OYENS FEED & SUPPLY, INC., Appellant, v. PRIMEBANK, Appellee.
No. 15-0806.
Supreme Court of Iowa.
May 27, 2016.
879 N.W.2d 853
The district court provided Sweet with an appropriate Miller-type hearing. After the sentencing hearing, the district court applied the unique facts of this case to the multiple factors we have set out in our caselaw. In a thorough, well-reasoned decision, the district court concluded this was the rare case where an LWOP sentence was appropriate. Having done exactly what we expect of our district court judges, and looking at the entire record independently as we are required to do, I would affirm the sentence of the district court.
WATERMAN and MANSFIELD, JJ., join this dissent.
Scott C. Sandberg and John O’Brien of Snell & Wilmer, L.L.P., Denver, Colorado, and Charles L. Smith and Nicole Hughes of Telpner, Peterson, Smith, Ruesch, Thomas & Simpson, L.L.P., Council Bluffs, for appellee.
Robert L. Hartwig, Johnston, for amicus curiae Iowa Bankers Association.
HECHT, Justice.
Crooked Creek Corporation operated a farrow-to-finish hog facility where it bred gilts and sows and raised their litters for slaughter. See Ballard v. Amana Soc’y, Inc., 526 N.W.2d 558, 559 (Iowa 1995) (per curiam) (explaining the term “farrow-to-finish hog operation“); see also
I. Background Facts and Proceedings.
This case is before us for a second time. See Oyens Feed & Supply, Inc. v. Primebank, 808 N.W.2d 186, 195 (Iowa 2011)
This dispute between Oyens Feed and Primebank arises through Crooked Creek Corporation’s chapter 12 bankruptcy in the United States Bankruptcy Court for the Northern District of Iowa. Crooked Creek is a farrow-to-finish hog producer located in Plymouth County, Iowa. Both Primebank and Oyens Feed claim liens on the proceeds of the sale of Crooked Creek’s hogs. Primebank had a perfected article 9 security interest in the hogs to secure two promissory notes predating Oyens Feed’s . . .
section 570A.5(3) agricultural supply dealer lien in the hogs. The proceeds from the sale of the approximately 7500 hogs are insufficient to satisfy both parties’ liens. Id. at 187. Although the proceeds from the sale are insufficient to satisfy both parties’ liens, $342,371.78 remains in escrow pending our resolution of the parties’ competing claims.Oyens Feed holds an agricultural supply dealer lien because it sold Crooked Creek feed “on credit . . . to fatten the hogs to market weight.” Id. Livestock feed is an agricultural supply, see
Iowa Code § 570A.1(3) , and “[a]n agricultural supply dealer who provides an agricultural supply to a farmer shall have an agricultural lien,” id.§ 570A.3 . In our 2011 decision, we concluded Oyens Feed was entitled to superpriority in at least some of the sales proceeds of Crooked Creek’s hogs even though it had not followed the statutory certified request procedure for notifying financial institutions of intent to provide a debtor with agricultural supplies on credit. Oyens Feed, 808 N.W.2d at 194-95. Because our decision did not resolve the amount of proceeds in which Oyens Feed had superpriority, the parties returned to the bankruptcy court for a trial to establish the extent of each party’s entitlement.
At trial, Oyens Feed claimed it was entitled to all of the escrowed funds because its agricultural supply dealer lien has superpriority over Primebank’s earlier perfected security interest. See
First, Primebank asserted Oyens Feed had not properly perfected a lien for the entire amount of feed sold because it had not filed a financing statement “within thirty-one days after” each date Crooked Creek purchased feed.
Second, Primebank noted that under the statute, Oyens Feed only has priority “to the extent of the difference between the acquisition price of the livestock and the fair market value of the livestock at the time the lien attaches or the sale price of
The bankruptcy court concluded the plain meaning of
In reaching its decision on the extent of Oyens Feed’s lien in the escrowed funds, the bankruptcy court reasoned the acquisition price of the hogs was zero because Crooked Creek raised hogs from birth rather than purchasing them. The court concluded “the ‘purchase price’ comprises the vast majority, if not all of, the ‘acquisition price’ for . . . purposes of
Both parties appealed to the federal district court. See
The United States District Court for the Northern District of Iowa adopted the magistrate’s recommendation and certified the following questions:
- Pursuant to
Iowa Code section 570A.4(2) , is an agricultural supply dealer required to file a new financing statement every thirty-one (31) days in order to maintain perfection of its agricultural supply dealer’s lien as to feed supplied within the preceding thirty-one (31) day period? - Pursuant to
Iowa Code section 570A.5(3) , is the “acquisition price” zero when the livestock are born in the farmer’s facility?
