The opinion
FILED
Dec 21 2018, 8:46 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Fred L. Cline Curtis T. Hill, Jr.
Danville, Indiana Attorney General of Indiana
Andrea E. Rahman
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Dick Sears, December 21, 2018
Appellant-Petitioner, Court of Appeals Case No.
18A-MI-883
v. Appeal from the Putnam Circuit
Court
Indiana Grain Buyers and The Honorable Matthew Headley,
Warehouse Licensing Agency, Judge
Appellee-Respondent. Trial Court Cause No.
67C01-1706-MI-236
Altice, Judge.
Case Summary
[1] Between 2009 and 2016, Dick Sears (Sears), an Indiana farmer, deposited corn
and soybeans with a grain elevator, Cline Grain, Inc. (Cline), which was
licensed with the Indiana Grain Buyers and Warehouse Licensing Agency (the
Court of Appeals of Indiana | Opinion 18A-MI-883 | December 21, 2018 Page 1 of 27
IGBWLA). On April 8, 2016, Cline financially failed, and the IGBWLA took
possession of Cline for the purpose of determining payment owed to depositors,
including Sears. The IGBWLA determined that pursuant to Ind. Code § 26-3-
7-2(5), which defines “claimant” under the relevant grain warehousing licensing
law, Sears was entitled to payment for grain delivered to Cline in the twelve-
month period prior to the elevator’s failure, but he did not qualify as a
“claimant” for grain delivered more than twelve months prior to the failure.
The IGBWLA, thus, denied Sears’s claim for grain delivered before April 8,
2015.
[2] Sears administratively appealed, and an ALJ affirmed the IGBWLA’s decision.
Sears appealed again, and the Ultimate Authority designated by the IGBWLA
adopted the findings and order of the ALJ, but with an adjustment based on a
statute enacted after the ALJ’s decision, I.C. § 26-3-7-37. Based on that statute,
the Ultimate Authority found that Sears was entitled to payment for grain
delivered after October 8, 2014, but not for grain delivered before that date.
Sears filed a petition for judicial review, and the trial court denied relief. Sears
filed the current appeal, raising the following restated issue:
Whether the trial court properly determined that the IGBWLA’s
interpretation of the term “claimant,” defined in I.C. § 26-3-7-
2(5), was not arbitrary or capricious.
[3] We affirm.
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Facts & Procedural History1
[4] Before we address the facts and history specific to Sears’s case, we find that a
brief overview of the grain warehousing licensing law is helpful to the analysis.
Grain Warehouse Licensing Law
[5] Many Indiana farmers deliver their harvested grain to a grain warehouse for
either storage or sale. The Indiana Grain Buyers and Warehouse Licensing and
Bonding Law, Indiana Code Chapter 26-3-7 (the Licensing Law) governs the
licensing and regulation of Indiana grain buyers and warehouses. The
Licensing Law contains numerous financial and reporting requirements for
warehouse licensees in order to maintain a license with the State. The
Licensing Law appoints the IGBWLA as the agency to administer the
Licensing Law.
[6] When an Indiana farmer, also referred to as a producer or depositor, delivers
harvested grain to a licensed grain warehouse for storage, title to the grain
remains with the producer until either he converts the grain to “grain for sale”
or ships the grain to another location. While in storage it is the producer’s
grain, and the producer pays a storage fee. In contrast, in a grain for sale
situation, the grain is sold, under several contract options, to the licensee. One
1
We held a traveling oral argument in this case on November 8, 2018, at Purdue University at the Frances
A. Cordova Recreational Sports Center. We commend counsel on the quality of their oral and written
advocacy, and we thank Purdue University for hosting the event, as well as attendees for their insightful
questions posed to the panel and counsel after the argument.
Court of Appeals of Indiana | Opinion 18A-MI-883 | December 21, 2018 Page 3 of 27
arrangement is referred to as “deferred pricing,” under which a producer
delivers the grain, title transfers to the licensee, and the price for the grain is
determined and paid at a later date.2 The grain that is the subject of this appeal
originated as a deferred pricing transaction between Sears and Cline.
[7] In the circumstance where a licensed warehouse fails financially, the IGBWLA
is charged with liquidating the failed licensee’s assets and distributing the
proceeds through a liquidation process set forth in I.C. § 26-3-7-16.5 (Section
16.5). During the liquidation process, producers are permitted to file claims at
or after a hearing. I.C. § 26-3-7-16.5(c), (d). The director of the IGBWLA
makes a determination as to the total proven storage obligation of each of the
claimants and the loss sustained by each depositor who has proven a claim.
I.C. § 26-3-7-16.5(e). The IGBWLA then makes distributions based upon
certain statutory priorities and prorates the distributions to the extent there are
insufficient funds to pay all claimants in full. I.C. § 26-3-7-16.5(g).
