Case LAE Assignment: Montoya v Grease Monkey Holding Corp
Using the language and principles of law and focusing on agency law, as well as the corporate form of business, analyze the legal benefits and liabilities of the corporate structure to determine the optimum business response to a corporation's efforts to expand its territorial operations.
Write a three-page response to the following:
Review the following Colorado Supreme Court case:
Grease Monkey v Montoya Case
Describe the business relationship between Grease Monkey and Arthur Sensenig.
In light of that business relationship, do you agree with the Court's determination that the former was liable for the tortious acts of the latter? Why? Why not?
What should Grease Monkey have done to avoid or mitigate its liability?
What should the Montoya's have done to avoid their loss?
Submit your assignment to the Dropbox following the instructions of your facilitator.
http://www(dot)leagle(dot)com/decision/19951372904P2d468_11372/GREASE%20MONKEY%20INTERN.,%20INC.%20v.%20MONTOYA?
CASE LAE
Name:
Institutional Affiliation:
Montoya v Grease Monkey Holding Corp
904 P.2d 468 (Col. 1995)
A Grease Monkey’s Uncle, er, Agent
The Business Relationship between Grease Monkey and Arthur Sensenig
Considering the oddly named and extreme case of Grease Monkey International, Inc. v. Montoya, 904 P.2d 468 (Colo. 1995). Mr. Sensenig was a former banker in the case hired by the president of Grease Monkey International Inc. As president, Sensenig appeared before the public to act as authorized personnel of the company. Unfortunately enough, the owners of the company never realized that Sensenig was a dishonest employee within the company (Adams, & Smith, 2013, pp.52).
Sensenig’s scheme and main agenda were to contact his former clients from the bank he worked for in a bid to solicit funds from them in the name of loaning money to invest in Grease Monkey, an aspect that succeeded, thus enabling him to raise $500,000. In return, Sensenig put this money in his pocket and when the victims of this fraud realized the situation, contacted their lawyers in a bid to establish the source of this discrepancy, thus filing their case against Grease Monkey (Hardy & Maguire, 2016, pp. 85).
Given the magnitude of this problem, Sensenig was an employee of Grease Monkey at the time of this incident, thus indicating that the employer should be held liable for his unethical actions in consideration of the principle of servant/master liability (Moriarty, 2016, pp.25). However, the court nullified the recovery of the lost funds arguing that it was the employer’s liability over the conduct of his employee since Sensenig used his position as an officer in this organization to benefit himself.
Upon discovering that the owners of the company had given Sensenig a significant authority to borrow funds within the company without approval by the Board of Directors who exercised little control over this matter, the Court established that Grease Monkey cloaked Sensenig with unusual authority to solicit funds from others on behalf of the company (Moriarty, 2016, pp.25). In as much as Grease Monkey had not permitted Sensenig to solicit for funds from external victims, evident clearly proved that the company granted the perpetrator a position to commit fraud, thus forcing the company to repay the money.
Agreement with the Judicial Opinion
As detailed in Section 261 of the Restatement (Second) of Agency, principles that put their servants or agents in positions that enable them act within their authority in committing fraud upon third persons are subject to liability to the third persons for such fraudulent activities (Paolini, 2015, pp.250). Given this, it is important to understand that the application of section 261 is not only limited to the agents and principles, but extends to the masters and servants as well.
In consideration of the doctrine of respondeat superior, masters are liable for the unauthorized torts committed by their servants while the servant acts within the scope of his employment. The master’s liability is in this case based on the phy...