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Keywords

contractlawsuitbreach of contractplaintiffdefendantdamagestrialmotionsummary judgmentmotion for summary judgment
contractplaintiffdefendanttrialmotionsummary judgmentmotion for summary judgment

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Atwood-Kellogg, Inc. v. Nickeson Farms, 602 N.W.2d 749, 40 UCC Rep.Serv.2d 196, 1999 S.D. 148

Facts

In 1995, farmers contracted to sell corn and soybeans to Farmers Elevator Company (FEC), which later became insolvent. Atwood-Kellogg provided financing to FEC and retained a security interest in its accounts. After FEC's insolvency, some farmers delivered commodities, while others did not, citing lack of assurance of payment. Atwood-Kellogg claimed damages due to the farmers' nondelivery and initiated a breach of contract lawsuit. Both parties filed for summary judgment, with the trial court ruling in favor of the farmers.

In 1995, farmers contracted to sell corn and soybeans to Farmers Elevator Company (FEC), which later became insolvent. Atwood-Kellogg provided financing to FEC and retained a security interest in its accounts. After FEC's insolvency, some farmers delivered commodities, while others did not, citing lack of assurance of payment.

Issue

Are the Defendant Farmers relieved from their obligation to deliver corn and soybeans to the insolvent buyer, Farmers Elevator of Eden, when the Plaintiff, the Elevator's financier, offered to pay for the corn and soybeans?

Are the Defendant Farmers relieved from their obligation to deliver corn and soybeans to the insolvent buyer, Farmers Elevator of Eden, when the Plaintiff, the Elevator's financier, offered to pay for the corn and soybeans?

Rule

Under SDCL 57A–2–609, a party may demand adequate assurances of due performance when reasonable grounds for insecurity arise, and under SDCL 57A–2–702, a seller may refuse delivery except for cash if the buyer is insolvent.

Under SDCL 57A–2–609, a party may demand adequate assurances of due performance when reasonable grounds for insecurity arise, and under SDCL 57A–2–702, a seller may refuse delivery except for cash if the buyer is insolvent.

Analysis

The court found that there were genuine issues of material fact regarding whether the farmers made a demand for assurances of payment and whether they communicated their intent to suspend performance until they received adequate assurances. The court noted that the farmers' actions and communications could be interpreted in different ways, which precluded the granting of summary judgment.

The court found that there were genuine issues of material fact regarding whether the farmers made a demand for assurances of payment and whether they communicated their intent to suspend performance until they received adequate assurances.

Conclusion

The Supreme Court reversed the trial court's summary judgment in favor of the farmers and remanded the case for trial, indicating that the issues of fact needed to be resolved.

The Supreme Court reversed the trial court's summary judgment in favor of the farmers and remanded the case for trial, indicating that the issues of fact needed to be resolved.

Who won?

The farmers prevailed in the trial court, as the court granted their motion for summary judgment based on the lack of adequate assurances from Atwood-Kellogg.

The farmers prevailed in the trial court, as the court granted their motion for summary judgment based on the lack of adequate assurances from Atwood-Kellogg.

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