North Dakota justices to hear grain bonding case today

BISMARCK, N.D. (Legal Newsline)-The North Dakota Supreme Court will hear a case today that could decide whether grain elevator bonding laws extend to farmers who haul their crops outside the state.

Jim Broten, his son, Eric, and the family's farming operation are attempting to recover some of the $336,911 they lost when Minnesota Grain Inc. went broke in March 2007.

The Brotens claim they delivered barley to the company's warehouse in Minnesota for which they were not paid.

Minnesota Grain was required to carry a $100,000 bond to compensate farmers if the company could not pay producers, but the North Dakota Service Commission refused to consider the Broten claims against the bond.

Southwest District Judge Allan Schmalenberger ruled last January that the commission was correct in its determination.

The Brotens argue that Minnesota Grain's presence in North Dakota should entitle them to a share of the company's bond.

There simply is "no exception" within state law regarding "an exclusion for receipts based upon grain delivered out of state," the Brotens' attorney, Sarah Vogel, wrote in court papers.

She said the law "must be interpreted for the benefit of farmers who have not been paid for their grain, not for the benefit of the bond company, insolvent warehouseman, or for ease of administration by the PSC."

The North Dakota Grain Dealers Association filed a brief in support of the Public Service Commission, saying grain licensing and bonding laws should not cover transactions made in other states.

The association said to argue as the Brotens do that a bond on a North Dakota warehouse extend to Minnesota is somewhat like "giving a North Dakotan legal permission to carry with him to Minnesota the 75 mph interstate highway speed limit, when the limit in Minnesota is 70 mph."

The case is Public Service Commission v. Minnesota Grain - No. 20080068.

From Legal Newsline: Reach reporter Chris Rizo by e-mail at chrisrizo@legalnewsline.com.