Eastern Livestock Co. v. Bode Livestock D/B/A Richard Bode

• Court: Court of Appeals of Texas
• Decided: February 14, 2002
• Docket: 03-01-00213-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-01-00213-CV

Eastern Livestock Co., Appellant

v.

Bode Livestock d/b/a Richard Bode, Appellee

FROM THE DISTRICT COURT OF SAN SABA COUNTY, 33RD JUDICIAL DISTRICT NO. 7646, HONORABLE GUILFORD L. JONES III, JUDGE PRESIDING

Following a jury trial, the district court rendered judgment on the verdict against

Eastern Livestock Co. (“Eastern”). The jury determined that Shane Hasha was acting as an agent

for Eastern when he purchased 140 heifers from Bode Livestock d/b/a Richard Bode (“Bode”) and

consequently, Eastern owed Bode for the cost of the cattle. Eastern appeals contending that the

district court erred in rendering judgment because: (1) insufficient evidence supported the jury’s

finding that Hasha acted as Eastern’s agent in the cattle purchase; (2) certain testimony and

documents were improperly excluded at trial; and (3) the court should have submitted a different jury

charge instruction about agency. We will affirm the judgment.

Background

Bode, a rancher and independent cattle dealer in San Saba, testified that he locates

cattle for sale, purchases the cattle, and then sells them again making a small profit on the resale. In

December 1997, Bode learned that Robert Whitten, also a San Saba resident, had 140 heifers for sale. After inspecting the cattle, Bode called Hasha, a cattle trader in Baird, because he thought Whitten’s

heifers matched a description of cattle Hasha was seeking. Bode had sold cattle to Hasha once

before. Bode heard that Hasha was buying cattle for Eastern, one of the largest cattle buying

companies in the country. When Bode first spoke with Hasha about the 140 heifers, Hasha told him

that he was interested in the cattle, would make a phone call, and get back with Bode about the cattle.

Hasha later called Bode and told him he would buy the cattle, they set the price, and set a delivery

date of December 10, 1997. Apparently, they did not at that time discuss who would be taking

delivery of the cattle.

Hasha called Bode on December 9, 1997, and told him that, although he was usually

present at a cattle delivery, this time he would be unable to attend the delivery of the 140 heifers set

for the next day. Hasha told Bode that Eastern trucks would be there to pick up the cattle, that

Eastern was taking the cattle to Montfort of Yuma, Colorado, and that Eastern wanted the certificate

of veterinary inspection sent to Montfort. Since Hasha was not going to be there for the delivery,

Bode asked Hasha to wire him the money for the cattle; Hasha said that he would. On December 10,

Bode paid Whitten for the 140 heifers with a Bode Livestock check and Eastern trucks picked up the

cattle to take them to Colorado. Bode phoned Hasha with the final weight and price information

regarding the cattle and again asked Hasha to wire him the money. In the same phone conversation,

Hasha then told Bode that Eastern’s policy was that it does not wire money, but, Hasha told Bode

that he was carrying an Eastern checkbook. Bode told Hasha he would rather have the money wired

but that a check by overnight mail would be acceptable. Bode assumed that since Hasha had an

Eastern checkbook he must be working for Eastern as their representative. Bode explained that in

2 the cattle trading business, when a trader states he is carrying a checkbook for another entity or

individual, implicit in such a statement is the representation that the trader is not working

independently, but is working for the other entity or individual. Additionally, Bode regarded

Eastern’s involvement in the transaction, the fact that Eastern’s trucks picked up the cattle and

Hasha’s representation that he had Eastern’s checks, as indicators that in this transaction Hasha was

acting as a cattle agent for Eastern.

