author: VANDE WALLE, Chief Justice.

text:
    2003 ND 146
    Tammie S. KRANK, Plaintiff and Appellant, v. Brandon J. KRANK, Defendant and Appellee.
    No. 20030071.
    Supreme Court of North Dakota.
    Sept. 23, 2003.

      Gary D. Ramsey, Greenwood & Ramsey, PLLP, Dickinson, for plaintiff and appellant.
    Thomas D. Kelsch (on brief), and Todd D. Kranda (argued), Kelsch, Kelsch, Ruff & Kranda, Mandan, for defendant and ap-pellee.
   VANDE WALLE, Chief Justice.

[¶ 1] Tammie Krank appealed from a divorce judgment dissolving her marriage with Brandon Krank, awarding custody of their minor son to Brandon with reasonable visitation for Tammie, and setting Tammie’s child support obligation. We hold the trial court’s custody award, visitation schedule, and award of child support are supported by the record evidence and are not clearly erroneous. We affirm.

I

[¶ 2] Brandon and Tammie were married on May 5, 2000. Their son was born on February 26, 2001. Tammie was married twice previously. She has two children from her first marriage, one age 15, and one age 13 at the time of trial. She also has one child from her second marriage, who was 5 years old at the time of trial.

[¶ 3] Tammie is 34 years old and in good health. She graduated from high school in 1986 and attended Dickinson State University for about 2½ years. At the time of trial Tammie was unemployed. When Tammie met Brandon she was working as a travel associate but she was terminated from her job for excessive absences. She plans to continue a correspondence course in medical transcription when her divorce is finalized.

[¶4] Brandon is age 29 and in good health. From 1992 to 1994 he was on active duty with the United States Army. He has earned approximately 56 college credit hours at various institutions. At the time of trial Brandon was employed as a materials handler for TMI in Dickinson.

[¶ 5] Problems developed in Tammie and Brandon’s marriage, and Tammie filed for divorce. After a hearing, the court granted Tammie a divorce on the grounds of irreconcilable differences. The court concluded it was in their child’s best interests to award his custody to Brandon with reasonable visitation for Tammie. The court also ordered Tammie to pay child support of $112 per month.

II

[¶ 6] Tammie asserts that the trial court, in deciding the custody issue, should have weighed more of the relevant factors in her favor and its failure to do so resulted in a clearly erroneous custody award. A trial court has substantial discretion in custody matters and must award custody based on its determination of the best interests and welfare of the child. Ackerman v. Ackerman, 1999 ND 135, ¶ 8, 596 N.W.2d 332. To assist the trial court in this task, the legislature has set forth several factors under N.D.C.C. § 14-09-06.2(1) which must be considered by the court in making its custody decision:

1. For the purpose of custody, the best interests and welfare of the child is determined by the court’s consideration and evaluation of all factors affecting the best interests and welfare of the child. These factors include all of the following when applicable:
a. The love, affection, and other emotional ties existing between the parents and child.
b. The capacity and disposition of the parents to give the child love, affection, and guidance and to continue the education of the child.
c. The disposition of the parents to provide the child with food, clothing, medical care, or other remedial care recognized and permitted under the laws of this state in lieu of medical care, and other material needs.
d. The length of time the child has lived in a stable satisfactory environment and the desirability of maintaining continuity.
e. The permanence, as a family unit, of the existing or proposed custodial home.
f. The moral fitness of the parents.
g. The mental and physical health of the parents.
h. The home, school, and community record of the child.
i. The reasonable preference of the child, if the court deems the child to be of sufficient intelligence, understanding, and experience to express a preference.
j. Evidence of domestic violence....
k. The interaction and interrelationship, or the potential for interaction and interrelationship, of the child with any person who resides in, is present, or frequents the household of a parent and who may significantly affect the child’s best interests. The court shall consider that person’s history of inflicting, or tendency to inflict, physical harm, bodily injury, assault, or the fear of physical harm, bodily injury, or assault, on other persons.
l. The making of false allegations not made in good faith, by one parent against the other, of harm to a child as defined in section 50-25.1-02.
m. Any other factors considered by the court to be relevant to a particular child custody dispute.

The trial court is not required to make specific findings of fact for each of the above statutory factors, but the court should consider all relevant factors in making its custody decision. DesLauriers v. DesLauriers, 2002 ND 66, ¶ 6, 642 N.W.2d 892. The court’s custody determination is a finding of fact which will not be reversed unless it is clearly erroneous. Kjelland v. Kjelland, 2000 ND 86, ¶ 8, 609 N.W.2d 100. A finding of fact is clearly erroneous only if it is induced by an erroneous view of the law, if no evidence exists to support it, or if the reviewing court, on the entire evidence, is left with a definite and firm conviction a mistake has been made. Id. This Court gives due regard to the trial court’s opportunity to assess the credibility and observe the demeanor of witnesses, and we do not retry custody issues or reassess the credibility of witnesses if the court’s decision is supported by evidence in the record. Corbett v. Corbett, 2001 ND 113, ¶ 6, 628 N.W.2d 312. We do not reverse the trial court’s factual findings merely because we may view the evidence differently, and a choice between two permissible views of the weight of the evidence is not clearly erroneous. Id.

[¶ 7] The trial court considered all of the relevant factors in deciding the custody issue. It concluded that the statutory factors (a), (f), (g), (h), (i), and (l) favored neither Tammie nor Brandon. Except for factor (a), Tammie concurs with the trial court’s conclusion that none of these factors favor either parent. The court found that factors (b), (c), (d), (e), and (k) favored Brandon, but factor (j) favored Tammie. Tammie claims the evidence demonstrates factors (a), (b), (c), (d), and (e) should have been weighed in her favor. She claims factor (k) does not favor either party.

[¶ 8] Under factor (a), the court must look at the love, affection, and other emotional ties existing between the parents and the child. The trial court found there exists love, affection, and emotional ties between the child and both parents, and this factor does not favor either parent. Tammie asserts she has been the child’s primary caretaker since his birth and that the child experiences separation anxiety whenever he is transferred from Tammie to Brandon. Consequently, she asserts this factor favors her. However, the court found that Brandon has spent an increased amount of time with the child and the court also considered the court-appointed custody investigator’s conclusion that the child seems “quite comfortable with both of his parents.” The court found that some separation anxiety when a child is transferred between parents is not abnormal and that the evidence does not clearly indicate there were stronger emotional ties between the child and one parent or the other. We conclude the record evidence supports the trial court’s findings on factor (a).

[¶ 9] Under factor (b), the court must consider the capacity and disposition of the parents to give the child love, affection, and guidance, and to continue the education of the child. Tammie concedes Brandon loves the child and has the capacity and disposition to give the child affection and guidance. However, she believes this factor should be weighed in her favor because she considers herself very loving and affectionate and better able to provide a more consistent and less harsh discipline with the child. The trial court found that both parents have the capacity and disposition to give the child love and affection, but the court found Brandon is better suited to provide the child with guidance. The court found Tammie is not a strong disciplinarian and has had considerable problems maintaining control of her children from the prior two marriages. The trial court also found Brandon “is a stronger figure when it comes to disciplining and enforcing the rules.” While some of Brandon’s discipline techniques were of concern to the court, the court was convinced that all things considered this factor favored Brandon being able to provide the better guidance for the child. We conclude the evidence supports the court’s finding on factor (b).

[¶ 10] Under factor (c), the court must look at the disposition of the parents to provide the child with food, clothing, medical care, and other material needs. Tammie concedes Brandon, at the time of the trial, was employed while she was not, but she asserts that she has always been able to provide adequately for this child and the children of her prior marriages and, therefore, the court should have found this factor weighed in her favor. The court found there was no evidence to indicate that either parent would not be disposed to provide the child with food, clothing, medical care, and other material needs. However, the court found that the evidence shows the child’s father has a history of employment at good paying jobs and is a good provider while the mother is currently unemployed, lives in subsidized housing, and depends upon child support that has not always been paid when due. Consequently, the court found this factor favors the father, and we conclude the evidence supports the trial court’s findings on this issue.

[¶ 11] Under factor (d), the court must look at the length of time the child has lived in a stable satisfactory environment and the desirability of maintaining continuity. Tammie asserts the trial court, in weighing this factor in Brandon’s favor, placed too much emphasis on the behavioral and disciplinary problems Tammie has experienced with the three children of her prior two marriages. The court found that even though this child has lived with Tammie all his life, and therefore maintaining continuity would favor Tammie in this regard, that fact is outweighed “by the unstable and unsatisfactory environment that exists in Tammie’s home.” The court noted that Tammie’s children from her prior marriages have had some very serious behavioral problems and could pose a threat or danger to this child. The court found that it could not ignore the fact that these problems “are of real concern and have created an unsatisfactory and unstable home environment.” We conclude the evidence supports the trial court’s findings on this factor.

