IN THE SUPREME COURT OF IOWA No. 15–0806
Filed May 27, 2016
Amended July 27, 2016
OYENS FEED & SUPPLY, INC.,
Appellant,
vs.
PRIMEBANK,
Appellee.
Certified questions of law from the United States District Court for
the Northern District of Iowa, Donald E. O’Brien, United States Senior
District Court Judge.
A federal district court certified two questions of law in a priority
dispute between competing creditors of a bankrupt hog operation.
CERTIFIED QUESTIONS ANSWERED.
Joel D. Vos and James W. Redmond of Heidman Law Firm, L.L.P.,
Sioux City, and A. Frank Baron of Baron, Sar, Goodwin, Gill & Lohr,
Sioux City, for appellant.
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. 2
Robert L. Hartwig, Johnston, for amicus curiae Iowa Bankers
Association. 3
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
Iowa Code § 459.102(46) (2009) (defining “swine farrow-to-finish
operation” for animal agriculture compliance purposes). After the
company filed for bankruptcy, the hogs were sold, but the sale did not
generate enough money to pay off competing liens asserted by two of
Crooked Creek’s creditors—Oyens Feed & Supply, Inc. and Primebank.
Today we determine the creditors’ relative priority in the remaining sales
proceeds by answering two questions of law a federal district court
certified to us.
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) (answering a
previous certified question from the United States District Court for the
Northern District of Iowa). Our previous decision sets forth the relevant
facts:
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. 4
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 Iowa Code
§ 570A.5(3). However, Primebank contended Oyens Feed is not entitled
to the entire escrow amount.
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. Id. § 570A.4(2); see id. § 570A.5 (granting priority to “an
agricultural supply dealer lien that is perfected under section 570A.4”);
In re Shulista, 451 B.R. 867, 874 (Bankr. N.D. Iowa 2011) (“[S]uper
priority is allowed . . . only insofar as the supply dealer has perfected its 5
lien.”); James J. White & Robert S. Summers, Uniform Commercial Code
§ 21–8, at 738 (5th ed. 2000) [hereinafter White & Summers] (“[Article 9
of the Uniform Commercial Code] grants potential super priority only to a
‘perfected agricultural lien.’ ”). Oyens Feed filed only two financing
statements, one on May 28 and the other on August 14, 2009. Thus,
Primebank contended Oyens Feed had only perfected its supply dealer
lien for the thirty-one-day periods immediately preceding the filing of
each of its financing statements, meaning it only had priority in, at most,
the amount of funds equaling the price of feed sold between April 27 and
May 28 and between July 14 and August 14.
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 livestock, whichever is greater.”
Iowa Code § 570A.5(3); see Oyens Feed, 808 N.W.2d at 194. Although all
of Crooked Creek’s pigs came from gilts and sows it raised from birth and
bred, Primebank asserted the acquisition price of the animals could not
be zero because the acquisition price must include costs of feed, labor,
transportation, facilities depreciation, utilities, and semen. As
Primebank put it, “the pigs do not magically appear.”
The bankruptcy court concluded the plain meaning of section
570A.4 creates a “discrete window of time,” beginning with the farmer’s
purchase of feed and ending thirty-one days later, within which an
agricultural supply dealer must file a financing statement to perfect its
lien. Shulista, 451 B.R. at 876; accord In re Schley, 509 B.R. 901, 908
(Bankr. N.D. Iowa 2014) (“[A]ny superpriority lien . . . would be limited
under § 570A.4(2) to the 31 days before [the party asserting an
agricultural supply dealer lien] filed a financing statement.”); cf. Caster v. 6
McClellan, 132 Iowa 502, 506–07, 109 N.W. 1020, 1021 (1906) (declining
to “extend the force of the enactment beyond the field marked out by the
language employed” because “[i]f . . . there should be an extension of the
lien right, it is for the Legislature to make provision therefor in clear and
unmistakable terms”). “If additional feed is sold after the . . . 31-day
period, another financing statement must be filed within 31 days of sale
to perfect the lien on that transaction.” Shulista, 451 B.R. at 877; see
also In re Big Sky Farms Inc., 512 B.R. 212, 219–20 (Bankr. N.D. Iowa
2014) (concluding Shulista remains good law after our previous Oyens
Feed decision). Accordingly, the bankruptcy court concluded Oyens Feed
had only perfected its lien as to amounts for feed delivered in the thirty-
one days preceding the filing of each of its financing statements. See
Schley, 509 B.R. at 908 (setting a maximum recovery under analogous
circumstances of the “total amount of feed supplied during the 31 days
prior to the first and second filings”). The court found Oyens Feed
perfected its lien in $156,367.43 of the escrowed funds and the
remainder of its lien was unsecured.
