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In re Pierce Elevator

Supreme Court of Nebraska

September 11, 2015

IN RE CLAIMS AGAINST PIERCE ELEVATOR. JOHN A. FECHT, DIRECTOR, GRAIN WAREHOUSE DEPARTMENT, NEBRASKA PUBLIC SERVICE COMMISSION, APPELLEE AND CROSS-APPELLEE,
v.
MATTHEW CHRISTENSEN, CLAIMANT, APPELLANT, AND DONNELLY TRUST ET AL., CLAIMANTS, APPELLEES AND CROSS-APPELLANTS, DAVID UECKER, CLAIMANT, APPELLEE AND CROSS-APPELLEE, AND LINDA ALFS ET AL., CLAIMANTS, APPELLEES

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Appeal from the Public Service Commission.

AFFIRMED IN PART, AND IN PART REVERSED AND DISMISSED.

Rocky C. Weber and Andrew C. Pease, of Crosby Guenzel, L.L.P., for appellant.

Richard P. Garden, Jr., Austin L. McKillip, and Gregory S. Frayser, of Cline, Williams, Wright, Johnson & Oldfather, L.L.P., for appellees Donnelly Trust et al.

Douglas J. Peterson, Attorney General, and L. Jay Bartel for appellee John A. Fecht.

HEAVICAN, C.J., CONNOLLY, STEPHAN, MCCORMACK, and CASSEL, JJ., and PIRTLE, Judge. WRIGHT and MILLER-LERMAN, JJ., not participating.

OPINION

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[291 Neb. 801] McCormack, J.

I. NATURE OF CASE

This appeal arises out of proceedings initiated by the Nebraska Public Service Commission (PSC) following the insolvency of Pierce Elevator, Inc. (PEI), to determine claims under the Grain Warehouse Act[1] and the Grain Dealer Act.[2] PEI voluntarily surrendered its grain warehouse license to the PSC on March 4, 2014, and the PSC took title to all PEI grain in storage in trust for all valid owners, depositors, or storers of grain pursuant to the Grain Warehouse Act. The PSC then determined valid claims under the Grain Warehouse Act and the Grain Dealer Act. The appellant and cross-appellants are claimants who are dissatisfied with the PSC's classification of their claims.

II. BACKGROUND

1. PEI

PEI operated licensed grain warehouses in Pierce, Randolph, and Foster, Nebraska. Brian Bargstadt was PEI's president and one-third owner.

PEI maintained a banking relationship with Citizens State Bank (the Bank) and obtained operating loans from the Bank. [291 Neb. 802] PEI borrowed funds from the Bank on a line of credit to facilitate the purchase of grain from its producers.

PEI's accountant testified that PEI was " in trouble" by the end of 2012 and that PEI needed to raise capital to address the negative owner's equity. At the end of 2012, PEI had a working capital deficiency in excess of $2.2 million.

On August 30, 2013, PEI's line of credit matured and the Bank permitted the line of credit to go past due until September 19. On that date, the Bank and PEI entered into a new contract extending the due date until October 31. The Bank agreed to continue to extend the maturity of PEI's line of credit on a monthly basis while PEI, its accountant, and the Bank addressed the working capital deficiency. Bargstadt testified that he requested the monthly extensions of the line of credit " [t]o satisfy John Fecht [the director of the PSC's grain warehouse department]" because " he wanted to know if we had money in our account to pay our bills and pay the grain."

During this time, the PSC became concerned about PEI's ability to pay producers. The PSC intensified its scrutiny of PEI because PEI's grain warehouse and dealer's licenses were set to expire at the end of September 2013. The PSC's grain

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warehouse department's director, John A. Fecht, expressed his concern that the Bank had not extended its line of ...


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