IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF IOWA

CENTRAL DIVISION





JAMES LARSON,
Plaintiff,

No. C 96-3138-MWB

vs.



PRELIMINARY AND FINAL INSTRUCTIONS

TO THE JURY

FARMERS COOPERATIVE ELEVATOR OF BUFFALO CENTER, IOWA, an Iowa Cooperative, and FARMERS COOPERATIVE COMPANY, LEDYARD, IOWA, an Iowa Cooperative,
Defendants.

____________________

TABLE OF CONTENTS

PRELIMINARY INSTRUCTIONS

NO. 1 - PRELIMINARY INSTRUCTIONS

NO. 2 - GENERAL

NO. 3 - BURDEN OF PROOF

NO. 4 - ELEMENTS OF CLAIMS

NO. 5 - DUTY OF JURORS

NO. 6 - ORDER OF TRIAL

NO. 7 - DEFINITION OF EVIDENCE

NO. 8 - CREDIBILITY OF WITNESSES

NO. 9 - STIPULATED FACTS

NO. 10 - DEPOSITIONS

NO. 11 - INTERROGATORIES

NO. 12 - OBJECTIONS

NO. 13 - BENCH CONFERENCES

NO. 14 - NOTE-TAKING

NO. 15 - ADMONITION

FINAL INSTRUCTIONS

NO. 1 - INTRODUCTION

NO. 2 - IMPEACHMENT OF WITNESSES

NO. 3 - LEGALITY OF THE CONTRACTS

NO. 4 - THE PLAINTIFF'S CLAIMS OF BREACH OF CONTRACT

NO. 5 - DEFENDANTS' COUNTERCLAIMS OF BREACH OF

CONTRACT

NO. 6 - DAMAGES--IN GENERAL

NO. 7 - DAMAGES--SPECIFIC

NO. 8 - DELIBERATIONS



VERDICT FORM

PRELIMINARY INSTRUCTION NO. 1 - PRELIMINARY INSTRUCTIONS



Members of the jury, before the lawyers make their opening statements, I give you these preliminary instructions to help you better understand the trial and your role in it. Consider these instructions, together with any oral instructions given to you during the trial and the written final instructions given at the end of the trial, and apply them as a whole to the facts of the case. In considering these instructions, the order in which they are given is not important.



PRELIMINARY INSTRUCTION NO. 2 - GENERAL



The following brief summary of the case is not to be considered evidence or proof of any facts or events in the case. It simply informs you of the factual disputes between the parties.

This is a civil case brought by plaintiff James Larson, a farmer from Armstrong, Iowa, against defendants Farmers Cooperative Elevator of Buffalo Center, Iowa, and Farmers Cooperative Company of Ledyard, Iowa. In these instructions, I will refer to the defendants as "Buffalo Center Coop" and "Ledyard Coop," respectively. This case involves several so-called "Hedge-to-Arrive" grain contracts or "HTAs" that Larson entered into with Buffalo Center Coop and Ledyard Coop. Larson contends that Buffalo Center Coop and Ledyard Coop each breached the contracts. Larson seeks damages for the resulting injuries. Buffalo Center Coop and Ledyard Coop dispute this claim.

Buffalo Center Coop and Ledyard Coop have also brought their own claims, called "counterclaims," in this lawsuit. Buffalo Center Coop and Ledyard Coop contend that Larson breached the HTAs he had with each of them. Buffalo Center Coop and Ledyard Coop seek damages for their resulting injuries. Larson disputes these counterclaims.

You will be asked to resolve these disputes between the parties.



PRELIMINARY INSTRUCTION NO. 3 - BURDEN OF PROOF

In these instructions, you are told that your verdict depends on whether you find certain facts have been proved. Larson has the burden of proving his claims, while Buffalo Center Coop and Ledyard Coop each have the burden of proving their counterclaims.

In this case, facts must be proved by the "greater weight of the evidence." To prove something by the greater weight of the evidence is to prove that it is more likely true than not true. It is determined by considering all of the evidence and deciding which evidence is more believable. If, on any issue in the case, the evidence is equally balanced, you cannot find that issue has been proved.

The "greater weight" of the evidence is not necessarily determined by the greater number of witnesses or exhibits a party has presented. The testimony of a single witness that produces in your mind a belief in the likelihood of truth is sufficient for proof of any fact and would justify a verdict in accordance with such testimony. This is so, even though a number of witnesses may have testified to the contrary, if after consideration of all of the evidence in the case, you hold a greater belief in the accuracy and reliability of that one witness.