II. The Parties’ Positions.
A. Oyens Feed. Oyens Feed asserts the answer to question one is “no” and the answer to question two is “yes.” It contends the word “within” in
Oyens Feed’s quarrel with Shulista is multifaceted. First, it asserts Shulista ignores an express reference to prospective filing in the general provisions of chapter 554—Iowa’s version of the Uniform Commercial Code (UCC). See
Oyens Feed further contends Shulista wrongly attributed material significance to a 2003 amendment that removed forward-looking language from chapter 570A. See Shulista, 451 B.R. at 877; see also 2003 Iowa Acts ch. 82, § 5. Before the 2003 amendment, chapter 570A provided a method through which an agricultural supply dealer could perfect a lien for the amount of “the agricultural [supply] which has been or may be furnished.”
B. Primebank. Primebank asserts the answer to question one is “yes” and the answer to question two is “no.” On the first question, it contends the plain meaning of the phrase “within thirty-one days after” sets both a start and end date for the perfection period, and thus, there is no ambiguity and no need to delve into legislative history, apply rules of statutory construction, or interpret the word “within.”
On the second question, Primebank contends the bankruptcy court erroneously ignored or diminished the significance of acquisition price in the agricultural lien scheme. Primebank distinguishes between the “purchase price” of Crooked Creek’s hogs, which it concedes is zero under the circumstances presented here, and the “acquisition price,” the phrase in
III. Power to Answer Certified Questions.
We may answer certified questions of law when a federal court or another state’s appellate court has before it a case in which questions of Iowa law may be determinative and the certifying court can find no controlling Iowa precedent.
IV. Analysis.
Oyens Feed holds an agricultural supply dealer lien—one of many types of agricultural liens that have caused “much confusion for those involved in agricultural financing.” Wyatt P. Peterson, Note, Revised Article 9 and Agricultural Liens: An Iowa Perspective, 8 Drake J. Agric. L. 437, 447 (2003) [hereinafter Peterson]; see also Keith G. Meyer, A Garden Variety of UCC Issues Dealing with Agriculture, 58 U. Kan. L. Rev. 1119, 1120 (2010) (“Producers, lenders, lawyers, and courts continue to grapple with problems connected with agriculture credit.“). Article 9 security interests and agricultural liens are distinct devices protecting those who extend credit in different contexts. See Stockman Bank, 180 P.3d at 1134. “A farm lender who acquires a ‘security interest’ through a ‘security agreement’ . . . has a security interest, not an agricultural lien.” White & Summers § 21-8, at 737; accord In re Coastal Plains Pork, LLC, No. 09-08367-8-RDD, 2012 WL 6571102, at *9 n.15 (Bankr. E.D.N.C. Dec. 17, 2012) (applying Iowa Code chapter 570A and noting “the lien created is statutory, not consensual,” meaning “[n]o security agreement is required“); Stockman Bank, 180 P.3d at 1134 (“Critical to an accurate
To answer the certified questions, we must interpret statutory provisions in Iowa Code chapter 570A. Our principles of statutory construction are well established:
When the plain language of a statute . . . is clear, we need not search for meaning beyond the statute’s express terms. We may presume the words contained within a statute have the meaning commonly attributed to them. We can resort to rules of statutory construction, however, when a statute’s meaning is ambiguous. “A statute is ambiguous if reasonable persons could disagree as to its meaning.”
Exceptional Persons, Inc. v. Iowa Dep’t of Human Servs., 878 N.W.2d 247, 251 (Iowa 2016) (citations omitted) (quoting Remer v. Bd. of Med. Exam’rs, 576 N.W.2d 598, 601 (Iowa 1998)).
A. Question One: Perfecting the Feed Supplier Lien. “[P]erfection is the process a creditor uses to establish its priority in relation to other creditors of the debtor in the same collateral by giving notice of its interest.” Stockman Bank, 180 P.3d at 1137.
Except as provided in this section, a financing statement filed to perfect an agricultural supply dealer lien shall be governed by chapter 554, article 9, part 5, in the same manner as any other financing statement.
1. The lien becomes effective at the time that the farmer purchases the agricultural supply.
2. In order to perfect the lien, the agricultural supply dealer must file a financing statement in the office of the secretary of state as provided in
section 554.9308 within thirty-one days after the date that the farmer purchases the agricultural supply. . . . Filing a financing statement as provided in this subsection satisfies all requirements for perfection of an agricultural lien as provided in chapter 554, article 9.
Ambiguity arises “when reasonable persons could disagree as to [a statute’s] meaning.” Naumann v. Iowa Prop. Assessment Appeal Bd., 791 N.W.2d 258, 261 (Iowa 2010). As we recognized in Jensen, the word “within” “is fairly susceptible of different meanings.” Jensen, 236 Iowa at 572, 19 N.W.2d at 598. Accordingly, we conclude
1. Relationship between chapter 554 and chapter 570A. Oyens Feed contends
An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection in
section 554.9310 have been satisfied. An agricultural lien is perfected when it becomes effective if the applicable requirements are satisfied before the agricultural lien becomes effective.