[8] For those claimants whose claim is not fully satisfied under the IGBWLA
liquidation process, there is still a possibility of recovering some of their claim
under the Indiana Grain Indemnity Program, set out in Ind. Code Chapter 26-
4-1. It provides further protection for farmers who experience a loss as a result
of the financial failure of a grain warehouse. If the farmer participated in the
2
“‘Deferred pricing’ or ‘price later’ means a purchase by a buyer in which title to the grain passes to the
buyer and the price paid to the seller is not determined: (A) at the time the grain is received by the buyer; or
(B) less than twenty-one (21) days following delivery.” I.C. § 26-3-7-2(7); Appellant’s Appendix Vol. IV at 6
(ALJ Order).
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Grain Indemnity Program, he may be considered a claimant under the program
if he possesses a claim resulting from a failure of a licensed grain buyer or
warehouse and the claim has been adjudicated by the IGBWLA. 3 I.C. § 26-4-1-
5.
Sears’s Claim
[9] Sears is a farmer from New Salem, Indiana and, since at least 2009, he
delivered harvested corn and soybeans to Cline, a grain elevator in Ladoga,
Indiana. On April 8, 2016, Cline failed and surrendered its Indiana
Buyer/Warehouse license to the IGBWLA. As a result, the IGBWLA,
pursuant to Section 16.5 of the Licensing Law, took possession of Cline’s
business and initiated a claims procedure “for the purpose of settling
outstanding accounts.” Appellant’s Appendix Vol. III at 17.
[10] A claims hearing was held on May 8, 2016, and potential claimants had the
opportunity to discuss their claims with IGBWLA auditors and were permitted
to make oral presentations regarding their claims at the hearing. On June 1,
2016, Sears timely submitted his Proof of Loss claim form. On August 8, 2016,
the IGBWLA issued its Findings of Fact and Final Order (IGBWLA Order).
In determining which claims qualified for payment and which did not, the
3
Sears points out that “the claim adjudication process is important, not only because a claim denial prevents
recovery from the assets of the licensee, but also recovery from the Grain Indemnity Fund.” Appellant’s
Appendix Vol. IV at 39.
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IGBWLA Order relied on I.C. § 26-3-7-2(5) (the Claimant Statute), which at
that time defined “claimant” as follows:
(5) “Claimant” means a person that is unable to secure
satisfaction within the twelve (12) months following delivery of
the financial obligations due from a licensee under this chapter
for grain that has been delivered to the licensee for sale or for
storage under a bailment.
Applying its interpretation of the Claimant Statute, the IGBWLA determined
as follows with regard to claims:
Cline Grain failed, and therefore closed, on April 8, 2016 making
that the operative date for a number of matters including the date
of loss being discovered, the price of grain for deferred pricing . . .
and the twelve month limit for claims is one year earlier, April 8, 2015.
****
Therefore, any grain deposited with Cline Grain before April 8, 2015
does not qualify for payment.
Id. at 18 (emphasis added). Applying the Claimant Statute, the IGBWLA
bifurcated the many claims, including Sears’s, into “Allowed Claims” for grain
deposited on or after April 8, 2015, and “Denied Claims Over 12 Months” for
grain deposited before April 8, 2015. Id. at 32, 76.
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[11] With respect to Sears’s particular claim, the IGBWLA determined that Sears
qualified for some payment4 based on his claim of $97,927.52, which
represented 13,295.982 bushels of corn and 6232 bushels of soybeans that he
delivered to Cline within the twelve-month period from April 8, 2015, through
April 8, 2016. The IGBWLA determined that Sears did not qualify as a
claimant for grain delivered between 2009 and 2014, and it therefore denied his
claim for payment for 83,146.78 bushels of corn and 17,293.41 bushels of
soybeans delivered to Cline between 2009 and 2014.5
[12] On August 26, 2016, Sears informed the IGBWLA that he wished to appeal the
IGBWLA Order to challenge the determination that he was not entitled to
payment for the grain delivered between 2009 and 2014. The narrow issue
before the ALJ was “whether or not Dick Sears qualifies as a ‘claimant’ for
grain that he delivered to Cline Grain before April 8, 2015.” Appellant’s
Appendix Vol. IV at 2. After a December 16, 2016 hearing, the ALJ issued, on
February 15, 2017, Recommended Findings of Fact, Conclusions of Law,
Finding of Ultimate Fact and Order (ALJ Order), in which the ALJ concluded
4
The IGBWLA Order advised that it only addressed the amount of loss that qualified for payment and that
the actual amount to be paid to a claimant, or to a lienholder, would be “addressed later by a pro rata
distribution of Cline Grain’s bond and grain assets that have been obtained by [IGBWLA].” Appellant’s
Appendix Vol. III at 19. It continued, “The Indiana Grain Indemnity Fund distribution will be made to
qualified recipients by the Board of the Indiana Grain Indemnity Corporation as provided for by Indiana
Code article 26-5.” Id.
