Plaintiff (a superior court judge) utilized the services of a real estate business advertising itself as "Coldwell Banker." In fact the business was a franchise and had a written agreement with Coldwell Banker indicated that it was to hold itself out as an independent contractor. The real estate business posted a large sign on its premises, using the name Coldwell Banker and containing the disclaimer language in very small print. Plaintiff eventually sued the real estate business on several theories related to the purchase of property. Coldwell Banker was named as a defendant on the theory of respondent superior. Coldwell Banker made a motion for summary judgment which was granted. The appellate court reversed, holding that there were sufficient facts to hold Coldwell Banker as an ostensible agent. The court restated the general rule that an ostensible agency must be created by acts of the "principal." Here the court reasoned that by allowing businesses to use its name and call themselves "members" of the organization, an ostensible agency could be found.
1. Why did the appellate court refuse to apply the doctrine of respondent superior?
2. Why did the court say that the theory of ostensible agency might apply?