Justia.com Opinion Summary: A hog producer with outstanding loans to Primebank went deeper into debt by purchasing feed on credit from Oyens Feed & Supply to fatten the hogs to market weight. The hog producer subsequently filed for bankruptcy. Primebank had a perfected security interest in the hogs to secure two promissory notes predating Oyen Feed's perfected agricultural supply dealer lien on the hogs. The hog producer filed an adversary proceeding to determine the priority of the liens. The bankruptcy court granted Primebank partial summary judgment on grounds that Oyens Feed failed to provide Primebank a certified request under Iowa Code 570A.2. Oyens Feed appealed the bankruptcy court's ruling to the U.S. district court, which then certified a question of law to the Supreme Court. The Court answered by holding that Primebank's prior perfected security interest in the hogs is trumped by Oyen Feed's agricultural supply dealer lien under Iowa Code 570A.5(3) to the extent of the enhanced value of the livestock presumptively attributable to the feed, even though the bank received no certified request before the feed was sold on credit.
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IN THE SUPREME COURT OF IOWA
No. 11–0532
Filed December 30, 2011
OYENS FEED & SUPPLY, INC.,
Appellant,
vs.
PRIMEBANK,
Appellee.
Certified question of law from the United States District Court for
the Northern District of Iowa, Donald E. O’Brien, Senior United States
District Court Judge.
Federal district court certified question on the priority of the
agricultural supply dealer lien in Iowa Code section 570A.5(3) over a
prior perfected article 9 security interest in the same livestock.
CERTIFIED QUESTION ANSWERED.
Joel D. Vos, Lance D. Ehmcke, and Jacob B. Natwick of Heidman
Law Firm, L.L.P., Sioux City, and A. Frank Baron of Baron, Sar,
Goodwin, Gill & Lohr, Sioux City, for appellant.
John A. O’Brien and Brian P. Gaffney of Snell & Wilmer, L.L.P.,
Denver, Colorado, and Charles L. Smith and Aimee L. Lowe of Telpner,
Peterson, Smith, Ruesch, Thomas & Simpson, LLP, Council Bluffs, for
appellee.
2
Eldon L. McAfee, Mark C. Feldmann, and Julia L. Vyskocil of
Beving, Swanson & Forrest, P.C., Des Moines, for amicus curiae Iowa
Institute for Cooperatives.
3
WATERMAN, Justice.
We are asked to interpret an Iowa statute enacted in the depths of
the 1980s farm crisis to help debt-laden farmers buy livestock feed on
credit to continue operations. Our answer is sought to resolve a dispute
between two creditors in a bankruptcy proceeding with competing liens
on the same hogs. A hog producer with outstanding loans to Primebank
went deeper into debt by purchasing feed on credit from Oyens Feed &
Supply to fatten the hogs to market weight.
We answer a certified
question from the federal district court by holding Primebank’s prior
perfected security interest in the hogs is trumped by Oyens Feed’s
agricultural supply dealer lien under Iowa Code section 570A.5(3) (2009)
to the extent of the enhanced value of the livestock presumptively
attributable to the feed—even though the bank received no certified
request under section 570A.2 before the feed was sold on credit. Our
interpretation effectuates the legislative intent to protect suppliers whose
feed enhances the value of livestock while honoring the security interest
of the earlier lender in the original value.
I. Background Facts and Proceedings.
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 perfected 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.
Oyens Feed claims its lien
4
trumps Primebank’s security interest as to $358,841.10 of the sale
proceeds. That amount is in escrow.
Crooked Creek filed an adversary proceeding to determine the
priority of the liens, without taking a position as to which creditor should
prevail.
Oyens Feed filed an answer asking the bankruptcy court to
deem its lien paramount to Primebank’s interest.
Primebank cross-
claimed, asserting its perfected security interest in the hogs had priority.
Primebank’s
cross-claim
sought
declaratory
relief
and
damages.
Primebank moved for partial summary judgment on its declaratory relief
claim, asserting Oyens Feed is not entitled to superpriority under section
570A.5(3) because it failed to comply with the certified request process in
section 570A.2.