You may have heard of the term "proof beyond a reasonable doubt." That is a stricter standard which applies in criminal cases. It does not apply in civil cases such as this. You should, therefore, put it out of your minds.



PRELIMINARY INSTRUCTION NO. 4 - ELEMENTS OF CLAIMS

To help you follow the evidence, here is a brief summary of the elements of Larson's claims and the Coops' counterclaims. You must give separate consideration to Larson's claim against each Coop. Likewise, you must consider separately each of the Coops' counterclaims against Larson.

Larson's claim of breach of contract by each Coop

For Larson to win his claim of breach of contract against a Coop, he must prove the following five elements by the greater weight of the evidence as to that Coop:

One, the existence of a contract;

Two, the terms of the contract;

Three, the plaintiff has done what the contract requires or has been excused from doing what the contract requires;

Four, the Coop has breached the contract; and

Five, the amount of any damage the Coop caused by its breach of the contract.

If Larson has failed to prove all of the above elements by the greater weight of the evidence as to one of the Coops, your verdict must be for that Coop on Larson's claim of breach of contract. You may find that Larson has proved his breach-of-contract claim against only one Coop, both Coops, or neither Coop.



Next, I will give you a brief summary of the elements of the Coops' counterclaims.

The Coops' counterclaims against Larson for breach of contract

To win its claim of breach of contract against Larson, each Coop must prove the following five elements by the greater weight of the evidence against him:

One, the existence of a contract;

Two, the terms of the contract;

Three, the Coop has done what the contract requires or has been excused from doing what the contract requires;

Four, Larson has breached his contract with that Coop; and

Five, the amount of any damage Larson caused by his breach of the contract.

If a Coop has failed to prove all of the above elements by the greater weight of the evidence against Larson, your verdict must be for Larson on that Coop's claim of breach of contract. Again, you may find that only one Coop has proved its claim, both Coops have proved their claims, or neither Coop has proved its claim.



This is only a preliminary outline of the elements of the parties' claims and counterclaims. At the end of the trial, I will give you final written instructions that explain these claims and counterclaims in greater detail. Because they are more detailed, those final instructions govern on the elements of the parties' claims and counterclaims.



PRELIMINARY INSTRUCTION NO. 5 - DUTY OF JURORS

It will be your duty to decide from the evidence what the facts are. You, and you alone, are the judges of the facts. You will hear the evidence, decide what the facts are and then apply those facts to the law which I will give you in these preliminary instructions, any instructions given during the trial, and in the final instructions at the conclusion of the case. You will then deliberate and reach your verdict. You are the sole judges of the facts; but you must follow the law as stated in my instructions, whether you agree with it or not.

You have been chosen and sworn as jurors in this case to try the issues of fact presented by the parties. Do not allow sympathy or prejudice to influence you. The law demands of you a just verdict, unaffected by anything except the evidence, your common sense, and the law as I will give it to you.

This case should be considered and decided by you as an action between persons of equal standing in the community, of equal worth, and holding the same or similar stations in life. In this case, the defendants are corporations. The mere fact that a party is a corporation does not mean that it is entitled to any greater or lesser consideration by you. All persons, including individuals and corporations, stand equal before the law, and are entitled to the same fair consideration by you.

When a corporation is involved, of course, it may act only through natural persons as its agents or employees; and, in general, any agent or employee of a corporation may bind the corporation by the acts and declarations made while acting within the scope of the authority delegated to the employee by the corporation, or within the scope of the employee's or agent's duties as an employee or agent of the corporation.

You should not take anything I may say or do during the trial as indicating what I think of the evidence or what I think your verdict should be.



PRELIMINARY INSTRUCTION NO. 6 - ORDER OF TRIAL

The trial will proceed in the following order:

After I conclude these preliminary instructions, the plaintiff's lawyer may make an opening statement. Next, the defendants' lawyer may make an opening statement. An opening statement is not evidence, but is simply a summary of what the lawyers expect the evidence to be.

The plaintiff will then present evidence and witnesses and the defendants may cross-examine. Following the plaintiff's case, the defendants may present evidence and witnesses and the plaintiff may cross-examine. Following the defendants' case, the plaintiff may take a further opportunity to present additional evidence.

