Mackey v. Burke, 81-1838

• Citation: 751 F.2d 322
• Decision Date: 26 December 1984
• Docket Number: No. 81-1838,81-1838
• Parties: Frank MACKEY, Frank Mackey, Jr. and Stephen Mackey, d/b/a Frank Mackey & Sons, Plaintiffs-Appellees, v. John P. BURKE, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 322

751 F.2d 322

Frank MACKEY, Frank Mackey, Jr. and Stephen Mackey, d/b/a Frank Mackey & Sons, Plaintiffs-Appellees, v. John P. BURKE, Defendant-Appellant.

No. 81-1838.

United States Court of Appeals Tenth Circuit.

Dec. 26, 1984.

Richard G. Langdon, of Herrick, Langdon & Langdon, Des Moines, Iowa (Michael

H. Maher of Veselich, Schulz, Bender, Maher & Larson, P.C., of Kansas City, Mo., was also on brief), for defendant-appellant John P. Burke.

Richard N. Roe of Lowe, Terry & Roberts, Olathe, Kan. (George A. Lowe of Lowe, Terry & Roberts, Olathe, Kan., was also on brief), for plaintiffs-appellees.

Before HOLLOWAY, Chief Judge, and SEYMOUR and TIMBERS, ^* Circuit Judges.

HOLLOWAY, Chief Judge.

This diversity action involves a dispute over the issuance of a stop payment order at defendants' request on a $74,200 check made out to plaintiffs. After a jury trial, the district court awarded plaintiffs judgment for $74,200 in actual damages and $50,000 in punitive damages against defendant-appellant Burke. Separate judgments were entered against defendants Rhee and United States Agro International, Inc. Defendant Burke appeals, and we affirm the award of actual damages and reverse the punitive damages award as to Burke.

I Facts

At the time of the events which gave rise to the instant suit, plaintiffs were engaged in the business of dairy farming and raising and selling Holstein heifers. Defendant United States Agro International, Inc. ("U.S. Agro") was an Illinois corporation with its principal office and place of business in Chicago. Defendant Burke, a resident of Iowa, was its President and Treasurer. Defendant Rhee, an Illinois resident, was vice-president.

U.S. Agro, through its Korean representative, contracted in November 1978 to supply the National Agricultural Cooperative Federation of Seoul, Korea ("Korean Agricultural Cooperative") with 637 bred Holstein heifers. II R. 266-67; V R. 114. Two of the five shipments which U.S. Agro made to complete its contract with the Korean Agricultural Cooperative consisted of Holstein heifers purchased from plaintiffs.

Approximately one month before the Korean contract was signed, Burke and Rhee went to plaintiffs' farm in Olathe to discuss the purchase of Holstein heifers for export to Korea. After the Korean contract was signed, Burke, Rhee, and two veterinarians representing the Korean Agricultural Cooperative went to plaintiffs' farm to select bred Holstein heifers for purchase. Plaintiff Frank Mackey Sr. ("Mackey") employed a veterinarian to examine the heifers and to prepare the required United States Origin Health Certificate ("health certificate").

In the first transaction on December 18, 1978, plaintiffs sold 111 heifers. The health certificate indicated that the consignor was U.S. Agro. II R. 257. Plaintiffs were paid $77,700 on a check drawn on the account of U.S. Agro and signed by "John Burke, Pres." Id. at 255. Before accepting the check, Mackey called the payor bank to check on Burke's credit. Mackey acknowledged receipt of the check on an invoice which stated that 111 head of Holstein heifers had been consigned to U.S. Agro. Id. at 256.

This case involves events surrounding the second transaction. On January 29, 1979, Burke, Rhee, and two veterinarians from the Korean Agricultural Cooperative again went to plaintiffs' farm to select heifers for a second shipment. When it became apparent that plaintiffs could not provide a sufficient number of heifers, Burke left plaintiffs' farm with one of the Korean veterinarians to try to acquire additional heifers elsewhere. V R. 148-49. The health certificate prepared by Mackey's veterinarian indicated that the consignor of the 106 heifers sold by plaintiffs was U.S. Agro. II R. 262. Plaintiffs were paid $74,200 on a check drawn on the account of U.S. Agro and signed by Rhee. Id. at 233. Before accepting the check, Mackey telephoned the payor bank to check on Rhee's credit. V R. 44-45, 71. Mackey acknowledged receipt of the check on an invoice which stated that 106 head of Holstein heifers had been consigned to U.S. Agro. Id. at 70.

After these heifers arrived in Seattle, Washington, a portion of them were rejected for shipment to Korea because they were sick or were calving. After discussing the problem with Mackey on the telephone, Burke stopped payment on the check and so informed Mackey. Mackey then called the Seattle Port Authority to halt the shipment. Rhee called Mackey and said that he would come to Olathe the following Monday to settle the matter if Mackey would permit the remaining heifers to be shipped to Korea. Mackey agreed. Rhee never came to Olathe. Plaintiffs were not paid for the heifers which were shipped to Korea.

