White v. Thomas, 319 Ark. 363 (Ark. Ct. App. 1991), is an Arkansas appellate decision holding that a landowner was not bound by his part-time employee’s unauthorized contract to sell 45 acres of his property, because the buyers had relied only on the employee’s own claim to hold a power of attorney. The case is a fixture in agency law courses for one reason: it shows that apparent authority must come from the principal’s conduct, not the agent’s self-description.
What Happened
Bradford White, a Fayetteville, Arkansas resident, employed Betty Simpson part-time for nearly two years. Her work was clerical and domestic: answering phones, typing, house-sitting, and property upkeep. She had once signed closing papers for White under a power of attorney, but she had never negotiated a real estate transaction on his behalf and had never bid for him at an auction.
In December 1988, White left for Europe. Before he went, he told Simpson to attend an auction and bid on a 220-acre farm in Washington County, excluding a three-acre homesite. He capped her at $250,000 and left her a signed blank check for the ten-percent deposit. That was the entirety of her instructions.
Simpson bought the 217-acre tract for $327,500, well over the ceiling. Then, after the bidding, she signed a separate offer-and-acceptance agreement selling roughly 45 acres of that land to Stanley and Mary Thomas. She signed as “Betty Simpson, POA, Power of Attorney for Brad White.” No such power of attorney existed.
The Thomases testified that they asked Simpson whether she had authority to convey the property and she said she held a power of attorney. They did not call White. They did not ask to see the document.
White returned on December 9, 1988. He learned about the $327,500 purchase price and, though upset, decided to close on the 217 acres. When he then learned about the separate contract to sell 45 acres to the Thomases, he repudiated it immediately.
The Trial Court’s Ruling
The Thomases sued for specific performance. The Washington County Chancery Court ruled for them, finding that White was estopped from denying Simpson’s authority and had ratified her actions. It ordered specific performance of the 45-acre sale.1Quimbee. White v. Thomas
Why the Appellate Court Reversed
The Arkansas Court of Appeals reversed and dismissed the case in 1991, calling the trial court’s conclusions clearly erroneous on every theory the Thomases had raised.2OpenCasebook. White v. Thomas
No Actual Authority
Simpson’s express authority was narrow: buy the 217 acres for up to $250,000. Nothing more. On implied authority, the court drew a clean line between buying and selling. Authority to purchase land does not carry authority to sell land; they are different transactions, and no reasonable person could treat one as containing the other.
No Apparent Authority
This is the part of the opinion that made the case famous. The court laid out a two-part test. First, the principal must have held the agent out as having the authority in question, or knowingly permitted the agent to act as though she did. Second, the third party must have known of that conduct by the principal, reasonably believed the agent had authority, and acted in reliance on that belief.
Neither part was met. White had done nothing to suggest Simpson could sell his land. The Thomases’ belief rested entirely on what Simpson herself had told them. The court held that a person who knows they are dealing with an agent cannot blindly trust the agent’s own statements about the scope of her power and has a duty to use reasonable prudence to verify. The Thomases did neither of the two obvious things: they never called White, and never asked to see the alleged power of attorney.
No Ratification
The Thomases argued that by closing on the overpriced auction purchase, White had ratified everything Simpson did that day, including the 45-acre sale. The court treated the two agreements as separate contracts. White ratified the 217-acre purchase from the auctioneer; he repudiated the sale to the Thomases the moment he learned about it. He accepted no benefit from the 45-acre deal, so he was not bound by it.
Outcome
The appellate court reversed the order of specific performance and dismissed the case. The Thomases did not get the 45 acres.
What the Case Stands For
Three principles from White v. Thomas travel into most agency law materials:
- Apparent authority flows from the principal’s conduct toward the third party. It cannot be proved by the agent’s own words. Neither the existence of an agency relationship nor the scope of an agent’s authority can be established solely by what the agent says.
- A third party who knows they are dealing with an agent has a duty of inquiry. Reasonable prudence means verifying the agent’s authority through the principal or through documentation, not accepting the agent’s assurance at face value.
- Ratification is transaction-specific. A principal who accepts the benefit of one unauthorized act is not automatically bound by a separate unauthorized act, particularly where they repudiate promptly on learning of it.
The practical lesson for anyone buying property through someone claiming to represent the owner is the one the Thomases learned the hard way: ask to see the written authority, and confirm it with the principal before signing.