Twin Falls Livestock Com'n Co. v. Mid-Century Ins. Co.

• Decision Date: 01 November 1989
• Docket Number: 17579,MID-CENTURY,Nos. 17498,s. 17498
• Citation: 117 Idaho 176,786 P.2d 567
• Parties: TWIN FALLS LIVESTOCK COMMISSION COMPANY, Plaintiff-Appellant, v.INSURANCE COMPANY, Triple H Co., a Colorado corporation dba Kanorado Cattle Company in the State of Idaho, and Cecil Patterson, Defendants-Respondents.
• Court: Idaho Court of Appeals

Page 567

786 P.2d 567

117 Idaho 176

TWIN FALLS LIVESTOCK COMMISSION COMPANY, Plaintiff-Appellant, v. MID-CENTURY INSURANCE COMPANY, Triple H Co., a Colorado corporation dba Kanorado Cattle Company in the State of Idaho, and Cecil Patterson, Defendants-Respondents.

Nos. 17498, 17579.

Court of Appeals of Idaho.

Nov. 1, 1989.

Petition for Review Denied Feb. 5, 1990.

[117 Idaho 177] Lloyd J. Walker, Twin Falls, for plaintiff-appellant.

Stephan, Slavin, Kvanvig & Greenwood, Twin Falls, for defendant-respondent Triple H. Co., dba Kanorado Cattle Co. Richard C. Greenwood argued.

G. Kent Taylor, Twin Falls, for defendant-respondent Mid-Century Ins. Co.

BENGTSON, Judge Pro Tem.

These are consolidated appeals from district court judgments denying claims by Twin Falls Livestock Commission Company (TFLC) against Triple H Co. (Triple H), doing business as Kanorado Cattle Company (Kanorado), and against Mid-Century Insurance Company (Mid-Century). An additional defendant, Cecil Patterson, consented to a judgment against him in the amount of $32,468.62 and is not involved in these appeals. We are asked to decide issues of agency and ratification. For the reasons which follow, we affirm the trial court's determination that neither Triple H nor Mid-Century is liable to TFLC.

BACKGROUND

Triple H is a Colorado corporation engaged, among other things, in the operation of cattle feedlots. Kanorado is an assumed business name which Triple H uses when purchasing cattle. Because Kanorado is merely an assumed business name, we will use that name and the name "Triple H" interchangeably throughout this opinion.

For some time before this dispute arose, Duane Kloberdanz was a salaried employee of Triple H in charge of the cattle purchase operations of Kanorado. Kloberdanz was individually bonded as a cattle buyer by Mid-Century. In making purchases of cattle, Kanorado dealt with order buyers (those who buy cattle for another on commission) and cattle dealers. Some of its cattle acquisitions were made directly at the time of purchase by order buyers who had direct access to Kanorado's bank account. Other purchases were made from order buyers or dealers who were paid upon receipt and acceptance of the cattle at feedlots operated by Triple H.

In early 1984, Cecil Patterson was recommended to Kloberdanz as a cattle buyer in Idaho. Over the course of several months in early 1984, Kanorado bought approximately 200 head of cattle from Patterson in three or four transactions. In his telephone communications with Patterson, Kloberdanz would tell Patterson what type of cattle Kanorado was seeking and the price Kanorado was willing to pay. Patterson would then look for that type of cattle, call Kloberdanz, and tell Kloberdanz what was available. If Kanorado needed the cattle, it would agree to purchase the cattle from or through Patterson. Patterson would arrange to ship the cattle, and upon receipt, inspection and acceptance in Colorado, Kanorado would wire-transfer to Patterson funds to cover the purchase price.

In April, 1984, Patterson bought some cattle upon being instructed to do so by Kanorado and received payment for the cattle from Kanorado. However, due to an order cancellation, Kanorado had no need for the cattle, and Kloberdanz instructed Patterson to resell the animals. Patterson later resold the cattle and tendered his personal check to Kanorado for the proceeds, but Patterson's check was twice dishonored Subsequent to that resale, but prior to August, 1984, other cattle which Kanorado had agreed to purchase from Patterson were placed in a feedlot in Bliss, Idaho, for custom feeding. Patterson agreed to pay the feedlot bill as part payment of the debt he owed Kanorado arising out of the April, 1984, transaction. At about the time Kanorado picked up the cattle from the feedlot, Kloberdanz advised the operator of the feedlot that Patterson should pay the feedlot bill because he was indebted to Kanorado, but that if he did not do so, Kanorado would pay the bill. The feedlot operator billed Patterson for its services in feeding the cattle, and Patterson tendered his personal check to the feedlot in payment of that bill, but, once again, Patterson's check was not honored because of lack of sufficient funds.

[117 Idaho 178] for lack of sufficient funds in Patterson's bank account. During the ensuing months, Kanorado made several attempts to recover the resale proceeds from Patterson, but met with no success. Thus, by August of 1984, Patterson was still indebted to Kanorado in a sum in excess of $32,000.

