Brumley Estate v. Iowa Beef Processors, Inc.

• Decision Date: 19 May 1983
• Docket Number: No. 81-1600,81-1600
• Citation: 704 F.2d 1351
• Parties: 36 UCC Rep.Serv. 819, 13 Fed. R. Evid. Serv. 668 BRUMLEY ESTATE, et al., Plaintiffs-Appellants, v. IOWA BEEF PROCESSORS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1351

704 F.2d 1351

36 UCC Rep.Serv. 819, 13 Fed. R. Evid. Serv. 668

BRUMLEY ESTATE, et al., Plaintiffs-Appellants, v. IOWA BEEF PROCESSORS, INC., Defendant-Appellee.

No. 81-1600.

United States Court of Appeals Fifth Circuit.

May 19, 1983.

Thomas A. Graves, Mike McKool, Jr., Charles W. Cunningham, Dallas, Tex., Lucian Morehead, Plainview, Tex., for plaintiffs-appellants.

Freeman, Rothe, Freeman & Salzman, Edward W. Rothe, James T. Malysiak, Chicago, Ill., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before WISDOM, RUBIN, and TATE, Circuit Judges.

TATE, Circuit Judge:

In this Texas diversity case, the plaintiffs, a group of cattle sellers and feedlot operators, appeal from a take-nothing judgment entered on jury verdicts against them. The basis for their original suit was their contention that the defendant, Iowa Beef Processors ("Iowa Beef"--a slaughterhouse and meat packing plant), through its alleged agent, Heller, purchased cattle that were not properly paid for, and for which Iowa Beef is liable.

Essentially, they contest three rulings of the district court. First, relying on two prior jury determinations of Heller's status as agent of Iowa Beef in similar cases, they question the district court's refusal to apply collateral estoppel as a bar to relitigation of Heller's agency status here. Second, in the alternative, they contest the court's exclusion of evidence of these prior agency determinations as relevant evidence tending to prove that because Heller contemporaneously acted as an agent of Iowa Beef in other cases involving similar facts, he acted as agent in this particular case. Finally, they contest the district court's granting, without written reasons, a partial summary judgment holding article 6903 of the Texas Revised Civil Statutes (currently codified at Tex.Agric.Code Sec. 146.001 (1981)), to be inapplicable to the transactions at issue. The plaintiffs argue, under this article, that the transfer of the cattle to Heller was accomplished without the formality required by Texas law, so that, under the circumstances here presented, they are entitled to an interest in the cattle superior to Iowa Beef's.

We find no reversible error in the evidentiary and collateral estoppel rulings of the district court. Accordingly, we affirm the judgment dismissing the plaintiffs' claim insofar as based upon the jury finding that Heller was not an agent of Iowa Beef. We also affirm the district court's refusal, by its partial summary judgment ruling, to admit evidence on the article 6903 claim asserted by the plaintiffs; as we interpret it, under diversity principles, following the most recent state court decision on the subject, Texas jurisprudence is to the effect that article 6903 is not applicable to the factual situation here presented.

The Factual and Procedural Context of the Issues

The details of the relationship between Iowa Beef and its alleged agent, Heller, have been thoroughly explicated in three prior opinions by this court involving similar transactions with different plaintiffs (other Texas cattle raisers and feedlot operators who sold cattle to or through Heller): Rufenacht v. Iowa Beef Processors, Inc., 656 F.2d 198 (5th Cir.1981), cert. denied, 455 U.S. 921, 102 S.Ct. 1279, 71 L.Ed.2d 462 (1982); Lubbock Feed Lots, Inc. v. Iowa Beef Processors, Inc., 630 F.2d 250 (5th Cir.1980); Valley View Cattle Co. v. Iowa Beef Processors, Inc., 548 F.2d 1219 (5th Cir.), cert. denied, 434 U.S. 855, 98 S.Ct. 174, 54 L.Ed.2d 126 (1977). Briefly, Heller carried on a regular course of business in which he would telephone Iowa Beef daily, and Iowa Beef would offer to purchase specified quantities of cattle from him at specified prices. He would then purchase the cattle from the plaintiffs (for which he paid with his personal check) and resell them to Iowa Beef. Although he sold cattle to other purchasers as well, most of his sales were to Iowa Beef.

In early 1974, due to Heller's insolvency, his personal checks to the plaintiffs, given in payment for cattle purchased, were dishonored. After collecting what they were able to from Heller's bankruptcy proceedings and surety, the plaintiffs filed this suit against Iowa Beef.

