## Facts

- Rezac Livestock Commission Co., Inc. (Rezac) operated a Kansas cattle auction.
- Charles Leonard was in the business of buying and reselling cattle and attended a Rezac auction as a buyer.
- Before the auction, Leonard spoke with Dinsdale Bros., Inc. (Dinsdale) about his plan to attend the auction (an auction Dinsdale had not previously known about).
- Dinsdale told Leonard it was interested in cattle meeting certain weight specifications, but the parties did not agree on price or quantity.
- Leonard purchased cattle at the auction for approximately $980,000.
- Some purchased cattle did not meet Dinsdale’s specifications; Leonard resold the nonconforming cattle to another buyer.
- Leonard instructed Rezac to deliver the remaining cattle to a feedlot in Colorado.
- Leonard paid Rezac with a check drawn on Leonard’s account at Pinnacle Bank (Pinnacle), and Pinnacle later dishonored the check for insufficient funds after the cattle were delivered.
- Dinsdale’s name did not appear on Leonard’s check or on Rezac’s invoices and other sale paperwork; Rezac’s documents identified Leonard as the buyer.
- Leonard did not tell Dinsdale the price he paid Rezac; instead, Leonard invoiced Dinsdale using Leonard’s own invoice with a markup that Dinsdale could not verify.
- Leonard lacked indicia of authority to act for Dinsdale: no Dinsdale check-writing authority, no use of Dinsdale vehicles or branding, and no tax documents showing Leonard as Dinsdale’s employee or contractor.
- Rezac sued Pinnacle and Dinsdale seeking recovery under multiple theories. Rezac’s contract theory against Dinsdale depended on proving Leonard acted as Dinsdale’s agent, even though Dinsdale had no direct dealings with Rezac.
- After discovery, Rezac, Pinnacle, and Dinsdale filed cross-motions for summary judgment.

## Issues

1. Whether the summary-judgment record could support a finding that Leonard acted as Dinsdale’s actual or apparent agent in buying cattle from Rezac, such that Dinsdale could be liable to Rezac for breach of contract.
2. Whether Dinsdale was entitled to summary judgment on Rezac’s noncontract claims (including conversion, civil conspiracy, and unjust enrichment) arising from Dinsdale’s receipt of cattle for which Rezac was not paid.
3. Whether Pinnacle, as the drawee bank that dishonored Leonard’s check, was entitled to summary judgment on Rezac’s claims (including conversion, civil conspiracy, unjust enrichment, and punitive damages).

## Decision

- The court denied Rezac’s motion for summary judgment in full.
- The court denied Pinnacle’s motion for summary judgment in full.
- The court granted Dinsdale’s motion for summary judgment on Rezac’s breach-of-contract claim.
- The court denied the remainder of Dinsdale’s motion, leaving Rezac’s conversion, civil conspiracy, and unjust enrichment claims against Dinsdale for trial.
- Because Pinnacle’s summary-judgment motion was denied, Rezac’s claims against Pinnacle (including conversion, civil conspiracy, unjust enrichment, and punitive damages) also remained for trial at this stage.

## Legal Principles

- Actual agency under Kansas law requires evidence that (1) the principal manifested an intent that the agent act on the principal’s behalf and subject to the principal’s control, and (2) the agent consented to do so.
- Apparent authority depends on the principal’s manifestations to the third party; a third party cannot establish apparent authority based solely on the alleged agent’s statements or conduct.
- Evidence that weighs against agency (in a purchase-and-resale setting) includes: no authority to pay from the alleged principal’s accounts; no use of the alleged principal’s branding or business materials; no employment or contractor documentation; and transaction documents identifying only the intermediary as buyer.
- A buyer’s resale to an alleged principal and the alleged principal’s specification of desired characteristics (such as weight ranges) may be relevant to agency and other liability theories, but do not alone establish an enforceable purchase contract between the auctioneer and the alleged principal.
- Summary judgment is improper when material fact disputes remain on whether a defendant wrongfully exercised control over property (conversion), combined with others to accomplish an unlawful objective (civil conspiracy), or retained a benefit without payment under circumstances that make retention unjust (unjust enrichment).

## Conclusion

In its summary-judgment order, the District of Kansas held that Rezac could not, on this record, bind Dinsdale to Rezac’s auction purchase contract through actual or apparent agency, and it entered summary judgment for Dinsdale on breach of contract; however, the court denied summary judgment on Rezac’s conversion, civil conspiracy, and unjust enrichment theories against Dinsdale and denied Pinnacle’s motion as well, leaving those tort and equitable claims (and punitive damages against Pinnacle) to be resolved at trial.


Rezac Livestock Commission Co. v. Pinnacle Bank, 2018 WL 6725386 (2018)