Mushitz v. First Bank of South Dakota

457 N.W.2d 849, 13 U.C.C. Rep. Serv. 2d (West) 1355, 1990 S.D. LEXIS 83, 1990 WL 82384
CourtSouth Dakota Supreme Court
DecidedJune 20, 1990
Docket16807
StatusPublished
Cited by16 cases

This text of 457 N.W.2d 849 (Mushitz v. First Bank of South Dakota) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mushitz v. First Bank of South Dakota, 457 N.W.2d 849, 13 U.C.C. Rep. Serv. 2d (West) 1355, 1990 S.D. LEXIS 83, 1990 WL 82384 (S.D. 1990).

Opinions

WUEST, Chief Justice.

Ed Mushitz (Ed), and others, appeal from a circuit court order granting summary judgment to First Bank of South Dakota (Bank). We affirm in part and reverse and remand in part.

Ed and Mary Mushitz operate a 6,000 acre ranch and farm near New Underwood, South Dakota. The two purchased the ranch in 1969 and shortly thereafter Ed began to negotiate loans with Bank, the proceeds of which were used essentially to purchase livestock and farm machinery. The notes executed to the Bank by Ed were generally renewed every year and were secured by all of Ed’s livestock and farm machinery. From 1969 through 1985, Ed paid and kept current at least the interest payments on the promissory notes and paid some of the principal when he was able. Every year, around March, Ed and the Bank would renew Ed’s promissory notes. In March of 1985, Ed met with Bank representative Casey Hunter (Hunter) for the purpose of renewing his promissory notes. During his visit with Hunter, Ed was informed that his notes would be renewed but he would be required to sign an agreement authorizing the Bank’s name to be put on all checks for the sale of any livestock, crops or machinery owned by Ed. Ed refused to sign the agreement, therefore, his notes were not renewed by the Bank.

On June 28, 1985, the Bank demanded payment of the principal on Ed’s outstanding notes. The Bank asked Ed to enter into an agreement whereby Ed would bind himself to pay in full the principal on those notes by November 1, 1985. The Bank informed Ed that if he did not enter into this agreement, it would begin foreclosure proceedings in July of 1985. Ed refused to enter into any such agreement. As a result, the Bank initiated an action against Ed for the unpaid portion of the outstanding promissory notes. By this action, the Bank also requested possession of the loan collateral pursuant to our Replevin statutes set forth in SDCL ch. 21-15.1 The record reflects the Replevin portion of this action was initiated by the Bank due to Ed’s refusal to deliver the collateral to the Bank after his apparent default on the notes.

In compliance with our Replevin statutes, Ed was served with an order to show cause in the early part of August. By this order, Ed was requested to appear in court the following week to show cause why the Bank should not be given possession of the collateral in question. On August 16,1985, the show cause hearing was held. Ed and his wife appeared at this hearing without an attorney. The attorney who was to represent them resided in North Dakota and was not licensed to practice law in this [852]*852State. This attorney had filed an answer to the Bank’s complaint prior to the show cause hearing. This answer, however, was orally stricken by the trial court at the show cause hearing because it was signed by the unlicensed attorney. Having heard no objections from Ed at the hearing with respect to the Bank’s request for possession of the loan collateral, the trial court then issued an order of immediate replevin of all Ed’s livestock and farm machinery.

On August 19, 1985, a sheriff appeared at Ed’s ranch and took possession of the livestock and farm machinery on the ranch. On August 22, 1985, the sheriff delivered the seized property to the Bank. Within two weeks from that date all of the livestock was sold by the Bank. Later, on November 4, 1985, the Bank filed a motion for default and requested that it be authorized to sell the machinery which it had earlier seized. The Bank did not provide any notice to Ed of this motion for default. Nevertheless, the trial court entered an order granting the motion on the same date. A certified copy of this order was mailed to Ed and Mary on November 5, 1985. One month later, the first sale of the machinery took place. The remaining machinery was sold on February 6, 1986, and on August 7, 1986. On February 17, 1989, the Bank made a motion for an order approving the accounting and for a deficiency judgment. At the present time, the Bank’s motion is still pending in that action.

In August of 1987, Ed, along with his wife and two sons, instituted an action for damages against the Bank. In this action, Ed sought damages from the Bank for wrongful prejudgment taking. Ed also claimed that our Replevin statutes were unconstitutional. Further, Ed alleged that by selling the loan collateral prior to the rendition of a final judgment in the Bank’s action on the notes, the Bank committed an act of conversion because the replevined property was to remain in the custody of the trial court until such a final judgment was rendered. As a result, Ed sought damages from the Bank for this alleged conversion. In addition to the conversion claim, Ed also claimed that the Bank breached an implied contract to forbear from suit when it instituted the first action against him. Finally, Ed asserted that the selling of the farm machinery and livestock was not done in a commercially reasonable manner.

After Ed filed his complaint asserting all of the aforementioned claims, the Bank filed an answer to this complaint and later submitted a motion for summary judgment. The trial court subsequently granted the Bank’s motion for summary judgment. The trial court reasoned that the undisputed facts clearly showed the Bank complied with the requirements of our Replevin statutes. Hence, the trial court concluded no cause of action existed for wrongful prejudgment taking. With respect to Ed’s claim of conversion, the trial court essentially determined that after the replevin order had been issued, the action in replev-in had ceased and therefore the property was no longer in the custody of the court. Thus, the trial court concluded the Bank was free to dispose of it. As a result, the trial court concluded no cause of action existed as to conversion. The trial court further determined that Ed’s breach of implied contract claim was a compulsory counterclaim which should have been alleged in the first action. The same conclusion was made with respect to Ed’s claim relating to the constitutionality of our Re-plevin statutes. Lastly, the trial court determined that no genuine issue of material fact existed as to Ed’s claim that the sale of the loan collateral was not done in a commercially reasonable manner. The trial court then determined that the facts presented showed the sale of the collateral was done in a commercially reasonable manner. Ed now appeals from this order of summary judgment. On appeal, Ed al- • leges the trial court erred in denying all of his aforementioned claims.

We first address Ed’s argument that the trial court erred in granting Bank’s motion for summary judgment regarding his claim of wrongful prejudgment taking. As noted previously, after Ed failed to pay the principal on certain outstanding promissory notes executed to the Bank, a Replevin action was instituted by [853]*853the Bank pursuant to SDCL ch. 21-15 for the purpose of gaining possession of Ed’s livestock and farm machinery. According to SDCL 21-15-2:

When an immediate delivery is claimed, an affidavit must be made by the plaintiff (Bank) or by someone on his behalf, stating:
(1) that the plaintiff is the owner of the property claimed, particularly describing it, or is lawfully entitled to the possession thereof, by virtue of a special property therein, the facts in respect to which shall be set forth;
(2) that the property is wrongfully detained by the defendant;

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Mushitz v. First Bank of South Dakota
457 N.W.2d 849 (South Dakota Supreme Court, 1990)

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Bluebook (online)
457 N.W.2d 849, 13 U.C.C. Rep. Serv. 2d (West) 1355, 1990 S.D. LEXIS 83, 1990 WL 82384, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mushitz-v-first-bank-of-south-dakota-sd-1990.