BRUNNER v. HORTON

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Docket Number

No. 83CA0572

Attorney(S)

Robert C. Burroughs, P.C., Robert C. Burroughs, for Plaintiff-Appellee. Veto and Potter, Anthony H. Veto, for Defendant-Appellant (on the briefs). Jack D. Horton, Pro Se.

Judges

Opinion by JUDGE KELLY.

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Smart Summary

Factual and Procedural Background

Plaintiff Rhinie Brunner, an onion farmer, engaged defendant Jack Horton, a produce broker, to market his 1980 onion crop on a commission basis. Defendant was responsible for arranging transportation, selecting buyers, setting prices, collecting proceeds, and paying plaintiff. Defendant shipped four loads of onions to Valdez Brokerage in Texas, from which payment was never received. Plaintiff filed a breach of fiduciary duty lawsuit against defendant. After a jury trial, judgment was entered in favor of plaintiff. Defendant appeals the verdict and the trial court's jury instructions.

Legal Issues Presented

Whether there was sufficient evidence to establish a fiduciary (agency) relationship between plaintiff and defendant.
Whether there was sufficient evidence to prove that defendant breached his fiduciary duty.
Whether the trial court erred in instructing the jury on the duties of an agent selling products on credit.
Whether the trial court erred by failing to give two of defendant's tendered jury instructions.

Arguments of the Parties

Defendant-Appellant's Arguments

Contended that there was insufficient evidence to establish a fiduciary relationship or a breach of fiduciary duty.
Argued that one of the jury instructions given was not supported by the facts or the law.
Claimed error in the trial court's refusal to give two of his proposed jury instructions.

Plaintiff-Appellee's Arguments

Asserted that the evidence supported the existence of an agency relationship and breach of fiduciary duty.
Maintained that the jury instructions given were proper and supported by the evidence and applicable law.
Argued that the substance of defendant's proposed instructions was included in the instructions actually given.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Shriver v. Carter, 651 P.2d 436 (Colo.App. 1982)	Definition of agency and that agency may be established by conduct; determination of agency relationship is a fact question for the jury.	The court found sufficient evidence for the jury to infer an agency relationship based on defendant's role in marketing plaintiff’s onions.
Lestoque v. M. R. Mansfield Realty, Inc., 536 P.2d 1146 (Colo. App. 1975)	An agent owes a fiduciary duty of utmost faith and loyalty to the principal.	Supported the court’s conclusion that defendant had a fiduciary duty to plaintiff.
Wheeler v. Carl Rabe, Inc., 599 P.2d 902 (Colo. 1979)	An agent must fully disclose all facts reasonably affecting the principal’s decisions.	Used to establish that defendant breached his fiduciary duty by failing to disclose financial risks related to the buyer.
City of Aurora v. Loveless, 639 P.2d 1061 (Colo. 1981)	Standards for breach of fiduciary duty.	Supported the jury’s finding that defendant breached his fiduciary duty by withholding material information.
Restatement (Second) of Agency § 424, comment c (1958)	Agent's duty to inquire into the financial circumstances of buyers and communicate such information to principal.	The jury instruction challenged by defendant was upheld as a correct statement of law consistent with this principle.
White v. Brock, 584 P.2d 1224 (Colo. App. 1978)	Agent’s duty of disclosure and inquiry.	Reinforced the propriety of the jury instruction concerning agent’s duties.
Federal Insurance Co. v. Public Service Co., 570 P.2d 239 (Colo. 1977)	Proper jury instructions must be supported by evidence and consistent with law.	Supported the court’s decision to affirm the jury instruction given.
Montgomery Ward Co. v. Kerns, 470 P.2d 34 (Colo. 1970)	Jury instructions are to be considered as a whole; trial court’s discretion in form and style of instructions.	Used to reject defendant’s claim that refusal to give certain instructions was error, since the substance was covered.

Court's Reasoning and Analysis

The court first addressed the existence of a fiduciary relationship, concluding that defendant’s responsibilities—arranging sales, transportation, pricing, collection, and payment—were sufficient for a jury to infer an agency relationship. The court cited Shriver v. Carter to emphasize that agency may be established by conduct and is a factual question for the jury.

Next, the court analyzed the fiduciary duty breach claim. Defendant had knowledge of the buyer's financial instability and prior late payments but failed to disclose this to plaintiff, instead assuring him of the buyer’s reliability. The court found this nondisclosure and continued shipments despite warnings to be sufficient evidence of breach, citing Wheeler v. Carl Rabe, Inc. and City of Aurora v. Loveless.

Regarding the challenged jury instruction, the court found it properly stated the agent’s duties to investigate buyers’ financial circumstances and communicate this to the principal, consistent with the Restatement (Second) of Agency and relevant case law. The instruction was supported by trial evidence.

Finally, the court rejected defendant’s claim that refusal to give two of his tendered instructions was erroneous, explaining that the trial court has discretion over jury instructions and that the substance of defendant’s instructions was included in those given, citing Montgomery Ward Co. v. Kerns.