[¶ 12] Under factor (e), the court must look at the permanence, as a family unit, of the existing or proposed custodial home. Tammie asserts the trial court should not have held her prior failed marriages against her in considering this factor. The court found that the unpredictable nature of Tammie’s life has not provided the permanence needed in a family unit and that the instability of her two older boys may have been caused in part by having to adjust to different stepfathers and different family units. The court found that based on past history Brandon is more likely to provide permanence and an appropriate family unit. We conclude the trial court gave thorough and adequate consideration to this factor and the evidence supports the trial court’s findings on this issue. 1

[¶ IB] Under factor (k), the trial court must consider the interaction and interrelationship of the child with any person who resides in or frequents the household of a parent who may significantly affect the child’s best interests. Tammie asserts this factor should not favor either parent. She asserts that her two older boys have never caused harm to this child and it is unfair of the trial court to speculate that either boy may do so in the future. She also asserts that it is unfair for the trial court to speculate that a male friend of hers may endanger this child. The trial court expressed concern about how Tammie’s male friend and her two older boys have conducted themselves in the past. The court found that although they have not yet injured this child, they present the potential for doing so. It is appropriate for the trial court to factor in these concerns in deciding which parental household provides the safest environment for the child and provides the likelihood of interrelationships with others that are in the child’s best interests. We conclude the evidence supports the trial court’s findings on factor (k).

[¶ 14] The trial court has a very difficult choice to make in deciding custody between two fit parents, and this Court will not retry a custody case or substitute its judgment for that of the trial court when that court’s determination is supported by the evidence. Ackerman, 1999 ND 135, ¶ 8, 596 N.W.2d 332. After reviewing the entire evidence in this case, we are not left with a definite and firm conviction that a mistake has been made. Consequently, we conclude the trial court’s decision to award custody to Brandon is not clearly erroneous.

Ill

[¶ 15] Tammie asserts the trial court’s award of visitation to her is inadequate and is clearly erroneous. The trial court awarded Tammie visitation on alternating weekends between 3:00 or 3:30 p.m. on Friday until 7:00 p.m. on Sundays. The court also awarded Tammie one weekday visitation, on Thursdays, between 3:00 or 3:30 p.m. and 8:00 p.m. In addition, the court directed the parties “shall alternate holiday visitation,” and the court awarded Tammie extended summer visitation of four weeks in August of each year. Tammie asserts her visitation is inadequate and the trial court should have awarded her an additional weekday visitation on Tuesdays.

[¶ 16] Section 14-05-22(2), N.D.C.C., provides:

After making an award of custody, the court shall, upon request of the noncustodial parent, grant such rights of visitation as will enable the child and the noncustodial parent to maintain a parent-child relationship that will be beneficial to the child, unless the court finds, after a hearing, that visitation is likely to endanger the child’s physical or emotional health.

The trial court’s decision on visitation is a finding of fact which will not be reversed on appeal unless it is clearly erroneous under N.D.R.Civ.P. 52(a). Schiffv. Sckiff, 2000 ND 113, ¶ 10, 611 N.W.2d 191.

[¶ 17] While there is no reason the parties cannot voluntarily agree to additional visitation between the child and his mother, the visitation awarded by the court is reasonable. We are not left with a definite or firm conviction the trial court made a mistake, and we, therefore, conclude the trial court’s visitation award is not clearly erroneous.

IV

[¶ 18] Tammie asserts the trial court’s finding that she should pay child support of $112 per month is clearly erroneous.

[¶ 19] Section 14-09-09.7, N.D.C.C., mandates the Department of Human Services to establish child support guidelines and creates a rebuttable presumption that the amount of support designated in the guidelines is correct. Child support determinations involve questions of law which are subject to a de novo standard of review, findings of fact which are subject to a clearly erroneous standard of review, and, in some limited areas, may involve matters of discretion subject to the abuse of discretion standard of review. Schiff, 2000 ND 118, ¶ 31, 611 N.W.2d 191. A proper finding of net income is essential to determine the correct amount of child support under the child support guidelines. Dufner v. Dufner, 2002 ND 47, ¶ 24, 640 N.W.2d 694. Although Tammie was not employed at the time of trial, the trial court found that Tammie is capable of earning at least minimum wage and, consequently, it was appropriate to determine her child support obligation based upon her earning capacity. Under N.D. Admin. Code § 75-02-04.1-07 the trial court imputed income to Tammie based upon her potential to earn minimum wage. The court subtracted an amount to reflect Tammie having two other children in her home and one in foster care and arrived at a support obligation of $112 per month. Tammie asserts the trial court’s calculation is in error because Tammie “does not have the present ability to pay child support. At the time of trial, Tammie was still a stay at home mother. She stayed at home to take care of the children ... even if she were to work out of the home, she would have to pay between 50 to 70 percent of her income for her children’s daycare expenses.” She asserts the trial court should have taken into consideration subsections (4)(a) and (c) of N.D. Admin. Code § 75-02-04.1-07:

4. Monthly gross income based on earning capacity may be imputed in an amount less than would be imputed under subsection 3 if the obligor shows:
a. The reasonable costs of child care equals or exceeds seventy percent of the income which would otherwise be imputed where the care is for the obligor’s child:
(1) Who is in the physical custody of the obligor;
(2) Who is under the age of fourteen; and
(3) For whom there is no other adult caretaker in the parent’s home available to meet the child’s needs during absence due to employment.
c. The unusual emotional or physical needs of a minor child of the obli-gor require the obligor’s presence in the home for a proportion of the time so great as to preclude the obligor from gainful employment that produces average monthly gross earnings equal to one hundred sixty-seven times the hourly federal minimum wage.

A person seeking amendment of a child support order has the burden of proving the existing level of child support is not in conformity with the amount required by the guidelines. See Henry v. Henry, 2000 ND 10, ¶ 7, 604 N.W.2d 234. After reviewing the record evidence, we are not convinced Tammie has met her burden of demonstrating the trial court erred in computing her child support obligation under the guidelines. The trial court did not find the record evidence required imputation of a lesser support obligation under N.D. Admin. Code § 75-02-04.1-07(4) because Tammie’s child care expenses would exceed seventy percent of her otherwise imputed income or because the unusual needs of a child in her care required Tammie’s presence in the home so as to preclude her from gainful employment. The evidence supports the court’s determination. We are not, therefore, persuaded the trial court’s calculation of Tammie’s support obligation is in error.

V

[¶ 20] We conclude the trial court’s custody award is not clearly erroneous, the court’s award of visitation is not clearly erroneous, and the court’s calculation of Tammie’s child support obligation is in accordance with the guidelines. We, therefore, affirm the judgment.

[¶ 21] DALE V. SANDSTROM, WILLIAM A. NEUMANN, MARY MUEHLEN MARING, and CAROL RONNING KAPSNER, JJ., concur.


source: Caselaw Access Project

author: NEUMANN, Justice.

license: Public Domain

text:
    2003 ND 148
    Timothy C. LAMB, Plaintiff and Appellee, v. Roland RIEMERS, Defendant and Appellant.
    No. 20030130.
    Supreme Court of North Dakota.
    Sept. 23, 2003.
    Rehearing Denied Oct. 23, 2003.

      Timothy C. Lamb (on brief), pro se, Grand Forks, ND, for plaintiff and appel-lee.
    Roland Riemers (on brief), pro se, Grand Forks, ND, for defendant and appellant.
   NEUMANN, Justice.

[¶ 1] Roland Riemers appealed from a judgment ordering him to return a $5,000 earnest money deposit made by Timothy Lamb for the purchase of an apartment complex from Riemers. We hold Riemers waived his right to a jury trial. We further hold the trial court did not err in construing the purchase contract, and we affirm.

I

[¶ 2] On February 1, 2002, Riemers and Lamb executed an earnest money receipt and purchase agreement with Lamb agreeing to purchase an eighteen-plex apartment building in Grand Forks from Riemers for $450,000. Lamb gave Riem-ers a check in the amount of $5,000 as earnest money for the purchase. Lamb asserts he was unable to secure appropriate financing and the sale was never completed. Riemers retained the $5,000 earnest money and refused to return it. Lamb then filed an action in small claims court for return of the money. Riemers moved the action to district court and requested a jury trial.

[¶ 3] At a pretrial conference on February 12, 2003, the trial court denied Riemers’ demand for a jury trial on the ground that “this matter involves equity, seeking the enforcement of a contract.” Riemers did not make an appearance at the hearing, nor does the record before us disclose that he ever made any objection to the ruling. Both parties appeared at the bench trial on March 11, 2003. After the trial, the court issued a memorandum decision and judgment requiring Riemers to return the earnest money to Lamb. Riem-ers appealed.

