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not to award attorney fees, particularly where that ruling was 

premised on the county court’s erroneous conclusion that Kim 

had failed to prove a breach of trust. But we hesitate to award 

fees ourselves, because we are reviewing a cold record and the 

county court oversaw the litigation. The county court is thus 

in the best position to determine, in light of our disposition of 

the merits of this appeal, whether “justice and equity” require 

attorney fees, and in what amount. We reverse, and remand for 

the court to do so.

CONCLUSION

We agree with the Court of Appeals’ general legal framework and ultimate conclusion that the trustee’s breach was 

harmless. We disagree, however, with the Court of Appeals’ 

conclusion that annual schedule K-1 tax reports were sufficient 

to reasonably inform beneficiaries of the trust and its administration. And we conclude that the county court should revisit 

the issue of attorney fees in light of our disposition of the merits of this appeal.

 Affirmed in part, and in part revers

remanded for further proceedin

on the issue of attorney fee

Wright, J., not participating.

Perry Elting et al., appellees, 

Kerwin Elting, appe

___ N.W.2d ___

Filed June 27, 2014. No. S-13-551.

1. Trial: Witnesses. In a bench trial of an action at law, the trial court is the 

sole judge of the credibility of the witnesses and the weight to be given 

their testimony.

2. Judgments: Appeal and Error. In reviewing a judgment awarded in a bench 

trial of a law action, an appellate court does not reweigh evidence, but considers the evidence in the light most favorable to the successful party and resolves 

evidentiary conflicts in favor of the successful party, who is entitled to every 

reasonable inference deducible from the evidence.

3. ____: ____. In a bench trial of a law action, the trial court’s factual findings 

have the effect of a jury verdict and will not be disturbed on appeal unless 

clearly wrong.
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4. Actions: Pleadings: Equity. The nature of an action, whether legal or equitable, 

is determinable from its main object, as disclosed by the averments of the pleadings and the relief sought.

5. Equity: Appeal and Error. On appeal from an equity action, an appellate 

court resolves questions of law and fact independently of the trial court’s 

determinations.

6. Breach of Contract: Damages. A suit for damages arising from breach of a 

contract presents an action at law.

7. Principal and Agent. Actual authority is authority that the principal expressly 

grants to the agent or authority to which the principal consents.

8. ____. The scope of an agent’s authority is a question of fact.

9. Ratification: Agents. Ratification of an agent’s unauthorized acts may be made 

by overt action or inferred from silence and inaction.

10. ____: ____. Retention of benefits secured by an agent’s unauthorized act with 

knowledge of the source of such benefits and the means by which they were 

obtained is a ratification of the agent’s act.

11. Ratification. Whether there has been a ratification is ultimately and ordinarily a 

question of fact.

12. Ratification: Proof. Because ratification is an affirmative defense, the burden of 

proving ratification rests on the party alleging the defense.

Appeal from the District Court for Nuckolls County: Vick

L. Johnson, Judge. Affirm

Daniel E. Klaus and Sheila A. Bentzen, of Rembolt Ludtke, 

L.L.P., for appellant.

Steven E. Guenzel and Cameron E. Guenzel, of Johnson, 

Flodman, Guenzel & Wedger, for appellees.

Heavican, C.J., Wright, Connolly, Stephan, M

Miller-Lerman, and Cassel,

Miller-Lerman,

NATURE OF CASE

Glenn Elting and Sons was a family farming partnership 

that was formed in 1976 among Glenn Elting and his sons, 

Kerwin Elting and Perry Elting, all as managing partners. 

The partners who comprised the partnership changed over the 

years. The managing partners during the time period relevant 

to the issues in this case were: Kerwin; Perry; Kerwin’s son, 

Carl Elting; and Perry’s son, Knud Elting. On March 30, 2011, 

Perry, Knud, and Perry’s wife, ReJean Elting, the appellees, 

filed this action in the district court for Nuckolls County 
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against Kerwin, the appellant. The amended complaint was 

filed on January 22, 2013. The appellees alleged that Kerwin 

had entered into a series of grain contracts on behalf of the 

partnership without the authority to do so, resulting in significant losses to the partnership. The appellees sought damages 

based on these losses.

After a bench trial, the district court filed its order on May 

30, 2013, in which it found in favor of the appellees. The 

district court determined that Kerwin did not have authority 

to enter into the contracts and that his actions were not ratified. The district court further determined that Kerwin was not 

shielded by the limitation of liability clause contained in the 

controlling partnership agreement. The district court awarded 

judgment in favor of the appellees in the amount of $1,072,175 

plus prejudgment interest. Kerwin appeals. Finding no error, 

we affirm.

STATEMENT OF FACTS

In 1976, Glenn Elting and Sons, a farming partnership, was 

formed among Glenn and his two sons, Kerwin and Perry. 

The partnership was later expanded and included as partners 

Glenn’s wife, Esther Elting; Kerwin’s wife, Patricia Elting; and 

Perry’s wife, ReJean Elting; however, the management of the 

partnership remained with Glenn, Kerwin, and Perry.

