Battle Creek State Bank v. Preusker
| Decision Date | 12 December 1997 |
| Docket Number | No. S-96-198,S-96-198 |
| Citation | 571 N.W.2d 294,253 Neb. 502 |
| Parties | BATTLE CREEK STATE BANK, Appellee, v. Mart PREUSKER and Phyllis Preusker, Appellants. |
| Court | Nebraska Supreme Court |
Syllabus by the Court
1. Summary Judgment. Summary judgment is proper when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.
2. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an appellate court views the evidence in a light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.
3. Summary Judgment: Proof. The party moving for summary judgment has the burden to show that no genuine issue of material fact exists and must produce sufficient evidence to demonstrate that the moving party is entitled to judgment as a matter of law.
4. Federal Acts: Agriculture: Security Interests: Sales. The only persons entitled to protection under the federal Food Security Act are those who are buyers in the ordinary course of business.
5. Federal Acts: Agriculture: Security Interests: Uniform Commercial Code. The federal Food Security Act is not meant to preempt or interfere with provisions of the Uniform Commercial Code regarding the creation, perfection, and priority of security interests.
6. Agriculture: Security Interests: Debtors and Creditors: Waiver. The failure to list a product on an effective financing statement does not act as a waiver of a prior security interest against entities that are not buyers in the ordinary course of business, such as in priority battles with other creditors.
7. Property: Security Interests: Conversion. When property is subject to a security interest, an exercise of dominion or control over the property that is inconsistent with the rights of the secured party constitutes, as to that secured party, a conversion of the property.
8. Parties: Jurisdiction: Waiver. The presence of necessary parties to a suit is a jurisdictional matter and cannot be waived by the parties; it is the duty of the plaintiff to join all persons who have or claim any interest which would be affected by the judgment.
9. Parties: Words and Phrases. An indispensable or necessary party to a suit is one who has an interest in the controversy to an extent that such party's absence from the proceedings prevents a court from making a final determination concerning the controversy without affecting such party's interest.
10. Parties: Pleadings: Tort-feasors: Damages: Liability. A plaintiff need not join all tort-feasors as defendants in an action for damages. Every joint tort-feasor is liable for all damages to which his conduct has contributed, and it is no defense that these damages would not have occurred without the concurring misconduct of another person.
11. Summary Judgment: Proof. On a motion for summary judgment, after the moving party has shown facts entitling it to a judgment as a matter of law, the opposing party has the burden to present evidence showing an issue of material fact which prevents judgment as a matter of law for the moving party.
12. Summary Judgment: Affidavits. If the movant for summary judgment submits an affidavit as to a material fact, and that fact is not contradicted by the adverse party, the court will determine that there is no issue as to that fact.
13. Affidavits. Supporting and opposing affidavits (1) shall be made on personal knowledge, (2) shall set forth such facts as would be admissible in evidence, and (3) shall show affirmatively that the affiant is competent to testify to the matters stated therein.
14. Affidavits. Statements in affidavits as to opinion, belief, or conclusions of law are of no effect.
James F. Brogan, Madison, for appellants.
Stan A. Emerson, of Sipple, Hansen, Emerson & Schumacher, Columbus, for appellee.
Robert J. Hallstrom, of Brandt, Horan, Hallstrom & Sedlacek, Nebraska City, for amicus curiae Nebraska Bankers Association, Inc.
This appeal presents two principal issues: (1) Whom does 7 U.S.C. § 1631 (1994) of the federal Food Security Act (FSA) protect? (2) What effect does the FSA have, if any, on security interests under the Uniform Commercial Code (U.C.C.)? The appellants, Mart Preusker and Phyllis Preusker, as
creditors of their daughter and son-in-law, received proceeds from the sale of fluid milk to a dairy cooperative to pay part of an existing debt. The milk was subject to a perfected security interest of the appellee, Battle Creek State Bank, pursuant to Neb. U.C.C. § 9-307(1) (Reissue 1992). However, the bank had failed to list milk on a "Nebraska Effective Financing Statement" that was filed pursuant to Neb.Rev.Stat. §§ 52-1301 through 52-1321 (Reissue 1988). The district court for Madison County granted summary judgment to the bank, and the Preuskers appealed. We conclude that the Preuskers are not buyers in the ordinary course of business and are not protected under the FSA. Because the FSA was not intended to alter the creation, perfection, or priority of security interests under the U.C.C., the Preuskers are liable to the bank for their conversion of the proceeds. Accordingly, we affirm.
