Smith v. Great Basin Grain Co.
| Decision Date | 09 March 1977 |
| Docket Number | No. 11936-11938,11936-11938 |
| Citation | 561 P.2d 1299,98 Idaho 266 |
| Parties | Lyle SMITH and Shayne Linderman, Plaintiffs-Respondents (#11936, #11937), Plaintiffs-Appellants (#11938), v. GREAT BASIN GRAIN CO., a corporation, and R. Kent Heileson, Individually and as Statutory Trustee, Defendants-Appellants (#11936), Defendants-Responent (#11937, #11938), and Millers National Insurance Company of Illinois, a corportation, Defendant-Appellant (#11937), Defendant-Respondent (#11936, #11938), and Ralph A. Heileson et al., Defendants-Respondents #11936, #11937, #11938). |
| Court | Idaho Supreme Court |
Mary Smith and J. D. Hancock, Smith & Hancock, Rexburg, for appellants and respondents Lyle Smith and Shayne Linderman.
Larry M. Boyle, Hansen & Boyle, Idaho Falls, for respondents and appellants Great Basin Grain Co. and R. Kent Heileson.
Robert J. Fanning, Fanning & Woolf, Idaho Falls, for respondent and appellant Millers National Insurance Company of Illinois.
W. Lynn Hossner, Ashton, for respondent Ralph A. Heileson.
W. Brent Eames, Jolley & Eames, Rexburg, for respondents Allan E. Mecham and Craig W. Mecham.
These three appeals, consolidated for decision here, arose from separate actions brought by Lyle Smith and Shayne Linderman, two grain farmers, against a warehouse corporation, its directors and purported statutory trustees, and its surety for an alleged conversion of grain placed in storage. Following special jury verdicts finding for the plaintiff farmers and entry of judgment, the district court granted the defendants' motions for a new trial unless the plaintiffs would accept remittiturs. Plaintiffs refused the remittiturs. The district court then entered an order for a new trial. These appeals followed, challenging various runlings and orders made below. For the reasons discussed herein, we affirm the order granting a new trial and remand the cases for further proceedings.
Lyle Smith and Shayne .linderman anre grain farmers in Teton County. In 1970, between May 5 and July 31, Lyle Smith (hereinafter Smith) 'stored' with Great Basin Grain Co. (hereinafter Great Basin) wheat and barley which had a total value of $56,870.34. The storate of this grain was evidenced by non-negotiable warehouse receipts issued by Great Basin over R. Kent Heileson's (hereinafter Kent Heileson) signature. These receipts bear along the lefthand margin the label 'grain settlement.' All the receipts indicate a scale ticket number, a delivery date and a gross, tare and net weight. The receipts for the wheat 'stored' also show figures on the test, grade and protein quality of the grain. The receipts in the record show a price per bushel or hundredweight and a total value for the grain represented by the receipt at the price listed.
Checks from Great Basin payable to Smith show that he received a total of $41,915.00 in payment, described on Great Basin's statements of remittance advice attached to the checks as 'advance(s) on grain.' Smith claimed, and the special jury verdict awarded, only $10,431.04. 'Off-setting' charges of $4,524.30 for other services by Great Basin make up the difference.
Shayne Linderman's (hereinafter Linderman) claim in his case arose out of two distinct sets of transactions. The first involves wheat (60,103 lbs.) and barley (20,870 ibs.) 'stored' with Great Basin in the fall of 1968, which Linderman claimed had a total value of $1,820.22. There are no checks in evidence which relate to this grain.
The second Linderman transaction involves 610,957 pounds of spring wheat, valued at $18,158.36. This wheat was apparently stored in Linderman's personal elevators in Tetonia, located near Great Basin's elevators. In August of 1970 Great Basin loaded that wheat onto railroad cars. Great, Basin issued one of its non-negotiable warehouse receipts for this wheat. In addition, however, this receipt lists Union Pacific railroad car numbers insts of scale ticket numbers and printed at the top of the receipt are the words 'contract #85.' In evidence is a document bearing Great Basin's letterhead, addressed to 'Shane (sic) Linderman,' which recites, 'We confirm purchase from, or sale to you of . . .' The words 'purchase from' are circled. The document is numbered '85.' The total of Linderman's claim in this case, and the amount awarded by the special jury verdict is $19,975.58. The proper legal characterization of the transactions behind these figures and receipts is the heart of the disputes in these cases.
