Psc v. Minnesota Grain, Inc.

• Decision Date: 22 October 2008
• Docket Number: No. 20080068.,20080068.
• Citation: 756 N.W.2d 763,2008 ND 184
• Parties: PUBLIC SERVICE COMMISSION, Petitioner and Appellee v. MINNESOTA GRAIN, INC., Respondent and Hartford Fire Insurance Company, Respondent and Appellee Jim Broten, Eric Broten, and Broten Farms, Appellants.
• Court: North Dakota Supreme Court

756 N.W.2d 763

2008 ND 184

PUBLIC SERVICE COMMISSION, Petitioner and Appellee v. MINNESOTA GRAIN, INC., Respondent and Hartford Fire Insurance Company, Respondent and Appellee

Jim Broten, Eric Broten, and Broten Farms, Appellants.

No. 20080068.

Supreme Court of North Dakota.

October 22, 2008.

William W. Binek, Special Assistant Attorney General, Bismarck, ND, for petitioner and appellee.

John J. McDonald (argued) and Rodger Allen Hagen (on brief), Meagher & Geer, PLLP, Minneapolis, MN, for respondent and appellee.

Sarah M. Vogel (argued) and Derrick L. Braaten (appeared), Sarah Vogel Law Firm, P.C., Bismarck, ND, for appellants.

Gary R. Wolberg, Fleck, Mather & Strutz, Bismarck, ND, for amicus curiae North Dakota Grain Dealers.

CROTHERS, Justice.

[¶ 1] Jim Broten, Eric Broten, and Broten Farms (collectively "Brotens") appeal from a district court order arising in connection with insolvency proceedings commenced by the North Dakota Public Service Commission ("PSC") against Minnesota Grain, Inc. ("Minnesota Grain"). The district court found Minnesota Grain was an insolvent grain warehouseman under N.D.C.C. ch. 60-04 and appointed the PSC to serve as trustee of the trust fund created for the benefit of Minnesota Grain receiptholders. Brotens appeal from the district court order approving the trustee's report and discharging the trustee, which determined Brotens' claims were ineligible for benefits under the trust fund. We affirm, holding the PSC did not err in concluding that Brotens were not entitled to payment from the trust fund established under N.D.C.C. ch. 60-04.

I

[¶ 2] In 2001, the PSC issued a public warehouse license under N.D.C.C. ch. 60-02 to Minnesota Grain of Eagan, Minnesota, to operate a grain warehouse in Rhame, North Dakota. Minnesota Grain obtained the requisite bond under N.D.C.C. § 60-02-09 from Hartford Fire Insurance Co. ("Hartford Fire"), initially in the amount of $75,000. In 2003, this bond amount was increased to $100,000. Minnesota Grain also had a facility in East Grand Forks, Minnesota, which was neither licensed nor bonded as a warehouse under North Dakota law.

[¶ 3] In March 2007, the PSC applied to the district court for an order finding Minnesota Grain insolvent, appointing the PSC as trustee of the Minnesota Grain estate, and joining the surety Hartford Fire as a respondent in the action. In April 2007, the court granted the PSC's application. In June 2007, the PSC, acting as trustee, filed its report and recommendation with the court for approval. The PSC's report in part rejected five claims, including Brotens' claims, as ineligible for N.D.C.C. ch. 60-04 protections, because their grain had been sold and delivered to the Minnesota Grain facility in East Grand Forks, Minnesota. Specifically, the PSC's report and recommendation stated:

"8. The Commission recommends that the five claims in the total amount of $467,920.69 for grain purchased by Minnesota Grain, Inc. through its East Grand Forks, Minnesota [facility] for delivery to East Grand Forks, Minnesota be denied. Claims for purchases of grain made by Minnesota Grain, Inc. through its East Grand Forks, Minnesota facility are Minnesota transactions that must be submitted to the Minnesota Department of Agriculture to be determined under Minnesota law. The surety bond on file with the Commission covers only grain purchases made by Minnesota Grain, Inc. through its Rhame North Dakota facility licensed under North Dakota law."

[¶ 4] The PSC also stated in its report and recommendation that there were no grain assets in the Minnesota Grain estate and that the $100,000 surety bond on file with the PSC was "needed to redeem outstanding claims for grain purchased for cash by Minnesota Grain, Inc. through its Rhame, North Dakota facility." Regarding these purchases, the PSC report stated that payments to valid claimants would be prorated for payment with available funds from the bond proceeds and that each claimant would receive "approximately 30% of its valid claim," but that there were insufficient funds to pay interest on the claims.

[¶ 5] In August 2007, Brotens filed an objection to the approval and adoption of the PSC's report, which determined Brotens' claims were ineligible for payments under the trust fund. Brotens requested the court reject the PSC's report and recommendation. In an affidavit submitted with Brotens' objection, Jim Broten stated that Brotens began selling barley to Minnesota Grain after he had received calls at his farm near Dazey, North Dakota, around harvest time in 2005 from Minnesota Grain officials. Broten said that grain was initially picked up from the Broten farms with Minnesota Grain trucks, but that after "about June 2006," Minnesota Grain asked Jim Broten to deliver the grain using his trucks because Minnesota Grain was "short of trucks." Broten received a greater price per bushel to cover trucking costs, but was sometimes paid separately for freight. Minnesota Grain, however, occasionally sent its own trucks.