5
Sears had a lien against the grain because he had not been paid for the grain that he delivered to Cline under
the deferred pricing transaction.
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that “Sears is not a claimant as that term is defined in Ind. Code § 26-3-7-2(5),
for grain he delivered to Cline Grain before April 8, 2015.” Id. at 8.
[13] In reaching this conclusion, the ALJ examined the legislative history of the
Claimant Statute. It recognized that, prior to March 2010, “claimant” was
defined in I.C. § 26-3-7-2(5) as follows:
“Claimant” means a person that is unable to secure satisfaction
of the financial obligations due from a licensee under this chapter
for grain that has been delivered to the licensee for sale or for
storage under a bailment.
In March 2010, the legislature amended the definition of “claimant” so that I.C.
§ 26-3-7-2(5) read:
“Claimant” means a person that is unable to secure satisfaction
within the twelve (12) months following delivery of the financial
obligations due from a licensee under this chapter for grain that
has been delivered to the licensee for sale or for storage under a
bailment.
[14] The ALJ observed that the parties focused on, and disagreed about, the
meaning of the phrase “delivery of financial obligations” within the Claimant
Statute. The IGBWLA’s position was that “delivery of financial obligations”
was synonymous with “delivery of grain” “because the delivery of grain creates
a lien . . . which is a ‘financial obligation’ to either Mr. Sears or the IGBWLA.”
Appellant’s Appendix Vol. IV at 10. The IGBWLA maintained that, under its
reading, the amendment to the Claimant Statute established “a twelve month
time bar” such that claims would not be paid for grain delivered earlier than the
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twelve months before the licensee failed. Id. at 9. Sears, on the other hand,
argued that “delivery of financial obligations” meant “when the depositor asks
to be paid. If the depositor is not paid on demand, a financial obligation to the
depositor arises.” Id. Under Sears’s reading, the statute excluded those
depositors who were satisfied/paid within one year after “delivering the
financial obligations to the licensee,” which occurred by requesting return of
grain or requesting payment. Id.
[15] The ALJ agreed with the IGBWLA’s position and explained:
[A]t the time grain is delivered to a warehouse, a lien “attaches in
favor” of claimants possessing proof of grain that is owned,
stored, or sold by the licensee. Ind. Code § 26-3-7-16.8(a)(1)-(4).
The lien becomes effective upon delivery of the grain for storage
or sale. Ind. Code § 26-3-7-16.8(b)(1)-(3). If the licensee fails, a
lien is assigned to the IGBWLA and is enforced and allocated
against a licensee’s grain assets by the IGBWLA director. For
that reason the delivery of grain, even in a deferred pricing
transaction, is a legally significant event. Title transfers to the
grain dealer and a lien right in the depositor is created. The
delivery of grain, therefore, equates to the “delivery of financial
obligations” and as a consequence, the twelve month time limitation
begins when the producer delivers the grain.
Id. at 11-12 (emphasis added). Based on that interpretation, the ALJ
determined “that claimants seeking reimbursement from the IGBWLA or the
Indiana Grain Indemnity Fund must have delivered their grain to the licensee
within one year of its failure,” and it affirmed the IGBWLA’s Order that denied
Sears’s claim for grain delivered before April 8, 2015. Id. at 13.
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[16] Sears appealed the ALJ’s decision to the Ultimate Authority designated by the
IGBWLA. The parties agreed that “there was a basic question of law to
resolve, namely whether or not Mr. Sears legally qualifies as a ‘claimant’ for
grain that he delivered to Cline Grain before April 8, 2015.” Id. at 26. On May
4, 2017, the Ultimate Authority issued Findings of Fact, Conclusions of Law,
and Final Order (Final Order), which adopted the overall recommendations of
the ALJ and concluded that “Sears . . . does not qualify as a claimant for grain
delivered before the bar date as established in Ind. Code [Chapter] 26-3-7.” Id.
at 26. The Ultimate Authority, however, observed that since the issuance of the
ALJ’s Order dated February 15, 2017, the Indiana legislature had amended Ind.
Code Chapter 26-3-7 to add a new section, I.C. § 26-3-7-37 (Section 37).
Section 37 became effective in April 20176 and provided in relevant part:
Notwithstanding any other law, a claimant who delivered grain
to a first purchaser for sale or storage under a bailment to a failed
licensee beginning October 8, 2014, and ending April 8, 2015,
shall be considered by the director or the director’s designated
representative in determining the total proven storage and
financial obligations due to depositors and the loss sustained by
each depositor who has proven a claim.
