Frontier Leasing Corp. v. Links Engineering, LLC

In January 2004, Royal Links USA solicited Dave Fleming, golf professional and director of golf for Links Engineering, doing business as Bluff Creek Golf Course, to purchase a nonmotorized beverage cart. Royal Links told Fleming that advertising revenue from the beverage cart would cover Bluff Creek's monthly lease expenses for the cart. On January 21, Fleming, on behalf of Bluff Creek, applied for financing for the beverage cart and signed a Royal Links USA credit application. Royal Links sent Bluff Creek's credit application to C&J Leasing Corp., which approved Bluff Creek for credit. In February 2004, Fleming and C&J Leasing signed a lease agreement for the beverage cart. In 2005, Bluff Creek defaulted on the lease payments. C&J Leasing sent a default letter to Bluff Creek stating that Bluff Creek could correct the default by paying $1,322. Otherwise, C&J Leasing would require payment of the entire balance of $14,636, and Bluff Creek would have to return the equipment. Upon receiving this letter, the managing owner of Bluff Creek, Lance Clute, called C&J Leasing and learned of the lease agreement signed by Fleming. Clute requested a copy of the lease, and upon its receipt, he stopped all payments on the cart. Clute communicated to C&J Leasing that he wanted the beverage cart removed from his property. Clute submitted an affidavit stating Fleming did not have authorization to enter into financing agreements. Nonetheless, Bluff Creek had made some payments on the cart lease to C&J Leasing prior to Clute learning about the lease. Bluff Creek was sued for breach of contract. The district court issued a summary judgment that Fleming had authority to bind Bluff Creek on the contract and that Bluff Creek was liable to the lessor, Frontier Leasing Corporation, which had acquired from C&J Leasing the rights to collect on the lease. The Iowa Court of Appeals reversed, and Frontier Leasing appealed to the Iowa Supreme Court.

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