## Facts

- Castro County Feeders I, Ltd. (Castro County) operated a Texas feedlot that fed cattle and provided vitamins, minerals, and medicine for cattle placed in its lots.
- Ryan Baldwin owned and ran a Texas cattle business that purchased and sold cattle, and he regularly placed his cattle at Castro County’s feedlot.
- After feeding, Castro County typically released Baldwin’s cattle so Baldwin could transport and sell them (often in Kansas).
- As part of the parties’ routine practice, sale checks were commonly issued jointly to Baldwin and Castro County so Castro County could be paid for feed and related services.
- Baldwin and Castro County executed a Cattle Feeding Agreement (Agreement) that granted Castro County a security interest in “collateral” described generally as Baldwin’s interest in farm products, limited to livestock, and the future sale of that livestock.
- The Agreement also included language describing livestock as being “specifically located in Lot(s) # __________ at Castro County Feeders, I, Ltd., Hart, Castro County, Texas,” but the lot-number line was left blank.
- Baldwin sold 78 head of his cattle at an auction in Wagner, South Dakota.
- Baldwin sued Castro County in South Dakota circuit court concerning the cattle sold in Wagner and the sale proceeds.
- The circuit court ruled that Castro County had a valid security interest in the cattle sold in Wagner and an enforceable security interest in the proceeds of that sale.
- Baldwin appealed to the South Dakota Supreme Court, arguing that the Agreement did not sufficiently identify the cattle because it did not specify the lot(s) where the cattle were located.

## Issues

1. Whether the Agreement’s collateral description sufficiently identified the cattle at issue so that Castro County held an enforceable Article 9 security interest in the 78 head sold at auction in Wagner, South Dakota.
2. Whether Castro County’s security interest, if enforceable, continued in the identifiable proceeds from the auction sale.

## Decision

- The South Dakota Supreme Court affirmed.
- The court upheld the circuit court’s determination that Castro County had an enforceable security interest in the cattle sold in Wagner despite the unfilled lot-number blank in the Agreement’s location reference.
- The court also upheld that Castro County’s security interest extended to the identifiable proceeds of the cattle’s sale.

## Legal Principles

- Under UCC Article 9, a security agreement must contain a description of the collateral that reasonably identifies what is covered; the description need not list each item with exact detail.
- A collateral description may be sufficient even if it includes an incomplete or omitted detail (such as an unfilled lot number) when the agreement otherwise describes the collateral by type and indicates the parties’ intent to cover the debtor’s livestock placed with the secured party.
- An enforceable security interest in collateral continues in identifiable proceeds when the collateral is sold, including proceeds from the sale of livestock.

## Conclusion

The South Dakota Supreme Court held that Castro County’s security interest was enforceable because the Agreement reasonably identified Baldwin’s livestock as collateral even though the lot-number line was left blank, and the court further held that the security interest continued in the identifiable proceeds from Baldwin’s auction sale of the 78 head of cattle in Wagner, South Dakota.


Baldwin v. Castro County Feeders I, Ltd., 678 N.W.2d 796 (2004)