Jenson Farms Co. v. Cargill, Inc.
Citation and Court
A. Gay Jenson Farms Co. v. Cargill, Inc., 309 N.W.2d 285 (Minn. 1981)
Facts
Warren Grain & Seed Co. operated as a local grain elevator, buying grain from farmers and reselling it. Cargill, a large grain trader, financed Warren’s operations, provided operational guidance, and had extensive contractual rights to supervise Warren’s management—including the right to approve major decisions. When Warren became insolvent and could not pay farmers for grain it had purchased, those farmers sued Cargill as Warren’s principal.
Issue
Whether Cargill’s extensive financing and control over Warren’s operations made Warren Cargill’s agent, making Cargill liable for Warren’s grain purchase contracts with farmers.
Holding
The Minnesota Supreme Court held that Cargill was Warren’s principal because Cargill’s control over Warren—through financing, operational oversight, and contractual supervision rights—was so pervasive that Warren acted on Cargill’s behalf.
Rule / Doctrine
A creditor who goes beyond merely financing a debtor and exercises control over the debtor’s business operations may become a principal and be held liable for the debtor’s obligations as if the debtor were the creditor’s agent. The degree of control exercised over the manner and details of the debtor’s business—not merely the financial relationship—is the dispositive factor.
Significance
A landmark case on agency by control and the liability of creditors who exercise excessive control over their debtors. Establishes that lenders and financiers risk principal liability if they exercise operational control beyond ordinary creditor oversight. Widely taught as the key case on the boundary between creditor and principal relationships.