Stockman Bank of Montana v. Mon-Kota, Inc.
| Decision Date | 04 March 2008 |
| Docket Number | No. DA 06-0282.,DA 06-0282. |
| Citation | 342 Mont. 115,180 P.3d 1125,2008 MT 74 |
| Parties | STOCKMAN BANK OF MONTANA, a Montana banking corporation, Plaintiff and Appellant, v. MON-KOTA, INC., a Montana corporation; Betaseed, Inc., a Minnesota corporation; AGSCO, Inc., a North Dakota corporation; Capital Harvest, Inc., d/b/a Capital Harvest Finance Co., a North Dakota corporation, individually, and as agent for AGSCO, Inc.; Farmers Union Oil Company of Williston, a North Dakota cooperative association; Oelkers, Inc., a Montana corporation; Ellen Rasmussen, individually and as partner in Flying O Ranch Partnership; Flying O Ranch Partnership, a partnership consisting of, among others, Ellen Rasmussen; Wilson Scott Berry, a/k/a Scot Berg; Susan Zimmerman; Charles Lowman, a/k/a Chuck Lowman; PT Farms, Inc.; and Paul Tjelde, Defendants and Appellees. AGSCO, Inc., and Capital Harvest, Inc., Third-Party Plaintiffs, Counterclaimants and Cross-claimants, v. Hardy Farm, Inc., Stockman Bank Of Montana, Mon-Kota, Inc., Betaseed, Inc., Farmers Union Oil Company Of Williston, Oelkers, Inc., Ellen Rasmussen, Flying O Ranch Partnership, Wilson Scott Berry, Susan Zimmerman, Charles Lowman, Jim Hardy, J.W. Hardy, Jr., and John Does A-Z, Third-Party Defendants, Counter-Defendant and Cross-Defendants. |
| Court | Montana Supreme Court |
For Appellant: Kevin Paul Heaney, Crowley, Haughey, Hanson, Toole & Dietrich, P.L.L.P., Billings, Montana, Garth Hans Sjue, Crowley, Haughey, Hanson, Toole & Dietrich, P.L.L.P., Williston, North Dakota.
For Appellees: Charles W. Hingle and Shane P. Coleman, Holland & Hart, LLP, Billings, Montana (AGSCO and Capital Harvest), Lyle R. Panasuk, Attorney at Law, Sidney, Montana, (PT Farms and Tjelde), Harry Malcolm Pippin, Attorney at Law, Williston, North Dakota (Betaseed), Charles Lohman, pro se, Sidney, Montana.
¶ 1 Appellant Stockman Bank of Montana (Stockman Bank) appeals from the Seventh Judicial District Court's orders granting the motion of Appellees, AGSCO, Inc. (AGSCO), and Capital Harvest, Inc. (Capital Harvest), for summary judgment and denying Stockman Bank's motion to alter or amend judgment. Appellant Stockman Bank contends that Appellees have improperly used Montana's agricultural lien statute to obtain a lien with "superpriority" over the prior perfected security interest held by Stockman Bank in the same crop collateral. We affirm.
¶ 2 We restate the issues on appeal as follows:
¶ 3 1. Did the District Court err in granting summary judgment to Appellees because they did not satisfy the procedural requirements for filing and perfecting an agricultural lien?
a. Failure to provide advance notice of its intent to file a lien under § 71-3-902(2), MCA;
b. Failure to file a Uniform Commercial Code financing statement.
¶ 4 2. Did the District Court err in granting summary judgment to Appellees because an inchoate lien cannot be assigned and filed by the assignee?
¶ 5 This case involves claims by a number of competing creditors asserting priority in certain sugar beet revenues. Stockman Bank is a Montana banking corporation with an office in Sidney, Montana. The Sidney office lends to, among others, agricultural producers in eastern Montana and western North Dakota. Stockman Bank served as the primary lender for Hardy Farm, Inc. (Hardy Farm), a North Dakota farming corporation, for the 2002 growing season, lending Hardy Farm money to pay operating expenses in connection with its farming operation, which included lands in Montana. On or about January 7, 2002, Hardy Farm delivered a promissory note, in the amount of $4,991,039 to Stockman Bank, which included indebtedness on a 2001 operating loan that remained unpaid and a new loan for 2002 farming expenses. On or about August 15, 2002, Hardy Farm delivered a second promissory note in the amount of $356,979 to Stockman Bank for a second loan for additional 2002 farming expenses. Pursuant to the relevant security agreements between Stockman Bank and Hardy Farm, Stockman Bank took a security interest in certain of Hardy Farm's personal property, including its crops and crop revenues (the subject of this action) to secure repayment of said loans. Stockman Bank perfected a security interest in the personal property by filing the appropriate financing statements in North Dakota and Montana.
