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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 93-8451
KARL ROVE & COMPANY
Plaintiff-Appellee/
Cross-Appellant,
v.
RICHARD THORNBURGH, ET. AL.,
Defendants,
RICHARD THORNBURGH,
Defendant-Appellant/
Cross-Appellee,
RAYMOND P. DIMUZIO,
Defendant/Cross-
Appellee.
Appeals from the United States District Court for the
Western District of Texas
(November 30, 1994)
Before SMITH, WIENER, and BENAVIDES, Circuit Judges.
WIENER, Circuit Judge:
1
This appeal arises from a diversity jurisdiction suit on a
contractual debt. Defendant-Appellant/Cross-Appellee Richard
Thornburgh ("Thornburgh") asks us to reverse the district court's
judgment holding him personally liable for a contractual obligation
incurred during his campaign for the U.S. Senate by the "Thornburgh
for
Senate
Committee"
(the
"Committee"),
Thornburgh's
unincorporated principal campaign committee. He argues that the
district court erred by finding that))personally and through his
general agent, Murray Dickman ("Dickman")))Thornburgh authorized,
assented to, or ratified the Committee's contract on which the
court held him personally liable. The Republican National
Committee ("RNC"), appearing as amicus curiae, argues that the
district court ignored notions of federalism, and thus applied an
incorrect legal standard, in determining Thornburgh's liability for
the Committee's debt.
In response, Plaintiff-Appellee/ Cross-Appellant, Karl Rove &
Company ("Rove & Company") cross appeals the district court's
dismissal of Rove & Company's claim against Defendant/Cross-
Appellee, Ray Dimuzio ("Dimuzio") for lack of personal
jurisdiction. Rove & Company argues in the alternative that if
Thornburgh is not liable for the Committee's contract, then Dimuzio
is, thus vesting the court with personal jurisdiction. As we
conclude that the district court properly interpreted and applied
the correct legal standard, we affirm the district court's judgment
holding Thornburgh liable and dismissing Rove & Company's claim
against Dimuzio for lack of personal jurisdiction.
2
I
FACTS AND PROCEEDINGS
A.
BACKGROUND
The facts material to the outcome of this appeal are
relatively straightforward and, for the most part, undisputed. As
the district court in its opinion has already provided an accurate
and detailed chronology of the events leading up to this
litigation,1 we limit our reiteration to those facts directly
relevant to the issues raised on appeal.
In 1991, Thornburgh ran in a special election to fill the U.S.
Senate seat that had become vacant when Pennsylvania Senator John
Heinz was killed in an aircraft accident. Dickman, a longtime
Thornburgh aide, agreed to the offer of Rove & Company to provide
direct mail fundraising services for the campaign, upon
Thornburgh's entering into the U.S. Senate race and establishment
of a principal campaign committee. The instant dispute arose when,
after Thornburgh lost the election, the then-insolvent Committee
failed to pay Rove & Company for services that it had provided
pursuant to a contract with the Committee, dated September 18, 1991
(the "September Contract").
There is no longer any dispute regarding the existence or
quantum of the Committee's liability to Rove & Company on the
September Contract. On appeal, therefore, the only issue is
whether Thornburgh personally has joint and several liability with
1See Karl Rove & Co. v. Thornburgh, 824 F. Supp. 662 (W.D.
Tex. 1993).
3
the Committee for the debt to Rove & Company. If not, then we must
consider whether Dimuzio is personally liable for the debt, and
thus subject to the jurisdiction of the court.
The September Contract was between Rove & Company and the
Committee, not Thornburgh. That agreement contained a signature
line for both parties and identified "Murray Dickman" as the
proposed signatory for the Committee.2 Rove signed the contract
and forwarded it to Bob Mason ("Mason"), the Financial Director of
the Committee, who, in turn, delivered it to Dickman. But neither
Dickman nor anyone else ever signed the document for the Committee.
The district court found nonetheless that Rove & Company and the
Committee thereafter conducted business according to the terms of
the September Contract.3 There is no evidence in the record,
however, that Thornburgh ever saw this agreement or knew of its
terms and conditions.
2The September Contract also contained the following
provision, which required that the Committee designate a
representative for the purposes of the contract:
4. [THE COMMITTEE'S] REPRESENTATIVE. [The Committee]
designates ____________________ as their [sic]
representative for the purposes of this Agreement, and
such designation shall constitute [the Committee's]
authorization for them [sic] to deal with [Rove &
Company] and make all decisions on behalf of [the
Committee] pursuant to this Agreement and [Rove &
Company] shall be entitled to rely on the advice,
decision and direction of this person as being the
advice, decision and direction of [the Committee].
In a September 9, 1991 memorandum to Rove & Company, Committee
Financial Director Bob Mason, on behalf of the Committee,
designated himself and Michele Davis, the Committee's Campaign
Manager, as the Committee's representatives.
3Karl Rove & Co., 824 F. Supp. at 666, 669-70.
4
Dickman is a longtime Thornburgh aide, who, according to the
district court, was widely known to be Thornburgh's spokesman.4
Karl Rove ("Rove"), the president of Rove & Company, initiated the
contact with Dickman when Rove learned that Thornburgh was
interested in running in the special election to select Heinz'
successor. Rove contacted Dickman because Rove was aware of
Dickman's association with Thornburgh and knew that Dickman was the
person who had been in primary control of Thornburgh's previous
campaigns.
True to form, Dickman also played a prominent role during this
senatorial campaign. He took part in the Committee's decision to
hire Michele Davis ("Davis") as campaign manager, a position
characterized as the chief executive officer of the Committee.
Dickman was the primary point of contact between the Committee and
Thornburgh; Dickman was also one of the persons involved in the
Committee's decisions to hire Rove & Company, then whether to pay
Rove & Company, and, if so, when to pay Rove & Company.
Dickman conducted the initial negotiations with Rove & Company
on behalf of the Committee and, in the early stages of the
campaign, delivered much of the material that Rove & Company needed
to conduct the direct mail campaign.5 For example, in response to
Rove's request, Dickman obtained and supplied Thornburgh's own list
of political donors, a collection of Thornburgh's speeches,
4Id. at 668.
5Later, Mason and Davis had more direct contact with Rove &
Company.
5
personal letters, previous campaign materials, and an exemplar of
Thornburgh's signature. Dickman was also the person who instructed
Rove that Thornburgh wanted the letterhead on all solicitation
letters to read "Dick Thornburgh," not "Richard Thornburgh." In
his discussions with Rove, however, Dickman never expressly
represented himself as an agent for either Thornburgh or the
Committee.
Thornburgh's direct interactions with Rove and with Rove &
Company were more limited than Dickman's. In fact, the district
court found that Rove's only personal contact with Thornburgh
occurred on September 23 or 24, 1991, when Rove accidentally ran
into Thornburgh in an airport.6 Rove stated that he identified
himself to Thornburgh as the person running the direct mail
fundraising campaign, and that Thornburgh responded by telling Rove
that he was doing a good job and to keep up the good work. At no
time, however, was Rove or anyone else told by Thornburgh that he
intended to be personally liable to Rove & Company for the
September Contract or any other debt incurred with regard to the
services provided by Rove & Company.
Thornburgh denied that he knew whom the Committee had retained
to provide direct mail fundraising services. He did acknowledge,
however, that he was aware that the Committee had contracted to
have such services provided and that the Committee was being
charged for these services. Neither did Thornburgh object to the
Committee's decision to purchase direct mail fundraising services;
6Karl Rove & Co., 824 F. Supp. at 668 n.8.
6
in fact, he testified that: "I assisted the [C]ommittee in
whatever way that I could in helping them to raise money through a
direct mail effort" and "I cooperated with [the Committee] and
facilitated with them and facilitated their efforts to see that the
contract [for direct mail services] went forward."
In support of those fundraising efforts, Thornburgh authorized
the Committee to use his signature on the solicitation letters; he
made available his political donors' list; and, he reviewed and
edited the content and language of several fundraising letters.
Thornburgh testified that he inspected the letters for accuracy to
"protect his reputation." Although Thornburgh did not review each
such letter, the district court found that there was very little
variation in these fundraising letters, and that "once Thornburgh
had approved the content and language of a given story or statement
attributed to him, there would be no need for him to review
subsequent letters reincorporating the same substance."7 Finally,
Thornburgh admitted that he had the authority, if he desired, to
stop completely all direct mail fundraising efforts on his behalf
at any time.
Thornburgh also testified regarding his knowledge of and
interactions with the Committee. On his statement of candidacy,
Thornburgh designated the Committee as his only "principal campaign
committee." He also approved Dimuzio as treasurer of the
Committee.
Thornburgh testified, however, that he did not know who was on
7Id. at 675 n.21.
7
the Committee, did not select or approve its members, and did not
know who had authority to act for the Committee. He further
testified that he was not familiar with the inner workings of the
Committee, was not involved in the management of Committee
finances, did not know how the Committee spent its funds, and
played no part in the Committee's selection of vendors in general
or Rove & Company in particular.
In light of the fact that Thornburgh is a "very experienced
and intelligent politician with intimate knowledge of the inner
workings of political campaigns," the district court found that
Thornburgh's testimony regarding his attenuation from the Committee
lacked credibility.8 The district court commented that "there is
no way a man of his intellect))a man who was entrusted with the
governorship of his home state and who served as Attorney General
for his nation))did not have control of the organization running
his campaign either directly or through persons in his confidence
and of his choosing."9 The district court found more credible the
testimony of Mason, who had stated that Thornburgh was "ultimately
in control" of the campaign.10
In all, Rove & Company completed 28 separate projects, mailed
695,094 letters, and raised over $750,000, netting $425,000 for the
Thornburgh campaign. Among those totals, 11,440 solicitation
letters were mailed to Texas residents, 306 of whom responded and
8Id. at 667.
9Id. at 668.
10Id.
8
contributed a total of $83,034. All of the money received by the
Committee was used exclusively to fund Thornburgh's campaign for
the Senate. Of Rove's total billings to the Committee, $169,732.48
went unpaid, excluding interest and attorneys' fees.
B.
PROCEDURAL HISTORY
Rove & Company filed the instant suit in federal district
court against Thornburgh, Dimuzio, and the Committee, seeking
recovery for breach of contract, quantum meruit, fraud, and theft
of services. A bench trial was held on April 1 and 2, 1993. On
June 17, 1993, the district court dismissed Rove & Company's claim
against Dimuzio for lack of personal jurisdiction, but held
Thornburgh and the Committee jointly and severally liable for
breach of contract. Having found liability under this breach of
contract, the district court did not address Rove & Company's other
theories of liability.
ThornburghSQbut not the CommitteeSQtimely filed a notice of
appeal. Thornburgh complains to us that the district court erred
in holding him liable based on the finding that he, personally and
through his general agent, Dickman, authorized, assented to, or
ratified the September Contract between Rove & Company and the
Committee. In particular, Thornburgh challenges the district
court's conclusions that he assented to the September Contract and
that Dickman was his general agent, vested with authority to enter
into contracts on behalf of Thornburgh personally.
Not unexpectedly, Rove & Company responds that the district
court got it right. Guarding against the eventuality that we might
9
reverse the district court, however, Rove & Company filed a cross
appeal in the alternative, urging that the district court's
dismissal of the claim against Dimuzio for lack of jurisdiction in
personam was error, and reiterating the claim that Dimuzio, as the
designated treasurer of the Committee, is personally liable on the
September Contract. Dimuzio not only asks us to dismiss Rove &
Company's cross appeal but to impose sanctions as well, arguing
that Rove's cross appeal is frivolous and inadequately briefed.
II
ANALYSIS
This is truly a case in which procedure imitates substance.
Rove & Company is a corporation created under the laws of Texas.
The district court properly found that it had jurisdiction over the
Committee because the Committee purposely availed itself of the
services of this Texas corporation, which would perform a material
part of its contractual obligations from and within Texas.11
Likewise, if either Thornburgh or Dimuzio is held liable for the
September Contract))either as a result of such person's or persons'
conduct or that of an agent))for availing himself of the Texas
Corporation's services, then the court will have personal
jurisdiction over such person or persons too as a result of this
conduct.12 Accordingly, we first consider who, if anyone, might be
personally liable for the September Contract between Rove & Company
and the Committee.
