Fed. Sec. L. Rep. P 95,468 Ernest C. Hector v. Herman Wiens, Individually and Dba Wiens Feed Lot

This is an action, inter alia, to recover damages for alleged violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Defendant bank moved to dismiss the cause for failure to state a claim under the Securities Acts on the ground that the transaction between plaintiff and defendant bank did not involve a security. The district court, treating the motion to dismiss as one for summary judgment pursuant to Rule 12(b) of the Federal Rules of Civil Procedure, granted defendant’s motion. We reverse.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Hector is a North Dakota grain farmer. Defendants are a Montana feedlot and a Montana bank. The parties had a business arrangement whereby the feedlot was to buy, feed, and sell cattle and hogs for the farmer’s account. The bank financed all livestock purchases and took notes from the farmer secured by the cattle and hogs. The bank loans were to be repaid from proceeds of sale of fattened cattle and hogs.

At the same time, the farmer was to provide grain from his farm to the feedlot for use in feeding cattle and hogs. The bank was to advance to the farmer an amount equal to his costs in producing and shipping…