When Bode did not receive an Eastern check overnight, he began making phone calls

to Hasha inquiring about his check. He never received a check from Hasha. By December 26, Bode

was very suspicious and tried to locate Hasha. As he was unsuccessful contacting Hasha, Bode called

Eastern’s home office in Kentucky, and they referred him to Jimmy Rhoderick, Eastern’s

representative in Amarillo. On December 27, Bode called Rhoderick who told Bode that he was

aware of the purchase of the 140 heifers and that Eastern had already paid Hasha for the cattle.

Rhoderick faxed Bode a copy of the Eastern check paid to the order of “Shane Hasha/Rafter

H–Security State Bank of Abilene, TX.”

At that point, Bode changed his mind about Hasha’s status as an agent of Eastern; he

thought instead that Hasha had lied to him about carrying an Eastern checkbook. Bode filed suit

against Hasha and also Security State Bank because Bode did not believe that the bank was entitled

to any of the money from the cattle purchase. Because he now believed this to be a theft case, Bode

contacted a private investigative group that assists in the prosecution of cattle theft cases by finding

evidence and presenting it to the district attorney. What in fact had occurred, was that Eastern had

indeed given Hasha Eastern checks and Hasha, rather than paying Bode with an Eastern check as he

3 had represented to Bode that he would do, made the check out to himself and never paid Bode for

the 140 heifers Eastern picked up on December 10.

Shortly after Bode filed his lawsuit, Hasha filed for bankruptcy protection. When

Bode reviewed evidence in the bankruptcy file, he learned that Hasha indeed had Eastern checks as

he initially represented to Bode. Bode realized that Hasha had not lied to him about having an

Eastern checkbook. Bode then amended his petition and included Eastern as a defendant in the

lawsuit. Bode agreed that Hasha never told him directly that he was an Eastern agent, but, the fact

that Hasha represented to Bode that he carried an Eastern checkbook, that Bode had heard that

Hasha had been involved in other cattle transactions for Eastern, that Hasha told Bode that Eastern

did not wire money, and that Hasha told Bode that Eastern trucks would pick up the cattle, and that

Hasha told Bode that Eastern wanted the veterinary certificate prepared and sent to Montfort, led

Bode to believe that Hasha was acting as an agent for Eastern when he bought the 140 heifers.

Hasha pleaded guilty to the offense of cattle theft of the 140 heifers, received a

probated sentence, and was ordered to pay Bode the money owed for the cattle over a period of ten

years. Bode testified that by this lawsuit against Eastern he was not seeking a double recovery but

that he believed Eastern could pay the full amount faster than Hasha and that Hasha could make his

restitution payments to Eastern rather than to Bode. 1

Eastern’s position in the lawsuit was that Hasha was not its agent in this cattle

transaction, that Hasha had never represented himself as such to Bode, and that Hasha was simply

an independent cattle dealer. Additionally, Eastern argued that, based on Bode’s invoice, Bode sold

1 Indeed, the judgment provided Eastern a credit for any payments Hasha made to Bode.

4 the heifers to Hasha and not to Eastern, and there was no indication of any agency relationship

between Hasha and Eastern on Bode’s sale invoice for the 140 heifers.

The question presented to the jury was, “Do you find that Shane Hasha was an Agent

for Eastern Livestock Co. in the purchase of the 140 heifers from Plaintiff Bode?” The charge

included instructions regarding actual authority and apparent authority. The jury answered, “Yes”

to the question presented, and the court rendered judgment against Eastern.

Discussion

On appeal Eastern contends that: (1) insufficient evidence supports the jury’s finding

that Hasha was an agent for Eastern; (2) the district court erred in excluding certain evidence; and

(3) the charge did not contain a proper instruction regarding apparent authority.

