Pillsbury Co. v. Ward
| Decision Date | 16 February 1977 |
| Docket Number | No. 2--57539,2--57539 |
| Citation | 250 N.W.2d 35 |
| Parties | 21 UCC Rep.Serv. 118 The PILLSBURY COMPANY, Appellant, v. Richard WARD, Appellee. |
| Court | Iowa Supreme Court |
Kenneth E. Wright and Ronald H. Rothert, of Goodenow & Wright, Maquoketa, for appellant.
J. R. Sokol, of Sokol & Sokol, Maquoketa, for appellee.
Submitted to MOORE, C.J., and MASON, UHLENHOPP, HARRIS and McCORMICK, JJ.
Plaintiff grain dealer appeals an adverse judgment in a law action it brought against a farmer. The farmer had contracted to raise and deliver soybeans to the grain dealer. We affirm the trial court.
The facts are hotly disputed. Taking the evidence in the light most favorable to the findings of the trial court the controlling material facts are established as follows.
Richard Ward (Ward) selected what proved to be an inopportune year for his first venture into the futures market. On March 10, 1972 Ward agreed in writing to sell the Pillsbury Company (Pillsbury) 3000 Bushels of soybeans at $3.06 per bushel. Ward intended to raise the soybeans during the ensuing crop year and agreed to deliver them during January 1973.
Ward's 1972 soybean crop came to only 2000 bushels leaving him 1000 bushels short. To make up the shortage he faced the necessity of buying 1000 bushels at the market price prevailing upon delivery.
Ward's predicament was compounded by a prodigious rise in the market price of soybeans. This rise obviously rendered Ward's contractual obligations decreasingly attractive to him. It also rendered his responsibilities for the 1000 bushels he lacked increasingly onerous. Correspondingly, the rise made Pillsbury's contractual rights increasingly attractive.
Pillsbury acted through its agent Del Aden who was employed by Pillsbury in Davenport as a grain merchandiser. Dale Bullock, an independent trucker, had a close and continuing relationship with both Ward and Pillsbury. Bullock was a friend and neighbor of Ward and regularly contracted to haul Ward's crops to market. Bullock also hauled grain for various other local farmers to Pillsbury's facility in Davenport on a regular basis. Daily, Bullock called Pillsbury to learn the prevailing grain prices and delivery conditions.
On January 25, 1973 Ward contacted Bullock in order to make delivery. Ward then made the necessary preparations for loading the soybeans from his bin into Bullock's truck.
For reasons which related more to Bullock's interests than to Ward's, Bullock called Aden at the Pillsbury facility before loading the soybeans for delivery. Weather and hauling conditions were generally unfavorable. Bullock was advised the trucks arriving with grain at the facility were lined up, causing delay before they could be unloaded. At trial Aden conceded he knew at the time Bullock was having '* * * trouble getting grain delivered in because he had wet fields to bring them out of, and the weather was bad, so--and he was having trouble in the truck lines that were around.'
Without consulting Ward, Aden and Bullock agreed to 'extend' the contract and await more favorable delivery conditions. Except for the possibility of spoilage, the extension would do little harm to Ward as to the 2000 bushels ready for delivery. But in view of the continuing rise in the soybean market, the delay would obviously require Ward to pay an increasing amount for the 1000 bushels he was short.
On January 27, 1973 Aden called Ward and announced that in a routine audit of contracts he noticed Ward had not delivered the beans and inquired what he intended to do. Ward testified he then told Aden 'Dale Bullock called you last night and told you that we was going to bring these beans in, and you told him that you was filled up, and you couldn't take them.' Ward testified Aden replied * * *.'
Upon inquiry Aden reminded Ward he would have to pay the difference between the contract price and market price for any soybeans he was short. Aden then stated he would send an extension agreement to Ward. Ward did not respond to Aden's statement, neither agreeing to sign the extension agreement nor announcing he would refuse to sign it.
The extension agreement was never signed. Ward never made delivery under the contract. On February 6, 1973 Ward advised Pillsbury in writing he considered the contract void on the ground he offered to deliver the soybeans within the specified time and delivery was refused by Pillsbury. Ward later sold 1500 bushels (500 bushels were spoiled and not fit for sale) for $8.72 per bushel.
