B & H Investment Co. v. Union Stockyards Co. of Fargo

513 N.W.2d 264, 1994 Minn. App. LEXIS 216, 1994 WL 76497
Court of Appeals of Minnesota·Decided March 15, 1994·No. No. C8-93-1591·Published·Cited by 1 cases

Opinion

[266] OPINION

FOLEY,* Judge.

In this ease arising out of the lease agreement between a stockyard and a meat packing plant, appellant alleges the trial court misinterpreted the lease, improperly instructed the jury, and erred when it denied JNOV or a new trial. In a notice of review, respondents contend that the trial court erred in its award of prejudgment interest. The lease agreement, which was clear and unambiguous on its face, precluded any claim for breach of implied contract. That lease contained no provision obligating appellants to provide a specific amount of cattle to respondents. We reverse and remand for entry of judgment notwithstanding the verdict.

FACTS

This action arises out of the interpretation of a lease that governs the relationship between a stockyard and the meat processing plant located adjacent to the stockyard in Cass County, North Dakota. The meat processing plant is located on land leased from appellant Union Stockyards Company of Fargo (Union). The lease underlying this action originated in 1978 between Union and Paul Schanno. This lease provides that the lessee may assign his interest in the lease without the lessor’s consent. In conjunction with the lease, Union and Schanno also entered a yardage agreement in which Union agreed to maintain and clean 17 cattle holding pens in the stockyard for the use of Schanno. This yardage agreement is also assignable without the consent of Union.

On February 29, 1980, Schanno sold the packing plant to Williston Packing Company with only two amendments to the lease and yardage agreement: a modification in the formula for calculating additional rent, and a reduction in the number of cattle holding pens from 17 to 8. Williston assigned the lease and yardage agreement to Held Beef Industries, which in turn sold the packing plant to respondents B & H Investment Co. and Federal Beef Processors, Inc. (Federal Beef) on September 1,1987. Union consented in writing to this assignment later in September 1987. On August 10,1988, Union entered a purchase agreement with Central Livestock Association, Inc. (Central) for the sale of a substantial part of the real estate on which the stockyards are located. However, Union retained title to the portion of the real estate which holds the cattle holding pens that are subject to the yardage agreement with Federal Beef.

Union is the lessor here; Federal Beef is the lessee. The lease requires Federal Beef to pay $900 annually in basic rent at a rate of $75 per month, plus additional rent for each animal “which is received directly at [Federal Beefs] plant * * * which was not immediately or shortly prior thereto purchased or handled at [Union’s] stockyards.”

Prior to Federal Beefs purchase of the processing plant, the prior owner, Held Beef, had been slaughtering approximately 300 cattle per day. The lease agreement defined “normal operation” of the packaging plant as “slaughtering and processing a daily average on a five (5) day week basis of not less than three hundred (300) head of livestock for such continuous period of operation.” Of this 300 head, however, Held Beef initially purchased only 40% and eventually only 20% of the cattle from the Union Stockyard. The evidence further demonstrates that packaging plants in general were experiencing a decline of cattle supply from the stockyards.

In spite of this trend, Robert Goldberger, co-owner of Federal Beef, planned to increase production at the packaging plant and slaughter 600-700 cattle per day. He felt that because a stockyard generally supplies the meat packing plant, Federal Beef would be able to purchase at least 50% of its cattle from the Union Stockyard. Goldberger did not discuss those expectations with anyone from Union, however. He and his brother simply came to the conclusion that they could run their meat packing plant to capacity; they did not consult Union to discuss the viability of such a plan. From September [267]*2671987 until October 1992, Federal Beef purchased approximately 34,308 cattle from Union Stockyard. This number constituted approximately 4.4% of the total number of cattle processed at the packing plant. Federal Beef then purchased the remainder of the cattle it needed for processing from farmers or cattle auctions.

Based on Federal Beefs demand for cattle and Union Stockyard’s inability to meet that demand, Federal Beef purchased its cattle from other sources, stored some of it in the holding pens at the Union Stockyard, and paid the additional rent charges set out in the lease. Federal Beefs claim against Union Stockyard was based on the amount of money it spent purchasing cattle from other sources and the amount of additional rent it paid per head to store some of that cattle at the stockyard.

Federal Beefs next claim arises from Union Stockyard’s sale of a portion of the stockyard to Central Livestock in 1988. Federal Beef contends that sale constituted the “closing” of Union’s stockyard and activated Federal Beefs right to exercise its option to purchase the stockyard for cash.

After a ten-day trial, the jury returned a verdict in favor of respondents, finding their total damages to equal $1,531,933.92. The trial court later ordered prejudgment interest on the $285,682 verdict for additional rent paid and allowed Federal Beef to exercise its purchase option. Appellant moved for JNOV or, in the alternative, a new trial. The trial court denied this motion.

ISSUES

1. Did the trial court err in submitting the implied contract claim to the jury and in upholding the jury’s verdict upon motion for JNOV?

2. Did the trial court err in denying JNOV on the breach of contract claim?

3. Did the trial court err in denying JNOV on the claim to exercise the purchase option under the lease, and in concluding that Federal Beef could validly exercise that purchase option?

ANALYSIS

Standard of Review

Judgment notwithstanding the verdict “may be granted only when evidence is so over-whelmingly on one side that reasonable minds cannot differ as to the proper outcome.”

Lamb v. Jordan, 333 N.W.2d 852, 855 (Minn.1983) (citations omitted). In applying this standard, the court must view all of the evidence in a light most favorable to the verdict; the court may not weigh the evidence or judge witness credibility. Id.

1. Implied Contract Claim

Union contends the trial court erred when it submitted the question of an implied contract to the jury. We agree. Our careful review of the record and briefs in this case leads to the inescapable conclusion that there were no issues to be submitted to the jury. A directed verdict should have been entered at the close of the evidence in favor of Union.

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B & H Investment Co. v. Union Stockyards Co. of Fargo, 513 N.W.2d 264, 1994 Minn. App. LEXIS 216, 1994 WL 76497 (Mich. Ct. App. 1994).

513 N.W.2d 264 (B & H Investment Co. v. Union Stockyards Co. of Fargo) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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