Hoffman v. Louis Dreyfus Corp.

• Decision Date: 16 February 1988
• Docket Number: 15839,Nos. 15828,s. 15828
• Citation: 435 N.W.2d 211
• Parties: Jim HOFFMAN, d/b/a Hoffman Trucking, Leonard Hunsley and Duane Hunsley, d/b/a Hunsley Trucking, George Kimbley and Morris Irrigation, Inc., Plaintiffs and Appellees, v. The LOUIS DREYFUS CORPORATION and Roger Koch, Defendants and Appellants, and Roger Petersen, d/b/a R & R Livestock, Clyde Keough, d/b/a Lewis Special, and Bud Smith, Defendants. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 211

435 N.W.2d 211

Jim HOFFMAN, d/b/a Hoffman Trucking, Leonard Hunsley and

Duane Hunsley, d/b/a Hunsley Trucking, George

Kimbley and Morris Irrigation, Inc., Plaintiffs and Appellees, v. The LOUIS DREYFUS CORPORATION and Roger Koch, Defendants and Appellants, and Roger Petersen, d/b/a R & R Livestock, Clyde Keough, d/b/a

Lewis Special, and Bud Smith, Defendants.

Nos. 15828, 15839.

Supreme Court of South Dakota.

Considered on Briefs Feb. 16, 1988.

Decided Jan. 18, 1989.

Rick Johnson of Johnson, Eklund & Davis, Gregory, for plaintiffs and appellees.

William J. Srstka of Olinger, Srstka, Lovald & Robbennolt, Pierre, defendants and appellants; Lee C. (Kit) McCahren, on the brief.

MORGAN, Justice.

This appeal lies from the consolidated trial of two lawsuits. The first, a declaratory judgment action, was commenced by Louis Dreyfus Corporation (Dreyfus) against James Hoffman d/b/a Hoffman Trucking (Hoffman), and Clyde Keough (Keough) and Willard Smith (Smith) d/b/a Lewis Special. The second was commenced by the aforementioned Hoffman, Leonard and Duane Hunsley d/b/a Hunsley Trucking (Hunsley), George Kimbley (Kimbley) and Morris Irrigation, Inc. (Morris), against Dreyfus, Keough, Smith, Roger Koch (Koch) and Roger Petersen (Petersen) d/b/a R & R Livestock. Keough filed for bankruptcy and was dismissed from the case. Smith did not appear and a default judgment was granted against him. At the close of the evidence, the trial court directed a verdict against Hunsley, Kimbley and Morris, except as to Smith. The jury returned a verdict in favor of Hoffman. These appeals arise from both aspects of the judgment. We affirm.

Hoffman's action arises from two contracts entered into between himself and two separate parties purportedly acting for or representing Dreyfus. Both contracts were for the hauling of cattle, owned by Dreyfus, to various locations on the Cheyenne River Reservation for summer pasturage and the eventual removal when the cattle were taken off grass.

The first contract, the Keough contract, was entered into by Hoffman with Keough and Smith. Hoffman was aware that the cattle belonged to Dreyfus, but it was disputed whether he knew the exact relationship between Dreyfus and Keough. During the period from early February through March 1, 1985, Hoffman trucked cattle to various South Dakota pastures. All trucking charges were timely paid by Keough during that period. Hoffman continued to haul for Keough through July 1, 1985, when the trucking charges reached $12,217.50, and payment was not forthcoming.

The second contract, the Koch-Petersen contract, was entered into by Hoffman with Koch and Petersen, who, in April of 1985, had represented themselves to Hoffman as Dreyfus' agents. Koch and Petersen met with Hoffman again in mid-July. Hoffman testified that Koch and Petersen informed him that Keough had been relieved of his services and that Dreyfus would guarantee payment on the unpaid trucking charges under the first contract if Hoffman would help retrieve the cattle from the reservation. Koch and Petersen denied any guarantee was made concerning the unpaid trucking charges.

On July 18, Hoffman began hauling cattle under the Koch-Petersen contract and by August 8, an additional $14,492.00 in unpaid trucking fees had accrued. Hoffman began to press for payment and was told by Koch and Petersen that they were not going to pay trucking bills under the Keough contract. When Hoffman promptly objected, he was sent to Koch's attorney who then advised him that Dreyfus would not pay the trucking fees under the Koch-Petersen contract unless Hoffman agreed to release Dreyfus from the trucking charges under the Keough contract. Hoffman instituted this suit.

The other plaintiffs in this action, Hunsley, Kimbley, and Morris also claim to have unpaid debts for services or feed provided to Keough. It is contended that at the April meeting between Hoffman, Koch, and Petersen, Hoffman and his secretary were told to include bills from these parties and these bills would also be paid. They were never paid and their claims were included in Count II. At the close of the evidence the trial court granted a directed verdict against Hunsley, Kimbley, and Morris except as to the defaulted Smith.

