First Western Bank, Sturgis v. Livestock Yards Co., No. 17134

CourtSupreme Court of South Dakota
Writing for the CourtHERTZ; MILLER; MORGAN
Citation466 N.W.2d 853
Docket NumberNo. 17134
Decision Date06 March 1991
PartiesFIRST WESTERN BANK, STURGIS, a South Dakota banking corporation, Plaintiff and Appellant, v. LIVESTOCK YARDS COMPANY, a limited partnership, Livestock Yards Co., a South Dakota corporation and the Bank of Belle Fourche, a South Dakota banking corporation, Defendants and Appellees.

Page 853

466 N.W.2d 853
FIRST WESTERN BANK, STURGIS, a South Dakota banking
corporation, Plaintiff and Appellant,
v.
LIVESTOCK YARDS COMPANY, a limited partnership, Livestock
Yards Co., a South Dakota corporation and the Bank
of Belle Fourche, a South Dakota banking
corporation, Defendants and
Appellees.
No. 17134.
Supreme Court of South Dakota.
Argued Jan. 9, 1991.
Decided March 6, 1991.

Keith R. Smit of Morman, Smit, Hughes, Strain, Molstad & Haivala, Sturgis, for plaintiff and appellant (Michael W. Strain of Morman, Smit, Hughes, Strain, Molstad & Haivala, on brief).

Harlan A. Schmidt, Spearfish, for defendant and appellee Livestock Yards Co.

Page 854

HERTZ, Acting Justice.

First Western Bank, Sturgis (Bank), appeals from a judgment entered pursuant to a jury verdict in favor of Livestock Yards Company (Partnership) on Bank's foreclosure action. Bank contends that Partnership was not entitled to a jury trial, that Partnership's agent had authority to undertake the loan at issue as a matter of law, and that the trial court erred in instructing the jury. We affirm.

FACTS

Madden's Livestock Market, Inc. (Corporation) was a commission sales barn at St. Onge, South Dakota, which was owned and operated by Michael Madden (Madden). In 1983, Madden and his wife formed a limited partnership pursuant to his plan to split the ownership of the sales barn facilities from its operation. Madden sold $1.2 million of limited partnership interests, and he was the general partner of the limited partnership. The limited partnership then purchased the sales barn from Corporation. Corporation, as the operating company, entered into an operating agreement leasing the sales barn from partnership, and as holding company, Corporation held all licenses and permits to operate the sales barn.

The Certificate of Limited Partnership of Livestock Yards Company provided in part as follows:

ARTICLE X.

Powers and Limitations of Partnership

The partnership shall have all of the powers of a partnership without limited partners under the South Dakota Uniform Partnership Act, including, by way of amplification and not in limitation, the power to:

. . . . .

B. to borrow money;

C. to mortgage, pledge or encumber in any manner all or any part of any real or personal property or any interest therein[.]

. . . . .

ARTICLE XI.

Power and Authority of Partners

A. The general partner shall have exclusive power and authority to conduct the business and affairs of the partnership. Any action taken by the general partner shall constitute the act of and bind the partnership. No person dealing with this partnership shall be required to inquire into the authority of the general partner.

B. The general partner shall have ... full power and authority to take any action consistent with the purpose of the partnership ..., or carry out any of the powers of the partnership[.]

The certificate also created an advisory board, the purpose of which was to review loans, contracts, leases and other transactions. The board's function was limited to determining whether individual transactions were fair and favorable; the board had no power to take any action in regard to transactions of partnership.

A few years after the limited partnership was started, Madden devised a plan to form a new corporation to buy back the sales barn from the limited partners, and to buy a second sales barn in Belle Fourche along with some property in Montana. In April, 1987, Madden approached Bank's president, John E. Johnson (Johnson), for a loan of $250,000. Johnson testified that Madden told him the money was to be used to pay outstanding bills, and that the loan would be repaid from the proceeds of the pending sale of Corporation. Johnson asked Madden to provide Bank with additional information, and subsequently Madden delivered to Johnson a copy of the certificate of limited partnership, a list of the names of the limited partners, and the December 31, 1986, financial statement of Partnership.

Johnson brought this information to a meeting of Bank's loan committee on April 21, 1987, where Madden's loan application was considered. The loan committee tentatively approved the loan, subject to the requirement that Johnson obtain a list of the bills payable, a confirmation of the sale of Corporation, the written approval of

Page 855

Partnership's Advisory Board and a list of the names of the limited partners. The next day, April 22, 1987, Johnson relayed to Madden the committee's tentative approval and the additional documentation needed. That same day, Madden brought to the Bank a list of bills payable, as follows:
Madden's Livestock Market, Inc. & Livestock Yards Co.
                Telephone system $13,693.92
                Truck scale 38,224.38
                Posts & Plank 8,790.60
                Insurance 18,820.00
                Taxes 9,262.06
                Scale repair 3,964.69
                Back-up beam scale 3,341.68
                Trailer loading chutes 13,500.00
                Repair sewer system 1,350.00
                Hay contracts 71,000.00
                Corn 3,115.61
                April Payroll 25,000.00
                April Payables 12,000.00
                 -----------
                 Total $222,062.94
                 -----------
                 -----------
                

Johnson admitted that he never tried to distinguish or allocate the bills between the two entities, and only inquired as to one of the listed expenditures. In fact, Johnson admitted that he knew that the bills for hay, corn, payroll, and payables were not Partnership debts, and that the financial statement Madden had provided him showed Partnership to be solvent and well-capitalized with no short-term payables. Although he knew that at least $111,115.00 (the total of hay, corn, payroll, and payables) of the bills were attributed to Corporation, Johnson suggested that the loan be made to Partnership since it owned the sales barn and the forty acres upon which it was situated. Even though Madden said he needed the loan to pay existing debts of Partnership, Johnson never inquired if any of the bills listed were for materials already purchased or debts actually incurred.