II

[¶ 4] Riemers asserts the trial court erred in denying him a jury trial. Money damages are traditionally legal relief triable by a jury and, while money damages incidental to primary equitable relief may not always qualify for a jury trial, where only legal relief is requested a trial by jury should be accorded on demand. Moses v. Burleigh County, 438 N.W.2d 186, 194 (N.D.1989). An action at law for the recovery of money is triable to a jury as a matter of right. First Nat’l Bank & Trust Co. of Williston v. Brakken, 468 N.W.2d 633, 635 (N.D.1991). Lamb’s action was for the recovery of money from Riemers and, therefore, trial by jury was appropriate.

[¶ 5] However, Riemers made no appearance at the hearing where the court ruled on his demand for jury trial, and the record on appeal fails to disclose any objection by Riemers either before or at the bench trial in which he fully participated. Actions or conduct inconsistent with a party’s demand for a jury trial may waive that right. Keller v. Darling, 298 N.W.2d 789, 791 (N.D.1980). A party, in proceeding with a bench trial, must register an objection to the denial of the demand for jury trial to preserve the jury trial issue for appeal. See First Western Bank of Minot v. Wickman, 500 N.W.2d 896, 899 (N.D.1993). In Keller, counsel for Darling filed a motion for a jury trial upon learning that the lawsuit had been rescheduled as a bench trial. However, counsel failed to appear at the hearing on the motion and the motion was denied. At the bench trial, counsel for Darling also failed to object or reassert his client’s right to a jury trial. Under those circumstances, this Court held it was proper for the trial to proceed without a jury, because Darling’s actions were inconsistent with the demand for a jury trial and constituted a waiver of that right. Keller, at 791. The facts here are similar to the circumstances in Keller. Riemers failed to appear at the hearing in which the motion for jury trial was denied and the record fails to disclose any subsequent objection. We conclude Riemers’ conduct was inconsistent with his request for a jury trial and that he, therefore, waived that right.

Ill

[¶ 6] Riemers asserts the trial court erred in construing the purchase agreement to require him to return the earnest money to Lamb. Construction of a written contract to determine its legal effect is a question of law for the court to decide and, on appeal, this Court will independently examine and construe the contract to determine if the trial court erred in its interpretation of it. Kondrad ex rel. McPhail v. Bismarck Park Dist., 2003 ND 4, ¶ 6, 655 N.W.2d 411. If the intent of the parties can be ascertained from the agreement alone, interpretation of the contract is a question of law. Spagnolia v. Monasky, 2003 ND 65, ¶ 10, 660 N.W.2d 223. Extrinsic evidence is properly considered only if the language of the agreement is ambiguous and the parties’ intentions cannot be determined from the writing alone. Meide v. Stenehjem ex rel. State of N.D., 2002 ND 128, ¶ 7, 649 N.W.2d 532.

[¶ 7] The trial court construed the purchase agreement language that the earnest money “is to be held by seller until closing” as requiring the seller to return the earnest money if closing did not occur. Earnest money is generally defined as a comparatively small down payment made as an assurance that the purchaser is in earnest and good faith and that if he fails to purchase the property the deposit will be forfeited. Bishop Ryan High School v. Lindberg, 370 N.W.2d 726, 728 (N.D.1985). Unless the contract specifically provides otherwise, the seller ordinarily may retain earnest money only if the buyer breaches the agreement. See Halldorson v. Gunderson, 401 N.W.2d 519, 522 (N.D.1987).

[¶ 8] Closing never occurred in this case, and Lamb asserts he did not purchase the apartment complex because he was unable to secure appropriate financing, a condition of the purchase agreement. There was no finding by the court that Lamb breached the contract. While Riemers claims this appeal raises nothing but legal issues, the question of whether Lamb breached the contract is a question of fact. Trinity Health v. North Cent. Emergency Servs., P.C., 2003 ND 86, ¶ 16, 662 N.W.2d 280. However, Riemers did not provide us with a transcript, and we cannot review that fact issue without one. As the appellant, Riemers has the duty to provide this Court with a transcript, and he must assume the consequences and the risk of failing to provide one. Wagner v. Miskin, 2003 ND 69, ¶ 9, 660 N.W.2d 593. We, therefore, conclude the trial court did not err in construing the purchase agreement or in determining that, under the circumstances, Riemers is required to return the earnest money to Lamb.

IV

[¶ 9] Lamb asserts Riemers’ appeal is frivolous, and he requests court costs for a frivolous appeal. Under N.D.R.App.P. 38, if the court determines an appeal is frivolous it may award just damages and single or double costs, including reasonable attorney fees. An appeal is frivolous if it is flagrantly groundless, devoid of merit, or demonstrates persistence in the course of litigation which could be seen as evidence of bad faith. Questa Resources, Inc. v. Stott, 2003 ND 51, ¶ 7, 658 N.W.2d 756. We conclude Riemers’ appeal was not so devoid of merit as to constitute a frivolous appeal, and we deny the request.

[¶ 10] The judgment is affirmed.

[¶ 11] GERALD W. VANDE WALLE, C.J., WILLIAM A. NEUMANN, MARY MUEHLEN MARING, CAROL RONNING KAPSNER, and DALE V. SANDSTROM, JJ., concur.


author: MARING, Justice.

text:
    2003 ND 149
    UNITED VALLEY BANK, a North Dakota Corporation, Plaintiff and Appellee v. Timothy C. LAMB and Elizabeth J. Lamb, Defendants and Appellants, The City of Grand Forks, Roof Depot, Inc., and University Heights Town Homes Association, Inc., Defendants.
    No. 20030070.
    Supreme Court of North Dakota.
    Sept. 23, 2003.
    Timothy C. Lamb (submitted on brief), pro se, and Elizabeth Fletcher Lamb, pro se, Grand Forks, ND, defendants and appellants.
    Roger J. Minch and Timothy G. Richard (submitted on brief), Serkland Law Firm, Fargo, ND, for plaintiff and appellee.
   MARING, Justice.

[¶ 1] Timothy C. Lamb and Elizabeth J. Lamb (“the Lambs”) appeal from a judgment granting foreclosure on then-mortgaged property. We affirm.

[¶ 2] United Valley Bank (“the Bank”) commenced a foreclosure proceeding against the Lambs for the property in question. Under N.D.C.C. § 32-19-20, “[a]t least thirty days and not more than ninety days before the commencement of any action or proceeding for the foreclosure of a mortgage on real estate, a written notice shall be served on the title owner of record of the real estate described in the mortgage as shown by the records in the office of the recorder of the county in which such real estate is situated.” The Bank voluntarily moved to dismiss this proceeding, without prejudice, because it defectively served the Notice Before Foreclosure less than thirty days before commencement of the proceeding. However, before the judgment of dismissal was filed, the Bank served the Lambs with a second Notice Before Foreclosure. The Bank then commenced a second foreclosure proceeding after the dismissal of the first proceeding.

[¶ 3] The Lambs argue the Bank could not serve a second Notice Before Foreclosure before the dismissal of the first proceeding. They cite no authority to support this argument, and the argument is completely without merit.

[¶ 4] The Bank requests attorney’s fees and costs pursuant to N.D.R.App.P. 38 arguing the Lambs’ appeal is frivolous. We have authority under Rule 38 to award just damages and single or double costs, including attorney’s fees for a frivolous appeal. We have stated “[a]n appeal is frivolous if it is flagrantly groundless, devoid of merit, or demonstrates persistence in the course of litigation which could be seen as evidence of bad faith.” Federal Land Bank of St. Paul v. Brakke, 417 N.W.2d 380, 381 (N.D.1988) (quoting Mitchell v. Preusse, 358 N.W.2d 511, 514 (N.D.1984)). In Ziebarth v. Farm Credit Bank of St. Paul, we granted an award under Rule 38 because there was a “complete absence of grounds on which a reasonable person could have thought we would render judgment in their favor.” 494 N.W.2d 145, 148 (N.D.1992).

[¶ 5] This appeal is flagrantly groundless and devoid of merit suggesting we would render judgment in the Lambs’ favor. The Lambs cite no authority to support their argument that the Bank could not serve a second Notice Before Foreclosure before the dismissal of the first proceeding. This appeal is merely an attempt to delay and obfuscate. In addition, the Lambs violated N.D.R.App.P. 30(a)(1) by including a document in their appendix not in the record. Hurt v. Freeland, 1997 ND 194, ¶ 11, 569 N.W.2d 266. Therefore, we affirm the trial court and award the amount of $1,000 toward the Bank’s attorney’s fees plus double costs under N.D.R.App.P. 38 and 39.

[¶ 6] GERALD W. VANDE WALLE, C.J., WILLIAM A. NEUMANN, DALE V. SANDSTROM, and CAROL RONNING KAPSNER, concur.