The partnership had an established decisionmaking process: The managing partners would have informal discussions 

regarding whether and how to proceed, and once a consensus was reached, the partners would proceed. No documents 

recorded the discussions or decisions of the managing partners. 

Once a decision was made, Glenn, and later Kerwin, was 

responsible for carrying out the decision, including signing 

contracts on the partnership’s behalf.

On January 31, 2005, the partners entered into the “Amended 

and Restated Partnership Agreement for Glenn Elting and 

Sons” (Partnership Agreement). The Partnership Agreement 

did not change how the partnership made decisions. Paragraph 

5.1 of the Partnership Agreement provided that the partnership 

was to be managed by the managing partners, and paragraph 

5.2 provided that the managing partners were Glenn, Kerwin, 
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and Perry. Paragraph 5.3 provided that at any time there were 

more than two managing partners, “the approval of a majority 

of the Managing Partners shall be required for the Managing 

Partners to act on behalf of the Partnership, unless unanimous approval of the Managing Partners is required for such 

action by another provision of [the Partnership] Agreement.” 

Paragraph 5.4 of the Partnership Agreement contained a limitation of liability clause, which provided:

Liability of Managing Partners. No Managing Partner 

shall be liable to the Partnership or to any other Partner 

for any action taken in good faith and reasonably 

believed by such Managing Partner to be in the best 

interest of the Partnership or taken in reliance on the 

provisions of [the Partnership] Agreement, or for good 

faith errors of judgment, but shall only be liable for willful misconduct or gross negligence in the performance 

of his or her duties.

In 2008, Kerwin’s son, Carl, and Perry’s son, Knud, joined 

the partnership and became additional managing partners. At 

this point, the managing partners were Kerwin, Perry, Carl, and 

Knud. On February 8, 2008, the partners entered into the “First 

Amendment to Amended and Restated Partnership Agreement 

for Glenn Elting and Sons” to reflect this change. This amendment to the Partnership Agreement did not change any other 

provisions of the Partnership Agreement regarding how decisions were made. When this amendment to the Partnership 

Agreement was signed, Glenn and Esther were no longer 

partners, and they are not involved in this appeal. As noted, 

the managing partners in 2008 thus were Kerwin, Perry, Carl, 

and Knud. Kerwin’s wife, Patty, and Perry’s wife, ReJean, 

remained as partners, but they did not have a significant role in 

managing the partnership.

In December 2008, Knud withdrew from active participation 

in the partnership and ceased his day-to-day involvement in the 

partnership’s activities. However, Knud’s status as a managing 

partner remained unchanged. Kerwin, Perry, and Carl continued to make the decisions involving the partnership.

In 2007, prior to the time that Carl and Knud became partners, the partnership had entered into hedge contracts with 
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Cargill, Inc., and Aurora Cooperative to sell all of the partnership’s anticipated corn production for the years 2008, 2009, 

and 2010. The partnership contracted to sell approximately half 

of its corn production to Cargill and the other half to Aurora 

Cooperative. It is undisputed that the initial hedge contracts 

with Cargill and Aurora Cooperative were entered into with the 

knowledge and consent of the managing partners at the time, 

Glenn, Kerwin, and Perry.

In approximately 2008, Cargill began offering a product 

called a focal point contract. The focal point contract allowed 

a farmer to “unlock” the price of hedged corn and allow it to 

float with the market based upon the increase or decrease in 

the market between the opening and closing dates specified 

in the focal point contract. The focal point contract generally 

was an amendment to the original hedge contract. If the market moved up and the price per bushel increased between the 

opening and closing dates, then the increased amount would be 

added to the price per bushel agreed to in the original hedge 

contract, minus a service fee of 3 cents per bushel. If the price 

per bushel decreased between the opening and closing dates, 

then the decreased amount, plus the 3-cent service fee, would 

be subtracted from the price per bushel agreed to in the original 

hedge contract. Because all the focal point contracts assessed 

the same 3-cent fee per bushel, a farmer entering into the focal 

point contract was predicting and hoping that the market would 

move up at least 3 cents per bushel during the time that the 

contract was open in order to maintain at least the same return 

as would have obtained on the original hedge contract after the 

payment of service fees.

In 2008 and 2009, Kerwin entered into a series of focal 

point contracts with Cargill on behalf of the partnership (Focal 

Point contracts). Cargill’s local representative had in-person 

and telephone conversations with Kerwin regarding the Focal 

Point contracts. Kerwin entered into the Focal Point contracts 

on behalf of the partnership at three times. The first set of 

contracts opened with 240,000 bushels on May 2, 2008, and 

closed on May 8. The second set of contracts opened with 

1,750,000 bushels on September 8 and 26, 2008, and closed 

on September 12 and October 7, respectively. The third set of 
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contracts opened on June 23, 2009, and closed on July 1. As 

a result of the first set of Focal Point contracts, the partnership gained $23,400. As a result of the second and third sets 

of contracts, the partnership lost significant money. In total, 

the partnership lost $2,144,350 on the three sets of Focal Point 

contracts from the originally contracted price.

