Valley View Cattle Co. v. Iowa Beef Processors, Inc., 75-4245

• Decision Date: 18 March 1977
• Docket Number: No. 75-4245,75-4245
• Citation: 548 F.2d 1219
• Parties: VALLEY VIEW CATTLE COMPANY, Plaintiff-Appellee, v. IOWA BEEF PROCESSORS, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1219

548 F.2d 1219

VALLEY VIEW CATTLE COMPANY, Plaintiff-Appellee, v. IOWA BEEF PROCESSORS, INC., Defendant-Appellant.

No. 75-4245.

United States Court of Appeals Fifth Circuit.

March 18, 1977.

Rehearing and Rehearing En Banc Denied April 15, 1977.

Edward W. Rothe, Chicago, Ill., Wentworth T. Durant, Charles M. Meadows, Jr., Dallas, Tex., for defendant-appellant.

Mike McKool, Jr., Don Campbell, Dallas, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before BROWN, Chief Judge, GODBOLD, Circuit Judge, and MEHRTENS ^*, District Judge.

GODBOLD, Circuit Judge:

Valley View Cattle Company conducted negotiations in Hereford, Texas, with Louie Heller for the sale of 259 head of cattle. Heller took possession of the cattle on January 29 and immediately made arrangements to have them shipped to the Iowa Beef Processors' plant in Emporia, Kansas, where they arrived the next day. On January 30, after receiving the cattle, IBP advanced approximately 90% of the estimated dressed price to Heller. ¹ On January 31, after the cattle had been slaughtered, IBP sent Heller a check for the balance due him. Valley View billed Heller for the purchase price but his checks were not honored. On February 12 some of Heller's creditors filed an involuntary bankruptcy petition against him, and later he was adjudicated bankrupt.

Valley View filed this diversity suit against IBP in the Northern District of Texas seeking to recover the value of the 259 head of cattle. Valley View advanced three theories of recovery which were submitted to the jury on special interrogatories: (1) Heller was acting as the agent of IBP in the purchase of the cattle; (2) Heller was vested with apparent authority; and (3) IBP was guilty of conversion because it purchased the cattle from Heller in bad faith and therefore could not receive good title. All issues were resolved in favor of Valley View, and the trial court entered a $113,649.41 judgment for Valley View. IBP moved for a judgment n. o. v. on the ground that there was insufficient evidence to support any theory of recovery advanced by Valley View and in the alternative for a new trial. The motions were denied and IBP appeals. We affirm on the grounds that the trial court did not abuse its discretion in denying IBP's motion for new trial ² and that there was sufficient evidence in support of the jury's finding that Heller purchased the cattle in question as the agent of IBP. ³

Agency, Actual and Implied.

Under Texas law, ⁴ "(t)he relation of agency is a consensual relation existing between two persons, by virtue of which one of them is to act for and in behalf of the other and subject to his control." Sorenson v. Shupe Bros. Co., 517 S.W.2d 861, 864 (Tex.Civ.App., 1974), quoting, Roper v. Compania De Perforaciones Y Servicio, S.A., 315 S.W.2d 30, 33 (Tex.Civ.App., 1958) and Bertrand v. Mutual Motor Co., 38 S.W.2d 417, 418 (Tex.Civ.App., 1931). The relationship of agent and principal is created either by express or implied contract or by operation of law. Green v. Hannon, 369 S.W.2d 853, 856 (Tex.Civ.App., 1963). Thus, the existence of an agency relationship may be implied from the conduct of the parties. Panhandle Steel Erectors, Inc. v. Whitlow, 359 S.W.2d 146, 149 (Tex.Civ.App., 1962).

The Texas courts have adopted Restatement (Second) of Agency § 14K (1957):

Agent or Supplier

One who contracts to acquire property from a third person and convey it to another is the agent of the other only if it is agreed that he is to act primarily for the benefit of the other and not for himself. (Emphasis added.)

See, American Employers Insurance Co. v. Kilgore, 412 S.W.2d 67, 69 (Tex.Civ.App., 1967). More particularly, the court in Kilgore quoted from and applied the factors for determining the existence of agency set out in the comments to § 14K, as follows:

Factors indicating that the one who is to acquire the property and transfer it to the other is selling to, and not acting as agent for, the other are: (1) That he is to receive a fixed price for the property, irrespective of the price paid by him. This is the most important. (2) That he acts in his own name and receives the title to the property which he thereafter is to transfer. (3) That he has an independent business in buying and selling similar property.