      . We have held that a request for attorney’s fees should be accompanied by an affidavit documenting the work performed on appeal if more than a nominal amount is requested. First Trust Co. of N.D. v. Conway, 423 N.W.2d 795, 797 (N.D.1988); United Bank of Bismarck v. Young, 401 N.W.2d 517, 519 n. 1 (N.D.1987).


author: PER CURIAM.

text:
    2003 ND 152
    In the Matter of the Application for DISCIPLINARY ACTION AGAINST Charles T. EDIN, a Member of the Bar of the State of North Dakota. Disciplinary Board of the Supreme Court of the State of North Dakota, Petitioner, v. Charles T. Edin, Respondent.
    No. 20030272.
    Supreme Court of North Dakota.
    Sept. 24, 2003.
   INTERIM SUSPENSION ORDERED

PER CURIAM.

[¶ 1] On September 18, 2003, an Application for Order of Interim Suspension of Charles T. Edin, a member of the Bar of North Dakota, was filed under N.D.R. Lawyer Discipl. 3.4. Edin was admitted to practice in the courts of North Dakota on April 16, 1984, and is currently licensed to practice law.

[¶ 2] The Application asserts that Charles T. Edin has closed his office at 418 E. Rosser Ave., Ste. 102, Bismarck, N.D. and that his telephone number is no longer in service. The Application is supported by statements from two of Edin’s clients who have been unable to contact him.

[¶ 3] Disciplinary Counsel asserts that the information provided is sufficient evidence to demonstrate that Edin has violated N.D.R. Prof. Conduct 1.3 (Diligence), and 1.4 (Communication), and that under N.D.Std.Imposing Lawyer Sanctions 4.41(a), disbarment is generally appropriate when a lawyer abandons the practice and causes serious or potentially serious injury to a client.

[¶ 4] By letter dated September 19, 2003, the Court requested a Response to the Application from Edin no later than noon, Tuesday, September 23, 2003. The letter was served on Edin at his last known business address, 418 East Rosser Ave., Ste. 102, P.O. Box 2391, Bismarck, ND 58502, and at his last known residential address, 1244 East Highland Acres Road, Bismarck, ND 58501. Edin did not file a Response to the Application. The Court considered the matter, and

[¶ 5] ORDERED, under N.D.R. Lawyer Discipl 3.4(B) Charles T. Edin’s license to practice law in North Dakota is SUSPENDED effective immediately and until further order of this Court.

[¶ 6] FURTHER ORDERED, that Disciplinary Counsel promptly apply to the district court for a professional trustee as provided in N.D.R. Lawyer Discipl. 6.4.

[¶ 7] FURTHER ORDERED, that Charles T. Edin comply with N.D.R. Lawyer Discipl. 6.3.

[¶ 8] GERALD W. VANDE WALLE, C.J., CAROL RONNING KAPSNER, MARY MUEHLEN MARING, WILLIAM A. NEUMANN and DALE V. SANDSTROM, JJ., concur.


author: KONENKAMP, Justice. SABERS, Justice

text:
    2003 SD 106
    CITY OF RAPID CITY, a municipal corporation of the State of South Dakota, Plaintiff and Appellant, v. PENNINGTON COUNTY, a political subdivision of the State of South Dakota, Defendant and Appellee.
    No. 22521.
    Supreme Court of South Dakota.
    Argued April 29, 2003.
    Decided Aug. 27, 2003.
    Adam Altman, City Attorney, Jason E. Green, Assistant City Attorney, Rapid City, South Dakota, for plaintiff and appellant.

      Glenn A. Brenner, Pennington County State’s Attorney, Tobin Earn, Pennington County Special Deputy State’s Attorney, Rapid City, South Dakota, for defendant and appellee.
   KONENKAMP, Justice.

[¶ 1.] Pennington County sought approval to change its former juvenile detention center into a jail-work release facility. Rapid City’s Planning Commission and Common Council disapproved the change in use. Invoking SDCL 11-6-21, the county overruled the city and proceeded with the project. Rapid City brought suit. The circuit court held that SDCL 11-6-21 authorized the county to proceed with the project without the city’s approval. On appeal, Rapid City argues that SDCL 11-6-21 does not authorize the county to proceed without the city council’s approval when the intruding jurisdiction is a county and the host jurisdiction is a municipality located within the county. Because the Legislature has statutorily permitted counties to construct certain governmental facilities within city limits without city approval, the county is not subject to municipal zoning in this instance. We affirm.

Background

[¶ 2.] The parties do not dispute the essential facts of this case. Pennington County wishes to renovate its juvenile detention center into a jail-work release facility on county-owned land located in Rapid City. Previously, this property had been operated as a juvenile detention center and before that as both a juvenile court and detention center. Rapid City has adopted a comprehensive zoning plan under SDCL 11-4-4 and a comprehensive plan for development under SDCL 11-6-18. The zoning district in which the property is situated is designated for medium density, residential use.

[¶ 3.] In December 2001, the county applied to the Rapid City Planning Commission for amendments to the city’s comprehensive plan, for a change in zoning, for a use on review permit, and for review under SDCL 11-6-19, allowing the property to be operated as a jail-work release facility. After public hearings, both the Planning Commission and the Common Council denied the requests. In response, the Pennington County Board of Commissioners voted unanimously to override the denial, invoking SDCL 11-6-21. It proceeded with the project to renovate the juvenile detention center property into a jail-work release facility.

[¶ 4.] Rapid City sought a writ of cer-tiorari, a permanent injunction, or an appeal under SDCL 7-8-27 to prevent the property from being used as a jail-work release facility in violation of the city’s comprehensive plan and zoning ordinances. The city also sought preliminary injunctive relief based on Lincoln County v. Johnson, 257 N.W.2d 453 (S.D.1977). The circuit court denied the city’s request for a preliminary injunction, finding no irreparable harm. After briefing and a hearing, the circuit court ruled that SDCL 11-6-21 authorized the county to proceed with the project without city approval. On appeal, Rapid City contends: (1) “SDCL 11-6-21 does not authorize a county to use property located within a municipality in violation of the municipality’s comprehensive plan and zoning ordinance without the approval of the municipal governing body.” (2) “The circuit court erred in failing to apply the rule of Lincoln County v. Johnson.”

Analysis and Decision

[¶ 5.] Statutory interpretation is a legal question reviewed without deference to the trial court’s decision. Ridley v. Lawrence County Comm’n, 2000 SD 143, ¶ 5, 619 N.W.2d 254, 257 (citations omitted). The specific question here is whether the county’s decision to construct and operate a jail-work release facility can override city zoning. The relevant statutes are as follows:

SDCL 11-6-19. Planning commission approval required for construction in area covered by comprehensive plan.
Whenever any such municipal council shall have adopted the comprehensive plan of the municipality or any part thereof, then and thenceforth, no street, park, or other public way, ground, place, space, no public building or structure, no public utility, whether publicly or privately owned, if covered by the comprehensive plan or any adopted part thereof, shall be constructed or authorized in the municipality or within its subdivision jurisdiction as defined in § 11-6-26, until and unless the location and extent thereof shall have been submitted to and approved by the planning commission.
SDCL 11-6-20. Reasons for planning commission disapproval of construction communicated to municipal council-Vote required for council to overrule.
In case of disapproval of any construction or authorization submitted under § 11-6-19, the planning commission shall communicate its reasons to the council, and the council, by vote of not less than two-thirds of its entire membership, shall have the power to overrule such disapproval and, upon such overruling the council or the appropriate board or officer shall have the power to proceed.
SDCL 11-6-21. Action by public bodies other than municipal council having jurisdiction over construction.
If the public way, ground, place, space, building, structure, or utility referred to in § 11-6-19 be one the authorization or financing of which does not, under the law or charter provisions governing the same, fall within the province of the council or other body or official of the municipality, then the submission of such to the planning commission shall be by the board or official having such jurisdiction, and the planning commission’s disapproval may be overruled by said board by a vote of not less than two-thirds of its entire membership or by said official.

(Emphasis added).

[¶ 6.] Several of the terms in these statutes are defined in SDCL 11-6-1 and SDCL 11-2-1, which govern planning and zoning in South Dakota. “Commission” “planning and zoning commission” and “planning commission” are defined as “any city planning and zoning commission created under the terms of [SDCL 11-6].” SDCL 11-6-1(1). “Comprehensive plan” is defined as “any document which describes in words, and may illustrate by maps, plats, charts, and other descriptive matter, the goals, policies, and objectives of the municipality to interrelate all functional and natural systems and activities relating to the development of the territory under its jurisdiction.” SDCL 11 — 6— 1(2). The term “council” is defined as “the chief legislative body or governing body of the municipality.” SDCL 11-6-1(3). “Municipality” or “city” is defined as “any incorporated city or town.” SDCL 11 — 6— 1(5). “Board” is defined as “the board of county commissioners.” SDCL 11-2-1(1). “Governing body” is “the board of county commissioners, the city council or city commission.” SDCL 11-2-1(4).

