Brundidge Banking Co. v. Pike County Agr. Stabilization and Conservation Committee

• Decision Date: 01 May 1990
• Docket Number: No. 89-7072,89-7072
• Citation: 899 F.2d 1154
• Parties: BRUNDIDGE BANKING COMPANY; Max C. Sconyers; and Lottie H. Sconyers, Plaintiffs-Appellees, v. PIKE COUNTY AGRICULTURAL STABILIZATION AND CONSERVATION COMMITTEE, etc., W.O. Hixon; Harold F. Lee; Jim M. Wilson, all in their official capacities, etc., Joe Stevens, in his official capacity, etc.; James H. Reeves, etc., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1154

899 F.2d 1154

BRUNDIDGE BANKING COMPANY; Max C. Sconyers; and Lottie H.

Sconyers, Plaintiffs-Appellees, v. PIKE COUNTY AGRICULTURAL STABILIZATION AND CONSERVATION

COMMITTEE, etc., W.O. Hixon; Harold F. Lee; Jim M. Wilson,

all in their official capacities, etc., Joe Stevens, in his

official capacity, etc.; James H. Reeves, etc., et al.,

Defendants-Appellants.

No. 89-7072.

United States Court of Appeals, Eleventh Circuit.

May 1, 1990.

James E. Wilson, U.S. Atty., Montgomery, Ala., Kenneth E. Vines, John F. Cordes, Matthew M. Collette, U.S. Dept. of Labor, Civ. Div., Appellate Section, Washington, D.C., for defendants-appellants.

O.K. McDowell, Brundidge, Ala., pro se.

John B. Scott, Jr., Capell, Howard, Knabe & Cobbs, Montgomery, Ala., John B. Crawley, Crawley & Jarrell, Troy, Ala., Alvin T. Prestwood, Frank Caskey, Capouano, Wampold, Prestwood & Sansone, Montgomery, Ala., for plaintiffs-appellees.

Appeal from the United States District Court for the Middle District of Alabama.

Before JOHNSON, Circuit Judge, RONEY ^*, Senior Circuit Judge, and MELTON ^**, District Judge.

MELTON, District Judge:

This appeal from the order of the district court setting a permanent peanut quota on a particular tract of land concerns the scope of judicial review and remedy for an aggrieved party who maintains that the peanut quota applied to the parts of a reconstituted farm was determined erroneously.

A tract of land known as the Ramage Place, situated in Pike County, Alabama, and listed in records of the Agricultural Stabilization and Conservation Service ("ASCS") as tract 823, came into the possession of O.K. McDowell, a defendant below who does not join this appeal, by way of inheritance in 1976. McDowell combined tract 823 with his other properties. ASCS identified the combined property as FSN G-56 and assigned a peanut quota to the farm as an entirety. In 1982, McDowell executed a mortgage to appellee Brundidge Bank ("the Bank") on the tract 823 portion of his farm; he subsequently lost the tract through foreclosure when he defaulted on his payments.

The underlying controversy grows out of the events surrounding the Bank's preparation for foreclosure and sale of tract 823. The Bank sought advice on the method by which appellant Pike County Agricultural Stabilization and Conservation Committee ("County Committee") would reallocate the peanut quota for FSN G-56 when tract 823 was separated from the farm through the foreclosure proceeding. The Bank suggested that the County Committee use the cropland method for allocating the quota. This method divides the quota assigned to the entire property using the proportion of cropland in the reconstituted farms relative to the amount of cropland in the original farm. If the cropland method was used to reallocate the quota for FSN G-56, tract 823 would receive a substantial share of the quota. The Bank preferred the cropland method because the alternative, the contribution method, would allocate the quota on the basis of a proportion derived from a comparison of the quota allotment, normal crop acreage and preceding year planted acreage that each piece of property being separated had at the time they were combined with the current quota allotment, normal crop acreage and preceding year planted acreage of the entire property. The Bank viewed the state of the records concerning FSN G-56 as too chaotic and uncertain to calculate the quota for the tract 823 portion of the entire property. ¹ The Bank faced the distinct possibility that the contribution method would result in no quota for tract 823, an event that would diminish significantly the property's market value.

On May 5, 1986, the Bank made its initial inquiry of the Pike County ASCS Office. Officials of that agency advised the Bank that the cropland method would be used and they later estimated a quota using 1985 figures. A few days after the Bank received an estimated quota an official of the County Office called the Bank's chief executive officer and retreated from the previous representation that the cropland method would be used. Instead, the Bank was informed, a historical method would be employed and the tract would receive no quota. Discussions between the Bank and the County Executive Director culminated in the identification of regulatory authority that would permit the County Committee to impose the cropland method as necessary for a fair and equitable distribution under the circumstances. The Bank requested to meet with the County Committee for the purpose of presenting its case for the cropland method. At a formal hearing held May 21, 1986, the County Committee determined that it would use the cropland method, apparently grounding its decision on its reading of a manual based on 7 C.F.R. Sec. 719.8.