Sufficiency of the evidence

In reviewing the evidence under a no-evidence point, we consider all the evidence in

the light most favorable to the prevailing party, indulging every reasonable inference in that party’s

favor. Associated Indem. Co. v. CAT Contracting, Inc., 964 S.W.2d 276, 285-86 (Tex. 1998); see

also Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 24 (Tex. 1994) (“The evidence presented,

viewed in the light most favorable to the prevailing party, must be such as to permit the logical

inference [that the jury must reach].”). “In evaluating legal sufficiency, we are required to determine

whether the proffered evidence as a whole rises to the level that would enable reasonable and

fair-minded people to differ in their conclusions.” Moriel, 879 S.W.2d at 25. In evaluating factual

sufficiency, we review the entire record and set aside the finding only if it is so against the great

5 weight and preponderance of the evidence so as to be manifestly unjust. Cain v. Bain, 709 S.W.2d

175, 176 (Tex. 1986). We will not substitute our judgment for that of the trier of fact merely because

we might reach a different conclusion. Westech Eng’g Inc. v. Clearwater Constructors, Inc., 835

S.W.2d 190, 196 (Tex. App.—Austin 1992, no writ).

A principal is liable for an agent’s acts when the agent has actual or apparent authority

from the principal to do the acts. Sociedad de Solaridad Social “El Estillero” v. McManus Produce

Co., 964 S.W.2d 332, 334 (Tex. App.—Corpus Christi 1998, no pet.) (citing Cameron County Sav.

Ass’n v. Steward Title Guar. Co., 819 S.W.2d 600, 602 (Tex. App.—Corpus Christi 1991, writ

denied); Curry v. Lone Star Steel Co., 676 S.W.2d 205, 209 (Tex. Civ. App.—Fort Worth 1984, no

writ)). “Actual” authority includes both express and implied authority and usually denotes the

authority that a principal (1) intentionally confers upon an agent; (2) intentionally allows the agent

to believe he possesses; or (3) by want of due care allows the agent to believe he possesses. Cameron

County Sav. Ass’n, 819 S.W.2d at 603. Implied actual authority can exist only if there has been

express actual authority. Behring Int’l, Inc. v. Greater Houston Bank, 662 S.W.2d 642, 649 (Tex.

App.—Houston [1st Dist.] 1983, writ dism’d). Implied authority is that authority which is proper,

usual, and necessary to the exercise of the authority the principal expressly delegated. Id.

While actual authority is created by written or spoken words or conduct by the

principal to the agent, apparent authority is created by written or spoken words or conduct by the

principal to a third party. Cameron County Sav. Ass’n, 819 S.W.2d at 603. “To establish apparent

authority, one must show that a principal either knowingly permitted an agent to hold itself out as

having authority or showed such a lack of ordinary care as to clothe the agent with the indicia of

6 authority.” NationsBank v. Dilling, 922 S.W.2d 950, 952-53 (Tex. 1996) (citing Ames v. Great S.

Bank, 672 S.W.2d 447, 450 (Tex. 1984)). A party seeking to charge a principal through the apparent

authority of its agent must establish conduct by the principal that would lead a reasonably prudent

person to believe the agent had the authority it purported to exercise. Id. (citing Biggs v. United

States Fire Ins. Co., 611 S.W.2d 624, 629 (Tex. 1981)). In determining whether an agent had

apparent authority, a court considers only the conduct of the principal that would lead a third party

to believe the agent had apparent authority. Dilling, 922 S.W.2d at 953. It is the principal’s conduct,

attitude and knowledge that determines whether an agent has apparent authority. Id.

There were several indications in the record that Hasha had actual authority to act as

an agent for Eastern. Eastern, through its Texas representative Rhoderick, gave Hasha signed, blank,

Eastern checks to carry so that Hasha could help Rhoderick buy cattle for Eastern. By giving Hasha

signed, blank, Eastern checks, Rhoderick expressly delegated authority to Hasha to negotiate the

signed, blank, checks and buy cattle for Eastern. Although there is no evidence of a formal, written

contract expressly designating Hasha as Eastern’s agent, Eastern intentionally conferred upon Hasha

the authority to purchase cattle for Eastern. According to Rhoderick, of the 500-600 people that

purchased cattle for Eastern through him, Eastern gave only four or five people signed, blank, Eastern

checks, one of whom was Hasha. Finally, authority as an agent can be implied based on the facts and

circumstances surrounding the transaction. While Hasha did not state that he was an Eastern agent,

the evidence presented supported the proposition that he acted with authority from Eastern in

purchasing cattle for them. Hasha told Bode that he carried an Eastern checkbook. Hasha knew that

7 Eastern did not wire money and informed Bode about the policy. Hasha also told Bode that Eastern

trucks would be taking delivery of the cattle.