[¶ 7.] In examining SDCL 11 — 6— 19 alone, it appears that Pennington County would not be able to proceed with its proposed renovation until the project was approved by the Rapid City Planning Commission because Rapid City has adopted a comprehensive plan. Yet, SDCL 11-6-20 and SDCL 11-6-21, provide exceptions to SDCL 11-6-19. SDCL 11-6-20 allows the municipal council to overrule a planning commission’s disapproval of a project by a two-thirds vote. But SDCL 11-6-20 does not control this case because the Rapid City Common Council voted to disapprove Pennington County’s change in use. Both parties agree that the applicable statute is SDCL 11 — 6— 21. They disagree, however, on how the statute should be interpreted. Rapid City argues that under SDCL 11-6-19, the city must approve any “street, park, or other public way, ground, place, space, ... [PJublic building or structure, ... public utility, whether publicly or privately owned,” before any construction may begin or such structure may be used within its municipal boundaries. In the alternative, Rapid City argues that even if SDCL 11-6-21 authorizes the county commissioners to overrule the planning commission, it does not allow the county to “proceed” without city council approval. Pennington County asserts that state law requires it to provide jail facilities and that such facilities are included in SDCL 11-6-19 through 11-6-21. Further, the county contends that this statutory duty to provide jails exempts the county from complying with municipal zoning ordinances and regulations. Both the county and the circuit court construed the language in SDCL 11-6-21 — “the planning commission’s disapproval may be overruled by said board” — to mean that the county can overrule the city and proceed with its project.

[¶ 8.] To decipher SDCL 11-6-21, we divide the text of the statute into elements. The first element is the “building ... referred to in § 11-6-19.” The jail-work release facility qualifies as a “building ... referred to in § 11-6-19.” The second element requires that the “financing of which [the jail-work release facility] does not ... fall within the province of the council or other body or official of the municipality.” Here, the jail-work release facility is financed by Pennington County, not Rapid City, so the “financing ... does not ... fall within the province of the ... municipality.” The third element states that “the board or official having such jurisdiction” shall submit the “building ... referred to in § 11-6-19” to the planning commission. The board, i.e., the Pennington County Board of County Commissioners, in accord with SDCL 11-2-1(1), did in fact, submit the jail-work release facility project to the Rapid City Planning Commission. The final element authorizes the “said board” or “said official” to overrule the planning commission’s disapproval “by a vote of not less than two-thirds of its entire membership.” Indeed, more than two-thirds of the members of the Pennington County Board of County Commissioners did vote to overrule the planning commission’s disapproval of the project.

[¶ 9.] We believe that in enacting SDCL 11-6-21, the Legislature could foresee that the placement and construction of certain public facilities, like jails, may not be popular with city residents, so it provided a mechanism to authorize county construction of these facilities. Rapid City argues that even if SDCL 11-6-21 authorizes the county commissioners to overrule the planning commission, it does not allow the county to, “proceed.” We examine statutory construction de novo. State v. Krahwinkel, 2002 SD 160, ¶ 13, 656 N.W.2d 451, 458. We read statutes as a whole along with the enactments relating to the same subject. Kayser v. South Dakota State Elec. Comm’n, 512 N.W.2d 746, 747 (S.D.1994) (citations omitted).

[¶ 10.] Originally, SDCL 11-6-19 through 11-6-23 were enacted in the same section; therefore, we review the language of these statutes together. SDCL 11-6-20 provides that “upon such overruling the council or the appropriate board or officer shall have the power to proceed.” Although SDCL 11-6-21 does not explicitly say so, the right to proceed is implied when the “board or official having such jurisdiction” overrules the planning commission. Thus, we conclude that SDCL 11-6-21 provides a mechanism to overrule a planning commission in order to construct and maintain a “street, park, or other public way, ground, place, space, ... public building or structure, ... public utility, whether publicly or privately owned” under SDCL 11-6-19. Under these statutes, Pennington County was not subject to Rapid City’s zoning ordinances in the creation of its jail-work release facility.

[¶ 11.] Other jurisdictions have ruled likewise under the common law. Several courts addressing the issue of whether a county is subject to city zoning ordinances when constructing or renovating a county jail within municipal corporate limits have held that a county jail is a “necessary” or “essential” governmental function, thus counties are not subject to municipal zoning ordinances. Lane v. Zoning Bd. of Adjustment of the City of Talladega, 669 So.2d 958, 959 (Ala.Civ.App.1995) (operating a county jail is a governmental function); County Comm’rs of Bristol v. Conservation Comm’n of Dartmouth, 380 Mass. 706, 405 N.E.2d 637, 640 (1980) (operating a county jail is an essential governmental function); Metro. Dade County v. Parkway Towers Condo. Ass’n, 281 So.2d 68, 69 (Fla.Dist.Ct.App.1973) (county could override its own zoning as it “possessed the right at common law to place a governmental function [prison work release facility] on any site selected within the County as directed by the Board of County Commissioners”); Los Angeles County v. City of Los Angeles, 212 Cal.App.2d 160, 28 Cal.Rptr. 32, 34 (1963) (“essential functioning of the county”); Green County v. City of Monroe, 3 Wis.2d 196, 87 N.W.2d 827, 829 (1958).

[¶ 12.] County commissions in South Dakota are required by statute to establish and maintain county jails. When a county maintains and operates a county jail under the authority of SDCL 24^11-2 and SDCL 7-25-3, it acts in a governmental capacity. Jerauld County v. St. Paul-Mercury Indem. Co., 76 S.D. 1, 7, 71 N.W.2d 571, 574 (1955). The erection and operation of a county jail is a governmental function necessary to the general administration of justice and particularly in the enforcement of the criminal laws. Green County, 87 N.W.2d at 829 (Wis. 1958).

[¶ 13.] Rapid City contends that the “balancing of the interests” test set forth in Lincoln County, 257 N.W.2d at 457-58, controls this issue because the county is the intrading jurisdiction and the host jurisdiction is a municipality located within the county. In Lincoln County, the City of Sioux Falls attempted to build a solid waste facility in an area of Lincoln County where it did not have comprehensive planning or zoning jurisdiction. This Court held that the intruding governmental unit is bound by the zoning regulations of another governmental unit in the use of its extraterritorial property purchased or condemned, in the absence of specific legislative authority to the contrary. Lincoln County, 257 N.W.2d at 458.

[¶ 14.] Here, the circuit court ruled that the holding of Lincoln County is inapplicable, finding that the property in question is located within Rapid City, which is within Pennington County, and therefore, the use by the county is not extraterritorial. We agree that the holding in Lincoln County is not applicable here because SDCL 11-6-21 specifically outlines the process for overruling a planning commission’s disapproval of a county’s attempt to create a county jail facility.

[¶ 15.] Affirmed.

[¶ 16.] GILBERTSON, Chief Justice, and ZINTER and MEIERHENRY, Justices, concur.

[¶ 17.] SABERS, Justice, dissents.

SABERS, Justice

(dissenting).

[¶ 18.] I dissent because the majority opinion’s interpretation of the statute allows the County to completely override the will of City and its residents with no judicial recourse. In situations like this, the invading entity should be required to bring the case before the circuit court in accord with our decision in Lincoln County v. Johnson, 257 N.W.2d 453 (S.D.1977).

[¶ 19.] A dispute of this magnitude between two government entities requires an objective resolution as a matter of public policy. The interests of each government should be balanced to determine whether the County is entitled to grant itself a permanent variance from the City’s comprehensive plan. Under the circuit court’s ruling, counties are free to disregard municipal planning commissions. The requirement that the County submit its proposal to the planning commission is reduced to a procedural hoop. This reading of the statute renders the review contemplated by SDCL 11-6-19 and 11-6-21 superfluous because regardless of the Commission’s recommendation, the County is entitled to proceed unilaterally. When interpreting statutes, we are charged with the duty to avoid absurd results. Helmbolt v. LeMars Mut. Ins. Co., Inc., 404 N.W.2d 55, 59 (S.D.1987) (citations omitted). An opinion that turns statutory requirements into an exercise in futility violates that duty and should not be permitted to stand. If that occurs here, the South Dakota Legislature should promptly overrule this case with remedial legislation.

[¶ 20.] The fact that this work-release facility will be placed within a block of one of the City’s high schools may be palatable because the building previously served as a juvenile detention center. That question should be determined on the merits by an objective fact finder, the circuit court. Taking the majority opinion’s interpretation of the statute to its logical end shows the alarming potential results. For example, this holding allows a county to purchase land on Main Street in any South Dakota town or city and place a sewage treatment plant on that parcel. The municipal government would have no means to prevent this happening because the County remains free to disregard the city’s zoning ordinances with no objective analysis of the respective interests of the City and the County. This reading of the statute renders planning commissions and city councils impotent in cases where the County owns or purchases land within the City.

[¶ 21.] Under the majority opinion’s reading, the requirement that the County submit its proposal to the City Commis•~sion is absurd because the County may proceed regardless of the Commission’s disapproval. It is doubtful that the Legislature intended these results, and our holding in Lincoln County prevents these results when, as here, there is an intergovernmental dispute over land use. I would reverse and remand for a proper balancing of the parties’ interests by the circuit court.

