N.D. Supreme Court rejects farmer's claim

By Chris Rizo | Oct 23, 2008

Daniel Crothers

BISMARCK, N.D. (Legal Newsline)-The North Dakota Supreme Court ruled Wednesday that grain elevator bonding laws do not extend to farmers who haul their crops outside the state.

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

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

Although Minnesota Grain was required to carry a $100,000 bond to compensate farmers if the company could not pay producers, the North Dakota Public Service Commission refused to consider the Broten claims against the bond because the grain was transported out of state.

Southwest District Judge Allan Schmalenberger ruled last January that the commission was correct in its determination. The Supreme Court ruled that North Dakota state law does not provide for the regulation of public warehouses outside this state.

"As a practical matter, is it also unclear how the PSC would promptly marshal assets, particularly grain, for a trust fund from public warehouses located in other states," said Supreme Court Justice Daniel Crothers, who wrote the court's majority opinion.

As Legal Newsline reported previously, the Brotens argued Minnesota Grain's presence in North Dakota should entitle them to a share of the company's bond.

Their attorney, Sarah Vogel, wrote in court papers that 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 at chrisrizo@legalnewsline.com.

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