11Id. at 671.
12Id. at 671-672.
10
A.
THE LEGAL FRAMEWORK OF THIS DISPUTE
We have never before been called upon to consider the extent
to whichSQor under what circumstancesSQa candidate for federal
office, or the treasurer of such a candidate's unincorporated
principal campaign committee, may be held personally liable for a
contractual debt incurred by such a committee. Accordingly, we
must determine which jurisdiction's body of substantive law governs
such situations, then apply that law to the facts of this case.
1.
Applicable Substantive Law
The district court applied substantive state law in concluding
that Thornburgh was liable for the Committee's debts. Thornburgh
argues that state law is inapposite, as Congress, by enacting the
Federal Election Campaign Act of 1971 ("FECA"),13 preempted the
application of state law by immunizing candidates for federal
office from personal liability. In its amicus role, the RNC argues
that because the resolution of this dispute will have a significant
impact on important federal interests, federal common law, not
state law, should govern. We address each argument in turn.
a.
FECA Preemption
For the first time on appeal, Thornburgh contends that by
enacting FECA, Congress has preempted the field, thereby barring
the application of state law to all situations involving the
liability of candidates for federal office for the debts of their
principal campaign committees. "We will ordinarily consider an
argument advanced for the first time on appeal only if the issue is
132 U.S.C. §§ 431-455 (1988).
11
a purely legal one and if consideration of the argument is
necessary to avoid a miscarriage of justice."14 In light of the
importance of clarifying the extent to which candidates for federal
office may be held personally liable for the debts of their
campaign committees, the legal nature of that issue, the thorough
briefing given the issue by both parties, and the extensive
interest that has been evidenced in the outcome of this case, we
have elected in this exceptional case to exercise our broad
discretion by reversing our ordinary practice and considering
Thornburgh's preemption argument. Our extraordinary decision to do
so here should not be mistaken as any relaxation of our virtually
universal practice of refusing to address matters raised for the
first time on appeal.
To bolster his argument that FECA expressly preempts state
law, Thornburgh relies on 2 U.S.C. § 453: "[T]he provisions of
this Act, and the rules prescribed under this Act, supersede and
preempt any provision of State law with respect to election to
federal office." Thornburgh insists that here Congress expressly
stated its intent that federal law preempt state law,15 so that the
court's sole task is to "`identify the domain expressly pre-
14In re HECI Exploration Co., 862 F.2d 513, 521 (5th Cir.
1988).
15Bruneau v. FDIC, 981 F.2d 175, 179 (5th Cir. 1992) (noting
that "[t]o determine whether a statute has preemptive force,
there must be evidence of "`the clearly manifested intent of
Congress"' that such preemption occur." (quotations omitted)),
cert. denied, 113 S. Ct. 2413 (1993).
12
empted.'"16
Although Thornburgh attempts to stretch § 453 far enough to
create a preemptive bar to applying state law to hold federal
candidates personally liable, we cannot read FECA as extending that
far. First, a "strong presumption" exists against preemption,17 and
"courts have given section 453 a narrow preemptive effect in light
of its legislative history."18 In addition, nowhere in the text of
FECA or accompanying regulations is the personal liability of a
candidate addressed. Finally, the Federal Election Commission
("FEC") has opined that state law supplies the answer to the
question who may be held liable for campaign committee debts.19
16Weber v. Heaney, 995 F.2d 872, 875 (8th Cir. 1993)
(quoting Cipollone v. Liggett Group, Inc., 112 S. Ct. 2608, 2618
(1992)).
17Id.
18Stern v. General Elec. Co., 924 F.2d 472, 475 n.3 (2d Cir.
1991); see Weber, 995 F.2d at 876 ("§ 453 could be read narrowly,
referring primarily to candidates' behavior, and preempting state
laws regarding contributions only to the extent the federal law
prohibited certain kinds of contributions."); see, e.g., Weber,
995 F.2d at 877 (§ 453 preempts state laws establishing systems
for campaign funding and expenditures); Stern, 924 F.2d at 475-76
(FECA does not preempt state law governing whether corporate
political contributions were actionable as corporate waste);
Reeder v. Kansas City Bd. Of Police Comm'rs, 733 F.2d 543, 545-46
(8th Cir. 1984) (§ 453 does not preempt state law forbidding
officers from contributing to federal campaigns); see also
Friends of Phil Gramm v. Americans for Phil Gramm in '84, 587 F.
Supp. 769, 772 (E.D. Va. 1984) (§ 432 preempts state-law cause of
action alleging unauthorized use of candidate's name in
committee's name).
19FEC, Advisory Opinion 1989-2, 1989 WL 168490 (F.E.C. Apr.
25, 1989) ("The Commission has long held that State law governs
whether an alleged debt in fact exists, what the amount of the
debt is, and which persons or entities are responsible for paying
a debt."). Although admittedly this statement is dicta, we
nonetheless believe that it provides an important insight into
13
Accordingly, in light of the FEC's view, the strong presumption
against preemption, the historically narrow reading of § 453, and
FECA's silence on the issue of candidate liability, we conclude
that Thornburgh's argument for express preemption must fail.20
Thornburgh also claims conflict preemption, i.e., that state
law cannot be enforced if it stands as an obstacle to the
accomplishment of a federal purpose21))one of which under FECA is,
according to Thornburgh, to separate a federal candidate from the
raising and disbursing of funds for his campaign. The primary
purpose of FECA, however, is to regulate campaign contributions and
expenditures in order to eliminate pernicious influenceSQactual or
perceivedSQover candidates by those who contribute large sums,22 not
to prevent candidates from spending their own money to get
themselves elected. In fact, FECA merely requires that candidates
reveal how much of their own money they spend; it does not keep a
how the agency charged with enforcing FECA views the extent of
that Act's preemptive effect on candidates' liability for
campaign debts.
20A similar result was reached by the Maryland Court of
Appeals in Parker v. Junior Press Printing Serv., Inc., 296 A.2d
377 (Md. 1972). In Parker, an unsuccessful candidate for
Congress argued that the Maryland Fair Election Practices Code
("Election Code"), a law that established campaign finance rules
similar to those of FECA, insulated candidates from incurring
personal liability for campaign debts. The court rejected the
candidate's contention, finding that the Election Code was not
intended to immunize candidates from personal liability; rather,
its purpose was to regulate and control campaign financing and to
insure centralized responsibility for campaign funds and
expenditures.
21Stern, 924 F.2d at 475-76.
22Orloski v. FEC, 795 F.2d 156, 163 (D.C. Cir. 1986).
14
candidate from spending his own money on his own campaign for
federal office or limit the amount that he may spend. We therefore
reject Thornburgh's second preemption contention that the
application of state law in this case obstructs FECA's purposes,
thereby creating conflict preemption.
b.
Federal Common Law & Other States' Laws
To govern the liability of candidates for federal office for
the contractual debts of their principal campaign committees, the
RNC entreats us to abandon state law in favor of what, in essence,
would amount to a federal common law. The RNC argues that such a
radical approach is necessary because the application of state law
to the facts of this case would jeopardize two vital and related
federal interests: (1) attracting candidates to seek federal
elective office, and (2) ensuring the vigor of the entire federal
electoral process itself. As federalism imparts to all states a
duty not to interfere with preeminent federal policy, the RNC
entreats, we should interpret state law in a manner that will least
affect these federal interests.
The RNC contends that citizens will be discouraged from
seeking federal office if, as candidates, they can be held liable
under state law for the debts incurred by their campaign
committees. As this case illustrates, the RNC continues, modern
campaigns involve significant amounts of money and require a wide
range of services that often must be procured from numerous vendors
scattered throughout the country. Consequently, deduces the RNC,
if each state's law is applied to determine whether a candidate for
15
federal office is liable for debts incurred in that state by his
campaign committee, then the candidate will be exposed to a
"nightmarish specter" of liability, and will run the risk of being
haled into court in any state to answer under each state's
substantive law.
The RNC also maintains that the application of each state's
law to determine the liability of a candidate for federal office
will harm the entire election process. The RNC posits that
applying each state's law could result in more cautious and less
informative campaigning, as the fear of personal liability might
make candidates reluctant to take advantage of the various methods
and media available to communicate their message. The RNC
perceives these policy concerns to be somewhat analogous to those
that prompted the development of the doctrine of official immunity
and thus asks us to look by analogy to immunity jurisprudence in
fashioning a federal common law rule to apply today.
The RNC does not go so far as to advocate a rule that would
immunize candidates from all liability: Rather, the RNC urges that
candidates be held liable only in circumstances "[w]here a
candidate expressly and intentionally (even if unwisely) assents to
personal liability." The RNC argues that this standard dovetails
neatly with the common law of agency as applied by some states,
which, according to the RNC, provides that neither the candidate
nor campaign officials will be held personally liable for campaign
debts except insofar as such debts are personally and specifically
16
authorized by the individual in question.23
Although mindful of the concerns raised by the RNC, we decline
its invitation either to abandon the established law of Texas or
Pennsylvania in favor of another state's law or to fabricate from
the whole cloth a new and entirely untested federal common law.24
We are not convinced that candidates for federal office are so
imperiled by the application of state law to determine their
liability for their committees' debts as to warrant either such
extreme measure.25
A candidate for federal office already has at least two
methods by which he could protect himself from personal liability
for the contracts entered into by his principal campaign committee.
First, he could incorporate his campaign committee.26 If the
committee were incorporated, then the candidate))whether or not he
23For this proposition, the RNC cited Decima Research v.
Cichetti, No. CV-92-0454471S, 1993 Conn. Super. LEXIS 1441 (June
4, 1993); W.H. Brewton & Sons, Inc. v. Kennedy, 110 Daily Wash.
L. Rep. 1681 (D.C. Super. Ct. 1982); Richmond
Advertising/Reinhold Assocs., Inc. v. Del Giudice, 411 N.Y.S.2d
251 (App. Div. 1978); Empire City Job Print, Inc. v. Harbord, 277
N.Y.S. 795 (1st Dept. 1935); American Art Works, Inc. v.
Republican State Comm., 60 P.2d 786 (Okla. 1936); Bloom v.
Vauclain, 198 A. 78 (Pa. 1938).
24O'Melveny & Myers v. FDIC, 114 S. Ct. 2048, 2052 (1994)
("`There is no federal general common law . . . .'" (quoting
Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938)).
25Accord Kennedy, 110 Daily Wash. L. Rep. at 1684 (stating
that "the reality [of candidate liability] is not as harrowing as
the hypothetical situation which the defendants describe,"
because candidates can incorporate their committees).
26See e.g., TEX. ELEC. CODE ANN. § 253.092 (West Supp. 1994)
(discussing treatment of incorporated political committees under
the election code).
17
is a shareholder))is shielded from personal liability by the
corporate entity,27 assuming, of course, that he takes no personal
action that creates liability apart from the corporation's.
Second, a candidate could include in all contracts entered into by
his principal campaign committee a provision expressly stipulating
that the contracting party may look only to the committee and its
assets for compensation,28 thereby eschewing the candidate's
personal liability, either directly or indirectly.
The test of time, we believe, confirms that these options are
sufficient to protect candidates. Independent of the briefs filed
with this court, our research has revealed remarkably few cases in
which vendors have sought to hold candidates, or the officers of
campaign committees for that matter, liable for the debts of the
committee. We find this particularly noteworthy in light of the
significant number of elections held periodically and the huge sums
27See Shortlidge v. Gutoski, 484 A.2d 1083, 1086 (N.H. 1984)
(explaining that candidates who incorporate their committees
become corporate shareholders, "shielded from personal liability
by the corporate entity"); see also Kennedy, 110 Daily Wash. L.
Rep. at 1684 (noting that "the Kennedy Committee was free to
incorporate. . . . [making] the personal assets of stockholders
and others . . . not reachable by creditors").
