Opinion ID: 1246677
Heading Depth: 1
Heading Rank: 3

Heading: Olin's claims against T.H.E. We next approach the Olin-T.H.E. dispute.

Text: A. T.H.E. argues the trial court erred in holding that Olin should recover the price of the urea from T.H.E. because the record does not contain substantial evidence that IMC acted as T.H.E.'s agent. Whether a principal-agent relationship exists is ordinarily a question of fact to be decided by the trial court in the absence of a jury. Reed v. Bunger, 255 Iowa 322, 329, 122 N.W.2d 290, 295 (1963). Fact findings of a trial court in cases tried by ordinary proceedings have the effect of a special verdict, and if supported by substantial evidence they bind us. Sand Seed Service, Inc. v. Bainbridge, 246 N.W.2d 911, 912 (Iowa 1976). Substantial evidence means evidence that a reasonable mind would accept as adequate to reach a conclusion. Briggs v. Hinton Community School District, 282 N.W.2d 740, 743 (Iowa 1979). The trial court highlighted the evidence it relied on in the following manner: The Court FINDS and CONCLUDES that T.H.E. has no defense to Olin's action against them on the contract [sic] that the agency relationship did not exist. The Court FINDS that Olin did not act negligently with IMC-T.H.E., nor was the actual and apparent agency agreement ever effectively terminated by T.H.E. During August of 1979, T.H.E. became aware of IMC's financial plight and T.H.E.'s potential liability. Officers of T.H.E. testified that IMC's agency was limited and special and that IMC had exceeded that limit when they entered into this contract with Olin and that this transaction had not been specifically authorized. The Court FINDS this testimony to be not credible. The Court FINDS ample evidence that the agency agreement continued; that T.H.E. was paid a fee by IMC for these credit accommodation practices; that T.H.E.'s officers and directors knew or should have known of IMC's financial circumstances and the extent of their agency agreement, lack of specific special agency authorization, and their acknowledged liability of five million dollars on about August 8, 1979, far exceeding any limits testified to; yet, the practice continued when the fertilizer was bought on August 24, 1979, from Olin. ... The Court FINDS and CONCLUDES, therefore, that T.H.E. was the purchaser of the fertilizer from Olin; and that IMC acted only as T.H.E.'s agent; that T.H.E. has failed to pay the contract price of $214,726.40; has breached the contract; and therefore, judgment should be entered for Olin and against T.H.E. for said sum plus interest and costs as allowed by law. The trial court relied on substantial evidence in finding that IMC had actual or apparent authority to act on T.H.E.'s behalf. Its decision is binding. B. The trial court also ruled that Olin was entitled to be indemnified by T.H.E. for the storage fees and other expenses incurred by C.F. Sales as a result of the interpleader. This court recognizes the common-law doctrine of indemnity, absent a contract, in four situations: (1) Where the one seeking indemnity has only a derivative or vicarious liability for damage caused by the one sought to be charged. (2) Where the one seeking indemnity has incurred liability by action at the direction, in the interest of, and in reliance upon the one sought to be charged. Restatement Restitution, Sec. 90. (3) Where the one seeking indemnity has incurred liability because of a breach of duty owed to him by the one sought to be charged. (4) Where the one seeking indemnity has incurred liability merely because of failure, even though negligent, to discover or prevent the misconduct of the one sought to be charged. Peters v. Lyons, 168 N.W.2d 759, 767 (Iowa 1969). This court has held that no common-law right exists to recover expenses and attorneys' fees if the party initially charged is defending its own act of primary negligence. Rauch v. Senecal, 253 Iowa 487, 491, 112 N.W.2d 886, 888 (1962). See Iowa Power & Light Co. v. Abild Construction Co., 259 Iowa 314, 338, 144 N.W.2d 303, 317 (1962) ([A] party guilty of independent acts of negligence cannot receive indemnity from one also actively negligent.). This interpleader occurred because Olin wrongfully reclaimed the urea, preventing ultimate actual transfer of the urea to Royster and directly causing the storage fees and expenses for which Olin seeks indemnity. Applying the facts to the four-part common-law indemnity doctrine, Olin cannot rely on any of the four situations: it is not derivatively or vicariously liable; it has not incurred liability at the direction, in the interest of, [or in] reliance upon T.H.E.; T.H.E. has breached no duty owed Olin in regard to the interpleader (although it breached a contractual duty to purchase the urea, which is distinct from the interpleader); and Olin has not incurred liability for interpleader expenses as the direct result of misconduct by T.H.E., but rather as the result of its own unlawful reclaiming of the urea. We therefore overturn the judgment of the trial court on this issue and hold that Olin has no right to indemnification by T.H.E. V. Pan Am's claims against Amfert. Amfert contends that the trial court erred in awarding Pan Am damages for lost profits in Pan Am's sale to Royster; the trial court held that Amfert breached its warranty of title to the urea. Amfert argues that a buyer of goods cannot recover from a seller where the sole basis for the claim of breach of warranty of title is that a third party wrongfully asserted title in the goods. Section 554.2312 of the Iowa Code provides in pertinent part: 1. Subject to subsection 2 [exclusion