Sometime in late 2008 or early 2009, Kerwin and Perry 

started having discussions with respect to dissolving the 

partnership. A “Partnership Separation Agreement” had been 

signed on February 8, 2008, which was the same date that 

the amendment to the Partnership Agreement changing membership was signed. On April 27, 2009, Kerwin, Patricia, 

and Carl signed a separation notice stating that they wished 

to dissolve the partnership in accordance with the partnership separation agreement. According to the findings of the 

district court, the performance of the first two sets of Focal 

Point contracts did not affect the decision to dissolve the 

partnership.

Before the partnership dissolved, in late 2007 or early 2008, 

the partnership began banking with the First National Bank 

of Fairbury (FNB). The partnership worked primarily with 

Dick Hoppe, a senior vice president and senior agriculture 

loan specialist. The partnership’s primary purpose of banking with FNB was to secure an operating note, which operated as a line of credit to secure the year’s farming expenses. 

Before agreeing to lend the partnership money, Hoppe needed 

to review the partnership’s financial information. Kerwin was 

primarily responsible for compiling the information. Kerwin 

provided Hoppe with the raw data, and Hoppe prepared a balance sheet and cashflow projections. FNB determined that the 

partnership was creditworthy, and the banking relationship 

began in January 2008. The 2007 balance sheet was signed by 

Glenn, Perry, and Kerwin, who were the managing partners at 

that time.

On January 9, 2009, Hoppe met with Kerwin, Carl, Perry, 

and ReJean for their annual meeting to review the partnership’s financial information, including the 2008 balance sheet 

and cashflow projections for 2009, in order to renew the partnership’s line of credit. At that meeting, Kerwin, Perry, and 
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Carl each signed the 2008 balance sheet for the partnership. 

Immediately above their signatures, the balance sheet stated:

For the purpose of securing credit from time to time 

this statement is furnished and is certified to be true 

and correct. I (or We) agree to notify the bank promptly 

of any material change herein. . . . False statement 

may be subject to prosecution under Title 18 of the US 

Code. I (or We) have read the above statement before 

signing . . . .

The 2008 balance sheet, as well as the cashflow projections for 

the upcoming 2009 crop year, reflected the price of the Cargill 

corn after the gains from the May 2008 Focal Point contracts 

and the losses from the September 2008 Focal Point contracts. 

There is dispute as to how specific the review of the partnership’s financial information was during the annual meetings 

with Hoppe, including the January 2009 meeting.

After the proceedings to dissolve the partnership began, 

Kerwin and Carl began farming together and Perry and Knud 

began farming together. Once the partnership stopped farming, 

Kerwin and Perry needed to establish separate relationships 

with FNB. To do so, they each needed to provide FNB with 

financial information to show that they were creditworthy.

When Perry and Knud began the preparation of their balance sheets and cashflow projections for 2010, they called 

various vendors to obtain input costs. They also called the 

Cargill elevator to determine their contract grain price, and 

the numbers they were provided were apparently based on the 

price in the original hedge contracts from 2008 and did not 

include adjustments due to the Focal Point contracts. Knud 

provided this information to Hoppe, who then completed the 

balance sheet.

In Hoppe’s review of Perry and Knud’s financial information, he noticed that Perry and Knud’s numbers differed from 

Kerwin and Carl’s numbers with respect to the price of the 

contracted corn. The Focal Point contracts with Cargill had 

been divided evenly between Kerwin and Perry in the dissolution documents, so the numbers should have matched. 

Kerwin’s numbers reflected the prices that had been adjusted 

due to the Focal Point contracts, whereas Perry’s did not. 
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Hoppe informed Perry and Knud that their financial numbers did not match Kerwin and Carl’s. Perry and Knud 

testified that this is the first time they learned of the Focal 

Point contracts.

On March 30, 2011, the appellees filed their complaint in 

the district court against Kerwin, seeking $867,000 in damages, which represented their understanding of their portion 

of the total partnership losses from the Focal Point contracts. The appellees alleged that Perry and Knud had not 

been consulted regarding whether the partnership should enter 

into the Focal Point contracts, that they had never voted to 

enter into the Focal Point contracts, and that Kerwin lacked 

authority to enter into the Focal Point contracts on behalf of 

the partnership.

On January 14, 2013, the appellees moved to amend their 

complaint, because they learned through discovery documents that there were other Focal Point contracts that Kerwin 

had entered into on behalf of the partnership of which the 

appellees were unaware. Based on these other Focal Point 

contracts, the appellees alleged that they were entitled to an 

additional $226,525, which represented their share of the 

losses resulting from these additional Focal Point contracts. 

The district court granted the appellees’ motion to amend 

their complaint.

In response to the appellees’ complaint and amended complaint, Kerwin alleged in his answer that he had received 

authorization to enter into the Focal Point contracts on behalf 

of the partnership and that even if he lacked such authority, the 

appellees had ratified his actions. Kerwin further alleged that 

he was shielded from any liability by the limitation of liability 

clause in the Partnership Agreement. He also alleged that the 

appellees’ additional claims in their amended complaint were 

barred by the statute of limitations.

