DAN DE FARMS INC V STERLING FARM SUPPLY INC
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STATE OF MICHIGAN
COURT OF APPEALS
DAN DE FARMS, INC.,
FOR PUBLICATION
September 27, 2002
9:05 a.m.
Plaintiff-Appellant,
v
STERLING FARM SUPPLY, INC.,
DEPARTMENT OF AGRICULTURE and
MICHIGAN MILLERS MUTUAL INSURANCE
COMPANY,
Defendants-Appellees.
No. 217413
Arenac Circuit Court
LC No. 98-006139-CZ
ON SECOND REMAND
Updated Copy
December 20, 2002
Before: Gage, P.J., and Holbrook, Jr., and Sawyer, JJ.
SAWYER, J.
This matter is once again before us. Earlier, the Supreme Court, in lieu of granting leave
to appeal, vacated our original opinion, Dan De Farms, Inc v Sterling Farm Supply, Inc, 244
Mich App 278; 625 NW2d 393 (2001), and directed us to reconsider this matter in light of Sun
Valley Foods Co v Ward, 460 Mich 230; 596 NW2d 119 (1999). 465 Mich 872 (2001).
Specifically, the Supreme Court concluded that we erred in considering extratextual evidence of
legislative intent in interpreting MCL 285.67a(1) without first finding that an ambiguity existed
in the statutory language. Dan De Farms, supra. In our opinion on remand, we stated that we
thought it obvious from our original opinion that we found the statute to be ambiguous, but that
we apparently overlooked the requirement that we explicitly state such a finding in our opinion.
Dan De Farms, Inc v Sterling Farm Supply, Inc (On Remand), 248 Mich App 511, 513; 640
NW2d 583 (2001). We then stated that we found MCL 285.67a, as it existed at the times
relevant to this case, to be ambiguous with regard to whether the bonding requirements of that
statute apply to all grain dealers for all transactions or is limited to warehouse receipt transactions
for bailed grain. Having found the statute to be ambiguous and in need of judicial interpretation,
including examination of extratextual evidence of legislative intent, we then readopted our
original reasoning and original opinion.
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Plaintiff again sought leave to appeal to the Supreme Court and, in lieu of granting leave
to appeal, the Court again vacated our opinion and remanded the matter to us for further
consideration and issuance of a new opinion. The shortcomings of our opinion on remand are
identified as follows:
However, nowhere in its opinion on remand has the Court of Appeals
identified the specific language of the statute which is allegedly ambiguous or
explained how or why that language is ambiguous. Pursuant to the remand, the
Court of Appeals is to do so and issue an opinion resolving this concern. [Dan De
Farms [, Inc] v Sterling Farm Supply, Inc, 467 Mich 857 (2002).]
We do note that Justice Cavanagh, joined by Justice Kelly, dissented, opining as follows:
I dissent from yet another remand. The Court of Appeals found the statute
involved here to be ambiguous "with regard to whether the bonding requirements
of that statute apply to all grain dealers for all transactions or is limited to
warehouse receipt transactions for bailed grain." That Court's original six-page
opinion and the six-page opinion on remand are sufficiently clear, in my view, to
warrant a denial of leave in this matter. [Id. at 857-858.]
Although we agree with Justice Cavanagh that we thought our reasoning was sufficiently clear in
our earlier opinions, we shall endeavor to lend greater clarity to this issue. At the times relevant
to this case, MCL 285.67a(1) provided as follows:
An application for a grain dealer's license shall be made on a form
provided by the director, shall be filed 30 days in advance of a license expiration
date if there is an outstanding license, and shall be accompanied by a sufficient
bond on a form provided by the director or an irrevocable letter of credit on a form
provided by the director in favor of the department of agriculture which fulfills the
requirements of subsection (4). The bond shall run to the department of
agriculture with sufficient surety conditioned for the faithful performance of the
duties of a grain dealer and compliance with all laws of this state relating to grain
dealers. The amount of the bond for a grain dealer who is a bailee of farm
produce or who issues warehouse receipts shall be $15,000.00 for the first 10,000
bushels of storage capacity of the grain dealer, plus $5,000.00 for each additional
10,000 bushel capacity or fraction of that capacity used for the storage of
warehouse receipted farm produce. The amount of the bond for a grain dealer
who does not own a farm produce storage or handling facility or does not own a
vehicle used to transport farm produce shall be $50,000.00.
What we find to be ambiguous is whether the bonding requirement of the statute applies to all
grain dealers and their transactions, as urged by plaintiff, or, as determined by the trial court and
this Court in its earlier opinions, only to warehouse receipt transactions.
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The ambiguity arises because the statute alternates between general references to "grain
dealers" and to grain dealers who are bailees of farm produce or who issue warehouse receipts for
stored grain. While it is certainly possible that a statute would provide different rules for
different classes of grain dealers, that is not the case here because not all potential classes of
grain dealers are covered by the statute. The first sentence of the statute suggests that the
bonding requirement applies to all classes of grain dealers. However, when looking at the two
final sentences of the statute, which establish the amount of the bond, we discover that the statute
cannot cover all grain dealers because a bond amount is not established for all grain dealers and,
worse yet, the statute applies two contradictory bond amounts for other dealers.