28Hafenbraedl v. LeTendre for Congress Comm., 213 N.W.2d
353, 354 (Wis. 1974) ("The members of such a campaign committee
can limit their individual liability if they wish by inserting
appropriate provisions in the contracts which the committee makes
with third parties."); see Cousin v. Taylor, 239 P. 96, 98 (Or.
1925) ("It is of course possible . . . that the [member] may have
expressly excluded personal responsibility . . . ."); Abrams v.
Brent, 362 S.W.2d 155, 159 (Tex. Civ. App. 1962, writ refused
n.r.e.) ("[P]ersonal liability [for an association's debts] could
be contracted against."); cf. Shortlidge, 484 A.2d at 1086 ("In
the absence of a . . . contract stipulation to the contrary, the
personal assets of each member who is liable can be reached by
creditors of the association.").
18
spent in such campaigns. We speculate that those few vendors who
do not insist on payment in full in advance simply assume the risk
of nonpayment, especially from losing candidates, lest such vendors
acquire an undesired reputation within the political industry.
Also, we gather that some losing candidates, looking ahead to
possible future campaigns, seek to avoid an equally unsavory
reputation in that industry by paying the financial obligations
incurred by their campaign committees. Thus, there is a dearth of
caselaw on the subject.29
We are not convinced that any of the traditional reasons for
abandoning settled law is present here. Applying state law has not
heretofore proved to be significantly unworkable or inequitable.
Courts have not abandoned this approach; neither have the
circumstances surrounding the liability of candidates generally so
changed of late as to rob this approach of its past relevance or
justification.30 Although the RNC argues that the application of
state law to determine a candidate's liability exposes him to a
"nightmarish" specter of liability and lawsuits, these precise
concerns were raised in dissent and rejected by the majority when
the question was considered by the Tennessee Court of Appeals more
than thirty-five years ago:
It is now a matter of general knowledge that a state-wide race
for public office, either in a primary or general election,
29See, e.g., Optima Direct, Inc. v. Thornburgh, No. CA 93-
0464 (D.D.C. filed Mar. 1993, dismissed Apr. 26, 1994 upon
plaintiff's motion).
30See Planned Parenthood v. Casey, 112 S. Ct. 2791, 2808-09
(1992).
19
requires the expenditure of many, many thousands of dollars
through
many
different
hands
for
many
different
purposes. . . . Obviously, the candidate himself cannot
supervise all of these many activities and many others not
mentioned above, though he knows and intends that they will be
done for him in behalf of his candidacy. In my humble opinion
it would not be in the public interest to saddle upon every
candidate for state-wide office a potential liability of so
many thousands of dollars and the possibility of multiple
claims against him with such limited opportunity to protect
and indemnify himself against such liability.31
Finally, we remain cognizant of the salient fact that this
case is before us on diversity jurisdiction. We therefore sit as
an Erie court, relegated to applying the applicable state law to
the facts before us; federalism instructs us that it is not our
place within the constitutional firmament to conjure up a new legal
paradigm to replace one already fashioned by our learned colleagues
in the state judiciary, or to supplant their considered judgment
with that from another state.32 Accordingly, contrary to the RNC's
exhortation to spin new gold out of old straw, we discern this case
to burden us with a far more modest, albeit equally difficult,
task: to apply faithfully and "federalistically" the appropriate
state law to the facts of this dispute. This, of course, requires
that we next determine which state's laws to apply.
31Rich Printing Co. v. Estate of McKellar, 330 S.W.2d 959,
960 (Tenn. Ct. App. 1959) (Carney, J., dissenting).
32See Walker v. Armco Steel Corp., 446 U.S. 740, 745 (1980)
(discussing Erie R.R. v. Tompkins, 304 U.S. 64 (1938)); Ayo v.
Johns-Manville Sales Corp., 771 F.2d 902, 909 n.4 (5th Cir. 1985)
("[W]hen a federal court exercises diversity jurisdiction, the
court must apply the law of the forum state . . . and when the
state court has spoken . . . clearly . . . we are bound to follow
that ruling."); Turknett v. Keaton, 266 F.2d 572, 572 (5th Cir.
1959) (per curiam) (stating that in diversity case, federal
courts cannot alter settled law of forum state regardless of
modern trend in other jurisdictions).
20
2.
Choice of Law
All parties concede that if state law is applicable, only the
laws of Texas or Pennsylvania could govern this case. All parties
also recognize that under such circumstances the outcome of this
appeal will be the same regardless of which of those two states'
laws we apply.33 This is because both Texas and Pennsylvania, like
the majority of the several states that have considered the issue,
have applied by analogy the common law rule governing the liability
of a member of an unincorporated nonprofit association to determine
the liability of a candidate or a campaign committee official for
conventional
obligations
incurred
by
that
candidate's
unincorporated campaign committee. Accordingly, like the district
court, we will decide this appeal based on the common law as
interpreted by jurisdictions, such as Texas and Pennsylvania, that
still follow that rule.
3.
The Applicable Law
a.
The Law of Unincorporated Nonprofit Associations
As noted, the common law has neither applied nor created a
separate legal regime to resolve disputes concerning the liability
of persons affiliated with unincorporated political campaign
committees; rather, such disputes have been adjudicated by
analogical extension of the law of unincorporated nonprofit
associations.34 That kind of association typically includes such
33Karl Rove & Co. v. Thornburgh, 824 F. Supp. 662, 673 (W.D.
Tex. 1993).
34Bloom v. Vauclain, 198 A. 78, 79 (Pa. 1938) ("The
principles of law governing the responsibility of candidates and
21
entities as churches, labor unions, and social clubs.35
Pursuant to this law, an individual is not liable for the
debts of the association merely because of his status as a member
or officer of the association.36 Rather, principles of the law of
agency are applied to the particular facts on a case by case basis
to decide whether the individual in question is liable.37
Fundamentally, a member is personally responsible for a contract
entered into by the nonprofit association only ifSQviewing him as
though he were a principal and the association were his agentSQthat
member authorized, assented to, or ratified the contract in
question.38 Both Texas and Pennsylvania have long embraced this
officers of [campaign] committees have been before the courts,
and in all cases we have adhered to the rule laid down for
voluntary associations."); Elections Bd. v. Ward, 314 N.W.2d 120,
123 (Wis. 1982). ("[A] political campaign committee at common
law is to be treated as a voluntary association . . . .").
35See HOWARD L. OLICK & MARTHA E. STEWART, NONPROFIT CORPORATIONS,
ORGANIZATIONS, AND ASSOCIATIONS § 1, at 1 (6th ed. 1994).
36Bloom, 198 A. at 79; Dunlap Printing Co. v. Ryan, 119 A.
714, 716 (Pa. 1923); see also Shortlidge v. Gutoski, 484 A.2d
1083, 1087 (N.H. 1984) ("Mere membership in the association,
without more, will not generally be sufficient to attach
liability for debts incurred in the name of the association.");
WILLIAM A. GREGORY & THOMAS R. HURST, AGENCY & PARTNERSHIP 695 (1994)
("[T]he general rule is that mere membership in the association
does not result in liability.").
37GREGORY & HURST, supra note 36, at 719 n.1 ("The basic theory
of the common law was that each member of the group is both a
principal and an agent as to all the other members of the
group.").
38Annotation, Personal Liability of Voluntary Association
Not Organized for Personal Profit or Contract with Third Person,
41 A.L.R. 754 (1936), 7 A.L.R. 222 (1920); see 2 SAMUEL WILLISTON,
WILLISTON ON CONTRACTS § 308, at 450-51 (3d ed. 1959) (stating that
each member of an unincorporated nonprofit association is "liable
only so far as he has personally assented to the transaction in
22
question"); see, e.g., Azzolina v. Order of Sons of Italy, 179 A.
201, 204 (Conn. 1935) ("[O]nly those members who authorize or
subsequently ratify an obligation are liable . . . ."); Progress
Printing Corp. v. Jane Byrne Political Comm., 601 N.E.2d 1055,
1069 (Ill. Ct. App. 1992) ("`[I]f a member of a voluntary
[nonprofit] voluntary association . . . expressly or impliedly
authorizes a transaction in which an indebtedness is incurred by
or on behalf of such association, or if he assents to or ratifies
the contract on which such liability is predicated, he is liable
as a principal for the indebtedness.'" (quoting Severinghaus
Printing Co. v. Thompson, 241 Ill. App. 35, 39 (1926)), cert.
denied, 610 N.E.2d 1275 (Ill. 1993); Victory Comm. v. Genesis
Convention Ctr., 597 N.E.2d 361, 364 (Ind. Ct. App. 1992)
("[M]embers of a not-for-profit unincorporated association are
liable for the obligations incurred by the association under a
contract if the members authorize the contract or subsequently
ratify its terms."); Wilson & Co. v. United Packinghouse Workers
of Am., 181 F. Supp. 809, 815 (N.D. Iowa 1960) ("Under the Iowa
law where members contract in the name of an unincorporated
association, they and all of their members who authorize,
approve, consent, and ratify the contract are personally liable .
. . .") (citing Lewis v. Tilton, 19 N.W. 911 (Iowa 1884)); Jim
Host & Assocs. v. Sharpe, 639 S.W.2d 784, 785 (Ky. Ct. App. 1982)
("[I]ndividual members [of a nonprofit unincorporated association
organized for political purposes] may be held liable when they
have authorized or ratified the transaction out of which the debt
arose."); Cox v. Government Employees Ins. Co., 126 F.2d 254, 256
(6th Cir. 1942) (stating that, under Kentucky law, "an individual
member of a mutual benefit association, nor organized for gain or
profit, is not liable for the debts and obligations of the
association, unless he authorizes or ratifies the transactions
out of which the obligations or contracts arose"); Krall v.
Light, 210 S.W.2d 739, 745 (Mo. Ct. App. 1948) ("[A] member of
the association who signs a contract, together with all other
members who signed, or authorized, or ratified the signing of the
contract are liable."); Shortlidge, 484 A.2d at 1086 ("[T]hose
members of a non-profit association who have authorized or
assented to, or ratified the underlying transaction and thereby
have become liable for the association's debts, are personally
liable."); Leslie v. Bendl, 759 P.2d 301, 302 (Or. Ct. App.) ("At
common law, a debt of an unincorporated association was jointly
and severally the liability of and collectible from individual
members who authorized or ratified the acts which resulted in the
debt."), cert. denied, 767 P.2d 75 (Or. 1988); FDIC v. Tyree, 698
S.W.2d 353, 354 (Tenn. Ct. App. 1985) ("Members of [a nonprofit]
association may be liable on contracts . . . of the association
when the members have given their assent or subsequently ratified
the contract."); see also Elections Bd. v. Ward, 314 N.W.2d 120,
123 (Wis. 1982) ("`Each member of a voluntary association is
liable for the debts thereof if incurred during his period of
23
rule.39 In searching for the correct result it is important to
remember at all times that this standard differs from the one that
governs the liability of members of unincorporated associations
organized for profit or to conduct a business, which standard
determines liability of members under principles of partnership
law, rather than the law of agency.40
b.
The Rationale for Holding Members of Unincorporated
Nonprofit Associations Liable for Contracts Entered
into by the Association
At common law it was necessary to hold certain members of an
unincorporated association personally liable for the association's
membership and contracted for the purpose of carrying out the
objects for which the association was formed.'" (quoting Vader v.
Ballou, 139 N.W. 413 (Wis. 1913)).
39See Bloom, 198 A. at 79; Wortex Mills, Inc. v. Textile
Workers Union of Am., 109 A.2d 815, 822 (Pa. 1954) ("Officers and
individual members of . . . [an] unincorporated association are
liable for acts which they individually commit or participate in
or authorize or assent to or ratify."); Dunlap Printing Co., 119
A. at 716 ("`The members of unincorporated associations . . . are
individually liable for the debts of the organization which they
contract, or authorize.'" (quoting Franklin Paper Co. v. Gorman,
76 Pa. Super. 276, 280 (1921)); Cox v. Thee Evergreen Church, 836
S.W.2d 167, 170 (Tex. 1992) ("In regard to contracts, members
incurring the debt on behalf of the association or assenting to
its creation were personally liable."); Abrams v. Brent, 362
S.W.2d 155, 159 (Tex. Civ. App. 1962) ("[I]t is held that members
of an unincorporated religious association who incur a debt for
the association or who assent to its creation are personally
liable therefor."); see also Reading Co. v. City of Phila., No.
