Opinion
July 21, 1997
Appeal from the Supreme Court, Kings County (Levine, J.).
Ordered that the order is affirmed, with costs.
From December 1983 until June 1984, the plaintiff gave the defendant Asher Yadlin $59,468.74 to invest in stock options and commodities. Yadlin deposited the plaintiff's money in options and commodities accounts that he had with Kidder, Peabody Co., Inc. (hereinafter Kidder, Peabody). The parties agreed that they would share equally any profits and losses generated by the accounts. The accounts were closed at the end of 1985, after sustaining losses of $142,039.
In March 1987, the plaintiff commenced this action seeking, inter alia, the return of her investment on the ground that Yadlin had misrepresented to her that he was a registered broker with Kidder, Peabody. After discovery was completed, Kidder, Peabody moved for summary judgment. Kidder, Peabody contended that the plaintiff had not sustained any damages because she had recovered $29,200 of her investment and the remaining $30,268.74 had been lost investing in the stock market. Alternatively, Kidder, Peabody argued that it was entitled to summary judgment because it was not liable for Yadlin's alleged fraud. The Supreme Court granted the motion, finding that the plaintiff had not sustained any damages.
We disagree with the Supreme Court that the plaintiff did not sustain any damages. If the plaintiff establishes that Yadlin fraudulently induced her into investing with him, she would be entitled to recover her out-of-pocket expenses, or $30,268.74 (see, Lama Holding Co. v. Smith Barney, 88 N.Y.2d 413, 421-422; AFA Protective Sys. v. American Tel. Tel. Co., 57 N.Y.2d 912; Reno v. Bull, 226 N.Y. 546).
However, we agree with Kidder, Peabody that as a matter of law it is not liable for Yadlin's alleged fraud. The record establishes that Yadlin was not a Kidder, Peabody employee. Thus, Kidder, Peabody is not liable for Yadlin's action under the doctrine of actual authority (see generally, Greene v. Hellman, 51 N.Y.2d 197; 2 N.Y. Jur 2d, Agency and Independent Contractors, §§ 71-72, at 520). Moreover, the plaintiff cannot rely upon the doctrine of apparent authority. "Essential to the creation of apparent authority are words or conduct of the principal, communicated to a third party, that give rise to the appearance and belief that the agent possesses authority to enter into a transaction" (Standard Funding Corp. v. Lewitt, 89 N.Y.2d 546, 551, quoting Hallock v. State of New York, 64 N.Y.2d 224, 231). Here, Kidder, Peabody made no representations to the plaintiff that Yadlin was its employee.
Kidder, Peabody also established that it is entitled to judgment as a matter of law on the remaining causes of action (see, Alvarez v. Prospect Hosp., 68 N.Y.2d 320; Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851).
O'Brien, J. P., Joy, Goldstein and Luciano, JJ., concur.