Yankton Production Credit Ass'n v. Jensen, Nos. 15614

• Court: Supreme Court of South Dakota
• Writing for the Court: MORGAN; WUEST, C.J., and MILLER; HENDERSON; SABERS; SABERS
• Citation: 416 N.W.2d 860
• Parties: YANKTON PRODUCTION CREDIT ASSOCIATION, Plaintiff and Appellee, v. Jerome E. JENSEN and Connie M. Jensen, Defendants and Appellants. . Considered on Briefs
• Docket Number: 15623,Nos. 15614
• Decision Date: 21 May 1987

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416 N.W.2d 860 YANKTON PRODUCTION CREDIT ASSOCIATION, Plaintiff and Appellee,
v.
Jerome E. JENSEN and Connie M. Jensen, Defendants and Appellants. Nos. 15614, 15623. Supreme Court of South Dakota. Considered on Briefs May 21, 1987.
Decided Dec. 9, 1987.

Steven M. Johnson of Brady, Kabeiseman, Reade & Johnson, Yankton, for plaintiff and appellee.

Roger W. Hunt, and Fred Hendrickson, Sioux Falls, for defendants and appellants.

MORGAN, Justice.

Defendants and appellants, Jerome E. Jensen and Connie M. Jensen (Jensens), appeal from a judgment of foreclosure entered following a court trial. Plaintiff and appellee, Yankton Production Credit Association (PCA), filed a notice of review. We affirm the trial court on Jensens' appeal.

For some years prior to 1980, Jensens borrowed money from the PCA to finance their farming operation. The loans were evidenced by duly executed promissory notes, secured by mortgages and security agreements. As was the case with many farmers, Jensens ran into financial problems in the early 1980s and began falling into default on their payments to PCA. Beginning in 1983, PCA urged Jensens to find other financing or to liquidate because PCA could no longer carry them. The maturity date of the loan was extended to November 1, 1984, based on a memorandum of understanding, signed by the parties, signifying that PCA was to be paid in full and would not continue financing Jensens. The November 1 date passed without payment and PCA finally instituted this action for foreclosure on March 13, 1985.

Jensens responded with an answer alleging affirmative defenses of failure of PCA to grant forbearance and other violations of the Farm Credit Act (FCA) ( 12 U.S.C. § 2001, et seq. (1980)). Jensens also filed a counterclaim, in five counts, asking unspecified actual damages and for punitive damages in the sum of $250,000. Several of these counts were based on alleged noncompliance with the FCA.

The trial court took evidence on the foreclosure action on October 9 and 10 and entered its first memorandum opinion on January 10, 1986. Upon motion for reconsideration, the trial court amended the first decision and rendered a second opinion denying Jensens' affirmative defenses to foreclosure and dismissed such counts of the counterclaim as were based on the FCA. The trial court, however, denied PCA's motion to dismiss all of the counts of the counterclaim, preserving those based on state claims. Judgment of foreclosure was entered and Jensens appeal this adverse judgment. From the trial court's refusal to dismiss all counts of Jensens' counterclaim, PCA filed notice of review.

Jensens state the issue generally, "whether the trial court erred in dismissing appellant's (sic) affirmative defenses based upon the bank's violation of certain mandates of the Farm Credit Act of 1971, as amended." More specifically, they urge two points: 1) The trial court erred in applying the "no private right of action" theory to this case; and 2) the Act, as amended, and the forbearance requirements (12 C.F.R. § 614.4510), provided a valid defense to foreclosure.

At the outset, we should note that this case is a companion case to Federal Land Bank v. Jensen, 415 N.W.2d 155 (S.D.1987), in conference, but the issues are quite different. One primary distinction is that this case centers on the FCA as it was prior to the 1985 Amendments. The foreclosure action in this case was commenced

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and judgment entered before the effective date of the 1985 Amendments. We would further express our dissatisfaction with the many references to the trial court's memorandum opinions in appellants' brief, particularly the references to the first opinion, which was reconsidered by the trial court on motion by PCA and materially changed by the second opinion. This court has repeatedly held that the memorandum opinion is merely an expression of the trial court's opinion of the facts and the law. It has no binding effect. The findings of fact and conclusions of law and judgment, as signed by the judge, are the binding statement of adjudication. Connelly v. Sherwood, 268 N.W.2d 140 (S.D.1978); Christiansen v. Strand, 82 S.D. 416, 147 N.W.2d 415 (1966). Yet, in this case, appellants' brief refers constantly to the trial court's memorandum opinions. We must disregard all such references. We will, instead, rely on the trial court's findings of fact and conclusions of law to express its decision.

The thrust of this appeal is Jensens' claim that the trial court erred in adopting the holding in Smith v. Russellville, 777 F.2d 1544 (11th Cir.1985), when he said in Finding of Fact No. 14: "That the forbearance policy of the Yankton Production Credit Association is not mandatory as to any particular borrower." Jensens would have us eschew the Smith holding and adopt the holding of a federal district court judge in DeLaigle v. Federal Land Bank of Columbia, 568 F.Supp. 1432 (S.D.Ga.1983).

Both decisions involved the effect of 12 C.F.R. § 614.4510(d)(1), which provides in...