After the evidence is concluded, I will give you the final instructions on the law that you are to apply in reaching your verdict. The lawyers will then make their closing arguments to summarize and interpret the evidence for you. As with opening statements, closing arguments are not evidence. I will then give you some final instructions on deliberations, and you will retire to deliberate on your verdict.



PRELIMINARY INSTRUCTION NO. 7 - DEFINITION OF EVIDENCE

You shall base your verdict only upon the evidence, these instructions, and other instructions that I may give you during the trial.

Evidence is:

1. Testimony in person or testimony previously given, which includes depositions or videotaped depositions.

2. Exhibits admitted into evidence by the court.

3. Stipulations, which are agreements between the parties.

4. Any other matter admitted into evidence.

Evidence may be direct or circumstantial. You should not be concerned with these terms since the law makes no distinction between the weight to be given to direct and circumstantial evidence. The weight to be given any evidence is for you to decide.

The following are not evidence:

1. Statements, arguments, questions, and comments by the lawyers.

2. Objections and rulings on objections.

3. Testimony I tell you to disregard.

4. Anything you saw or heard about this case outside the courtroom.

You should not take anything I may say or do during the trial as indicating what I think of the evidence.



PRELIMINARY INSTRUCTION NO. 8 - CREDIBILITY OF WITNESSES

In deciding what the facts are, you may have to decide what testimony you believe and what testimony you do not believe. You may believe all of what a witness says, or only part of it, or none of it.

In deciding what testimony to believe, consider the witnesses' intelligence, their opportunity to have seen or heard the things they testify about, their memories, the motives they may have for testifying a certain way, their manner while testifying, whether they said something different at an earlier time, the general reasonableness of their testimony, and the extent to which their testimony is consistent with other evidence that you believe.

In deciding whether or not to believe a witness, keep in mind that people sometimes hear or see things differently and sometimes forget things. You need to consider therefore whether a contradiction is an innocent misrecollection or lapse of memory or an intentional falsehood, and that may depend on whether it has to do with an important fact or only a small detail.

You may hear testimony from persons described as experts. Persons who have become experts in a field because of their education and experience may give their opinions on matters in that field and the reasons for their opinions. Consider expert testimony just like any other testimony. You may accept it or reject it. You may give it as much weight as you think it deserves, considering the witness's education and experience, the reasons given for the opinion, and all the other evidence in the case.

Also, an expert witness may be asked to assume certain facts are true and to give an opinion based on that assumption. This is called a hypothetical question. If any facts assumed in the question are not proved by the evidence, you should decide if that omission affects the value of the expert's opinion.



PRELIMINARY INSTRUCTION NO. 9 - STIPULATED FACTS

The plaintiff and defendants have agreed or "stipulated" to certain facts and have reduced these facts to a written agreement or stipulation. Any counsel may, throughout the trial, read to you all or a portion of the stipulated facts. You should treat these stipulated facts as having been proved.



PRELIMINARY INSTRUCTION NO. 10 - DEPOSITIONS

Certain testimony from a deposition may be read into evidence. A deposition is testimony taken under oath before the trial and preserved in writing. Consider that testimony as if it had been given in court.



PRELIMINARY INSTRUCTION NO. 11 - INTERROGATORIES

During this trial, you may hear the word "interrogatory." An interrogatory is a written question asked by one party of another, who must answer it under oath in writing. Consider interrogatories and the answers to them as if the questions had been asked and answered here in court.



PRELIMINARY INSTRUCTION NO. 12 - OBJECTIONS

From time to time during the trial I may be called upon to make rulings of law on objections or motions made by the lawyers. It is the duty of the lawyer for each party to object when another party offers testimony or other evidence that the lawyer believes is not properly admissible. You should not show prejudice against a lawyer or the party the lawyer represents because the lawyer has made objections. You should not infer or conclude from any ruling or other comment I may make that I have any opinions on the merits of the case favoring one side or the other. Also, if I sustain an objection to a question that goes unanswered by the witness, you should not draw any inferences or conclusions from the question itself.



PRELIMINARY INSTRUCTION NO. 13 - BENCH CONFERENCES

During the trial it may be necessary for me to talk with the lawyers out of your hearing, either by having a bench conference here while you are present in the courtroom, or by calling a recess. Please understand that while you are waiting, we are working. The purpose of these conferences is to decide how certain evidence is to be treated under the rules of evidence, and to avoid confusion and error. We will, of course, do what we can to keep the number and length of these conferences to a minimum.