91-CV-2377, 1992 WL 392595, at *6 (E.D. Pa. Dec. 17, 1992)
("[U]nder Pennsylvania law, the officers or individual members of
unincorporated associations are liable for the acts which they
individual commit or to which they contribute or authorize or
ratify.")
402 WILLISTON, supra note 38, § 308, at 449 (contrasting
liability of members of nonprofit unincorporated associations
with that of unincorporated associations organized for profit);
see 6 AM. JUR. 2D Associations & Clubs § 46, at 478-79 (1963); 7
C.J.S. Associations § 31, at 77 (1980).
24
contracts to protect third parties with whom the unincorporated
association dealt. This was because an unincorporated association
was not recognized as a juridical entity and thus could not be held
liable for contracts entered into in its name.41 Consequently, when
a member contracted for services on behalf of an unincorporated
nonprofit association, the common law treated that member as though
he had represented himself to be the agent of a nonexistent
principal. Under the law of agency, such a putative agent was and
is held liable for the contract entered into on behalf of the
nonexistent principal.42
In the modern era, Texas,43 Pennsylvania,44 and many other
41See Cox, 836 S.W.2d at 169-70 ("Historically,
unincorporated associations were not considered separate legal
entities and . . . a judgment could not be rendered against such
an association."); Hutchins v. Grace Tabernacle United
Pentecostal Church, 804 S.W.2d 598, 599 (Tex. App.))Houston [1st
Dist.] 1991) ("An unincorporated association is not liable on its
contracts . . . ."); see also 7 TEX. JUR. Associations & Clubs §
10 (3d ed. 1980) ("[I]n the absence of statute, an unincorporated
association is not a legal entity, contracts entered into its
association name do not render it subject to liability, and such
contracts are regarded as those of individual members who
authorized or ratified the contract." (footnotes omitted)).
42See Cousin v. Taylor, 239 P. 96, 97 (Or. 1925); Smith &
Edwards v. Golden Spike Little League, 577 P.2d 132, 133 (Utah
1978).
43TEX. R. CIV. P. 28 ("Any . . . unincorporated association .
. . may sue or be sued in its . . . common name for the purpose
of enforcing for or against it a substantive right."); see also
Cox, 836 S.W.2d at 171 & n.5 (same).
44Spica v. International Ladies Garment Workers' Union, 130
A.2d 468, 477 (Pa. 1957) (noting that by statute, Pennsylvania
"made unincorporated associations subject to suit").
25
states,45
have enacted statutes permitting
unincorporated
associations to sue and be sued. In many of these "entity" states,
third parties who contract with unincorporated nonprofit
associations may now pursue a cause of action against the assets of
the association itself. In such jurisdictions, therefore, a member
of an association who enters into a contract on behalf of the
association is not contracting for a nonexistent principal. One
could argue, therefore, that it is no longer necessary or even
appropriate for the laws of these jurisdictions to permit third
parties to sue individually the members of an association for the
contract debts incurred by the association in its own name. The
argument would go as follows: The third party is no longer being
misled or deceived about a nonexistent principal; such a party is
contracting with a disclosed, juridical entity, the assets of which
can be reached to satisfy any debt that the association may owe.
As appealing and logical as that argument might appear,
however, that is not the way the law has developed. The courts of
the states that have adopted statutes permitting suit against
unincorporated associations have not altered or supplanted the
preexisting common law rule governing the personal liability of
association members.46 The courts of both Pennsylvania and Texas
45OLICK & STEWART, supra note 35, § 446 at 1363 & n.141; see,
e.g., Hartford Accident & Indem. Co. v. Sena, 619 A.2d 489, 494
(Conn. Super. Ct. 1992); Elections Bd. v. Ward, 314 N.W.2d 120,
123 (Wis. 1982) ("[B]y the Laws of 1959, . . ., the Wisconsin
legislature explicitly recognized that unincorporated
associations may be suable entities." (citation omitted)).
46Jim Host & Assocs. v. Sharpe, 639 S.W.2d 784, 785 (Ky. Ct.
App. 1982) ("We do not view the fact that an unincorporated
26
have continued to hew to this line.47
c.
Problems With Applying the Law of Unincorporated
Nonprofit Associations to Political Campaign
Committees
Not surprisingly, borrowing from the law of unincorporated
nonprofit associations to resolve disputes involving unincorporated
campaign committees has presented some practical difficulties.
Churches and social clubs often have bylaws or other instruments of
governance that outline how the particular organization is going to
be operated. For example, such documents typically describe the
formalities by which one may become a member of the organization,
or by which the association may enter into contracts with a third
association has been held to have `sufficient legal entity' to be
sued . . . as in any way modifying established common law
principles regarding the liability of individual members of such
an association for its debts."); Shortlidge v. Gutoski, 484 A.2d
1083, 1087-88 (N.H. 1984) ("We find that [the statute] permitting
an association to be sued in its assumed name, does not preclude
a plaintiff from pursuing his common law right to proceed against
each individual member of the association." (citing cases));
Leslie v. Bendl, 759 P.2d 301, 302 (Or. Ct. App. 1988) (stating
that statute permitting association to be sued in its own name
"cannot modify the substantive individual liability of the
members").
47See, e.g., Kerney v. Fort Griffin Fandangle Ass'n, 624
F.2d 717, 720 (5th Cir. 1980) ("Texas law permits entity suits
against unincorporated associations, [but] it specifically
provides that the grant of entity status does not `affect nor
impair . . . the right of any person to sue the individual
stockholder or members.'" (quoting TEX. REV. CIV. STAT. ANN. art.
6138 (Vernon 1976))); Wortex Mills, Inc. v. Textile Workers Union
of Am., 109 A.2d 815, 822 n.3 (Pa. 1954) (stating that statutes
permitting suit against associations eo nomine did not alter the
"applicable principles of substantive law holding members of an
unincorporated association individually liable upon claims
against the association").
27
party.48 As a result, many such associations maintain membership
rosters or attendance records of group gatherings and meetings; and
frequently, prior to committing the association to a contract with
a third party, poll the membership to ascertain whether a consensus
exists in support of the contemplated action. By sampling the
membership, the association thus determines the number, and often
the identity, of those members who assent to the undertaking.
Political campaign committees typically are not organized and
operated in this manner because they are usually formed for limited
purposes and short durations. The typical political campaign
committee does not have bylaws; does not create or maintain a
"membership" roster (assuming that "membership" is even a proper
concept in the context of a political campaign committee); and does
not consult its "members" every time the committee incurs a
contractual obligation. Accordingly, as the instant case
illustrates, the law of unincorporated nonprofit associations can
be less than ideally suited to determine precisely who may be held
accountable for the contractual debts incurred by an unincorporated
campaign committee. Nonetheless, it is our task to resolve the
instant controversy based on this body of law.
B.
LIABILITY OF THORNBURGH FOR THE SEPTEMBER CONTRACT WITH THE COMMITTEE
There is no dispute that Rove & Company and the Committee were
the only nominate parties to the September Contract; both the
language of the instrument and the intent of all parties are clear.
48See OLICK & STEWART, supra note 35, §§ 63-64, at 170-90
(describing various methods and documents that may be used to
establish an unincorporated nonprofit associations).
28
As the district court properly concluded, and the parties do not
contest on appeal, the Committee is liable for all amounts owed
Rove & Company under that agreement.
Again, the only issue before us is whetherSQin addition to the
CommitteeSQThornburgh, or in the alternative, Dimuzio, is jointly
and severally liable with the Committee for its contractual debt.
To answer this question, we must ascertain whether either man
personally, or through his agent, authorized, assented to, or
ratified the September Contract.
In holding Thornburgh liable, the district court found that he
had assented to the September Contract. On appeal, Thornburgh
proffers two arguments why this conclusion was wrong. He first
argues that he was never a member of the Committee and, he
contends, only "members" or officers of the Committee can assent
to, authorize, or ratify Committee contracts. Second, Thornburgh
asserts that, even if he were deemed to be a "member" of the
Committee or otherwise had the capacity to incur personal liability
for the Committee's debts, he did nothing that could rise to the
level of an assent to this agreement. We address each argument in
turn.
1.
Thornburgh's Capacity to Assent
The district court found that "the law provides for personal
liability if a member or officer or candidate authorizes, assents
to, or ratifies a committee transaction."49 Thornburgh challenges
49Karl Rove & Co. v. Thornburgh, 824 F. Supp. 662, 667 n.7
(W.D. Tex. 1993).
29
this statement of the law, claiming that under the law governing
unincorporated nonprofit associations only "members" or "officers"
of the association have the legal capacity to incur personal
liability for its debts.
Again, state law answers the question, "who may be held
responsible for the debts of an unincorporated political campaign
committee?"50 In decisions addressing the liability of individuals
for the debts of such committees, state courts have frequently
recited the governing legal standard in terms of the actions of
"officers" or "members" or both.51 We do not read these cases,
however, to exclude the capacity of the candidate qua candidateSQby
his own actsSQto become liable for the debts of his designated
50See FEC, Advisory Opinion 1989-2, 1989 WL 168490 (F.E.C.
Apr. 25, 1989) ("The Commission has long held that State law
governs whether an alleged debt in fact exists, what the amount
of the debt is, and which persons or entities are responsible for
paying a debt."); cf. Kerney, 624 F.2d at 720 (stating that
"whether only members of the association, or only the association
itself, or both the association and its members may be held
liable for its wrongs . . . rests, as it always has, with the
state rule of decision in diversity cases").
51See, e.g., Wortex Mills, Inc., 109 A.2d at 822 ("Officers
and individual members of . . . [an] unincorporated association
are liable for acts which they individually commit or participate
in or authorize or assent to or ratify."); Dunlap Printing Co. v.
Ryan, 119 A.2d 714, 716 (Pa. 1923) ("`The members of
unincorporated associations . . . are individually liable for the
debts of the organization which they contract, or authorize.'"
(quoting Franklin Paper Co. v. Gorman, 76 Pa. Super. 276, 280
(1921)); Cox v. Thee Evergreen Church, 836 S.W.2d 167, 170 (Tex.
1992) ("In regard to contracts, members incurring the debt on
behalf of the association or assenting to its creation were
personally liable."); see also Reading Co. v. City of Phila., No.
91-CV-2377, 1992 WL 392595, at *6 (E.D. Pa. Dec. 17, 1992)
("[U]nder Pennsylvania law, the officers or individual members of
unincorporated associations are liable for the acts which they
individual commit or to which they contribute or authorize or
ratify.").
30
principal campaign committee. To the contrary, many of these cases
implicitly recognize that candidates have such capacity.
In Bloom v. Vauclain,52 for example, the Pennsylvania Supreme
Court drew no distinction among candidates, members, and officers
in its discussion of the rule governing the liability of
individuals for the debts of campaign committees:
The principles of law governing the responsibility of
candidates and officers of such committees have been before
the courts, and in all cases we have adhered to the rule laid
down for voluntary associations. The mere fact that one is a
candidate, an officer, or a member of a political organization
does not, of itself, establish his liability, personally or
otherwise, for debts incurred by that organization. . . . But
those who make a contract, not forbidden by law, are
personally liable, and all are included in such liability who
assented to the undertaking.53
Likewise, in Progress Printing Corp. v. Jane Byrne Political
Committee,54 Hunt v. Davis,55 and W.H. Brewton & Sons, Inc. v.
Kennedy,56 state courts discussed the potential personal liability
of the candidate in a manner reflective of the fact that those
courts drew no distinction among the respective capacities of the
candidate, a member, and an officer of the committee, to incur
liability for a campaign committee's debts.57
52198 A. 78 (Pa. 1938).
53Id. at 79 (emphasis added).
