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Stine Seed Co. v. A & W Agribusiness, LLC

United States Court of Appeals, Eighth Circuit

July 13, 2017

Stine Seed Company Plaintiff- Appellant
v.
A & W Agribusiness, LLC; James R. Williams; C. Daniel Alexander Defendants - Appellees

          Submitted: February 9, 2017

         Appeal from United States District Court for the Southern District of Iowa - Des Moines

          Before LOKEN, COLLOTON, and KELLY, Circuit Judges.

          KELLY, Circuit Judge.

         Stine Seed Company (Stine Seed), an Iowa corporation, sued A&W Agribusiness (A&W), an Illinois limited liability corporation, and its principals, James R. Williams and C. Daniel Alexander, both Illinois residents, for breach of contract, breach of implied-in-fact contract, and unjust enrichment. Stine Seed alleged that it delivered corn and soybean seed worth $279, 000 to A&W, and that, although the defendants planted the seed and sold the resulting crop, they never paid Stine Seed. Alexander filed no answer or responsive pleading, and default judgment was entered against him. The case against Williams and A&W proceeded to a bench trial. The court found in favor of Stine Seed on its implied-in-fact contract claim against Williams in the amount of $28, 160, and found in favor of Williams and A&W on the remaining claims. Stine Seed appeals. We affirm in part and reverse in part.

         I. Background

         Williams testified at trial that in February 2010, he and Alexander joined J&A Farms (J&A), an existing partnership between Don Wheatley and Eric Funk. J&A owned thousands of acres of farmland, but was having trouble obtaining financing to buy seed. Williams met with J&A's bank, the Bank of Rantoul, which agreed to extend a line of credit to J&A if Williams personally guaranteed it. That fall, J&A lost about $220, 000 on its harvest. The Bank of Rantoul limited J&A's line of credit, requiring J&A to seek financing for its operations from other sources.

         In the fall of 2010, Williams and Alexander decided to form A&W. A&W's operating agreement identified Alexander as a "manager" and Williams as a "member" of the company. It provided that managers would have no authority to acquire or sell property, borrow or lend money, or execute any security documents on behalf of the company "without the express approval of members holding at least a majority of all Member Interests." Williams was the only member, and therefore was the only person who held a majority of member interests.

         The parties offer differing accounts of J&A's plans to purchase seed for the 2011 planting season, and of A&W's role in those plans. Williams testified that J&A planned to purchase its seed through another farm he operated-RJW Williams Farms (RJW). He explained that he planned to use RJW's John Deere credit account to finance the purchases, which would allow J&A to take advantage of a low interest rate and a bulk discount. Williams testified that he intended to purchase 500 units of corn for J&A from Channel Seed through RJW. Additionally, in his understanding, Alexander would purchase another 380 units of corn from LG Seeds for J&A, also using the John Deere credit account. Finally, J&A would purchase about 100 units of corn, as well as some soybeans, from Stine Seed. As Williams understood it, Wheatley and Funk would purchase the soybeans through Brad Ramp, who was a J&A employee, as well as a dealer for both Stine Seed and Channel Seed. Williams testified that there were no plans to use A&W to purchase seed for J&A, and that the sole purpose of A&W was to limit his and Alexander's liability for J&A's losses.

         Alexander, on the other hand, testified via deposition that J&A planned to purchase all of its seed from Stine Seed through Ramp. However, Stine Seed rejected J&A's application for credit. As a result, Alexander testified, he and Williams decided to use A&W to buy seed on behalf of both J&A and RJW. This arrangement, according to Alexander, would allow A&W to obtain a bulk discount on seed and pass the savings along to J&A and RJW. Wheatley and Funk also testified via deposition that this was J&A's plan to purchase seed.

         Brad Hubble, a regional sales manager for Channel Seed, testified via deposition that in the fall of 2010, he and Williams discussed J&A's plan to purchase seed from Channel Seed. Eric Curry, a district sales manager for Channel Seed, testified via deposition that he met with Williams, Wheatley, and Funk about the prospective purchase. On October 29, 2010, RJW placed an order for 600 units of corn from Channel Seed, financed through RJW's John Deere credit account. Williams testified that 500 of the units were intended to be planted by J&A, and the other 100 units were intended to be planted by RJW, though the order form does not specify that part of the seed was to go to J&A. According to Williams, J&A's other partners were aware of these arrangements.

         In contrast, Ramp testified via deposition that in the fall of 2010, Williams and Alexander informed him that they had formed a limited liability corporation to pool seed purchases. Ramp provided them with a credit application for purchasing seed from Stine Seed. Later that fall, Ramp became a district sales manager for Stine Seed, and as a result, was no longer permitted to sell seed on behalf of other companies. Alexander filled out the credit application and sent it to Stine Seed. The application, dated December 20, 2010, listed Alexander, Williams, and A&W as the applicants, and sought $250, 000 of credit to purchase 3, 000 units of soybeans and 550 units of corn. The application appears to bear the signatures of Williams and Alexander. However, Williams testified that, although the signature on the application looks like his, it must be a forgery because he never signed the application and did not apply for credit from Stine Seed in December 2010. Alexander submitted another credit application to Stine Seed on January 25, 2011, for $250, 000 to purchase 2, 460 units of soybeans and 700 units of corn. Again, the application lists Alexander, Williams, and A&W as applicants and appears to bear the signatures of Williams and Alexander, but Williams denies that he signed it. Alexander testified that he did not remember seeing Williams sign the applications, but Ramp testified that he saw Williams sign either the December or January application.

         Ramp testified that in March 2011, he provided Alexander and Williams with a document adjusting A&W's credit amount from $250, 000 to $300, 000. The document appears to have been signed by Alexander and Williams on March 20, 2011. Williams denies signing the document, but Ramp testified that he witnessed Williams sign it. On April 15, 2011, Alexander signed a promissory note (the Note) committing A&W to borrow $300, 000 from Stine Seed. The Note appears to bear the signatures of Williams and Alexander, but again, Williams denies the signature is his. In his deposition, Alexander testified that he did not know whether the signature on the Note was Williams'. He testified that he might have signed Williams' name, but that he could not recall. He further testified that Williams had expressly authorized him to sign documents on his behalf. Williams testified that he had not given Alexander, or anyone else except his wife, permission to sign his name.

         In the spring of 2011, Ramp planted corn on J&A's land. The majority of the corn he used was from Stine Seed. Funk planted the soybean seed on J&A's land, which all came from Stine Seed. Williams was not involved in the planting, because he had two hip surgeries between December 2010 and June 2011, and could not drive a tractor or plant more than a small amount of seed. At the end of May, Wheatley and Ramp returned 400 units of unplanted corn from Channel Seed to RJW. Williams testified that he was shocked that corn from Stine Seed had been planted on J&A's land instead of all 500 units of corn purchased from Channel Seed for J&A. Williams testified that he confronted Ramp about why he had planted corn from Stine Seed instead of Channel Seed. According to ...


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