Farmers Nat'l Bank v. Green River Dairy, LLC, 40101.
| Citation | 318 P.3d 622 |
| Decision Date | 24 January 2014 |
| Docket Number | No. 40101.,40101. |
| Court | United States State Supreme Court of Idaho |
| Parties | FARMERS NATIONAL BANK, Plaintiff–Counterdefendant–Appellant, v. GREEN RIVER DAIRY, LLC; Herculano J. Alves and Frances M. Alves, husband and wife, dba Green River Dairy, Defendants–Cross Defendants–Respondents, and Ernest Daniel Carter dba Carter Hay and Livestock; Lewis Becker; Jack MC Call, Defendants–Counterclaimants–Cross Claimants–Respondents, and Hull Farms, Inc.; Tim Thornton, Defendants–Respondents. |
FARMERS NATIONAL BANK, Plaintiff–Counterdefendant–Appellant,
v.
GREEN RIVER DAIRY, LLC; Herculano J. Alves and Frances M. Alves, husband and wife, dba Green River Dairy, Defendants–Cross Defendants–Respondents,
and
Ernest Daniel Carter dba Carter Hay and Livestock; Lewis Becker; Jack MC Call, Defendants–Counterclaimants–Cross Claimants–Respondents,
and
Hull Farms, Inc.; Tim Thornton, Defendants–Respondents.
No. 40101.
Supreme Court of Idaho,
Twin Falls, November 2013 Term.
Jan. 24, 2014.
[318 P.3d 623]
Coleman, Ritchie & Cluff, Twin Falls, for appellant. John Stephen Ritchie argued.
Gery W. Edson, P.A., Boise, for respondent Hull Farms, Inc. Gery Edson argued.
Wright Brothers Law Office, PLLC, Twin Falls, for respondents Ernest Daniel Carter and Jack McCall. Andrew Benjamin Wright argued.
White Peterson Gigray Rossman Nye & Nichols, P.A., Nampa, for respondent Lewis Becker.
Hollifield Law Office, Twin Falls, for respondent Tim Thornton.
HORTON, Justice.
This is an appeal from the district court's grant of declaratory judgment in favor of Green River Dairy, LLC, and four commodities dealers: Ernest Carter, Lewis Becker, Jack McCall, and Hull Farms (collectively “Sellers”). Appellant, Farmers National Bank (FNB), argues that the district court misinterpreted I.C. § 45–1802, a statutory lien provision, and, as a result, erred in granting Sellers a priority lien on collateral securing a loan previously made by FNB. We agree with FNB and vacate the district court's grant of declaratory judgment in favor of Sellers.
FNB made ten loans to Green River in 2008 and 2009 to support Green River's dairy operations.1 In connection with the loans, Green River granted FNB a security interest in its dairy cows. After executing a security agreement, FNB properly filed a UCC–1F, farm products financing statement, with the Idaho Secretary of State on May 12, 2008. All parties agree that FNB properly attached its interest in the collateral and properly perfected its interest through the filing of a financing statement.
Sellers sold commodities to Green River on credit, which included hay and/or wheat products, as feed for Green River's dairy cows. In conjunction with the sale of commodities to Green River, each seller filed lien notices with the Idaho Secretary of State pursuant to I.C. § 45–1804.
Green River defaulted on its loan repayment obligations to FNB. Accordingly, FNB took possession of Green River's dairy cows that secured FNB's loans. FNB sold the dairy cows at an auction held by Producers Livestock Marketing Association, the proceeds of which totaled $211,957.58. Despite FNB's perfected security interest in Green River's dairy cows, Sellers also claimed an interest in the dairy cows and the proceeds of the auction because the dairy cows had consumed liened agricultural products sold by Sellers to Green River.
FNB initiated this case on November 22, 2011, when it filed its Complaint for Declaratory Judgment. FNB asserted that Green River owed the bank $2,627,526.42. The amount claimed by FNB exceeded the total proceeds from the sale of the collateral. Further, FNB's complaint stated that pursuant to I.C. § 28–9–101, the bank had a senior perfected security interest in all dairy cows owned by Green River and the proceeds from the sale of those dairy cows. FNB's complaint asked the district court for: (1) a declaration of the respective priority rights of the parties in the proceeds of sale pursuant
[318 P.3d 624]
to I.C. § 28–9–101 and I.C. § 45–1801; (2) a declaration that FNB's UCC–1F interest in the collateral was properly perfected and a first priority encumbrance on Green River's dairy cows; and (3) a declaration that liens created pursuant to I.C. § 45–1802 in commodity sales do not extend to the dairy cows that consume the agricultural products subject to the lien. Each defendant named in FNB's complaint individually filed an answer.
On March 5, 2012, FNB filed a motion for summary judgment and a memorandum in support. On May 8, 2012, the district court issued its Memorandum Decision Re: Plaintiff's Motion for Summary Judgment. The district court framed the issue before it as “whether an agricultural commodity producer's lien created under I.C. § 45–1802 continues to exist upon the livestock that consume the agricultural product.” Ultimately, the district court held that commodity liens created pursuant to I.C. § 45–1802 on agricultural products did extend to livestock that consumed the liened agricultural products. Accordingly, the district court denied FNB's motion for summary judgment and granted declaratory judgment in favor of Sellers. The district court issued its final judgment on May 30, 2012. FNB timely appealed.
