SW Legal Educational Publishing

Agent Who Acts for Dishonest Principal Liable for Losses
Description Louisiana appeals court held that an auction house that sold stolen cattle was an agent acting for a dishonest principal, so was liable to the owner of the cattle for his loss. The agent auctioneer failed to make proper inquiry into the ownership of the cattle and should have suspected something was amiss.
Topic Agency
Key Words Dishonest Principal; Liability
C A S E   S U M M A R Y
Facts Through fraud, Smith obtained possession of numerous cows owned by Littleton. Smith sold the cows, without Littleton's knowledge, at an auction run by Livestock Producers, Inc. (LPI). Littleton sued to recover for his cows that had been sold at auction. Complex litigation resulted in appeal.
Decision "LPI was an agent acting for Smith, a dishonest principal. Smith was not a regular customer of the business, the cattle had fresh brands not associated with Smith, and LPI ... made no inquiry into the ownership of the cattle. Under these circumstances, we find that LPI is liable to Littleton for the price of the 126 cows sold at auction, $94,500." Littleton was not at fault in any way for the theft that occurred. Since the agent stands in the shoes of the seller, the auction barn (LPI) must stand the loss. LPI may, of course, attempt to recover from Smith, who knowingly sold property he did not own.
Citation Livestock Producers, Inc. v. Littleton, 1999 WL 1044500 (Slip Copy, Ct. App., La.)

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