Oyens Feed resisted the partial summary judgment
motion by arguing the superpriority rule in section 570A.5(3) operates
independently of the certified request provision in section 570A.2. The
bankruptcy court granted Primebank partial summary judgment on
grounds that Oyens Feed failed to provide Primebank a certified request
under section 570A.2.
Oyens Feed appealed the bankruptcy court’s ruling to the United
States District Court for the Northern District of Iowa. The Honorable
Donald E. O’Brien sua sponte certified this question of law to our court:
Is the special priority afforded agricultural supply dealer
liens for livestock feed under Iowa Code § 570A.5(3)
susceptible to the affirmative defense afforded financial
institutions under § 570A.2(3), or does § 570A.5(3) instead
operate independently of or as an exception to § 570A.2(3),
so as to allow an agricultural supply dealer supplying
livestock feed to obtain a lien that, pursuant to § 570A.5(3),
has priority over a financial institution’s prior perfected
security interest in the same collateral 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 livestock, whichever is
greater, without the dealer having complied with the
5
requirements imposed by § 570A.2(1) and contemplated
under § 570A.2(3)?
II. Our Discretion to Answer Certified Questions.
Iowa Code section 684A.1 allows this court to answer questions of
Iowa law certified to us by a federal court that concludes controlling
precedent is lacking when the answer may be determinative of the federal
proceeding. See Foley v. Argosy Gaming Co., 688 N.W.2d 244, 246 (Iowa
2004). No disputed fact questions complicate our analysis. The question
certified to us is a purely legal issue on the interpretation of an Iowa
statute that will resolve the lien priority dispute in the federal
proceeding. Our state appellate courts have not decided the question,
and interpretations of the statute by Iowa district courts and federal
courts are in conflict. Although Primebank initially opposed certification
in the federal proceeding, neither Oyens Feed nor Primebank now urges
us to decline to answer the question. Amicus curiae Iowa Institute for
Cooperatives, representing Iowa farmers, agricultural suppliers and
businesses, notes the importance of this issue to the availability of
financing for farming operations so vital to our rural communities.
Accordingly, we elect to answer this question certified to us.
III. Construction of Chapter 570A.
Chapter 570A creates an agricultural supply dealer lien.
It was
enacted in 1984. 1984 Iowa Acts ch. 1072, § 1. According to the senate
file “Explanation,” it sought “to create[] a lien against all livestock
consuming feed, to secure payment of the retail cost of the feed that was
furnished.”
S.F. 510 Explanation, 70th G.A. (Iowa 1984).
Other
legislative history is sparse. As with most Iowa statutes, there are no
committee
hearings
or
floor
debates
to
review.
Commentators
contemporaneous to the chapter’s enactment, however, noted, “It is
6
generally believed that the enactment of chapter 570A of the Iowa Code
was in response to the farm debt crisis” this state suffered in the 1980s.
Thomas E. Salsbery & Gale E. Juhl, Chapter 570A Crop and Livestock
Lien Law: A Panacea or Pandora’s Box, 34 Drake L. Rev. 361, 363 (1984–
85).1
Farmers’ assets were often encumbered by lender security
interests, making agricultural suppliers hesitant to sell seed, feed, or
other products to farmers on credit.
Id. at 364.
The commentators
suggest the legislature intended the lien to encourage the credit sale of
agricultural supplies by providing the supplier a secured lien in the
farmers’ crops or livestock. Id. By increasing available credit to debttroubled farmers from suppliers, the legislature hoped farmers could
continue to operate through difficult times. Id. The commentators also
noted, however, that “Chapter 570A is a compromise between the
interests of agricultural supply dealers and financial institutions”
because the chapter provides lenders protection through the certified
request process. Id. at 387.
Chapter 570A defines “agricultural supply dealer” or “dealer” as “a
person engaged in the retail sale of agricultural chemicals, seed, feed, or
petroleum products.” Iowa Code § 570A.1(4). Section 570A.3 creates the
agricultural supply dealer lien.
It provides dealers of agricultural
chemicals, petroleum products, or seed a lien in crops, and it provides a
feed dealer a lien in livestock that consumes the purchased feed. Section
570A.4 requires dealers to comply with article 9 perfection requirements.
In 2003, chapter 570A was amended to comply with the requirements of
revised
article
1The
9.
