Duxbury v. Spex Feeds, Inc., No. A03-1456.

• Citation: 681 N.W.2d 380
• Decision Date: 15 June 2004
• Docket Number: No. A03-1456.
• Parties: Kent DUXBURY, et al., Respondents, v. SPEX FEEDS, INC., Appellant, David Shanahan, Respondent.
• Court: Court of Appeals of Minnesota

681 N.W.2d 380

Kent DUXBURY, et al., Respondents, v. SPEX FEEDS, INC., Appellant, David Shanahan, Respondent.

No. A03-1456.

Court of Appeals of Minnesota.

June 15, 2004.

Peter C. Sandberg, Kari C. Stonelake-Hopkins, Dunlap & Seeger, P.A., Rochester, MN, and Scott Kerry Springer, Adams, Rizzi & Sween, P.A., Austin, MN, for appellant.

Charles A. Bird, Jeremy R. Stevens, Bird & Jacobsen, Rochester, MN, for respondents Kent Duxbury, et al.

Scott V. Kelly, Aaron J. Glade, Farrish Johnson Law Office, Mankato, MN, for respondent David Shanahan.

Considered and decided by WRIGHT, Presiding Judge; SCHUMACHER, Judge; and WILLIS, Judge.

OPINION

WRIGHT, Judge.

Respondents-farmers brought an action against appellant-feed producer after feed manufactured by appellant caused illness in respondents' gestating sows. A jury returned a verdict in respondents' favor on their claims of negligence, products liability, consumer fraud, and breach of express and implied warranties. Appellant moved for judgment notwithstanding the verdict (JNOV), challenging both the legal and factual bases for the verdict. The district court denied the motion. We affirm in part, reverse in part, and remand.

FACTS

Respondents Ken, Vickey, Steven, and Marlys Duxbury are farmers who raise corn and hogs. In February 2000, the Duxburys' sows began having gestational problems. When veterinarians were unable to confirm that an infectious disease was the source of the problem, the Duxburys had their hogs' feed tested in spring and summer 2000. This testing showed toxins in the feed. After the Duxburys discontinued use of the feed in August 2000, their sows recovered.

The Duxburys received the suspect hog feed from appellant Spex Feeds, Inc. Spex manufactures and sells feed and feed additives. Spex also operates a "grain bank" at which farmers deposit corn and receive a proportional share of the corn commingled in the bank. In 1999, the Spex grain bank comprised deposits from 38 farmers in nine grain bins.

In 1998 and 1999, the Duxburys deposited corn in the Spex grain bank. In late 1999, the Duxburys arranged for Spex to provide hog feed from their share in the grain bank.¹ They allege that Spex did not take reasonable steps to control moisture levels or monitor for mold or toxins in the grain bank.

Spex manufactured the feed by grinding grain bank corn and mixing in soybean meal, medicines, and nutritional supplements. The feed additives and supplements made up approximately 12 to 14 percent of the feed. The Duxburys were charged for all components of the feed except the corn. They also were charged a fee for the grinding, mixing, and delivery of the feed.

Respondent David Shanahan, a salesperson for Spex, had been selling feed to the Duxburys since 1990. In 1997, Shanahan invested in the Duxburys' hog farming operation. In return, he received 20 percent of the sows' surviving newborn pigs. Aside from assisting the Duxburys in the course of his employment at Spex, Shanahan did not participate in the management or operation of the Duxburys' farm and did not share in their profits or losses.

In October 2001, the Duxburys brought an action against Spex. Under the terms of a stipulation between the Duxburys and Spex, Shanahan was joined as a co-defendant. According to Spex's theory, Shanahan was a joint venturer whose knowledge about Spex should be imputed to the Duxburys. The case proceeded to trial. Following Shanahan's testimony, the district court held as a matter of law that a joint venture between Shanahan and the Duxburys did not exist and dismissed the claims against Shanahan.

Later during the trial, the Duxburys called Dr. Michael Behr, a forensic economist, who testified about the losses suffered by the Duxburys. Without taking into account inflation, he determined a total loss of $246,230. He calculated an additional $39,730 to account for inflation from the time of the losses.

Following an extensive charge conference, the jury was instructed on negligence, products liability, consumer fraud, and violation of express and implied warranties. The jury returned a verdict for the Duxburys, assessed comparative fault of 90 percent to Spex and 10 percent to the Duxburys, and awarded $247,000 in damages and $25,000 in interest.

Spex brought a motion for JNOV or a new trial, which the district court denied. This appeal followed.

ISSUES

I. Is the Uniform Commercial Code's "sale" requirement satisfied when a grain bank depositor, regulated under Minn. Stat. ch. 236, purchases feed from the grain bank?

II. Did the district court err in formulating the special verdict form for the claims brought under the Minnesota Consumer Fraud Act?

III. Does the Minnesota Commercial Feed Law supply a negligence per se standard for grain bank operators?

IV. Did the district court err in concluding as a matter of law that the Duxburys and Shanahan did not engage in a joint venture?