In November 1990, Todd Duhacek and Deb Duhachek borrowed money from the Battle Creek State Bank. The Duhacheks executed a financing statement granting the bank a security interest in certain farm property, including a security interest in the "products, proceeds ... and profits thereof ... [in][a]ll farm products or inventory, including but not limited to all livestock, crops ... and products of crops and of livestock...." The financing statement was properly filed. In January 1992, the Duhacheks executed a "Nebraska Effective Financing Statement" pursuant to §§ 52-1301 through 52-1321, listing cattle and calves as some of the products subject to the bank's security interest. However, the statement did not include milk.
Before proceeding further, an explanation of the Nebraska Effective Financing Statement might be helpful in understanding the background and later analysis. The Nebraska Effective Financing Statement is not the conventional financing statement that is filed under the Nebraska U.C.C. Rather, it is the form filed pursuant to the FSA that allows a creditor to retain a security interest effective against a buyer of farm products in the ordinary course of business.
The appellants in this case, the Preuskers, are Deb Duhachek's parents. Between August 1991 and August 1994, the Preuskers loaned the Duhacheks money with the agreement that it would be repaid from the proceeds of fluid milk that was to be produced and sold by the Duhacheks. The Duhacheks sold milk to Northeast Nebraska Milk Producers, Inc., a Nebraska cooperative corporation, and between June 1993 and December 1994, the Duhacheks repaid part of the loan from the Preuskers through the assignment of the proceeds of the milk sold to the cooperative. The affidavit of the bank indicated that the Preuskers received not less than $4,838.48 in milk proceeds. The affidavits presented by the Preuskers stated that the bank had knowledge of the loans and assignment of proceeds, and that the bank acquiesced in the arrangement. However, the court determined that the Preuskers' affidavits were not based on personal knowledge. The affidavit of the bank stated that the Duhacheks did not disclose their indebtedness to the Preuskers on loan disclosure statements that they provided to the bank in January and June 1994. In December 1994, the Duhacheks filed a petition for bankruptcy. The bank then sought to recover from the Preuskers the proceeds they received following the sale of milk by the Duhacheks.
The district court, in its order granting summary judgment to the bank, found that the Preuskers received proceeds from the sale of milk that was subject to the bank's perfected security interest. The district court further found that a Nebraska Effective Financing Statement covering milk had not been filed by the bank pursuant to §§ 53-1301 through 52-1321 and that the Duhacheks had not given the Preuskers a security interest in the milk. The district court determined that the failure of the bank to list milk on the Nebraska Effective Financing Statement did not invalidate the security interest in milk that was properly perfected under the U.C.C. The court further determined that the Preuskers' affidavits concerning the bank's acquiescence to the distribution of proceeds were not based on
foundational facts and that an action for conversion was proper. Accordingly, [253 Neb. 506] the district court held that the bank's lien had priority over any claims the Preuskers had to the proceeds of the milk sales and awarded $4,838.48 to the bank.
The Preuskers assign as error the district court's actions in (1) sustaining the bank's motion for summary judgment, (2) overruling the Preuskers' motion for summary judgment, (3) finding that no issues of material fact were present in the case, (4) ignoring a motion by the Preuskers to join Northeast Nebraska Milk Producers as an additional necessary party defendant, (5) finding that the bank did not waive its security interest in fluid milk when it filed a Nebraska Effective Financing Statement that did not include milk as a listed product, (6) finding that the bank's lien on fluid milk survived the sale of the milk to the Northeast Nebraska Milk Producers, and (7) finding that the bank was entitled to a judgment for conversion.
Summary judgment is proper when the pleadings, depositions, admissions, stipulations, and affidavits in the record disclose that there...
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