This deficiency is glaringly apparent here, as neither art. 1.14-2 or the terms of the agency agreement between Acceptance and Southwestern specifically address whether Southwestern has the authority to retract a Notice of Cancellation. Texas courts, on the other hand, have not utilized such a rigid standard when determining the scope of a surplus lines agent's authority. In both Foundation Reserve Ins. Co. v. Wesson, 447 S.W.2d 436, 438 (Tex.Civ.App. 1969), and in Bellefonte, 663 S.W.2d at 585-86, Texas courts considered the extent of a surplus lines agent's authority without solely limiting their discussion to contractual and statutory limitations upon the agent. Instead, the court determined that the cumulative effect of the agent's actions and duties marked the boundaries of a surplus agent's authority, and thus the extent of the unauthorized insurer's liability.

The question of agency is one of fact, and circumstantial evidence may be used to establish the agency and the extent of the agent's authority. Foundation Reserve Insurance Co. v. Wesson, 447 S.W.2d 436, 438 (Tex.Civ.App. — Dallas 1969, writ ref'd). For there to be an agency relationship, there must be some act constituting an appointment of a person as an agent; it is a consensual relationship.

As stated in this Court's prior Memorandum Opinion and Order, CHM may be held accountable for Smith's actions under the theories of vicarious liability or ratification. See Weyant v. Acceptance Ins. Co., 917 F.2d 209, 213-14 (5th Cir. 1990) (applying Texas law); Foundation Reserve Ins. Co. v. Wesson, 447 S.W.2d 436, 439 (Tex. Civ. App.—Dallas 1969, writ ref'd); Prunty v. Arkansas Freightways, Inc., 16 F.3d 649, 653 (5th Cir. 1994). Here, there are genuine issues of material fact as to whether Smith maliciously procured a prosecution, whether Smith was acting within the scope of her employment when she reported the nurses, and whether CHM confirmed, adopted, or failed to repudiate Smith's actions.

When an individual is entrusted with specific duties, he is the agent of the entrusting company for such purposes. See Foundation Reserve Ins. Co. v. Wesson, 447 S.W.2d 436, 439 (Tex.Civ.App.1969, writ ref'd). The principal is charged both with the acts of an agent committed within the scope of his duties and with knowledge of such acts.

Fenchurch was clearly HCC's agent. See Foundation Reserve Ins. Co. v. Wesson, 447 S.W.2d 436, 438 (Tex.App.-Dallas 1969, writ ref'd) ("The general rule is that . . . an insurance broker acts for the insured in making the application and procuring the policy. . . ."); see also Fenchurch's Motion to Dismiss and for Summary Judgment 20 ("It is uncontested that Fenchurch was acting solely as an agent of HCC in negotiating the terms and conditions of coverage.") (citing Edinburgh Assurance, 479 F. Supp. at 151). Nevertheless, an agent may not bind its principal in the absence of either actual or apparent authority to do so.

The court found that the intent as expressed by Mr. Hixon, a Wortham partner, "was that of Wortham and Hartford, not necessarily that of Tomlinson." The question of agency is one of fact, see Foundation Reserve Ins. Co. v. Wesson, 447 S.W.2d 436, 438 (Tex.Civ.App.-Dallas 1969, writ ref'd), and as such is reviewed under the clearly erroneous standard. The trial court's finding as to agency and its bearing on the issue of intent is not clearly erroneous and will not be disturbed.

See also 1 Bertram Harnett, Responsibilities of Insurance Agents and Brokers § 2.02 (1991 Supp.); 3 Couch on Insurance 2d § 25:95, 448-55 (Rev. ed. 1984 Supp. 1990). Although some Texas courts have used the term "insurance broker" in this sense, see, e.g., Foundation Reserve Insurance Co. v. Wesson, 447 S.W.2d 436, 438 (Tex.Civ.App. — Dallas 1969, writ ref'd); Zurich General Accident Liability Insurance Co. v. Fort Worth Laundry Co., 58 S.W.2d 1058, 1059 (Tex.Civ.App. — Fort Worth 1933, no writ), the broker/agent distinction is not found in the Texas Insurance Code. Although the Code does distinguish in some contexts between local recording agents and soliciting agents, Tex.Ins. Code art. 21.14, this categorization does not apply to agents selling life, health and accident insurance, Tex.Ins. Code art. 21.14 § 20. See also Tex.Ins. Code art. 21.07-1 § 16 (Vernon Supp. 1992) (providing separate licensing requirements for "accident and health insurance agents"). Because this case involves only the sale of a health insurance policy, we do not address the differing duties imposed on Texas local recording agents and soliciting agents.

See Foundation Reserve Ins. Co. v. Wesson, 447 S.W.2d 436, 439 (Tex. App.-Dallas 1969, writ ref'd) (rejecting appellant surplus lines insurer's argument that its broker could not be its agent for purposes of collecting premiums based on the Insurance Code's proscription against surplus lines insurers "doing business 'by or through any person or agent acting within [Texas]'" because appellant had authorized the broker to collect the premiums and therefore should not be allowed "to avoid its responsibility . . . on the ground that the law prohibited it from having such an agent"); see also Johnson v. Essex Ins. Co., No. 04-00-00745-CV, 2002 WL 112561, at *10 (Tex. App.-San Antonio Jan. 30, 2002, no pet.) (mem. op., not designated for publication) (recognizing that insurance adjuster was surplus lines insurer's agent).

Found. Reserve Ins. Co. v. Wesson, 447 S.W.2d 436, 438 (Tex.Civ.App.-Dallas 1969, writ ref'd); Townsend v. Univ. Hosp.-Univ. of Colorado, 83 S.W.3d 913, 921 (Tex.App.-Texarkana 2002, pet. denied). In this case, only three loans in which the Jarvises participated with NAC, including the Lofton loan, were paid off.

The question of agency is usually one of fact, and circumstantial evidence may be used to establish the agency relationship and to determine the scope of the agent's authority. St. Paul Surplus Lines Ins. Co., Inc. v. Dal-Worth Tank Co., Inc., 917 S.W.2d 29, 48 (Tex.App.-Amarillo 1995, no writ); Found. Reserve Ins. Co. v. Wesson, 447 S.W.2d 436, 438 (Tex.Civ.App.-Dallas 1969, writ ref'd). Absent actual or apparent authority, an agent cannot bind a principal.