Restatement (Second) of Agency § 14K, Comment, at 75-76 (1957); Kilgore, 412 S.W.2d at 69.

Heller's dealings with IBP commenced in either 1966 or 1967, at which time Heller contacted IBP's head cattle buyer, Russell Walker, offering to sell IBP two loads of cattle. IBP accepted Heller's offer, and shortly thereafter they entered into a business arrangement or fixed course of dealings which continued for about eight years until the events from which this case arose. Heller would call Walker almost every day and receive the price IBP would pay for dressed cattle, how many head IBP was interested in, when IBP wanted them delivered and how long the offer was open. Heller knew the maximum weight per head that IBP desired. Heller would generally accept all or a portion of the offer either at that time or at a later time before the offer lapsed. Next, Heller would ship the agreed head of cattle to IBP where they would be slaughtered. Once their dressed weight was determined, payment was made to Heller by check. If requested, IBP would advance Heller a substantial portion of the estimated dressed weight of the cattle after they were in IBP's possession. This arrangement was in effect on January 29, 1974, and continued in effect until Heller's bankruptcy.

The parties agree that in the industry there are basically three types of cattle buyers who act as intermediaries between the feed lots and the beef packers:

"Packer buyer": a salaried employee of the packer.

"Order buyer": a person who buys for various packing firms and is compensated on a commission basis. He may buy in his own name, the name of the packer or both.

"Dealer": an independent buyer, who buys for his own account in the hope that he can later resell for a profit. A cattle buyer can function in different capacities in different transactions.

On this appeal IBP argues that there was insufficient evidence from which a consensual agency arrangement between it and Heller can be inferred and that, to the contrary, the evidence demonstrates conclusively that Heller was an independent dealer buying for his own account and dealt with Valley View in that capacity. Valley View points to evidence which circumstantially tends to show that Heller was not an independent dealer but was an order buyer acting as the agent of IBP and vested with actual or implied authority. ⁵ Therefore, we review the evidence tending to show the existence of agency, express or implied, bearing in mind the "primarily for the benefit" test of § 14K, the indicia of the comment to that section that were followed and applied in Kilgore, the dichotomy in the industry between order buyers and independent dealers, and the details of the arrangements and dealings between IBP and Heller.

(1) Heller was IBP's only regular buyer in the South Plains area of west Texas. IBP had at least some control over the choice of area in which Heller could buy cattle to be shipped to IBP.

(2) It was understood between Heller and IBP what kind of cattle IBP was interested in. Heller called IBP almost every day to find what IBP would pay for dressed cattle and how many head IBP wanted. Thus, IBP controlled size, quality and quantity purchased by Heller to be shipped to it.

(3) Although no evidence of the exact volume of Heller's dealings with IBP was introduced at the trial of the case, it is apparent that these dealings constituted a large percentage of Heller's total business. Robert Wagoner, a truck driver who hauled approximately 100,000 head of cattle per year for Heller, testified that 98% of the cattle he handled were delivered to rail cars bound for IBP's plant in Emporia, Kansas. A feed lot manager stated that 85 to 90% of the cattle Heller bought at his feed lot were shipped to IBP. Heller testified that IBP would generally take whatever he could get. According to the testimony of Eugene Redd, a livestock order buyer and independent dealer, Heller was the only purported dealer Redd had ever encountered doing such a large volume of business with one packer.

(4) IBP regularly advanced to Heller, at his request, a large portion of the estimated dressed price of the cattle, and in the instant transaction advanced 90%. In the early stages of their dealings Heller did not ask for advances, but as time passed his requests became more and more frequent. Heller could not recall a request for an advance being denied or altered in any way. Redd testified that advancing in this manner was an uncommon practice, not generally available to a dealer. Another witness testified that risk of loss was a distinguishing feature between dealers and order buyers. Inferentially, Heller's regular receipt of advance notice from IBP of the price he would be paid limited his risk of loss and was inconsistent with the status of an independent dealer.

(5) Dealers normally pay cattle sellers within 48 hours after the cattle are weighed. Heller customarily paid his sellers by check written on the weekend for purchases made during the week.

(6) Heller consistently paid "top dollar" among cattle buyers in the South Plains and helped to hold the market price up. Inferentially, an independent dealer buying for his own account could not regularly do this and survive.

(7) Heller leased railroad cars for the sole purpose of shipping cattle to IBP's Emporia, Kansas, plant....