54601 N.E.2d 1055 (Ill. Ct. App. 1992).
55387 So. 2d 209 (Ala. Civ. App.), cert. denied, 387 So. 2d
213 (Ala. 1980).
56110 Daily Wash. L. Rep. 1681 (D.C. Super. Ct. 1982).
57Jane Byrne Political Comm., 601 N.E.2d at 1069 ("[L]ike
any member of a voluntary association who knows, or should have
known under the circumstances, that a transaction has occurred
31
In fact, we have uncovered only one other case in which the
question of a candidate's capacity to assent to a contract of his
campaign committee was even raised.58 The opinion in that case is
unclear whether the committee in question was the candidate's
principal campaign committee; and we are aware of no decision in
which a court has held in favor of a candidate based on a finding
that he lacked the capacity to incur liability for his principal
campaign committee's debts.
Thornburgh offers no legal foundation to support his
conclusionary assertion that courts should fashion a rule that
and who then accepts its benefits for herself, the candidate here
may be held liable for the [campaign] Committee's debts."
(emphasis added)); Hunt, 387 So. 2d at 211 (noting that
individual liability will attach only if a member, "here the
candidate," authorized or ratified the transaction); Kennedy, 110
Daily Wash. L. Rep. at 1681, 1686 (D.C. Super. Ct. 1982) (finding
that the committee "does not have . . . members," but that
Kennedy nonetheless could be held liable if the evidence showed
that "he authorized or ratified the obligation in a manner that
reasonably implicated his personal credit").
58In FDIC v. Morrison, Nos. 85-5272, 85-5273, 1987 WL 37065
(6th Cir. Apr. 14, 1989) (table opinion at 816 F.2d 679), Randy
Tyree, a candidate for governor, argued that, because he was not
a member of the unincorporated campaign committee "Tennesseans
for Tyree" he could not be held personally liable for a
promissory note executed by P. Douglas Morrison as chairman of
that committee. The Sixth Circuit implicitly rejected this
argument, as it reversed a district court judgment granting
summary judgment in favor of Tyree. In its opinion, the Sixth
Circuit noted that summary judgment was inappropriate as two
questions of material fact existed: whether Tyree (1) was a
"member" of the committee and (2) ratified the note.
The Sixth Circuit remanded the case to the district court,
which then ruled that Tyree was not liable as he neither ratified
nor agreed to be held personally liable for the note. The Sixth
Circuit affirmed this decision in FDIC v. Tennesseans for Tyree,
886 F.2d 771 (6th Cir. 1989). The Sixth Circuit found that Tyree
did not ratify the note, as under Tennessee law, to receive a
"benefit" from a loan, the loan must be used to increase money in
hand or to extinguish personal liabilities. Id. at 775.
32
would insulate the candidate (but not the members and officers of
his committee) from personal liability for the debts incurred by
the candidate's principal campaign committee. Query whether any
reasonable explanation even exists, given that such a rule would
appear to defy both logic and equity. To hold that candidates do
not have capacity to incur liability for the debts of their
principal campaign committees but that members and officers do
could very well lead to perverse and anomalous results: Campaign
committee officers and members could incur personal liability for
campaign committee debts by assenting to or ratifying such debts
but the candidate, for whose election the officers and members
labor, could not. Although we recognize that Congress has
constructed a somewhat analogousSQand anomalous59SQlegal regime to
shield candidates from liability for violations of FECA, absent
express direction from that branch, we decline to extend further
such an apparently inequitable rule.

As the district court concluded that a candidate qua candidate
does have the capacity to incur personal liability, the court was
not required to make))and thus did not make))a specific ruling
whether Thornburgh was a "member" of the Committee. We agree with
the district court's conclusion of law as to a candidate's capacity
to incur liability, but we also are satisfied that, as a matter of
fact, Thornburgh was a "member" of the Committee. At the very
59See FEC v. Gus Savage for Congress '82 Comm., 606 F. Supp.
541, 546-47 (N.D. Ill. 1985) (commenting that this aspect makes
FECA "perhaps the most ingeniously unfair piece of legislation
ever enacted by Congress").
33
least, Thornburgh's active participation in the Committee's
activities estops him from denying membership in the Committee.
The record contains no Committee membership roster or list, a
fact we do not find particularly surprising in light of the nature
of political campaign committees. Although the Indiana legislature
enacted a provision specifically stating that a candidate is an "ex
officio member" of his own campaign committee,60 neither Congress
nor Pennsylvania or Texas lawmakers have been so accommodating.61
Neither are we aware of any other such legislation.62 Finding
little guidance from the Committee's documents or applicable state
statutes, we next examine state common law to determine whether
60IND. CODE ANN. § 3-9-1-8 (West 1994) ("A candidate is an ex
officio member of the candidate's committee."); see Victory Comm.
v. Genesis Convention Ctr., 597 N.E.2d 361, 363 (Ind. Ct. App.
1992) ("[Indiana] law unequivocally defines the status of
[candidate] and [campaign treasurer] as members of the [campaign]
Committee.").
61Pennsylvania law requires only that a campaign committee
identify its treasurer and chairman. PA. STAT. ANN. tit. 25,
§ 3242 (1992) (organization of political committees). FECA
requires that a candidate's principal political committee
identify its treasurer. 2 U.S.C. § 432(a). Texas requires that
candidates for federal office comply with federal law, i.e.,
identify their treasurers. TEX. ELEC. CODE ANN. § 251.006 (West
Supp. 1994) (Federal Office Excluded).
62We do note that some other states provide that a candidate
has broad authority over his committee and its members. See,
e.g., MO. ANN. STAT. § 130.011(7)(b) (Vernon 1994) ("A committee
is presumed to be under the control and direction of an
individual candidate . . . unless the candidate files an
affidavit . . . stating that the committee is acting without
control or direction on his part . . . ."); UTAH CODE ANN. § 20-14-
3 (1994) (stating that the "candidate may revoke the selection of
any member of the campaign committee").
34
Thornburgh was a member of his own principal campaign Committee.63
Under both Texas and Pennsylvania law, an "unincorporated
association" is defined generally as "a body of individuals acting
together for the prosecution of a common enterprise."64 As such
entities typically are loosely organized, written formalities are
not required for membership; a person joins an association
when))either expressly or tacitly))he is accepted as, and agrees to
become, a member.65 The intent of both parties, the putative member
and the association, is what governs.66 Whether a person is a
member of an association is a question of fact.67
Thornburgh testified conclusionally that he was not a member
63See, e.g., Hafenbraedl v. LeTendre for Congress Comm., 213
N.W.2d 353 (Wis. 1974) (applying common law definition of an
unincorporated association and finding it a "fair inference,"
under liberal construction of plaintiff's complaint, that
chairman, treasurer, and manager of political campaign committee
were "members" of the committee); cf. Arlington v. Juhl, 883
S.W.2d 286 (Tex. Ct. App.))El Paso 1994) (applying common law
definition to determine whether group of abortion protesters were
an "unincorporated association").
64Reading Co. v. City of Phila., No. 91-CV-2377, 1992 WL
392595, at *6 (E.D. Pa. Dec. 17, 1992) (citing Selected Risks
Ins. Co. v. Thompson, 552 A.2d 1382 (Pa. 1989)); see Cox v. Thee
Evergreen Church, 836 S.W.2d 167, 169 (Tex. 1992) ("An
unincorporated association is a voluntary group of persons,
without a charter, formed by mutual consent for the purpose of
promoting a common enterprise or prosecuting a common
objective."); see also OLICK & STEWART, supra note 35, § 11, at 33
(defining unincorporated association as a "body of people united
in purpose and acting together, usually with a formal charter").
657 C.J.S. Associations § 19, at 54.
66Id.
67Id.; see Lunsford v. City of Bryan, 292 S.W.2d 852, 854
(Tex. Civ. App. 1956) ("Membership is a question of fact."),
rev'd on other grounds, 297 S.W.2d 115 (Tex. 1957).
35
of the Committee. Circumstantial evidence, however, may be
considered to determine whether a person acted in a manner evincing
membership.68 In the instant case, we are satisfied that such
evidence compels the conclusion that both Thornburgh and the
Committee contemplated his membership.
The Committee was formed for the sole purpose of promoting
Thornburgh's senatorial candidacy during Pennsylvania's 1991
special election))obviously an objective shared by Thornburgh
himself. As Thornburgh and the Committee shared this common goal,
the only open question remaining is what was the intent of each
party, i.e., did Thornburgh intend to associate voluntarily with
the Committee and did the Committee approve of his affiliation,
either expressly or implicitly. Based on the record before us, we
believe that the evidence strongly supports affirmative answers to
both questions.69
68See Libby v. Perry, 311 A.2d 527, 531 (Me. 1973) (stating
that "proof of participation in its organization, meetings, and
activities," is sufficient to support finding that persons
accepted membership in an unincorporated nonprofit association);
Francis v. Perry, 144 N.Y.S. 167, 173 (Oneida County Ct. 1913)
(considering acts by alleged member to determine intent and
understanding of parties regarding his status in the
association).
69We are aware of only two decisions where courts found that
a candidate for federal office was not a member of his campaign
committee. Neither finding was relevant to the resolution of
either case. See Pittman v. Martin, 429 So. 2d 976 (Ala. 1983)
(reversing trial court's summary judgment in favor candidate for
the U.S. Senate in wrongful death action arising out of aircraft
accident during campaign); W.H. Brewton & Sons, Inc. v. Kennedy,
110 Daily Wash. L. Rep. 1681 (D.C. Super. Ct. 1982) (expressly
finding that committee "does not have . . . members," but
concluding nonetheless that candidate still could be held
liable).
36
We note initially that a candidate is not necessarily a member
of any committee established to promote his election. We are aware
of two instancesSQand there are likely moreSQin which candidates
were completely uninvolved with, and in one case even opposed to,
the efforts of committees ostensibly organized to support their
candidacy for federal office.70 In both cases, however, the
candidates made clear that they had no intention of affiliating
with the committees.71 This, however, is not such a case.
The instant record is replete with evidence that Thornburgh
and the Committee voluntarily chose to associate with one another.
Thornburgh designated the Committee as his one and only "principal"
campaign committee. By doing so, Thornburgh expressly sanctioned
the Committee as the only organization authorized to receive and
expend contributions on his behalf.72 He campaigned extensively in
70See FEC v. Florida for Kennedy Comm., 681 F.2d 1281, 1287
(11th Cir. 1982) (finding that candidate did not control
committee organized to promote his candidacy); Friends of Phil
Gramm v. Americans for Phil Gramm in '84, 587 F. Supp. 769, 771
(E.D. Va. 1984) (suit brought by congressman and his official
campaign committee to stop an independent political action
committee from raising funds in the name, and on the behalf, of
the congressman's election to U.S. Senate).
71See Florida for Kennedy Comm., 681 F.2d at 1282 (noting
that before entering the race, the candidate "specifically
disavowed [the committee's] activities"; Friends of Phil Gramm,
587 F. Supp. at 771.
722 U.S.C. § 431(5) (defining the principal campaign
committee as the committee "designated and authorized by a
candidate" to receive contributions or make expenditures on the
candidate's behalf); see 25 PA. CONS. STAT. ANN. § 3243 (1994)
(providing that a political committee cannot receive
contributions until "authorized in writing by the candidate").
This provision gives the candidate the ultimate control over
whether a committee can enter into contracts to promote his
candidacy.
37
concert with employees of the Committee; spoke almost daily with
Committee employees who were supporting his candidacy; and actively
facilitated contracts entered into by the Committee (as noted, for
example, Thornburgh reviewed and approved several vignettes
appearing in fundraising letters for the September Contract, and
facilitated its performance by providing a signature exemplar and
his personal mailing lists). AndSQin the words of MasonSQThornburgh
was "ultimately in control" of the entire campaign, including all
activities undertaken by the Committee. For any reasonable finder
of fact, these would establish Thornburgh's membership in the
Committee beyond cavil.