PRELIMINARY INSTRUCTION NO. 14 - NOTE-TAKING

If you want to take notes during the trial, you may. However, it is difficult to take detailed notes and pay attention to what the witnesses are saying. If you do take notes, be sure that your note-taking does not interfere with listening to and considering all of the evidence. Also, if you take notes, do not discuss them with anyone before you begin your deliberations. Do not take your notes with you at the end of the day. Be sure to leave them on your chair in the courtroom. The court attendant will safeguard the notes. No one will read them. The notes will remain confidential throughout the trial and will be destroyed at the conclusion of the trial.

If you choose not to take notes, remember it is your own individual responsibility to listen carefully to the evidence. You cannot give this responsibility to someone who is taking notes. We depend on the judgment of all members of the jury; you must all remember and consider the evidence in this case.

Whether or not you take notes, you should rely on your own memory regarding what was said. Your notes are not evidence. A juror's notes are not more reliable than the memory of another juror who chooses to consider the evidence carefully without taking notes. You should not be overly influenced by the notes.

You will notice that we do have an official court reporter making a record of the trial. However, we will not have typewritten transcripts of this record available for your use in reaching your verdict.



PRELIMINARY INSTRUCTION NO. 15 - ADMONITION

You will not be required to remain together while court is in recess. However, to ensure fairness, you, as jurors, must obey the following rules:

First, do not talk among yourselves about this case, or about anyone involved with it, until the end of the case when you go to the jury room to decide on your verdict.

Second, do not talk with anyone else about this case, or about anyone involved with it, until the trial has ended and you have been discharged as jurors.

Third, when you are outside the courtroom, do not let anyone tell you anything about the case, or about anyone involved with it until the trial has ended and your verdict has been accepted by me. If someone should try to talk to you about the case during the trial, please report it to me.

Fourth, during the trial you should not talk with or speak to any of the parties, lawyers or witnesses involved in this case--you should not even pass the time of day with any of them. It is important not only that you do justice in this case, but that you also give the appearance of doing justice. If a person from one side of the lawsuit sees you talking to a person from the other side--even if it is simply to pass the time of day--an unwarranted and unnecessary suspicion about your fairness might be aroused. If any lawyer, party, or witness does not speak to you when you pass in the hall, ride the elevator, or the like, remember it is because they are not supposed to talk or visit with you either.

Fifth, do not read any news stories or articles about the case, or about anyone involved with it, or listen to any radio or television reports about the case or about anyone involved with it.

Sixth, do not do any research or make any investigation about the case on your own.

Seventh, do not make up your mind during the trial about what the verdict should be. Keep an open mind until after you have gone to the jury room to decide the case and you and your fellow jurors have discussed the evidence.

DATED this 3rd day of May, 1999.



_____________________________

MARK W. BENNETT

U. S. DISTRICT COURT JUDGE



FINAL INSTRUCTION NO. 1 - INTRODUCTION

Members of the jury, the instructions I gave you at the beginning of the trial and any oral or written instructions I gave you during the trial remain in effect. I now give you some additional instructions.

You must, of course, continue to follow the instructions I gave you earlier, as well as those I give you now. You must not single out some instructions and ignore others, because all are important. The instructions I am about to give you now, as well as the preliminary instructions given to you at the beginning of the trial, are in writing and will be available to you in the jury room. I emphasize, however, that the final instructions are not more important than the preliminary instructions, nor are written instructions more important than oral ones. Again, all instructions, whenever given and whether in writing or not, must be followed. This is true even though some of the instructions I gave you at the beginning of the trial are not repeated here.

In considering these instructions, the order in which they are given is not important.

Neither in these instructions nor in any ruling, action, or remark that I have made during the course of this trial have I intended to give any opinion or suggestion as to what your verdict should be.



FINAL INSTRUCTION NO. 2 - IMPEACHMENT OF WITNESSES

In Preliminary Instruction No. 8, I instructed you on the credibility of witnesses. I now give you this further instruction on how the credibility of a witness can be "impeached."

A witness may be discredited or "impeached" by contradictory evidence, or by evidence that at some time the witness has said or done something, or has failed to say or do something, that is inconsistent with the witness's present testimony. If you believe any witness has been impeached and thus discredited, it is your exclusive province to give the testimony of that witness such credibility, if any, as you may think it deserves.



FINAL INSTRUCTION NO. 3 - LEGALITY OF THE CONTRACTS

You have heard evidence in this case that may suggest that the HTA contracts in question are or were somehow illegal, or that one of the parties questioned their legality. However, after this suit was filed, I determined that the HTA contracts in question here are legal. Therefore, the only remaining question is whether or not any party breached the contracts.