[17] The Ultimate Authority determined that Section 37 was to be applied
retroactively, and it ordered the IGBWLA to “consider Mr. Sears a claimant for
6
This statute was effective from April 24, 2017 until June 30, 2018.
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all grain delivered to Cline Grain after October 8, 2014.” Appellant’s Appendix
Vol. IV at 26. In its Final Order, the Ultimate Authority observed:
Clearly, law makers view [the Claimant Statute] as establishing a
twelve month time bar as argued by IGBWLA in this case and
they chose to extend that time frame during the 2017 legislative
session.
Id. at 33.
[18] On June 2, 2017, Sears filed a Verified Petition for Judicial Review of the
IGBWLA’s denial of Sears’s claim “for all grain delivered by Sears to Cline
Grain, Inc. prior to October 8, 2014,” arguing that “[a]ll of Sears’[s] claim
satisfies the statutory definition of claimant found in IC 26-3-7-2(5)” and that
“IGBWLA’s interpretation of I.C. 26-3-7 as applied to Sears’[s] claim [] is
arbitrary, capricious, and [an] abuse of discretion, and otherwise not in
accordance with law[.]” Appellant’s Appendix Vol. II at 11-12. Sears asked for an
order declaring that he is a “claimant” for the portion of the claim related to
grain delivered to Cline prior to October 8, 2014. On March 8, 2018, the trial
court issued the following order:
Court, upon review of the briefs and the ALJ’s decision, now
finds and concludes that Claimant/Sears shall be considered a
Claimant for purposes of this matter between the dates of
October 8, 2014 through April 8, 2016.
Court finds and concludes that the agency’s interpretation is not
arbitrary or capricious, not contrary to constitutional rights, and
is supported by the evidence pursuant to I.C. 4-21.5-5-14(d).
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As such, Court den[ies] Petitioner/Claimant[’]s petition for
interpretation different than that of the agency.
Id. at 8. Sears now appeals.
Discussion & Decision
[19] Judicial review of an administrative decision is limited under the
Administrative Orders and Procedures Act (AOPA). Huffman v. Office of Envtl.
Adjudication, 811 N.E.2d 806, 809 (Ind. 2004). We may set aside an agency
action only if it is
(1) arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law; (2) contrary to constitutional right,
power, privilege, or immunity; (3) in excess of statutory
jurisdiction, authority, or limitations, or short of statutory right;
(4) without observance of procedure required by law; or (5)
unsupported by substantial evidence.
Ind. Code § 4-21.5-5-14(d). The party seeking judicial review bears the burden
of proving that the agency action is invalid for one of the five reasons. Jay
Classroom Teachers Ass’n v. Jay Sch. Corp., 55 N.E.3d 813, 816 (Ind. 2016). An
action is arbitrary and capricious only where there is no reasonable basis for the
action. Ind. Dep’t. of Envtl. Mgmt. v. Boone County Res. Recovery Sys., Inc., 803
N.E.2d 267, 272 (Ind. Ct. App. 2004), trans. denied.
[20] Here, the parties agree that the issue is purely a matter of statutory
interpretation. When reviewing an agency’s interpretation of a statute, our
standard of review is de novo, and we “accord the administrative tribunal no
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deference.” NIPSCO Indus. Grp. v. N. Indiana Pub. Serv. Co., 100 N.E.3d 234,
241 (Ind. 2018). The goal of statutory interpretation is “to ascertain and give
effect to” the intent of the legislature. 21st Amendment, Inc. v. Ind. Alcohol &
Tobacco Comm’n, 84 N.E.3d 691, 696 (Ind. Ct. App. 2017), trans. denied. The
best evidence of legislative intent is the statutory language itself, and we strive
to give the words in a statute their plain and ordinary meaning. Id. (quotations
omitted). “A statute should be examined as a whole, avoiding excessive
reliance upon a strict literal meaning or the selective reading of individual
words.” Id. at 696-97. We presume that the legislature intended for the
statutory language to be applied in a logical manner consistent with the statute’s
underlying policy and goals. Id. at 697.
[21] We are tasked today with reviewing the IGBWLA’s interpretation of the then-
existing Claimant Statute, which read:
“Claimant” means a person that is unable to secure satisfaction
within the twelve (12) months following delivery of financial
obligations due from a licensee under this chapter for grain that
has been delivered to the licensee for sale or for storage under a
bailment.
