AgriStor Leasing v. Farrow

• Decision Date: 25 September 1987
• Docket Number: No. 86-2006,86-2006
• Citation: 826 F.2d 732
• Parties: AGRISTOR LEASING, a Wisconsin Partnership consisting of AgriStor Credit Corporation, a Delaware corporation, and Steiner Financial Corporation, a Utah corporation, Appellees, v. Leon K. FARROW and Joyce Farrow, Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 732

826 F.2d 732

AGRISTOR LEASING, a Wisconsin Partnership consisting of

AgriStor Credit Corporation, a Delaware

corporation, and Steiner Financial

Corporation, a Utah

corporation, Appellees, v. Leon K. FARROW and Joyce Farrow, Appellants.

No. 86-2006.

United States Court of Appeals,

Eighth Circuit.

Submitted March 10, 1987.

Decided Aug. 7, 1987.

Rehearing and Rehearing En Banc Denied Sept. 25, 1987.

Robert Malloy, Goldfield, Iowa, for appellants.

Brent B. Green, Des Moines, Iowa, for appellees.

Before HEANEY and FAGG, Circuit Judges, and LARSON, ^* Senior District Judge.

LARSON, Senior District Judge.

Defendants Leon K. and Joyce Farrow appeal from the district court's grant of summary judgment in favor of plaintiff AgriStor Leasing. The Farrows are grain and livestock farmers in Ledyard, Iowa. Following numerous solicitations by Norman Nicol, an employee of a local Harvestore dealer, the Farrows entered into an eight year lease agreement for a Harvestore and related agricultural equipment. ¹ Plaintiff AgriStor filed the present action seeking damages and replevin of the leased equipment when the Farrows refused to make further payments under the lease. The Farrows denied liability and counterclaimed based upon alleged misrepresentations by Nicol that if the Farrows decided not to keep the Harvestore equipment after one year, they could return it upon payment of an initial rental fee of approximately $19,500.

Upon completion of discovery, AgriStor moved for summary judgment on the ground that Nicol was not its agent and hence any statements he may have made to the Farrows were no defense to its action on the lease. ² The district court granted the motion on the ground that the Farrows had failed to raise a genuine issue of fact regarding AgriStor's control of Hawkeye Harvestore, Nicol's employer. The district court concluded that because of this failure, a directed verdict for plaintiff AgriStor would be required on the agency issue and hence summary judgment was warranted. The Farrows contend on appeal that there are genuine issues of fact concerning Nicol's implied or apparent authority to act on behalf of AgriStor in connection with the lease agreement. We agree that a reasonable jury could find in favor of the Farrows on the agency issue, and hence we reverse the district court's decision and remand this case for further proceedings.

I. STANDARD OF REVIEW

We address at the outset the appropriate standard of review. Plaintiff AgriStor contends a clearly erroneous standard of review should be applied "where the evidence is undisputed and where the summary judgment decides issues of ultimate fact rather than pure issues of law." Appellee's Br. at 13. Without specifying the particulars, plaintiff asserts that the district court "carefully assessed the lengthy deposition and documentary record and made a factual determination within the meaning of Pullman[-Standard v. Swint, 456 U.S. 273, 293, 102 S.Ct. 1781, 1792, 72 L.Ed.2d 66 (1982) ]," which this Court is urged to defer to.

Plaintiff misconstrues the function of the court in deciding a motion for summary judgment. Summary judgment is appropriate only when there is no genuine issue of material fact, so that the dispute may be decided on purely legal grounds. Holloway v. Lockhart, 813 F.2d 874, 878 (8th Cir.1987). As the Supreme Court has recently stated:

The inquiry performed is the threshold inquiry of determining whether there is the need for a trial--whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). The judge's function is not to weigh the evidence, but rather is to determine as a matter of law whether there are genuine factual conflicts. Id.; Niagara of Wisconsin Paper Corp. v. Paper Industry Union-Management Pension Fund, 800 F.2d 742, 746 (8th Cir.1986). In making this determination, the court is required to view the evidence in the light most favorable to the non-moving party and to give that party the benefit of all reasonable inferences to be drawn from the underlying facts. Economy Housing Co. v. Continental Forest Products, Inc., 757 F.2d 200, 203 (8th Cir.1985) (citing Vette Co. v. Aetna Casualty & Surety Co., 612 F.2d 1076, 1077 (8th Cir.1980)). See Holloway v. Lockhart, 813 F.2d 874, 876. In this case we, like the district court, must determine whether there is a genuine factual issue on the status of Nicol as AgriStor's agent in connection with the Farrows' execution of the lease agreement. See Niagara of Wisconsin Paper Corp. v. Paper Industry Union-Management Pension Fund, 800 F.2d at 746; Vette Co. v. Aetna Casualty & Surety Co., 612 F.2d at 1077; Butler v. MFA Life Insurance Co., 591 F.2d 448, 451 (8th Cir.1979).