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 Iowa Code § 570A.5(3).” In adopting this formulation of
“acquisition price,” the court rejected Primebank’s contention that
acquisition price includes all expenses prorated per hog. Further, the
court concluded that while chapter 570A imposes some important
limitations on feed suppliers’ priority—for example, a thirty-one-day filing
period—the legislature could not have intended to make feed suppliers 7
engage in an elaborate accounting process to demonstrate the extent of
their priority. Cf. Oyens Feed, 808 N.W.2d at 194 (declining to require
feed suppliers to engage in an “impractical and cumbersome” certified
request process because “[t]he legislature presumably sought to
encourage a fluid feed market without burdening cooperatives and
farmers”). The bankruptcy court awarded Oyens Feed $156,367.43 of
the escrowed funds and awarded Primebank the remainder.
Both parties appealed to the federal district court. See 28 U.S.C.
§ 158(a)(1) (2012) (vesting federal district courts with jurisdiction to hear
appeals from final judgments and orders in cases and proceedings
referred to bankruptcy judges). Oyens Feed appealed the determination
that chapter 570A requires agricultural supply dealers to file a new
financing statement to perfect a lien for additional feed sold after filing
the first financing statement. Primebank appealed the determination
that the acquisition price for livestock born in Crooked Creek’s farrow-to-
finish facility is zero. A federal magistrate recommended that the district
court certify two questions of law to us.
The United States District Court for the Northern District of Iowa
adopted the magistrate’s recommendation and certified the following
questions:
1. 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?
2. Pursuant to Iowa Code section 570A.5(3), is the “acquisition price” zero when the livestock are born in the farmer’s facility? 8
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 section 570A.4 is ambiguous and asserts we should resolve
that ambiguity by holding once an agricultural supply dealer initially
perfects its lien, the lien remains continuously perfected both as to the
initial amount and as to any future amounts the feed supplier provides.
Oyens Feed acknowledges the bankruptcy court reached a contrary
conclusion in Shulista, but it asserts Shulista was wrongly decided.
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 Iowa Code § 554.9308(2) (“An agricultural lien is
perfected when it becomes effective if the applicable requirements are
satisfied before the agricultural lien becomes effective.”). Second, Oyens
Feed contends requiring a feed supplier to file serial financing statements
is impractical and cumbersome, and we rejected an impractical and
cumbersome process in our prior decision in this case. See Oyens Feed,
808 N.W.2d at 194. But see Big Sky Farms, 512 B.R. at 220–21
(concluding the certified request process and the process of filing
financing statements “are in fact very different” because a feed supplier
filing a financing statement may act unilaterally).
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 9
or may be furnished.” Iowa Code § 570A.4(1)(b) (2001) (emphasis added).
Oyens Feed points to the billbook explanation for the 2003 amendment,
which states the amendment maintained agricultural liens’ priority
status. S.F. 379, 80th G.A., 1st Sess. explanation (Iowa 2003); see
Oyens Feed, 808 N.W.2d at 189 (referring to this explanation in tracing
the history of chapter 570A). Asserting the bankruptcy court’s
interpretation of current section 570A.4 diminishes the priority status of
agricultural supply dealers’ liens by limiting the perfecting effect of a
financing statement to a period of thirty-one days before filing, Oyens
Feed contends the court misunderstood the legislative intent underlying
the 2003 amendment.
Finally, Oyens Feed relies upon a 1945 probate case for a
definition of “within” that suggests the word only sets an end date, not a
start date, for determining whether a financing statement was timely
filed. See Jensen v. Nelson, 236 Iowa 569, 572, 19 N.W.2d 596, 598
(1945).