Following the foreclosure sale of tract 823 on May 28, 1986, at which the Bank bought the property, the Bank credited McDowell's account with the sale price less foreclosure expenses. This left a debt of approximately nine thousand dollars, which the Bank collected through a detinue action for cows previously pledged as additional security for the loan. The Bank communicated with the County Executive Director on three separate occasions during June and July to fix more precisely the amount of the quota that tract 823 would receive. The last of these communications, on July 29, 1986, was in anticipation of a sale of the property to appellees Max C. and Lottie H. Sconyers. After receiving confirmation of an estimated quota calculated by reference to the cropland method, the Bank sold tract 823 to the Sconyers.

McDowell subsequently registered his complaint with the County Committee that the contribution method should have been used to allocate the quota. The County Committee met first with McDowell on August 13, 1986, and then with him and the Bank's representatives two days later. The County Committee affirmed its decision to use the cropland method.

Timely appeal by McDowell to the Alabama State Agricultural Stabilization and Conservation Committee ("State Committee") followed. On October 9, 1986, the State Committee reversed the County Committee and directed that the contribution method should have been used. The Bank then took timely appeal to the Deputy Administrator of State and County Operations ("DASCO") of the ASCS, U.S. Department of Agriculture. On May 11, 1987, DASCO affirmed the State Committee's decision.

Suit in the district court ensued. Appellees/plaintiffs originally asserted jurisdiction pursuant to 7 U.S.C. Sec. 1365, the exclusive provision for statutory review of quota allocation decisions, and 28 U.S.C. Sec. 1331. It became apparent during the progress of the action, however, that 7 U.S.C. Sec. 1365 no longer applied to peanut quota determinations for the 1986 through 1990 crops by the terms of the Food Security Act of 1985, Pub.L. 99-198, tit. VII, Sec. 701(4), 99 Stat. 1430 (1985). ² The district court permitted amendment of the complaint to assert jurisdiction under the Administrative Procedure Act, 5 U.S.C. Secs. 701, et seq. Appellants/defendants unsuccessfully argued that 7 U.S.C. Sec. 1385 precluded any judicial review whatsoever, but the district court did find that the section reduced the scope of its review.

On the merits of the suit, the district court declined to address whether the State Committee and DASCO were correct in imposing the contribution method in lieu of the County Committee's decision to use the cropland method. Instead, the district court observed that DASCO found that the County Committee had "erred" in promising use of the cropland method. This admission, the district court reasoned, dovetailed with the program of reserve for the correction of error, 7 C.F.R. Sec. 729.322. The district court ordered relief out of this reserve in the form of a permanent quota for tract 823.

The central issue on appeal is the propriety of the relief granted by the district court. We reverse, and remand for further proceedings. Section 729.322 does not independently authorize the relief obtained below. The decision by DASCO to affirm the State Committee's reversal of the County Committee should be subject to review unconstrained by 7 U.S.C. Sec. 1385, a review best left to the district court in the first instance.

We begin by an examination of section 729.322. Titled "Reserve for corrections," this regulation has two parts. In subsection 729.322(a), directions are given for the calculation from year to year of a reserve established "[f]or purposes of correcting quota allocation errors...." Subsection 729.322(b) provides that "in establishing the reserve, the State committee shall hold an amount that is estimated to be sufficient to satisfy the need to correct errors based on past history of appeals and other appropriate factors." This subsection further describes how a state committee should recalculate quota allocations if the reserve is inadequate.

A natural reading of section 729.322 suggests that it provides where to turn to find an available quota allocation in order to correct an error, but not how to determine when an error that is eligible for such an allocation has been made. While the past history of appeals is stated as a factor to consider in the calculation of the reserve, the regulation does not reveal how the appeals process culminates in an award from the reserve. It would seem likely that other sections must be consulted to uncover the criteria for an award from the reserve.

The district court's reasoning apparently finds implied authority for making an award in section 729.322 and applies an estoppel theory in doing so. The core of the argument is completely stated in a few brief passages that are worth repeating here:

Where, as here, a quota is divided more than six years after the underlying property was first combined, 7 C.F.R. 719.8 expressly precludes use of the cropland method by the County Committee without the State Committee's...