Holding and Implications

The court AFFIRMED the judgment entered in favor of plaintiff. The jury verdict finding breach of fiduciary duty was supported by sufficient evidence, and the trial court’s jury instructions were proper and consistent with applicable law.

The direct effect is the upholding of plaintiff’s recovery against defendant. The opinion does not establish new legal precedent but reinforces established principles regarding agency relationships, fiduciary duties, and jury instructions in such contexts.

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Rhinie Brunner, d/b/a Brunner Produce Company, Plaintiff-Appellee, v. Jack D. Horton, d/b/a Horton Horton, Defendant-Appellant.

Opinion by JUDGE KELLY.

Defendant, Jack Horton, appeals the jury verdict entered in favor of the plaintiff, Rhinie Bruner, in this breach of fiduciary duty action, arguing that there was insufficient evidence to support the verdict and that the trial court erred in instructing the jury. We affirm.

Plaintiff, an onion farmer, engaged defendant, a produce broker, to market his 1980 crop. On a commission basis, defendant assumed the job of arranging transportation, selecting buyers, setting prices, collecting the net proceeds of the sales and paying plaintiff. Defendant shipped four loads of onions to the Valdez Brokerage in Texas for which payment was never received. Plaintiff brought this action alleging that defendant breached his fiduciary duty, and after trial to a jury, judgment was entered in favor of plaintiff.

Defendant argues that there is both insufficient evidence to establish a fiduciary relationship and to establish that any fiduciary duty was breached. We disagree.

An agent is one who is granted authority to act for or in the place of another. Shriver v. Carter, 651 P.2d 436 (Colo.App. 1982). Agency may be established by the conduct of the principal and agent. The question of the existence of an agency relationship is ordinarily for the factfinder. Shriver, supra.

Here, defendant was responsible for arranging the sale of plaintiff's onions. This included the responsibility of arranging for transportation, selecting buyers, setting prices, as well as collecting and paying plaintiff for the net proceeds of the sales. In addition, defendant received a commission on each sale of onions. There was sufficient evidence in the record for the jury to infer the existence of an agency relationship.

An agent has a fiduciary duty to act with the utmost faith and loyalty in behalf of, and to act solely for, the benefit of his principal. Lestoque v. M. R. Mansfield Realty, Inc., 36 Colo. App. 32, 536 P.2d 1146 (1975). An agent must make a full and complete disclosure of all facts which might reasonably affect the principal's decision. Wheeler v. Carl Rabe, Inc., 198 Colo. 311, 599 P.2d 902 (1979).

Defendant had very little information about the solvency of the brokerage. Defendant knew that Valdez had just gone into business and that the business was not listed in the "Blue Book," a financial reference in the produce industry. Defendant also knew that the previous year, when he was acting as a broker for another onion farmer, Valdez ran from 90 to 120 days late on payments. Defendant did not disclose any of this information to the plaintiff, but rather, assured plaintiff that he knew Valdez and that she always paid her bills, although she was a little slow. Defendant also told plaintiff that he had set Valdez up in business and that she was all right.

Moreover, defendant was advised that there were problems at the brokerage, but he continued to make deliveries. The trucker who delivered the first load of plaintiff's onions to Valdez at defendant's request called defendant and advised him that problems existed at the brokerage. The trucker indicated that he had problems both contacting Valdez and arranging for the unloading of the onions. Defendant did not disclose this information to the plaintiff and did not indicate that he was having trouble getting payment from Valdez until almost a month after the last shipment of onions. This evidence was sufficient to support the jury's finding of breach of fiduciary duty. See City of Aurora v. Loveless, 639 P.2d 1061 (Colo. 1981).

II.

Defendant next argues that one of the instructions given is not supported by the facts or the law. We disagree.

The instruction in question stated:

"An agent employed to sell the products of his principal on credit is subject to the following duties to the principal:

"1. To make reasonable inquiry as to the financial circumstances of the buyer.

"2. To communicate the information regarding the financial circumstances to the principal for his acceptance or rejection of the business.

"However a principal may choose to waive the above requirement concerning communication if in fact there has been authority given by the principal to the agent to act without the above requirement being satisfied."

Here, this instruction was supported by the facts in evidence at trial. The instruction is a proper application of the law concerning an agent's duty of disclosure to the facts of this case. See Restatement (Second) of Agency § 424, comment c (1958). See also White v. Brock, 41 Colo. App. 156, 584 P.2d 1224 (1978); Wheeler, supra. Hence, plaintiff was entitled to the instruction as it was supported by the evidence and consistent with existing law. Federal Insurance Co. v. Public Service Co., 194 Colo. 107, 570 P.2d 239 (1977).

III.

Defendant's argument that the trial court erred by failing to use two of his tendered instructions is also without merit.

All of the court's instructions to the jury are to be read and considered as a whole in determining whether the necessary law has been correctly stated to the jury. Montgomery Ward Co. v. Kerns, 172 Colo. 59, 470 P.2d 34 (1970). It is in the sound discretion of the trial court to determine the form and style in which instructions shall be given. Montgomery, supra. Here, there was no error as the substance of defendant's instructions was included in the instructions given.

Judgment affirmed.

JUDGE BERMAN and JUDGE VAN CISE concur.