942 N.W.2d 249
S.D.2020Background
- On November 1, 2016 Stromberger Farms bought 395 cows and 368 calves from Johnson for $963,000 payable in three annual installments; a handwritten notation stated “Add 12500 to each payment.”
- Johnson retained a security interest by separate Security Agreement (executed April 12, 2017) that allowed Stromberger to sell livestock in the normal course of business while preserving Johnson’s security interest and permitted Stromberger to retain sale proceeds when payments were current.
- In December 2017 Stromberger sold the remaining cows at auction for $508,579; Stromberger calculated a payoff to Johnson of $322,860 and claimed $185,718.30 in excess proceeds, which Johnson refused to permit the sale barn to release.
- Stromberger tendered (Dec. 19, 2017) what it calculated as the full principal and interest payoff; Johnson did not specify any objection to the tender amount but refused release of proceeds, asserting among other things the handwritten $12,500 item was still owed.
- Stromberger sued; the circuit court denied Johnson’s venue transfer, granted partial summary judgment on Count 2 awarding Stromberger $185,718.30, and certified that judgment under SDCL 15-6-54(b). Johnson appealed.
- The Supreme Court dismissed the venue appeal for lack of jurisdiction, affirmed the Rule 54(b) certification, affirmed summary judgment as to all but a disputed $12,500, and remanded to reduce the judgment by $12,500 while preserving lien rights and the parties’ claims to that amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Venue: denial of change of venue | Venue in Butte County was proper under SDCL 15-5-1(4); intermediate venue order not appealable as of right | Johnson argued venue improper because he owned the cattle/proceeds and Meade County was proper | Appeal of venue dismissed for lack of jurisdiction (Johnson failed to seek discretionary review) |
| Rule 54(b) certification and final judgment | Certification warranted because Count 2 was a standalone, fully resolved claim and judicial economy favored immediate appeal | Johnson argued unresolved claims could yield setoff and certification was premature | Certification affirmed; court did not abuse discretion — Count 2 was separable and justice favored finality |
| Ownership of the cows/proceeds | Stromberger: ownership passed under Sales Agreement and Security Agreement; checks issued to both parties | Johnson: brand laws and registered brand created presumption he owned cattle/proceeds | Ownership found to have transferred to Stromberger; statutory brand presumption rebutted by written agreements and evidence |
| Sufficiency of tender / offer of performance (including handwritten $12,500) | Stromberger: tendered full principal and interest; Johnson waived objections under SDCL 20-5-15 | Johnson: handwritten “Add 12500” created an additional owed amount; tender was incomplete | Court erred to the extent it extinguished the disputed $12,500 — genuine issue of contract ambiguity remains. But Johnson waived any claim to post-tender interest by not specifying objections at the tender. |
| Breach of Security Agreement / sale outside normal course | Stromberger: sale was permitted under the Security Agreement and UCC; no breach or unrecovered damages | Johnson: sale of all cows was outside the normal course and breached the agreement | No evidence Johnson suffered damages from the sale beyond the contested payment; summary judgment on breach-related damages was proper |
Key Cases Cited
- Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1 (U.S. 1980) (explains two-step Inquiry for Rule 54(b) certification and deference to trial court’s discretionary judgment)
- Davis v. Farmland Mut. Ins. Co., 669 N.W.2d 713 (S.D. 2003) (sets burdens, factors, and requirement for articulated reasons when granting Rule 54(b) certification)
- DRD Enters., LLC v. Flickema, 791 N.W.2d 180 (S.D. 2010) (intermediate orders that are predicate to final judgment may be reviewed on appeal from final judgment)
- American Fed. Sav. & Loan Ass’n of Madison v. Mid-Am. Serv. Corp., 329 N.W.2d 124 (S.D. 1983) (tender doctrine: party may test a disputed claim; failure to specify objection can limit post-tender recovery)
- Ochs v. Nw. Nat’l Life Ins. Co., 254 N.W.2d 163 (S.D. 1977) (factors and guidance for Rule 54(b) certification analysis)
- Berbos v. Krage, 754 N.W.2d 432 (S.D. 2008) (tender must be unconditional and sufficient to discharge liability to be effective)