Border State Bank Of Greenbush v. Bagley Livestock Exchange, Inc.

690 N.W. 2d 326 (2004)

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Nature of the Case

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Facts

Johnson (D) and Anderson (D) entered into an oral cattle-sharing contract in December 1997. A month later, they memorialized the oral contract in written form. Anderson (D) agreed to care for, and breed cattle owned by Johnson (D) and Johnson would receive a 'guaranteed' percentage of the annual calf crop. The cattle Johnson (D) placed with Anderson (D) were 'considered to be owned by Johnson (D) and any offspring is to be sold under Johnson's (D) name. The contract required when the calves would be sold and within thirty days of receiving money for the sale, Johnson (D) to pay the 'remainder' to Anderson (D) 'for his keeping of the cattle.' In October 1999, Johnson (D) asked Anderson (D) to care for additional cattle on the same terms. Anderson (D) initially declined as he was getting out of the business. After further discussions, Anderson (D) eventually agreed to continue based on certain modifications: (1) the share percentage would be a straight 40/60 split, without Johnson's (D) 'guaranteed' percentage; (2) Johnson (D) would provide feed, including beet tailings; (3) Johnson (D) would provide additional pasture; and (4) the agreement would include approximately 500 cattle, instead of the original 151 cattle. Johnson (D) denied that he had agreed to provide feed, other than the beet tailings, and denied that he had agreed to change the provision that 'guaranteed' that his percentage of the calf crop would be calculated on the initial number of cows regardless of whether each produced a calf that survived. In March 2000, Anderson (D) negotiated with P for loans totaling $ 155,528. Anderson granted P a security interest in, among other things, all of Anderson's (D) 'rights, title and interest' in all 'livestock' then owned or thereafter acquired. Johnson (D) made a number of shipments of beet tailings and sent checks totaling $55,000 to Anderson (D) for the purchase of feed. Anderson (D) encountered difficulty caring for the cattle, and the cattle were reclaimed by Johnson (D), but the calves remained with Anderson (D) for sale. Some of the cattle that Johnson (D) reclaimed were actually Anderson's (D) cattle or were cattle that belonged to Evonne Stephens, another person with whom Anderson (D) had a cattle-sharing contract. The 289 calves that had remained were sold at Livestock (D). Livestock (D) knew of P's security interest but determined the security interest did not attach to the calves. Livestock (D)issued a check to Johnson (D) in the amount of $119,403. Johnson (D) gave Anderson (D) a check for $19,404, representing Anderson's (D) share of the sale proceeds, less $55,000 that Johnson claimed as repayment for money advanced to Anderson (D) to purchase feed. P sued Livestock (D) and Johnson (D), contending that they had converted P's perfected security interest in the calves. Johnson (D) sought indemnity from Anderson (D). Anderson (D) served a counterclaim against Johnson (D), asserting a breach of contract. Johnson (D) and Livestock Exchange moved for a directed verdict. The district court granted the motion; Johnson (D) did not 'grant' Anderson (D) an 'ownership interest' in the calves. P appealed. The jury determined that the written contract between Anderson (D) and Johnson (D) had been modified, Johnson (D) breached the contract, and Johnson's (D) breach directly caused damages to Anderson (D) in the amount of $92,360. Johnson (D) appealed.