Great Basin was incorporated in April of 1968 as an Idaho corporation by the defendants Kent Heileson, Ralph A. Heileson, Craig W. Mecham, and Allan E. Mecham. They were Great Basin's sole stockholders, directors and officers. Great Basin took over the business of Colorado Milling and Elevator which had been managed for many years by Ralph Heileson, Kent Heileson's father. Great Basin leased the property, buildings and equipment it operated from a Utah investment partnership, owned by Kent Heileson and Craig Mecham, which bought them from Colorado Milling and Elevator. Kent Heileson was the resident manager of Great Basin, apparently assisted by his father Ralph Heileson. The officers and directors of Great Basin were required quired to be stockholders. Great Basin operated as a corporation until November 30, 1970, when the Idaho Secretary of State ordered its corporate charter forfeited for failure to file a 1970 annual statement. It is disputed whether Allan Mecham effectively resigned as a director in 1969; whether Craig Mecham effectively resigned as an officer and director in the spring of 1970; and, whether Ralph Heileson effectively resigned as an officer and director in July of 1970. Whether these individuals were directors on November 30, 1970, and therefore statutory trustees of the defunct corporation under I.C. § 30-611, is also disputed. In addition, it is disputed whether Craig Mecham, Ralph Heileson and Allan Mecham sold their ownership interests in Great Basin.
Great Basin, or Kent Heileson acting on its behalf, allegedly filed a voluntary petition for bankruptcy on February 21, 1971. The trustee of the bankrupt's estate was discharged, and the estate was closed, in December of 1973. A formal discharge of Great Basin as a bankrupt was apparently not obtained. Smith and .linderman were named as unsecured creditors in the bankrupt's schedule of creditors, but never filed a claim in the bankruptcy proceedings. These actions were filed in December of 1971, following demand upon the surety Millers National Insurance Company of Illinois (hereinafter Millers).
Great Basin operated its grain warehouse and elevators as a bonded warehouse, licensed under state law by the department of agriculture. Title 69, Ch. 2, 'Bonded Warehouse Law.' Idaho Code; I.C. § 69-203. As part of the licensing requirements of Chapter 2, an applicant for a license must execute a bond. Accordingly, Great Basin executed a Warehouseman's Bond with Millers as surety, in the amount of $24,500.00, effective May 1, 1968, until May 1, 1969, and for succeeding yearly periods unless cancelled. The bond was in force during all times pertinent to these cases. Millers was named as a defendant and alleged to be liable for a purported conversion of Smith's and Linderman's grain by Great Basin. I.C. § 69-209. The plaintiffs also claimed attorney's fees from Millers pursuant to I.C. § 41-1839.
Generally, Smith's and Linderman's amended complaints took the position that all of the grain was in 'storage' with Great Basin and was converted by it. Great Basin, its directors and purported statutory trustees, and its surety contended that the grain was sold to Great Basin, that plaintiffs are merely unpaid sellers, and that they, the defendants, are therefore not liable for any conversion. The defendants especially insisted that the plaintiffs' actions on these debts were barred by Great Basin's bankruptcy.
The testimony at trial was in much conflict. Kent Heileson testified that Great Basin purchased all the grain in question from Smith and Linderman. Smith testified that his grain was originally delivered for storage and only later was it offered to Great Basin for 'conditional sale.' Linderman took the position that the small portion of his grain held in storage by Great Basin was never offered for sale. He also testified that the much larger amount of grain held in his own elevators was offered to Great Basin for 'conditional sale' on terms like those testified to by Smith.
This was the basic evidence presented at trial. In addition, there was evidence introduced about the manner in which Great Basin as a corporation conducted its business, about the role of the individual directors in Great Basin's management, and about the circumstances of the purported resignations as directors of Ralph Heileson, Craig Mecham and Allan Mecham. Before trial the parties agreed the trial court would decide the liability of the individual defendants as directors and statutory trustees after the trial was completed. At the close of the plaintiffs' evidence, the trial court granted motions to dismiss by Ralph Heileson and Craig Mecham on their liability as directors, reserving until after trial the question of their liability as statutory trustees. The jury was then presented with special verdict forms concerned solely with the issues whether plaintiffs' grain was stored and converted, or sold, and if stored and converted, what the extent of their damages was.
The jury's verdict with respect to Smith found that Smith stored wheat 'and/or' barley with Great Basin between May 5, 1970, and July 31, 1970; that the amount of grain stored was 'all' wheat and 'none' barley; that Smith sold wheat 'and/or' barley to Great Basin between May 5 and July 31, 1970; that the amount of grain sold was 'wheat all but $10,431.04' and 'Barley all'; that Great Basin converted wheat 'and/or' barley belonging to Smith after May 5, 1970; and, that...
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