[¶ 6] Regardless of who hauled the grain, all barley sold by Brotens to Minnesota Grain was delivered to the Minnesota Grain facility in East Grand Forks, Minnesota, where the grain was re-weighed and graded, and Broten received scale tickets. Broten later received purchase settlement statements from "Minnesota Grain, Inc.— EGF Elevator," bearing an East Grand Forks address. Broten stated the barley was processed at the East Grand Forks mill into pearled barley or barley flour. Broten asserts he never agreed to store grain in Minnesota and all transactions with Minnesota Grain were outright sales.

[¶ 7] On August 20, 2007, the district court held a hearing, and additional briefing was permitted. In January 2008, the district court approved the PSC's report and recommendation, upholding Brotens' ineligibility. In its memorandum opinion, the court explained:

"[Brotens] assert their claims should be included and be eligible for any payments from the trust fund in this case. The Court agrees with the PSC's analysis that the bond required under N.D.C.C. § 60-02-09 applies only to warehouses licensed in North Dakota. N.D.C.C. § 60-02-07 requires a license must be obtained for each public warehouse in operation in this state, and N.D.C.C. § 60-02-09(3) provides for the bond to run to the State for the benefit of persons storing or selling grain in the warehouse. Thus, the statute requires that the bond benefit persons storing or selling grain in such warehouse, and the facts are undisputed that Broten[s] ... did not store or sell grain in the [Rhame] elevator."

The district court further concluded, "The bond covers the warehouse operated by Minnesota Grain at Rhame, North Dakota. Neither the statutes nor the warehouse bond extend coverage to sales made by the North Dakota growers to facilities owned by the [sic] Minnesota Grain outside of North Dakota."

II

[¶ 8] The dispositive issue is whether Brotens are "noncredit-sale receiptholders of the insolvent warehouseman" entitling them to payment by the PSC from the trust fund created under N.D.C.C. § 60-04-03.1.

A

[¶ 9] Generally, "[s]tatutory interpretation is a question of law and fully reviewable on appeal." Farmers Union Mut. Ins. Co. v. Associated Electric & Gas Ins. Servs. Ltd., 2007 ND 135, ¶ 9, 737 N.W.2d 253. "Words in a statute are given their plain, ordinary, and commonly understood meaning, unless defined by statute or unless a contrary intention plainly appears. N.D.C.C. § 1-02-02. Statutes are construed as a whole and are harmonized to give meaning to related provisions. N.D.C.C. § 1-02-07." Farmers Union, at ¶ 9 (quotations omitted). This Court "harmonize[s] statutes when possible to avoid conflict between them." See Haugenoe v. Workforce Safety & Ins., 2008 ND 78, ¶ 8, 748 N.W.2d 378.

[¶ 10] "Our interpretation of a statute `must be consistent with legislative intent and done in a manner [to further] the policy goals and objectives of the statutes.'" Haugenoe, 2008 ND 78, ¶ 8, 748 N.W.2d 378 (quoting Rojas v. Workforce Safety and Ins., 2006 ND 221, ¶ 13, 723 N.W.2d 403). "We presume the Legislature did not intend an unreasonable result or unjust consequence." Id. (quotation omitted). Further, this Court has explained, "The law relating to grain insolvencies was intended for the benefit of claimants, and must be construed with sufficient liberality to effectuate its purpose of settling the legitimate demands of owners of grain delivered to an insolvent elevator without doing injury to those who are liable." Public Service Comm'n v. Wimbledon Grain Co., 2003 ND 104, ¶ 21, 663 N.W.2d 186 (emphasis added) (citing North Dakota Pub. Serv. Comm'n v. Central States Grain, Inc., 371 N.W.2d 767, 779 (N.D.1985); North Dakota Pub. Serv. Comm'n v. Valley Farmers Bean Ass'n, 365 N.W.2d 528, 544 (N.D.1985); State v. Hoover Grain Co., 63 N.D. 344, 352, 248 N.W. 275, 278 (1933)).

B

[¶ 11] Chapter 60-04, N.D.C.C., addresses insolvent grain warehousemen and provides "an insolvency procedure designed to provide a prompt method for receipt holders to recover their claims." North Dakota Public Serv. Comm'n v. Jamestown Farmers Elevator, Inc., 422 N.W.2d 405, 407 (N.D.1988) (internal quotation omitted). Section 60-04-02, N.D.C.C., which establishes when a warehouseman is considered insolvent, states: "A licensee is insolvent when the licensee refuses, neglects, or is unable upon proper demand to make payment for grain purchased or marketed by the licensee or to make redelivery or payment for grain stored." (Emphasis added.) Upon any warehouseman's insolvency, N.D.C.C. § 60-04-03, provides that the PSC "shall apply to the district court of a county in which the warehouseman operates a licensed warehouse for authority to take all action necessary and appropriate to secure and act as trustee of the trust fund described in section 60-04-03.1." (Emphasis added.)

[¶ 12] Section 60-04-03.1, N.D.C.C., establishes the trust fund to be...