I.C. § 26-3-7-2(5). The IGBWLA Order disallowed that portion of Sears’s
claim associated with grain that he had delivered to Cline before April 8, 2015 –
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one year before the failure.7 Appellant’s Appendix Vol. III at 18. The ALJ
affirmed the IGBWLA’s interpretation, as did the Ultimate Authority, but due
to the interim passage of Section 37, the Ultimate Authority directed the
IGBWLA to consider Sears a claimant for all grain delivered to Cline Grain
after October 8, 2014. The trial court on judicial review concluded that the
IGBLWA’s interpretation was not arbitrary or capricious, not contrary to
constitutional rights, and was supported by the evidence. Although Sears urges
that, for various reasons, the IGBWLA’s interpretation of the Claimant Statute
was erroneous, we agree with the trial court’s decision.
[22] We begin by observing that, effective March 2010, the legislature amended the
definition of “claimant” by adding the words indicated in bold:
“Claimant” means a person that is unable to secure satisfaction
within the twelve (12) months following delivery of financial
obligations due from a licensee under this chapter for grain that
has been delivered to the licensee for sale or for storage under a
bailment.
The parties agree on appeal that the added phrase reflects an intention to add a
limitation, but they disagree over the meaning and effect of the inserted phrase.
[23] The IGBWLA argues that, in reference to “within twelve months following
delivery,” what is being “delivered” is grain, such that claims would not be paid
7
The IGBWLA’s Order reflects that 189 producers were entitled to “some payment,” and five were entitled
to “no payment because of the twelve month limitation.” Appellant’s Appendix Vol. III at 19, 30.
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for grain that was delivered more than twelve months before the licensee fails.
Sears, on the other hand, argues that the 2010 amendment “was not seeking to
create a bar date to exclude certain depositors’ claims.” Appellant’s Brief at 23.
Rather, he argues that a plain reading of the statute’s language shows that what
is being “delivered” are financial obligations, which, he explains, arise when the
producer asks the licensee to be paid. Under Sears’s reading, a producer would
qualify as a claimant if he was unable to secure satisfaction of financial
obligations due from a licensee within twelve-months after asking for payment.
As explained below, however, we find that Sears’s position strings together
words in the Claimant Statute – “delivery of financial obligations” – which
were not intended to be connected in such a way, and instead, we find that the
IGBWLA’s determination was correct.
[24] The IGBWLA’s construction, which is that the “within twelve months
following delivery” phrase was intended to and did serve as a limitation on
grain for which a producer could be reimbursed, is consistent with and
supported by the legislative history of the statute, including subsequent history.
As we have observed, “Legislative intent may be identified and effectuated by .
. . changes made to the law since its enactment and the reasons for those
changes.” Miller Brewing v. Bartholomew County, 674 N.E.2d 193, 205 (Ind. Ct.
App. 1996), trans. denied. Here, after the May 2016 claims hearing, which
limited reimbursement for grain that was delivered on or after April 8, 2015,
and in response to the Cline warehouse failure, the legislature enacted Section
37, which extended the time frame for which a producer could be compensated,
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extending it from April 8, 2015 back to October 8, 2014. In full, Section 37
provided:
Notwithstanding any other law, a claimant who delivered grain to a
first purchaser for sale or storage under a bailment to a failed
licensee beginning October 8, 2014, and ending April 8, 2015, shall be
considered by the director or the director’s designated
representative in determining the total proven storage and
financial obligations due to depositors and the loss sustained by
each depositor who has proven a claim.
(Emphasis added). The legislature’s action in this regard did two things: (1) it
effectively recognized the existence of the one-year limitation in the Claimant
Statute, i.e., a person was a “claimant” only for grain that was delivered within
one year of the warehouse’s failure, and (2) it extended that look-back period
from April 8, 2015 to October 8, 2014. The clear implication of Section 37 is
that the Claimant Statute as written allowed a claim only for grain that was
delivered on or after April 8, 2015 – one year before the failure – and the
legislature wanted to extend that one-year limitation.
[25] Also, pursuant to the same legislative action, the legislature changed the
definition of “claimant” in the Claimant Statute, removing the previously-
inserted “within twelve months following delivery” phrase, such that a claimant
was defined beginning in April 2017 as “a person to whom a licensee owes a
storage or financial obligation under this chapter for grain that has been
delivered to the licensee for sale or for storage under a bailment.” I.C. § 26-3-7-
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2(6).8 Further, the same bill that struck the twelve-month provision from the
definition of “claimant” simultaneously added a separate fifteen-month time-
bar provision in another section, codified at I.C. § 26-3-7-16.5(e) (Subsection
16.5(e)). Thus, the legislature changed the twelve-month bar to fifteen months
and relocated that time limitation to Section 16.5. Specifically, Subsection
16.5(e) provides:
(e) Only grain that has been delivered to a first purchaser licensee for
sale or storage under a bailment not more than fifteen (15) months
before the date of failure of the licensee may be considered by the
director or the director’s designed representative in determining
the total proven storage and financial obligations due to
depositors and the loss sustained by each depositor who has
proven a claim.