A bench trial was held on January 29 and 30, 2013. The 

appellees called three witnesses, including Perry, Knud, and 

the Cargill representative. Portions of Kerwin’s deposition 

were also read into the record. The appellees offered and 

the court received seven exhibits, including: the Partnership 

Agreement, the first amendment to the Partnership Agreement, 
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purchase contracts with Cargill, and the Focal Point contracts 

with Cargill. Kerwin called three additional witnesses, including Kerwin, Hoppe, and Carl. Kerwin offered, and the court 

received, 24 exhibits, including: the partnership separation 

agreement; Hoppe’s notes regarding meetings with the partners; the partnership’s financial information, including balance sheets and projected cashflow statements; and contracts 

between the partnership and Aurora Cooperative.

At trial, Kerwin and Carl generally testified that they were 

familiar with the Focal Point contracts, and that the contracts 

were entered into after all the managing partners—Kerwin, 

Perry, Knud, and Carl—had fully discussed the matter and had 

come to a consensus that all partners wanted to enter into the 

Focal Point contracts. In contrast, Perry and Knud generally 

testified that they were not aware of the Focal Point contracts 

prior to the partnership’s entering into them and that they 

had not authorized Kerwin to enter into them on behalf of 

the partnership.

After the bench trial, on May 30, 2013, the court filed its 

order in which it determined that Kerwin lacked authority to 

enter into the Focal Point contracts on behalf of the partnership; that Kerwin’s actions had not been ratified; and that 

because Kerwin lacked authority, he was not shielded from liability by the limitation of liability provision in the Partnership 

Agreement. The court found Kerwin liable to the appellees for 

$1,072,175 plus prejudgment interest.

Kerwin appeals.

ASSIGNMENTS OF ERROR

Kerwin claims on appeal that the district court erred when 

it (1) found that Kerwin did not have authority to enter into 

the Focal Point contracts on behalf of the partnership, (2) 

found that the other managing partners did not ratify Kerwin’s 

actions in entering into the Focal Point contracts, (3) found that 

the limitation of liability clause did not shield Kerwin from 

liability, and (4) awarded prejudgment interest to the appellees. Because the fourth assignment of error is not argued in 

Kerwin’s brief, we do not consider it. See C.E. v. Prairie Fields 

Family Medicine, 287 Neb. 667, 844 N.W.2d 56 (2014).
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STANDARDS OF REVIEW

[1-3] In a bench trial of an action at law, the trial court 

is the sole judge of the credibility of the witnesses and the 

weight to be given their testimony. Liljestrand v. Dell Enters., 

287 Neb. 242, 842 N.W.2d 575 (2014). In reviewing a judgment awarded in a bench trial of a law action, an appellate 

court does not reweigh evidence, but considers the evidence 

in the light most favorable to the successful party and resolves 

evidentiary conflicts in favor of the successful party, who 

is entitled to every reasonable inference deducible from the 

evidence. Hooper v. Freedom Fin. Group, 280 Neb. 111, 784 

N.W.2d 437 (2010). See, also, Black v. Brooks, 285 Neb. 440, 

827 N.W.2d 256 (2013). In a bench trial of a law action, the 

trial court’s factual findings have the effect of a jury verdict 

and will not be disturbed on appeal unless clearly wrong. 

Black v. Brooks, supra.

ANALYSIS

The legal framework for our analysis is Nebraska’s Uniform 

Partnership Act of 1998 (1998 UPA), found at Neb. Rev. Stat. 

§§ 67-401 to 67-467 (Reissue 2009), as well as the terms of the 

Partnership Agreement. The 1998 UPA is Nebraska’s counterpart to the model act known as the Revised Uniform Partnership 

Act (RUPA). See, Robertson v. Jacobs Cattle Co., 285 Neb. 

859, 830 N.W.2d 191 (2013); Shoemaker v. Shoemaker, 275 

Neb. 112, 745 N.W.2d 299 (2008). After January 1, 2001, the 

1998 UPA became applicable to any Nebraska partnership, 

including those partnerships formed prior to January 1, 1998. 

See §§ 67-464 and 67-467. It is not disputed that the 1998 UPA 

applies to this case.

[4] As an initial matter, we must determine the nature 

of the action brought by the appellees, because the nature 

of the action will determine our standard of review. Under 

§ 67-425(2)(a) of the 1998 UPA, a partner may maintain an 

action against another partner for legal or equitable relief. The 

nature of an action, whether legal or equitable, is determinable from its main object, as disclosed by the averments of the 

pleadings and the relief sought. Genetti v. Caterpillar, Inc., 261 

Neb. 98, 621 N.W.2d 529 (2001).
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[5] Kerwin contends that because this case involves an 

action among partners, it is necessarily an action in equity 

rather than an action at law and that our standard of review 

should be de novo on the record. Kerwin refers us to cases 

such as Robertson v. Jacobs Cattle Co., supra, involving an 

action for a partnership dissolution and accounting between 

partners which we deemed as one in equity and properly 

reviewed de novo on the record. In Robertson, we noted that 

on appeal from an equity action, an appellate court resolves 

questions of law and fact independently of the trial court’s 

determinations.