Even absent a finding that Thornburgh's activities with the
Committee were sufficient to evince his intent to affiliate with
that organization as a "member," based on these same interactions
Thornburgh would have to be estopped from now denying his
membership in the Committee. "[A] person may be estopped from
denying membership in an association, particularly where there has
been active participation in its activities."73 It seems clear to
us that this rule applies with particular force when, as here, the
candidate's sole purpose in claiming estrangement from the
737 C.J.S. Associations § 19, at 54 (citing Electrical
Contractors' Ass'n v. A.S. Schulman Elec. Co., 63 N.E.2d 392, 397
(Ill. 1945) (defendant corporation sent representative to
meetings of, and paid dues to, association); Francis v. Perry,
144 N.Y.S. 167, 173 (Oneida County Ct. 1913) (defendant attended
meeting, was elected as member, voted at meetings, and became an
officer of and made payments to the association)); see also Hann
v. Nored, 378 P.2d 569, 574-75 (Or. 1963) (considering, but not
deciding, whether a person was a member, where the person paid
dues to and attended two meetings and was listed on the mailing
list of the association).
38
committee is the evasion of personal liability for the committee's
debts,74 especially where such claim is proffered post hoc.
As the facts of this case compel the conclusion that
Thornburgh had the capacity to incur personal liability for the
debts of the Committee, we next consider whether he did so.
2.
Thornburgh Assented to the September Contract
For Thornburgh to be held liable for the September Contract,
the evidence must show that he, or his agent for him, authorized,
assented to, or ratified that agreement. The district court found
that Thornburgh assented to the September Contract. We agree.
As a general proposition in the context of the law of
unincorporated nonprofit associationsSQand thus unincorporated
political committeesSQ"assent" connotes "approval" and is roughly
equivalent to authorization.75 Assent can be express or tacit. To
manifest tacit assent to a contract through conduct, one must
"[intend] to engage in the conduct and know[] or ha[ve] reason to
know that the other party may infer from his conduct that he
74Inapposite to the instant case are decisions discussing
whether a person or entity is a "member" of an association, where
the association has established particular requirements for
membership. See, e.g., NLRB v. J.D. Indus. Insulation Co., 615
F.2d 1289, 1292-94 (10th Cir. 1980) (reversing NLRB finding that
company was estopped from denying membership in national
association, where company did not file an application for
membership, pay an initiation fee, or appear on membership list);
United Nuclear Corp. v. NLRB, 340 F.2d 133, 136-37 (1st Cir.
1965) (where labor union constitution imposes requirements for
membership, membership will not be inferred by the acts of
attending meetings and voting).
75BLACK'S LAW DICTIONARY 115 (6th ed. 1991).
39
assents."76 "A person has reason to know a fact . . . if he has
information from which a person of ordinary intelligence would
infer that the fact in question does or will exist."77 Absent more,
however, a member's mere knowledge that his association entered
into a contract is insufficient to establish that he tacitly
assented to the contract.78 Whether a principal assented to a
transaction is a question of fact,79 a finding of which will be
reversed only if clearly erroneous.
We deem it important to remember that, when we discuss
Thornburgh's "assent to" the September Contract, we are asking only
whether Thornburgh tacitly or implicitly agreed with the
Committee's decision to contract for direct mail fundraising
services. Had he expressly agreed to become personally liable for
the September Contract, our inquiry would be at an end; we would
have no need to consider the concept of assent in the context of
unincorporated nonprofit associations. But under that concept in
76RESTATEMENT (SECOND) OF CONTRACTS § 19(2).
77Id. § 19 cmt. b.
78Bloom v. Vauclain, 198 A. 78, 79 (Pa. 1938) ("[E]ven if
[the member] knew [the services] were being purchased, that fact
could not be used as the basis for a presumption that he assented
and would be personally bound therefor.").
79JOHN D. CALAMARI & JOSEPH M. PERILLO, CONTRACTS § 2-19 (3d ed.
1987); see Progress Printing Corp. v. Jane Byrne Political Comm.,
601 N.E.2d 1055, 1069 ("`[T]he liability of the participating,
assenting or ratifying members [of a voluntary association] is
joint and several, and that is a question for the [factfinder] to
determine to whom the credit was given and whether the members
authorized or ratified the contract.'" (quoting Severinghaus
Printing Co. v. Thompson, 241 Ill. App. 35, 39 (1926) (second
alteration in original)), cert. denied, 610 N.E. 2d 1275 (Ill.
1993).
40
that context, Thornburgh's liability attached by operation of law
at the time he concurred with the Committee's decision to enter
into the September Contract.80 (We are aware that some state courts
in New York have stated that members and officers are not liable
for the debts of a campaign committee "[a]s long as the members
don't intend to be personally liable."81 To the extent that this
rule may correctly state the law of New York, we note simply that,
80Summerhill v. Wilkes, 133 S.W. 492, 493 (Tex. Civ. App.
1910, no writ) (stating that member of church, an unincorporated
nonprofit association, who signed contract is responsible
individually, "although in signing the same as chairman of the
building committee it was not his intention to become
individually liable"); see also Victory Comm. v. Genesis
Convention Ctr., 597 N.E.2d 361, 365 (Ind. Ct. App. 1992)
(stating that "[t]he issue is not . . . whether [the member]
agreed to become personally liable for the debts of the
Committee. Rather, the issue is whether they assented to the
contract. If so, they became personally liable by operation of
law.").
81Xerox Corp. v. Rinfret, 589 N.Y.S.2d 723, 724 (N.Y. City
Civ. Ct. 1992); cf. Empire City Job Print, Inc. v. Harbord, 277
N.Y. Supp. 795 (App. Div. 1935) (stating that, even though
defendants assented to contract, they could not be held
personally liable absent a showing that they extended personal
credit); Richmond Advertising/Reinhold Assocs., Inc. v. Del
Giudice, 411 N.Y.S.2d 251 (App. Div. 1978) (applying Empire
City); see also W.H. Brewton & Sons, Inc. v. Kennedy, 110 Daily
Wash. L. Rep. 1681 (D.C. Super. Ct. 1982) (stating that candidate
would be liable upon a showing that he "he authorized or ratified
the obligation in a manner that reasonably implicated his
personal credit").
We also note that seventy-five years ago, Judge Polley in
Robbins Co. v. Cook, 173 N.W. 445 (S.D. 1919), argued in dissent
for a similar standard in a slightly different context. He
stated that members of the South Dakota Panama Pacific Exposition
Commission, an unincorporated nonprofit association organized at
the behest of the governor to finance an exhibit for the state,
should not have been held liable for a contract entered into by
that association as the members did not clearly express their
intent to incur a personal responsibility. The majority rejected
Judge Polley's argument, applied the majority rule governing
unincorporated nonprofit organizations, and held the members
liable.
41
regardless of whatever approval such a rule might have there or
elsewhere, it is not the legal standard in either Texas or
Pennsylvania, and we have no authority as an Erie court to change
the settled law of either state by substituting the New York rule
for those extant in Texas and Pennsylvania.)
We are therefore concerned here only with the question whether
Thornburgh acted in a manner that evinced agreement with the
Committee's decision to enter into the September Contract with Rove
& Company for direct mail fundraising services. Once that question
is posed properly, the answer becomes self-evident. The district
court concluded that through his actions Thornburgh manifested his
agreement with the Committee's decision to procure direct mail
fundraising services. In particular, the court found that
Thornburgh (1) knew that Dickman had hired some person or company
to provide direct mail services; (2) played a direct role in the
fulfillment of that contract by furnishing his signature exemplar,
by reviewing, editing, and approving drafts of fundraising letters,
and by supplying lists of names and addresses to which such
correspondence would be sent; (3) understood that the letters were
written on his behalf and that his approval meant that some
contractor had the authority to mail them; (4) knew that the funds
raised by these solicitations were, in fact, used for the sole
purpose of promoting his election; and (5) admitted that he had the
authority, if he desired, to stop such fundraising efforts at any
42
time.82 Based on these discrete factual findings))all of which are
supported by the record, and none of which are contested by
Thornburgh))the district court concluded that Thornburgh assented
to the Committee's decision to retain the services of a direct mail
fundraiser, Rove & Company in this instance. Whether Thornburgh
knew the identity of the fundraiser selected by the Committee is
irrelevant and immaterial. The record does not tell us that those
facts are clearly erroneous or that the district court's conclusion
based on those facts requires reversal.
Thornburgh nevertheless insists that the district court erred
in its analysis. He objects in particular to the district court's
reliance on the fact that Thornburgh "provid[ed] signature
exemplars, review[ed] drafts, and provid[ed] a list of
contributors." He contends that, as these acts occurred for the
most part well before September 18, 1991, they had no nexus with
the September Contract. He insists, for the district court to rely
on such attenuated acts as a basis of its finding that Thornburgh
assented to that agreement is improper. As we do not agree, we do
not conclude that the district court erred in relying on this
evidence.
We first observe that all of these prior acts anticipated and
directly facilitated the performance of direct mail solicitations
in general and the September Contract in particular. For example,
in mailings made pursuant to the September Contract, Rove & Company
82Karl Rove & Co. v. Thornburgh, 824 F. Supp. 662, 674-75
(W.D. Tex. 1993).
43
used the signature exemplar and excerpts previously edited and
approved by Thornburgh.83 Evidence that a member of an association
actively facilitated the performance of a contract entered into by
the associationSQeven prospectivelySQis certainly probative of
whether that member agreed with the association's decision to enter
into that same agreement.
As the court must determine whether Thornburgh (as principal)
assented to the contract entered into by the Committee (as his
agent), it was not error for the district court to consider
Thornburgh's actions ante-dating the September Contract. Contrary
to Thornburgh's assertions, both the prior and contemporaneous
actions of a principal can be relied on to ascertain whether the
principal approved of a particular transaction.84 Moreover, the
fact that Thornburgh cooperated in the Committee's direct mail
fundraising effort before, during, and after the Committee entered
into the September Contract strongly supports the conclusion that
he continuously approved of Rove & Company's work for the
Committee.85
Thornburgh also posits that he could not assent to a contract
83See id. at 675 n.21 (finding that "there was very little
variation in the different form letters . . . . Thus, once
Thornburgh had approved the content and language of a given story
or statement attributed to him, there would be no need for him to
review subsequent letters reincorporating the same substance.").
84See Armstrong v. Palmer, 218 S.W. 627 (Tex. Civ. App.
1920, writ refused).
85See RESTATEMENT (SECOND) OF AGENCY § 43(2) ("Acquiescence by
the principal in a series of acts by the agent indicates
authorization to perform similar acts in the future.").
44
the terms of which he did not know. In this case, however, it is
clear that Thornburgh knew the substance of the contract if not the
details: he reviewed the letters to be sent; knew they were being
prepared by a direct mail vendor; knew that the vendor was charging
for its services; and knew (or should have known) the identity of
the vendor.86 Knowledge of these facts is sufficient for Thornburgh
to be able to assent to the September Contract.87
But even if Thornburgh's knowledge were insufficient, he
cannot shield himself from liability merely by failing to read or
otherwise familiarize himself with a contract entered into by his
agent, when as here the initial proposal and the subsequent
86Recall that the district court credited Rove's testimony
that he met Thornburgh and identified himself as the person
providing the direct mail services, and that Thornburgh responded
by telling Rove that he was doing a good job and to keep up the
good work.
87RESTATEMENT (SECOND) OF CONTRACTS § 23 cmt. e (1981) ("An
offeree, knowing that an offer has been made to him, need not
know all its terms."); see Land Title Co. v. F.M. Stigler, Inc.,
609 S.W.2d 754, 756 (Tex. 1980) (knowledge of "transaction"
necessary for ratification); see e.g., Progress Printing Corp. v.
Jane Byrne Political Comm., 601 N.E.2d 1055, 1069 (Ill. Ct. App.
