Stromberger Farms, Inc. v. Johnson

• Decision Date: 08 April 2020
• Docket Number: #28827
• Citation: 942 N.W.2d 249
• Parties: STROMBERGER FARMS, INC. , a Nebraska Corporation, Plaintiff and Appellee, v. Corey JOHNSON , Defendant, Third-Party Plaintiff and Appellant, v. Bart Stromberger, Third-Party Defendant and Appellee.
• Court: South Dakota Supreme Court

942 N.W.2d 249

STROMBERGER FARMS, INC. , a Nebraska Corporation, Plaintiff and Appellee,

v. Corey JOHNSON , Defendant, Third-Party Plaintiff and Appellant,

v. Bart Stromberger, Third-Party Defendant and Appellee.

#28827

Supreme Court of South Dakota.

CONSIDERED ON BRIEFS AUGUST 26, 2019

OPINION FILED April 8, 2020

NATHAN R. CHICOINE of DeMersseman, Jensen, Tellinghuisen & Huffman, LLP, Rapid City, South Dakota, Attorneys for defendant, third-party plaintiff and appellant.

KENNETH E. BARKER of Barker Law Firm, LLC, Belle Fourche, South Dakota, Attorneys for plaintiff, third-party defendant and appellees.

JENSEN, Justice

[¶1.] On November 1, 2016, Stromberger Farms, Inc. (Stromberger Farms) purchased cows and calves from Corey Johnson, pursuant to the terms of a written agreement (Sales Agreement). The Sales Agreement required Stromberger Farms to pay for the cattle in three annual installments, with Johnson retaining a security interest in the cattle. In December 2017, Stromberger Farms sold all the remaining cows purchased from Johnson for $508,579 at auction. Stromberger Farms calculated a $322,860 payoff to Johnson to satisfy the balance of the Sales Agreement, with the remaining balance of $185,718.30 paid to Stromberger Farms. Johnson refused to allow any of the sale proceeds to be released from the auction sale barn.

[¶2.] Stromberger Farms commenced this action against Johnson in Butte County seeking injunctive relief and a monetary judgment for the sale proceeds Stromberger Farms claimed Johnson wrongfully refused to release. Johnson moved for a change of venue, which the circuit court denied. Subsequently, the court granted Stromberger Farms’ motion for partial summary judgment on its claim for the sale proceeds, entering a final judgment against Johnson for $185,718.30 pursuant to SDCL 15-6-54(b). Johnson appeals the entry of summary judgment and the order denying the motion for change of venue. We dismiss the appeal of the order denying the change of venue. We affirm the Rule 54(b) certification, and affirm in part and reverse in part the entry of partial summary judgment.

Facts and Procedural History

[¶3.] Stromberger Farms purchased 395 cows and 368 calves from Johnson, pursuant to the Sales Agreement. The total purchase price for the cattle was $963,000. Stromberger Farms agreed to make three annual principal payments of $321,066.66, plus annual interest payments calculated at 4.25% beginning on November 1, 2016. Next to the total purchase price in the Sales Agreement, the parties added hand-written language stating, "Add 12500 to each payment[.]"¹ It is undisputed that Stromberger Farms made the first two principal payments, together with accrued interest. Stromberger Farms also paid an additional $12,500 with each payment.

[¶4.] The Security Agreement was not executed until April 12, 2017. One section of the Security Agreement provided:

Stromberger agrees that it will not sell or attempt to sell the Collateral or any interest in it, except in the normal course of business, and Johnson permits Stromberger to do so provided that Johnson’s security interest remains in any cattle that are sold. Specifically, Stromberger may sell any calves, cull cows provided that the payments of Stromberger to Johnson are current at the time of sale. Stromberger may retain the proceeds of any such sale ....

[¶5.] Along with the cattle sale, Stromberger Farms and Johnson also entered into a separate lease agreement for Stromberger Farms to rent pasture land from Johnson for additional compensation. On December 6, 2017, Johnson sent an email to Stromberger Farms stating, "I want to terminate the [pasture] lease and I want [to be] compensated for the damages and expenses you have caused." On December 12, 2017, Stromberger Farms delivered all the remaining cows purchased from Johnson for sale at the Belle Fourche Livestock Exchange in Butte County (Sale Barn).

