A. Gay Jenson Farms v. Cargill PDF

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Case Brief Bus Org I...

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A. GAY JENSON FARMS CO. v. CARGILL, INC. 309 N.W.2d 285 (Minn. 1981) FACTS: Parties: Appellant: Cargill, Warren (Δ) Appellee: 86 Famers (Π) Procedural History: 

Jury trial in favor of Π

Relevant Facts: 

Cargill financed loan to Warren

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Warren had to keep financial statements and provide them to Cargill

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Cargill would keep the books for Warren and Cargill was given the right of access to Warrens books for inspection

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Warren was not to make improvements or repairs in excess of $5000 without Cargill’s approval

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Warren could not guarantor another’s debt or divide or sell and purchase stock without Cargill’s consent

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Memo to Warren’s account manager at Cargill that Warren needed “very strong paternal guidance”

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Warren acted as agent for Cargill in contracting for seed growers, Cargill was named as the contracting party

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Warren became insolvent and owed Π’s $2 million and Cargill $3.6 million

ISSUE: 

Whether Cargill, by its course of dealing with Warren, became liable as a principal on contracts made by Warren with Πs

PARTIES’ ARGUMENTS: Plaintiff: 

Defendant: 

Cargill o No agency relationship was established o Never consented to agency relationship

DISPOSITION OF THE COURT: 

Affirmed

RULE OF LAW: 

Agency is the fiduciary relationship that results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act

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In order to create an agency relationship there must be an agreement, not necessarily a contract

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Agency relationship may be proved through circumstantial evidence which shows a course of dealings o Principal must have consented to the agency

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A creditor who assumes control of his debtor’s business may become liable as principal for the acts of the debtor in connection with the business

HOLDING: 

Cargill became a principal of Warren as its agent

COURT’S REASONING:     

Cargill exercised control and influence over Warren By directing Warren to implement recommendations Cargill manifested consent Warren acted on behalf of Cargill in business transactions Cargill interfered with the internal affairs of Warren Cargill exercised de facto control over Warren o Constant recommendations o Right of first refusal o Warren’s inability to enter into mortgages, purchase stock or pay dividends without Cargill’s approval o Right of entry on Warren’s premises o Correspondence and criticism of Warren’s finances o Strong paternal guidance o Drafts and forms to Warren on Cargill letterhead

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o Financing of all Warren’s purchases of grain o Power to discontinue financing Not a buyer/supplier relationship because Warren’s operations were financed by Cargill and most of its grain was sold to Cargill...