Specifically, the next to last sentence of the statute establishes the bond requirement for
"a grain dealer who is a bailee of farm produce or who issues warehouse receipts" and sets forth
the amount of the bond based on the grain dealer's storage capacity. The last sentence of the
statute sets forth a flat-rate bond amount for "a grain dealer who does not own a farm produce
storage or handling facility or does not own a vehicle used to transport farm produce . . . ."
However, these two categories of grain dealers do not encompass the entire universe of all grain
dealers and in other cases overlap. The wording of these two sentences suggests that grain
dealers may fall into at least eight different categories on the basis of their status as bailees of
farm produce or issuers of warehouse receipts and whether they have storage or handling
facilities and a vehicle to transport farm produce: (1) Grain dealers who are bailees of farm
produce or who issue warehouse receipts and who do have storage/handling facilities but do not
own a vehicle to transport farm produce, (2) grain dealers who are bailees of farm produce or
who issue warehouse receipts and who do have storage/handling facilities and do own a vehicle
to transport farm produce, (3) grain dealers who are bailees of farm produce or who issue
warehouse receipts and who do not have storage/handling facilities and do not own a vehicle to
transport farm produce, (4) grain dealers who are bailees of farm produce or who issue
warehouse receipts and who do not have storage/handling facilities but do own a vehicle to
transport farm produce, (5) grain dealers who are not bailees of farm produce and do not issue
warehouse receipts and who do have storage/handling facilities but do not own a vehicle to
transport farm produce, (6) grain dealers who are not bailees of farm produce and do not issue
warehouse receipts and who do not have storage/handling facilities and do not own a vehicle to
transport farm produce, (7) grain dealers who are not bailees of farm produce and do not issue
warehouse receipts and who do not have storage/handling facilities but do own a vehicle to
transport farm produce, (8) grain dealers who are not bailees of farm produce and do not issue
warehouse receipts and who do have storage/handling facilities and do own a vehicle to transport
farm produce.
Now, if we attempt to apply the bonding requirements as set forth in the statute to these
various categories of grain dealers, the ambiguity becomes, we think, obvious. We must keep in
mind that the penultimate sentence applies by its terms only to grain dealers who are either
bailees of grain or who issue warehouse receipts and have a storage facility (because the bond
amount is based on the storage capacity). Similarly, the last sentence applies only to grain
dealers who do not own a farm produce storage or handling facility or do not own a vehicle to
transport farm produce. The bonding requirements for the various categories are as follows:
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Category 1: Both bonding requirements apply. The penultimate sentence
applies because the grain dealer bails grain or issues a warehouse receipt. The last
sentence applies because the grain dealer does not own a vehicle to transport farm
produce. Therefore, it's ambiguous whether the bond based on storage capacity or
the flat rate bond would apply.
Category 2: This obviously is covered by the penultimate sentence and is
excluded under the last sentence;
Category 3: Both bonding requirements apply for the same reasons as
with category 1 and therefore it is ambiguous;
Category 4: Once again ambiguous because both provisions apply, the
penultimate sentence because the dealer is a bailee or issues warehouse receipts
and the last sentence because he does not own a storage facility;
Category 5: The flat rate bond applies because the penultimate sentence
does not apply because the dealer does not bail grain or issue receipts and the last
sentence applies because the dealer does not own a vehicle.
Category 6: Same as category 5 (although a strict reading of the word "or"
in the last sentence arguably renders it ambiguous because both the lack of a
storage facility and the lack of a vehicle apply, rather than one "or" the other).
Category 7: Neither bonding provision applies; the penultimate sentence
does not apply because the dealer does not bail grain or issue warehouse receipts
and the last sentence does not apply because the dealer does own a vehicle to
transport farm produce.
Category 8: Neither bonding provision applies, essentially for the same
reasons as category 7 (except here, the dealer not only owns a vehicle, but also
does have a storage or handling facility).
Thus, we think the ambiguity becomes readily apparent. Although the first sentence of
MCL 285.67a(1) suggests that it applies to all grain dealers, the penultimate and last sentences,
the only provisions regarding the amount of the bond, do not cover all grain dealers. Further,
those last two sentences contain an ambiguity because they can, in certain circumstances, both
apply conflicting bonding requirements to the same grain dealer. Thus, while in some cases it
may be clear which bond requirement to apply, in others the statute applies either conflicting
bond amounts or no bond amount.
However, if we look to the penultimate sentence of MCL 285.67a(1) for guidance, the
ambiguity may be resolved. That is, if we read the statute as applying only to grain dealers who
are bailees of farm produce or who issue warehouse receipts, the ambiguities are resolved. The
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penultimate sentence applies where the grain dealer has storage capacity and the last sentence
applies where the dealer does not have storage capacity.
Furthermore, such an interpretation does not torture the wording of the statute. The
penultimate sentence specifically refers to grain dealers who are bailees or issue warehouse
receipts, while the reference to "a grain dealer" in the last sentence means the group of grain
dealers as in the previous sentence, i.e., those who are bailees or who issue warehouse receipts.
That is, the distinction between grain dealers referred to in the two sentences is not between
bailees and nonbailees, but between those bailees who have storage capacity and those who do
not.
Therefore, for the reasons set forth above, and for the reasons set forth in our earlier
opinions, we hold that MCL 285.67a(1) is ambiguous and its proper interpretation is that it
should apply only to warehouse receipt transactions for bailed grain.
We once again affirm. Defendants may tax costs.
/s/ David H. Sawyer
/s/ Hilda R. Gage
/s/ Donald E. Holbrook, Jr.
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