*1 STENSVAD, L.D. personally representative investing agri-services, al., et Plain shareholders AND THE MINERS MER Respondents, tiffs v. ROUNDUP, CHANTS BANK OF Montana, Defendant Appellant. No. 80-210. 16, Sept. 1981. Submitted Decided Jan. 1982. Rehearing Feb. Denied 1982. *3 Enright Mackey, argued,
Towe, Ball, & Towe, Thomas Neely, argued, Billings, appellant. Gerald for defendant and Wright, Tolliver, Guthals & Prater, Tolliver, Kenneth argued, Billings, plaintiffs respondents. and opinion
JUSTICE SHEEHY delivered the of the Court. by Appeal judgment is Miners and Merchants Bank from a against complaint rendered it on in Stensvad’s the District County. Court, Fourteenth Judicial District, Musselshell The against pro- unpaid bank had counterclaimed Stensvad on missory notes. an the bank had breached District Court found
The after that Stensvad’s and to finance agreement corporations his resulting breach had converted appropriated property, lost in the $1,631,047, to Stensvad of damages plus $1,750,234 as of The court set-off $511,695. granted sum of reason the indebtedness of the 31,1979 plaintiff Januаry $392,508 against The judgment to the bank. court’s net deducting tunc pro bank was reduced nunc subsequently The $117,904 23,1980. resulting against on June judgment $274,604. bank is from the There is no cross-
The bank appealed judgment. appeal. at located arises from a cattle-feeding operation
This action Melstone, relationship Montana. banking and Roundup Bank and Merchants D. Stensvad and the Miners between L. bank) (hereinafter commenced of Roundup L. all of which four corporations, in 1965. The activities roles case, played intertwining D. this represents L. D. Stensvad Cattle Originally Company in the operation. operated them for feed feedlots buy place would cattle Inc. Enterprises, Agri- Feeders and M. V. M & S Cattle it cattle feed feed which sold Services, Inc. purchased however, four for the corporations In operators. reality, are L. D. Stensvad, although case personally, this purposes stockholders not shown there were other investing record. the bank loaned years, 1965 and
During subsequent his cattle for purchase feeding Stensvad funds for the 1968, Stensvad purchased account. In November personal Montana, substantially which mill facilities at Roundup, feed he In spring to feed cattle. capacity his expanded con- near and completed 300 acres of land acquired Roundup 1969, an In the fall of 3,500 oppor- of a animal feedlot. struction cattle in Stensvad’s arose to investor-owned tunity place *4 allow them to financing pur- desired to feedlots. The investors Ar- on margin. and to feed cattle margin chase cattle on in- bank and various made between the the were rangements for funds bank loaned to the investors whereby the vestors the costs. The was with purchase feeding program popular investors, and the feedlot at was with Roundup expanded to facilities accommodate additional cattle. temporary 1970, In the bank an to early indicated inability provide pur- money chase for the financing investors-feeders expanding result, As a this of the group. portion financing placed with Production Credit Lewistown, Association of Mon- tana, during 1970, bank spring to continuing provide for the financing feeding costs the cattle. in
However, order to its the bank simplify recordkeeping, requested obtained a in which allowed change procedure loan to the feeding directly cost funds to one of the four which were plaintiff corporations created for the purpose this conducting business. During 1970, summer of bank advanced funds construction of additional feedlot at capacity as well as for Roundup, feed. The PCA made loans investors of cattle be purchase fed at the facilities. As of 9, March PCA was on participation (the investors) basis: the following borrowers California' ad- vanced the sum cash, head in cash and per $100 part part by letter of credit so head provide for feed per $50 be supplied by Stensvad, and toward the purchase $50 The PCA cattle. to finance the balance of agreed the purchase price the cattle.
Until such time as Stensvad his completed financing with the PCA on each he obtained interim purchase, financing from the bank. The monies bank advanced for the construc- tion of additional feedlot were carried the bank on capacity short- term notes, had in mind such although parties indebtedness would eventually placed long-term be notes. however, As of June 1971, this had been done.
