The Texarkana Court docket of Appeals just lately issued an opinion in Lee v. Jorgenson, which gives a vital reminder about the necessity to have all livestock gross sales contracts in writing. [Read opinion here.]
Background
Ralph Lee offered Waygu cattle to TJ’s Land and Cattle Firm, LLC, (“the LLC”) of which Tom Jorgenson was a member. Lee alleges this was a “handshake deal” that was memorialized in a Cattle Buy Settlement (“CPA”). The CPA was not signed by Jorgenson or anybody representing the LLC, however did embrace worth phrases for Waygu steers, acknowledged payments have been to be despatched to “TJ’s Cattle Co” and famous that funds had been made by “TJ’s Cattle Co. LLC.” Lee claims to have had no data that an entity was concerned within the deal, which he says he negotiated with Jorgenson.
Lee filed swimsuit in opposition to Tom Jorgenson claiming that he nonetheless owed $76,104.56 that remained unpaid pursuant to their settlement. Particularly, he introduced claims of breach of contract, unjust enrichment, and quantum meruit.
In response, Jorgenson claimed that Lee didn’t ship the cattle in conformity with the contractual necessities, the swimsuit was filed in opposition to the improper social gathering because it was not Jorgenson, however the LLC that was a celebration to the contract, the statute of frauds barred Lee’s claims or an oral contract, a quantum meruit declare was barred by an specific contract, and that restoration for unjust enrichment was barred by the statute of limitations. Jorgenson additionally claimed that Lee was conscious of the LLC as the 2 talked about their firms typically. He launched proof displaying that each one funds for cattle have been made by the LLC, and he didn’t make any private funds.
The trial court docket issued a directed verdict in favor of Jorgenson. Lee appealed.
Appellate Court docket Opinion
The Texarkana Court docket of Appeals affirmed. [Read opinion here.]
Oral Contract
Lee’s arguments primarily based on the contents of an oral settlement have been invalid due to the Statute of Frauds. Underneath Texas legislation, a contract for the sale of excellent for $500 or extra have to be in writing and signed by the individual charged with the settlement or by the individual legally licensed to signal for him. See Tex. Bus. & Com. Code 26.01. Texas legislation is obvious that cattle are thought-about “items.” See Tex. Bus. & Com. Code 2.105(a) Thus, as a result of this case concerned items and the value was greater than $500, the alleged oral contract was topic to the Statute of Frauds. This made Lee’s claims referring to an oral settlement correctly dismissed.
Cattle Buy Settlement
Lee argues that the CPA happy the Statute of Frauds. The court docket, nevertheless, disagreed because the CPA was not signed by Jorgenson or anybody appearing with authority on behalf of the LLC. The larger situation, nevertheless, was that the LLC that allegedly entered into the CPA was not a celebration to the case.
Correct Occasion
The court docket held that Lee introduced his lawsuit in opposition to the improper social gathering. The court docket famous that “a bedrock precept of company legislation is that a person can incorporate a enterprise and thereby usually protect himself from private legal responsibility for the company’s contractual obligations.” Right here, the LLC was recognized as the client within the CPA and was the social gathering who made the funds to Lee, it ought to have been named as a defendant. Jorgenson, in his particular person capability, was not a correct social gathering to the swimsuit as he was not a celebration to the CPA. Once more, this declare was correctly dismissed.
Quantum Meruit
Quantum meruit is an equitable idea meant to stop unjust enrichment when there exists an implied settlement to pay for items or providers. Usually, to ensure that restoration below quantum meruit to be accessible, there should not be a legitimate contract protecting the providers or supplies. Lee admitted that the CPA was a legitimate contract. The existence of a contract precluded restoration below quantum meruit.
Unjust Enrichment
Lee’s unjust enrichment declare was barred by the two-year statute of limitations. This declare associated to not the CPA, however to a different alleged oral settlement. Lee claims that Jorgenson wanted to go away some cattle at Lee’s place for a number of weeks and agreed to pay for feed and care. The cattle have been taken from Lee’s property by January 2018. Subsequently, the newest, the unjust enrichment declare come up in January 2018. The unjust enrichment declare primarily based on an settlement to pay for feed was not filed till Might 2020. Since this was exterior the two-year bar for unjust enrichment claims, the court docket correctly present in favor of Jorgenson.
Primarily based on this, the court docket affirmed the trial court docket’s verdict in favor of Jorgenson and a take-nothing judgment for Lee.
Key Takeaways
Before everything, this case illustrates why it’s so essential for gross sales of livestock to be put in writing. Due to the Statute of Frauds, any gross sales of livestock over $500 have to be put in writing to be a legally legitimate contract.
Second, it’s vital {that a} written settlement be signed by the individual to whom it’s to be enforced. Right here, that meant the CPA must be signed by Jorgenson or another person on behalf of the LLC, which was the social gathering to be charged.
Third, this case can be a very good reminder to watch out to concentrate to company formalities. Right here, it was the LLC, somewhat than Jorgenson individually that was the social gathering to the contract. This was a vital distinction that Lee both didn’t perceive or neglected when submitting the lawsuit. Past this context, holding this in thoughts is essential anytime an entity is concerned. For instance, when coming into right into a contract, events ought to all the time ensure the contract is drafted with the right entity listed. One other instance the place this may come up is with regard to insurance coverage. When buying farm and ranch insurance coverage, it’s vital to make sure that the coverage is written within the identify of the entity that truly owns the property.
Supply: Texas A&M AgriLife, Texas Agriculture Regulation Weblog