¶ 6 AGSCO is a North Dakota corporation that sells agricultural chemicals to growers in North Dakota and Montana. Capital Harvest is a corporate affiliate of AGSCO. AGSCO sells agricultural chemicals through its own retail stores, and Capital Harvest finances the purchase of those chemicals. Both AGSCO and Capital Harvest are owned by Randy Brown, the principal stockholder. During the 2002 growing season, AGSCO sold Hardy Farm roughly $500,000 in agricultural chemicals and services using a line of credit approved by Capital Harvest. On October 29, 2002, Capital Harvest filed an agricultural lien with the office of the Montana Secretary of State for the agricultural chemicals furnished, pursuant to § 71-3-901 et seq., MCA.1, 2 On the same day it filed the agricultural lien, Capital Harvest also mailed notice to Hardy Farm that it was filing the lien. Three days after mailing the notice, Capital Harvest filed a second lien to cure its first lien's failure to properly describe the land upon which AGSCO's chemicals were applied.
¶ 7 The sugar beet crop was sold by Hardy Farm to Holly Sugar and Sidney Sugars, Inc. These buyers issued payment instruments which were jointly payable to Stockman Bank and one or more other parties, including Appellees. Stockman Bank consequently filed an action to determine the respective rights among the numerous parties as to the various checks, which represented both 2001 and 2002 sugar beet revenues, and as to future checks that would be issued for those growing years.3 In conjunction with bringing the action, Stockman Bank deposited checks totaling $1,846,392.96 into two courts: approximately 40 percent ($725,750.31) was deposited with the Montana Seventh Judicial District Court, Richland County, and 60 percent ($1,120,642.65) was deposited with a state district court in North Dakota, where litigation also ensued.4 The only unresolved claims that remain in this action are between Stockman Bank and Appellees, with Stockman Bank claiming a priority to all of the funds deposited with the Montana District Court due to its perfected security interests.
¶ 8 Stockman Bank and Appellees each filed cross-motions for summary judgment asking that the District Court determine as a matter of law that their respective claims to the funds deposited with the District Court were superior. The motions were heard on December 4, 2003, and thereafter the District Court denied Stockman Bank's motion for summary judgment and granted partial summary judgment in favor of Appellees — effectively declaring the agricultural lien to be both valid and of "superpriority."
¶ 9 After the District Court granted partial summary judgment to Appellees, issues remained as to the proper amount of the lien. Consequently, the parties stipulated between themselves in regard to the amount of chemical sold by AGSCO to Hardy Farm that were applied to crops in Montana in 2002, and to the interest on the funds deposited with the District Court to be credited on such sum. On October 25, 2005, pursuant to the parties' stipulation, the District Court ordered that the amount of the agricultural lien filed in Montana by Capital Harvest was $196,000 plus interest and ordered that sum be paid from the funds deposited with the court. The court further ordered that the remaining funds, including interest earned, be paid to Stockman Bank, and entered judgment.
¶ 10 Stockman Bank subsequently filed a motion to alter or amend judgment, or for relief from judgment or order. The District Court denied the motion on May 16, 2005. Stockman Bank appeals.
¶ 11 "We review a district court's grant of summary judgment de novo, using the same Rule 56, M.R. Civ. P., criteria as applied by that court." Hi-Tech Motors, Inc. v. Bombardier Motor Corp. of America, 2005 MT 187, ¶ 32, 328 Mont. 66, ¶ 32, 117 P.3d 159, ¶ 32 (citing Arthur v. Pierre Ltd., 2004 MT 303, ¶ 14, 323 Mont. 453, ¶ 14, 100 P.3d 987, ¶ 14). In that regard, M.R. Civ. P. 56(c), provides:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
The party moving for summary judgment must establish the absence of genuine issues of material fact and entitlement to judgment as a matter of law. "If this burden is met, then the burden shifts to the nonmoving party to establish that a genuine" issue of material fact exists." Hi-Tech Motors, Inc., ¶ 32 (citing Arthur, ¶ 14). If the district court determines no genuine issue of material fact exists, it then determines whether the moving party is entitled to summary judgment as a matter of law. This determination is a conclusion of law which this Court reviews for error. Hi-Tech Motors, Inc., ¶ 32 (citing Arthur, ¶ 14).
¶ 12 This Court reviews a district court's denial of a M.R. Civ. P. 59(g) motion to amend for abuse of discretion. Lee v. USAA Cas. Ins. Co., 2001 MT 59, 27, 304 Mont. 356, ¶ 27, 22 P.3d 631, ¶ 27 (citation omitted). "The test for abuse of discretion is whether the trial court acted arbitrarily without employment of conscientious judgment or exceeded the bounds of reason resulting in substantial injustice." Jarvenpaa v. Glacier Elec. Coop., Inc., 1998 MT 306, ¶ 13, 292 Mont. 118, ¶ 13, 970 P.2d 84, ¶ 13 (citation omitted). "Our standard in reviewing a ruling on a Rule 60(b)(6), M.R. Civ. P., motion for relief from judgment...
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