(Emphasis supplied). The foregoing legislative action reflects that, as the
IGBWLA had found, the “within twelve months following delivery” language
in the Claimant Statute was intended to create a twelve-month limitation,
precluding recovery on claims for grain deposited more than twelve months
before the warehouse’s failure.
[26] We find that our decision is also supported by the language used in other
sections of the Licensing Law. Sears’s position – which maintains that the
8
P.L. 145-2017 (H.E.A. 1237) amended the Claimant Statute as follows: “Claimant” means a person that is
unable to secure satisfaction within the twelve (12) months following delivery of the financial obligations due
from to whom a licensee owes a storage or financial obligation under this chapter for grain that had been
delivered to the licensee for sale or for storage under a bailment.
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Claimant Statute concerned “delivery of financial obligations,” not delivery of
grain – fails to account for the fact that the prior version of the statute read
“unable to secure satisfaction of financial obligations due from a licensee.” I.C. §
26-3-7-2(5) (emphasis added). That is, it was “financial obligations” that were
“satisfied.” Although the legislature in 2010 inserted the phrase “within twelve
months following delivery” in the midst of the “satisfaction of financial
obligations” phrase, we find that it is still financial obligations that are being
satisfied and that “delivery” does not refer to delivery of financial obligations,
as Sears suggests, but rather refers to delivery of something else. As the
IGBWLA observes, the word “delivery” is repeatedly used throughout the
Licensing Law in connection with the delivery of grain. See e.g., I.C. § 26-3-7-
2(10) (“‘Depositor’ means . . . [a] person that delivers grain to a licensee”); I.C.
§ 26-3-7-18(a) (permitting licensee “to deliver grain previously received”); I.C. §
26-3-7-22 (stating that “same type of grain delivered” may be commingled); I.C.
§ 26-3-7-26(2) (providing that “[e]very ticket issued shall embody within its
terms . . . the date the grain was delivered”).
[27] Similarly, we observe that, in Section 37 and in Subsection 16.5(e), grain is
what is being “delivered” (“grain delivered to a licensee beginning October 8,
2015 and ending April 8, 2015,” and “grain delivered not more than fifteen
months before the date of failure”). Thus, the language of other sections within
the Licensing Law makes clear that grain, not financial obligations as Sears
argues, is what the legislature was referring to when in 2010 it inserted the
“within twelve months of delivery” phrase into the Claimant Statute.
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[28] In opposing the IGBWLA’s interpretation of the Claimant Statute, Sears argues
that, prior to the enactment of Subsection 16.5(e), “there was no statutory
basis” to exclude a claim based upon the date that the grain was deposited.
Appellant’s Brief at 14. He maintains that Section 16.5 is the section of the
Licensing Law that governs the claims process, and because that section
contained “no mention of limiting or barring claims based upon the date grain
was deposited,” no such bar existed. Id. at 13. We do not disagree that Section
16.5 was the more logical location for any limitation, and indeed the legislature
later moved it there, but the fact that the limitation appeared initially in another
section does not preclude our determination that a twelve-month limitation
provision existed in the Claimant Statute at the time of the IGBWLA’s
decision.
[29] Another argument posed by Sears is that once he was established as a claimant
– and it is undisputed that he was, for some of his grain – “there was no
statutory basis for the IGBWLA to reduce, disallow, or bifurcate his claim on
the basis that the grain was deposited with Cline.” Id. at 24. His position is
that “[i]t is an either/or proposition: a person either is a claimant as defined by
the law or he is not. A person cannot be both a claimant and not a claimant at
the same time[,]” and the IGBWLA’s Order should be reversed to allow his
claim in full. Id. This argument, however, is built on the assumption that
“within twelve months following delivery” was not intended to serve as a
limitation or bar on claims for grain that had been delivered to the warehouse
more than twelve months prior to its failure. We have rejected this view, as
Court of Appeals of Indiana | Opinion 18A-MI-883 | December 21, 2018 Page 19 of 27
explained above, and thus are not persuaded that claimant is an “all or
nothing” proposition. Rather, we find that in the Claimant Statute the
legislature intended to limit the IGBWLA’s exposure for repayment of claims.
[30] Based on the above, we find no error with the trial court’s determination that
the IGBWLA’s interpretation, which found that the Claimant Statute excluded
claims for grain that was delivered over twelve months prior to the licensee’s
failure, was not arbitrary and capricious, not contrary to constitutional rights,
and was supported the evidence. Accordingly, we affirm its denial of relief to
Sears.
[31] Judgment affirmed.
Kirsch, J., concurs.
Robb, J., dissents with opinion.
