Rausch v. Aronson

Supreme Court of Minnesota · 1941 · Corporations

1 N.W.2d 371 (1941)

Updated August 22, 2026

CorporationsAgencySurety bondWholesale produce dealer licensingactual authorityimplied authoritycourse of dealingprincipal

Facts

Aronson operated a wholesale produce business as Market Produce Company and furnished a bond conditioned to pay the purchase price of produce when due, with National Surety Corporation as surety. Aronson and Carp had an arrangement under which Carp bought eggs and paid by issuing drafts on Aronson; sometimes Carp left sales slips and later issued drafts on Aronson for prior purchases. Plaintiffs sought payment for eggs purchased by Carp in September 1938, some represented by drafts and some by sales slips. The central dispute was whether Carp was acting as Aronson's agent in those purchases.

Issue

Whether the evidence was sufficient to support the trial court's finding that Carp acted as Aronson's agent in purchasing plaintiffs' eggs, making Aronson and his surety liable on the produce dealer's bond. Also, whether plaintiffs were barred because they knew or had notice that Carp was acting contrary to instructions and fraudulently, and whether the complaints were defective for not pleading agency.

Rule

Agency arises when the principal manifests consent that another shall act on the principal's behalf. An agent's authority may be proved either by express agreement or circumstantially through a course of dealing, but when authority is proved circumstantially, all inferences of authority must be drawn exclusively from facts for which the principal is responsible. A complaint against the principal need not plead agency or the agent's authority.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Des Moines, Nora Vega sold cartons of eggs to Leo Benton, who arrived twice a week and paid with draft forms bearing the heading of Prairie Valley Produce, a business owned by Sam Keller. Benton signed each draft over the printed word "Buyer," Keller had honored similar drafts for months, and Keller had supplied the forms to Benton.

If Nora sues Keller for the unpaid purchases, which is the strongest argument that Benton had authority to buy on Keller's behalf?

Explanation. Agency may be proved circumstantially through a course of dealing, but the inference must come from facts for which the principal is responsible. Here, Keller supplied the forms bearing his business name and repeatedly honored them, so those facts support an inference of authority. Benton’s own statements alone would not suffice, and merely issuing drafts on another is not enough by itself.