      . The Honorable Timothy R. Johns of the Fourth Judicial Circuit, sitting by designation.

      . Initially, the Pennington County Board of County Commissioners voted to overrule the Rapid City Common Council. The circuit court made note of this and allowed the Pennington County Board of County Commissioners to correct the vote at the next meeting to overrule the Rapid City Planning Commission’s disapproval.

      . A county commission has only those powers as are expressly conferred upon it by statute and such as may be reasonably implied from the powers expressly granted. Heine Farms v. Yankton County ex rel. County Commissioners. 2002 SD 88. ¶ 17. 649 N.W.2d 597. 601 (citing State v. Quinn, 2001 SD 25, ¶ 10, 623 N.W.2d 36, 38) (county has only such powers as are expressly conferred by statute and those reasonably implied from the powers expressly granted).

      . The circuit court quoted Black’s Law dictionary to define "extraterritorial” as " ‘beyond the geographic limits of a particular jurisdiction!.]’ "


author: ZINTER, Justice (on reassignment).

text:
    2003 SD 107
    CONSOLIDATED NUTRITION, L.C., Plaintiff and Appellant, v. IBP, INC., a Delaware Corporation, Defendant and Appellee.
    No. 22456.
    Supreme Court of South Dakota.
    Considered on Briefs Nov. 19, 2002.
    Reassigned June 4, 2003.
    Decided Aug. 27, 2003.

      Robert W. Klimisch of Goetz & Klim-isch, Yankton, South Dakota, Attorneys for plaintiff and appellant.
    Roger W. Damgaard of Woods, Fuller, Shultz <& Smith, Sioux Falls, South Dakota, Attorneys for defendant and appellee.
   ZINTER, Justice (on reassignment).

[¶ 1.] IBP, Inc. (IBP), entered into a hog procurement contract with livestock producers, David and Kim Bloch (Blochs). Blochs also gave Tri County Ag Service a security interest in their hogs. This security interest was later assigned to Consolidated Nutrition, L.C. (Consolidated). IBP subsequently purchased hogs from the Blochs under the contract, but without notice of Consolidated’s security interest. After the sale, IBP applied part of the proceeds to satisfy Blochs’ preexisting debt under a “deficiency account” that was created by the procurement contract. Consolidated then commenced this action to recover the hog sale proceeds from IBP. The circuit court held that under the federal Food Security Act (FSA), IBP took the hogs and the proceeds free of Consolidated’s security interest. Consolidated appeals. We agree that under the FSA, IBP took the hogs free of Consolidated’s security interest. However, we hold that this priority dispute over proceeds is governed by the Uniform Commercial Code rather than the FSA. We also hold that under the UCC, Consolidated’s security interest was subject to IBP’s contractual right of setoff.

FACTS AND PROCEDURAL HISTORY

[¶ 2.] IBP purchased hogs from farm producers for IBP’s hog processing plants. IBP had hog procurement contracts with approximately 130 hog producers/farmers. IBP was also registered as a buyer of farm products with the South Dakota Secretary of State’s Office pursuant to the FSA.

[¶ 3.] The Blochs were engaged in a farming and hog production operation. On May 22, 1998, the Blochs entered into the hog procurement contract with IBP. Consolidated, a feed supply company, subsequently extended credit to, and took a security interest from the Blochs for feed supplies.

[¶ 4.] The hog procurement contract created a price stabilization mechanism for hog producers. Under the contract, IBP agreed to pay a “floor price” calculated by a formula. Under the formula, if the market price was higher than the floor price, IBP kept a portion of the excess and applied it to a “reserve account.” The remaining portion was paid to the seller. If the market price was lower than the floor price, IBP agreed to pay the floor price by supplementing the market price with proceeds from the reserve account. If the reserve account had a zero balance, IBP still paid the floor price, but it then created a “deficiency account” to cover the difference. If subsequent sale prices exceeded the floor price, the excess was applied to satisfy the deficiency account. When the agreement terminated, the seller remained liable for any balance in the deficiency account.

[¶ 5.] In 2001, the Blochs sold hogs to IBP under the contract. On April 6, Blochs sold 590 hogs to IBP for over $70,000. Because Blochs had a deficiency account at that time, IBP applied approximately $62,000 of the proceeds to Blochs’ deficiency account. On April 13, Blochs sold 321 hogs to IBP for over $30,000. Blochs received the entire proceeds of that sale.

[¶ 6.] Prior to the April 2001 hog sales, IBP was not on notice from Tri County Ag Service, Consolidated, the Blochs, or by a filed financing statement, that Consolidated had a security interest in the hogs. Tri County Ag Service did not file its “Nutrition Feeder Credit Application” with the Secretary of State’s office until May 7, 2001. Furthermore, Tri County Ag Service did not file a Form UCC-3, noting an assignment of its security interest to Consolidated, until May 21, 2001. Finally, Consolidated did not send a written notice to IBP informing it of Consolidated’s security interest until July 9, 2001, and Consolidated failed to file an “effective financing statement” under the FSA.

[¶7.] Nevertheless, Consolidated initiated this action to recover the proceeds of the hog sales from IBP. IBP filed an answer and a motion for summary judgment. Following a hearing, the court granted summary judgment in favor of IBP. The trial court concluded that, under the FSA, IBP took the hogs (farm products) and the proceeds free of Consolidated’s security interest because IBP was a “buyer in the ordinary course” and it had not received the notice required by the FSA. The court also granted the motion because Consolidated did not offer to file a criminal complaint against the Blochs as required by SDCL 57A-9-609.1. Consolidated appeals.

DECISION

Under the FSA, IBP took the hogs free of Consolidated’s security interest, and under the UCC, Consolidated’s security interest in the proceeds was subject to IBP’s contractual right of setoff.

[¶ 8.] The standard of review of summary judgments is well settled:

In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and [established] entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party[,] and reasonable doubts should be resolved against the moving party.... Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied.

Braun v. New Hope Township, 2002 SD 67, ¶ 8, 646 N.W.2d 737, 739 (citing South Dakota State Cement Plant Comm’n v. Wausau Underwriters Ins. Co., 2000 SD 116, ¶ 9, 616 N.W.2d 397, 400-01).

[¶ 9.] The undisputed facts of this case reveal that neither Consolidated nor Tri County Ag Service gave timely notice to IBP of their security interest in the hogs. Consolidated did not file with the Secretary of State’s office until nearly one month after the final hog transaction. Consolidated also failed to give the notice required to protect its security interest under the FSA. Therefore, because IBP was a “buyer in the ordinary course,” it took the hogs and was entitled to pay Blochs free of Consolidated’s security interest under the FSA. See Farmers and Merchants State Bank v. Teveldal, 524 N.W.2d 874, 878 (S.D.1994).

[¶ 10.] Although IBP took the hogs free of Consolidated’s security interest under the FSA, we must next determine whether the FSA applies to the priority dispute over the proceeds applied to the Blochs’ deficiency account with IBP. We begin the analysis by reiterating the distinction between claims to the hogs and claims to the proceeds of that collateral. That well recognized distinction was mentioned in Teveldal. Id. at 876 (noting that bank “brought suit [against a feed supplier] to determine the priority of the competing security interests in ... hogs and the proceeds from the sale to [a meat packer]”) (emphasis added).

[¶ 11.] We must also consider the different priority analysis that applies to farm products and their proceeds. With respect to the taking of farm products:

The FSA provides that “a buyer, who in the ordinary course of business buys a farm product from a seller engaged in farming operations shall take free of a security interest created by the seller, even though the security interest is perfected [,] and the buyer knows of the existence of such interest.”

Teveldal, 524 N.W.2d at 878 (quoting 7 USC § 1631(d)).

[¶ 12.] However, “[o]ther than eliminating double payment liability for a ‘buyer in ordinary course’ in farm products, Congress did not intend to preempt state law relating to the creation, perfection, or priority of security interests.” Id. at 878-79 (citing 9 CFR § 205.202; Food Servs. of America v. Royal Heights, 69 Wash.App. 784, 850 P.2d 585, 588 (1993)). Therefore, we have implicitly recognized that the application of proceeds to a preexisting contractual debt would not be protected by the priority rules of the FSA. We did so by denying “buyer in the ordinary course” status to such buyers.

“Buying” does not include receiving goods or document of title under a preexisting contract as security “for or in total or partial satisfaction of a money debt,” SDCL 57A-1-201(9), thereby excluding “attaching creditors and others who take goods in satisfaction of preexisting debts” from the definition of a “buyer in ordinary course.”

Teveldal, 524 N.W.2d at 878 (citing 2 James White & Robert Summers, Uniform Commercial Code § 26-13, at 533 n. 2 (3rd ed. 1988)) (emphasis added).