Regarding evidence of Hasha’s apparent authority, Bode testified that in the cattle

trading business, when a person is carrying a company’s checkbook, the implication is that the person

is an agent for the company. Thus, in giving Hasha signed checks, Eastern knowingly conveyed to

others the impression that Hasha carried the checks with the authority of the company. Eastern’s

involvement in the purchase, i.e., taking possession of the cattle and issuing instructions regarding

veterinarian certificates for the cattle, were indicators that Hasha had apparent authority to act as an

agent for Eastern when purchasing the cattle from Bode. Finally, to prove apparent authority, Bode

must show that he relied upon the representation of authority. Bode testified that based upon

Eastern’s stature in the cattle trading business, anyone who states they are carrying an Eastern

checkbook is given a great deal of credibility. Instead of following his regular practice of requiring

payment before releasing cattle, Bode indicated that he was willing to release these cattle to Eastern

trucks without payment because at the time he believed the cattle were actually being sold to Eastern.

Specifically, Bode was willing to release the cattle because Eastern gave Hasha an Eastern

checkbook. The sentiment among cattle dealers was that it was unlikely Eastern would write a bad

check or fail to pay for delivered cattle. Eastern’s actions placed Bode in a position where it was

reasonable for him as a person familiar with the cattle trading business to believe that Hasha had

authority to act for Eastern.

8 We hold that the evidence is legally and factually sufficient to support the jury’s

finding that Hasha acted with actual and apparent authority for Eastern either of which would support

the verdict. Eastern’s first issue is overruled.

Exclusion of testimony and evidence

In its second issue, Eastern contends that the district court erred by excluding

testimony from Trey Aiken, who was a vice-president of Security State Bank where Hasha

maintained his bank accounts. Eastern argues that Aiken’s testimony was critical in determining

whether Hasha acted as Eastern’s agent. Eastern preserved its complaint and developed Aiken’s

testimony in a bill of exception. According to the bill of exception, Aiken would have testified that

Hasha was an independent cattle dealer in this transaction, that Hasha never told Aiken that he was

an agent for Eastern, that Hasha always acted independently, and that Hasha had requested that the

Bank pay Bode but by that time his account had been frozen.

The admission and exclusion of evidence is a decision within the trial court’s

discretion. Best Indus. Uniform Supply Co. v. Gulf Coast Alloy Welding, Inc., 41 S.W.3d 145, 147

(Tex. App.—Amarillo 2000, pet. denied). In challenging the trial court’s decision to exclude

evidence, the complaining party must show that the court’s decision was arbitrary and unreasonable.

Id. at 147-48. To challenge the exclusion of Aiken’s testimony, Eastern must show that (1) it was

preserved by an offer of proof; (2) the testimony was controlling on a material issue in the case; and

(3) the testimony was not cumulative. Mentis v. Barnard, 870 S.W.2d 14, 16 (Tex. 1994).

The issue of whether Hasha was an agent for Eastern is determined by examining the

conduct of Eastern, Hasha and Bode. See Curry, 679 S.W.2d at 210; Disney, 981 S.W.2d at 30.

9 Aiken’s excluded testimony would relate to representations made by Hasha to a third party, Aiken,

who was not involved in the cattle transaction. Additionally, Aiken’s testimony would be cumulative

of other testimony from individuals with first-hand knowledge of the transaction. Both Hasha and

Rhoderick testified that Hasha was not an agent and acted independently in the transaction. We hold

that Eastern has not shown that the trial court erred in excluding Aiken’s testimony. Even if it was

error to exclude Aiken’s testimony, the decision was not harmful and did not cause the rendition of

an improper judgment. See Tex. R. App. P. 44.1(a)(1). Eastern’s second issue is overruled.