When reviewing a grant of summary judgment, this Court employs the same standard as the district court. Cnty. of Boise v. Idaho Cntys. Risk Mgmt. Program, Underwriters, 151 Idaho 901, 904, 265 P.3d 514, 517 (2011). Summary judgment is proper when “the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” I.R.C.P. 56(c). A “district court may grant summary judgment to a non-moving party even if the party has not filed its own motion with the court.” Aardema v. U.S. Dairy Sys., Inc., 147 Idaho 785, 793, 215 P.3d 505, 513 (2009) (quoting Harwood v. Talbert, 136 Idaho 672, 677, 39 P.3d 612, 617 (2001)). Additionally, “[t]his Court freely reviews the interpretation of a statute and its application to the facts.” St. Luke's Reg'l Med. Ctr., Ltd. v. Bd. of Comm'rs of Ada Cnty., 146 Idaho 753, 755, 203 P.3d 683, 685 (2009).
The primary issue presented in this appeal is whether an agricultural commodity lien that encumbers an agricultural product extends to livestock that consume the liened agricultural product. This hinges on the interpretation of I.C. § 45–1802, which provides:
An agricultural commodity producer or an agricultural commodity dealer who sells, or delivers under contract or bailment, an agricultural product has a lien on the agricultural product or the proceeds of the sale of the agricultural product as provided in section 45–1804, Idaho Code. The lien created in this chapter may attach regardless of whether the purchaser uses the agricultural product purchased to increase the value of his livestock or whether he uses the agricultural product purchased to maintain the value, health or status of his livestock without actually increasing the value of his agricultural product.
The Legislature enacted what would become I.C. § 45–1802 in 1983; as originally enacted the statute consisted of only the first sentence. 1983 Idaho Sess. L. ch. 202, § 1, p. 550. However, in 1989 the Legislature amended I.C. § 45–1802 by adding the second sentence. 1989 Idaho Sess. L. ch. 299, § 1, p. 746–47.
“Agricultural product” is defined as:
[W]heat, corn, oats, barley, rye, lentils, soybeans, grain sorghum, dry beans and peas, beans, safflower, sunflower seeds, tame mustards, rapeseed, flaxseed, leguminous seed or other small seed, or any other agricultural commodity, including any of the foregoing, whether cleaned, processed, treated, reconditioned or whether mixed, rolled or combined in any fashion or by any means to create a product used as animal, poultry or fish feed.
[318 P.3d 625]
I.C. § 45–1801(1). Notably, livestock are not included in the definition of “agricultural product.”
B. Statutory liens on agricultural products created under I.C. § 45–1802 do not continue in livestock that consume the liened agricultural products.
The district court concluded that I.C. § 45–1802 was unambiguous and provided that liens created by I.C. § 45–1802 continued in livestock that consumed liened agricultural products. The district court relied heavily on the term “uses” from the second sentence and referred to it as a “triggering verb” which, when read in context, created a lien in livestock that consume the liened agricultural product.
“The objective of statutory interpretation is to give effect to legislative intent.” State v. Yzaguirre, 144 Idaho 471, 475, 163 P.3d 1183, 1187 (2007). “Such intent should be derived from a reading of the whole act at issue.” St. Luke's Reg'l Med. Ctr., Ltd., 146 Idaho at 755, 203 P.3d at 685. “Statutory interpretation begins with ‘the literal words of the statute, and this language should be given its plain, obvious, and rational meaning.’ ” Seward v. Pac. Hide & Fur Depot, 138 Idaho 509, 511, 65 P.3d 531, 533 (2003) (quoting Jen–Rath Co. v. Kit Mfg. Co., 137 Idaho 330, 335, 48 P.3d 659, 664 (2002)). “If the statutory language is unambiguous, ‘the clearly expressed intent of the legislative body must be given effect, and there is no occasion for a court to consider rules of statutory construction.’ ” St. Luke's Reg'l Med. Ctr., Ltd., 146 Idaho at 755, 203 P.3d at 685 (quoting Payette River Prop. Owners Ass'n v. Bd. of Comm'rs of Valley Cnty., 132 Idaho 551, 557, 976 P.2d 477, 483 (1999)). This is because “[t]he asserted purpose for enacting the legislation cannot modify its plain meaning.” Verska v. Saint Alphonsus Reg'l Med. Ctr., 151 Idaho 889, 892–93, 265 P.3d 502, 505–06 (2011). A statute is ambiguous where:
[T]he meaning is so doubtful or obscure that reasonable minds might be uncertain or disagree as to its meaning. However, ambiguity is not established merely because different possible interpretations are presented to a court. If this were the case then all statutes that are the subject of litigation could be considered ambiguous.... [A] statute is not ambiguous merely because an astute mind can devise more than one interpretation of it.
BHA Investments, Inc. v. City of Boise, 138 Idaho 356, 358, 63 P.3d 482, 484 (2003) (internal citations and quotations omitted).
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