Capital Dredge and Dock Corporation, an Ohio Corporation v. City of Detroit, a Municipal Corporation ( 1986 )

WELLFORD, Circuit Judge,

dissenting.

Upon reconsideration of the issue of the attorney’s apparent authority to settle his client’s case, which was the basis for our original disposition, petitioner directs our attention to Coates v. Drake, 131 Mich.App. 687, 346 N.W.2d 858 (1984). Coates holds that

[A] settlement, made by an attorney without prior special authorization and which was not subsequently ratified by his client, is not binding on the client, and ... this rule applies equally to cases where relief from a judgment or court order is sought.

346 N.W.2d at 861. Coates relies on Henderson v. Great Atlantic & Pacific Tea Co., 374 Mich. 142, 132 N.W.2d 75 (1965), for this rule and also makes reference to The Bradford Exchange v. The Trein’s Exchange, 600 F.2d 99, 102 (7th Cir.1979), which holds that “an attorney may not consent to a final disposition of his client’s case without express authority.” See also Smith v. Widman Trucking & Excavating, Inc., 627 F.2d 792, 796 (7th Cir.1980).¹ In our panel decision we made no reference to these cases, but rather cited other federal authority and authority from several other states to the effect that an attorney has “apparent authority to settle claims.” Coates acknowledged, as does The Bradford Exchange, that “it is to be presumed that the attorney had authorization and the movant [seeking relief from an unauthorized settlement] must overcome that presumption.” 346 N.W.2d at 862. We acknowledged that Michigan has held that the attorney has “no implied authority to settle or compromise” without express authority.²

The question in light of Coates is whether Michigan would recognize an attorney’s apparent authority to settle his client’s claim when it does not recognize an attorney’s implied authority to settle without special authorization. Michigan National Bank of Detroit v. Kellam, 107 Mich.App. 669, 309 N.W.2d 700 (1981), discussed “the prerequisites necessary to a finding of agency by apparent authority.” 309 N.W.2d at 705. It decided that the trial court had erroneously held that an attorney who had formed a partnership and represented the principal partner had apparent authority to bind that partnership to an agreement relied upon by the other parties to that agreement. This holding came about despite the attorney’s representation that he had such authority. Id. (“Apparent authority ... may not be established by representations of the agent.”). See also Grosberg v. Michigan National Bank, 420 Mich. 707, 362 N.W.2d 715 (1984) (clarified the law as to both the apparent and implied authority of a partner to act on behalf of a partnership emphasizing “inherent agency power” of a partner).

I believe the cases discussed raise a substantial question whether Michigan will follow the general rule allowing an attorney clothed in only apparent authority to compromise his client’s claim. I would therefore certify the issue to the Supreme Court of Michigan. If the Michigan Supreme Court declines to decide the issue, I would remand to the trial court to make a factual finding on the apparent authority issue. Accordingly, I would withdraw our previous disposition and certify the case for resolution of the question of attorney Al-teri’s authority to compromise and settle Capital’s claims.

1 . These cases also stand for the proposition that a purported settlement effectuated by the attorney without his client’s consent may be set aside.

2 . In Presnell v. Board of City Road Commissioners, 105 Mich.App. 362, 306 N.W.2d 516 (1981), the court stated:

[I]t has been said that [an] "attorney who has the conduct of a lawsuit is presumed to have authority to act in his client’s behalf.” Jackson v. Wayne Circuit Judge, 341 Mich. 55, 59, 67 N.W.2d 471 (1954). This general rule, however, has not been extended to permit an attorney to compromise a client’s claim absent specific authority from the client to do so.

306 N.W.2d at 518 (emphasis added); see also Michigan National Bank v. Patmon, 119 Mich.App. 772, 327 N.W.2d 355 (1982).