[6] Kerwin’s characterization of this case as an action in 

equity does not accurately assess the substance of the appellees’ claim. In this case, the appellees alleged that Kerwin 

breached the Partnership Agreement, a contract, and sought 

damages. The appellees did not request an accounting nor 

did they seek to dissolve the partnership. We have stated 

that a suit for damages arising from breach of a contract presents an action at law. Thomas & Thomas Court Reporters v. 

Switzer, 283 Neb. 19, 810 N.W.2d 677 (2012). Because this 

is a suit for damages arising from breach of the Partnership 

Agreement, the action is one at law, and we apply the applicable standards of review recited earlier in this opinion. In 

this regard, we repeat that the trial court’s factual findings 

have the effect of a jury verdict and will not be disturbed 

on appeal unless clearly wrong and add that an appellate 

court will not reevaluate the credibility of witnesses or 

reweigh testimony but will review the evidence for clear 

error. Henderson v. City of Columbus, 285 Neb. 482, 827 

N.W.2d 486 (2013). With the foregoing framework and standard of review in mind, we turn to Kerwin’s assignments of 

error and in so doing, refer at length to the district court’s 

detailed findings and opinion.

Kerwin Was Not Authorized by the 

Partnership to Enter Into the 

Focal Point Contracts.

In Kerwin’s first assignment of error, he claims that the 

district court erred when it determined that Kerwin did not 
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have authority to enter into the Focal Point contracts on 

behalf of the partnership. We find no merit to this assignment 

of error.

[7,8] With respect to a partner’s agency to act on behalf 

of a partnership, § 67-413(1) of the 1998 UPA provides that 

“[e]ach partner is an agent of the partnership for the purpose 

of its business.” Because each partner is an agent of the 

partnership, the partner must have authority in order to act 

on behalf of the partnership. We have stated that “[a]ctual 

authority is authority that the principal expressly grants to the 

agent or authority to which the principal consents.” Koricic v. 

Beverly Enters. - Neb., 278 Neb. 713, 717, 773 N.W.2d 145, 

150 (2009). See, also, Restatement (Third) of Agency § 2.01, 

comment c. at 81 (2006) (stating that “[a]ctual authority is 

a consequence of a principal’s expressive conduct toward 

an agent, through which the principal manifests assent to 

be affected by the agent’s action, and the agent’s reasonable 

understanding of the principal’s manifestation”). The scope of 

an agent’s authority is a question of fact. Koricic v. Beverly 

Enters. - Neb., supra.

The Partnership Agreement in this case contains language 

regarding the partners’ authority to act on behalf of the partnership. Paragraph 5.1 of the Partnership Agreement provides 

that the management of the partnership is vested in the managing partners. At all relevant times, the four managing partners 

were Kerwin, Perry, Carl, and Knud. Paragraph 5.1 further 

provides that the managing partners “shall have power and 

authority to manage all business and affairs of the Partnership, 

which power and authority shall include, but is not limited 

to . . . entering into and terminating lease agreements and 

other contracts.” Paragraph 5.3 states in part that “[a]t any 

time in which there are more than two (2) Managing Partners, 

the approval of a majority of the Managing Partners shall be 

required for the Managing Partners to act on behalf of the 

Partnership . . . .”

Pursuant to the language of the Partnership Agreement, 

approval of at least three of the four managing partners was 

required in order for Kerwin to have had authority to act on 

behalf of the partnership and to enter the partnership into 
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the Focal Point contracts. For completeness, we note that the 

record indicates that in the course of the conduct of the partnership’s affairs, some incidental decisions, such as getting a tire 

fixed, were not viewed as requiring the approval of a majority 

of the managing partners. However, it is undisputed that entering into the Focal Point contracts was viewed as a significant 

decision, and it naturally follows that such decision required 

approval of a majority of the managing partners as provided in 

paragraph 5.3 of the Partnership Agreement.

At the bench trial, evidence was adduced regarding whether 

Kerwin was authorized to enter into the Focal Point contracts 

on the partnership’s behalf. The partners agree that Kerwin 

was generally responsible for handling the paperwork of the 

partnership, including the signing of contracts on behalf of the 

partnership. Kerwin and Carl both testified that the managing partners discussed and agreed that the partnership should 

enter into the Focal Point contracts. In contrast, Perry and 

Knud both testified that they were unaware of the Focal Point 

contracts prior to the time the partnership entered into them. 

Perry and Knud testified that the managing partners never 

discussed entering into the Focal Point contracts and that they 

never agreed to authorize Kerwin to enter into them on behalf 

of the partnership.

In its order, the district court delineated a number of factors 

it considered in making its finding that Perry and Knud did not 

authorize Kerwin to enter the partnership into the Focal Point 

contracts. The district court evaluated the credibility of the 

witnesses and found Perry and Knud to be credible. As stated 

above, in a bench trial of an action at law, the trial court is the 

sole judge of the credibility of the witnesses and the weight to 

be given their testimony. Liljestrand v. Dell Enters., 287 Neb. 

