A. Gray Jenson Farms Co. v. Cargill, Inc.
309 N.W.2d 285 (Minn. 1981).
Warren was a company that entered into a financing agreement with Cargill. Cargill would loan money for working capital, and in return, Warren appointed them as its agent for transaction. Warren eventually went under and owed $2 million to the plaintiffs (86 individual, partnership, or corporate farmers). They then sued Cargill for acting as principal, because they were very much involved in Warren’s business.
The trial court ruled in favor of the plaintiffs.
Whether or not Cargill became liable as a principal on contracts made by Warren with the plaintiffs.
Cargill’s control and influence over Warren made it a principal for the transactions entered into by Warren:
(1) Cargill’s constant recommendations to Warren by telephone;
(2) Cargill’s right of first refusal on grain;
(3) Warren’s inability to enter into mortgages, to purchase stock or to pay dividends without Cargill’s approval;
(4) Cargill’s right of entry onto Warren’s premises to carry on periodic checks and audits;
(5) Cargill’s correspondence and criticism regarding Warren’s finances, officers salaries and inventory;
(6) Cargill’s determination that Warren needed “strong paternal guidance”;
(7) Provision of drafts and forms to Warren upon which Cargill’s name was imprinted;
(8) Financing of all Warren’s purchases of grain and operating expenses; and
(9) Cargill’s power to discontinue the financing of Warren’s operations.