When Porter Elevator Feed Mill closed in December 2015, farmers’ outcomes depended on the transaction: grain still in storage, grain sold for a check, or grain sold under a deferred-payment contract. In this Minnesota case, stored grain was liquidated and proceeds shared among farmers, while sellers whose grain title had transferred were treated as unsecured creditors. The figures and legal descriptions below concern the Porter case as reported in 2017; they do not establish current Minnesota law.
What happened at Porter Elevator
Porter Elevator Feed Mill, a longtime grain, feed, storage, and hauling business in Porter, Minnesota, closed its doors to customers at noon on December 10, 2015. The elevator filed for Chapter 7 bankruptcy on December 23.
Court documents at filing showed $3.6 million in assets and $4.2 million in liabilities, including more than $1 million in unsecured claims, as reported by Successful Farming in 2017. Attorney Kevin Stroup said nearly 90 farmers were affected.
Leon VanDerostyne had sold 34,800 bushels of corn and deposited a $111,229 check the day before the closure. His bank later told him the check was not valid. He also had grain in open storage, grain-bank corn, and soybeans under a deferred-payment contract. Those were not interchangeable claims: each transaction put him in a different position.
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Three transactions, three claim paths
The distinctions below describe the Porter case and the rules and processes reported for its 2015–2017 timeline. They are not a guide to current rights or procedures.
| Farmer’s position | Ownership and claim path in the Porter case | Bond treatment reported | Reported outcome |
|---|---|---|---|
| Grain still in storage | The farmer still owned the stored grain. Because grain was commingled, USDA arranged liquidation and distributed proceeds pro rata after storage fees. | The report does not identify the bond as the recovery path for stored-grain claims. | A little over $3 million in liquidation proceeds was set against $2.8 million owed farmers after storage fees; approximately 9% of the stored-grain amount was paid during the week of April 10, 2017. |
| Grain sold for a check | Title had transferred to the elevator, so the farmer was treated as an unsecured creditor even if the check bounced. Farmers could submit claims against the Minnesota bond. | The state bond was limited; valid claims shared it pro rata. | VanDerostyne said he received approximately $13,000, around 12% of the bounced grain-check amount. |
| Grain sold with payment deferred | After title transferred, the farmer was described as an unsecured creditor. | Minnesota Department of Agriculture official Nick Milanowski said signed voluntary extension of credit contracts (VECCs), including deferred-payment contracts, were not covered by the bond in this case. Some unsigned contracts were included because the seller had not signed to acknowledge the additional risk. | The report does not provide a separate recovery figure for deferred-payment claims. |
Why stored grain was liquidated instead of returned
Attorney Kevin Stroup explained the ownership distinction plainly: “If you stored grain at the elevator, you still own that grain.” But ownership did not mean each farmer could readily reclaim an identifiable quantity from the bins. The grain was commingled, and USDA officials cited transportation costs and uncertainty about the exact quantity and quality available for redelivery.
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Attorney Greg Bucher said, “A farmer does have state law reclamation rights relating to the sale of goods (grain) under the Uniform Commercial Code.” In this bankruptcy, however, the report says exercise of reclamation rights and related litigation were under bankruptcy-court oversight. USDA chief of the examination branch Ned Bergman summarized the practical concern about physical redelivery: “In reality, there are a lot of weaknesses in allowing them to do that.”
USDA instead arranged a market liquidation of the commingled grain. USDA case figures, as reported by Successful Farming in 2017, put proceeds at a little over $3 million, against $2.8 million owed to farmers after storage fees. Approximately 9% of the stored-grain amount was paid during the week of April 10, 2017. Those are case-specific figures, not a forecast of what stored grain might recover in another insolvency.
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Why a bounced check did not return ownership
For grain sold to the elevator, the report says title had transferred. A bad check therefore did not put the grain back in the farmer’s ownership; the seller was treated as an unsecured creditor and could also submit a claim against the state bond described in the case.
The USDA bond amount reported for Porter was $230,000. Minnesota Department of Agriculture figures, as reported by Successful Farming in 2017, show that 12 producers submitted claims totaling $2,001,042.45; 11 valid claims totaled $1,106,435.17. The state bond was limited, so valid claims were paid pro rata rather than in full. VanDerostyne said he received approximately $13,000, around 12% of the amount of his bounced grain check.
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How deferred-payment contracts were treated
A deferred-payment sale was different from grain left in storage: according to Stroup’s account in the report, title had transferred and the farmer was an unsecured creditor. Bond coverage also turned on whether a voluntary extension of credit contract (VECC) had been signed.
Milanowski, supervisor of the Minnesota Department of Agriculture Fruit, Vegetable & Grain Unit, said: “The voluntary extension of credit contracts (VECC) or deferred payment contracts are not covered by the bond.” In context, his statement concerned signed contracts in this case. The report says some unsigned contracts were included because the seller had not signed to acknowledge the additional risk. It does not supply a separate recovery total for deferred-payment claims.
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What this case can—and cannot—tell farmers
- Storage, a completed sale, and deferred payment can create different positions. In Porter, stored grain remained the farmer’s property, while title had transferred for the sold grain.
- Commingling affected the practical remedy. The stored grain was liquidated, with proceeds allocated pro rata after storage fees, rather than simply returned farmer by farmer.
- A failed payment was not the same as retaining ownership. The bounced-check sellers were treated as unsecured creditors and could pursue the bond process described in the report.
- Signed deferred-payment paperwork mattered to bond treatment. The report distinguishes signed contracts from some unsigned contracts in this case.
- Historical recovery figures are not promises. The amounts and outcomes above are particular to Porter’s bankruptcy and the 2015–2017 timeline.
Successful Farming reporter Laurie Bedord published the case account on May 19, 2017, after interviewing affected farmers, a vendor, attorneys, USDA and Minnesota Department of Agriculture officials, and others, and reviewing court documents. The report also said attempts to reach Porter Elevator president Bruce Tetrick for comment were unsuccessful. The case account does not establish current Minnesota law; a present-day claim requires current official guidance and legal advice specific to the transaction and circumstances.
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