Opinion ID: 369731
Heading Depth: 1
Heading Rank: 3

Heading: The Validity of the Setoff Claim.

Text: 43 As an affirmative defense, the Bank asserted in its pleadings that Olsen-Frankman's right of setoff, if any, applied only to the check for $28,346.12 issued to John T. Keim & Sons because Olsen-Frankman's records showed no indebtedness owed by G. M. Grain Co., the payee of the second check. 44 This argument may be well taken. The right of setoff exists only as to mutual debts. See Henderson v. Northwest Airlines, Inc., 231 Minn. 503, 43 N.W.2d 786 (1950). Here the record shows mutual debts only between Olsen-Frankman on the one hand, and John T. Keim & Sons on the other. 45 On appeal, Olsen-Frankman does not dispute this mutuality requirement; rather, it contends that the evidence establishes that G. M. Grain Company and John Keim & Sons constituted a single entity. According to this theory, the $100,000 indebtedness constitutes a debt of Keim and/or G. M. Grain Company as one entity, and therefore mutuality exists in fact with respect to both payees. 46 Appellant's theory that John T. Keim & Sons and G. M. Grain Company were one and the same seems to have first surfaced in its reply brief. At trial, Olsen-Frankman did not advance this theory but rather contended that Keim owned the cattle. Olsen-Frankman presented evidence that in payment for livestock purchased on July 17, 1975, it contemplated the issuing one check to Keim for the cattle. However, at the request of Gary Keim, a son of John Keim who brought in the loads of cattle, it issued two checks and split the proceeds between Keim and G. M. Grain Company. 14 Appellee Bank introduced evidence at trial indicating that, on the contrary, G. M. Grain owned the cattle. The jury by answer in the special verdict determined that on July 17, 1975, G. M. Grain Company owned the cattle in question. 47 Whether under the pleadings and trial record the appellant should now be permitted to advance the theory that Keim and G. M. Grain constituted a single entity, thereby establishing complete mutuality of indebtedness between Olsen-Frankman and both payees on the two checks in question, is a matter that we do not address. This question, as well as the substance of the claim if allowed, should be considered in the first instance by the district court. 48 On the record before us, appellant has demonstrated a right of setoff, hence a claim of damages for fraud, only with respect to the check made out to John T. Keim & Sons for $28,346.12. This right remains subject to certain other defenses asserted by the Bank. 49