Importantly,
the
legislature’s
accompanying
article was coauthored by counsel to the Iowa Farm Bureau Federation, an
organization actively involved in the legislative process that led to the enactment of
chapter 570A.
7
“Explanation” states the amendment “maintains [the] priority status [of
agricultural liens] over other security interests and liens.”
S.F. 379
Explanation, 80th G.A. (Iowa 2003).2
The specific provisions at issue are section 570A.5, which sets
forth the lien’s priority rules, and section 570A.2, which provides
financial institutions with perfected security interests an affirmative
defense to a dealer who fails to provide the institution with a certified
request.
A. Framing the Statutory Dispute.
Iowa Code section 570A.5
contains three priority rules. Section 570A.5 states:
For an agricultural supply dealer lien that is perfected under
section 570A.4, all of the following shall apply:
1. The lien shall have priority over a lien or security
interest that applies subsequent to the time that the
agricultural supply dealer lien is perfected.
2. Except as provided in section 570A.2, subsection 3,
the lien shall have equal priority to a lien or security interest
which is perfected prior to the time that the agricultural
supply dealer lien is perfected. However, a landlord’s lien
that is perfected pursuant to section 570.1 shall have
priority over a conflicting agricultural supply dealer lien as
provided in section 570.1, and a harvester’s lien that is
perfected pursuant to section 571.3 shall have priority over a
conflicting agricultural supply dealer lien as provided in
section 571.3A.
3. A lien in livestock feed shall have priority over an
earlier perfected lien or security interest 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 livestock, whichever is
greater.
2The
amendment’s primary effect was to synchronize the lien’s perfection
procedures with the financing statement requirements in article 9. Article 9 expressly
states “agricultural liens” are governed by state statutory law.
See Iowa Code
§ 554.9302 (“While farm products are located in a jurisdiction, the local law of that
jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority
of an agricultural lien on the farm products.”).
Accordingly, the priority rules
articulated in chapter 570A are unaffected by the 2003 amendments.
8
(Emphasis added.)
Section 570A.2 details the certified request process.
Section
570A.2(3) provides a financial institution an affirmative defense to a
dealer’s enforcement of its lien. Section 570A.2(3) states:
Upon an action to enforce a lien secured under section
570A.3 against the interest of a financial institution secured
to the same collateral as that of the lien, it shall be an
affirmative defense to a financial institution and complete
proof of the superior priority of the financial institution’s lien
that the financial institution either did not receive a certified
request and a waiver signed by the farmer, or received the
request and a waiver signed by the farmer and provided the
full and complete relevant financial history which it held on
the farmer making the purchase from the agricultural supply
dealer on which the lien is based and that financial history
reasonably indicated that the farmer did not have a
sufficient net worth or line of credit to assure payment of the
purchase price.
A “certified request . . . state[s] the amount of the purchase and the
terms of sale and [is] accompanied by a waiver of confidentiality signed
by the farmer, and a fifteen dollar fee.”
Iowa Code § 570A.2(1).
The
financial institution must respond within four days. Id. The financial
institution can elect to supply credit for the purchase.
Id.
If the
institution elects not to respond to the request or declines to provide
credit, then the dealer may perfect an agricultural supply lien under
section 570A.3. Id. § 570A.2(2).
Section
characteristics.
570A.5
codifies
three
priority
rules
with
distinct
Section 570A.5(1) gives the agricultural supply dealer
lien priority over subsequent liens. Section 570A.5(2) awards all dealers
“equal priority” in the entire collateral.
By contrast, section 570A.5(3)
provides feed dealers superiority in part of the livestock collateral—the
new value presumptively attributable to the feed. Importantly, section
570A.5(2) also conditions its equal priority as applying “[e]xcept as
9
provided in 570A.2, subsection 3”—the affirmative defense at issue here.
That exception is not found in section 570A.5(3)’s superpriority
provision—an omission key to answering the certified question in favor of
Oyens Feed.