1992) (holding candidate liable for committee's contract because
"like any member of a voluntary association who knows, or should
have known under the circumstances, that a transaction has
occurred and who then accepts its benefits for herself, the
candidate here may be held liable for the Committee's debts"),
cert. denied, 610 N.E.2d 1275 (Ill. 1993); Leslie v. Bendl, 759
P.2d 301 (Or. Ct. App. 1988) (holding officer of association
liable on basis that he "knew or should have known that the
association had filed the action [and] . . . did not object to
the filing"); see also Vader v. Ballou, 139 N.W. 413 (Wis. 1913)
(holding members of a campaign committee liable for a contract
debt as they "had knowledge that this work was being done and
this material furnished, that it must be paid for, that it was
adapted to the purpose for which they had organized themselves
into a committee, and that it was a disbursement necessary to
effectual (sic) work").
45
agreement were readily available.88 Both the initial proposal and
the September Contract were provided to Dickman, both an employee
of the Committee and Thornburgh's longtime "Man Friday." Rove sent
the initial fundraising proposal to Dickman; later, Rove provided
a copy of the September Contract to Mason, who, in turn, forwarded
the agreement to Dickman. Thornburgh was aware that the Committee
was going to obtain direct mail fundraising services and that it
had subsequently entered into an agreement to obtain such services.
Had Thornburgh desired, he easily could have obtained a copy of the
September Contract and reviewed its terms. The fact that
Thornburgh never availed himself of the opportunity))remaining
deliberately ignorant))cannot now inoculate him from personal
liability. It would be inequitable to hold otherwise: An
affiliate of an association who (1) knowingly benefits from an
association's contract, (2) directly facilitates the performance of
such contract, and (3) claims the right to terminate the activities
therein contracted for, cannot be permitted to escape personal
liability for such association's contract merely because he remains
willfully ignorant of the specific terms of the association's
agreement, the existence of which is known to him.
Thornburgh contends finally that the acts relied on by the
district court as evidencing assent constitute nothing more than
88See Pandem Oil Corp. v. McKinney, 3 S.W.2d 466 (Tex. Civ.
App. 1927, writ dismissed w.o.j.); see also Jane Byrne Political
Comm., 601 N.E.2d at 1067-68 ("[A]lthough normally a principal's
actual knowledge of the transaction is essential, one whose
ignorance or mistake was the result of gross or culpable
negligence in failing to learn the facts will be estopped as if
he had full knowledge of the facts.").
46
ordinary interactions that any federal candidate would have with
his principal campaign committee. He argues that if such actions
are held to manifest assent to a contract, virtually every
candidate could be held to have assented to virtually every
contract entered into by his campaign committee so long as the
candidate is needed to facilitate performance of the contract.
Like others before us, we recognize that the application of
the law governing the liability of members for the debts of their
unincorporated nonprofit association may sometimes lead to harsh or
even subjectively unintended results. In fact, one commentator has
ventured that the choice of this form of organization "usually
results from sheer ignorance of the possible degree of personal
liability of its members."89 Thus, although we do not join
Thornburgh in speculating on the extent to which future candidates
could be held liable for the debts incurred by their unincorporated
campaign committees, we are constrained to note in passing that he
is not the first candidate to be held liable or potentially liable
for his committee's debts. The list includes many widely
recognized names, including: Senator Edward Kennedy,90 Senator
89OLICK & STEWART, supra note 35, § 48, at 144.
90W.H. Brewton & Sons, Inc. v. Kennedy, 110 Daily Wash. L.
Rep. 1681, 1686 (D.C. Super. Ct. 1982) (stating that candidate
would be liable for committee's contract if the facts show that
"he authorized or ratified the contract in a manner that
reasonably implicated his personal credit"); see W.H. Brewton &
Sons, Inc. v. Kennedy, 110 Daily Wash. L. Rep. 2222 (D.C. Super.
Ct. 1982) (denying candidate's motion to dismiss complaint, as
allegations raised issue whether candidate's actions established
actual or apparent authority).
47
James Abdnor,91 Senator Kenneth D. McKellar,92 Senator Vance
Hartke,93 Senator Allen J. Ellender,94 James M. Collins (candidate
for the U.S. Senate),95 Peter Parker (candidate for the U.S.
Congress),96 Alabama gubernatorial candidate Guy Hunt,97 Tennessee
gubernatorial candidate Randy Tyree,98 Louisiana gubernatorial
candidate, William L. Clark,99 Alabama Attorney General candidate
91See Metro Printing & Mailing Servs., Inc. v. Abdnor, No.
81-0877(A) (denying motion to dismiss suit alleging Senator was
personally liable for contract entered into by his principal
campaign committee, where plaintiff submitted evidence that
Senator authorized and accepted its services and had ratified the
acts of his committee) (discussed in Kennedy, 110 Daily Wash. L.
Rep. at 1686)).
92Rich Printing Co. v. Estate of McKellar, 330 S.W.2d 361
(Tenn. Ct. App. 1959) (candidate's estate held liable).
93Hartke v. Moore-Langen Printing & Publishing Co., 459
N.E.2d 430 (Ind. Ct. App. 1984) (candidate held liable).
94Innovative Data Sys. v. Ellender, 316 So. 2d 12 (La. Ct.
App. 1975) (heir of candidate held potentially liable).
95Collins v. Williamson Printing Corp., 746 S.W.2d 489 (Tex.
App.))Dallas 1988) (candidate held liable).
96Parker v. Junior Press Printing Serv., Inc., 296 A.2d 377
(Md. 1972) (candidate held liable).
97Hunt v. Davis, 387 So. 2d 209 (Ala. Ct. Civ. App.)
(candidate held liable), writ denied, 387 S.W.2d 213 (Ala. 1980).
98FDIC v. Tyree, 698 S.W.2d 353 (Tenn. Ct. App. 1985) (Tenn.
1985) (reversing trial court grant of summary judgment in favor
of candidate); see also FDIC v. Morrison, Nos. 85-5272, 85-5273,
1987 WL 37065 (6th Cir. Apr. 14, 1989) (table opinion at 816 F.2d
679) (reversing district court grant of summary judgment in favor
of candidate).
99Rehm v. Sharp, 144 So. 78 (La. Ct. App. 1932) (candidate
held liable).
48
T. Dudley Perry,100 Chicago Mayor Jane Byrne,101 and Gary (Indiana)
Mayor Richard Hatcher.102
We must reiterate, however, that regardless of how harsh or
anomalous the results dictated by application of the law of
unincorporated nonprofit associations may appear to some, wary
candidates can easily avoid this trapSQat least in states with laws
like those of Texas and PennsylvaniaSQby either incorporating their
campaign committee or specifying in all committee contracts that
the purveyors of goods or services may look only to committee
assets for compensation.
In sum, Thornburgh's actions, especially when viewed in light
of his education, his experience, and his familiarity with the
facts surrounding this matter, were no mere "string of
trivialities" as Thornburgh would have this court believe. Rather,
they confirm that he knew that the Committee would and did contract
for direct mail fundraising services and that he approved, at least
tacitly, the Committee's decision to enter into the September
Contract. This is sufficient proof that Thornburgh assented to the
agreement. Thus, we stand unconvinced that the district court
erred by holding Thornburgh liable for the September Contract; we
agree with the district court that "[g]iven his knowledge of the
100Perry v. Meredith, 381 So. 2d 649 (Ala. Ct. Civ. App.
1980) (candidate held liable).
101Progress Printing Corp. v. Jane Byrne Political Comm., 601
N.E.2d 1055 (Ill. App. Ct. 1992) (candidate held liable), cert.
denied, 610 N.E.2d 1275 (Ill. 1993).
102Victory Comm. v. Genesis Convention Ctr., 597 N.E.2d 361
(Ind. Ct. App. 1992) (candidate held liable).
49
direct fundraising campaign, his control over the substance of the
fundraising letters, and his authority to refuse to allow his
signature to appear on any letter or to refuse to allow any letter
to be mailed, Thornburgh did effectively say `go ahead' with the
direct mail campaign."103
3.
Thornburgh's Liability Resulting From Dickman's
Acts
The district court also found Thornburgh liable "as a result
of Dickman's authorization of, and assent to, the contract."104
Thornburgh does not contest the district court's finding that
Dickman authorized or assented to the contract; rather, Thornburgh
takes issue only with the court's conclusion that Dickman acted as
Thornburgh's general agent with authority to enter into a contract
with Rove & Company on Thornburgh's personal behalf.
"Under Texas law, agency is a mixed question of law and fact.
To the extent that the facts are undisputed, the trial court's
ruling is freely reviewable on appeal. However, where . . . the
facts are disputed, the clearly erroneous standard applies."105 As
Thornburgh does not contest the factual findings upon which the
103Karl Rove & Co. v. Thornburgh, 824 F. Supp. 662, 675
(W.D. Tex. 1993).
104Id. at 675.
105In re Carolin Paxson Advertising, Inc., 938 F.2d 595, 598
n.2 (5th Cir. 1991) (citing American Int'l Trading Corp. v.
Petroleos Mexicanos, 835 F.2d 536, 539 (5th Cir. 1987)); see Ross
v. Texas One Partnership, 796 S.W.2d 206, 209-10 (Tex. Ct.
App.))Dallas 1990, writ denied) ("Although the question of agency
is generally one of fact, the question of whether a principal-
agent relationship exists under established facts is a question
of law for the court.").
50
district court based its conclusion that Dickman acted as
Thornburgh's general agent, we review de novo that court's legal
conclusion.106
Agency is a legal relationship created by an express or
implied agreement or by operation of law whereby the agent is
authorized to act for the principal, subject to the principal's
control.107 As in the formation of any contract, the consent of
both parties is necessary to establish an agency relationship.108
Agency is never to be presumed; it must be shown affirmatively.109
The party who asserts the existence of agency relationship has the
106Glauser v. State Farm Life Ins. Co., No. 01-93-00015-CV,
1994 WL 470355, at *14 (Tex. Ct. App.))Houston [1st Dist.] Aug.
31, 1994); see In re Incident Aboard D/B Ocean King, 813 F.2d
679, 688-89 (5th Cir. 1987), modified on other grounds by 877
F.2d 322 (5th Cir. 1989). See generally 1 STEVEN A. CHILDRESS &
MARTHA S. DAVIS, FEDERAL STANDARDS OF REVIEW § 2.18, at 2-125 to 2-127
(2d ed. 1992) (noting that, although many courts agree that mixed
questions in general are freely reviewed, more and more courts
now attempt to sort out whether the question primarily involves a
factual inquiry (reviewed under clearly erroneous standard) or a
legal inquiry (reviewed de novo).
107Lubbock Feedlots, Inc. v. Iowa Beef Processors, 630 F.2d
250, 269 (5th Cir. 1985) (citing Sorenson v. Shipe Bros. Co., 517
S.W.2d 861, 864 (Tex. Civ. App.))Amarillo 1974); Tarver, Steele &
Co. v. Pendleton Gin Co., 25 S.W.2d 156, 158 (Tex. Civ.
App.))Eastland 1930); and Valley View Cattle Co. v. Iowa Beef
Processors, Inc., 548 F.2d 1219, 1221 (5th Cir.), cert. denied,
434 U.S. 855 (1977)); Hall Dadeland Towers Assocs. v. Hardeman,
736 F. Supp. 1422, 1429 (N.D. Tex. 1990) (citing Carr v. Hunt,
651 S.W.2d 875 (Tex. Ct. App.))Dallas 1983, writ refused n.r.e));
3 TEX. JUR. Agency § 1.
1083 TEX. JUR. Agency § 13.
109Glauser, 1994 WL 470355, at *14; see Girard Trust Bank v.
Sweeney, 231 A.2d 407, 410 (Pa. 1967); Buscholz v. Kline, 184
S.W.2d 271 (Tex. 1944).
51
burden of proving it.110 To prove an agency relation under Texas
law, there must be evidence from which the court could conclude
that "[t]he alleged principal [had] the right to control both the
means and the details of the process by which the alleged agent
[was] to accomplish the task."111
Thornburgh argues that Rove failed to meet that burden.
Specifically, Thornburgh contends that Dickman was the Committee's
agent, not Thornburgh's; or, in the alternative, that if Dickman
was Thornburgh's agent, it was for the general purposes of running
the political side of the campaign))not for the purpose of imposing
personal liability on Thornburgh for the debts of the Committee.
