Federal Enterprises, Inc. v. Greyhound Leasing & Financial Corp., 87-1117

• Decision Date: 25 July 1988
• Docket Number: No. 87-1117,87-1117
• Citation: 849 F.2d 1059
• Parties: FEDERAL ENTERPRISES, INC., a Missouri Corporation; Douglas S. Evans, Trustee in Bankruptcy, Appellants, v. GREYHOUND LEASING & FINANCIAL CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1059

849 F.2d 1059

FEDERAL ENTERPRISES, INC., a Missouri Corporation; Douglas S. Evans, Trustee in Bankruptcy, Appellants, v. GREYHOUND LEASING & FINANCIAL CORPORATION, Appellee.

No. 87-1117.

United States Court of Appeals Eighth Circuit.

Submitted Oct. 14, 1987.

Decided June 2, 1988.

Rehearing and Rehearing En Banc Denied July 25, 1988.

Christopher J. Stark, Springfield, Mo., for appellants.

John R. Lewis, Springfield, Mo., for appellee.

Before HEANEY, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and JOHN R. GIBSON, Circuit Judge.

HEANEY, Circuit Judge.

This is an appeal from a judgment entered in accordance with a jury verdict obtained after retrial on remand from this Court. We affirm.

I. Background

The facts underlying the instant dispute are fully set forth in this Court's original opinion, Federal Enterprises, Inc. v. Greyhound Leasing & Financial Corp., 786 F.2d 817 (8th Cir.1986), and will only be repeated to the extent here relevant. The case involves a transaction whereby Federal Enterprises, Inc. (Federal) was to sell certain coal processing equipment to Greyhound Leasing & Financial Corporation (Greyhound) which was to lease the equipment to Blue Eagle, Inc. (Blue Eagle).

Representing both Federal and Blue Eagle in the transaction was Nathaniel P. Gunn. Gunn's role in the transaction is disputed by the parties. At the time of the transaction, Gunn owned one-third of the outstanding stock of Federal, was its President, and was in control of its day to day operations. In addition, Gunn was the President and sole shareholder of Blue Eagle.

Originally Gunn dealt with James Brown, an employee of Greyhound. Gunn provided Brown with background and business information in his capacity as the President of Federal. Thereafter, on Brown's recommendation, Greyhound's credit committee approved the proposed transaction provided several conditions were met. First, Blue Eagle was to obtain a letter of credit for one-fourth ($204,250) of the $817,000 purchase price to secure performance of its obligations under the lease. Second, Federal was to agree to repurchase the equipment from Greyhound if Blue Eagle defaulted on its lease obligations. Third, Gunn and his wife were to personally guarantee payment of one-fourth of the purchase price.

Subsequently, a meeting was held to close the transaction. The meeting was attended by Gunn, Donald Boutot, an employee of Federal, and John Greene, an attorney and employee of Greyhound. At the closing, however, the transaction did not proceed as contemplated. Contrary to the earlier understanding, Blue Eagle failed to provide Greyhound with an acceptable letter of credit. Instead, Gunn proposed that Greyhound pay Federal $612,750 and place the balance of the purchase price ($204,250) in a savings and loan account. It appears that the $204,250 was to remain in the account pending full performance by Blue Eagle. ¹ Greyhound agreed to the proposal and received a "receipt" from Gunn reflecting payments according to it. ²

In late August, Federal notified Greyhound that it had not received one-fourth of the agreed purchase price. Greyhound responded that it had fully complied with the directions for payment set forth in Gunn's proposal. Several months later, Federal brought suit against Greyhound seeking to recover one-fourth of the agreed purchase price. ³ The case was tried to a jury which returned a verdict in favor of Greyhound. Federal moved the district court for a new trial arguing that the jury instructions were improper and that the court erred in admitting certain evidence. The district court denied the motion.

Federal then appealed to this Court raising the same arguments as were raised in connection with the post-trial motion. This Court reversed the district court, concluding that the jury instructions were inadequate in a number of respects. These included the failure of the instructions to define key terms such as "appearance of authority," their failure to set forth Greyhound's duty to ascertain Gunn's authority to act as Federal's agent, and their failure to inform the jury that it was for them to decide whether Gunn, in specifying the manner of payment, was acting as the agent of Federal and within the scope of his actual or apparent authority. ⁴ Federal Enterprises, Inc. v. Greyhound Leasing & Financial Corp., 786 F.2d at 820-21.