Because Partnership held the only available collateral, Bank prepared, and Madden, as general partner, executed a 30-day promissory note and mortgage on behalf of Partnership on April 22, 1987. Madden and his wife personally guaranteed the loan, and Bank issued Madden a certified check payable to Partnership that day. Madden immediately diverted the funds and none of the loan proceeds were ever received by or deposited to accounts of Partnership. Johnson did not satisfy the loan committee's requirements for approval of the loan as Madden never provided Bank...

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18 practice notes
  • State v. One 1969 Blue Pontiac Firebird, No. 24272.
    • United States
    • Supreme Court of South Dakota
    • June 27, 2007
    ...to a jury trial." First Nat'l Bank of Philip, 2002 SD 36, ¶ 10, 642 N.W.2d at 201 (quoting First W. Bank, Sturgis v. Livestock Yards, 466 N.W.2d 853, 856 (S.D.1991)) (additional citations [¶ 7.] The State argues there are two reasons Baade should be denied a jury trial. First, forfeiture ac......
  • In re Tri-State Ethanol Co., LLC, No. CIV 06-1040.
    • United States
    • United States District Courts. 8th Circuit. United States District Courts. 8th Circuit. District of South Dakota
    • May 17, 2007
    ...A complaint seeking to foreclose a mortgage is unquestionably an equitable action. See First W. Bank, Sturgis v. Livestock Yards, 466 N.W.2d 853, 856 (S.D.1991), which case cites Lounsberry v. Kelly, 32 S.D. 160, 142 N.W. 180, on reh'g 32 S.D. 456, 143 N.W. 369 (S.D.1913). "Foreclosure of a......
  • Fox v. Burden, No. 20811.
    • United States
    • Supreme Court of South Dakota
    • December 15, 1999
    ...(S.D.1991) (quoting Rosebud Sioux Tribe v. Strain, 432 N.W.2d 259, 264 (S.D.1988)); First Western Bank, Sturgis v. Livestock Yards Co., 466 N.W.2d 853, 856-57 (S.D.1991); Nizielski v. Tvinnereim, 453 N.W.2d 831, 832-33 (S.D.1990). We have previously stated: "In cases where the pleadings see......
  • Darrow v. Schumacher, No. 17689
    • United States
    • Supreme Court of South Dakota
    • May 27, 1992
    ...and correct statement of the law applicable to the case, the instructions are not erroneous." First W. Bank, Sturgis v. Livestock Yards, 466 N.W.2d 853, 858 (S.D.1991). Accord Stormo v. Strong, 469 N.W.2d 816, 825 (S.D.1991); Frazier v. Norton, 334 N.W.2d 865, 870 (S.D.1983). Darrow must pr......
  • Request a trial to view additional results
18 cases
  • State v. One 1969 Blue Pontiac Firebird, No. 24272.
    • United States
    • Supreme Court of South Dakota
    • June 27, 2007
    ...to a jury trial." First Nat'l Bank of Philip, 2002 SD 36, ¶ 10, 642 N.W.2d at 201 (quoting First W. Bank, Sturgis v. Livestock Yards, 466 N.W.2d 853, 856 (S.D.1991)) (additional citations [¶ 7.] The State argues there are two reasons Baade should be denied a jury trial. First, forfeiture ac......
  • In re Tri-State Ethanol Co., LLC, No. CIV 06-1040.
    • United States
    • United States District Courts. 8th Circuit. United States District Courts. 8th Circuit. District of South Dakota
    • May 17, 2007
    ...A complaint seeking to foreclose a mortgage is unquestionably an equitable action. See First W. Bank, Sturgis v. Livestock Yards, 466 N.W.2d 853, 856 (S.D.1991), which case cites Lounsberry v. Kelly, 32 S.D. 160, 142 N.W. 180, on reh'g 32 S.D. 456, 143 N.W. 369 (S.D.1913). "Foreclosure of a......
  • Fox v. Burden, No. 20811.
    • United States
    • Supreme Court of South Dakota
    • December 15, 1999
    ...(S.D.1991) (quoting Rosebud Sioux Tribe v. Strain, 432 N.W.2d 259, 264 (S.D.1988)); First Western Bank, Sturgis v. Livestock Yards Co., 466 N.W.2d 853, 856-57 (S.D.1991); Nizielski v. Tvinnereim, 453 N.W.2d 831, 832-33 (S.D.1990). We have previously stated: "In cases where the pleadings see......
  • Darrow v. Schumacher, No. 17689
    • United States
    • Supreme Court of South Dakota
    • May 27, 1992
    ...and correct statement of the law applicable to the case, the instructions are not erroneous." First W. Bank, Sturgis v. Livestock Yards, 466 N.W.2d 853, 858 (S.D.1991). Accord Stormo v. Strong, 469 N.W.2d 816, 825 (S.D.1991); Frazier v. Norton, 334 N.W.2d 865, 870 (S.D.1983). Darrow must pr......
  • Request a trial to view additional results

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