A Livestock Branding Primer For Bankers

November 30, 2018 | dehs

Cows in sunset 0

By Davenport Evans lawyer Vince Roche

Anyone who has traveled from east to west across South Dakota has seen the curious sign on the west side of the bridge where Interstate 90 crosses the Missouri River informing the traveler that he or she has now entered the “Livestock Ownership Inspection Area.”  More than a few kids over the years have asked their parents “what does that sign mean?” and the majority of those parents have answered back, “it beats me!!”

That’s a fine answer from the bedraggled parent driving a carload of kids to the Black Hills, but a South Dakota banker should at least have a passing knowledge of what it means under South Dakota law if an animal is branded.

Many years ago, the Legislature created the South Dakota State Brand Board.  Among other things, the Brand Board registers and maintains a book of brands issued to livestock producers in South Dakota.

What does it mean if an animal is branded?  Under South Dakota law, the presence of a registered brand is prima facie evidence that the owner of the brand is the owner of the animal.  Use of a brand that is not registered with the Brand Board is a criminal offense and, once registered, the owner of the brand enjoys the exclusive right to use of the brand in exchange for paying the initial fee and renewal fees.  The South Dakota Supreme Court has observed that South Dakota’s branding laws “consummate the usage of trade in the cattle industry.”

Some may labor under the misimpression that a brand is meaningless east of the Missouri River.  After all, why else would that sign be present on Interstate 90?  In reality, the only difference is that livestock may not be removed from the “livestock inspection area,” comprising all of South Dakota west of the Missouri River, without an inspection by the Brand Board.  That, however, does not mean that the presence of a brand east of the Missouri River is meaningless.  To the contrary, a registered brand on an animal anywhere in South Dakota is prima facie evidence of ownership.

Thus far, the seasoned banker may still be thinking “well, none of this matters to me because the Uniform Commercial Code trumps everything else.”  While it is true that the UCC sets forth a comprehensive scheme for resolving priority disputes among creditors, in many circumstances the UCC asks whether a party acted in good faith.  In the context of a livestock dispute, oftentimes that question will be resolved by whether a particular creditor was cognizant of the presence or absence of a brand on the livestock in question.  An astute banker who lends to livestock producers should know whether the customer has a registered brand, encourage the customer to brand his or her livestock and ask questions if an inspection reveals livestock with a different brand in the customer’s possession.

Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the State’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.dehs.com.

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