In June Towe, Edward principal stockholder bank, indicated as a to Stensvad his intention to withdraw par- ticipant unless Stensvad cattle-feeding program withdrew his efforts from the creation of a new bank Roun- in a dup. Meetings between the and Stensvad culminated *5 from participation to withdraw agreement Stensvad to con- agreement the bank’s the new bank and founding done for the previously as it had financing tinue to provide and the plain- cattle-feeding operation, operated commitment, In of this renewed furtherance tiff corporations. the bank a complete portfolio furnished to the plaintiffs’ assets, as well in the plaintiffs’ interests security of the Stensvad, plaintiff. Otto father from guarantee continued until meeting under the June arrangement it 1971, bank found that was when the or August September Its of- corporations. to the Stensvad overextended on its loans that he for the arrange and asked ficers went to Stensvad be which would involved feeding take costs PCA to over handle the interim with the bank to of the cattle fattening PCA, its ex- 7, 1971, through On financing. September to this committee, changed financing arrangement its ecutive extent: at from investors kept $100
1. The requirement w;as margin let- head per in cash head in cash per $50 head per $50 the PCA prior be the borrower paid by ter credit to any loan funds. disbursement full cattle price 2. PCA would finance the purchase were for feed. Feed provide per requirements head $80 advance these months, and PCA was not to be budgeted No advancement the feed was consumed. actually funds until was to be allowed. The feeder feed of funds for stockpiling every of invoices was to be PCA upon presentation paid two weeks. setting wrote the
On September PCA pro- after the financing changed need interim out his for He said: gram. be no need for however, will mean, that there
“This does because as each lot for our feed yards any operating capital time between the said fed, day will be a delay cattle there is received from the any money on feed and cattle put Since we billing a 30 P.C.A., program. we will be on day for we will can see that weekly, you our feed and pay purchase financing purpose. course, addition, In for this need interim necessary pay purchased financing be for cattle will interim are contracted between the time the cattle custom feeders for pays bought outright, the P.C.A. and the time for, or financing accounts interim There is need for same. also Agri- inventory regular trade at for our retail receivable and . . . Services why may your question I still need arise in minds as to
“The capital operating I am I have stated that hav- $500,000 when explained ing my above the P.C.A. This is feed financed operating clarify I in- I here. will still need and will further it being financing day period fed to cattle for a 30 for feed terim *6 security [sic] by would be feeders. The therefor owned custom inventory necessary each com- receivable. The for accounts pur- financing pany interim for cattle contracted for expected Co., L. D. Cattle an increase chased inventory Agri-Services . . at .” accounts receivable and meeting Friday, September was held at 17,1971, On another representatives bank, and Stensvad the bank between attorney. parties that time essence, In at and Stensvad’s agreed: period program During the old PCA to the transaction from head cattle under the new, 4,000 5,000 there would be repay pen program, sold, each was Stensvad would old and as money Bank the amount of advanc- the Miners and Merchants put feed. Since new cattle those cattle were ed it when replace program being purchased under the new were up proposal number to build sold, and because of the cattle agreed many 15,000head, the bank 13,000 cattle as as money repaid immediately to the reloan the amount “to pen each of cattle under Bank when Miners and Merchants program me to feed the cattle has to enable been sold the old before, provided days” monies. the feed 30 the PCA for the agree- Friday, September confirmed the setting September substan- 21,1971, forth ment in letter of stating: tially here, in addition above what is said explained Bank that Miners and Merchants to the “It was operating capital program, been which had under the old new That under $502,000. amounted to me extended be which would capital amount of operating total program, but $500,000, amount of to a total amount would still necessary [set- follows: be earmarked would capital that the operating corporations].” the Stensvad between out the allocation ting held between was meeting 30, 1971, another On September writ- The only Stensvad. bank and of the the representatives Otto, the Wally meeting provided ten evidence a memorandum who prepared PCA representative, condi- financial that the decided The bank apparently meeting. Otto deteriorating badly. was operation of the Stensvad tion due to current balance reported cattle, assigned, 1,000 head of $440,000, secured in- delivered, feed but not cattle, contracted for 2,000 head of $180,000, machinery accounts receivable of $90,000, ventory fees to Stensvad. $35,000, and prepaid at make all future checks the PCA to The bank then requested all and Stensvad to which parties to the bank jointly payable covering release general The bank PCA gave agreed. under the new program and the feed paid cattle purchased an manager assign- also to the PCA and the bank delivered to the bank received from Stensvad granting ment that it had after to monies rights all L.D. Stensvad Cattle Company’s been investor loans had paid. what occurred between is unclear as to The record *7 However, 7, 1971. on October 7, 30 and October September the following Directors of the bank 1971, adopted the Board of to the Stensvad operations: resolution with regard that present assigned “The motion was made and seconded *8 Corporations all and notified that assets of feedyards sold from the be removed were to no cattle arrangements bank. making first without months, the bank sold the next several course of Over the personal corporations. The sale of assets the Stensvad recoupment $354,111.73.The cattle property in the resulted eventually estate was The real $520,000. sold for were eventually Faunco, com- upon, another sold to foreclosed Larry pany run cattle Stensvad to thereafter hired which operation. commitment of the bank
The District Court found that the corporations agreed in the manner to to finance the Stensvad binding agreement upon September 1971was a June and “change bank; no circumstances” be- occurred September the bank’s tween 17 and adopted when October set board resolution we have forth of directors any above; eliminate the effect of the resolution was to plaintiffs, financing operation conducted for the cattle ability severely corporation’s do business and limit the financing PCA cause the withdrawal from eventual operations. adopted reaching judgment, Court, District accounting par- between the 11, 1979, as the date November in- date, the court found that Stensvad was of that ties. As borrowings amount all debted to the bank for bank was The District concluded that the $1,022,325.71. Court though bank had that the interest, it had found entitled agreement which on valuations to finance. Based breached property at the time to be worth Court found the District pro- computation of lost sales, and its of the foreclosures following judgment based on the court entered fits, elements:
DISTRICT AWARD COURT A. STENSVAD CLAIM *9 property........$354,111 of
1. Conversion personal cattle....................382,000 of 2. Conversion elevators.........814,936 & of feedlot Conversion 3. 80,000 business................. Mishandling