242, 842 N.W.2d 575 (2014). We generally defer to a trial 

court’s assessment of conflicting evidence, because the trial 

court had the advantage of hearing and observing important 

parts of evidence that are not readily apparent from a cold 

record. Id. The court stated that it considered the fact that 

after it was decided that the partnership would be dissolved 

and the families had agreed to begin farming separately, Perry 

and Knud prepared their separate 2010 financial information 
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for FNB without adjusting the price of corn for the losses due 

to the Focal Point contracts. In this regard, the court noted 

“the consternation which erupted once it became known that 

Perry and Kerwin were presenting corn prices to [FNB] which 

should have matched, but did not.” Also in support of its 

decision finding Perry and Knud more credible was the fact 

that when filing their original complaint, the appellees omitted some of the Focal Point contracts entered into in 2008, of 

which they were apparently unaware of until discovery took 

place prior to trial.

In support of its findings, the court further stated that

[i]t has considered that if all four [managing] partners 

were aware of the opening up of the [Focal Point] contracts, and watched the spectacular drops in the value 

of their corn crop, it would seem that someone would 

remember a specific, undoubtedly unpleasant conversation, between [sic] the partners regarding the ultimate 

decisions to close the [Focal Point] contracts. One would 

also think that such an incredible loss in corn contract 

prices would have been cited as a reason to end the 

partnership, but it was not. [The court] has considered 

the fact that the last group of Focal Point contracts were 

[sic] apparently entered into after the parties had agreed 

to dissolve the partnership and go their separate ways. 

It does not seem plausible that partners whose business 

relationship had reached to the point of dissolution a 

few short weeks or months earlier would agree to open 

up additional contracts with another potential for significant loss.

The district court added that it “considered the demeanor, 

conduct, testimony, statements in conflict between witnesses, 

and conflicts within the witness’s own testimony. It credits 

the version that Perry and Knud told and finds that they were 

unaware of the Focal Point contracts until Perry and Knud 

began their separate relationship with FNB.” Given the foregoing, the district court found that Perry and Knud were unaware 

of the Focal Point contracts until after they were entered 

into and it found that Perry and Knud did not agree to enter 

the partnership into the Focal Point contracts. Therefore, the 
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district court found that Kerwin was not authorized to enter 

into the Focal Point contracts on the partnership’s behalf.

As stated above, the scope of an agent’s authority is a question of fact. Koricic v. Beverly Enters. - Neb., 278 Neb. 713, 

773 N.W.2d 145 (2009). The district court found that Perry 

and Knud did not agree to enter into the Focal Point contracts 

and that therefore, there was not approval by a majority of the 

managing partners to enter into the Focal Point contracts as 

was required by paragraph 5.3 of the Partnership Agreement. 

There is sufficient evidence to support these findings. The 

district court’s finding that Kerwin did not have authority to 

enter the partnership into the Focal Point contracts was not 

clearly wrong.

Kerwin’s Actions of Entering the Partnership 

Into the Focal Point Contracts 

Were Not Ratified.

In Kerwin’s second assignment of error, he claims that the 

district court erred when it found that his actions were not 

ratified. Kerwin argues that even if he lacked authority to 

enter into the Focal Point contracts on behalf of the partnership, Perry and/or Knud nevertheless ratified his actions, and 

he is relieved of liability. We find no merit to this assignment 

of error.

[9-12] As we have noted above, “[e]ach partner is an agent 

of the partnership for the purpose of its business.” § 67-413(1). 

Regarding ratification, § 4.01 of the Restatement (Third) of 

Agency (2006) provides in part:

(1) Ratification is the affirmance of a prior act done by 

another, whereby the act is given effect as if done by an 

agent acting with actual authority.

(2) A person ratifies an act by

(a) manifesting assent that the act shall affect the person’s legal relations, or

(b) conduct that justifies a reasonable assumption that 

the person so consents.

Id. at 304. We have previously stated:

Ratification of an agent’s unauthorized acts may be made 

by overt action or inferred from silence and inaction. 
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Further, retention of benefits secured by an agent’s unauthorized act with knowledge of the source of such benefits and the means by which they were obtained is a 

ratification of the agent’s act. And whether there has been 

a ratification is ultimately and ordinarily a question of 

fact. Because ratification is an affirmative defense, the 

burden of proving ratification rest[s] on the [party alleging the defense].

Brook Valley Ltd. Part. v. Mutual of Omaha Bank, 285 Neb. 

157, 168-69, 825 N.W.2d 779, 789 (2013). In this case, 

Kerwin affirmatively pled ratification in his “Third Affirmative 

Defense” and therefore, Kerwin had the burden to show that 

his actions were ratified. The district court found that they 

were not.

In order for a previously unauthorized act to be ratified, the 

ratifying partners must have actual knowledge of the unauthorized act before they can ratify the action. Section 4.06 

of the Restatement provides that “[a] person is not bound 

by a ratification made without knowledge of material facts 

involved in the original act when the person was unaware of 

such lack of knowledge.” Id. at 336. Comment b. to § 4.06 

further explains:

A person who has ratified is not bound by the ratification 

if it was made without knowledge of material facts about 

the act of the agent or other actor. Thus, ratification concerns actions that have already taken place, of which the 

person is aware, not actions or events that may occur in 

the future. The burden of establishing that a ratification 

was made with knowledge is on the party attempting to 

establish that ratification occurred.

