Opinion ID: 532808
Heading Depth: 2
Heading Rank: 2

Heading: Proof of Cow Ownership.

Text: 23 At trial, the Bank contended that Dairy Farm's interest in the cows was not a true lease, but was a security interest which was trumped by the Bank's prior security interest. The trial court determined that Dairy Farm had a true lease with the Brocks and therefore retained a property interest in its cows as well as any replacement cows. Mem. op. at 14. The court wrote that: 24 the Brock lease was a true lease and not a security agreement subject to the requirements of Article Nine of the Uniform Commercial Code. Defendant [Dairy Farm] retained title to the original cows and any replacement cows. Thus, defendant's ownership rights in the original and replacement cows trump plaintiff's [the Bank's] perfected security interest in all of the livestock on Brock's farm. However, defendant must be able to identify the original and replacement cows. Plaintiff has the right to possession of all of the cows that defendant cannot prove belonged to it; its security interest in all livestock, now or hereafter acquired, entitles it to assume all the livestock is subject to its lien, unless it can be shown otherwise. 25 Id. (citing Burlington Nat'l Bank v. Strauss, 50 Wis.2d 270, 184 N.W.2d 122 (1971)). 26 Although the trial judge concluded that Dairy Farm had the right to original and replacement cows, she did not mention that Dairy Farm also had a property interest in the progeny of its cows as is provided for by the lease agreement. Def. Ex. 1. The court wrote that as to the progeny of any leased cows, the issue is simple: defendant had only a security interest that was not recorded, and therefore not perfected. Mem. op. at 14. [D]efendant's interest in any of the progeny of its leased cows was secondary to plaintiff's lien on all the livestock. Id. 27 Having resolved that Dairy Farm had the burden of identifying its cows and that it only had a property interest in originals and replacements, the court wrote that Dairy Farm could only identify three of its original cows when its employees examined the herd on October 20, 1987, id. at 15, and its effort to identify additional cows with photos in October 1986 was flawed and unpersuasive, since it relied on Mr. Brock's flawed memory. Id. at 15-16. As a result, the court awarded Dairy Farm only the sale proceeds for the four cows that the parties had stipulated Dairy Farm owned. Id. at 16-17. 28 We consider two errors alleged by Dairy Farm: whether the trial court placed the proper burdens on the parties with regard to proof of ownership and whether Dairy Farm had a right to the progeny of its cows. The trial court treated this case as a declaratory judgment action to determine the property rights of the two parties. No one disputes the court's application of Wisconsin substantive law to the issues before it. 2 29 In concluding that Dairy Farm should have the burden of identifying its cows, the trial court relied on the case of Burlington National Bank v. Strauss, 50 Wis.2d 270, 184 N.W.2d 122 (1971). From that case, the court arrived at the rule that if a holder of a superior interest cannot identify its own cattle, then the holder of the lesser, but general, lien obtains possession of them. The district court wrote that [Burlington ] court placed burden on defendant to identify livestock in which defendant had a security interest that would have been senior to that of plaintiff, which had a general lien on all livestock now owned or hereafter acquired. Mem. op. at 14-15. 30 The Burlington court's statements regarding defendant's failure of proof are dicta, since the case turned on the fact that the defendant, Strauss, had not perfected his purchase money security interest. Strauss had missed the required ten-day window for filing his conditional sales note and, therefore, his interest was secondary to plaintiff's security interest in all of the debtor's property. The Burlington court went on to express approval of the trial court's decision that Strauss had failed to prove ownership either with ear tags or by the testimony of the debtor, since the debtor's testimony was inconsistent with the facts of the case and, therefore, incredible. There is no discussion of whether the bank had presented evidence of the debtor's (and, therefore, its) ownership of the disputed cattle. 31 We find that the trial judge, in the present case, erred by creating a presumption of ownership in favor of the general interest holder. The Strauss dicta are not sufficient authority for such a rule in the face of the general rules on burden of proof. The general rule is that the party that asserts the affirmative of an issue has the burden of proving the facts essential to its claim. Miller v. Milwaukee Odd Fellows Temple, 206 Wis. 547, 240 N.W. 193, 199 (1931) (party seeking to establish the invalidity of the defendant's title assumed the burden of proof on that issue); Chybowski v. Bucyrus Co., 127 Wis. 332, 106 N.W. 833, 837 (1906) (plaintiff loses personal injury suit, because he claimed that a steam hammer was defective but failed to present credible proof of that allegation); 29 Am.Jur.2d Evidence Sec. 127 (1967). Another way of stating this rule is that the party who would lose if no evidence were presented has the burden. 29 Am.Jur.2d Evidence Sec. 128 (1967) (citing Thoe v. Chicago, Milwaukee & St. Paul R.R. Co., 181 Wis. 456, 195 N.W. 407 (1923)); Annotation, Burden of Proof in Actions under General Declaratory Judgment Acts, 23 A.L.R.2d 1243, 1253 (1952). 32 In the present case, there is no reason to create a presumption that either Dairy Farm or the Bank (by virtue of its security interest) had title to any of the cows. With the exception of the four stipulated to belong to Dairy Farm, the Bank in its complaint (at p. 2, p 1) claimed, and Dairy Farm in its answer (at p 2) counterclaimed, all of the remaining cows. The Bank bore the burden of proving its claim and Dairy Farm had the burden of proving its counterclaim. Absent a presumption, either party would lose if it presented no evidence. However, we can see no reason why the burden should be placed solely on Dairy Farm to prove ownership, especially since the Bank knew of Dairy Farm's ownership interest, could have acted to preserve evidence of the identity of Brock's cows, and was responsible for their sale and destruction. If we consider the incentives involved, the rule should be that all parties asserting ownership should take measures to prove the identity of their own. 33 Turning to the progeny issue, we note that the lease agreement signed by the Brocks retained for Dairy Farm the right to the progeny of its cattle. The agreement provides in relevant part that  'A' hereby leases to 'B' and 'B' hereby leases from 'A' twenty-two (22) cows, ... and any and all offspring, progeny and replacements thereof.... Def. Ex. 1 at p 1. Even more explicitly, the lease states that [t]itle and ownership of all animals furnished by 'A' and of their progeny and any replacements, shall be and remain in the name of 'A' until final settlement of this Lease. Id. at p 6 (emphasis supplied). Therefore, contrary to the district court's resolution of this issue, Dairy Farm had a superior title interest in the progeny of its cows to the security interest of the Bank. We need not decide whether the district court was correct that Dairy Farm had not perfected its security interest, see mem. op. at 14, since Dairy Farm had a superior ownership interest in the progeny. 34 Dairy Farm claims that the trial court erred by disregarding the evidence it presented of ownership, especially since Dairy Farm alleges that the Bank did not present any evidence of its ownership. Because we have found that the court erred by placing the burden of proving ownership solely on Dairy Farm and by denying Dairy Farm's title interest in the progeny of its cows, we decline to consider the sufficiency of Dairy Farm's evidence at this time. We remand for a reconsideration of the ownership issues. On remand, the district court should consider all evidence of ownership presented by both parties in deciding who owned which cows. 35