In remanding the case for a new trial, this Court offered the district court several guidelines. We stated:

On remand, the jury instructions should be so formulated, if the evidence at trial again warrants, to: (1) allocate clearly the burden of proof of agency; (2) define key legal terms such as "agent" and "apparent authority", and (3) clarify Greyhound's duty to inquire into Gunn's authority and the representations he made where Greyhound knew that Gunn, purporting to act in a dual capacity, was in a position of divided loyalty.

Id. at 812.

On remand, the case was tried to a jury which again found in favor of Greyhound. On December 10, 1986, the district court entered judgment in accordance with the verdict. Thereafter, Federal filed motions for a new trial and for judgment notwithstanding the verdict. On January 13, 1987, the district court denied the motions. Federal appeals on the grounds that the jury instructions at the trial on remand were improper and that certain evidence was erroneously admitted.

II. Analysis

In reviewing jury instructions, this Court must determine whether, as a whole, they state the governing law fairly and correctly. See, e.g., Crimm v. Missouri Pacific R. Co., 750 F.2d 703, 711 (8th Cir.1984). We will not find error in instructions simply because they are technically imperfect or are not a model of clarity. Id. (citing Tribble v. Westinghouse, 669 F.2d 1193, 1197 (8th Cir.1982), cert. denied, 460 U.S. 1080, 103 S.Ct. 1767, 76 L.Ed.2d 342 (1983)). Rather, the district court has broad discretion in formulating the language of the jury instructions and will not be overturned on appeal so long as the instructions given are accurate and fair to both parties. Villanueva v. Leininger, 707 F.2d 1007, 1009 (8th Cir.1983).

Federal contends that the instructions were defective in a number of respects. First, it argues that they fail to properly place the burden of proving agency on Greyhound. See, e.g., Houston v. Groth Enterprises, Inc., 670 S.W.2d 178, 180 (Mo.Ct.App.1984) (party relying on authority of agent has the burden of proving both the fact and scope of the agency). We disagree.

Although no single instruction placed the burden of proving the existence and scope of Gunn's agency on Greyhound, read in their entirety, the instructions clearly do so. Instruction number 4 states in part:

The burden of causing you to believe a proposition of fact is upon the party whose claim or defense depends upon that proposition. In determining whether or not you believe any such proposition, you must consider only the evidence and the reasonable inferences derived from the evidence. If the evidence in the case does not cause you to believe a particular proposition submitted, then you cannot return a verdict requiring belief of that proposition.

In addition, instruction number 5 states:

Your verdict must be for plaintiff if you believe:

First, at defendant's request plaintiff furnished to Blue Eagle Company certain coal washing equipment between June 16, 1980 and August 14, 1980, and

Second, plaintiff charged a total of $817,000.00 for such goods.

Unless you believe plaintiff is not entitled to recover by reason of Instruction No. 7.

Instruction number 7 states:

Your verdict must be for the defendant if you believe that Nathaniel Gunn signed and delivered defendant's exhibit "A" directing defendant to pay $204,250.00 to First Federal Savings and Loan Association while acting within the scope and course of his agency with the plaintiff.

Acts were within the "scope and course of agency" as that phrase is used in this instruction if:

1. Nathaniel Gunn had actual authority from the plaintiff to act on plaintiff's behalf, or

2. Plaintiff created the appearance of authority of Nathaniel Gunn to act upon its behalf in closing the transaction with defendant and defendant relied upon such appearance of authority to close such transaction using reasonable prudence in so doing, or

3. Plaintiff ratified the act of Nathaniel Gunn by failing to return the $612,750.00 after having notice of the acts of Nathaniel Gun.

The term "appearance of authority" as used in this instruction exists where the plaintiff has created such an appearance of things that it causes defendant to reasonably and prudently believe that Nathaniel Gunn had the power to act on behalf of plaintiff.

Taken as a whole, instructions 4, 5 and 7 place the burden of proving agency on Greyhound, and in point of fact, directed a verdict in favor of Federal if that burden was not met. Accordingly, we find that the jury instructions, while not a model of clarity, properly place the burden of proving agency on Greyhound.

Second, Federal contends that the instructions did not inform the jury that it was to decide whether Gunn was acting as an agent of Federal and within the scope of that agency when he directed Greyhound to place a portion of the purchase price in the savings and loan account. Instructions 4 and 7 set forth above, however, are clear that the jury was to determine whether Gunn was acting "within the scope and course of his agency with [Federal]" when he signed exhibit "A", directing payment. Therefore, we reject Federal's contention that the instructions were erroneous in this respect.

Third, Federal contends that the instructions did not accurately define the "scope and course" of Gunn's agency. We disagree. Instruction number 7 allowed the jury to find Gunn's acts within the scope and course of his agency if Gunn had actual or apparent authority to act for Federal or if Federal ratified Gunn's acts. ⁵

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