4. Lost profits..........................511,695 5.
$2,142,742 B. BANK COUNTERCLAIM
1. Principle..........................$1,022,325 1/31/79................727,909 2. Interest through to from 2/1/79 judgment.........117,904 3. Interest
1,868,138 NET JUDGMENT $274,604 TO STENSVAD in this are as follows: The accrued the bank appeal issues finance 1. to the Stensvad agreed opera- Whether in to the Stensvad operation tion sufficient keep companies less hand or not sufficient business on and complete of two fattening cycles required complete than the time cattle? it existed, have if an is found to Whether, agreement 2. such mutuality, lack of indefiniteness, grounds enforceable is consideration? failure of enforceable, to be whether If an is found agreement 3. such bank? at or breached terminable will it was ter- if is enforceable and Whether, 4. such an agreement the evidence bank, sup- and at will breached by minable awarding any damages? ports interest agreed are limited any damages a. Whether money rate obtain rate and the interest required elsewhere? at most damages is measure not,
b. If whether the proper of assets? mismanagement amount of lost profits plus proximately profits, any, if caused c. lost were Whether of October 1971? the bank resolution any any certainty lost is d. Whether there reasonable profits in fact would have occurred? allowing in so, If the District Court erred
e. whether testimony showing gross profits per animal? exhibits is not, the level of lost awarded
f. If whether appropriate? damages mismanagement
g. Whether the awarded support evidence, should been admit- assets find have profits, duplication are a of lost excessive? ted, assets in the h. Whether the award the cost fixed supported by evidence, amount of excessive $814,936 amount, or even available conversion? vacating its earlier
5. WThetherthe District Court erred summary judgment in favor of the order for bank? respondent urges findings that the made the District respects, additionally, although proper it in all Court were *10 urges cross-appealed, the District erred has allowing that Court con- interest to the bank after the bank’s breach of failing and in credit funds the tract, to the cash received property against liquidation the the bank when Stensvad calculating to loan balance before interest due the bank. LEND TO MONEY THE BANK’S CONTRACT The first issue we must determine is whether the District finding erred in between the Court contract existed operation. to finance feeder bank and Stensvad the September 21, 1971, found The District Court that as agreements reached had been between furnish or to fur- to the effect that Stensvаd would continue security plaintiff’s nish in all of the interests the financing to for assets; the bank would continue furnish plaintiff’s the four to five cattle then in thousand head of financing to lots, modification; feed without feed sufficient agreement days; in- for 30 feed cattle under modified financing financing purchase cattle; for the of new feed terim newly purchased prior their to financed for cattle sale PCA financing owned and inven- owners; cattle, feed rancher Agri-Services, financing tory Inc. accounts receivable agreement express In the of an term of the absence as contracts, the court that it the con- bank’s determined was templation parties that the term would be related to the investor-feeding required contracts, the time to fatten for sale cycles cattle. two moving
Presumably the consideration to the bank was the ranging percent per percent intеrest, at rates from 8 V2 to 10 unpaid during annum on the balances, that would be collected operation agreement. pre- extra An element of judice, agreement however, was the of Stensvad not to engage Roundup. in the formation of another bank in Such statutory good consideration meets the definition of con- agreed sideration, 28-2-801,MCA, section a benefit to be con- promissor upon promissor likely ferred to which the is not prejudice agreed entitled, or a suffered or to be suffered promisee lawfully other than what he is at the time bound suffer. The participa- District Court also that the concluded PCA operation dependent upon agree- tion the Stensvad necessary ment of the bank to furnish the funds. agreement arguable,
While the exact nature of bank’s especially findings sup- term, court must be ported appeal supports on where substantial evidеnce such findings may clearly not be set aside us er- unless 52(a), roneous. Rule M.R.Civ.P. parties may intention of the to a contract be furnish (1923),
