Can a dissolved partnership's agent create apparent authority through his own representations? Wittingham, LLC v. TNE Limited Partnership Explained

The Utah Supreme Court’s recent decision in Wittingham, LLC v. TNE Limited Partnership provides important guidance on apparent authority in the partnership context, particularly when dealing with dissolved entities.

Background and Facts

The Muir Partnership, a Utah limited partnership, was administratively dissolved in 2007. Two years later, the general partner Nick executed a $435,000 loan transaction with TNE Limited Partnership, pledging partnership real estate as collateral. TNE knew about the partnership structure and Nick’s role as general partner, but relied primarily on Nick’s own representations about his authority to bind the partnership. The partnership later sued to void the transaction, claiming Nick lacked authority to act for the dissolved entity.

Key Legal Issues

The central issue was whether Nick possessed apparent authority to bind the dissolved partnership. TNE argued that Nick had apparent authority based “entirely on [Nick’s] representations.” The district court rejected this theory, concluding that apparent authority cannot be established solely through an agent’s own statements or conduct without manifestations traceable to the principal partnership.

Court’s Analysis and Holding

The Utah Supreme Court affirmed, applying the three-part test for apparent authority from Drew v. Pacific Life Insurance Co. The court emphasized that apparent authority “must still be based on manifestations by the principal as to the agent’s authority, and not solely the representations of the agent.” TNE’s reliance exclusively on Nick’s statements failed the first element requiring manifestations from the principal. When TNE later argued the partnership agreement itself manifested Nick’s authority, the district court properly found the agreement actually limited Nick’s post-dissolution authority.

Practice Implications

This decision reinforces that apparent authority requires objective manifestations from the principal that a third party can reasonably rely upon. Practitioners should ensure clients obtain clear evidence of authority from the partnership itself, not just the purported agent. The case also demonstrates the importance of addressing the district court’s actual reasoning on appeal rather than focusing on preliminary rulings that preceded key arguments.