II. THE AGENCY RELATIONSHIP

As the district court properly recognized, this determination must be made in accordance with the agency principles of Iowa law. Under Iowa law, the question of whether an agency relationship exists is ordinarily one of fact, and the burden of establishing the existence of the relationship is upon the party who asserts it, here, the Farrows. See Gatzemeyer v. Vogel, 544 F.2d 988, 991-92 (8th Cir.1976); Chariton Feed & Grain, Inc. v. Harder, 369 N.W.2d 777, 789 (Iowa 1985); C.F. Sales, Inc. v. Amfert, Inc., 344 N.W.2d 543, 553 (Iowa 1983); Mayrath Co. v. Helgeson, 258 Iowa 543, 139 N.W.2d 303, 305-06 (1966); Grismore v. Consolidated Products Co., 232 Iowa 328, 5 N.W.2d 646, 651 (1942). The extent of an agent's authority, that is, whether the act in controversy was within the scope of the agent's authority, is also ordinarily a question of fact. Mayrath Co. v. Helgeson, 139 N.W.2d at 305-06; Hall v. Crow, 240 Iowa 81, 34 N.W.2d 195, 200-01 (1948); Wright v. Iowa Power & Light Co., 223 Iowa 1192, 274 N.W. 892, 894 (1937).

Defendants seek to establish a very limited agency relationship in this case. They do not suggest, for example, that AgriStor would be liable for representations by Nicol concerning the characteristics, performance or use of the Harvestore. They merely assert that Nicol acted as AgriStor's agent with respect to the presentation and terms of AgriStor's lease agreement. ³ To defeat AgriStor's motion, the Farrows thus have the burden of producing facts from which a reasonable jury could conclude, based on a preponderance of the evidence, that Nicol was acting on AgriStor's behalf in connection with the signing of the lease agreement. The facts related to this claim, viewed in the light most favorable to the Farrows, may be summarized as follows.

A. The Facts

At the time the lease agreement was signed by the Farrows, Norman Nicol was a salesperson employed by Hawkeye Harvestore, Inc., a farm equipment dealer which sells the Harvestore brand of grain storage silos and related equipment. Harvestores are manufactured by A.O. Smith Harvestore Products, Inc. (AOSHPI), a subsidiary of A.O. Smith. Plaintiff AgriStor Leasing is a Wisconsin partnership which leases Harvestore equipment on favorable terms to facilitate its use by farmers such as the Farrows. One of AgriStor Leasing's two general partners is AgriStor Credit Corporation, which is also owned by A.O. Smith.

AgriStor Leasing had done business with Hawkeye for several years prior to the Farrows' lease of the Harvestore. AgriStor utilized Hawkeye's sales force to present the option of financing through AgriStor Leasing to prospective customers. Hawkeye employees performed a similar function for other financiers as well. Employees such as Nicol explained the leasing program and performed all of the "leg work" required to obtain signatures on the various documents. If a lease application was approved by AgriStor and a lease agreement signed by the customer, Hawkeye would sell the Harvestore to AgriStor, which would in turn lease the equipment to the farmer-customer. Hawkeye also assisted AgriStor in reselling any structures which AgriStor had ownership of at the end of the lease period.

In connection with these arrangements, AgriStor provided Hawkeye salespeople with lease application forms, a booklet entitled "Leasing" which contained the terms of the leasing program, and training in how to inform the customer of AgriStor's leasing terms and how to answer any questions customers might have. AgriStor also provided Hawkeye with various written forms regarding changes in programs and rates, as well as an AgriStor sticker, which adorned the window at Hawkeye Harvestore.

The leasing agreement in this case was obtained pursuant to the general arrangements described above. In early 1981, Norm Nicol visited the Farrows' farmstead five or six times in an effort to sell them a Harvestore structure. Leon Farrow advised Nicol at the first and at subsequent meetings that he was not interested in purchasing the equipment because it was too expensive. ⁴ On one of Nicol's subsequent visits, Nicol allegedly told Farrow that he could rent the equipment and could return it at the end of one year for an initial rental fee of $19,500 if the Harvestore did not fit into the Farrows' farming operations. Farrow states in his affidavit that he discussed with Nicol his ability to return the equipment "for a long time on several occasions to make certain that the equipment could be returned."

On June 24, 1981, Nicol again presented his proposal to the Farrows. He gave them a purchase order, as well as a lease application and financial statement, which bore the name of AgriStor Leasing and was provided to Hawkeye by AgriStor. Hawkeye then forwarded the Farrows' application to AgriStor's offices. At some later date, ⁵ Nicol returned to the Farrows' farmstead with John Kirkpatrick, owner of Hawkeye Harvestore, and Rich Wayne, AgriStor's assistant manager from Milwaukee. The purpose of the visit was to evaluate the...