807 F.2d 712 (8th Cir. 1986), 85-2534, Beef Nebraska, Inc. v. United States

Docket Nº:85-2534.
Citation:807 F.2d 712
Party Name:BEEF NEBRASKA, INC., a Nebraska Corporation, Petitioner, v. UNITED STATES of America, United States Department of Agriculture, Respondent.
Case Date:December 10, 1986
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
FREE EXCERPT

Page 712

807 F.2d 712 (8th Cir. 1986)

BEEF NEBRASKA, INC., a Nebraska Corporation, Petitioner,

v.

UNITED STATES of America, United States Department of

Agriculture, Respondent.

No. 85-2534.

United States Court of Appeals, Eighth Circuit

December 10, 1986

Submitted Oct. 15, 1986.

Page 713

Steven D. Johnson, Omaha, Neb., for petitioner.

Raymond W. Fullerton, Washington, D.C., for respondent.

Before FAGG, BOWMAN and TIMBERS, [*] Circuit Judges.

TIMBERS, Circuit Judge.

Petitioner Beef Nebraska, Inc. ("Beef Nebraska"), a "packer" subject to the provisions of the Packers and Stockyards Act, 7 U.S.C. Secs. 181-231 (1982 & Supp. III 1985) ("the Act"), petitions this court to set aside a decision and order entered November 26, 1985 by respondent United States Department of Agriculture ("USDA"), Donald A. Campbell, Judicial Officer, ordering Beef Nebraska to cease and desist from paying for livestock with checks drawn on remote, distant, or country

Page 714

bank accounts. The judicial officer held that Beef Nebraska's use of checks drawn on a distant bank to pay for livestock often lengthened the check-clearing process by at least one day, and hence delayed the "collection of funds" in violation of Sec. 409(c) of the Act, 7 U.S.C. Sec. 228b(c) (1982) ("Sec. 228b(c)"). In its petition, Beef Nebraska claims, first, that its use of checks drawn on the distant bank did not delay the "collection of funds" within the meaning of Sec. 228b(c), and, second, that an administrative law judge, in denying its motions to require USDA to answer certain interrogatories, deprived it of its right to pre-hearing discovery under the United States Constitution and certain statutes and regulations. 1

We hold that Beef Nebraska's use of checks drawn on the distant bank delayed the collection of funds in violation of the unambiguous proscription of Sec. 228b(c). We further hold that the administrative law judge did not deprive Beef Nebraska of its right to obtain answers to its interrogatories, to whatever extent such right exists. We deny the petition for review and affirm the order.

I.

Beef Nebraska conceded at oral argument before us that, if the judicial officer interpreted Sec. 228b(c) correctly, the record before him contained sufficient evidence to support the conclusion that Beef Nebraska violated the Act. Beef Nebraska thus does not dispute the facts, but rather disputes the judicial officer's interpretation of Sec. 228b(c). We summarize only those facts believed necessary to an understanding of the issues raised in the petition.

Beef Nebraska is engaged in the business of buying livestock in commerce for slaughter and sale. Hence it is a "packer" subject to the provisions of the Act. 7 U.S.C. Sec. 191 (1982). Its sole processing plant is in Omaha, Nebraska. Its daily purchases of livestock average $305,000. They are from livestock sellers located throughout the midwestern United States.

The acts leading to the instant petition began in July 1982. At that time Beef Nebraska's use of a new checking account to pay livestock sellers often increased the period of time between the point at which it tendered a check to a seller and the point at which the seller had unconditional access to the funds pursuant to the check. Prior to July 1982, Beef Nebraska paid livestock sellers with checks drawn on its ordinary corporate account at the Omaha National Bank ("ONB"). In view of ONB's location in Omaha, the Federal Reserve System classifies it as a "city" bank. Livestock sellers paid with checks drawn on Beef Nebraska's ONB account would deposit such checks in their own banks. These banks often granted the sellers provisional credit. Provisional credit became final only after the checks cleared Beef Nebraska's ONB account. When a check drawn on that account was presented to the Federal Reserve Bank in Omaha ("the Federal Reserve Bank"), the check cleared at a time determined under Federal Reserve System schedules applicable to city banks. At that time the funds became available to the depositing bank. In general, under these schedules a check drawn on Beef Nebraska's ONB ordinary corporate account cleared on the same day that the check was presented to the Federal Reserve Bank. When the checks were presented to commercial clearinghouse associations--private collection systems with which ONB maintained agreements for such purposes--the checks cleared at least as quickly.

Page 715

Presentments of checks drawn on the accounts of ONB's customers are made throughout the day at the Federal Reserve Bank. The same is true of checks presented to several commercial clearinghouse associations and by other banks directly to ONB. These numerous presentments prevent ONB from predicting accurately the value of checks which will clear against its customers' ordinary checking accounts on any given day. As a result, Beef Nebraska either had to maintain large idle balances in its checking account or had to pay overdraft charges on checks drawn on insufficient funds. To avoid this dilemma, Beef Nebraska opened a "controlled disbursement" checking account ("controlled account") at ONB on June 28, 1982. A check drawn on the controlled account appeared on its face to have been drawn on the State Bank of Palmer ("the Palmer Bank"), a small bank located in Palmer, Nebraska, 125 miles west of Omaha. In fact, however, pursuant to an agreement between ONB and the Palmer Bank, ONB would intercept the check at the Federal Reserve Bank, process the check, and debit its customer's controlled account. The Palmer Bank never received or processed the check. In view of its remote geographic location, the Palmer Bank is classified by the Federal Reserve...

To continue reading

FREE SIGN UP