order to prevent
substantial loss to the agent's employer. That was certainly the
case here.
And even if Kramer's authority under sections 33, 47, and
73 of the Restatement is regarded as ambiguous rather than clear,
the subsequent rescission of the April 2 resolution by the board
demonstrates that Kramer acted as the district desired her to act.
This, to use the terms of section 43(1) of the Restatement,
"indicates that [her] conduct was authorized."
In summary, the appellees knew when they purported to
accept the offer on April 18 that it was based on mistaken
calculations that were overly generous to them and that the school
district no longer wished to go through with it. Since Kramer had
authority under the law of agency to withdraw the offer pending the
special meeting of the school board, appellees' purported
acceptances did not result in the formation of contracts. For
these reasons, I would reverse the judgment of the superior court
and remand with directions to enter judgment in favor of the school
district.
FOOTNOTES
Footnote 1:
The six teachers are Doyle Traw, Barbara Goozen, Beverly Goad,
Gary Stenberg, Karen Stenberg, and Stanley Wallace.
Footnote 2:
In a related, pending case, the district is suing the
Teachers' Retirement System (TRS). The district and TRS have
agreed to defer further activity on the third-party claims until
the present case is resolved.
Footnote 3:
See Davis v. Dykman, 938 P.2d 1002, 1006 (Alaska 1997).
Footnote 4:
Id.
Footnote 5:
See Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
Footnote 6:
Id.
Footnote 7:
Restatement (Second) of Contracts sec. 24 (1981). See alsoYoung
v. Hobbs, 916 P.2d 485, 488 (Alaska 1996) (setting out requirements
for formation of express contract).
Footnote 8:
Restatement (Second) of Contracts sec. 26 (1981). See also
Thrift Shop, Inc. v. Alaska Mut. Sav. Bank, 398 P.2d 657, 658-59
(Alaska 1965) (citing Restatement).
Footnote 9:
10 Eugene McQuillin, The Law of Municipal Corporations sec.
29.03, at 247 (3d ed. 1999).
Footnote 10:
31 P.2d 637, 641 (Or. 1934) (the words "or other officers" do
not appear in Winklebleck).
Footnote 11:
See id. at 638.
Footnote 12:
See id. at 638-39.
Footnote 13:
Id. at 639.
Footnote 14:
See id. at 639-40.
Footnote 15:
See id. at 640.
Footnote 16:
Id. at 641-42.
Footnote 17:
See id. at 641-43.
Footnote 18:
Id. at 641.
Footnote 19:
See Restatement (Second) of Contracts sec. 26 (1981).
Footnote 20:
See id.
Footnote 21:
Id. at sec. 26 cmt. a.
Footnote 22:
1 Richard A. Lord, Williston on Contracts sec. 4:7 (4th ed.
1990).
Footnote 23:
Restatement (Second) of Contracts sec. 26 (1981).
Footnote 24:
AS 14.14.090.
Footnote 25:
AS 14.14.100.
Footnote 26:
The superintendent is the chief school administrator in the
Copper River School District.
Footnote 27:
AS 14.14.130.
Footnote 28:
See Restatement (Second) of Contracts sec. 42 (1981) ("An
offeree's power of acceptance is terminated when the offeree
receives from the offeror a manifestation of an intention not to
enter into the proposed contract."); id. at sec. 43 ("An offeree's
power of acceptance is terminated when the offeror takes definite
action inconsistent with an intention to enter into the proposed
contract and the offeree acquires reliable information to that
effect.").
Footnote 29:
See Restatement (Second) of Contracts sec. 42 illus. 5 (1981)
("A
makes an offer to B, and later says to B, 'Well, I don't know if we
are ready. We have not decided, we might not want to go through
with it.' The offer is revoked.").
Footnote 30:
Dissent at 5-7.
FOOTNOTES (Dissent)
Footnote 1:
1 Arthur L. Corbin, Corbin on Contracts sec. 2.20, at 227
(rev.
ed. 1993).
Footnote 2:
Restatement (Second) of Contracts sec. 42 cmt. d, illus. 5
(1981). This illustration is based on Hoover Motor Exp. Co. v.
Clements Paper Co., 241 S.W.2d 851 (Tenn. 1951), in which the court
concluded that the language "Well, I don't know if we are ready.
We have not decided, we might not want to go through with it"
"brought home to [the offeree] that [the offeror] no longer
consented to the transaction" and so amounted to a withdrawal of
the offer.
Footnote 3:
Restatement (Second) of Agency sec. 73 cmt. b (1958).
Footnote 4:
Restatement (Second) of Agency sec. 43(1) (1958).
Footnote 5:
See Restatement (Second) of Agency sec. 33 (1958).