V. Does prejudgment interest calculated under Minn.Stat. § 549.09 preclude a jury award of interest on damages?

VI. Is there sufficient evidence to support the verdict?

ANALYSIS

I.

Spex argues that, because under the grain bank statutes the Duxburys kept title to the corn used to manufacture the feed, the "sale" requirement under the Uniform Commercial Code was not satisfied. See generally Minn.Stat. §§ 236.01,.03 (grain bank provisions), .2-106, .2-313,.2-314(UCC) (2002). As a result, Spex contends, the remedies of warranty and products liability are not available. In addressing this issue, we consider the scope and effect of regulation in this field to determine whether these remedies are abrogated. We review de novo questions of law, including matters of statutory interpretation. Modrow v. JP Foodservice, Inc., 656 N.W.2d 389, 393 (Minn.2003).

The licensing and operation of grain banks is governed by Minn.Stat. §§ 236.02-.09 (2002). When grain is deposited in a grain bank, the depositor obtains a receipt indicating the type and quantity of the grain. Minn.Stat. § 236.03. The depositor may later demand that the grain be sold or that the grain bank redeliver grain of equivalent type and quantity. Id. at § 236.04. As a condition of licensing, the grain bank must post a bond sufficient to satisfy the claims of all depositors. Id. at § 236.02, subd. 5. A depositor may bring an action to recover against the bond, which is the only remedy that Minn.Stat. ch. 236 specifically grants to depositors. Id., subd. 6.

Under Minn.Stat. § 236.06, the grain bank receives a possessory lien on the grain for all charges arising out of the storage and processing of the grain. This provision establishes the sole form of action for recovering against this lien and states that "[i]n the event of inconsistency between this section and the Uniform Commercial Code, this section applies." Because the language of section 236.06 plainly refers to "this section" and not the entire chapter, other UCC remedies remain available in grain bank cases that do not involve the grain bank's possessory lien.

The legal relationship between a grain bank and a depositor is controlled by the common law of bailment. Torgerson v. Quinn-Shepherdson Co., 161 Minn. 380, 382, 201 N.W. 615, 616 (1925). A bailment occurs when goods are delivered, without transferal of ownership, under an express or implied agreement that the goods will be returned. Wallinga v. Johnson, 269 Minn. 436, 438, 131 N.W.2d 216, 218 (1964). When grain is deposited in a grain bank, a bailment is created that gives rise to the grain bank's duty of care in keeping the grain. Production Credit Ass'n of St. Cloud v. Fitzpatrick, 385 N.W.2d 410 (Minn.App.1986). If the grain is damaged or lost, the operator has the burden to show lack of negligence. See Wallinga, 269 Minn. at 438-39,

131 N.W.2d at 219. These principles are consistent with grain bank regulation under Minn.Stat. ch. 236, which recognizes that the depositor is the "owner" of the grain. See Minn.Stat. § 236.03. The Duxburys contend that, because the depositor is entitled only to grain of the same type and quantity, rather than the same grain as deposited, no bailment arises. This argument is without legal support. Since the origin of statutory grain bank regulation, the Minnesota Supreme Court has consistently found a bailment, regardless of whether the grain is identical. See Torgerson, 161 Minn. at 382-83, 201 N.W. at 616; State v. Cowdery, 79 Minn. 94, 96-97, 81 N.W. 750, 750 (1900); Weiland v. Krejnick, 63 Minn. 314, 316-17, 65 N.W. 631, 632 (1895).

Our canons of statutory construction provide that, when two statutes are in conflict, they shall be construed, if possible, to give effect to both. Minn.Stat. § 645.26, subd. 1 (2002); State by Beaulieu v. Indep. Sch. Dist. No. 624, 533 N.W.2d 393, 396 (Minn.1995). In addition, remedies under the UCC are expressly protected from implied repeal. Minn.Stat. § 336.1-104 (2002); cf. Hampton Bank v. River City Yachts, Inc., 528 N.W.2d 880, 887 (Minn.App.1995)

(concluding that statutory regulation of watercraft titles does not preclude the application of UCC), review denied (Minn. Apr. 27, 1995). The availability of a statutory remedy does not abrogate other common law remedies except by "express wording or necessary implication." Ly v. Nystrom, 615 N.W.2d 302, 314 (Minn.2000). Thus, although statutory regulation in a field may supply the standard of care, compliance with such regulations does not protect a party from common law actions. Licha v. N. Pac. Ry., 201 Minn. 427, 431, 276 N.W. 813, 815 (1937); see generally 2B Norman J. Singer, Statutes and Statutory Construction § 50:05 (6th ed.2002).

Whether a transaction is governed by the UCC is a question of law, which we review de novo. Valley Farmers' Elevator v. Lindsay Bros. Co., 398 N.W.2d 553, 556 (Minn.1987). A warranty action under Article 2 of the UCC requires a "sale," which is defined as "the passing of title from the seller to the buyer for a price." Minn.Stat. § 336.2-106(1) ...