Id. at 336.

Comment b. to § 4.06 at 336 clarifies the nature of the 

knowledge needed for ratification, providing that “[r]atification 

requires that the principal have actual knowledge of material 

facts, not notice as defined in § 1.04(4).” The definition of 

notice in § 1.04(4) of the Restatement includes constructive 

knowledge, and states in part that “[a] person has notice of a 

fact if the person knows the fact, has reason to know the fact, 

has received an effective notification of the fact, or should 
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know the fact to fulfill a duty owed to another person.” Id. 

at 70. Therefore, the Restatement (Third) of Agency makes 

it clear that the ratifying partners must have actual knowledge, not merely constructive knowledge, of the previously 

unauthorized act before they can ratify the act. Mere notice as 

defined in § 1.04(4) does not equate to knowledge for ratification purposes.

Kerwin argues that evidence of constructive knowledge on 

the part of the ratifying partners is sufficient for the other partners to have ratified a previously unauthorized act. He asserts 

that both Perry and Knud ratified the partnership’s participation in the Focal Point contracts. In particular, he contends that 

Perry had constructive knowledge of the Focal Point contracts, 

because at the FNB meeting on January 9, 2009, Perry signed 

the first page of the 2008 balance sheet, and elsewhere in the 

document, the price of corn was adjusted for the Focal Point 

contracts. Kerwin contends that in signing the balance sheet, 

Perry indicated that he had read the entire document and was 

aware of its contents. Kerwin asserts that if Perry had had 

any questions or concerns regarding the price of the corn, he 

would have raised them at the FNB meeting. Kerwin further 

asserts that the Focal Point contracts were kept in an unlocked 

filing cabinet in the partnership’s office and that the managing partners had access to them at any time and could have 

reviewed them.

We reject Kerwin’s argument that constructive knowledge 

is sufficient for ratification in this case. None of the cases 

upon which Kerwin relies involved partners or a partnership 

ratifying the previously unauthorized act of another partner 

based upon constructive knowledge. By way of example, 

Eicher v. Mid America Fin. Invest. Corp., 275 Neb. 462, 748 

N.W.2d 1 (2008), involved whether a person who signed a 

contract for the sale of his home had constructive knowledge of the content contained in the contract. Gonzalez v. 

Union Pacific RR. Co., 282 Neb. 47, 803 N.W.2d 424 (2011), 

involved whether a person who had signed a release of 

liability had constructive knowledge of the contents of the 

release. In the instant case, the 2008 balance sheet signed by 
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Perry has not been determined to be a contract, and it is not 

a release of liability, therefore, neither Eicher nor Gonzalez

controls our analysis.

As noted above, the Restatement (Third) of Agency (2006) 

provides that actual knowledge, not constructive knowledge, is 

required for ratification, and we determine that this principle is 

applicable in this case. Whether there has been a ratification is 

ultimately and ordinarily a question of fact. Brook Valley Ltd. 

Part. v. Mutual of Omaha Bank, 285 Neb. 157, 825 N.W.2d 

779 (2013). In the bench trial, both Perry and Knud testified 

and the court found that they were “adamant that they had no 

knowledge of the Focal Point contracts.” In the district court’s 

order, the court stated that it considered Perry’s testimony that 

he trusted Kerwin “to do the book work” for the partnership 

and that “[i]t is clear that Perry is not a detail-oriented person.” In weighing the testimony, the court stated that although 

“[t]here is some evidence that Perry, at a minimum, had the 

ability to notice that the contract price had changed on some 

of the corn,” the district court found that Perry and Knud were 

credible witnesses and ultimately found that neither Perry nor 

Knud had actual knowledge of the Focal Point contracts for 

purposes of ratification.

Because actual knowledge of the Focal Point contracts was 

required in order for Perry or Knud to ratify Kerwin’s decision 

to enter into them on behalf of the partnership, and because 

Perry and Knud lacked such actual knowledge, they could not, 

and did not, ratify Kerwin’s decision to enter into the Focal 

Point contracts on the partnership’s behalf. Given our standard 

of review, we cannot say that the district court was clearly 

wrong when it found that neither Perry nor Knud ratified 

Kerwin’s actions.

The Limitation of Liability Clause in the 

Partnership Agreement Does Not 

Shield Kerwin From Liability.

In Kerwin’s third assignment of error, he argues that the 

limitation of liability clause found in paragraph 5.4 of the 

Partnership Agreement shields him from liability for the losses 
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resulting from his unauthorized actions, and he claims that the 

district court erred in not so determining. We find no merit to 

this assignment of error.

Paragraph 5.4 of the Partnership Agreement states:

Liability of Managing Partners. No Managing Partner 

shall be liable to the Partnership or to any other Partner 

for any action taken in good faith and reasonably 

believed by such Managing Partner to be in the best 

interest of the Partnership or taken in reliance on the 

provisions of [the Partnership] Agreement, or for good 

faith errors of judgment, but shall only be liable for willful misconduct or gross negligence in the performance 

of his or her duties.