ed their conduct and declarations. Glantz v. Gabel 66 Mont. P. 858; 28-2-103, section MCA. finding conclude District Court did not err in an
We agreement part of the bank to finance the operation. PROFITS LOST
THE $511,695 AWARD FOR OF *11 support award, To this District the Court found and conclud- wrongful prevented ed that of the bank’s breach contract earning profits business; Stensvad from his that Stensvad enough qualified capacity; had to fill lots investors that term of the investment contracts the investors was cycles required cattle; the time to fatten two that bank’s though definitely, reasonably expressed contract, not would cycles financing fattening; require two that Stensvad 206 a 12 Vz services, percent net on yardage
would realize profits its feed pro- and anticipated from the investor’s profits, bonus $511,695. was profits reasonable estimate of such fits; that a that item on the grounds to this objects The that the to be was not shown profitable; Stensvad operation net court are and not gross, profits, found profits of other allowed. damages are duplicative damages of an award objective proper The in as wronged is to place breach contract wrongful party Kirby v. as if the contract had been performed. good position Company Kenyon-Noble Lumber 332, (1976), 329, 171 Mont. measure of 454. The bank contends that 452, 558 P.2d obtaining money to the cost of should be limited damages v. withheld. See Miller elsewhere, money wrongfully when is Spokane(9th Bank Federal Land 1978), 415, Cir. 587 F.2d 1067. 962, 2407, 441 99 60 L.Ed.2d 424, cert. den. U.S. S.Ct. if not may speculative. for loss of be awarded Damages profits Asplund(19B5), v. 152, 161, 452, 42 P.2d 456. 99 Mont. Silfvast apply rule that does not prohibits speculative profits but uncertainty as to the amount of such profits uncertainty is the result of profits to whether loss speculation have been derived wrong and whether such would profit v. at all. Tri-Tron Intern. (9th Velto. 1975), 432, Cir. F.2d is the that liability shown, certainty 437. Once on a then loss of breach, are caused damages profits basis for and the best evidence reasonable computation a reasonably under the circumstances will support available Zepp v. Court. Smith of the loss close estimate District 930. But no (1977), 358, 370, damages Mont. 567 P.2d both clearly are recoverable which are ascertainable cer reasonably which are origin, only profits nature Fergus County (1934), Smith v. may tain be awarded. 377, 386, 39 P.2d 195. Mont.
The award of lost in this profits may case be sustained if that the say we can not based on only specula since no record tion, profit enterprises to the breach. We find here clearly shown prior *12 There is no are for lost speculative. damages profits that Stensvad lost record certainty reasonable bеen have of the would wrong, profit as the result Intern., at all. Tri-Tron supra. derived Feeders, for & S Cattle Inc. financial statements M The $7,813.89 30,1971, retained earnings as of November show a stock $260,638.59. Claimed assets include on total assets notes to the $17,499.57. The payable reserve subscription $110,874.79 $82,500.00 30,1971, from on to bank increase June 30,1971. June this had 30,1971, on On corporation November hand, no and an overdraft cash $241.22. Inc. financial statements for M. V. show Enterprises, The before income taxes of earnings provision retained $336,261.51. *13 repay cient flow to service and over a cash indebtedness period time, reasonable there is no evidence of control inventory, proceeds extent of sales from and the to which placed paper collateral is shared between this loan and behind questionable margin loan, the SBA indicates at best. Further- V<¿% equity more, the 7 indicated owner is too small to ex- be pected protect against shrinkage in it value the event necessary liquidation.” should be to resort to force respect Enterprises, With to M. V. Inc.: management subsequent ex- “Review to date of subsequent [$60,000] amination to 60 M advance made regarded repay- bank indicates current assets as a source of aggregating ment funds are limited to feed inventories 31.4M [$31,400].” respect L.
With to D. Cattle Stensvad Co.: subject company “Checks on have been issued substantial deposit amounts at times when insufficient funds were on checking them. In cover this connection it is that the observed account of firm this was overdrawn in the amount of $83,907.10on 3-22-71and the firm was on here indebted loans on that date in the amount of 110 so that the M liabilities of subject lending that firm were far in excess of banks limit on that date. Overdrafts have been noted on other occasionsalso.
