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Quote of the Day - A man who has never gone to school may steal from a freight car; but if he has a university education, he may steal the whole railroad. - Teddy Roosevelt
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Now Where Did I Put That Railroad Car?

The contract cases on apparent authority and ostensible authority in law school are hundreds of years old, commonly referred to as "black-letter law" because the definitions are so well known.  Why then, would CSX Transportation, Inc. litigate a case involving the apparent authority of someone with a corporate email address who welshed on a debt?

Because it involved the internet, where the law is as undefined as the 'net itself.

Let's review the facts.  CSX received an email message from Albert Arillotta, who claimed he worked for Recovery Express and used the e-mail address albert@recoveryexpress.com (no longer active), which would appear to most people as someone associated with Recovery Express, Inc.  It turns out he actually worked for Interstate Demolition & Environmental Corporation, who shared office space with REI.

The Court gives us the pleasure of reviewing the email, and says,  "The entire e-mail - horrendous grammar and all - is reproduced here:

From: Albert Arillotta [albert@recoveryexpress.com]
Sent: Friday, August 22, 2003 4:57 PM
To: Whitehead, Len Jr.

Subject: purchase of out service railcars

lynn this is albert arillotta from interstate demolition and recovery express we are interested in buying rail cars for scrap paying you a percentage of what the amm maket indicator is there are several locations i suggest to work at the exsisting location of the rail cars. we will send you a brocheure and financials per your request our addressis the following:

interstate demolition/recoveryexpress
180 canal street 5th floor boston mass 02114
phone number- 617-523-7740
fax number 617-367-3627
email address albert @recoveryexpress .com
thank you for your time"

Mr. Arillotta apparently gained access to REI's computers and sent an email message to CSX offering to buy railroad cars for scrap.  Since that's one of the things that REI does, CSX bit, and bit hard.  They set up a deal with Mr. Arillotta, who showed up at their railroad yard with check in hand, and hauled several cars away. 

Mr. Arilotta's $116,000 check bounced, and CSX sued REI and IDEC, believing that one of the two companies had reneged on the deal.

The Court's opinion ruled in favor of REI and IDEC, reasoning that a mere email address, even with a proper domain name, does not confer apparent authority on Mr. Arillotta.  Judge William G. Young said it was no different than someone who showed up with a business card, company vehicle or used letterhead, each of  which taken alone are insufficient to establish apparent authority.  For that matter, if he ruled in favor of CSX, the Judge thought he would have been conferring on everyone at the corporation who had an email address the authority to enter into a contract, all the way down to the janitor. 

CSX can't find the railroad cars taken by Mr. Arillotta. 

Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Tuesday, March 07, 2006 at 17:11 Comments Closed (0) |
 
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