## Facts

- A family farming partnership (“Glenn Elting and Sons”) operated under an amended partnership agreement requiring approval of a majority of managing partners for partnership action.
- The managing partners included Kerwin Elting and Perry Elting; later, their sons Carl (Kerwin’s) and Knud (Perry’s) also became managing partners.
- The partnership previously entered hedge-to-arrive corn contracts with the knowledge and consent of managing partners.
- Cargill offered “Focal Point contracts” (FPCs) tied to hedged corn prices; the partnership’s use of FPCs was profitable at first but later produced major losses.
- In 2008 and 2009, Kerwin entered into multiple FPCs on behalf of the partnership without first obtaining majority approval from the managing partners.
- The FPC activity ultimately reduced the partnership’s position by approximately $2,144,350 from the originally contracted price.
- During financing activities, some partnership financial statements reflected FPC-related gains and losses; Kerwin argued this showed the others knew and accepted the contracts.
- During dissolution planning and separate financing preparations, a bank questioned discrepancies in documentation; Perry and Knud asserted they then first learned of the FPCs and denied authorizing them.
- Perry, Knud, and ReJean sued Kerwin for damages, alleging lack of authority and seeking recovery for their share of the losses.

## Issues

1. Whether Kerwin had actual authority under the partnership agreement and course of dealing to enter the FPCs without majority approval of managing partners.
2. Whether the partnership ratified the FPCs through knowledge and conduct (including acceptance of benefits or failure to object).
3. Whether a limitation-of-liability clause in the partnership agreement shielded Kerwin from personal liability for FPC-related losses.
4. What appellate standard governs review of factual findings after a bench trial in an action at law for breach-of-contract damages.

## Decision

- The Nebraska Supreme Court treated the case as an action at law for contract damages and reviewed factual findings for clear error, deferring to the trial court’s credibility determinations.
- The court affirmed the finding that Kerwin lacked authority because the agreement required majority approval and the evidence supported that no such approval occurred.
- The court affirmed rejection of ratification because the plaintiffs’ lack of knowledge supported the finding that they did not knowingly accept or confirm the unauthorized acts.
- The court affirmed that the limitation-of-liability clause did not protect Kerwin for unauthorized conduct outside the agreement’s required approval process.
- The judgment and damages award for the plaintiffs were affirmed.

## Legal Principles

- A suit seeking damages for breach of contract is an action at law; after a bench trial, appellate review does not reweigh evidence and will not disturb factual findings unless clearly wrong.
- Actual authority requires express grant or consent by the principal; the scope of an agent’s authority is generally a question of fact.
- Where a partnership agreement requires majority approval by managing partners, an individual managing partner’s unilateral execution of contracts without the required approval can be unauthorized.
- Ratification may be express or inferred from silence or inaction, but it requires knowledge of the material facts; retention of benefits constitutes ratification only when the benefits are retained with knowledge of their source and means.
- Ratification is an affirmative defense; the party asserting ratification bears the burden of proof.
- A contractual limitation-of-liability provision protecting managing partners does not shield a partner for acts taken outside granted authority and the agreement’s decision-making requirements.

## Conclusion

The Nebraska Supreme Court upheld liability and damages against a managing partner who entered substantial grain marketing contracts without the approval required by the partnership agreement, finding no ratification because the other partners lacked the necessary knowledge and holding that a liability-limiting clause did not protect unauthorized conduct.


Elting v. Elting, 288 Neb. 404, 849 N.W.2d 444 (Neb. 2014)