B. The Arguments of the Parties and Iowa Institute for
Cooperatives. Oyens Feed argues its livestock lien trumps Primebank’s
security interest under section 570A.5(3) because the provision creates a
superpriority rule that operates independently of the certified request,
affirmative-defense provision of section 570A.2(3). Oyens Feed relies on
the legislature’s selective inclusion of the phrase, “Except as provided in
section 570A.2, subsection 3” into section 570A.5 subsection (2), but not
subsection (3).
According to Oyens Feed, this selective inclusion
demonstrates the legislature intended the affirmative defense to apply
only to dealers claiming “equal priority” under section 570A.5(2), and not
to feed dealers seeking superpriority in the new value created in livestock
under section 570A.5(3).
Oyens Feed supports this assertion by
observing the subsections articulate different priority rules.
For
example, subsection (3) applies exclusively to feed dealers, awarding
superpriority to the extent the livestock’s acquisition value is exceeded by
its value at the time the lien attached or its ultimate sale price. Since the
subsections create different priority rules, Oyens Feed claims the
legislature’s selective inclusion must be given effect.
Oyens Feed argues a “contrary rule would give a windfall to the
lender who is not extending new value to pay for necessary feed.”
Livestock must be fed to mature and increase in value.
According to
Oyens Feed, the legislature did not intend the secured lender to improve
its position through the increased value of the livestock collateral without
extending additional credit for the feed that enhanced the livestock’s
10
value.
The Iowa Institute for Cooperatives elaborates by arguing
livestock feed suppliers are not required to comply with the certified
request process because “[i]t goes without saying the livestock feed is
necessary to keep livestock alive. While crop inputs are necessary for
crop production, crops are not animals that will suffer and/or perish
without daily feeding.”
Accordingly, burdening credit feed sales with
procedural requirements poses harm not present in chemical, seed, and
petroleum sales.
Primebank contends chapter 570A as a whole creates a uniform,
balanced scheme that protects lenders and dealers through its certified
request and superpriority rules.
Primebank relies on the broad
declaration in section 570A.2(3) that “[u]pon an action to enforce a lien
secured under section 570A.3 against the interest of a financial
institution secured to the same collateral . . . it shall be an affirmative
defense . . . that the financial institution . . . did not receive a certified
request.”
Primebank argues section 570A.2(3) expressly provides
financial institutions an affirmative defense to lien claims by any dealer
who omits the certified request procedure, including dealers claiming
superpriority under section 570A.5(3).
Primebank also relies on the
prefatory “all” in the introductory clause to section 570A.5. Id. § 570A.5
(“For an agricultural supply dealer lien that is perfected under section
570A.4, all of the following shall apply . . . .”
(Emphasis added.)).
According to Primebank, that “all” requires us to read the subsections as
imposing sequential and cumulative requirements such that subsection
3 is an addendum to subsection 2.
This interpretation subjects the
superpriority lien in subsection 3 to the affirmative defense incorporated
into subsection 2’s provision for equal priority liens. Primebank argues
that, if feed suppliers are not required to complete a certified request,
11
“the risk to financial institutions making livestock loans increases and
becomes very difficult to ascertain,” which will lead to a credit crunch in
livestock lending.
C. The Split in Authority Among Courts Considering the Issue.
Iowa appellate courts have not squarely decided this issue.
A 1994
opinion of this court suggested, without analysis, that a feed dealer must
comply with section 570A.2 before claiming superpriority under section
570A.5(3). Wilkin Elevator v. Bennett State Bank, 522 N.W.2d 57, 62 n.3
(Iowa 1994).
In Wilkin, a feed dealer sued a bank for tortious
interference. Id. at 59. The court held the feed store had no basis to
challenge the bank’s action because the store never had a perfected
security interest or agricultural lien in the livestock.
Id. at 62.
In a
footnote, the court gratuitously stated the feed store could not prevail
under section 570A because “[a]ny lien under that statute was ineffective
as against the bank . . . because of the feed store’s failure to provide the
bank with the required documentation.” Id. n.3. That statement was not
necessary to the holding of the case and therefore is dictum.
The
certifying court concluded there is no controlling authority, and we agree
Wilkins is not dispositive. We will perform our own statutory analysis to
answer this certified question.