Plaintiffs filed this civil action against U.S. Agro, Burke, and Rhee in the District Court of Johnson County, Kansas, in February 1979. Plaintiffs sought actual damages of $74,200 as well as $75,000 in punitive damages in connection with the stop payment order. The case was removed to the United States District Court for the District of Kansas.

The three defendants filed separate answers and U.S. Agro filed a counterclaim. I R. 10-11 (Burke's answer), 30-31 (Rhee's answer), 12-18 (U.S. Agro's answer and counterclaim). The district court overruled Rhee's motion to quash service of process and to dismiss. Id. at 35. Rhee and U.S. Agro failed to appear at the pretrial conference in October 1980. Id. at 114. Following Rhee's failure to engage in court-ordered discovery, ¹ the district court entered judgment in March 1981 against Rhee on the issue of liability.

The case was tried to a jury. Rhee and U.S. Agro did not appear or participate in the trial. The jury returned a verdict in favor of plaintiffs and against Burke for $74,200 actual damages and $50,000 punitive damages. The court entered judgment against Burke individually for $74,200 actual damages and $50,000 punitive damages, as well as separate judgments against Rhee and U.S. Agro for $74,200 actual damages and $50,000 punitive damages.

On appeal, Burke contends that the district court erred in (1) failing to grant Burke's motions for a directed verdict and for judgment n.o.v. because Burke did not act in his personal capacity, but only as U.S. Agro's agent in contracting with plaintiffs to purchase the 106 heifers; (2) instructing the jury that it could disregard U.S. Agro's corporate identity if it found certain factors present; and (3) submitting the punitive damages issue to the jury. We affirm except with respect to the punitive damages award.

II

Burke's individual liability and agency relationship with Rhee

Burke contends that the district court erred in overruling his motions for a directed verdict and for judgment n.o.v. because there was insufficient evidence that Burke individually agreed to purchase the 106 head of heifers and that Rhee acted as Burke's agent. See Brief of Appellant 13-17; Reply Brief of Appellant 1-5. We disagree.

Motions for a directed verdict and for judgment n.o.v. are considered under the same standard. E.g., Hurd v. American Hoist and Derrick Co., 734 F.2d 495, 498 (10th Cir.1984); 9 C. Wright & A. Miller Federal Practice and Procedure Sec. 2524, at 541-42 (1971). " 'The question is not whether there is literally no evidence supporting the party against whom the motion is directed but whether there is evidence upon which the jury could properly find a verdict for that party.' " Hurd, 734 F.2d at 499 (quoting 9 C. Wright & A. Miller, supra, Sec. 2524, at 543 (footnote omitted)). We must view the evidence in the light most favorable to plaintiffs as the party against whom the motions were made. See, e.g., Downie v. Abex Corp., 741 F.2d, 1235, 1238 (10th Cir.1984); Hurd, 734 F.2d at 498; Peterson v. Hager, 724 F.2d 851, 853 (10th Cir.1984) (opinion on rehearing).

A. Disclosed Principal

Burke first argues that he acted as an agent for a disclosed principal (U.S. Agro) rather than in an individual capacity when he revisited plaintiffs' farm and entered into the second transaction with plaintiffs for shipment of 106 heifers to the Korean Agricultural Cooperative. Under Kansas law, only the disclosed principal is liable on a contract executed by its agent with a third party; the agent of the disclosed principal is not liable on the contract. See, e.g., State ex rel. Carlton v. Triplett, 213 Kan. 381, 517 P.2d 136, 139 (1973); Kirkpatrick v. Seneca National Bank, 213 Kan. 61, 515 P.2d 781, 785 (1973) ("a well-established principle of agency law"); Service Iron Foundry, Inc. v. M.A. Bell Co., 2 Kan.App.2d 662, 588 P.2d 463, 470 (1978) ("the general rule in Kansas"); see also Restatement (Second) of Agency Sec. 320 (1957).

We are satisfied that the jury reasonably could have rejected Burke's argument that he acted for a disclosed principal rather than for himself ². Mackey testified that Burke and Rhee never told him that they were working on behalf of U.S. Agro. Mackey stated that his only knowledge concerning U.S. Agro came from the paperwork associated with the two transactions. V R. 33-34, 43, 45-46. Mackey also took actions consistent with his belief that Burke and Rhee were acting in their individual capacities and not on behalf of U.S. Agro. For example, Mackey checked on the individual credit of Burke and Rhee before accepting the checks in the two transactions. Id. at 38-39, 44-45. Mackey also recorded the transactions in the company's financial records in their individual names. Id. at 54-55. Although Burke relies on other evidence to support his claim that he acted for a disclosed principal, we are convinced on the basis of all of the evidence, viewed in the light most favorable to plaintiffs, that the jury properly could have found Burke liable in his individual capacity.

B. Authority

Burke next argues that Rhee lacked authority to bind him to any contracts or to subject him to tort liability. Under Kansas law, an agency relationship "may be, and frequently is,...