891 F.2d 286 (4th Cir. 1989), 88-2215, Barnes v. Cargill, Inc.

Docket Nº:88-2215.
Citation:891 F.2d 286
Party Name:Gordon BARNES; Glenn Phelps, individually and on behalf of others similarly situated with themselves, Plaintiffs-Appellants, v. CARGILL, INCORPORATED, Defendant-Appellee.
Case Date:November 22, 1989
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 286

891 F.2d 286 (4th Cir. 1989)

Gordon BARNES; Glenn Phelps, individually and on behalf of others similarly situated with themselves, Plaintiffs-Appellants,


CARGILL, INCORPORATED, Defendant-Appellee.

No. 88-2215.

United States Court of Appeals, Fourth Circuit

November 22, 1989

Editorial Note:

This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA4 Rule 36 regarding use of unpublished opinions)

Argued: May 11, 1989.



Appeal from the United States District Court for the Eastern District of North Carolina, at Elizabeth City. Franklin T. Dupree, Jr., Senior District Judge. (CA 86-18-2-CIV).

William Walton Pritchett, Jr. (Pritchett, Cooke & Burch, on brief), for appellants.

William Henry Holdford (Henry C. Babb, Jr., Walter L. Hinson (Narron, Holdford, Babb, Harrison & Rhodes, P.A., on brief), for appellee.

Before K.K. HALL and WILKINSON, Circuit Judges, and GLEN M. WILLIAMS, Senior United States District Judge for the Western District of Virginia, sitting by designation.


Plaintiffs Gordon Barnes and Glenn Phelps, who breed and raise swine for a living, brought suit against Cargill, Inc., a large international company also involved in the swine business, alleging breach of contract; fraud; unfair and deceptive trade practices under N.C.Gen.Stat. § 75-1.1 (1985); violation of the North Carolina Business Opportunity Sales Act, N.C.Gen.Stat. § 66-94, et seq. (1985); and conversion. They also sought certification of their suit as a class action.

The trial court denied the motion for class certification and dismissed the unfair trade practices and Business Opportunity Sales Act counts. After reviewing depositions, affidavits, and exhibits introduced by the parties, the trial court granted summary judgment on the remaining counts. The plaintiffs appeal.

The plaintiffs offered the following version of events leading up to this suit: Phelps and Barnes were approached in 1985 by an individual named Dale Warsco, whom they both had known for some years as an operator of swine farms in Eastern North Carolina. At the time he was the sole owner of a corporation known as H.O.G.S., Inc., though this company was soon absorbed into a new entity, B & D Milling Co., the stock of which was owned 50% by Mr. Warsco and 50% by a Dr. Bradsher. Warsco wanted Phelps and Barnes to help him feed and care for a large number of hogs belonging to Cargill, for which he (Warsco), through B & D Milling, had contracted to raise for Cargill. At all times Cargill owned all of the pigs and hogs; B & D Milling's job was to raise them for Cargill until they were ready for market.

Warsco explained that Cargill would pay B & D Milling, which in turn would pay Phelps and Barnes for their work in raising the swine. In fact, B & D Milling was insolvent, and although it was paid by Cargill for the period of November 27, 1985 to January 15, 1986, none of this money was ever turned over to the plaintiffs. They allege that Cargill was well aware of B & D's financial straits at the time B & D contracted with them, and that it was fraudulent to conceal this information, as well as an unfair and deceptive trade practice. Furthermore, they allege that Cargill's failure to reimburse them after Cargill's "agent" had entered into the deal with them was a breach of contract.

Cargill maintains that there is no question of a breach of contract because Warsco (or B & D) was an independent contractor rather than an agent of Cargill; that Warsco could not and did not therefore bind Cargill when he entered into his agreement with Barnes and Phelps; and therefore the complete lack of privity between the plaintiffs and Cargill is a bar to the contract claim. Warsco, they say, was acting entirely on his own in subcontracting some of the hogs to the plaintiffs, while Barnes and Phelps were sophisticated businessmen who were well acquainted with Dale Warsco and his financial condition, better acquainted, in fact, than Cargill was. The trade practices engaged in by Cargill could not have been unfair or deceptive under North Carolina law, furthermore, because breach of contract alone is not enough to support such a claim.

We will consider each issue seriatim.


