This section contains the nature of the case and procedural background.

Blackburn (P) was a widow who was alleged to have no business experience and no family to advise her. P was introduced to Long, an employee of Walston & Company. Long became her trusted investment advisor on behalf of Walston and later Dean Witter (Ds). During his tenure with Ds, Long convinced P to invest in a nonexistent company he called American Commercial Investment Company. Long claimed that it was willing to pay 10% interest. P sold some of her stocks and invested her money in the fictitious company. P got rediform receipts from Long for her investments but nothing appeared on her statements with Ds regarding this new investment, and the receipts and note she got were not written on company stationery. Long claimed that the company was so new that stationery was being printed. P testified at trial that she trusted Long and that he had represented he was working for Ds and had no reason to doubt his statements even though the statements were different and Long was taking the money as trustee of the nonexistent company. Ds presented testimony at trial concerning the limitations that they placed on their agents but presented no evidence that P was ever told of those limitations. On the theory of ostensible authority, the trial court entered judgment in favor of P.

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