[¶ 13.] Other courts explicitly hold that a buyer or commission merchant entitled to priority for a purchase under the FSA, who also extends credit and then seeks to retain proceeds from the sale as repayment, is not protected by the FSA. A party who “retain[s] ... the ... proceeds from the sale of the [farm products]” is acting as a lender instead of a party protected by the FSA. Food Servs. of America v. Royal Heights, Inc., 123 Wash.2d 779, 871 P.2d 590, 593 (1994). Therefore, a party who seeks to retain the proceeds from the sale of farm products in repayment of an obligation as a lender, must look to state law to determine the priority of interests. Id. The rationale for this rule is that the FSA was designed to protect “buyers and commission merchants ... [but not] to reorder the normal priority of liens in farm products with regard to competing lenders.” Id. at 595.

[¶ 14.] Therefore, IBP was entitled to “buyer in the ordinary course” priority under the FSA to the extent that it purchased the hogs and paid Blochs. However, IBP was not entitled to that priority to the extent that it acted as a creditor and setoff the sale proceeds to satisfy Blochs preexisting debt under the hog procurement contract-

[¶ 15.] Having determined that IBP was not entitled to FSA protection to the extent that it applied the hog sale proceeds to Bloch’s preexisting debt, we must now look to state law to determine the priority of IBP’s and Consolidated’s conflicting claims. IBP argues that it had a common law, contractual right of setoff that allowed it to keep the proceeds of the hog sale notwithstanding Consolidated’s security interest. IBP argues that SDCL 57A-9-104(9) (1986) took this case out of Article 9, and that its common law right of setoff was superior to Consolidated’s security interest. However, we do not address IBP’s common law argument because we conclude that even though IBP’s claim is based on the right of setoff, this priority dispute is governed by Article 9.

[¶ 16.] Before beginning the analysis of the UCC’s application to setoff, we note that Article 9 was substantially revised effective July 1, 2001. The transitional provision, SDCL 57A-9-709, provides that “if the relative priorities of the claims were established before July 1, 2001, former chapter 57A-9 determines priority.” Id. Because these transactions occurred prior to July 1, 2001, we look to the pre-revision Article 9 to determine its applicability to this dispute.

[¶ 17.] IBP argues that pre-revision SDCL 57A-9-104(9) removed this case from the priority scheme of Article 9, and therefore, we should apply state common law. SDCL 57A-9-104(9) did generally provide that “[t]his chapter does not apply ... to any right of setoff....” IBP also cites two cases from other jurisdictions that held that UCC § 9-104(9) took setoffs entirely out of the scope of the UCC. See State Bank of Rose Creek v. First Bank of Austin, 320 N.W.2d 723, 725-26 (Minn.1982); Pennsylvania Nat’l Bank & Trust Co. v. CCNB Bank, 446 Pa.Super. 625, 667 A.2d 1151, 1154 (1995). However, there were two major views on the scope of the setoff exclusion under § 9-104(9). First Bank of Austin analyzed the competing views.

Two views have been taken as to the meaning of section [9-104(9) ]. The narrow view is that the section means simply that a right of set-off may exist in a creditor who does not comply with Article 9 security and filing requirements!, but the section does not exempt priority disputes involving setoff.] Citizens Nat’l Bank v. Mid-States Dev. Co., [177 Ind.App. 548] 380 N.E.2d 1243 (Ind.App.1978); Associates Discount Corp. v. Fidelity Union Trust Co., 111 N.J.Super. 353, 268 A.2d 330 (1970).
Other courts and commentators have taken a broader view of the set-off exclusion, arguing that the provision takes all situations dealing with set-offs out of the ambit of Article 9, making the priority provisions inapplicable as well. See, e.g., First Nat’l Bank v. Lone Star Life Ins. Co., 529 S.W.2d 67 (Tex.1975); Skilton, The Secured Party’s Rights in a Debtor’s Bank Account Under Article 9 of the Uniform Commercial Code, 1977 S Ill ULJ 120, 201-06.

First Bank of Austin, 320 N.W.2d at 725.

[¶ 18.] We note that most jurisdictions have adopted the narrow view of the § 9-104(9) setoff exclusion. Under that narrow view, § 9-104(9) allowed a party to acquire a setoff right without abiding by the Article 9 requirements for creating and perfecting a security interest. The exclusion did not, however, take the setoff right out of the priority scheme of Article 9 when analyzing competing interests in the same collateral. We agree with this view.

[¶ 19.] Our conclusion is reinforced by the 2001 revision of SDCL 57A-9-104(9). That revision (SDCL 57A-9-109(d)(10)) resolved the conflict in views and clarified that claims and defenses allowed by § 9-404 (2001) (formerly SDCL 57A-9-318), apply to a secured creditor and purchaser asserting setoff rights in the same collateral. SDCL 57A-9-109(d)(10) (2001) clarified that “[t]his chapter does not apply to ... [a] right of recoupment or setoff, but ... [s]ection 57A-9^104 applies with respect to defenses or claims of an account debtor.” Id. Official Comment 14 to UCC § 9 — 109(d)(10) explains that this revised section “recognizes [sjection 9-404 [formerly § 9-318], which affords the obligor on an account [IBP, the buyer and account debtor] ... the right to raise claims and defenses against an assignee (secured party).” UCC § 9-109(d)(10) cmt. 14 (2002). “The revised text effectively equates a party asserting a set-off with an account debt- or. This means that a priority conflict between an account debtor asserting a set-off right and a secured party asserting a security interest in the same asset will generally be worked out under the rules specified in UCC § 9-404(rev) [formerly § 9-318].” Eldon H. Reiley, Security Interests in Personal Property § 4:32 (3rd ed. 2003).

[¶ 20.] In light of this clarification and the majority view, we apply pre-revision SDCL 57A-9-318 to resolve this priority dispute between Consolidated’s security interest and IBP’s contractual right of set-off. Under that section, unless the account debtor (IBP, the buyer) had agreed to not assert its rights under the contract, the rights of an assignee (Consolidated, the secured party) are subject to the contractual agreement for the sale of collateral between the account debtor (IBP) and the assignor (Blochs, the sellers). SDCL 57A-9-318(l)(a)-(b) (1997) provided in relevant part:

(1) Unless an account debtor [IBP] has made an enforceable agreement not to assert defenses or claims ... the rights of an assignee [Consolidated] are subject to:
(a) All the terms of the contract between the account debtor [IBP] and assignor [Blochs] and any defense or claim arising therefrom; and
(b) Any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives notification of the assignment. ...

Id. (emphasis added).

[¶ 21.] Under this emphasized language in SDCL 57A-9-318(a)(l) (1997), IBP had priority over Consolidated’s security interest in the proceeds of the hog sale because “an assignee [secured party] takes the right assigned subject to all terms of the agreement between the account debtor [buyer] and the assignor [seller].” 11 Ronald A. Anderson & Lary Lawrence, Anderson on the Uniform Commercial Code [Rev] § 9-404:4 [formerly § 9-318] (3rd ed. 1999). “The fact that [a creditor] had a perfected security interest ... makes no difference because [the secured party’s] secured status comes into play only after it is shown that [the assignor] was entitled to payment of the funds.” Chrysler Realty Corp., 244 F.3d at 783. See also Maine Farmers Exch, 789 A.2d at 89; In re Apex Oil, 975 F.2d at 1367-68; Pioneer Commercial Funding Corp., 122 B.R. at 883.

[¶ 22.] This priority rule for claims or defenses like setoffs is, however, subject to one requirement. Under SDCL 57A-9-318(l)(a) (now § 9^04(a)(l)), a security interest is subject to a claim or defense of setoff only if the setoff arises out of and is part of the contract between the account debtor (IBP) and the assignor (Blochs). Maine Farmers Exchange, 789 A.2d at 89. Therefore, Consolidated’s security interest was subject to IBP’s contractual claim of setoff if the setoff arose out of the same contract involving the hog sales. SDCL 57A-9-318(l)(a).

[¶ 23.] The same contract requirement was satisfied in this case. IBP’s right to setoff arose out of the same hog procurement contract that governed the hog sales and the deficiency account. Because IBP’s contractual right of setoff arose from the hog procurement contract, Consolidated’s security interest was subject to the terms of that contract. One of those terms included IBP’s right to setoff sale proceeds to satisfy the deficiency account. Therefore, Consolidated’s security interest in the proceeds of the first hog sale was subject to IBP’s contractual right of setoff. Because Consolidated’s security interest in the second sale was subordinated under the FSA, IBP was entitled to summary judgment on Consolidated’s claims.

[¶ 24.] We affirm.

[¶ 25.] GILBERTSON, Chief Justice, KONENKAMP, Justice, AMUNDSON, Retired Justice, and DOBBERPUHL, Circuit Judge, concur.