FINAL INSTRUCTION NO. 4 - THE PLAINTIFF'S CLAIMS OF BREACH OF CONTRACT

Larson contends that each Coop breached its HTA contract or contracts with him. Larson seeks damages for his resulting injuries. The Coops dispute Larson's claims of breach of contract.

Remember that you must give separate consideration to Larson's claim against each Coop. In other words, you may find that Larson has proved his breach-of-contract claim against only one Coop, both Coops, or neither Coop.

For Larson to win his claim of breach of contract against a Coop, he must prove the following four elements by the greater weight of the evidence as to that Coop:

One, the existence of a contract.

"Contract" means the total legal obligation that results from the parties' agreement. "Agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances, including course of dealing or course of performance, as defined below. The existence of a contract requires a meeting of the minds on the material terms. This means the parties must agree upon the same things in the same sense. You are to determine if a contract existed from the words and acts of the parties, together with all reasonable inferences you may draw from the surrounding circumstances.



Two, the terms of the contract.

A writing signed by the parties need not contain all the material terms of the contract and such material terms as are stated need not be precisely stated. All that is required is that the writing afford a basis for believing that oral evidence of an agreement rests on a real transaction. The only term that must appear in the writing is the quantity of goods involved in the agreement. Terms in a writing that is intended by the parties as a final expression of their agreement with respect to such terms as are included in it may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement, but may be explained or supplemented. "Supplement" means "to add to."

Terms of the writing may be supplemented by a course of dealing. A "course of dealing" is a sequence of previous conduct between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct. A course of dealing can give particular meaning to and can supplement or qualify terms of an agreement.

Terms of the writing may also be supplemented by a course of performance. A "course of performance" can exist where a contract involves repeated occasions for performance by either party with knowledge of the nature of the performance and an opportunity for objection to it by the other. A course of performance accepted or acquiesced in without objection can be used to determine the meaning of the agreement.

Whenever it is reasonable to do so, the written terms of the agreement and any course of performance or course of dealing must be construed as consistent with each other. However, when it is unreasonable to do so, the written terms shall control over course of performance or course of dealing.

Terms of the writing may also be supplemented by evidence of consistent additional terms.

Larson contends that the material terms of his HTA contracts included a term that the Coop would be responsible for commission and margin requirements of the transactions set forth in the contract. Larson also contends that the material terms of his HTA contracts with the Coops also included a term that if he was dissatisfied with the contract price, he could "roll" the contracts into a deferred month and sell the grain for cash on the open market. In determining whether these terms were part of the contract, you may consider the following:

a. the intent of the parties along with a reasonable application of the surrounding circumstances.

b. the intent expressed in the language used prevails over any secret intention of either party.

c. the intent may be shown by the practical interpretation of a contract by the parties and by the surrounding circumstances.

d. you must attempt to give meaning to all language of a contract. Because an agreement is to be interpreted as a whole, assume that all of the language is necessary. An interpretation that gives a reasonable, effective meaning to all terms is preferred to an interpretation that leaves a part of the contract unreasonable or meaningless.

e. the meaning of a contract is the interpretation a reasonable person would give it if he or she were acquainted with the circumstances both before and at the time the contract was made.

f. ambiguous language in a written contract is interpreted against the party who selected it.

g. where general and specific terms in the contract refer to the same subject, the specific terms control.



Three, the plaintiff has done what the contract requires or has been excused from doing what the contract requires.

The plaintiff's performance is excused by a defendant's prior breach of the contract, such as by renouncing or repudiating the contract, as "renunciation" and "repudiation" are defined in the explanation to element four.



Four, the Coop has breached the contract.

A breach of the contract occurs when the defendant fails to perform a term of the contract. A breach also occurs when the defendant "renounces" or "repudiates" a contract. A "renunciation" occurs when the defendant clearly rejects the contract by giving notice to the plaintiff that the defendant will not perform. A "repudiation" occurs when the defendant makes a statement that, fairly read, amounts to a statement of intention not to perform the contract except on conditions that go beyond those provided in the contract.

Iowa law provides that when reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance. Therefore, a breach of contract also occurs when the defendant unreasonably demands adequate assurances of performance when not insecure or demands assurances that are unreasonable, and refuses to perform without such assurances.