We deem it necessary to relate the causes of action as brought by Hoffman to their origin. In Count I, Hoffman sought recovery in contract for the trucking charges incurred under the Koch-Petersen contract. In Count II, Hoffman also sought recovery in contract for the trucking charges incurred under the Keough contract. In Count III, in tort, Hoffman sought compensatory and exemplary damages alleging that Koch and Dreyfus fraudulently deceived him into performing the Koch-Petersen contract.

In the answer and cross-claim, Dreyfus admitted liability for payment of the Koch-Petersen contract (Count I), denied liability under the Keough contract (Count II) and, under Count III, and requested a court order for release for payment to Hoffman of $14,492 tendered therewith. This was accomplished by a stipulation and order which further provided that such payment did not constitute a waiver or release of any rights of the parties in the pending litigation. Thus, the case went to the jury on two counts. The first was on the original Count II for the past-due trucking expenses under the Keough contract. The second was on the alternative theory of Count III, for damages for deceit in inducing performance of the Koch-Petersen contract, and for punitive damages.

The jury held that Keough was an agent of Dreyfus and returned a jury verdict for Hoffman on the contract theory (Count II) awarding him $12,217.50. On the theory of deceit (Count III), the jury fixed Hoffman's actual damages at $12,217.50, and awarded punitive damages in the sum of $24,000.

Dreyfus and Koch frame their issues on appeal as follows:

(1) Whether there was sufficient evidence for the jury to find that Keough, d/b/a Lewis Special was an agent of Louis Dreyfus Corporation. (Count II)

(2) Whether there was sufficient evidence, as a matter of law, to allow [Hoffman's] cause of action based upon alleged deceit to be submitted to the jury. (Count III)

(3) Whether there was sufficient evidence for the trial court to submit [Hoffman's] claim for punitive damages to the jury. (Count III)

Hunsley, Kimbley and Morris Irrigation also petitioned for review on the issue of whether there was sufficient evidence to support a jury issue on their claims against Dreyfus and Koch. We will review the Hoffman judgment first.

In resolving sufficiency of the evidence issues on appeal, this court examines the record to determine only if there is competent and substantial evidence to support the verdict. We resolve all conflicts and draw all reasonable inferences therefrom in favor of the verdict. Kostel Funeral Home, Inc. v. Duke Tufty Co., 393 N.W.2d 449 (S.D.1986); Zee v. Assam, 336 N.W.2d 162 (S.D.1983). There is substantial competent evidence to support the jury verdict on Count II. Although the evidence may have been disputed as to Keough's representations to Hoffman, and Koch's and Petersen's representations to Hoffman, these were questions of credibility for the jury to decide.

Because the jury instruction on agency ^* was not objected to, it is the law of the case. However, that does not resolve the sufficiency of the evidence issue. To determine whether an agency relationship exists, we examine the relations of the parties as they exist under their agreement or acts. Kasselder v. Kapperman, 316 N.W.2d 628 (S.D.1982); Watkins Company v. Dutt, 84 S.D. 453, 173 N.W.2d 41 (1969). Whether the agency relationship has been created depends upon the existence of the following factual elements: " '... The manifestation by the principal that the agent shall act for him, the agent's acceptance of the undertaking, and the understanding of the parties that the principal is to be in control of the undertaking.' " Southard v. Hansen, 376 N.W.2d 56, 58 (S.D.1985); Kasselder, supra; Watkins Company, supra.

In support of the argument that there was insufficient evidence to support the jury verdict that Keough was an agent of Dreyfus, Dreyfus points to the contract entered into between Dreyfus and Keough denominated a "Range Feeding Agreement." This agreement purportedly made Dreyfus liable for transportation expenses to deliver the cattle to the Diamond Ring Ranch and to remove them therefrom. While he further testified that under that agreement Keough was responsible for "veterinary work, trucking, feed bills, anything that had to do with care of the cattle, until they were moved," he also testified to a side agreement by R & R to reimburse Keough at the rate of $2.00 per head for extra trucking. We find this to be unpersuasive in view of the fact that Hoffman was not a party to either of these agreements. There is nothing in the record to indicate that he was aware of them. The issue before the jury was whether or not Hoffman had reason to believe and did believe that Dreyfus was in control of the operation. The jury determined that Keough was the agent of Dreyfus at the time the Keough contract was entered into and, accordingly, awarded Hoffman the trucking charges due under that contract. We affirm on that issue.

The second and third issues raised by Dreyfus and Koch will be treated together. At trial, by appropriate motions for directed verdicts, and by objections to instructions, and again on appeal, they earnestly charge that it was error to submit the issue of deceit and the claim for punitive damages to the jury. At trial, the motion for directed verdict was couched as follows:

--first of all, I move for a directed verdict at the close of all of the evidence and against the Plaintiff Hoffman on the issue of punitive damages. And on the issue of deceit, there is just--the case has boiled down to a dispute over a bill, and as to who said what. The Defendants state that they never...