Kansallis Finance LTD v. Fern
Massachusetts Supreme Judicial Court
659 N.E.2d 731 (1995)
Stephen Jones was a law partner in Fern, Anderson, Donahue, Jones & Sabatt, P.A. (Fern) (defendant). Jones issued a fraudulent opinion letter to Kansallis Finance Ltd. (Kansallis) (plaintiff) on Fern letterhead. Kansallis successfully sued Jones and his co-conspirators for $880,000 in damages, and Jones was criminally convicted. Kansallis sued Fern in the United States District Court for the District of Massachusetts when it could not collect the damage award from Jones or the co-conspirators. The jury found that Jones did not act with apparent authority. The jury was instructed that Jones’ conduct was nevertheless within the scope of the partnership if it was (1) the type of conduct a law partner would engage in, (2) within the appropriate time and geographic scope of the partnership, and (3) “motivated at least in part by a purpose to serve the partnership.” The jury found that Jones did not act with apparent authority and Jones’ conduct did not satisfy the three-prong test. Kansallis appealed to the Court of Appeals for the Second Circuit. The appellate court affirmed the findings of fact and certified two questions to the Massachusetts Supreme Judicial Court, including whether intent to benefit the partnership was a requirement for partnership liability.
Rule of Law
Holding and Reasoning (Fried, J.)