Mid-South Order Buyers, Inc. v. Platte Valley Livestock, Inc., MID-SOUTH

• Decision Date: 22 January 1982
• Docket Number: MID-SOUTH,No. 43600,43600
• Citation: 210 Neb. 382,315 N.W.2d 229
• Parties: ORDER BUYERS, INC., a corporation, Appellee, v. PLATTE VALLEY LIVESTOCK, INC., a corporation, Appellant.
• Court: Nebraska Supreme Court

Page 229

315 N.W.2d 229

210 Neb. 382

MID-SOUTH ORDER BUYERS, INC., a corporation, Appellee, v. PLATTE VALLEY LIVESTOCK, INC., a corporation, Appellant.

No. 43600.

Supreme Court of Nebraska.

Jan. 22, 1982.

Syllabus by the Court

1. Federal Acts: Livestock: Words and Phrases. The terms practice and practices in 7 U.S.C. § 208(a) (1976) do not necessarily require repetitious acts. The term practice may involve only a single transaction if the unjust or unreasonable practice is among the evils the Packers and Stockyards Act was intended to remedy.

2. Federal Acts: Livestock: Trusts. A trustee may not offset against the trust account a debt owing to the trustee individually and not as trustee. Under the regulations issued by the Secretary of Agriculture under 7 U.S.C. § 228 (1976), the custodial account of a market agency is a trust fund of which the marketing agency is a trustee. The misuse of a custodial account by a marketing agency is an unjust practice under the provisions of 7 U.S.C. § 208(a) (1976), and the marketing agency may be liable under the provisions of 7 U.S.C. § 209(a) (1976) to the person injured by such misuse.

3. Federal Acts: Reparation Orders: Jurisdiction. An order of the Secretary of Agriculture for the payment of money may be enforced in any U.S. District Court or in any state court having general jurisdiction of the parties. The findings and orders of the Secretary are prima facie evidence of the facts therein stated. 7 U.S.C. § 210(f) (1976).

4. Federal Acts: Reparation Orders: Summary Judgments. Where a reparation order of the Secretary of Agriculture contains findings on all matters necessary to the plaintiff's recovery and is supported by substantial evidence and no rebutting evidence is offered, the cause may be decided on motion for summary judgment in the court having jurisdiction.

Leo A. Knowles of McGrath, North, O'Malley & Kratz, P. C., Omaha, for appellant.

Frank J. Mattoon of Martin, Mattoon, Matzke & Mattoon, Sidney, for appellee.

William G. Kanter, James Michael Kelly, and Raymond W. Fullerton, Washington, D.C., Irene M. Solet, Arlington, Va., John J. Casey, Washington, D.C., and Helen C. Harris, Omaha, amicus curiae.

Heard before KRIVOSHA, C. J., and BOSLAUGH, McCOWN, CLINTON, BRODKEY, and HASTINGS, JJ.

CLINTON, Justice.

This is an action commenced in the District Court for Scotts Bluff County, Nebraska, by plaintiff, Mid-South Order Buyers, Inc. (Mid-South), against the defendant, Platte Valley Livestock, Inc. (Platte Valley), under the provisions of the Packers and Stockyards Act, 7 U.S.C. §§ 208 et seq. (1976), to enforce, under the provisions of § 210(f), a reparation order for the payment of money made by the Secretary of Agriculture through his delegate.

Mid-South, as its name implies, was engaged in the business, among others, of buying cattle for others on order for a commission and is a registrant under the act. Platte Valley is a dealer and market agency under the terms of the act, registered as such with the Secretary of Agriculture. It is engaged in the business of buying and selling cattle on commission and on its own account.

The cause in the District Court was tried on motions for summary judgment filed by both Mid-South and Platte Valley. The evidence in support of the motions was the order and findings of the hearing examiner of the Department of Agriculture (the Secretary's delegate) and the record made in the hearing before the examiner, together with the foundational exhibits. The order of the examiner directed Platte Valley to pay Mid-South the sum of $26,156.04 with interest at 8 percent from April 1, 1973, until paid. The District Court denied the motion of Platte Valley, granted that of Mid-South, and entered judgment for Mid-South in the amount specified in the order of the examiner. Platte Valley has appealed to this court and raises the following issues: (1) The U.S. Department of Agriculture was without jurisdiction over this matter inasmuch as the action of Platte Valley on which the reparation order is based did not constitute a "practice" within the meaning of the Packers and Stockyards Act, § 208. (2) Irrespective of the jurisdiction of the Secretary of Agriculture over this dispute, the actions of Platte Valley were clearly lawful and do not, in any event, amount to an unlawful, unreasonable, or discriminatory practice, and such holding was contrary to law and unsupported by substantial evidence.