“At the time of a return visit to the bank on 11-12-71a fiscаl (6-30-71) year [financial statement] end P.S. had been Company, Despite L. received for the D. Stensvad Cattle Inc. nearly year 3 Vi months since the end of the fiscal reportedly the accountant for the firm been unable to com- has pile a financial or which is statement will balance he that unresolved been indicated and it has certify prepared M, an amount between in excess of 200 differences in the 12-31-70PS of the corporation NW [net worth] times the firm a con- for this of the statement In the absence above. cannot be compil- the affiliated corporations PS for solidated firms of the related financial condition the overall ed, thus, for the the PSs hand Furthermore cannot be determined. intercom- information on do not include other corporations that also would be needed receivables payables pany is without informa- Also,-the bank consolidation. meaningful the L. D. to other creditors of tion as to any obligations not have a PS of Inc., and does Cattle Company, Stensvad L. D. has in which Patton-Stensvad Cattle Feeders (40%) dealings interest and which has stock minority D. Cattle Inc. Company, the L. all of virtually
“It the bank is providing appears in addition to for the various enterprises operating capital and conclusive the fixed assets financing corporations be Assets of collateral cannot ascertained. coverage evidence definitely but not suggested sufficient to cover liabilities effort to exercise the bank is making every established and here.” on debts control of cash proceeds application the District turn now to examine the method used We *14 In its $511,695.00. of at the lost arriving profits figure Court that L. D. Stensvad fact, the District Court found of findings cattle charged net from fees Cattle derived Company based services, from 12 Vz% bonus owners for yarding the sale of cattle. It found cattleowners’ from upon profit the amount the $511,695.00 plaintiffs of figure that the profit realize from yardage have been reasonably expected would based upbn the 12 Vz bonus payments fees and percent business. existing completion the profit what portion
The District Court did not indicate In to determine to bonus order it attributed figure payments. have utilized however, plaintiffs’ it must bonus payments, a net margin to establish trial exhibit no. which purported steer when purchased, based on a 600 pound for investors of 450 1,050 pounds. for a pounds gain sold at figures exhibit, In that are utilized from the States United Agriculture Department price that which showed bring City compared feeder cattle would in Kansas to the price bring that fat fed cattle would Omaha on the same day. gross margin on difference was tabulated find the day against margin the cattle investor. Offset this barley which the witness from cost feed determined prices published by Crop plus Reporting Service, the Montana freight handling. figures, 30 cents for From these based pound weight gained, the ratio of feed used to gain, computed (averaging per witness a cost of 20.8 cents 1972) pound multiplied by which when the theoretical 450 gain pound produced steer, in the the cost of feed for the gross margin steer. The between difference and the cost of represented profit, feed net on exhibit no. in- 49, to the cattle irrespective vestor. The witness testified that of different might prices prevail Roundup market or other purchaser’s Montana markets for the sale feeder cattle or margin profit cattle, fed could nevertheless be deter- mined in the manner set forth in exhibit it no. because figures computed be would the same nationwide. Such were for each month from November 1971until December 1974on еxhibit no. 49. The evidence does indicate date of each computations strongly month on which the were It is made. speculative figures any relationship whether such had to the operation. important, computation Stensvad feeder Most no for interest cost to the California investor that would be charged by for the monies the bank or the PCA advanced appears in exhibit no. 49. these institutions plaintiffs’ purports
Likewise, exhibit no. in- to show the operations, upon come to be derived Stensvad’s based pens numbers of cattle to be fed in the from the business on alleged hand on the of the bank’s breach. A number is date given average per in that exhibit number of cattle usually pends. month, 13,000head in the Income is determin- average multiplying ed number of cattle times 15cents per day days. against generated for 30 the income thus Offset *15 are variable costs. Fixed costs are shown as an fixed costs and
211 by costs are determined $11,604.36. Variable unvarying cattle that month by number for the of average multiplying the income The difference between of figure the $1.44. the costs variable costs the fixed and and sum generated, on the exhibit. to Stensvad profit yields evidence, it was exhibit no. 52 was offered stated When costs that for fixed costs and variable on that computation However, be “connected such up”. connecting exhibit would done. The result is a very speculative figure was never up the District Court in lost computing profits. used profit net contends in brief that the profits operating 1972 year the Stensvad fiscal June operation ending $207,615.12 $334,237.68. be and for the 1973 fiscal year would been addition, In the bonus that would have receiv- payments $230,985.00 for equal under would projections ed $103,400.00 for The total of these 1971-1972, and 1972-1973. $876,237.80. finding is The court’s of lost is figures profits ap- this total We are unable to percent figure. proximately determine, and no brief of the delineates the basis for parties the award.
