IV. Barker's Summary Expulsion of Nehls
A. The Ambush of October 22, 1991.
We shall now take up the expulsion and its aftermath.
Nehls continued to publish the Spectator in the fall semester of 1991. He continued to criticize the college and Roche, especially over the ban on distributing his paper on campus. Barker continued banning distribution of the paper.
On October 22, 1991, college treasure Ken Cole called Nehls to his office, purportedly to discuss student federation business. Barker was also there when Nehls arrived. She held several documents in her hand. One of the documents was most probably a copy of the Distribution Contract, obtained from TCB Publishing as part of Barker's "investigation." After Nehls sat down, Barker handed him a letter notifying him of his expulsion from Hillsdale College. In pertinent part, the letter stated the following:
This letter serves to notify you officially of your dismissal from Hillsdale College as of Tuesday, October 22, 1991; this dismissal is the result of your unauthorized use of College facilities; i.e acting as an agent of Hillsdale College to enter into a contract with TCB Publishing Co., following which Hillsdale College was falsely represented to solicit advertising revenue of a product from said publishing company.
Hillsdale College demands that you return all money within 15 days of this date to the eight businesses fraudulently solicited; Domino's Pizza (Hillsdale), O'Meara-Sumnar Agency, Broad Street Market, LoPresto's Body Shop, Hillsdale County National Bank, Sud-Z Cleaners/Laundry, Hunt Club, and Burke's Auto Specialist.
Any appeal for reconsideration of the dismissal must be received by November 7, 1991, addressed to George C. Roche, President, Hillsdale College, Hillsdale, MI 49242. Attorney James B. Parker, Hillsdale, is handling all matters related to the funds fraudulently solicited. (Emphasis supplied).
After handing Nehls the letter of expulsion, Barker asked him why he had ordered the folders and how he intended to repay the money, as the letter demanded. Wisely, Nehls refused to answer until he had consulted his attorney. Nehls also asked for copies of the contracts in Barkers hands. Ungenerously and unfairly, she told him that he would have to obtain them from Parker, the college's attorney.
B. Barker's Expulsion Letter.
The deceit, brutality and cruelty of Barker's conduct in summoning Nehls to Cole's office and then expelling him hardly need comment, but the charges and demands of her letter certainly do. We begin with her demand that Nehls return the money "fraudulently solicited." This demand supports the inference, which has been drawn above, that Barker had not contacted the eight merchants who purchased advertising space in the folders prior to expelling Nehls. If she had contacted them, she would have learned what Harwell later found out: the local merchants had been solicited by two representatives of TCB, not Nehls; that Nehls had not signed the Sales Contract; and that TCB had their money, not Nehls.
Furthermore, neither Barker nor the college had standing to demand the return of the merchants' money from Nehls, even if he had it. If there were any fraud in TCB's sale of advertising space, the victims of the fraud were the merchants, not the college, and they alone had standing to cancel their contract with TCB and demand their money back. As Harwell discovered, none of them, with the possible exception of Broad Street Market, wanted to cancel the contract and all of them expressing an opinion on the matter stated that they would be satisfied with the distribution of the folders. It may be that the folders were imprinted with the college's logo. If so, the college would have the right to compensation from TCB for the unauthorized use of its intellectual property, but it did not have the right to seize the folders and prevent their distribution.
Barker's letter charges Nehls with "unauthorized use of College facilities; i.e acting as an agent of Hillsdale College to enter into a contract," which was followed by "false[] represent[ation]" and "fraudulent[] solicit[ation]." The awkward wording of this charge invites comment. According to the Hillsdale College Code of Conduct, unauthorized contracting is not a disciplinary offense, but section 7 of the Code provides that "students or others are subject to discipline through due process for the . . . unauthorized entry or use of College facilities." Clearly, section 7 prohibits the unauthorized entry into, or use of, the college's physical plant or other property, but signing a contract, with or without authority, is not the use of the college's physical plant or other property. Apparently, Barker wanted to hang a wrap on Nehls for acting as the agent of the college without authority, but finding no provision in the Code reaching that sort of conduct, she found a Code section using the word "unauthorized" and charged Nehls under it. Even the most tendentious guardhouse lawyer would be ashamed to defend what Barker had done.
Barker's letter also asserts, without supporting argument or proof, that Nehls did not have authority to sign the Distribution Contract with TCB, which is a debatable proposition to be explored below. She then assumes that the folders were represented to local merchants as a college-authorized project, and finally, like Roche's letter confirming the expulsion, she asserts that all of this is per se fraud ("tantamount to fraud") on Nehls's part. As we have already stated, it is extremely doubtful that TCB affirmatively represented the folders project as a college-endorsed activity, although the local merchants may have assumed it was. Nonetheless, for present purposes, we shall assume, but not concede, that the project was so misrepresented. Even so, Nehls is not liable for any fraud.
C. "Fraud," "agency" and "authority."
Barker's letter bandies the terms "authority," "agent" and "fraud," but it is evident that she does not understand those terms or does not want to understand them. The terms are plainly camouflage used to intimidate and discredit Nehls and provide a fig leaf of respectability for the decision to expel him. The charges against Nehls confuse unauthorized conduct with fraudulent contracting. In order to make this clear, it will be necessary to explain what the terms "fraud," "agent," and "authority" mean.