Court of Appeals of Indiana | Opinion 18A-MI-883 | December 21, 2018 Page 20 of 27
IN THE
COURT OF APPEALS OF INDIANA
Dick Sears,
Appellant-Petitioner, Court of Appeals Case No.
18A-MI-883
v.
Indiana Grain Buyers and
Warehouse Licensing agency,
Appellee-Respondent,
Robb, Judge, dissenting.
[1] In affirming the trial court and the various entities below, the majority reads
Indiana Code section 26-3-7-2(5) (2010) so that the definition of “claimant” acts
as a bar to all claims for grain delivered more than twelve months immediately
preceding a licensee’s failure. Id; slip op. at ¶ 22. The result of this interpretation
is that only those producers who delivered grain within the twelve months
before a licensee’s failure are compensated by the statute. As the majority
acknowledges, however, an agency’s interpretation of a statute is entitled to no
deference and I believe this reading of “claimant” is too narrow and serves to
exclude producers the statute intended to compensate. Therefore, on the facts
presented here, I would reverse the judgment of the trial court and remand for
additional evidence.
Court of Appeals of Indiana | Opinion 18A-MI-883 | December 21, 2018 Page 21 of 27
[2] The legislature added the emphasized language to the definition of “claimant”
effective March 2010:
“Claimant” means a person that is unable to secure satisfaction
within the twelve (12) months following delivery of financial
obligations due from a licensee under this chapter for grain that
has been delivered to the licensee for sale or for storage under a
bailment.
Ind. Code § 26-3-7-2(5); slip op. at ¶ 23. To the extent that the majority
concludes any producer who delivered grain in the twelve months immediately
preceding a licensee’s failure constitutes a claimant—I agree.9 After all, if a
licensee failed six months after delivery, the producer is “unable to secure
satisfaction within . . . twelve months[.]” Id. However, I do not believe these
producers are the only claimants.
[3] Nothing in the definition of “claimant” suggests to me that once a producer
meets the definition of claimant by having been “unable to secure satisfaction
within the twelve (12) months following delivery[,]” that the producer then
ceases to be a claimant after twelve months. Having determined the legislature
added the language “within the twelve (12) months following delivery[,]”
9
With the caveat in deferred pricing arrangements that a producer must also request payment in addition to
delivering the grain within those twelve months. See infra ¶ 9.
Court of Appeals of Indiana | Opinion 18A-MI-883 | December 21, 2018 Page 22 of 27
though, the question becomes: why? what purpose did it serve? I believe the
statute was amended for two reasons.
[4] First, the language served as a means of defining when, exactly, a warehouse
licensee was deemed to have failed. The Licensing Law defined the “failure” of
a warehouse licensee as, among other things, “[t]he inability of a licensee to
financially satisfy fully all obligations due to claimants.” Ind. Code § 26-3-7-
2(13)(A) (2015). The previous version of the claimant statute, that without a
time period, left uncertainty regarding how long a producer must wait before
enlisting the aid of the IGBWLA to collect on outstanding financial obligations.
The amended statute, however, resolved that uncertainty by allowing producers
to enlist the aid of the IGBWLA once they had attempted to collect a financial
obligation from a licensee for a period of twelve months, at which point the
facility could be deemed to have “failed,” and the IGBWLA would be charged
with liquidating the failed licensee’s assets through the process contained in
Indiana Code section 26-3-7-16.5 (2010). Should a claimant be defined as only
those who were unable to obtain satisfaction within the twelve-month period
immediately preceding the licensee’s failure, as the majority concludes, the
foregoing definition of “failure” becomes circular. Under that view, a
warehouse licensee fails when they are unable to satisfy their financial
obligations to “claimants” for a period of twelve months and “claimants” are
only those whose were unable to secure the satisfaction of the financial
obligations due from a licensee for the immediately preceding twelve months.
Court of Appeals of Indiana | Opinion 18A-MI-883 | December 21, 2018 Page 23 of 27
[5] Secondly, the language served to distinguish a “claimant” from a “depositor.”
A “depositor” was defined as, among other things, “[a] person that delivers
grain to a licensee under this chapter for storage or sale.” Ind. Code § 26-3-7-
2(9)(A) (2015). The claims process provided, in relevant part:
(c) . . . At the hearing on claims, the director may accept as
evidence of claims the report of agency representatives who in
informal conferences with depositors have concluded that a claim
is directly and precisely supported by the licensee’s books and
records. When there is disagreement between the claims of a
depositor and the licensee’s books and records, the director or the
director’s designated representative shall hear oral claims and
receive written evidence of claims in order to determine the
validity of the claim.