Chapter 554 contains general provisions that act as default settings. But the legislature can supersede the general provisions with more specific guidelines or different rules in statutes with narrower scope—as it has in chapter 570A. See
Thus, although chapter 570A incorporates some provisions of chapter 554, to the extent there is a conflict between them, chapter 570A prevails if it requires something more to perfect an agricultural supply dealer’s lien. See
The language of
2. Legislative history. Having clarified the relationship between Code chap
Removing potentially dispositive language from a statute through the amendment process is material even if the legislature does not expressly indicate that it is. See Orr v. Lewis Cent. Sch. Dist., 298 N.W.2d 256, 260-61 (Iowa 1980) (concluding the legislature materially amended a statute despite no “indication that a substantive change in the law was intended” because it “removed the language which had been determinative” in a prior case). Here, the legislature clearly removed the phrase in the pre-2003 statute that authorized filings covering amounts for supplies that “may be furnished.” Compare
But even accepting as true Oyens Feed’s contention that the legislature intended the 2003 amendments merely to maintain the previous lien priority framework for agricultural supply dealers, the interpretation of
Before the 2003 amendment of chapter 570A, agricultural supply dealers were not required to file financing statements to establish their liens. They were required instead to “file a verified lien statement” to perfect their liens.
By contrast, a supply dealer filing a financing statement under current law need only disclose its own name, “the name of the debtor,” and a description of “the collateral covered by the financing statement.” Id.
“Chapter 570A is a compromise between the interests of agricultural supply dealers and financial institutions.” Thomas E. Salsbery & Gale E. Juhl, Chapter 570A Crop and Livestock Lien Law: A Panacea or Pandora’s Box, 34 Drake L. Rev. 361, 387 (1985) [hereinafter Salsbery & Juhl]; see also In re Crooked Creek Corp., 427 B.R. 500, 506 (Bankr. N.D. Iowa 2010) (stating “the legislature tried to strike a balance among the various stakeholders,” protecting feed suppliers in some instances and financial institutions in others), overruled on other grounds by Oyens Feed, 808 N.W.2d at 195; Peterson, 8 Drake J. Agric. L. at 445 (concluding the legislature intended to protect agricultural supply dealers but also enacted “more notice and filing requirements than had been previously required [for] agricultural liens“).
We conclude the bankruptcy court’s decision in Shulista correctly balances this compromise. See Shulista, 451 B.R. at 876. In the agricultural supply dealer’s lien context, any increased burden arising from a requirement that agricultural supply dealers file serial financing statements is “fairly . . . considered as a reasonable exchange for the super-priority status the filing helps to acquire.” Id. at 881.
3. The word “within.” As we have noted, Oyens Feed asserts the word “within” in
In Jensen, we addressed a will’s charitable bequest of property to the county when the will specified the gift was to be made if the county built a new courthouse “within ten years after [the testator’s] death.” Jensen, 236 Iowa at 570, 19 N.W.2d at 597. The county in fact built a new courthouse, but it did so “between the making of the will and testator’s death.” Id. at 571, 19 N.W.2d at 597. The testator’s heirs contended the charitable bequest failed because the county had built the courthouse too early. See id.
We acknowledged the meaning of the word “within” was the “vital question.” Id. at 572, 19 N.W.2d at 598. We explored several definitions:
In fixing time, this word is fairly susceptible of different meanings. It may be taken to fix both the beginning and end of the period of time in which a specified act must be done. In this sense “within” means “during.”
However, “within” frequently means “not beyond, not later than, any time before, before the expiration of.” In this sense “within” fixes the end but not
the beginning of a period of time. This meaning is neither unusual nor strained and is well recognized in law.
Id. (citation omitted). We chose to apply the latter meaning in Jensen because courts favor charitable bequests and honoring the bequest plainly carried out the testator’s intent. See id. at 571-72, 19 N.W.2d at 598. Oyens Feed urges us to apply that meaning once again in this context.
However, we recognized in Jensen that sometimes the word within “may be taken to fix both the beginning and end of the period of time.” Id. at 572, 19 N.W.2d at 598. Our decision in Johnson v. Brooks, 254 Iowa 278, 286-87, 117 N.W.2d 457, 461-62 (1962), illustrates one example. In Johnson, the plaintiff mailed the defendant a notification of filing before actually filing their petition. Id. at 280, 117 N.W.2d at 458-59. Yet the relevant statute required plaintiffs to send the notification “within ten days after” filing. Id. at 281-82, 117 N.W.2d at 459. The plaintiff served a second notification after filing the petition, but that notification was outside the prescribed limit of ten days. See id. at 280-81, 117 N.W.2d at 458-59. The defendant raised a statute of limitations defense, contending the first notification was too early and the second was too late. Id. at 281, 117 N.W.2d at 459.
