Vennerberg Farms, Inc. v. IGF Ins. Co., 86-506

Decision Date13 May 1987
Docket NumberNo. 86-506,86-506
PartiesVENNERBERG FARMS, INC., Appellee, v. IGF INSURANCE COMPANY, Appellant.
CourtIowa Supreme Court

Charles F. Becker and Ronald L. Anderson of Dickinson, Throckmorton, Parker, Mannheimer & Raife, Des Moines, for appellant.

Gale E. Juhl of Morain, Burlingame, Pugh & Juhl, West Des Moines, for appellee.

Considered by REYNOLDSON, C.J., and McGIVERIN, LARSON, LAVORATO, and NEUMAN, JJ.

NEUMAN, Justice.

This appeal arises from a suit on a grain dealer's bond in which the district court entered judgment in favor of the claimant, Vennerberg Farms, Inc. (Vennerberg), against the surety, IGF Insurance Company (IGF). At the heart of the controversy is the question whether the limitation period for filing claims against the surety commences from the date of a hearing examiner's proposed order revoking the grain dealer's license or from the date such order is affirmed by the agency. The district court held that the latter date applied and we agree, thereby affirming the trial court.

By way of background, we note that the legislature has delegated the licensing and regulation of grain dealers and bonded warehouses for agricultural products to the Iowa State Commerce Commission by virtue of Iowa Code chapters 542 and 543 (1983). 1 The statutory scheme provides the following procedure for filing claims against dealers whose licenses have been revoked:

Upon revocation, termination or cancellation of a grain dealer license, any claim for the purchase price of grain against the grain dealer shall be made in writing and filed with the grain dealer and with the surety on the grain dealer bond within 120 days after revocation, termination or cancellation. Failure to make this timely claim shall relieve the surety of all obligation to the claimant....

Upon revocation of a grain dealer license, the commission shall cause notice of such revocation to be published once each week for two consecutive weeks in a newspaper of general circulation within the state of Iowa.... The notice shall state the name and address of the grain dealer, the effective date of revocation, and the name and address of the surety on the grain dealer bond. The notice shall also state that any claims against the grain dealer shall be made in writing and sent by ordinary mail or delivered personally within 120 days after revocation to the grain dealer and the surety on the grain dealer bond.

Iowa Code § 542.12 (1983).

With this statutory framework in mind, we turn to the facts stipulated by the parties before the district court. Vennerberg held deferred payment contracts with Stennett Elevator, Inc. of Red Oak, Iowa, for corn delivered and sold from May 1983 to September 1983 totaling $85,279.93. When the contracts were executed, Stennett (who is not a party to this action) was a grain dealer licensed in accordance with chapter 542 and IGF was the surety on its grain dealer's bond.

In September 1983, the head of the grain warehouse division of the Iowa State Commerce Commission filed an information against Stennett Elevator alleging that it was in violation of a number of licensing requirements including, most significantly, a quality deficiency in more than 250,000 bushels of grain.

An evidentiary hearing was held and on November 23, 1983, an Iowa State Commerce Commission hearing examiner issued a ruling captioned "Proposed Order Revoking License" which stated:

1. [Stennett] Warehouse License No. W-3900 and Grain Dealer License No. GD-2286 are hereby revoked. Licensee is prohibited from removing or permitting the removal of grain from its facilities and from purchasing or otherwise acquiring grain.

2. This order shall become the final order of the Commission unless appealed to the Commission within 20 days of the date of issuance.

On December 2, 1983, Stennett Elevator filed a notice of appeal from the foregoing decision and contemporaneously sought a stay order. By order dated December 7, 1983, the commerce commission denied the stay 2 and provided an accelerated briefing schedule for the appeal. On December 23, 1983, the commerce commission issued an "Order Affirming Proposed Decision." In accordance with section 542.12, the commission then published the following notice in the Red Oak Express, a newspaper of general circulation in Red Oak, Iowa:

Pursuant to the requirements of sections 542.12 and 543.14, Code of Iowa, 1983, all interested persons are hereby notified of the revocation of grain dealer license no. GD-2286 and warehouse license no. W-3900 held by Stennett Elevator, Inc., Stennett, Iowa, effective December 14, 1983, the date on which the Iowa State Commerce Commission was confirmed as receiver of the above-named licensee. 3 The surety on the grain dealer and warehouse bond is IGF Insurance Company, 2882--106th Street, Des Moines, Iowa 50322.

Any claims against the former grain dealer and warehouseman must be in writing and sent by ordinary mail or delivered personally within 120 days after revocation (April 12, 1984) to the Iowa State Commerce Commission, Grain Warehouse Division, Lucas State Office Building, Des Moines, Iowa 50319, the above-named licensee and the surety company.

Vennerberg's written claim, dated March 29, 1984, was received by IGF on April 2, 1984. IGF denied the claim as untimely taking the position that Stennett Elevator's license had been revoked November 23, 1983, and therefore the claim period expired March 22, 1984. Vennerberg filed a petition at law claiming IGF had breached its obligation under the terms of its grain dealer's bonds on file with the commerce commission. IGF generally denied the allegations of the petition and a trial to the court followed.

Ruling in favor of Vennerberg, the district court held that for purposes of determining the claims limitation period of section 542.12, the effective date of revocation of the licenses of Stennett Elevator was December 23, 1983, the date the commerce commission affirmed the proposed order revoking the licenses. On appeal, IGF advances five arguments supporting its claim that the district court erred: (1) the specific language of the hearing examiner's order compels a contrary holding; (2) the district court erroneously equated "effectiveness" with "finality" of the agency order; (3) a judgment appealed to a "superior tribunal" should be given effect as of the date of its entry in the "lower tribunal;" (4) Vennerberg is bound by its assertion in a prior action that the license was revoked in November 1983; and (5) policy considerations favor commencement of the claims period from the earlier date. We shall briefly address each argument in turn.

1. IGF correctly argues that the clear language of section 542.12 provides for commencement of the 120-day claims limitation period "upon revocation, termination or cancellation of a grain dealer license," not after the time for appeal has expired, or upon affirmance of the hearing examiner's proposed order or any other time. Such an analysis, however, begs the ultimate question before us: on what date was Stennett's license revoked? In answer to that question IGF points to the clear language of the hearing examiner's November 23 order which states that the licenses "are hereby revoked." Taken out of context, such an order might arguably be deemed to have immediate effect. But the directive was part of a ruling captioned "Proposed Order Revoking License" (emphasis added) containing equally explicit language that it "shall become the final order of the commission unless appealed...." (Emphasis added). When read in context, the prospective application of the order seems readily apparent. Moreover, we presume the hearing officer phrased the proposed order with finality so that it would become effective unless appealed. IGF's selective emphasis on certain wording in the order to the exclusion of the rest does not persuade us otherwise.

2. The district court reasoned that the revocation could only have become effective on December 23, 1983, when the commission ruled on the appeal and the hearing examiner's proposed order became final. IGF argues that the trial court erred by equating finality with effectiveness. We disagree.

Until the commerce commission acted on December 23, 1983 to affirm the proposed order, the hearing officer's order was nothing more than a proposal, subject to the agency's "unfettered right to find the facts in the first instance." Iowa State Fairgrounds Security v. Iowa Civil Rights Comm'n, 322 N.W.2d 293, 294 (Iowa 1982). This fundamental rule of administrative procedure is embodied in Iowa Code...

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