A demand for adequate assurances must be in writing. Between merchants, the reasonableness of grounds for insecurity and the adequacy or reasonableness of demands for or offers of assurances must be determined according to commercial standards. "Between merchants" means any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants. "Merchant" means a person who deals in goods of the kind or otherwise by the person's occupation holds that person out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by the person's employment of an agent or broker or other intermediary who by the intermediary's occupation holds the intermediary out as having such knowledge or skill.

You are also instructed that it is unlawful to enter into a contract for the purchase or sale of commodity futures unless the transaction is conducted on or is subject to the rules of the Chicago Board of Trade or other designated contract market. Therefore, if you find that a demand for assurances constituted a demand to enter into a purchase or sale of commodity futures that was not on or subject to the rules of a designated contract market (i.e., it constituted a demand for an "off-exchange" transaction), you may find that such a demand was unlawful and unreasonable, and therefore constituted a breach of the underlying HTA contract, if the Coop making the demand refused to perform the underlying HTA further without such a transaction.



If Larson has failed to prove all of the above elements as to one of the Coops by the greater weight of the evidence, your verdict must be for that Coop on Larson's claim of breach of contract. However, if Larson has proved all of these elements by the greater weight of the evidence as to a Coop, Larson is entitled to nominal damages for breach of contract from that Coop. "Nominal damages" will be explained to you in Final Instruction No. 7 on damages. Remember that "greater weight of the evidence" was explained to you in Preliminary Instruction No. 3 on the burden of proof.



FINAL INSTRUCTION NO. 5 - DEFENDANTS' COUNTERCLAIMS OF BREACH OF CONTRACT

The Coops have each also brought their own claims, called "counterclaims," in this lawsuit. The Coops each contend that Larson breached the HTAs. Larson disputes these counterclaims.

Again, remember that you must consider separately each of the Coops' counterclaims against Larson. In other words, you may find that only one Coop has proved its counterclaim, both Coops have proved their counterclaims, or neither Coop has proved its counterclaim.

To win its counterclaim of breach of contract against Larson, a Coop must prove the following five elements by the greater weight of the evidence against him:

One, the existence of a contract.

This element was explained for you in Final Instruction No. 4.



Two, the terms of the contract.

This element was explained for you in Final Instruction No. 4.



Three, the Coop has done what the contract requires or has been excused from doing what the contract requires.

This element was explained for you in Final Instruction No. 4. In addition, a prior breach excusing performance may include the plaintiff's refusal to give adequate assurances when reasonably demanded, as explained in element four.



Four, Larson has breached his contract.

A breach of the contract occurs when the counterclaim defendant fails to perform a term of the contract. Iowa law provides that when reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance. Therefore, a breach of contract also occurs when one party to a contract fails to provide the other party with adequate assurances of performance after a justified demand for such assurances has been made in writing.

Under a grain contract, the buyer is entitled to demand adequate assurances of performance by the seller if either the willingness or the ability of the seller to perform under the contract declines materially between the time the contract is entered and the time for performance. Whether or not the buyer under a grain contract has reasonable grounds for insecurity concerning performance by the seller must be determined from all of the circumstances. Reasonable grounds for insecurity concerning performance by the seller may arise from events and conditions that are not stated in the written contract itself, but which nevertheless would cause a reasonable person to believe that the seller's willingness or ability to perform under the contract has substantially declined between the time that the contract was entered and the time for performance.

Thus, the buyer may treat the contract as breached if, after a justified demand for adequate assurances is made, the seller fails within a reasonable time to provide such assurances of due performance as are adequate under the circumstances of the particular case. This right to demand adequate assurances need not be stated in the written contract itself, but is instead imposed by law.

You are also instructed that it is unlawful to enter into a contract for the purchase or sale of commodity futures unless the transaction is conducted on or is subject to the rules of the Chicago Board of Trade or other designated contract market. Therefore, if you find that a demand for assurances constituted a demand to enter into a purchase or sale of commodity futures that was not on or subject to the rules of a designated contract market (i.e., it constituted a demand for an "off-exchange" transaction), you may find that such a demand was unlawful and unreasonable, and therefore the Coop that made the demand cannot prove a failure to give adequate assurances based on refusal to enter into such a transaction.

In summary, to prove a failure to give adequate assurances, the Coop must prove the following: (1) reasonable grounds for insecurity arose with respect to Larson's performance under his HTA contracts; (2) the Coop demanded from Larson, in writing, reasonable assurances of due performance of his HTA contracts; and (3) Larson failed to provide the Coop with adequate assurances of due performance of the HTA contracts within a reasonable time after the Coop's demand.



