Rogelstad v. Farmers Union Grain Terminal Ass'n, Inc.

• Decision Date: 13 February 1975
• Docket Number: No. 9038,9038
• Citation: 226 N.W.2d 370
• Court: North Dakota Supreme Court
• Parties: Harlen ROGELSTAD, on behalf of himself and all others similarly situated, Plaintiff and Appellant, v. FARMERS UNION GRAIN TERMINAL ASSOCIATION, INC., a Minnesota Corporation, Defendant and Appellee. Civ.

Page 370

226 N.W.2d 370

Harlen ROGELSTAD, on behalf of himself and all others similarly situated, Plaintiff and Appellant, v. FARMERS UNION GRAIN TERMINAL ASSOCIATION, INC., a Minnesota Corporation, Defendant and Appellee.

Civ. No. 9038.

Supreme Court of North Dakota.

Feb. 13, 1975.

Syllabus by the Court

1. Rule 23(b), N.D.R.Civ.P., offers alternative ways of finding a class action appropriate, and it is error to assume that all the requirements of Rule 23(b) must be met before an action may be classified as a class action.

2. The fact that there is but one party plaintiff and no other persons have sought to intervene and no other independent actions have been commenced is not determinative as to the feasibility of permitting the maintenance of a class action.

3. Where the contentions of the named plaintiff and the potential plaintiffs are similar and involve legal questions as to the right of the class plaintiffs to recover and these issues predominate over separate questions affecting individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy, it is an abuse of discretion for the trial court to deny class action status.

4. Rule 23, N.D.R.Civ.P., is a remedial rule which has as its objectives the efficient resolution of the claims or liabilities of many individuals in a single action, the elimination of repetitious litigation and possibly inconsistent adjudications involving common questions, related events, or requests for similar relief, and the establishment of an effective procedure for those whose economic position is such that it is unrealistic to expect them to seek to vindicate their rights in separate lawsuits.

5. The adoption of Rule 23, N.D.R.Civ.P., was not intended to reduce or minimize in any way the use of class actions in North Dakota.

6. Class action status is not to be refused merely because individual issues will remain even after common issues are disposed of.

Ohnstad, Twichell, Breitling, Arntson & Hagen, West Fargo, for plaintiff and appellant.

Pringle & Herigstad, Minot, for defendant and appellee.

VOGEL, Judge.

This is an appeal from an order of the Ramsey County district court denying the plaintiff's motion for an order allowing him to maintain a class action pursuant to Rule 23 of the North Dakota Rules of Civil Procedure.

In a prior appeal in this case, reported at 224 N.W.2d 544 (N.D.1974), we held that the denial of class action status was appealable, and we now consider the appeal on the merits.

Harlen G. Rogelstad, the plaintiff and appellant, brings this suit on behalf of himself and all others similarly situated for damages arising from alleged violations of Section 47--14--09 of the North Dakota Century Code relating to usury and for damages arising from alleged violations of the United States Federal Reserve Regulation Z, 15 U.S.C. § 1640, relating to truth in lending. The parties agree that the latter issue has been disposed of, contrary to Rogelstad's contentions, in Farmers Union Grain Terminal Assn. v. Nelson, 223 N.W.2d 494 (N.D.1974). The remainder of this opinion will therefore be concerned with the merits of the claim for class action status as to the cause of action alleging usury.

Rogelstad entered into contracts with the appellee, Farmers Union Grain Terminal Association, hereinafter GTA, through its line elevator at Hamberg, North Dakota, whereby Rogelstad agreed to deliver 30,000 bushels of wheat and 10,000 bushels of durum on or before June 30, 1973, at an agreed price. On February 21, 1973, Rogelstad received from GTA an advance of $2,000 on the purchase price of this grain. This advance was delivered to Rogelstad without the benefit of any written agreement, although it was apparently understood by both parties that the amount of the advance would be deducted from the agreed price at the time Rogelstad was paid for the delivered grain.