[¶6.] The day before the sale, Stromberger Farms gave notice to Johnson of its intention to sell the cows at the Sale Barn. The letter also terminated the pasture lease. The letter assured that, "Mr. Johnson’s name will be placed on the check, along with Stromberger’s, requiring both endorsements." When Johnson learned of the proposed sale, he invoked his right under the Security Agreement to inspect the cattle. Johnson also informed the Sale Barn that he would not consent to the sale unless the sale proceeds were issued in his name. The cattle were sold on December 14 and December 15, 2017. The Sale Barn issued two checks for the sale proceeds, both made payable to Stromberger Farms and Johnson.²

[¶7.] On December 19, 2017, Stromberger Farms, through counsel, sent correspondence to Johnson, along with an attached worksheet showing a payoff to Johnson under the Sales Agreement of $322,860, including interest through December 20, 2017. The letter requested Johnson approve the calculation so the sale proceeds could be released. Johnson’s counsel forwarded a letter to Stromberger Farms on December 22, 2017, claiming Stromberger Farms was in default for selling the cows outside the normal course of business. The letter did not respond to the proposal to pay the balance of the Sales Agreement.³

[¶8.] On December 27, 2017, counsel for Stromberger Farms sent a second letter requesting Johnson approve the payoff calculation. The letter alleged Johnson’s actions were preventing Stromberger Farms from "recovering funds due it in the amount of $185,718.30" and that Johnson would be expected to pay interest on these funds. Johnson did not respond.

[¶9.] On January 18, 2018, Stromberger Farms commenced this action against Johnson in Butte County, alleging two counts: "Count One—Johnson’[s] Refusal to Allow Stromberger to Ship 224 of the Calves to Stromberger’s Feedlot"; and "Count Two—Johnson’s Refusal to Release Proceeds from the Sale of the Cows[.]" On January 19, 2018, counsel for Stromberger Farms corresponded with Johnson’s counsel, attaching a copy of the complaint and photocopies of two checks totaling $508,579, endorsed by Stromberger Farms and Premier Farm Credit. The letter concluded:

I propose that you review my letter to you dated December 19, 2017[,] with the attached worksheet, and respond. I further propose that we come to an agreement as to the distribution of the funds from the sale of the livestock, without prejudice to either of the parties’ claims and defenses, and arrange a "closing" at which your client can provide his endorsement of the checks.

[¶10.] Counsel for Stromberger Farms sent another letter on February 5, 2018, stating that litigation could be avoided if Johnson "would simply agree to the distribution, while preserving any claims to which he feels entitled." The letter also requested Johnson correct any misstatement of facts in the letter. Johnson’s counsel responded on February 7, 2018, stating the proposed distribution did not reflect the balance due, but failed to provide an amount Johnson claimed was owed under the Sales Agreement.

[¶11.] Johnson filed an answer and counterclaim alleging Stromberger Farms (1) breached the terms of the Security Agreement by selling all the cows; and (2) breached the pasture lease agreement. Johnson also filed a third-party complaint against Bart Stromberger, a shareholder in Stromberger Farms, alleging trespass on land and conversion of feed owned by Johnson. Johnson moved for a change of venue to Meade County, where Johnson resided. Following a hearing, the circuit court denied the motion, determining venue was proper in Butte County under SDCL 15-5-1(4) because the complaint was "for the recovery of personal property distrained [in Butte County]."

[¶12.] Stromberger Farms subsequently filed a motion for partial summary judgment on Count 2 of its complaint, seeking a judgment against Johnson for Stromberger Farms’ portion of the proceeds that Johnson refused to allow the Sale Barn to release. On November 15, 2018, the circuit court granted the motion, determining that Stromberger Farms’ offer of $322,860 as a payoff under the Sales Agreement was an unconditional "offer of performance" under SDCL 20-5-1,⁴ and that Johnson waived objection to the tender under SDCL 20-5-15.⁵ The court also concluded there were no facts showing Stromberger Farms had breached the Security Agreement by selling the cows.

[¶13.] On November 21, 2018, Stromberger Farms filed a brief requesting the circuit court certify the summary judgment ruling as a final judgment under SDCL 15-6-54(b). Johnson filed a brief objecting to the request on November 26, 2018. On the same day, the circuit court entered a final judgment in favor of Stromberger Farms and against Johnson in the amount of $185,718.30, plus prejudgment interest from December 21, 2017.

[¶14.] Johnson raises three issues in this appeal:

1. Whether the circuit court erred when it denied Johnson’s motion to change venue to Meade County.

2. Whether the circuit court’s entry of final judgment on Count 2 of Stromberger Farms’ complaint was an abuse of discretion.

3. Whether the circuit court erred in granting Stromberger Farms’ motion for partial summary judgment.

Analysis & Decision

1. Whether the circuit court erred when it denied Johnson’s motion to change venue to Meade County.

[¶15.] Johnson argues the circuit court’s reliance on SDCL 15-5-1(4) to maintain venue in Butte County was misplaced because Stromberger Farms did not own the cows, or the proceeds generated from their sale. On the merits, Stromberger Farms argues venue was proper under SDCL 15-5-1(4), but asserts that the order denying venue was an intermediate order which this Court lacks jurisdiction to review. Before considering Johnson’s challenge to the circuit court’s venue order, we must first determine whether we have jurisdiction to review the order.

[¶16.] "This Court has only such appellate jurisdiction as may be provided by the legislature. The right to appeal is statutory and therefore does...