The trial courts reaching the precise statutory question are divided
in their resolution.3 Those ruling in favor of the feed suppliers note the
3See
Farmers Coop. Soc’y of Sioux Center v. First Nat’l Bank of Omaha, No. 7:10–
CV–202–H (E.D.N.C. Sept. 15, 2011) (ruling in favor of feed supplier) (appeal pending);
In re Coastal Plains Pork, LLC v. Farmers Coop. Soc’y, 438 B.R. 845, 851–52 (Bankr.
E.D.N.C. 2010) (ruling in favor of lender), rev’d, First Nat’l Bank of Omaha, No. 7:10–
CV–202–H (ruling in favor of feed supplier); In re Crooked Creek Corp. v. Primebank, 427
B.R. 500, 506, 509 (Bankr. N.D. Iowa 2010) (ruling in favor of lender) (appeal pending);
First State Bank v. Kerber Milling Co., Clay County No. CVCV027234 (Iowa Dist. Ct.
Aug. 2, 2010) (ruling in favor of feed supplier); Galva-Holstein Ag, LLC v. Holstein Dairy,
LLP, Ida County No. EQCV014128 (Iowa Dist. Ct. June 21, 2010) (ruling in favor of the
12
certified request provision is incorporated only into section 570A.5(2) but
not the superpriority provision in subsection 3.
For example, Iowa
District Court Judge John Ackerman stated:
To this court, it doesn’t make any sense that if the
provisions of § 570A.2(3) apply to all of the special priority
rules set out in subsections 1, 2, and 3 of § 570A.5, why did
the legislature expressly reference § 570A.2(3) [only in
subsection 2] . . . . If the provisions of § 570A.2(3) had the
breadth as argued by the bank, it would not be necessary to
specifically reference § 570A.2(3) in § 570A.5(2).
Doon Elevator Co. v. Am. State Bank, Sioux County No. LACV022572
(Iowa Dist. Ct. March 29, 2010). Judge Ackerman concluded:
[T]he legislature intended to give a more protected status to
the livestock feed sellers over the retailers of seed, chemicals,
and petroleum.
The priority status given to sellers of
livestock feed as opposed to the equal priority given to other
agricultural supply dealers and the legislature’s failure to
make the feed sellers’ lien subject to the provisions of
§ 570A.2(3) evidences that intent.
Id.
Similarly, the United States District Court for the Eastern District
of North Carolina concluded:
[T]his court agrees with the appellant that if the Iowa
legislature had wanted to subject the priority rule stated in
§ 570A.5(3) to the affirmative defense created by § 570A.2(3),
it is clear they knew how to do that. Where the legislature
includes particular language in one section of a statute but
omits it in another section of the same Act, it is generally
presumed that [the legislature] acts intentionally and
purposely in the disparate inclusion or exclusion . . . . The
omission of the affirmative defense language from
§ 570A.5(3) must be presumed to be intentional, and leads to
the conclusion that § 570A.5(3) was not intended to be
subject to the affirmative defense in § 570A.2(3).
________________________
lender); Doon Elevator Co. v. Am. State Bank, Sioux County No. LACV022572, (Iowa
Dist. Ct. March 29, 2010) (ruling in favor of feed supplier).
13
Farmers Coop. Soc’y of Sioux Center v. First Nat’l Bank of Omaha, No.
7:10–CV–202–H (E.D.N.C. Sept. 15, 2011) (appeal pending).4
By contrast, courts ruling in favor of lenders emphasize the
comprehensive nature of the chapter’s certified request provisions. One
bankruptcy court reasoned:
[T]he Court believes that Iowa Code § 570A.5(3) cannot stand
or be read alone. The rules of statutory construction require
the Court to read the statute as a whole and give effect to the
plain meaning of the statute, where the meaning of the
statute is plain. Taken as a whole, this statute is a well
organized scheme for the creation, perfection, priority and
enforcement of liens to secure the sale of agricultural
supplies in Iowa.
In re Coastal Plains Pork, LLC, 438 B.R. 845, 851–52 (Bankr. E.D.N.C.
2010) (citations omitted), rev’d, First Nat’l Bank of Omaha, No. 7:10–CV–
202–H. The bankruptcy court ruling underlying this certified question
adopted similar reasoning, finding the legislature sought “to strike a
balance among the various stakeholders, . . . including the holders of
statutory liens and creditors holding Article 9 security interests other
than financial institutions.”