It appears that GTA handles its accounts receivable through its home office in St. Paul, Minnesota. Rogelstad asserts that the account arising from the $2,000 advance made to him was treated by GTA as any other account receivable. It further appears that in the usual course of business such accounts are initially received in St. Paul in the month in which the obligation is incurred. No interest or finance charge is assessed for this first month, and statements are not sent out until the end of the first full month following the month in which the obligation is incurred. The finance charge is computed at the rate of five-sixths of one percent per month on the unpaid balance remaining on the principal and on the total amount of unpaid finance charges.

The advance made to Rogelstad was partially repaid in May and fully repaid on June 27, 1973, and finance charges were assessed for the months of March, April, and May 1973 in the total sum of $39.14.

It appears that the rate of interest or 'finance charge' applied by GTA was five-sixths of one percent per month, while the applicable statutes as to usury limited interest rates to nine percent per annum during the pertinent period. See Sections 47--14--09, 47--14--10, and 6--03--63, N.D.C.C.

From the affidavit of the plaintiff's attorneys, filed in support of the motion for class action status, it appears that GTA owned 39 elevators in North Dakota, that the Hamberg elevator with which the plaintiff dealt is one of these, and that 'numerous' customers of the Hamberg elevator received advances and were charged five-sixths of one percent on the advances, just as the plaintiff was. While the affidavit is indefinite as to the number of potential class plaintiffs, statements were made during oral argument that there were 10 or 12 potential class plaintiffs who were customers of the Hamberg elevator, which was not a very big elevator, and that there were perhaps several hundred total potential class plaintiffs within this State.

The trial court denied the motion to declare this action a class action. Pertinent portions of the court's memorandum of opinion follow:

'The plaintiff now moves for an order determining that the plaintiff be allowed to maintain this as a class action under the authority of Rule 23(a) N.D.R.Civ.P. which in part provides, that

'(1) the class is so numerous that joinder of all members is impracticable,

'(2) there are questions of law or fact common to the class,

'(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and

'(4) the representative parties will fairly and adequately protect the interests of the class.

'The rule further provides that an action may be maintained as a class action if the above four prerequisites are satisfied and in addition:

'(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

'Rule 23(b)(3), N.D.R.Civ.P.

'The plaintiff's motion that he be allowed to maintain this as a class action is denied.

'An essential element of usury is the existence of an agreement that one party shall receive and the other shall pay a sum which constitutes an excessive charge for the loan or forbearance, and that the creditor intends to exact the usury.

'Weicker v. Stavely, 14 N.D. 278, 103 N.W. 753 (1905). The existence of such an agreement is a question of fact. In this instance the plaintiff bases his case upon implied agreement, there being no written contract. By brief the plaintiff acknowledge that the class which he seeks to represent may have executed promissory notes or agreements of some other type. Necessarily, in exerting a claim based upon implied agreement, such as advanced by the plaintiff, all surrounding circumstances are material and relevant in determination of the usurious issue in the case.

'If existence of usury is dependent upon promissory note or other written agreement, then interpretation of those express contracts becomes all important to the resolution of the case.

'For these reasons a common question of fact or law does not predominate over questions affecting only individual members of the claimed class.

'The defendant, according to the files of this case, has 149 affiliated elevators and 38 line elevators located in North Dakota. Despite the number of elevators involved, there presently is but one party plaintiff in the instant action. Originally there were two but one party was dropped on motion because of a previously instituted lawsuit in Wells County in which the later party was a named defendant. No other persons have sought to intervene in the instant case and no other independent actions have been commenced in other courts. It is interesting to note that the defendant in the Wells County lawsuit unsuccessfully raised the issue of usury, and that this case presently is in the Supreme Court of North Dakota.

'These extraneous factors are relevant to the feasibility of permitting the maintenance of a class action,

'7A Wright & Miller, Fed'l Pr. & Pro., Section 1780, page 68,

and in this instance militate against the claimed representative capacity of the plaintiff.'

Rule 23, North Dakota Rules of Civil Procedure, identical with Rule 23, Federal Rules of Civil Procedure, in pertinent part, reads:

'(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

'(b) Class Actions Maintainable. An action may be maintained as a class action if...