of warranty] there is in a contract for sale a warranty by the seller that a. the title conveyed shall be good, and its transfer rightful; and b. the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge. The record shows that in this industry, sales are made rapidly and informally by telephone and deliveries are accomplished by passing the release numbers to the buyers as the goods pass from broker to broker. Olin sold the urea to IMC (or T.H.E.) and delivered the urea to IMC's leased warehouse space; title then passed. The urea thus was beyond Olin's control. IMC sold and, by giving the release numbers, delivered the urea to Amfert, and title passed to Amfert. Then Amfert sold and similarly delivered the urea to Pan Am, and title passed to Pan Am. No one except Olin and Pan Am (and Pan Am's purchaser, Royster) claimed title to the urea. Pan Am received title from Amfert, and Olin's claim to the title is unfounded. As no security interest, lien, or encumbrance existed against the urea, no breach of a warranty of title by Amfert to Pan Am occurred. A breach of warranty of title occurs when an outstanding superior title exists. 67 Am.Jur.2d Sales §§ 480, 487 (1973); 77 C.J.S. Sales § 335a (1952). The trial court erred in awarding Pan Am damages for breach of implied warranty of title, and we overturn that judgment. No occasion exists to determine whether Pan Am would be entitled to attorneys' fees from Amfert if it had prevailed on its warranty claim. VI. Pan Am's claims against Olin. Because Pan Am was unable to perform its contract fully with Royster, it made claim against Olin for tortious interference with that contract. The trial court found that Olin knowingly interfered with the Pan Am-Royster contract but denied recovery for tortious interference. We listed the elements necessary to establish a prima facie case of tortious interference with an existing contractual relation in Stoller Fisheries, Inc. v. American Title Insurance Co., 258 N.W.2d 336, 340 (Iowa 1977): 1. The existence of a valid contractual relation; 2. Knowledge of the relationship; 3. Intentional interference inducing or causing a breach or termination of the relationship; and 4. Resultant damage to the party whose relation has been disrupted. A purpose to injure or destroy an existing contract is not essential. Farmers Cooperative Elevator, Inc. v. State Bank, 236 N.W.2d 674, 679 (Iowa 1975). Under the trial court's fact findings, the conduct of Olin falls within the parameters of these four elements. First, Pan Am and Royster had a valid contractual relationship for the sale of urea. Second, Olin had knowledge of that relationship; if Olin did not know of the relationship prior to stopping delivery, it knew on October 23, 1979, when it discovered that C.F. Sales was loading the urea into cars for shipment to Royster. Third, Olin's action was intentional; it was done by design. Lerch v. Lerch, 177 So.2d 159, 162 (La.App.1965). The natural and reasonable consequence of inducing C.F. Sales to stop delivery, by the nature of the act and the manner in which it was done, resulted in harm to the Pan Am-Royster contract, and that harm was intentional. Velotta v. Western Fire Insurance Co., 121 So.2d 857, 858 (La.App.1960). It was not an act that can be traced to impaired judgment. Rosa v. Liberty Mutual Life Insurance Co., 243 F.Supp. 407, 408 (D.C.Conn.1965). Finally, Pan Am incurred lost profits when the contract was disrupted. The trial court relied on the following rule in Restatement (Second) of Torts § 773 (1977): One who, by asserting in good faith a legally protected interest of his own or threatening in good faith to protect the interest by appropriate means, intentionally causes a third person not to perform an existing contract or enter into a prospective contractual relation with another does not interfere improperly with the other's relation if the actor believes that his interest may otherwise be impaired or destroyed by the performance of the contract or transaction. Comment a to that section states this defense is of narrow scope and protects the actor only when (1) he has a legally protected interest, and (2) in good faith asserts or threatens to protect it, and (3) the threat is to protect it by appropriate means. Under these circumstances his interference is not improper although he knows that his conduct will cause another to break his contract.... If any of these elements is lacking, the rule stated in this Section, does not apply.... For Olin to interfere with the Pan Am-Royster contract and also to take refuge in this defense, Olin must have had a legally protected interest. The trial court found and we agree that Olin's right to stop delivery of the fertilizer terminated August 29-30, 1979, when it delivered to C.F.'s warehouse; and all of Olin's attempts to regain title and exercise its rights subsequent to that date were lost by virtue of the delivery and the subsequent purchases by Amfert and Pan Am as good faith purchasers for value without knowledge of potential defects in the title. Olin did not have a legally protected interest in the urea, and the trial court's reliance on section 773 was misplaced. Pan Am is entitled to damages from Olin for its lost profits on the Royster sale, together with interest. VII. Amfert's claims against Olin. Amfert argues it is entitled to recover from Olin on its claim of tortious interference with its contract with Pan Am. But Amfert sold and delivered the urea to Pan Am, under the mode of delivery of this commodity which exists among brokers. Olin did not interfere with that contract and is not liable to Amfert on that account.