Border State Bank of Greenbush v. Bagley Livestock Exchange, Inc.

Bert Johnson had a cattle-sharing agreement with Hal Anderson: Johnson owned the cattle, Anderson maintained and bred them, offspring were sold under Johnson's name, and Johnson got a guaranteed percentage of calves; the parties later disputed whether they had dropped the guaranteed percentage. Border State Bank (plaintiff) lent Anderson $155,528 and took a security interest in all his rights in livestock, owned or later acquired. Johnson reclaimed the cattle but Anderson kept the calves, which Bagley Livestock Exchange (defendant) sold for him. The bank sued Bagley for conversion of its perfected security interest in the calves. The district court directed a verdict for Bagley, reasoning Anderson had no 'ownership interest' and thus could grant no security interest. The bank appealed.

Whether a party must have complete ownership of property to grant a security interest in it.