Sometime in the summer of 1984, apparently prior to August 29, 1984, Patterson telephoned Kloberdanz and told him that he (Patterson) had found a "backer" who was going to "back" Patterson's cattle operations. Patterson asked if Kanorado would accept cattle, instead of money, for the debt he owed Kanorado, because his "backer" would permit him to satisfy that debt with cattle, but not with money. Kloberdanz told Patterson he didn't care how the debt was paid--whether by money or cattle--just so long as the debt was paid.

On August 29, 1984, Patterson went to TFLC's sale yard and purchased a number of head of livestock. He told an employee of TFLC that he had an order to buy cattle "for Kanorado." Apparently, Patterson had not previously purchased any cattle on behalf of Kanorado from TFLC in the capacity of an order buyer or cattle dealer. Patterson gave TFLC's employee the name of an employee of a Colorado bank, representing to TFLC's employee that the bank had a business relationship with Kanorado. TFLC's employee then called the employee at the Colorado bank (who, it was subsequently learned, was Patterson's son) and was assured by the bank's employee that Kanorado was "financially secure."

Other than Patterson's representation that he had an order to buy cattle for Kanorado, TFLC had no information--nor did it take any steps to obtain information--verifying that Patterson was an authorized agent of Kanorado or that he had any authority to purchase cattle for the account of Kanorado. TFLC had no knowledge of the relationship between Patterson and Kanorado. TFLC did not attempt to determine whether Patterson was bonded (he was not) or whether Patterson had sufficient funds to pay for the cattle; TFLC did not contact or attempt to contact Kanorado. Neither Kanorado nor Kloberdanz did anything which led TFLC to believe that they were going to be responsible for the payment of the purchase price of the cattle.

When Patterson purchased the cattle on August 29, he wrote a personal check to TFLC in the amount of $32,468.62; the check was post-dated September 26, 1984. The check was dishonored upon presentation to the bank upon which it was drawn, due to lack of sufficient funds. The purchase price for those cattle was never paid. TFLC made no demand upon Kanorado for payment until quite some time (which is unclear from the record) after Patterson's check had been returned to TFLC by the bank and it had become apparent that Patterson--despite his promises to make the check good--would not be able to perform.

Although Kanorado had purchased cattle through "order buyers" in the past, Patterson was not acting in that capacity for Kanorado on August 29, 1984. At no time, on or prior to that date, did Kanorado authorize Patterson to purchase any cattle for it from TFLC. However, on that date, at about 4:00 p.m., Patterson phoned Kloberdanz and told him that he had bought cattle at TFLC and was sending them to Kanorado to "square" the debt he owed Kanorado and that he, Patterson, had paid Two of the scale tickets issued by TFLC show that 53 head were "purchased by C. Patterson" and "purchased for Konado [sic] Cattle Co." A third scale ticket makes no mention of Kanorado; it merely reflects that Patterson was the purchaser of the balance of the cattle purchased from TFLC. Apparently, the balance of the cattle purchased by Patterson were sold by him and the proceeds were used by Patterson to pay the Bliss, Idaho, feedlot bill which he earlier had told Kanorado he would pay. That feedlot bill was paid on August 30, 1984. The brand inspection certificates issued August 29, 1984, relating to the 53 head, show the "owner or buyer" to be "Cecil Patterson" and "sold or consigned to Konado [sic] Cattle Co."

[117 Idaho 179] for the cattle by a check with the approval of his backer. Patterson also told Kloberdanz that the "titles" to such cattle were made out in Kanorado's name.

Forty-nine head of the cattle purchased on August 29 were delivered by Patterson to an employee of Kanorado and transported to Colorado upon instructions from Kanorado. The cattle received by Kanorado had a value of $25,073.19.

The instant action was commenced by TFLC's complaint naming Patterson, Kloberdanz and "Kanorado--Order Buyers, Inc.," as defendants. Later, TFLC's complaint was amended and Mid-Century was joined as a defendant. Trial to the district court, sitting without a jury, commenced March 25, 1987. The issues raised by Mid-Century's cross-claim against codefendants were not addressed in that trial, the court having ordered that such issues would not be tried at that time. When TFLC rested its case in chief, the court granted Kloberdanz's motion for a "directed verdict," but denied a similar motion by Mid-Century.

During the course of the trial, it had become apparent that no such legal entity as "Kanorado--Order Buyers, Inc." existed, and the court ordered the trial continued to a later date. Thereafter, TFLC filed two amended complaints seeking judgment against Kloberdanz, Triple H Co. d/b/a Kanorado Cattle Company, Mid-Century and Patterson for the purchase price of the cattle sold on August 29, 1984. Mid-Century then moved for summary judgment, which the court granted on March 22, 1988.

Trial to the court resumed on April 13, 1988. At the outset, Patterson "stipulated" to the entry of judgment against him in favor of TFLC in the sum of...