***
(e) Following the hearing on claims, the director shall make a
determination as to the total proven storage obligation of the
claimants and the loss sustained by each depositor who has
proven a claim. Depositors found to have proven their claims
shall be proven claimants. In arriving at that loss, in accordance
with section 19 of this chapter, the director shall apply all grain
on hand or its identifiable proceeds to meet the licensee’s
obligations to grain depositors of grain of that type. Initial
determinations of loss shall be made on the amount of grain on
hand, or identifiable proceeds, and shall reduce the amount to
which a depositor may have a proven claim. With respect to the
remaining unfulfilled obligations, the director shall, for the sole
purpose of establishing each depositor’s claim under this chapter,
establish a date upon which the loss is discovered, shall price the
grain as of that date, shall treat all outstanding grain storage
obligations not covered by grain on hand or identifiable proceeds
as being sold as of that date, and shall determine the extent of
Court of Appeals of Indiana | Opinion 18A-MI-883 | December 21, 2018 Page 24 of 27
each depositor’s loss as being the actual loss sustained as of that
date. . . .
Ind. Code § 26-3-7-16.5 (2010).
[6] The claims process clearly acknowledged a difference between a depositor and
a claimant, i.e., “the director shall make a determination as to the total proven
storage obligation of the claimants and the loss sustained by each depositor who
has proven a claim[,]” but provided a means by which depositors could join
claimants who had been denied payment for twelve months, i.e., “[d]epositors
found to have proven their claims shall be proven claimants.” Id. In my view,
this “once a claimant always a claimant until satisfied” interpretation of the
statute is the only way the subsequent language of the claims process makes
sense. Applying the majority’s time-barred definition of claimant to this section
renders the statute’s separate discussion of depositors and claimants
meaningless because, under that approach, a claimant is nothing more than a
depositor who was unable to secure payment within the twelve months
immediately preceding the licensee’s failure.
[7] Finally, the majority interprets the fact that the legislature has since amended
the statute to add a clear fifteen-month time bar as evidence that the previous
definition of “claimant” intended to do the same. Slip op. at ¶ 26. I, however,
believe this is evidence to the contrary. Had the legislature sought to change a
twelve-month bar to a fifteen-month bar, I believe the legislature would have
Court of Appeals of Indiana | Opinion 18A-MI-883 | December 21, 2018 Page 25 of 27
simply amended the definition of “claimant.” Instead, as part of larger changes
to the statute, the legislature removed several parts of the definition of
“claimant,” not just the language “within twelve (12) months following
delivery[,]” see slip op. at 26, n.8, and inserted the following language in the
section detailing the claims process:
(e) Only grain that has been delivered to a first purchaser licensee
for sale or storage under a bailment not more than fifteen (15)
months before the date of failure of the licensee may be
considered by the director or the director’s designated
representative in determining the total proven storage and
financial obligations due to depositors and the loss sustained by
each depositor who has proven a claim.
Ind. Code § 26-3-7-16.5(e). Had the legislature intended to bar producers who
delivered their grain more than twelve months before the date of failure with
the previous version of the statute, this amended language evidences that it
clearly knew how to do so.
[8] In sum, I believe that once a producer became a claimant they remained a
claimant until satisfied, regardless of the date of failure. This, I believe, is more
congruous with the statute’s language and the statute’s overall intent to aid
farmers—not to exclude them.
[9] Applied here, the record reveals the grain delivered before October 8, 2014,
some 83,146.78 bushels of corn and 17,293.41 bushels of soybeans, was
Court of Appeals of Indiana | Opinion 18A-MI-883 | December 21, 2018 Page 26 of 27
delivered under a deferred pricing arrangement. Under such an arrangement,
“a producer delivers the grain, title transfers to the licensee, and the price for the
grain is determined and paid at a later date.” Slip op. at ¶ 6. Because the
financial obligation remains uncertain until the producer requests payment from
the licensee, however, the producer must also have requested payment in order
for such obligation to have been “due.” See Black’s Law Dictionary 609 (10th
ed. 2014) (defining “due” as “[i]mmediately enforceable” or “[o]wing or
payable”); Black’s Law Dictionary 499 (6th ed. 1990) (“The word “due”
always imports a fixed and settled obligation or liability, but with reference to
the time for its payment there is considerable ambiguity in the use of the term . .
. .”). The record is silent, however, regarding when, or even if, Sears requested
payment pursuant to the deferred pricing arrangement. If he had requested
payment and was denied for a period of twelve months or if he had requested
payment in the twelve months preceding Cline’s failure, I believe he would also
constitute a “claimant” for the purposes of the grain delivered before October 8,
2014. Therefore, I would reverse the judgment of the trial court and remand
this cause for further evidence regarding the specifics of Sears’ dealings with
Cline under the deferred pricing agreement.
Court of Appeals of Indiana | Opinion 18A-MI-883 | December 21, 2018 Page 27 of 27