In re Crooked Creek Corp., 427 B.R. 500,
506, 509 (Bankr. N.D. Iowa 2010).
The court concluded feed dealers
must comply with the certified request process to attain superpriority
status. Id. at 509.
D. Construction.
In resolving statutory disputes, “our ultimate
goal is to ascertain and give effect to the intent of the legislature.” Iowa
4Coastal
Plains Pork, LLC was a North Carolina company that operated a farrowto-finish farm that produced swine in several states, including Iowa, where it had a hoggrowing operation. First National Bank of Omaha provided Coastal Plains a loan for the
Iowa operations and perfected a security interest in the livestock. Coastal Plains also
purchased feed from two Iowa feed suppliers. It filed for bankruptcy protection in the
Eastern District of North Carolina. In an adversary proceeding, First National Bank of
Omaha and the feed suppliers disputed their lien priority in the livestock. Accordingly,
the dispute over the meaning of Iowa chapter 570A made its way to federal court on the
Atlantic Coast.
14
Comprehensive Petroleum Underground Storage Tank Fund Bd. v. Mobil
Oil Corp., 606 N.W.2d 359, 363 (Iowa 2000).
“We look to both the
language and the purpose behind the statute.” Id. When construing a
statute, we assess the statute as a whole, not just isolated words or
phrases.
In re Conservatorship of Alessio, 803 N.W.2d 656, 661 (Iowa
2011). Guided by well-established principles of statutory construction,
we hold Oyens Feed can claim superpriority under section 570A.5(3)
without complying with the certified request process in section 570A.2.
“[L]egislative intent is expressed by omission as well as by
inclusion of statutory terms.” Freedom Fin. Bank v. Estate of Boesen, ___
N.W.2d ___, ___ (Iowa 2011); accord Chestnut v. Montgomery, 307 F.3d
698, 701–02 (8th Cir. 2002) (“ ‘[W]here Congress includes particular
language in one section of a statute but omits it in another section of the
same Act, it is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.’ ” (quoting Russello v.
United States, 464 U.S. 16, 23, 104 S. Ct. 296, 300, 78 L. Ed. 2d 17, 24
(1983))).
The legislature selectively incorporated the prefatory clause,
“Except as provided in section 570A.2, subsection 3,” into section 570A.5
subsection (2) but not subsection (3).
We presume this clause was
located in subsection 2 for a reason—to apply the affirmative defense
solely to the equal priority lien recognized in that subsection.
The phrase “[e]xcept as provided in subsection 570A.2” would be
redundant or surplusage if section 570A.2(3)’s affirmative defense
applied to all subsections of section 570A.5.
“When interpreting the
meaning of the statute, we give effect to all the words in the statute
unless no other construction is reasonably possible.”
State v.
Osmundson, 546 N.W.2d 907, 910 (Iowa 1996). We decline Primebank’s
invitation to view section 570A.5(3) as an addendum subject to the
15
affirmative defense incorporated in subsection 2.
recognize distinct liens.
The subsections
The superpriority lien in section 570A.5(3)
applies only to the new value presumably created by the feed, not the
acquisition value of the livestock subject to the lender’s security interest.
The interpretation sought by Oyens Feed and the Iowa Institute for
Cooperatives, by limiting the affirmative defense to the equal priority lien,
harmonizes and gives effect to all terms in the relevant sections.
In Boesen, we found the legislature’s selective inclusion of the
phrase “not necessary for the payment of debts and charges” to be
dispositive in resolving whether an intestate surviving spouse receives
real property free and clear of her husband’s debts. Boesen, ___ N.W.2d
at ___.
The statute at issue, section 633.211, provided the spouse in
subsection (1) “[a]ll the value of . . . real property” while an adjacent
subsection provided only the “personal property . . . not necessary for the
payment of debts and charges.”
Id.
We observed:
“If the legislature
intended to subordinate the surviving spouse’s real property interest to
the decedent’s debts, it would have expressly said so, as it did in subpart
3 with nonexempt personal property.”
Id.
We find this reasoning
applicable here. If the legislature had intended to subordinate a dealer’s
priority under section 570A.5(3), it would have expressly said so as it did
in subsection (2).