We cannot the conclusion that on the basis of escape evidence, record here presented underlying court award for lost based profits entirely no in- certainty reasonable us to speculation, appears dicate that such were lost profits alleged wrong further finance refusing operations. is case,
This not to that in a say lost proper damages pro are recoverable, fits not out of a of a arising breach lender loan contract authorities money. agree such Bank Trust see Hunt v. United & awarded, be damages may (Cal. Co. the lender knows 1930), 184, 291 P. when especially In such case use the proceeds. intended made, contemplated by parties, have been as which would v. (Okla. 1926), recoverable, Milbourn Buzzard 252 P. to a certain factual data reasonable if are established they of a history opera even in the absence past profitable ty, Realty Morg. Bancorp. (Ore. 1979), v. U.S. Welc tions. in his restricted The borrower P.2d 693-964. elsewhere, money obtaining to the cost of damages supra. Welch, bank contends this case. See *16 DAMAGES BREACH OF FOR CONTRACT RECOVERABLE finding after that the contract concluded, The Court District money existed, that the bank had breached its con- to lend resultantly property taken the of Stensvad tract, wrongfully. had over by damages the District Court are
The awarded by already in- from all the bank. We have attacked directions by improper that the lost awarded bank dicated turn to examine the other elements of in this case. We now damages by awarded the court favor of Stensvad. argument $354,111.00 of be little that the amount
There can by personal property the court awarded for the conversion of substantially supported proper. in the evidence and It is is parties. subject stipulation of a between pro- cattle, $382,000.00, The item for conversion of includes by the in the between $104,897.73 fit of made difference have the cattle been sold the bank would received had what actually the amount received at the later November by awarding Court, the full amount time of sale. The District cattle, $382,000.00, the bank from the sale of the received gave profit benefit of the the bank in Stensvad the made making sale as it did. mishandling however, $80,000.00 business,
The item of of by us, must be and amended downward. examined The $80,000.00, District Court awarded Stensvad sum of during plaintiffs process for the “losses sustained wrongful downpayments foreclosure, Bank’s for loss of on through cattle, death, for loss of livestock and for losses sus- through disruption shipment tained of the cattle”. Larry of that award. $58,000.00 sustains evidence by the at the time of the take-over testified that agreеments paid operations $58,000.00 had out bank, his purchase these sums were forfeited cattle, and that to com- was unable when Stensvad sellers to the prospective damages an item of Such the contracts purchase. plete 27-1-311, MCA, with of section the contemplation within contract, for the breach of damages the measure respect take-over, caused by were they proximately because to result be likely would things course ordinary therefrom. the sum award, that is $80,000.00
The remaining part the record: on this portion based $22,000.00, is apparently attention I like to direct Stensvad, your would Mr. “Q. the lot from cattle that were moved involving the situation the bank after at Melstone by to the lot in Roundup to review have occasion you of these cattle. Did took control bank, regard the closeout figures produced the closeout figures produce A. The bank didn’t these cattle? *17 them. figures I the closeout on them. produced IWell, obtain this information? A. had the “Q. you How did what the cattle when went in they information on weighed then in there, down and when the cattle were terms shipped, of numbers. when the cattle were out and And weight shipped I of the Melstone was there and yards spring out, obtained when the cattle went and copies weights I out numbers, so that could the compare weights going I in, the as well as numbers. And then also-the weights going time, at the before they bank used forms that we were using over, cattle, track out to the daily took feed fed keep while had it. And I had the to have those they opportunity cost on the cat- records to feed and data prepare consumption in I these tle while had them there. Then returned they there, when I my documents to down yards completed calculations. in at this point had that you these documents From
“Q. money аmount of as to the a calculation time, did you prepare in means which manner and reason of the lost by that was IYes, A. did. for fed. cared and cattle were a few that amount? A. The amount what was And “Q. $22,000.00.” over dollars
Missing foregoing testimony any upon from the basis overspent feed, it couldbe determined the bank for which spent by or that the cattle, or underfed amounts caring they in the cattle until were sold were Damages clearly in which are not ascertainable unreasonable. origin cannot be recovered for a breach both their nature and 27-1-311, contract. Section MCA. $814,936.00 next consider the for the We award loss in its and elevators. District Court feedlots Stensvad’s findings upon original this based award cost of construc- Among acquisition. tion and various values of the feedlot appearing top evidence, and elevators the award is (L. corporations the books of three of the dollar. On assets) D. Stensvad Cattle Co. had no fixed the feedlots and depreciated at a $430,944.81 elevators were carried value of total. request Larry April Stensvad,