Five, the amount of any damage Larson caused by his breach of the contract.

If a Coop has failed to prove all of the above elements by the greater weight of the evidence against Larson, your verdict must be for Larson on that Coop's claim of breach of contract. However, if a Coop has proved all of the above elements by the greater weight of the evidence, then that Coop is entitled to damages in some amount against Larson on its claim of breach of contract. Remember that "greater weight of the evidence" was explained to you in Preliminary Instruction No. 3 on the burden of proof.



FINAL INSTRUCTION NO. 6 - DAMAGES--IN GENERAL

If you find in favor of one of the parties on one of his or its claims or counterclaims, you must award that party such sum as you find will fairly and justly compensate that party for any damages you find that party sustained as a direct result of the other party's wrongful conduct. However, I must explain to you now some matters applicable to all of your determinations of damages.

In arriving at the amount of damages on a claim or counterclaim, you cannot establish a figure by taking down the estimate of each juror as to damages and agreeing in advance that the average of those estimates shall be your award of damages for that claim or counterclaim.

Remember, throughout your deliberations, you must not engage in any speculation, guess, or conjecture. Although the precise amount of a party's damages may be difficult to determine, that should not affect the party's recovery. On the other hand, a party is not to be awarded purely speculative damages. Damages may be awarded only when there is some reasonable basis in the evidence in the case for determining that the party has in fact suffered a loss, even though the amount of such loss is difficult to determine.

You must not award damages under any of these Instructions by way of punishment or through sympathy. Your judgment must not be exercised arbitrarily, or out of sympathy or prejudice, for or against any of the parties. The amount you assess for any item of damage must not exceed the amount caused by the wrongful conduct of a party as proved by the evidence.

The fact that I am instructing you on the proper measure of damages should not be considered as an indication that I have any view as to which party is entitled to your verdict in this case. Instructions as to the measure of damages are given only for your guidance, in the event that you should find that a party is entitled to damages in accord with the other instructions.



FINAL INSTRUCTION NO. 7 - DAMAGES--SPECIFIC

The parties seek damages for breach of contract. I will now explain the measure of damages for each party's claims or counterclaims.

If you find that Larson has prevailed on his breach-of-contract claim against one or both of the Coops, as that claim is explained to you in Final Instruction No. 4, he is entitled to nominal damages. "Nominal" damages are allowed, not as an equivalent for the wrong, but in recognition of a technical injury and by way of declaring or vindicating a legal right and are not the same as damages small in amount. When, as here, the breach of contract caused no loss, if you find that a Coop breached its contract or contracts with James Larson, you must award him $1 in nominal damages against that Coop.

If, on the other hand, you find that a Coop has prevailed on its counterclaim of breach of contract, as that counterclaim is explained to you in Final Instruction No. 5, that Coop is entitled to an award of actual damages in some amount. The measure of damages for the Coops' breach of contract counterclaims is an amount that will reimburse the party making the counterclaim for the loss caused by its reliance on the contract and that will place it in as good a position as if the other party had not breached the contract. The damages you award for breach of contract must be foreseeable or have been reasonably foreseen at the time the parties entered into the contract. Therefore, if you find that a Coop has prevailed on its breach-of-contract counterclaim against Larson, the specific measure of the prevailing Coop's damages is the difference between the market price of the grain at the time the Coop learned of the breach and the contract price of the grain. Market price is determined at the place where the grain was to be delivered.

Remember that damages for breach of contract, like other elements of that claim or counterclaim, must be proved by the greater weight of the evidence.



FINAL INSTRUCTION NO. 8 - DELIBERATIONS

In conducting your deliberations and returning your verdict, there are certain rules you must follow.

First, when you go to the jury room, you must select one of your members as your foreperson. That person will preside over your discussions and speak for you here in court.

Second, it is your duty, as jurors, to discuss this case with one another in the jury room. You should try to reach agreement if you can do so without violence to individual judgment. Each of you must make your own conscientious decision, but only after you have considered all the evidence, discussed it fully with your fellow jurors, and listened to the views of your fellow jurors. Do not be afraid to change your opinions if the discussion persuades you that you should, but do not come to a decision simply because other jurors think it is right, or simply to reach a verdict. Remember at all times that you are not partisans. You are judges--judges of the facts. Your sole interest is to seek the truth from the evidence in the case.