The Eastern District of North Carolina utilized the
same reasoning to resolve this issue.
First Nat’l. Bank of Omaha, No.
7:10–CV–202–H (“Where the legislature includes particular language in
one section of a statute but omits it in another section of the same Act, it
is generally presumed that [the legislature] acts intentionally and
purposely in the disparate inclusion or exclusion.”).
Another
conclusion.
principle
of
statutory
construction
buttresses
our
“To the extent ‘there is a conflict or ambiguity between
16
specific and general statutes, the provisions of specific statutes control.’ ”
Boesen, ___ N.W.2d at ___ (quoting Goergen v. State Tax Comm’n, 165
N.W.2d 782, 787 (Iowa 1969)); see also Iowa Code § 4.7. Section 570A.1
separately defines “petroleum products,” “seed,” “agricultural chemicals,”
and “feed.”
Section 570A.3 distinguishes between crop collateral from
the sale of petroleum, seed, and chemicals and livestock collateral from
feed sales. Section 570A.5(1) and (2) articulate general priority rules that
apply to all of those agricultural supplies and to crops and livestock
collateral. Section 570A.5(3), however, articulates a specific priority rule
applicable only to livestock feed and the resulting new value.
This
specific superpriority provision prevails over the general provisions.
It makes sense the legislature would give superpriority status to
livestock feed suppliers limited to the new value created, without
requiring compliance with the certified request procedure. Livestock feed
is often supplied on an ongoing basis, and it would be impractical and
cumbersome to require serial certified requests with ever changing dollar
amounts and recurring fees.
farmers.
Livestock feed is grown and sold by
The legislature presumably sought to encourage a fluid feed
market without burdening cooperatives and farmers with the certified
request process. By contrast, sales of crop seed, herbicides, and fertilizer
are more often bulk transactions by large vendors for whom the certified
request process is less cumbersome.
Importantly, the superpriority provision only allows feed suppliers
to trump perfected secured lenders to the extent the acquisition value of
the livestock is exceeded by the livestock’s value at the time the lien
attaches or its ultimate sale price.
Accordingly, the secured lender
generally retains its secured position up to the livestock’s acquisition
price.
The feed supplier’s superpriority corresponds to the livestock’s
17
increase in value that typically results from consuming feed.
The
legislature reasonably could conclude the feed supplier who made the
credit sale, not the secured lender, should be entitled to superpriority in
this new value.
This interpretation furthers the legislature’s goal to
encourage feed sales to livestock producers already burdened with bank
debt. North Dakota similarly allows feed suppliers a superpriority lien
without requiring a certified request or notice to prior lenders.
N.D.
Cent. Code § 35–31–03 (West, Westlaw through 2011 Reg. Special Sess.)
(“An agricultural supplier’s lien obtained under the provisions of this
chapter has priority, as to the crops or agricultural products covered
thereby, over all other liens or encumbrances except any agricultural
processor’s lien.”).5
IV. Conclusion.
We hold section 570A.5(3) creates a superpriority rule independent
of the chapter’s certified request provisions; accordingly, Oyens Feed did
not have to comply with section 570A.2 in order to achieve superpriority
status under section 570A.5(3). Costs in this court are assessed against
Primebank.
CERTIFIED QUESTION ANSWERED.
5Other
state legislatures have chosen a different policy for their state. See, e.g.,
Kan. Stat. Ann. § 58–243(b) (West, Westlaw through 2011 Reg. Sess.) (“[T]he [livestock]
lien shall have priority over a security interest of a lender only if perfected and if the
supplier notifies the lender of such supplier’s lien pursuant to K.S.A. 58–242.”); Minn.
Stat. Ann. § 514.966(3)(b) (West, Westlaw through 2011 First Spec. Sess.) (requiring
feed dealer to provide lender a “lien-notification statement” before obtaining lien); Neb.
Rev. Stat. Ann. § 54–208 (West, Westlaw through 2011 First Reg. Sess.) (stating the lien
“shall be a first, paramount, and prior lien if the holders of any prior liens have agreed
in writing to the contract for the feed or feed ingredients and related delivery cost”).
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