At the Hall Billings, appraisers appraised Hall, from the fair market value Roundup Roundup feedlot, feedlot, of Melstone rolling mill stock, and found a total market value of $488,000.00.At the time of the foreclosure, sheriff’s sale on the bank in for bid the feedlot and elevators the sum of $200,000.00, was the Later successful bidder. Roundup contracted to sell the feedlots and elevators corporation Feeders, Inc., a the owners of the formed Roundup bank, $350,000.00. Feeders, Inc. in turn leased properties corporation to a Faunco, Inc., named for cattle feeding operations management Larry Stensvad, under payment payments which in a of $176,731.00 resulted lease Roundup Feeders, either to Inc. or the is not bank, record *18 stipulate clear. On March 27,1979, the bank offered to as 30,1971, of June the value of the fixed assets of the Stensvad corporations $696,968.00. (1975), Dolajak 1258, 1, 6, Mont. P.2d 1260
In Bos v. 167 Ralph approval Spackman quoted from v. M. Par we (1966), Company 918, 921, 147 Mont. P.2d sons followingquotation: personal property, though it related to damages, question compensatory is issue “As for the wrongdoer always actions, liable, a one. In tort is difficult general, any injury probable which is natural and wrong. may consequence of the These include both direct reasonably probable, wrong. but indirect, results of damage property purpose concerned, Where to the awarding damages party injured is to return the to the same, nearly possible enjoyed same, or as condition as he before injury property. injured party to his is to be made as nearly possible profit. Compen- whole as realize a —but satory damages designed compensate injured party injury supra, actual no more, loss less.” In Box, we —no approved damages replacement a measure of based cost in an action silo, for breach of contract to silo, erect a but in appeared replacement that case it that the item was a second- hand silo and its cost was well within the actual market value destroyed. of the silo that was The fairest value of the feedlots by professional unting- and elevators in this case, found by any personal parties, ed bias of the is the fair market value by Hall Hall, found & the sum of $488,000.00.We find figure District Court should have used that in a determination proper plaintiff of the amount to be awarded to for his ouster from the feedlots and elevators. It should be however, noted appraisal rolling that Hall & Hall’s included Stensvad’s stock. rolling already per- The value of the stock is included property sonal receipts of $354,111.00. award The auction rolling from the sale of stock which were included $66,064.70. amount were We should in fairness deduct the rolling appraisal value of the stock from Hall & Hall’s figure elevators, feedlots and which a net leaves rounded proper $411,935.00 market value of as the value of the feedlots and elevators.
Accordingly, we the District amend Court’s award of damages to Stensvad follows: personal property 1. $354,111.00 Conversionof
2. Conversionof cattle 382,000 411,935.00 3. Value feedlot and elevators Mishandling 4. 58,000.00 of business 5. Lost $1,206,046,000
TOTAL *19 THE TO THE SET-OFF BANK parties agree, the found, and the that Court The District owing bank as of principal due and to the amount of the notes The $1,022,325. sum of District 11, 1971, was the November to that amount the date awarded interest on however, Court, prop- judgment. that the In view of the fact erty in- the bank as collateral the taken and sold as we have above shown it, due exceeded value debtedness improper principle it in this indebtedness, of is the amount the to the interest the bank on the note balances case to award ap- judgment. had Oncethe value of the collateral been date of through principle plied means of to the indebtedness obligation for further sales, other Stensvad’s foreclosure and *20 an understandable together job putting an excellent done opinion. the bank did of the that
I with the conclusion majority agree interests.' to the Stensvad money to loan have an agreement for the ter- an factual basis I find there was However, ample to loan and money, the bank that agreement mination by of the Stensvad proper- taking possession subsequent to the of bank ex- The refers majority opinion reports ties. aminers who examined Stensvad loan 12, on November to the of the just рrior taking possession assets by bank. The examiners out that on November point 12, nearly of the fiscal year one-half months after end three and Co. the firm had been unable to Inc., compile Cattle Stensvad the ac- financial statement which would balance and which to The examiners noted that as countant was prepared certify. in substantial 30, 1971, checks had been issued June to cover. amounts when insufficient funds were available L. D. 30, 1971, of June out points majority opinion $271,058.17 net worth of Stensvad Cattle Co. had negative addition, In assets even on that statement. with questionable that during there is evidence the weeks prior taking substantial bank, Stensvad failed to remit possession to make bank, had failed payments funds to the to other feedlot investors, being and funds were diverted his As of bank instructions. pointed in direct disregard operations was all of during majority opinion, out financed, subject made his operations which under grossly are a market. All of these facts suffi- adverse turns any I therefore taken the bank. would basis for the action cient to loan the agreement terminated properly hold loans, to make additional Stensvad, and refused money con- assets which of the various took possession properly for the loans. security stituted that the award lost the majority opinion
