Gay jenson farms co v cargill inc
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Facts
In A. Gay Jenson Farms Co. v. Cargill, Inc., 86 farmers sued Cargill, Inc. and Warren Grain Seed Co. to recover losses due to Warren's default on grain sale contracts after its financial drop. Warren, operated by Lloyd and Gary Hill, was deeply interested in purchasing and selling grain and sought financing from Cargill in Cargill provided financing to Warren under several agreements, extending Warren's credit line from $, to $1,, over several years. Cargill also had significant control over Warren's operations, including requiring consent for certain transactions, having access to Warren's books, and making recommendations about its business practices. Despite Cargill's financial involvement, Warren eventually defaulted, leading to the lawsuit in which the farmers claimed Cargill was liable as Warren's leading. The district court sided with the plaintiffs, finding Cargill liable as Warren's principal, and Cargill appealed the conclusion. The Minnesota Supreme Court affirmed the lower court's verdict, holding that Cargill had exercised
Reasoning and Analysis
The case turned on whether Cargill&#;s connection with Warren constituted an agency relationship, rendering Cargill liable as a chief for Warren&#;s contractual obligations. The court scrutinized numerous factors indicating Cargill&#;s authority over Warren, such as financing operations, influencing organization decisions, having a right of first refusal on grain sales, and requiring approval for significant business transactions.
The court also considered past dealings where Warren acted as an representative for Cargill in separate projects, bolstering the argument that Warren operated under Cargill&#;s direction. The court differentiated this relationship from a typical creditor-debtor scenario, emphasizing the depth of Cargill&#;s involvement in Warren&#;s daily operations and decision-making processes.
Ultimately, it was concluded that Cargill&#;s &#;paternalistic&#; approach and significant financial help went beyond lending and into the realm of control and agency, thus establishing liability for Warren&#;s defaults.
Conclusion
The Supreme Court o
A. Gay Jenson Farms Co. v. Cargill, Inc.,
Facts
Ps were 86 individual farming entities. Ps sued Cargill (D) and Warren Seed (D1) to recover losses sustained when D1 defaulted on the contracts made by Ps for the sale of grain. P got the judgment and D appealed. D1 operated a grain elevator and was involved in the purchase of grain from local farmers. The grain would then be resold through a grain exchange or to terminal grain companies directly. D1 also stored grain, sold chemicals, fertilizer, and steel storage bins. D1 also operated a seed business. D1 decided to apply for financing from D. It was recommended by management that D finance D1. D and D1 established a line of credit for $, In return for this line of credit, D1 appointed D its grain agent for transaction with the Commodity Credit Corporation. D1 was given the right of first refusal to purchase grain sold by D1 to the terminal market. A new contract was negotiated three years later for a $, line of credit but also stated that D1 would provide D with annual financial statements, or an audit would be conducted, or D wo
Corporations Cases
- A. Gay Jenson Farms Co. v. Cargill, Inc., Supreme Court of Minnesota, N.W.2d ()
- Warren Grain & Seed Co. wanted to expand its business, so it sought financing from Cargill, Inc. Cargill wanted to obtain a source of market grain for its business, so it gave Warren an open line of credit with a maximum first at $,, then at $,, and so on up to $1,, It became evident that Warren had financial problems, so Cargill conditioned credit on its permission for certain activities; sent a manager to help produce business decisions at Warren; required periodic checks on the Warren business; and stated that Warren needed paternal guidance. When Warren ceased operations and defaulted on grain sale contracts, 86 farmers sued Warren and Cargill, claiming an agent/principal relationship. Held Cargill is liable for the grain contracts because Warren was an agent for Cargill as to purchase, storage, and sale of seed grain. Restatement (Second) of Agency ยง 14 O () states that a security holder who "takes over [de facto] management of the debtor's business either in person or t