Thornburgh reminds us that both he and Dickman testified that
Dickman was not expressly authorized to act as Thornburgh's agent
for any purpose))much less to enter into a contract for Thornburgh
personally))and that there is no direct evidence in the record to
refute this testimony and support the district court's findings to
the contrary.112
110Jones v. Philpott, 702 F. Supp. 1210 (W.D. Pa. 1988)
(Pennsylvania law), aff'd, 891 F.2d 381 (3d Cir. 1989); Norton v.
Martin, 703 S.W.2d 267, 272 (Tex. Ct. App.))San Antonio 1985,
writ refused n.r.e) (Texas law).
111In re Carolin Paxson Advertising, Inc., 938 F.2d 595, 598
(5th Cir. 1991); see United States v. Contemporary Health
Management, 807 F. Supp. 47, 49 (E.D. Tex. 1992) ("Under Texas
agency law, the essential element is the `right of control' of
the purported agent by the purported principal.").
112In fact, Thornburgh argues that the court based its
finding solely on the fact that it did not believe Thornburgh's
and Dickman's testimony to the contrary, and "`[a] trial judge
may not use his disbelief of a witness as affirmative support for
the proposition that the opposite of the witness's testimony is
the truth.'" Seymour v. Oceanic Navigating Co., 453 F.2d 1185,
52
a.
Dickman As Thornburgh's Agent
Although both Thornburgh and Dickman testified that Thornburgh
had not constituted Dickman as Thornburgh's agent for any purpose,
agency can be implied from the conduct of the parties under the
circumstances.113 In the instant case, Dickman (the person
authorized to answer interrogatories on behalf of the Committee)
admitted in the Committee's answers to Rove & Company's
interrogatories that he was "the primary point of contact between
the Committee and Defendant Richard Thornburgh." Dickman also
acknowledged that he was known as "an intermediary" to Thornburgh
regarding, inter alia, the running and organizing of Thornburgh's
campaign. Thornburgh solicited Dickman's opinion on a "day-to-day
basis" about campaign activities, including broad campaign
strategies, where Thornburgh should speak, and what issues
Thornburgh should address. Thornburgh used Dickman as his go-
between to provide mailing lists, a signature exemplar, and edited
solicitation letters to the Committee to facilitate the Committee's
direct mail contract with Rove & Company. Thornburgh testified
that Dickman was a "loyal friend," who had served as a high-level
assistant to Thornburgh during several of Thornburgh's campaigns
1191 (5th Cir. 1972) (alteration in original)).
113Grace Community Church v. Gonzalez, 853 S.W.2d 678, 680
(Tex. Ct. App.))Houston [14th Dist.] 1993); Kirby Forest Indus.,
Inc. v. Dobbs, 743 S.W.2d 348, 356 (Tex. Ct. App.))Beaumont 1987,
writ denied); see Wood v. Holiday Inns, Inc., 508 F.2d 167 (5th
Cir. 1975); Orozco v. Sander, 824 S.W.2d 555, 556 (Tex. 1992)
(per curiam); 3 TEX. JUR. Agency § 16.
53
and while Thornburgh served in various government positions.114
Consistent with a principal's role, Thornburgh retained the
ultimate authority over Dickman and Dickman's activities within the
Committee. For example, even though Dickman took part in the
Committee's decision to hire Davis as the Committee's Campaign
Manager, Dickman acknowledged that, had Thornburgh disapproved of
this choice, another campaign manager would have been selected. In
addition, although Dickman authorized and assented to the
Committee's contract with Rove & Company, Thornburgh retained
control over the content of the fundraising letters and whether the
letters would be mailed at all.115 Finally, Thornburgh was the only
person authorized to grant the Committee (and thus its employees,
one of whom was Dickman) the authority to raise and spend funds on
Thornburgh's behalf. Thornburgh thus had the right to withhold his
authorization of the Committee, a decision that would have halted
all Committee activities))including Dickman's. Consequently, the
evidence supports the district court's finding that Dickman served
as Thornburgh's agent acting under Thornburgh's control.
Nevertheless, we still must determine the scope of Dickman's
114Contrary to Thornburgh's assertions, it was proper for the
district court to consider Dickman's relationship to Thornburgh
in determining whether Dickman acted as Thornburgh's agent.
Although agency cannot be proven by evidence of the alleged
agent's general reputation as the agent of the alleged principal,
this does not mean that a court cannot look to the relationship
between the parties and their conduct concerning the transaction
in controversy as competent evidence of an agency relationship.
See Union Producing Co. v. Allen, 297 S.W.2d 867 Tex. Civ. App.
1957); RESTATEMENT (SECOND) OF AGENCY § 34.
115See Karl Rove & Co. v. Thornburgh, 824 F. Supp. 662, 668,
675 & n.21 (W.D. Tex. 1993).
54
authority.
b.
The Scope of Dickman's Authority
An agent has only as much authority as the principal has
either expressly or impliedly conferred.116 The extent of an
agent's authority is determined in light of all surrounding
circumstances, including, inter alia, the parties' relations to one
another, the undertaking in which the parties are engaged, and the
general usages and practices of those engaged in such
undertakings.117
The district court found that Dickman acted as Thornburgh's
general agent, or, "[a]t the very least, Dickman had apparent
authority to act on Thornburgh's behalf with respect to the
campaign and, specifically, the agreement with Rove."118 Thornburgh
counters that even if Dickman did act as Thornburgh's agent, he was
authorized only to run the political side of the campaign, not to
enter into contracts making Thornburgh personally liable.
Although we recognize that there is some evidence and
authority to support the district court's conclusion that Dickman
was acting as Thornburgh's general agent, authorized to enter into
the September Contract for Thornburgh personally,119 we need not go
116See RESTATEMENT (SECOND) OF AGENCY § 33 ("An agent is
authorized to do, and to do only, what it is reasonable for him
to infer that the principal desires him to do . . . .").
117See id. § 34.
118Karl Rove & Co., 824 F. Supp. at 671.
119See Hunt v. Davis. 387 So. 2d 209 (Ala. Ct. Civ. App.)
(candidate held liable based on contract entered into by employee
of campaign committee), writ denied, 387 So. 2d 213 (1980). We
55
that far to hold Thornburgh liable here. The record makes clear
that Dickman acted as Thornburgh's agent to the Committee and was
authorized to represent Thornburgh in all Committee activities,
including whether to enter into the September Contract. This
finding alone is sufficient to hold Thornburgh personally liable,
given Thornburgh's acknowledgement that Dickman authorized and
assented to that Committee's contract with Rove & Company.
As discussed earlier, for Thornburgh to be liable for the
September Contract, Rove & Company had only to prove that
Thornburgh authorized, assented to, or ratified the Committee's
decision to enter into the agreement. Thornburgh could manifest
his authorization or assent personally or through an agent. In the
instant case, the record is clear that Dickman, as Thornburgh's
representative to the Committee, authorized or assented to the
September Contract.
Much of the same evidence that establishes that Dickman acted
as Thornburgh's agent also supports the district court's findings
that Dickman was Thornburgh's "primary point of contact" with the
find distinguishable other cases holding candidates liable based
upon the actions of an alleged agent contracting with a vendor on
the personal behalf of the candidate. See, e.g., Hartke v.
Moore-Langen Printing & Publishing Co., 459 N.E.2d 430 (Ind. Ct.
App. 1984) (vendor testified that purported agent identified
himself as candidate's agent); Rehm v. Sharp, 144 So. 78 (La. Ct.
App. 1932) (unclear whether campaign committee existed,
candidate's designated campaign manager thus had actual or
implied authority to incur expenses on behalf of campaign); Rich
Printing Co. v. Estate of McKellar, 330 S.W.2d 361 (Tenn. Ct.
App. 1959) (primary campaign organization was not a voluntary
nonprofit association, thus campaign manger acted as candidate's
general agent during a primary campaign).
56
Committee120 and that "Dickman's role in the Committee was obviously
to assure Thornburgh's interests would best be served and to be
Thornburgh's voice."121 There is no indication that these findings
by the district court were clearly erroneous. We also note that
Thornburgh testified that it is customary during a political
campaign for a candidate to rely on others, such as Dickman, to
manage the day-to-day operations of the campaign))which operations
would include such things as the purchase of services necessary to
support the candidacy. As it is customary to rely on others for
such services, and as the district court found that Dickman was the
primary person upon whom Thornburgh relied during his senatorial
campaign, we are led to but one conclusion: Dickman, as
Thornburgh's representative to the Committee, had either actual or
apparent authority to bestow Thornburgh's blessings on Committee
activities, which included the Committee's decision to contract
with Rove & Company. As Dickman had such authority, and as
Thornburgh
concedes
(and
the
record
substantiates
with
uncontroverted evidence) that Dickman authorized and assented to
the September Contract, Thornburgh can also be found liable for the
September Contract as a result of Dickman's authorization and
assent to the Committee's decision to enter into that agreement.122
120Karl Rove & Co., 824 F. Supp. at 668.
121Id. at 676.
122As we find Thornburgh liable on this basis, Thornburgh's
other assertions explaining why Dickman could not enter into a
contract for Thornburgh personally are irrelevant to the
resolution of this dispute. It is immaterial whether Thornburgh
lacked capacity to contract with Rove & Company, and thus could
57
Consequently, we need not, and do not, reach the issue whether
Thornburgh also is personally liable because Dickman acted as
Thornburgh's general agent vis-á-vis Rove & Company, vested with
authority to enter into pacts such as the September Contract and
bind Thornburgh personally.
B.
PERSONAL JURISDICTION OVER DIMUZIO
Guarding against the possibility that we might reverse the
district court's decision holding Thornburgh personally liable for
the September Contract, Rove & Company filed a cross appeal in the
alternative, contesting the portion of the district court judgment
holding that it lacked personal jurisdiction over Dimuzio. As we
conclude that Thornburgh is liable on the contract, we do not reach
this jurisdictional issue.
In addition to urging affirmance of the dismissal of the suit
against him, however, Dimuzio as cross-appellee seeks double costs
as a sanction against Rove & Company for filing a frivolous appeal
of the district court's ruling dismissing Dimuzio for lack of
personal jurisdiction. Although we agree with Dimuzio that Rove &
Company provided no authority and little argument in the section of
its brief designated as addressing its cross appeal, we believe
that, when read in its entirety, Rove & Company's brief adequately
explains the basis upon which it believed that Dimuzio could be
not delegate such authority to Dickman, because Dickman
contracted with Rove & Company on the Committee's behalf))not for
Thornburgh personally. Likewise, it is unimportant to the issue
whether Dickman acted as Thornburgh's agent on the Committee
whether, as Thornburgh alleges, Rove was an experienced vendor
who believed that he could contract only with the Committee, and
thus looked to the Committee alone, not Thornburgh, for payment.
58
held amenable to the district court's jurisdiction and liable for
the Committee's debt. Thus, Rove & Company's cross appeal was not
so baseless as to constitute frivolousness for purposes of
sanctions. Accordingly, in the exercise of our discretion, we
elect to consider Rove & Company's cross appeal non-frivolous in
the context of the entire case and in light of the content of Rove
& Company's entire brief. We thus deny Dimuzio's request for
sanctions.
III
CONCLUSION
The outcome of this case is dictated by the laws of Texas and
Pennsylvania. Under these laws, we are compelled to conclude that
Thornburgh personally is jointly and severally liable with the
Committee on the September Contract with Rove & Company.
As we observed, relatively little time and money are required
to incorporate a campaign committee or to ensure by express
contractual provisions that all committee agreements exclude
personal liability of the candidate. Thus we are satisfied that
sufficient legal protection for candidates is already available in
the law, if candidates just avail themselves of these existing
safeguards. Otherwise, the law regarding unincorporated nonprofit
associations will supply the rules, and uncautious candidates will
be left to shoulder the financial consequences of their imprudence.
For the reasons detailed above, we AFFIRM the district court
judgment to the extent it holds Thornburgh liable for the debts of
the Committee, and DISMISS as moot the cross appeal of the court's
dismissal of Rove & Company's claim against Dimuzio. And we
59
DISMISS Dimuzio's request for sanctions.
60

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