I. The first question is whether the agreement between Pillsbury and Bullock to extend the delivery date of Ward's soybeans was binding on Ward. To determine this question consideration must be given the following: (1) in connection with the extension agreement was Bullock an agent of Ward? (2) even if Bullock was not such an agent of Ward did Ward ratify the extension agreement? (3) even if Bullock was not such an agent of Ward and did not ratify the extension agreement was Ward estopped from denying the extension agreement?
Was Bullock an agent of Ward for purposes of the extension agreement? The question of whether a principal-agent relationship exists is ordinarily one of fact. Walnut Hills Farms v. Farmers Co-op, Etc., 244 N.W.2d 778, 781 (Iowa 1976); Pay-N-Taket, Inc. v. Crooks, 259 Iowa 719, 724, 145 N.W.2d 621, 624 (1966); Reed v. Bunger, 255 Iowa 322, 329, 122 N.W.2d 290, 295 (1963). The trial court found Bullock was, for the purposes of the extension agreement, an agent of Pillsbury and not of Ward. Findings of fact by the trial court have the effect of a special verdict and are binding on us if supported by substantial evidence. Evidence is construed in the light most favorable to the judgment. In case of ambiguity the evidence is construed to uphold rather than defeat the judgment of the trial court. Rule 344(f)(1), Rules of Civil Procedure; Nora Springs Co-op Co. v. Brandau, 247 N.W.2d 744, 747 (Iowa 1976); Sand Seed Service, Inc. v. Bainbridge, 246 N.W.2d 911, 912 (Iowa 1976).
The record reveals ample evidence to support the trial court's finding Bullock was not an agent of Ward, especially in view of the established elements of agency. Agency has been defined as a fiduciary relationship which results from (1) manifestation of consent by one person, the principal, that another, the agent, shall act on the former's behalf and subject to the former's control and, (2) consent by the latter to so act. Dailey v. Holiday Distributing Corp., 260 Iowa 859, 867, 151 N.W.2d 477, 483 (1967) and authorities. See also Walnut Hills Farms, supra, 244 N.W.2d at 780--781. There is substantial evidence Bullock was not acting in Ward's behalf in negotiating the extension, was not subject to Ward's control, and had not consented to be Ward's agent for the purpose of negotiating the extension agreement.
Did Ward nevertheless ratify the extension agreement? Pillsbury argues Ward ratified the extension agreement by failing to repudiate it in his phone conversation with Aden. Pillsbury relies on the rule:
Miller v. Chatsworth Sav. Bank, 203 Iowa 411, 413, 212 N.W. 722, 724 (1967). See also Abodeely v. Cavras, 221 N.W.2d 494, 503 (Iowa 1974).
Ratification is defined in the Restatement, Second, Agency, § 82 as follows:
'Ratification is the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.' See Shannon v. Gaar, 234 Iowa 1360, 1362, 15 N.W.2d 257, 258 (1944).
Affirmance is defined in the Restatement, Second, Agency, § 83 as follows:
'Affirmance is either
'(a) a manifestation of an election by one on whose account an unauthorized act has been done to treat the act as authorized, or
'(b) conduct by him justifiable only if there were such an election.'
But it is clear ratification does not apply where, as here, the act is done by one who is not an agent or does not purport to be one. Restatement, Second, Agency, § 85 states:
'Purporting to Act as Agent as a Requisite for Ratification
'(1) Ratification does not result from the affirmance of a transaction with a third person unless the one acting purported to be acting for the ratifier.
'(2) An act of service not involving a transaction with a third person is subject to ratification if, but only if, the one doing the act intends or purports to perform it as the servant of another.'
In the instant case Bullock did not act as agent for Ward in the transaction. The trial court so found and we have pointed out substantial evidence supports the finding. The record is void of any indication Bullock purported to act for Ward in connection with the extension agreement. On the contrary, the record is clear Bullock was acting in his own behalf and to the elevator's advantage in negotiating the extension agreement.
Even if we were to assume Bullock had been Ward's agent, Ward did not ratify Bullock's unauthorized act. To ratify an unauthorized act of an agent the principal must have full knowledge of the facts (actual or inferred) and must intend to ratify ( or impliedly). A failure to repudiate the unauthorized act of an agent within a reasonable time after learning thereof will be deemed a ratification. The receipt or retention of benefits from the unauthorized transaction may constitute ratification. Abodeely, supra, 221 N.W.2d at 502--503 and authorities.
Under these principles we do not believe Ward can be said to have ratified the extension agreement. The trial court expressly discredited Aden's...
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