First Bank relies, Rush Creek Solutions, Inc. v. Ute Mountain Ute Tribe
In First Bank relies, Rush Creek Solutions, Inc. v. Ute Mountain Ute Tribe, 107 P.3d 402 (Colo. App. 2004), the Colorado appellate court applied state apparent authority principles to determine that the tribe authorized the chief financial officer (CFO) to waive immunity.
In Rush, the tribe argued that pursuant to its constitution, the tribal council was the "governing body with exclusive power over tribal matters" including the right to waive immunity, and the tribal council never gave the CFO authority to waive its immunity. Id. at 406.
The court said, however, that the authority to waive sovereign immunity may be implied -- even though waiver of immunity must be express, not implied. It rejected a federal district court's conclusion that because waivers of sovereign immunity must be clear and express, the authority to waive immunity must also be expressly granted.
The Rush Court said it found nothing in the federal cases to mean that "because waivers of sovereign immunity must be express, the authority to sign admitted waivers cannot be established by apparent authority." Id. at 407.
The court also concluded that inasmuch as the tribe's constitution did not speak to the issue of apparent authority, or prohibit or refute it, general laws of agency govern. It then applied Colorado's laws concerning apparent authority.
Among the Colorado common law upon which the Rush Court relied is that apparent authority is established by evidence of the principal's words, written or spoken, or other conduct of the principal "which, reasonably interpreted, causes a person to believe that the principal consents to have the act done on his behalf by a person purporting to act for him." Id.
The court reasoned that the policy supporting apparent authority -- an authority that is not actual or express -- is for the protection of "third parties who, in good faith, rely upon their belief that an agency relationship exists between the apparent principal and agent." Id.
Further, under Colorado law, if the agent is acting pursuant to apparent authority, the agent can make the principal responsible for his or her actions regardless of the principal's knowledge about the agent's conduct.
The court stated that ordinarily the issue of apparent authority is a question of fact that requires a hearing.
In Rush, the issue of the CFO's apparent authority had not been addressed by the trial court. Id. at 406. However, the court concluded the undisputed facts allowed it to make that determination on appeal as a matter of law.
According to the court, at all relevant times: the CFO was authorized to enter into contracts on behalf of the tribe; the contract at issue designated the tribe as the customer; the CFO signed on behalf of the customer on a line designated for authorized signatures; the plaintiff and the tribe performed their respective duties under the contract, including the making of payments by the tribe to the plaintiff, for eighteen months before the dispute arose; and the tribe's "Constitution and personnel policy were silent concerning procedures for signing contracts, waiving sovereign immunity, or authorizing persons to sign waivers." Id. at 407.
Under those facts the court said that "when, as here, a person has authority to sign an agreement on behalf of a sovereign, it is assumed that the authority extends to a waiver of immunity contained in the agreement." Id. at 408.