Hester v. Farmers Home Admin., S84-0105C (D).
| Decision Date | 01 April 1985 |
| Docket Number | No. S84-0105C (D).,S84-0105C (D). |
| Citation | 49 BR 593 |
| Parties | Archie Leon HESTER, Jr., individually and as Treasurer of A.L. Hester Farms, Inc.; Barbara Ann Hester, Jr., individually; Jeffrey Kent Hester, individually and as Secretary of A.L. Hester Farms, Inc.; June E. Hester, individually and as President of A.L. Hester Farms, Inc.; and A.L. Hester Farms, Inc., Plaintiffs, v. FARMERS HOME ADMINISTRATION; John O. Foster, individually and as Missouri State Director of Farmers Home Administration; John Harvey, individually and as Chief of Farmer Programs of Missouri Farmers Home Administration; Gareld W. Calfee, individually and as a Farmer Program Specialist attached to the Missouri State Office of Farmers Home Administration; Harry C. Vogt, individually and as District Director for Farmers Home Administration in Ellington, Mo.; and Gerald C. Noland, individually and as a County Supervisor for Farmers Home Administration, Marble Hill, Missouri, Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Joseph F. Devereux, Jr., Timothy R. Barrett, St. Louis, Mo., Thomas D. Kershaw, Jr., Thomas M. Sheridan, Klamath Falls, Or., for plaintiffs.
Robert L. Purcell, Regional Atty. by Philip B. Green, U.S. Dept. of Agriculture, Kansas City, Mo., Edwin B. Brzezinski, Asst. U.S. Atty., St. Louis, Mo., for defendants.
This matter is before the Court upon defendants' motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure and defendants' motion for summary judgment pursuant to Rule 56 of the Federal Rules. This Court's jurisdiction is invoked pursuant to Title 5 U.S.C. §§ 702 and 706 and 28 U.S.C. §§ 1331, 1343, and 1346(a).
Plaintiffs Archie Leon Hester, Jeffrey Kent Hester, and E. June Hester are stock holders and officers in plaintiff A.L. Hester Farms, Inc., a family farm corporation, organized and operated under the laws of the State of Missouri. Defendant United States of America acted through its agency, the Farmers Home Administration (FmHA). The individual defendants are officials and/or employees of FmHA.
Plaintiffs allege the following: Plaintiffs Archie Leon Hester, Jr. and Barbara Ann Hester have obtained Farmer Program loans from defendant FmHA since 1976 pursuant to the Consolidated Farm and Rural Development Act. Plaintiff Jeffrey Kent Hester has obtained similar loans since 1978. Archie and Jeffrey Hester farmed together on land which they rented from plaintiff A.L. Hester Farms, Inc. and on land owned by Archie Leon Hester.
On April 14, 1981, Archie Hester entered into a written contract by which he agreed to pay A.L. Hester Farms, Inc. Seventy Five Dollars ($75.00) per deeded acre as cash rent for the use of five hundred fifty three (553) acres of farmland owned by the corporation; Jeffrey Hester entered into a similar contract for two hundred forty seven (247) acres that same day. On July 15, 1981, in consideration for the Bank of Bloomfield's (the Bank's) agreement to loan Archie and Barbara Hester One Hundred Twelve Thousand Dollars ($112,000.00), FmHA subordinated in favor of and assigned the bank liens or security interests in all of the Hesters' farm machinery and the majority of their crops. On October 22, 1981, FmHA issued another subordination agreement in the amount of Seventy Thousand Dollars ($70,000.00) FmHA also subordinated liens and security interests in plaintiff Jeffrey Hester's machinery and crops. The exact amount of the subordination is unknown to plaintiffs.
Plaintiffs allege that through the subordination agreements defendant United States, by and through FmHA and defendant Gerald C. Noland, agreed to a number of conditions: (a) to consent for plaintiffs to obtain the loans from the Bank; (b) that one of the purposes for the loan was to finance the plaintiff's annual operating expenses; (c) that the loan proceeds would be deposited in a "supervised" checking account where checks would have to bear the signature of defendant Noland as well as plaintiffs; (d) that defendant Noland would sign checks for plaintiff's annual operating expenses; (e) that FmHA would subordinate its liens and security interests in plaintiff's property to the Bank. Plaintiff allege that dispite the terms of the agreement, the Federal defendant and defendant Noland failed to issue the loan proceeds deposited in the supervised bank accounts to pay plaintiff's cash rent.