In its third issue, Eastern contends that the trial court erred by excluding invoices

offered by Eastern and excluding testimony from Hasha regarding his guilty plea to the offense of

cattle theft.

Regarding Eastern’s contention that the trial court improperly excluded Eastern

invoices, Bode notes that two of the documents about which Eastern complains were admitted at trial

as Bode’s exhibits one and four. Eastern’s complaint regarding these two documents is overruled.

The trial court has discretion to admit or exclude evidence. National Liab. & Fire Co.

v. Allen, 15 S.W.3d 525, 527-28 (Tex. 2000). To obtain reversal based upon the erroneous exclusion

of evidence, an appellant must show that the excluded evidence was controlling on a material issue,

was not cumulative of other evidence, and the error in excluding the evidence probably caused the

rendition of an improper judgment. Tex. R. App. P. 44.1(a)(1); Williams Distrib. Co. v. Franklin,

898 S.W.2d 816, 817 (Tex. 1995).

The other two invoices Eastern contends were improperly excluded are Eastern

shipping invoices that relate to the same cattle transaction and show essentially the same information

10 as other invoices admitted at trial. Because these invoices are cumulative of information admitted

during trial, we hold that the trial court did not err in excluding them from evidence. Additionally,

even if it was error to exclude them, such error did not cause the rendition of an improper judgment.

See Tex. R. App. P. 44.1(a)(1).

Eastern also contends that the trial court erred in disallowing testimony from Hasha

that he would not have pleaded guilty to cattle theft if he had in fact been acting as an agent for

Eastern. Admitted into evidence as Eastern’s exhibits were documents relating to Hasha’s guilty plea,

the judgment on his guilty plea, and the terms and conditions of his probation. The jury heard

testimony that Hasha pleaded guilty to cattle theft and that Bode was receiving restitution payments

from Hasha as a result of a plea bargain. The jury also heard testimony from Hasha that he did not

act as Eastern’s agent. Consequently, the jury was informed that Hasha was personally convicted of

the theft and the jury had the ability to infer that Hasha would not have entered the guilty plea if

instead he had been acting as Eastern’s agent. Again, such testimony from Hasha would have been

cumulative and would not have provided any new evidence. We hold that the trial court did not

abuse its discretion in refusing to allow Hasha to testify that he would not have entered the guilty plea

if he had been acting as Eastern’s agent. Eastern’s third issue is overruled.

Jury charge instruction

In its fourth issue Eastern contends that the trial court erred in submitting a charge to

the jury that contained an improper instruction regarding agency. Eastern contends that the trial court

should have submitted an instruction to the jury stating that “the principal in that case must have

affirmatively held out an agent as possessing the authority or must have knowingly and voluntarily

11 permitted the agent to act in an authorized manner.” Bode responds that although phrased slightly

differently, the jury instruction submitted addressing apparent authority was substantially similar to

the language requested by Eastern.

One of the instructions given stated, “To establish apparent authority, Bode must show

that Eastern either knowingly permitted Hasha to hold himself out as having authority or showed lack

of ordinary care in order to clothe Hasha with indicators of authority.” We hold that the instruction

submitted adequately addressed the issue about which Eastern complains. The jury was instructed

that in order to find apparent authority, the principal, Eastern, must have either knowingly permitted

Hasha to hold himself out as having authority, or, through its lack of due care, gave Hasha the

indicators of authority. Eastern’s fourth issue is overruled.

The judgment of the trial court is affirmed.

David Puryear, Justice

Before Chief Justice Aboussie, Justices B. A. Smith and Puryear

Affirmed

Filed: February 14, 2002

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