Court Opinion

ID: 5173773
Source: CourtListenerOpinion
Date Created: 2022-01-02 05:15:23.938371+00
Date Added: 2024-06-11T08:26:11.978334
License: Public Domain

BURNETT, Judge,
specially concurring.
The lead opinion declares the common law rule that an auctioneer may be liable for selling property on behalf of a principal whose interest in the property is subject to a lien and who has no right to sell the property without the lienholder’s consent. This declaration would seem to frame a straightforward issue — did the principal in this case (Nunes) have a right to sell the cows without consent of the lienholder (Newgen)? The liability of the auctioneer (OK Livestock) turns on that question.
The lead opinion does not answer the question directly. Rather, it suggests a distinction between authority to remove cows from a dairy herd and authority to sell them. It then discusses the ancillary question of whether authority to sell, if it did exist, would have the secondary effect of waiving the lienholder’s security interest. The opinion holds that the security interest was not waived in the present case and — upon this ancillary predicate — it concludes that Nunes lacked authority to sell the cows without consent.
With due respect to my colleagues, I believe the issue can be decided by a more straightforward analysis. The contract between Newgen and Nunes consists of three documents. First, there is a “Sales Agreement” prepared with specific reference to this transaction. Second, there is a boiler plate form of “Loan and Security Agreement” containing blank spaces for information pertaining to the transaction. Third, there is a UCC-1 form used to perfect the security interest. The “Loan and Security Agreement” contains a boiler plate provision requiring Nunes to obtain written consent from Newgen before re-selling any collateral. However, the “Sales Agreement” specifically gives Nunes “cull privileges to remove non-productive cows from said herd____” The “Sales Agreement” goes on to say that Nunes is required to replace any cows thus removed and that the new cows will become replacement collateral under the “Loan and Security Agreement.”
When interpreting a contract, our duty is to give reasonable meaning to all of the provisions — avoiding, if possible, the treatment of any provision as mere surplusage. Here, the construction which gives meaning to all parts of the contract is one which recognizes that the “culling privilege” contained in the “Sales Agreement” embodies a specific exception to the general requirement of prior written consent as set forth in the boiler plate “Loan and Security Agreement.” Indeed, failure to recognize such an exception would reduce the “culling privilege” to mere surplusage. Although the lead opinion draws a distinction between authority to remove cows from the herd and authority to sell them, I think the distinction is artificial. The only reason for culling an unproductive cow from a dairy herd is to sell it and replace it with a productive cow.
Accordingly, I deem it clear that Nunes had narrow authority to sell in connection with the culling process, but a sale for any *452other purpose could not be made without Newgen’s consent. Thus, the question is narrowed to whether Nunes was engaged in “culling” when he sold the cattle in question. On this point, there is no genuine issue of material fact. Nunes’ own affidavits make it clear that none of the cows was sold and replaced in a culling process. Rather, the herd was simply liquidated to raise money during a period of financial distress. These affidavits are uncontradicted.
Therefore, I would hold that the sale of the cows did not come within the “culling privilege” exception to the general requirement of written consent. The sale at auction was without authorization, subjecting Nunes to liability (an academic point in light of his bankruptcy), and subjecting OK Livestock to liability under the common law rule declared in the lead opinion.