On July 24, 1981, at the request of defendant Noland, Archie and Jeffrey Hester entered into a formal partnership agreement to farm under the name of Hester Brothers Farming Company. The financial difficulties plaintiffs encountered in 1980 and 1981 led to a default of plaintiff's FmHA payments. Consequently, plaintiff met with defendant Noland in December of 1981 or January of 1982. The parties decided that the plaintiffs would sell their farm machinery at a public sale, and that Archie and Barbara Hester would sell their farm at the same sale or quickly thereafter.
Plaintiffs allege that if defendants had notified them of 7 U.S.C. § 1981a they would have applied for a deferral under that section rather than liquidate their equipment and land.
Plaintiffs further allege that the contract entered into between them and defendant United States of America for the sale of the farm equipment failed to include the Bank of Bloomfield. The Bank was a necessary party to any attempt to sell the equipment because the liens which had been held by defendant United States of America had subsequently been subordinated and assigned to the bank.
On March 8, 1982, the Board of Directors of plaintiff A.L. Hester Farms, Inc. authorized the purchase of machinery and grain bins at the upcoming auction and authorized the application of a loan from the Bank of Bernie to be used for the purchase of machinery, operating, and incidental expenses. Plaintiffs allege that there was an understanding that the loan monies for the purchase of machinery would be needed only in the event that the proceeds from the life insurance of Archie Hester, Sr., who had died on January 2, 1982, did not arrive in time to pay for the machinery purchased at the sale. Plaintiffs allege that they informed defendant Noland of the corporation's plan to purchase the machinery and that he had no objections.
The auction was held on March 9, 1982. Plaintiff A.L. Hester Farms, Inc. purchased One Hundred Thirty Five Thousand Six Hundred Forty Eight Dollars ($135,648.00) worth of equipment at the auction. Plaintiff was unable to pay for the equipment after the auction, however, because the proceeds from the life insurance of Archie Hester, Sr. had not been delivered. Archie Hester, Jr. assured the auctioneer that the money should arrive any day or, failing that, that a bank loan would be obtained to secure payment.
On March 10, 1982, the auctioneer relayed this information to defendant Noland. On that same day, plaintiff Archie Hester also informed defendant Noland of the delay in payment. Plaintiff states that defendant indicated no opposition to the arrangement. Subsequent complaints from borrowers, however, initiated an investigation of the sale. On March 12, 1982, plaintiffs discussed the circumstances of the sale with defendants Noland and Vogt as well as the plan to finance the purchases. Plaintiff Archie Hester allegedly told the defendants that the funds necessary to purchase the machinery would be available on or before March 23, 1982. Plaintiff avers that defendants agreed to wait until that date.
Three days later, however, defendant Noland met with plaintiffs Archie Hester, Jr. and Jeffrey Hester and informed them that the equipment purchased by A.L. Hester Farms, Inc. was to be declared a "no sale" by the FmHA. Plaintiffs were then presented with a Notice of Acceleration and Demand For Payment. Plaintiffs stated their opposition to the acceleration of their accounts and the declaration of "no sale." They requested information concerning how to appeal the decision, but defendant Noland allegedly told them that it would be useless.
On March 16, 1982, plaintiff Archie Hester, Jr. telephoned the state FmHA office and scheduled an appointment for March 19, 1982. On the following day, plaintiffs allege that defendant Vogt sent to defendant Foster a report which stated that the public sale had been improper. At the March 19 meeting, defendant Foster refused plaintiff's offer of payment, stating that plaintiffs had rigged the sale, but declining to specify the source of his information. Defendant Foster then informed plaintiffs of FmHA's decision to repossess the equipment sold to A.L. Hester Farms, Inc. Plaintiffs further aver that defendant gave them no notice of how they could appeal the decision and, moreover, assured plaintiff's that "You'll never be back with this agency as long as I'm here."
Plaintiffs' farm machinery was then repossessed by FmHA. The agency employed the Crader Equipment Company to move and store the machinery and Macke's Farm Equipment to disassemble and transport a grain bin. The charges for these services amounts to Ten Thousand Two Hundred Fifteen Dollars and Forty Cents ($10,215.40) and were deducted from the accounts of plaintiffs Archie and Jeffrey Hester. The loss of the grain bin also caused a significant amount of plaintiffs' rice crop to spoil resulting in claimed losses of Thirty Two Thousand Seven Hundred Seven Dollars ($32,707.00). A second sale of plaintiffs' farm machinery and equipment was held on April 23, 1982. It netted Four Thousand One Hundred Eighty One Dollars and Fifty Eight Cents ($4,181.58) more than the first sale, not including the losses incurred by the plaintiffs in the form of lost crops and storage costs.
Following unsuccessful attempts to determine why a "no sale" had been declared, plaintiffs requested a hearing from defendant Foster. This letter was also unavailing. Plaintiffs allege that defendants have purposely withheld...
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