A. Gray Jenson Farms Co. v. Cargill, Inc.
309 N.W.2d 285 (Minn. 1981).

Facts:
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.

History:
The trial court ruled in favor of the plaintiffs.

Issue:
Whether or not Cargill became liable as a principal on contracts made by Warren with the plaintiffs.

Holding:
Yes. Affirmed.

Reasoning:
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.