Payment pain

FARGO, N.D. -- Tim Hase of Martin, N.D., has a $47,000 problem because of the Anderson Seed Co. melt-down. He figures that if he gets his share of a $280,000 bond he'll be compensated about $93 -- about the price of a tank of gas.

In the past month, Hase and his wife Marian were scrambling to find a lawyer to take their case. There are dozens of farmers filing complaints about the company across three states, with claims totaling at least $4 million.

Hase, 58, has farmed since 1976, when his parents retired. He milked cows for 34 years, but sold his 40-head herd when the cheese plant he'd been delivering to closed its doors in 2010. Today, he farms more than 1,200 acres, raising mostly wheat and sunflowers and -- just this past year -- got into soybeans. He also keeps about 30 cow-calf pairs.

Typically, Hase raises 700 acres of sunflowers, but he cut back to 300 acres in 2011 because of disease problems. All of those acres in 2011 were contracted with Anderson Seed. He figures the company owes him for about five loads.

Two of the loads were picked up Nov. 18 and Nov. 23 from his farm and hauled 230 miles to Mentor, Minn. Hase delivered the third and fourth loads 15 miles to the company's Selz, N.D., receiving station on Nov. 23 and Nov. 29. A fifth load was picked up and sent to Mentor on Dec. 9.

Never had a problem

"For 10 to 15 years, we've done business with this company," Hase says. "We'd never had a problem. They always said you had to hold the checks for 30 days. We knew that; it was written in the grower contract."

On Nov. 28, Hase phoned the company's home office in Mentor. He says he wasn't yet worried about payment at that point but he wanted to "defer" his grain income on the delivered loads into 2012 for tax purposes, as he'd done in previous years

"But they never sent me a deferred payment contract," Hase says. This would be significant later.

Some of the contracts were for $32 per hundredweight (cwt.) for "confection oil" seeds -- a sunflower seed with white stripes on it. "They were supposedly set up at the plant at Durbin, N.D., to take these 'con-oils,' so I thought it was odd that they went to Mentor," Hase says. Durbin is about 190 miles away. He also delivered oil-type seeds for de-hulling at $30.25 per hundredweight.

He thought it was odd that the Quonset building west of the Selz plant never filled up this year as it usually did. "They told the guy who was running it that they wanted to keep the inventory amounts down," Hase says, he'd heard. "In early January they shipped everything out of Selz."

In February, when Hase hadn't been paid, his neighbor and friend, Steven Schuh, had some advice. In January, Schuh had been concerned about payments and drove to Mentor. Schuh told Hase he'd demanded a check and got paid the full amount he was owed, about $85,000. After he got his check Schuh was even given a tour of the facility.

Schuh urged Hase to do the same.

On Feb. 13, Hase and Schuh drove more than four hours to Mentor and dropped in on Ron Anderson, who owned Anderson Seed.

"Schuh said, 'We're not leaving until we get a check,'" Hase recalls. They say Anderson initially told them there would be money -- and no tour -- but eventually told them to come back in a half an hour and he'd see what he could do.

"He gave us a check for $8,747.70, the smallest amount for one of the loads that we'd delivered," Hase says. Anderson agreed that Hase was still owed $46,627 for the remaining four loads. Anderson said the company was in the process of "refinancing" its business and they could expect the balance by the following Monday, Feb. 20.

"We asked what happens if we don't have it by Monday, and he says, 'Shoot me,'" Hase says.

Hase cashed the partial payment check on Feb. 14.

On Feb. 17, concerned about reports that the company had been sold, they wrote the North Dakota Public Service Commission a letter, telling their story and asking for an investigation.

Still no check

On Feb. 20, there was no check.

Hase says his dealings with Anderson Seed haven't always made complete sense to him. In 2010, Hase and two neighbors delivered some sunflowers to Anderson Seed that failed to make the contract grade.

"We had a load go to Mentor," Hase recalls of the 2010 deal. "They said it didn't qualify for de-hulling because of a thing called 'dark roast,' from snow sitting on the heads. They normally could take it for bird food but they didn't have room, so I had to pay the freight (to get the load back)."

Oddly, the seed at the time was worth more on the open market than it was in the rejected contract. The contract was for 17 cents a pound and the elevator in Martin, N.D., was paying about 30 cents, so the rejection was to his benefit.

The amount Hase is owed is too big for small claims court.

Sue Richter, director of licensing for the state Public Service Commission, advised him that he may need legal representation to establish that he'd intended a deferred payment. There was no paperwork for the request, which could make him eligible for payment through a $6 million deferred contract indemnity fund, established in North Dakota 10 years ago.

For the past three weeks, Hase has called lawyers in the Bismarck and Fargo areas, looking for representation. Some lawyers implied that the date of the check was an issue. Some indicated they had other clients in the case and had a conflict of interest. Some said his claim was just too small. They finally hired a Fargo lawyer.

Hase says the Anderson Seed case will hit him hard. Besides the sunflowers that were delivered, he has an equal amount of sunflowers that were contracted and should have been delivered to Anderson Seed. He'll haul them to an elevator but thinks he'll lose $5 per hundredweight, compared with what he would have gotten had his contracts been honored.

They don't expect the issue to tip them over financially, but they'll have to make some adjustments. "It will definitely make our financial situation interesting," says Marian, who does the books.

She wonders how Anderson Seed could have sold the business to Legumex Walker Inc. of Winnipeg, Manitoba, and not sold the debt with it. "We can't understand why we're short $47,000."