The 1998 UPA provides that the relations among the partners and between the partners and the partnership are generally governed by their partnership agreement. § 67-404(1). 

Under the 1998 UPA, a partnership agreement may place 

some limitations on the partners’ duty of care, as is done in 

paragraph 5.4 of the Partnership Agreement, but it may not 

unreasonably reduce the duty of care in some scenarios. See, 

e.g., §§ 67-404(2)(d) and 67-424(3) (regarding conduct and 

winding up of partnership). See, also, § 67-433(2)(c) (regarding dissociation). Section 67-404 of the 1998 UPA provides 

in part:

(1) Except as otherwise provided in subsection (2) of 

this section, relations among the partners and between the 

partners and the partnership are governed by the partnership agreement. To the extent the partnership agreement 

does not otherwise provide, the [1998 UPA] governs relations among the partners and between the partners and 

the partnership.

The 1998 UPA is Nebraska’s counterpart to the model act 

known as RUPA. Section 67-404 of the 1998 UPA is equivalent 

to § 103 of RUPA. Comment 6 to § 103 of RUPA states:

[P]artnership agreements frequently contain provisions 

releasing a partner from liability for actions taken in good 

faith and in the honest belief that the actions are in the 

best interests of the partnership and indemnifying the 

partner against any liability incurred in connection with 
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the business of the partnership if the partner acts in a 

good faith belief that he has authority to act.

Robert W. Hillman et al., The Revised Uniform Partnership 

Act § 103, comment 6 at 44 (2013-14 ed. 2013) (emphasis supplied).

In this case, the district court determined that because 

Kerwin’s actions in entering into the Focal Point contracts were 

not authorized by the partnership, his actions were not shielded 

by the limitation of liability clause. The district court reasoned 

that “[a]s Kerwin had no right to bind [the partnership] to the 

Focal Point contracts without a majority vote of the [managing] partners, his entering into the [Focal Point] contracts 

was outside his duties as a partner and therefore not ‘taken 

in reliance on the provisions of’ the Partnership Agreement.” 

The district court therefore determined that Kerwin was not 

shielded by the limitation of liability clause in the Partnership 

Agreement. We believe the district court’s reasoning is incomplete, but we agree with the ultimate determination that Kerwin 

is not shielded from liability under paragraph 5.4 of the 

Partnership Agreement.

Paragraph 5.4 quoted above provides for several scenarios 

which excuse liability, and as we read it, the actions which 

gave rise to each scenario must have been taken in good faith. 

The district court made no specific comment on whether 

Kerwin’s conduct was taken in “good faith,” but we believe 

the court’s factual findings are inconsistent with good faith; 

thus, Kerwin is not shielded from liability under any scenario 

in paragraph 5.4 of the Partnership Agreement.

According to the court’s findings, Kerwin acknowledged 

that a consensus of the managing partners was required to enter 

into the Focal Point contracts and contended that a consensus 

had been reached. To the contrary, the district court found that 

Perry and Knud had no prior knowledge of the Focal Point 

contracts. The court found that “consternation . . . erupted once 

it became known that Perry and Kerwin were presenting corn 

prices to [FNB] which should have matched, but did not.” The 

court stated that, if all four managing partners had watched 

the “spectacular drops in the value of their corn crop, it would 

seem that someone would remember a specific, undoubtedly 
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unpleasant conversation,” but that there was no such exchange. 

The district court noted that the Focal Point contracts led to 

an “incredible loss in corn contract prices [which] would have 

been cited as a reason to end the partnership, but it was not.” 

The district court found that “the partnership lost significant 

money” as a result of the second and third series of contracts. 

The district court found the total loss was $2,144,350. The 

district court determined that Kerwin’s actions were outside 

and therefore not “‘taken in reliance on the provisions of’” the 

Partnership Agreement.

The findings by the district court in this case wherein 

Kerwin shared neither the fact of entering into the Focal Point 

contracts nor the fact of repeated significant losses with his 

partners cannot be explained by oversight or forgetfulness. 

Kerwin’s failure to mention the exposure of the partnership on 

the front side of the Focal Point contracts and the over $2 million loss on the back side, does not meet the measure of candor 

expected among partners. Despite his assertion of good faith, 

Kerwin was not forthright with his partners about important 

matters and the facts are inconsistent with Kerwin’s having 

taken action in good faith. Because good faith is required to 

shield Kerwin from liability under each scenario in paragraph 

5.4 of the Partnership Agreement, given the absence of good 

faith, Kerwin cannot take advantage of the provisions of paragraph 5.4, as the district court determined.

CONCLUSION

We determine that the district court was not clearly wrong 

when it determined that Kerwin was not authorized to enter 

into the Focal Point contracts on behalf of the partnership 

and when it determined that Kerwin’s actions of entering into 

the Focal Point contracts on the partnership’s behalf were not 

ratified. We further determine that the limitation of liability 

clause in the Partnership Agreement did not shield Kerwin 

from liability for the partnership’s losses due to the Focal Point 

contracts. We therefore affirm the order of the district court 

awarding judgment and damages to the appellees.

Affirmed