An understanding of the issues makes necessary a summary of the pertinent federal statutes and regulations as well as a summary of the facts as found by the hearing examiner.

We will first summarize the statutes and the regulations. Section 208(a) places the duty upon stockyard owners and market agencies to "establish, observe, and enforce just, reasonable, and nondiscriminatory regulations and practices in respect to the furnishing of stockyard services, and every unjust, unreasonable, or discriminatory regulation or practice is prohibited and declared to be unlawful." Section 209(a) makes any person violating any provision of the chapter (act) liable to the person injured thereby for the full amount of damages sustained as a consequence of the violation. Liability under the act may be enforced by complaint to the Secretary of Agriculture as provided in § 210. An order of the Secretary for the payment of money may be enforced in any U.S. District Court or in any state court having general jurisdiction of the parties. The findings and orders of the Secretary are prima facie evidence of the facts therein stated. § 210(f).

Section 228(a) authorizes the Secretary to make rules and regulations to carry out the purposes of the act. Regulations adopted by the Secretary require a market agency to maintain a separate bank account designated as "custodial account for shippers' proceeds," or some similar designation, and make the depositor or market agency a fiduciary, and designate funds in the account as trust funds.

In the reparation proceedings before the examiner, there were parties other than Mid-South and Platte Valley. They are not parties to this appeal because of an intervening bankruptcy. However, they must be identified for purposes of setting forth the factual summary. These parties were Tige Enterprises, Inc. (Tige), and its president and sole stockholder, Gary Berta.

A brief summary of the facts taken from the findings and order and the accompanying record is as follows. On February 2, 7, and 9, 1973, Tige, through Berta, purchased from Mid-South three separate lots of cattle numbering, respectively, 118, 107, and 104 head. The invoices on these purchases, which were separately shipped on the dates above mentioned, provided: "Customers paying for livestock purchased of or through this company by check or draft agree that title does not pass until the funds have actually been received by this company." The motor truck bills of lading consigned the cattle to Tige Enterprises, Inc., in care of Gary Berta, at Platte Valley Livestock, Gering, Nebraska.

When the cattle from the first and second shipments were delivered at Platte Valley, the cattle were under stress and not fit for sale. The weather was bad, and the yards were wet and muddy. The matter was discussed by Berta and Floyd Engleman, president and sole stockholder of Platte Valley. Engleman suggested that the stressed cattle be placed in pasture on feed and medication, and furnished to Berta some pastureland which he had available. Twenty cattle from the first shipment and all the cattle from the second shipment, except a few that had died, were placed in the pasture along with other cattle which were in similar condition.

When the second load of cattle was shipped from Mid-South's place of business in Mississippi, Mid-South had not received payment for the first shipment. It contacted Berta who indicated the check was in the mail. When the third load arrived at Platte Valley, no payment had been made for any of the cattle shipped.

On February 27, 1973, the approximately 129 head of cattle which had been placed in pasture along with the others, 333 head in all, were sold at Platte Valley by Platte Valley as agent for Tige. At that time Tige and/or Berta was indebted to Platte Valley in the amount of approximately $62,000 on unrelated cattle transactions because of unpaid drafts drawn on Tige. The net proceeds of the February 27th sale, approximately $63,000, were deposited in Platte Valley's custodial account.

On the evening of February 27, 1973, an employee of Mid-South spoke by telephone to Engleman, president of Platte Valley, and made inquiry concerning Tige, informing Engleman that Mid-South had not been paid for the cattle shipped. This conversation spanned approximately 45 minutes.

On February 28, 1973, Platte Valley delivered its check in the amount of $38,483.40 drawn on its custodial account to a bank to which it was indebted because of Tige's unpaid drafts. Tige was named as a payee on the check drawn on the custodial account but did not endorse it.

On March 1, 1973, Platte Valley deposited in its general account a check in the amount of $23,894.77 drawn on its custodial account. Tige was named as a payee on this check but did not endorse it. Later Engleman informed Berta that he need not worry anymore because Tige was no longer indebted to Platte Valley. It is Platte Valley's use of the custodial account to pay itself money owed by Tige on other transactions after it had notice of Mid-South's interest in the cattle which is alleged to constitute the unjust, unreasonable practice declared unlawful by the act.

The essence of Platte Valley's contention in the first issue is that the Secretary of Agriculture had no jurisdiction to enter the order because the transaction was not a "practice" within the meaning of § 208(a), and further urged that the term "ordinarily implies uniformity and continuity, and does not denote a few isolated acts, and...