We agreed. We found no basis for holding that a notification “is sufficient if it states that a copy of the original notice will be filed. . . . If such was the intention of the legislature, it could have and would have so provided.” Id. at 284, 117 N.W.2d at 461. Although the plaintiff cited Jensen, we explained Jensen was not controlling because setting both a beginning and end of the temporal window for the timely filing of original notices was vital to protecting other parties under the circumstances. See id. at 286, 117 N.W.2d at 462 (“[A]s used in this statute, filing of the copy of the original notice is made a condition to the validity of the notice to defendant.“). We concluded,
The statute clearly requires the [plaintiff] to notify the defendants that the copy of the original notice has already been filed . . . , and from the time of that filing [plaintiff] had only ten days to properly notify the defendants. Thus we have a significant commencement date as well as terminus date fixed by the words of the statute, which is the polestar for its true meaning in such matters.
Id. at 286-87, 117 N.W.2d at 462. Our understanding of the word “within” in Johnson has persuasive force in this case as well. We conclude a feed supplier’s financing statement gives notice that the supplier’s lien has—not will—become effective. Cf. Lydick v. Smith, 201 Neb. 45, 266 N.W.2d 208, 210 (1978) (“[I]t is not . . . compliance with the statute to give notice of something which has not yet been done.“).
Furthermore, a meaning of “within” that fixes both the beginning and end of a period for filing agricultural supply dealer lien financing statements seems most appropriate when the language of
These provisions from chapter 554 stand in stark contrast to the phrase “within thirty-one days after the date that the farmer purchases the agricultural supply” in
4. Answer to question one. We answer “yes” to question one. We conclude an agricultural supply dealer’s financing statement cannot perfect a lien under
B. Question Two: Acquisition Price.
We agree with the commentators that
Primebank contends the legislature’s use of the term “acquisition” rather than the “purchase” or “sale” price means acquisition price necessarily includes a farmer’s overhead costs and costs of production such as transportation, labor, and semen. However, we conclude Primebank’s argument conflates acquisition price with acquisition cost. Cf. David Frisch, UCC Section 9-315: A Historical and Modern Perspective, 70 Minn. L. Rev. 1, 55 (1985) (disputing that “cost was intended to mean acquisition price” because the UCC’s “drafters knew how to use the term price when they wished to do so“); William E. Hogan, Financing the Acquisition of New Goods Under the Uniform Commercial Code, 3 B.C. Indus. & Com. L. Rev. 115, 153 n.151 (1962) (noting the UCC generally does not define “costs,” but “an argument that the term includes more than acquisition price . . . may be made from the fact that elsewhere the Code uses terms clearly indicating ‘price’ “). Furthermore, we conclude Primebank’s formulation of “acquisition price” would require detailed and elaborate recordkeeping and accounting of every conceivable cost—including variable items like utility bills and facilities depreciation—incurred by a farmer in raising a constantly changing group of animals and would frustrate the legislature’s intent “to encourage a fluid feed market without burdening cooperatives and farmers.” Oyens Feed, 808 N.W.2d at 194.
Our resolution of this issue is also influenced by the notions that one can incur a cost unilaterally and that a price tends to involve two parties exchanging something. The Black’s Law Dictionary definition of “price” refers to a sales transaction and the amount of money that changes hands. Price, Black’s Law Dictionary (10th ed. 2014). The bankruptcy court here noted Crooked Creek’s pigs came into the farrow-to-finish operation without a purchase, sale, or exchange.
The phrase “acquisition price” appears in one other chapter of the Iowa Code: chapter 6B, detailing the power of eminent domain.
Our conclusion does not write acquisition price out of the statute or substitute the word “purchase” in place of “acquisition.” One can imagine a hypothetical transaction that does have an acquisition price but no purchase price. In our hypothetical scenario, two farmers raise both cows and pigs, but each decides to focus prospectively on just one or the other. One farmer trades his or her pigs for the other farmer’s cows, and vice versa. Neither farmer has purchased the other’s animals because no currency exchanged hands, but each farmer has acquired new livestock. The acquisition price paid by each farmer could be established by proving the market value of the respective farmer’s animals at the time of the trade.
We answer “yes” to question two. Livestock born in Crooked Creek’s farrow-to-finish operation had a zero acquisition
V. Conclusion.
We answer both certified questions in the affirmative. We return this case to the federal district court for further proceedings consistent with this opinion.
CERTIFIED QUESTIONS ANSWERED.