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Divided COA rules against grain farmer in statutory dispute

December 21, 2018

A Putnam County farmer will only be partially compensated for grain he deposited with a failed grain elevator after a divided panel of the Indiana Court of Appeals rejected his reading of the relevant compensation statute.

Between 2009 and 2016, New Salem farmer Dick Sears deposited corn and soybeans with Cline Grain, Inc., which was licensed with the Indiana Grain Buyers and Warehouse Licensing Agency. When Cline failed financially, IGBWLA took over in October 2016 to determine payment owed to depositors, including Sears.

The agency determined that as defined by Indiana Code § 26-3- 7-2(5), Sears was not considered a “claimant” for grain delivered more than 12 months prior to Cline’s failure. Using an adjustment based on a statute enacted after an administrative law judge denied Sears’ appeals, the “ultimate authority” determined Sears was entitled to payment for grain delivered after Oct. 8, 2014, but not for grain delivered before that date.

Following a trial court’s denial of his petition for judicial relief, Sears appealed, arguing the Putnam Circuit Court improperly determined that the IGBWLA’s interpretation of the term “claimant” was not arbitrary or capricious.

Prior to 2010, the statute defined a “claimant” as “a person that is unable to secure satisfaction of the financial obligations due from a licensee under this chapter for grain that has been delivered to the licensee for sale or for storage under a bailment.” Then in March 2010, the Indiana Legislature amended the definition of “claimant” to “a person that is unable to secure satisfaction within the twelve (12) months following delivery of the financial obligations due from a licensee under this chapter for grain that has been delivered to the licensee for sale or for storage under a bailment.”

On appeal, Sears argued the 2010 amendment shows that what is being “delivered” are financial obligations, which arise when the producer asks the licensee to be paid. However, the IGBWLA argued that what was being “delivered” was grain, such that claims would not be paid for grain that was delivered more than twelve months before the licensee failed.

“As explained below, however, we find that Sears’s position strings together words in the Claimant Statute – ‘delivery of financial obligations’ – which were not intended to be connected in such a way, and instead, we find that the IGBWLA’s determination was correct,” Judge Robert Altice wrote.

“Sears’s position – which maintains that the Claimant Statute concerned ‘delivery of financial obligations,’ not delivery of grain – fails to account for the fact that the prior version of the statute read ‘unable to secure satisfaction of financial obligations due from a licensee,’” Altice continued. “…That is, it was ‘financial obligations’ that were ‘satisfied.’”

The appellate court thus split in finding the trial court did not err in its determination that the IGBWLA’s interpretation was not arbitrary and capricious, was not contrary to constitutional rights, and was supported by the evidence.

But Judge Margret G. Robb, dissenting in a separate opinion, argued, among other things, that the majority’s reading of “claimant” was too narrow and served to “exclude producers the statute intended to compensate.”

“Therefore, I would reverse the judgment of the trial court and remand this cause for further evidence regarding the specifics of Sears’ dealings with Cline under the deferred pricing agreement,” Robb wrote in Dick Sears v. Indiana Grain Buyers and Warehouse Licensing Agency, 18A-MI-883.

 

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