The plaintiffs contend that throughout his course of dealings with them, Heller acted as an agent of Iowa Beef. Therefore, under agency principles, they argue that Iowa Beef is liable to them for the acts of Heller and thus for the unpaid purchase price of their cattle. Iowa Beef, on the other hand, maintains that Heller was not an agent but an independent dealer and speculator, seeking to profit from the purchase and resale of cattle, and that in no way did Iowa Beef become liable for Heller's transactions.

The jury found, on the basis of extensive evidence presented by both sides, that Heller was not an agent of Iowa Beef. Although the evidence was subject to conflicting factual inferences, we are unable to say that the jury's determination was not supported by substantial evidence, nor do the plaintiffs so argue on their appeal.

I.

However, based on jury determinations on similar facts and cattle transactions in other litigation between Iowa Beef and other parties, in which Heller was indeed found to have been the agent of Iowa Beef, the plaintiffs do raise two contentions of error in urging that the take-nothing judgment against them, founded on the jury verdicts, should be reversed: A. that the district court erred in its pretrial ruling rejecting the plaintiffs' contention that Iowa Beef was collaterally estopped from denying Heller's agency relationship with it, because of adverse determinations of the issue against it under virtually identical facts in similar litigation brought by other parties; and B. that, in any event, the district court erred in ruling to be inadmissible the judgments in these prior adjudications as evidence that Heller had acted as Iowa Beef's agent in contemporaneous and virtually identical cattle purchases from other cattle sellers of the area.

We will discuss these contentions in this Part I of the opinion. (In Part II, we will discuss the plaintiffs' remaining contention on appeal--that the district court erred in granting summary judgment, prior to trial, that dismissed the plaintiffs' claim against Iowa Beef founded on Texas article 6903, supra cit.)

A. Collateral Estoppel--No Abuse of Discretion in Failing to Apply Here

This appeal marks the fourth time that this court has considered the substantially similar question of the liability of Iowa Beef to various Texas cattle folk arising from the transactions of Heller. In the first two cases before this court, we reviewed and affirmed jury determinations that Heller had acted as Iowa Beef's agent. Valley View, supra; Lubbock Feed Lots, supra. In the third case, on the other hand, we affirmed a district court's finding, after a non-jury trial, that Heller had not so acted. Rufenacht, supra. In that third case, we also upheld the district court's exercise of discretion in failing to give collateral estoppel effect to the two earlier contrary judgments. Id. at 204.

Now, the plaintiffs contend that the district court erred in this case by failing to apply collateral estoppel to preclude a relitigation of the agency issue. However, we again find that the district court did not abuse its discretion.

The use of offensive collateral estoppel, in which a defendant is prohibited from relitigating an issue previously decided adversely to him with a different plaintiff, Parklane Hosiery Company v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979), is permitted in the discretion of the district court. Rufenacht, supra, 656 F.2d at 202. However, as noted in Rufenacht,

[a]pplicability of collateral estoppel is conditioned upon three requirements: (1) that the issue to be concluded be identical to that involved in the prior action; ...

656 F.2d at 202. In rejecting the application of the doctrine in Rufenacht, this court affirmed the district court's finding that there was no true identity of issues: "There is no doubt that the [cattle] transactions ... were similar in nature and close in time. But they were not identical." Id. at 203. This court there compared other cases in which the doctrine had been applied and generally concluded that,

[i]n each instance [where] estoppel applies there is an actual identity of issues--the legality of one proxy statement, the negligence arising from one incident, the execution of one guarantee--as opposed to the cases at bar which involve separate albeit similar sales of cattle.

Id. Similarly in this case, a series of transactions similar but not identical to the ones at issue in the other cases were before the district court. The district court therefore concluded that the lack of identity of issues, properly found controlling in Rufenacht, foreclosed the application of the doctrine in the present case also.

The plaintiffs contend, however, that the situation here is different from that in Rufenacht, and therefore more strongly warrants application of the doctrine. They point to testimony of various witnesses, Heller included, to the effect that Heller's relationship with Iowa Beef during the period of the transactions at issue in this case is exactly the same as it was in all of the other transactions occurring during this time period. The plaintiffs contend that this establishes the necessary identity of issues (i.e., the one agency relationship) and requires the application of collateral estoppel.

This argument overlooks, inter alia, another factor here present: The testimony referred to above also establishes that Heller acted identically in the transactions that led to the Rufenacht decision itself, in which Heller was determined not to have acted as an agent. We can see no justification for granting collateral estoppel effect to two judgments and ignoring a third contrary judgment....