One can almost hear Barker and Roche and their supporters protesting that they are not lawyers and were not using technical terms. Such protests should be rejected out of hand. Throughout the Nehls case, Barker and Roche had a lawyer available to them and acted on his advice, or pretended to. Furthermore, the following discussion of the terms "fraud," "authority," and "agent" is not technical, merely precise. Any layman, even one of mean intellectual capacity, can understand the difference between acting without authority and acting fraudulently. It does not lie in the mouth of one such as Barker, who regularly mobilizes legal flapdoodle to intimidate students, or one such as Roche, who loudly and publicly opines on many subjects, including the law, to protest that their charges against an impecunious nineteen-year-old have been subjected to informed analysis.
An agent is someone who acts on behalf of another, who is usually called the principal. As a general rule, if the principal is to be bound by his agent's act, the agent must have authority, actual or apparent, express or implied, to do the act. For example, if an agent has authority to enter into a contract with a third-party, the principal is bound by the contract and must perform according to its terms. On the other hand, if the agent does not have authority to contract on behalf of his principal, the principal is not bound, but the agent may be bound. If the agent is so bound, he must perform the contract according to its terms. If he does not perform, the agent is liable for damages sustained by the third party as a result of the nonperformance. For example, assume that Principal, a collier, authorizes Agent, a fuel retailer, to solicit contracts to supply coal to householders throughout the winter at one hundred dollars a ton. If Agent enters into a contract with a third party to supply apples, not coal, throughout the winter for a dollar a bushel, not a hundred dollars a ton, the collier is not bound to perform, i.e. he is not bound to deliver apples to the third party at the agreed price. On the other hand, Agent must deliver the requisite apples to the purchaser at the agreed price or pay the purchaser damages, which in this case would be difference between the contract price and the cost of purchasing the apples on the open market.
A principal may also be bound by the acts of his agent, even if the principal has not authorized them, if the principal subsequently ratifies the contract by knowingly accepting the benefits of the contract. In the example above, the Principal would have ratified the contract and be bound by its terms, if he started delivering apples to the purchaser at the start of the winter and collected payment for them.
The terms "agency," "authority," and "fraud" have no intrinsic connection. Fraud is an intentional misrepresentation of a material fact which causes another person to act to his detriment. (A material fact is one that would matter to a reasonable person in the circumstances). An essential element of fraud is scienter, the present intention to deceive. A person who knows the truth and intentionally misrepresents it in order to deceive his victim has committed fraud. A person who does not know the truth does not commit fraud. He has made a mistake. Therefore, a person who enters into a contract with another impliedly represents that he intends to perform it. A person who does not intend to perform a contract when he makes it with another party has committed fraud. On the other hand, a person is liable for breach of contract, not fraud if he enters into a contract in good faith but is unable to perform it.
D. "Fraud," "agency" and "authority" in Nehls's case.
In the present context, the issue is whether a purported agent who enters into a contract without authority from his principal or who exceeds his authority necessarily commits fraud, i.e. whether his conduct is "tantamount to fraud." The answer is no. The agent may honestly believe that he has the authority he needs , or he may believe that his principal will ratify the purportedly unauthorized contract. He may even be willing to perform the contract if his principal repudiates it. There is fraud only if the agent does not intend to perform the contract or knows that his principal does not intend to perform it.
The foregoing demonstrates that Nehls did not commit fraud by signing the contract with TCB. Nehls made no representation to TCB about his authority. TCB approached him. Its representatives believed that Nehls had the necessary authority, as Nehls himself did. In addition, even if Nehls did tell the TCB representatives that he had authority to sign the contract, it was an innocent--indeed, reasonable--mistake. Prior to signing the contract, he talked to his predecessor, Jones, about the folders, and after signing it, he advised Shelton and Pictor, fellow federation officers, that he had signed it. No one protested his conduct or told him that he did not have authority to do as he had done. In fact, by failing to object to Nehls's action, Shelton and Pictor probably ratified it on behalf of the federation. One wonders why they were not also expelled.
Finally, we come to the issue of whether the "false[] represent[ation]" of the college to the local merchants was fraud on Nehls's part. For reasons given above, it is unlikely that the factual premise of this charge is true. The available evidence indicates that in the face of strongly contradicting evidence, i.e. the Sales Contract itself, the local merchants simply assumed that the TCB representatives were affiliated with the college. The contract does not specify that the folders were college-endorsed. But even if the salesmen did say that it was a college-endorsed project, there was no fraud if the TCB representatives honestly believed that it was, as they apparently did, and Nehls certainly did. Finally, let us assume that the TCB salesmen acted in bad faith and did not believe that Nehls had authority to sign the Distribution contract and that the folders project was not college-endorsed. Under such assumptions, there would be fraud, but not by Nehls. If we assume the TCB acted in bad faith when they approached Nehls and later the merchants, they committed fraud, but Nehls did not. Like the Hillsdale merchants, Nehls would be the victim of fraud, not its perpetrator.
If Nehls had been afforded a fair opportunity to defend himself against Barker's charges, he could have pointed out the flaws in Barker's case against him, but of course, he was not afforded such an opportunity. The railroad was running, and the Roche regime was not about to let Nehls off the train. To be sure, Barker's letter informed him of a right to appeal his dismissal to Roche, and he availed himself of this right, but the appeal, like the expulsion, had no other purpose than to provide the college with a fig leaf to cover the nakedness of its injustice.