Problem:

Federal Land Bank (FLB) filed an action to foreclose a mortgage on property owned by Howard and Harriet Franklin. Before trial, FLB's attorney wrote to the Franklin's attorney inviting settlement offers. The Franklin's attorney wrote to FLB's attorney expressing an interest in settling. FLB's attorney responded with an offer that he stated his "client has authorized me to extend." George Johnson, a vice president of FLB, received copies of all letters. The Franklins accepted the offer, but three weeks late the FLB attorney wrote to say that all settlement offers had to be cleared through the Cleveland office. Because their agreement had not been approved by that office, the foreclosure was going to proceed. The Franklins sued, claiming that the FLB attorney had authority to settle the case and that FLB was bound by the settlement agreement.

Required:

Question 1) How should the court rule? Discuss fully. Provide thorough explanation of the given question.