[¶ 26.] DOBBERPUHL, Circuit Judge, sitting for SABERS, Justice, disqualified.

      . See Food Security Act of 1985, 7 USC § 1631.

      . The Hog Procurement Agreement provided: Section 4(c):
      When the Market Price (converted from a carcass to a live price) is less than the Floor Price, as defined in Schedule 4(c), the Floor Price shall be paid to Producer. When the Market Price is less than the Floor Price, the difference between the Market Price and the Floor Price, multiplied by the total live weight (expressed in cwt) of that lot, the "Deficiency Amount”, [sic] shall be drawn from the Reserve Account (defined below) if the Reserve Account has a positive balance. When the Reserve Account balance has been reduced to zero, then the Deficiency Amount shall be accrued in the Deficiency Account (defined below) pursuant to Section 5.
      Section 5(b):
      When there are Deficiency Amounts, and when the Reserve Account has a zero balance, such Deficiency Amounts will be accounted for by IBP in an account maintained by IBP for Producer to accrue Deficiency Amounts ("Deficiency Account”). ...
      Section 6:
      If the Deficiency Account has a positive balance, deductions will be made from Producer checks for Market Hogs when the Market Price (converted to a live price) exceeds the Floor Price. All amounts which exceed the Floor Price shall be subtracted from Producer's check and applied' to the Deficiency Account balance until the Deficiency Account is reduced to zero. If there is no Deficiency Account balance, then the Market Price will be paid to Producer subject to Reserve Amount deductions pursuant to Section 5.

      . As explained hereafter, Consolidated’s failure to timely perfect its security interest by filing a financing statement is not relevant to our analysis under the FSA or SDCL 57A-9-318 (1997) because under either law, even a perfected security interest is subordinated. Therefore, to simplify this opinion we omit further reference to the unperfected status of Consolidated’s security interest.

      . The Food Security Act defines “farm product” as follows:
      The term “farm product” means an agricultural commodity such as wheat, corn, soybeans, or a species of livestock such as cattle, hogs, sheep, horses, or poultry used or produced in farming operations, or a product of such crop or livestock in its unmanufactured state (such as ginned cotton, wool-clip, maple syrup, milk, and eggs), that is in the possession of a person engaged in farming operations.
      7 USC§ 1631(c)(5).

      . The Food Security Act, 7 USC § 1631, provides in part:
      (d) Purchases free of security interest
      Except as provided in subsection (e) of this section and notwithstanding any other provision of Federal, State, or local law, a buyer who in the ordinary course of business buys a farm product from a seller engaged in farming operations shall take free of a security interest created by the seller, even though the security interest is perfected; and the buyer knows of the existence of such interest.

        (e) Purchases subject to security interest
      A buyer of farm products takes subject to a security interest created by the seller if—
      (1)(A) within 1 year before the sale of the farm products, the buyer has received from the secured party or the seller written notice of the security interest organized according to farm products that—
      (i) is an original or reproduced copy thereof;
      (ii) contains,
      (I) the name and address of the secured party;
      (II) the name and address of the person indebted to the secured party;
      (III) the social security number of the debtor or, in the case of a debtor doing business other than as an individual, the Internal Revenue Service taxpayer identification number of such debtor;
      and
      (IV) a description of the farm products subject to the security interest created by the debtor, including the amount of such products where applicable, crop year, and the name of each county or parish in which the farm products are produced or located;
      (iii) must be amended in writing, within 3 months, similarly signed, authorized, or otherwise authenticated and transmitted, to reflect material changes;
      (iv) will lapse on either the expiration period of the statement or the transmission of a notice signed, authorized, or otherwise authenticated by the secured party that the statement has lapsed, whichever occurs first; and
      (v)contains any payment obligations imposed on the buyer by the secured party as conditions for waiver or release of the security interest; and
      (B) the buyer has failed to perform the payment obligations, or (2) in the case of a farm product produced in a State that has established a central filing system—
      (A) the buyer has failed to register with the Secretary of State of such State prior to the purchase of farm products; and
      (B) the secured party has filed an effective financing statement or notice that covers the farm products being sold; or
      (3) in the case of a farm product produced in a State that has established a central filing system, the buyer—
      (A) receives from the Secretaiy of State of such State written notice as provided in subsection (c)(2)(E) or (c)(2)(F) that specifies both the seller and the farm product being sold by such seller as being subject to an effective financing statement or notice; and
      (B) does not secure a waiver or release of the security interest specified in such effective financing statement or notice from the secured party by performing any payment obligation or otherwise.

      . See supra note 5.

      . The Congressional record clearly established that the FSA was not intended to preempt state laws on the creation, perfection, and priority of security.interests between competing lenders.
      [I]t is clear to us that the changes were not made to reorder the normal priority of liens in farm products with regard to competing lenders. The best evidence of Congress's intent is found in the House Committee Report on the Food Security Act of 1985 which states in relevant part:
      The bill is intended to preempt state law (specifically the so-called "farm products exception” of the Uniform Commercial Code section 9-307) to the extent necessary to achieve the goals of this legislation. Thus, this Act would preempt state laws that set as conditions for buyer protection of the type provided by the bill requirements that the buyer check public records, obtain no-lien certificates from the farm products sellers, or otherwise seek out the lender and account to that lender for the sale proceeds. By contrast, the bill would not preempt basic state-law rules on the creation, perfection, or priority of security interests.

        Id. at 595-96 (further citations omitted).

      . See Commerce Bank, N.A. v. Chrysler Realty Corp., 244 F.3d 777, 783 (10th Cir.2001); In re Apex Oil Co., 975 F.2d 1365, 1367-68 (8thCir.1992); MNC Commercial Corp. v. Joseph T. Ryerson & Son, Inc., 882 F.2d 615, 619 (2nd Cir.1989); Pioneer Commercial Funding Corp. v. United Airlines, Inc., 122 B.R. 871, 881 (D.N.Y.1991); Cont’l American Life Ins. Co. v. Griffin, 251 Ga. 412, 306 S.E.2d 285, 286-87 (1983); Citizens Nat’l Bank of Whitley County v. Mid-States Dev. Co., Inc., 177 Ind.App. 548, 380 N.E.2d 1243, 1247-48 (1978); Bank of Kansas v. Hutchinson Health Servs., Inc., 12 Kan.App.2d 87, 735 P.2d 256, 260 (1987); Maine Farmers Exch., Inc., v. Farm Credit of Maine, ACA, 789 A.2d 85, 88-89 (Me.2002); Southeastern Fin. Corp. v. Nat’l Bank of Detroit, 145 Mich.App. 717, 377 N.W.2d 900, 900-01 (1985); Morris Plan Co. of St. Joseph v. Broadway Nat’l Bank of Kansas City, 598 S.W.2d 557 (Mo.Ct.App.1980); Associates Discount Corp. v. Fid. Union Trust Co., 111 N.J.Super. 353, 268 A.2d 330, 332 (1970); Insley Mfg. Corp. v. Draper Bank & Trust, 111 P.2d 1341, 1344-45 (Utah 1986); First Wisconsin Nat’l Bank of Milwaukee v. Midland Nat’l Bank, 76 Wis.2d 662, 251 N.W.2d 829, 833 (1977); David B. Harrison, J.D., Annotation, Effect of UCC Article 9 Upon Conflict, as to Funds in Debtor’s Bank Account, Between Secured Creditor and Bank Claiming Right of Setoff, 3 A.L.R.4& 998 (1981).

      . IBP was the buyer and account debtor because it purchased the hogs, did not fully pay the seller, and was thereby obligated on account. SDCL 57A-9-102(3). Blochs were the sellers and assignors because they assigned their rights to the proceeds of the hog sale to IBP (by way of the hog procurement contract) and to Consolidated (by way of the security interest). Consolidated was the as-signee, by way of the assignment to it of the right to receive payment from the sale of the hogs. See Maine Farmers Exch., 789 A.2d 85 (applying UCC § 9-318).

      . Consolidated also argued that the circuit court erred when it held that Consolidated could not bring this action against IBP unless it first filed a criminal conversion action against the Blochs, pursuant to SDCL 57A-9-609.1. SDCL 57A-9-609.1 provides:
      No cause of action for recovery of security or its value may be commenced by a secured creditor against an innocent third-party purchaser of farm products as defined in subsection (34) of § 57A-9-102, nor may such a cause of action be commenced against a livestock auction agency, as defined in chapter 40-15 and § 301 of the Packers and Stockyards Act (7 USC 201), or a public grain warehouse, or a public terminal grain warehouse, or a grain dealer as defined by chapters 49-43, 49-44, and 49-45 respectively, unless such action is commenced within twenty-four months from the date the farm products are sold and unless such action is preceded by the secured creditor offering to file against the debtor, a complaint as defined by § 23A-2-1.

        Id. Because IBP prevails on the priority dispute, we need not address whether Consolidated was required to offer to file a criminal complaint against the Blochs.