I concur with do not sus- the District Court level speculative at of the personal prop- I also that the valuation tainable. agree and the value feedlot $354,111.00 in the amount of erty I would $411,935.00 amount of is correct. elevators $382,000.00 by profit the cattle valuation of reduce a con- I would not find the bank because $104,897.73 made I also eliminate award of the cattle. would version of I Last, would award of business. $48,000.00 mishandling of its loan reduction to the bank after appropriate interest assets repossessed. totals notes income shall be received and applied present re- all loans and regard only Stensvad Corporation each head amount, days quested namely, per per $10.00 to the ad- animal in shall be advanced in addition the feed lot of cattle for finance interim purchases [sic] vances needed to PCA. refinancing through no shall be ad- was made and seconded that funds “Motion of cattle financing purchased hereafter for interm [sic] vanced (all cor- cattle operation or for costs of feed the Stensvad unless such poration) cattle and the feed in be question fed to cattle located in the feed lots at and Melstone, Roundup only.” Stensvad was notified of the resolution letter on October 8, 1971. In the time that between the June elapsed meeting 1971, September Stensvad, although had requested, presented bank with financial statements. Sometime, the unclear, date is the bank received statements reflecting financial condition of the L. D. corporations. Stensvad Cattle Company particularly in bad The accountant’s shape. a report showed negative balance of $271,000. about Of the assets claimed by the corporation, $150,000 approximaely represented bounced checks, and one of the liabilities was for $385,000 nearly for prepaid feed. On October letter from Stensvad’s attorney, Stensvad notified the bank that he considered the directors’ resolution a breach of the agreements made between Stensvad’s corporations and the bank. The letter demanded that the bank assume control of the physical plant opera- tions of the company. Stensvad claimed he had no operating funds with which to pay employees, purchase feed оr pay other expenses because of the Board of Directors decision of October 7. By letter of October 14, 1971, the bank confirmed to the PCA representative that it would continue to finance the in- terim funds necessary operating money until permanent was obtained financing from the PCA its through commitment of October 11, 1971. On October 19, the PCA wrote to Stensvad’s corporations it was the investors in notifying the cattle feeding program the assignment of the monies to the bank. Apparently at this time Stensvad was “out of trust” with the investors. On November 16,1971, the bank advised PCA that it would continue its loan with the arrangements Stensvad Cattle Com- pany for the interim of cattle purchase and their sub- feeding ject to limitation of head week. per per Also on November $5 16,1971, the bank issued letter stating it was over all taking
Notes
on total assets of Notes $55,261.86, payable The that time are shown the sum of ac- $159,597.86. bank at statement, to thе countants noted with June respect Inc. of a inasmuch as M. V. was part Enterprises, the ac- “brother- sister” of controlled group corporations, intercor- not been able to determine having any countants not could be transactions, liability income tax porate We no November 1971 statement M. determined. find V. Enterprises. Co. for The financial statement of L. D. Stensvad Cattle is it 30, 1971, is, June worthless. As it reflects total assets $692,860.72, for a $421,802.55, liability negative total net Even claimed $271,058.17. ques- worth of assets reports: tionable. accountant 3. amount of $76,500.00 “NOTE This represented $45,000.00 that not Mr. bank check of did clear Wilson’s D. that Mr. Wilson did not remit L. $31,500.00 not ascer- Co. on client’s Collection probability Cattle deposit. now. tained as of 4. This amounts withheld $121,000.00 “NOTE represents clients as a com- feeding Dean from California cattle Mr. Jack an error L. D. Cattle believes this is mission. Co. are in Collection to collect this process. probability and steps of now.” ascertained as $383,568.26 an item of owed to Custom The liabilities include Feeding payments clients for advance on feed. telling reports in- Most are the examiners who vestigated bankability this bank to loans made corporations. the Stensvad respect Agri-Services, Inc. With statement of June 30, 1971,the examiners noted: operating “The results mentioned above indicate insuffi-
notes the extent of collectionwas obvious- interest on those ly The bank entitled to a set-off of no more than terminated. is principal of the date of the the amount indebtedness of by the District Court. breach found JUDGMENT OF THE SUMMARY ISSUE presiding commenced, was the then When this action first summary judge granted judgment in favor district of a of the sum- bank. Plaintiff filed motion for reconsideration mary judge judgment qualified when second was to sit on judge, considering issues, reversed cause. second summary opened judgment In for trial. сause contrary, spite is the bank’s contentions to it clear of questions inception of this material fact existed from litigation entry summary judgment and that the first improper. We find no merit therefore bank’s contention improperly District Court reversed the stand on summary judgment question. CONCLUSION above, it claim, the Stensvad as we find The amount of subject $1,022,325. in the sum We to set-off in- to the District Court therefore remand this cause modify judgment heretofore in this entered structions judgment in sum of to enter favor Stensvad inthe cause, and paid, set- shall constitute full final $183,721,which when personally, Stensvad, of L. D. and as tlement of all claims corporations investing representative shareholders and of the Interest on the amount of the corporations. judg- ment run from shall the date of its after remittitur entry herein. Costs to Stensvad. MR. JUSTICE WEBER dissents: his and competent Sheehy I Justice careful commend He facts in this case. has confusing complex analysis