A. Agency

On appeal, one of plaintiffs' two grounds for stating that the trial court should not have granted summary judgment against Barnes on the breach of contract count 1 is certain testimony in the deposition of Roland Henry "Moe" Mohesky, a Vice-President of Cargill, to the effect that Dale Warsco was acting as an agent of Cargill when he negotiated the producer agreements with Barnes and Phelps. Before signing the deposition, Mohesky attached an errata sheet changing his answer to say that Warsco was a "contractor." Barnes insists that this "contradiction" at least creates a question of fact for a jury to resolve. However, matters are not quite that simple.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The standard for granting summary judgment mirrors the standard for a directed verdict under Federal Rule of Civil Procedure 50(a). Anderson v. Liberty Lobby, Ind., 477 U.S. 242, 250 (1986); see also Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 624 (1944). Rule 50(a) requires the trial judge to direct a verdict if, under controlling law, there can be only one reasonable conclusion as to the verdict. Brady v. Southern R. Co., 320 U.S. 476, 479-80 (1943). Cf. Wilkerson v. McCarthy, 336 U.S. 53, 62 (1949) (where reasonable minds could differ as to the interpretation of evidence, verdict should not be directed). Of course, the standard under Rule 56 is more than "the mere existence of some alleged factual dispute between the parties;" there must be "no genuine issue of material fact." Anderson, 477 U.S. at 247-8 (emphasis in original).

Applying this standard to Mr. Mohesky's statement, it is evident that it concerns a material fact, but does not create a genuine issue. Mr. Mohesky's statement is the only piece of evidence, apart from their plerophory, that the plaintiffs offer to prove agency. Mr. Mohesky is not an attorney and a layman's use of a legal term of art such as "agent" is too slender a reed to support a finding that a genuine issue exists in the face of overwhelming evidence to the contrary.

The written contract between Cargill and B & D Milling Company clearly states that B & D was an independent contractor. Although an independent contractor can be an agent, see Standard Supply Co. v. Reliance Ins. Co., 49 N.C.App. 613, 272 S.E.2d 394, 397 (1980); Restatement (Second) of Agency, § 14N (1958), a written contract on the subject is conclusive on this issue absent other evidence of agency or course of dealing. Gibbs v. Plymouth Motor Corp., 203 N.C. 351, 166 S.E. 74, 76 (1932). The fact that a Cargill employee visited Barnes' farm to give him advice on how better to take care of the animals is not, contrary to Barnes' suggestion, enough to overcome the presumption in favor of the written instrument. Id.; A.B. Farquhar Co. v. Hardy Hardware Co., 174 N.C. 369, 93 S.E. 922, 924 (1917) ("The plaintiff did not waive its contractual rights, by rendering services gratuitously during the season in the effort to give them perfect satisfaction."). Moreover, the Restatement notes that an independent contractor may be an agent only when he is also a fiduciary, giving the examples of "brokers, factors, attorneys, collection agencies, and selling agencies." Restatement (Second) of Agency, § 14N, comment a (1958). Independent contractors who are non-fiduciaries are non-agents. Id., comment b. Therefore we conclude that the granting of summary judgment on this issue was proper.

B. Implied Contract

The second contract theory on which plaintiffs seek to recover is based on the equitable principle of unjust enrichment, or quantum meruit, upon an implied contract between plaintiffs and defendants. The doctrine of unjust enrichment was devised in order to force the return of benefits received, or payment for them, when it would be unfair for the recipient to retain them without compensation. Collins v. Davis, 68 N.C.App. 588, 315 S.E.2d 759, 761, affirmed 312 N.C. 324, 321 S.E.2d 892 (1984). In such situations, equity implies a contract between the parties; the contract is not the product of any agreement between them. Ellis Jones, Inc. v. Western Waterproofing Co., 66 N.C.App. 641, 312 S.E.2d 215, 217 (1984). However, it is settled law in North Carolina that where two persons contract to furnish goods or services to a third person, the third person is not liable on an implied contract just because he has received such services or goods. Vetco Concrete Co. v. Troy Lumber Co., 256 N.C. 709, 124 S.E.2d 905, 908 (1962); Baumann v. Smith, 41 N.C.App. 223, 254 S.E.2d 627, 632 (1979), reversed on other grounds 298 N.C. 778, 260 S.E.2d 626 (1979).

quantum meruit action. Therefore, the plaintiffs cannot recover under a theory of implied contract.


The plaintiffs also sought relief on the grounds that the alleged representations made to them by Warsco and an employee of Cargill, Leon Calhoun, amounted to actual fraud. The trial court denied Cargill's motion to dismiss this claim, but later granted summary judgment. It rejected the fraud claim as to Warsco because of its finding that he was never the agent of Cargill, and therefore, Cargill could not be responsible for any false representations Warsco might have made. This court agrees.

As for the claim involving Calhoun, the plaintiffs said that they asked Calhoun a number of times about the financial condition of Warsco, or B & D Milling, and that Calhoun's answers were favorable, or at least not unfavorable. At the same time, however, Calhoun knew of a consent order entered in a North Carolina Superior Court action, in which both Cargill...

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