Third, if you need to communicate with me during your deliberations, you may send a note to me through the Court Security Officer, signed by one or more jurors. I will respond as soon as possible either in writing or orally in open court. Remember that you should not tell anyone--including me--how your votes stand numerically.

Fourth, your verdict must be based solely on the evidence and on the law which I have given to you in my instructions. Nothing I have said or done is intended to suggest what your verdict should be--that is entirely for you to decide.

Finally, I am giving you the verdict forms. A verdict form is simply the written notice of the decision that you reach in this case. You will take this form to the jury room, and complete it when you have reached a verdict. During the first six hours of deliberations, excluding meals and recesses outside your jury room, your decision must be unanimous. If you all agree, the verdict form must be signed by your foreperson and all members of the jury. After deliberating for six hours, excluding meals or recesses outside your jury room, then it is necessary that only seven of you agree upon the answers to the questions. In that case, the verdict must be signed by all seven jurors who agree. When you have reached a verdict, the foreperson will advise the Court Security Officer that you are ready to return to the courtroom.

DATED this 6th day of May, 1999.



_____________________________

MARK W. BENNETT

U. S. DISTRICT COURT JUDGE

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF IOWA

CENTRAL DIVISION



JAMES LARSON,
Plaintiff,

No. C 96-3138-MWB

vs.





VERDICT FORM

FARMERS COOPERATIVE ELEVATOR OF BUFFALO CENTER, IOWA, an Iowa Cooperative, and FARMERS COOPERATIVE COMPANY, LEDYARD, IOWA, an Iowa Cooperative,
Defendants.

____________________





I. LARSON'S CLAIMS

Question No. 1: On James Larson's claim of breach of contract against Buffalo Center Coop, as explained in Final Instruction No. 4, in whose favor do you find?

We, the Jury, find in favor of

_____ James Larson _____ Buffalo Center Coop



Question No. 2: If you found in favor of James Larson in response to Question No. 1, you must award $1 as nominal damages on his claim of breach of contract against Buffalo Center Coop.

$ ___________________





Date: ________________ Time: ________________



To be signed only if the verdict is unanimous.



____________________________ ____________________________

FOREPERSON JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR



To be signed by the jurors agreeing thereto after six hours or more of deliberation.



____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________

JUROR



Question No. 3: On James Larson's claim of breach of contract against Ledyard Coop, as explained in Final Instruction No. 4, in whose favor do you find?

We, the Jury, find in favor of

_____ James Larson _____ Ledyard Coop



Question No. 4: If you found in favor of James Larson in response to Question No. 3, you must award $1 as nominal damages on his claim of breach of contract against Ledyard Coop.

$ ___________________



Date: ________________ Time: ________________



To be signed only if the verdict is unanimous.



____________________________ ____________________________

FOREPERSON JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR



To be signed by the jurors agreeing thereto after six hours or more of deliberation.



____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________

JUROR

II. THE COOPS' COUNTERCLAIMS

Question No. 5: On Buffalo Center Coop's counterclaim for breach of contract against James Larson, as explained in Final Instruction No. 5, in whose favor do you find?

We, the Jury, find in favor of

_____ Buffalo Center Coop _____ James Larson



Question No. 6: If you found in favor of Buffalo Center Coop in response to Question No. 5, what amount of actual damages, if any, do you award Buffalo Center Coop on its counterclaim of breach of contract against James Larson?

$ ___________________



Date: ________________ Time: ________________



To be signed only if the verdict is unanimous.



____________________________ ____________________________

FOREPERSON JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR



To be signed by the jurors agreeing thereto after six hours or more of deliberation.



____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________

JUROR

Question No. 7: On Ledyard Coop's counterclaim for breach of contract against James Larson, as explained in Final Instruction No. 5, in whose favor do you find?

We, the Jury, find in favor of

_____ Ledyard Coop _____ James Larson



Question No. 8: If you found in favor of Ledyard Coop in response to Question No. 7, what amount of actual damages, if any, do you award Ledyard Coop on its counterclaim of breach of contract against James Larson?

$ ___________________



Date: ________________ Time: ________________



To be signed only if the verdict is unanimous.



____________________________ ____________________________

FOREPERSON JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR





To be signed by the jurors agreeing thereto after six hours or more of deliberation.



____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________ ____________________________

JUROR JUROR

____________________________

JUROR