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 section 570A.5(3) (2009). In other words, Primebank asserts 10
the word acquisition must mean something different from the word
purchase.
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. Iowa Code § 684A.1. As the bankruptcy
court has noted, there is no controlling Iowa precedent on the questions
presented in this case because we did not address the “within thirty-one-
days” language of section 570A.4 in our prior Oyens Feed decision. Big
Sky Farms, 512 B.R. at 219–20. Additionally, as before, the questions
certified to us are “purely legal issue[s] on the interpretation of . . . Iowa
statute[s] that will resolve the lien priority dispute.” Oyens Feed, 808
N.W.2d at 188. “To resolve these issues, we are faced with the weighty
task of determining the working relationship between . . . agricultural
liens and Revised Article 9 of the UCC.” Stockman Bank of Mont. v. Mon-
Kota, Inc., 180 P.3d 1125, 1133 (Mont. 2008). Both parties urge us to
answer the questions. Accordingly, we elect to do so. See Oyens Feed,
808 N.W.2d at 188.
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 11
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
reading of the agricultural lien provisions within Revised Article 9 is an
understanding that agricultural liens are not security interests.”); see also
Iowa Code § 554.9102(1)(e) (defining “agricultural lien” as an interest
“other than a security interest”).
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. Iowa Code 12
section 570A.4 sets forth the requirements for perfecting an agricultural
supply dealer lien. The relevant provisions of section 570A.4 are as
follows:
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.
Iowa Code § 570A.4.
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 section 570A.4(2) is
ambiguous and proceed to apply our rules of statutory construction to
resolve the ambiguity.
1. Relationship between chapter 554 and chapter 570A. Oyens
Feed contends section 570A.4’s express incorporation of section
554.9308 compels the conclusion that it needed to file only one financing
statement to perfect its lien for all of Crooked Creek’s feed purchases—
including those occurring after the first financing statement was filed on
May 28, 2009. Section 554.9308(2) provides,
An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection in section 13 554.9310 have been satisfied. An agricultural lien is perfected when it becomes effective if the applicable requirements are satisfied before the agricultural lien becomes effective.
Iowa Code § 554.9308(2). In turn, section 554.9310 simply states that,
with some exceptions not applicable to agricultural liens, “a financing
statement must be filed to perfect all security interests and agricultural
liens.” Id. § 554.9310(1); see White & Summers § 21–8, at 738 (“With
respect to perfection, section 9–310 makes no concessions to the
agricultural lien.”). Thus, because chapter 554 contemplates agricultural
liens that are perfected immediately when they become effective, and
chapter 570A refers to that portion of chapter 554, Oyens Feed contends
a single financing statement perfects an agricultural supply dealer’s lien
for the value of any feed sold after the dealer files a financing statement.
We disagree.
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 Iowa Code §§ 570A.4–.5 (applying
some article 9 provisions to agricultural supply dealer liens “[e]xcept as
provided in this section”). Commentators have noted that references to
agricultural liens within article 9 do not establish article 9 as the
principal source of rules governing them. See Robert D’Agostino & Bruce
Gordon Luna II, The U.C.C. and Perfection Issues Relating to Farm
Products, 35 N. Ill. U. L. Rev. 169, 173 (2014) (“The governance and
creation of agricultural liens . . . are still relegated to the related non-
U.C.C. state statute that creates an agricultural lien.”); see also White &
Summers § 21–8, at 738 (“[T]he agricultural lien has one foot in Article 9
and one foot outside of it.”). Instead, the reason for including agricultural 14
liens among those that are perfected by filing a financing statement “was
to eliminate secret liens by requiring a public filing.” Keith G. Meyer, A
Potpourri of Article 9 Issues, 8 Drake J. Agric. L. 323, 333 (2003); see also
Peterson, 8 Drake J. Agric. L. at 441–42 (noting the reason for including
agricultural liens within article 9 was to eliminate uncertainty in lenders’
secured status).
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 Iowa Code § 570A.4(2) (“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.” (Emphasis
added.)); Shulista, 451 B.R. at 880 (giving chapter 570A’s terms “priority
over the general UCC standards”); cf. Iowa Code § 554.9322(7) (“A
perfected agricultural lien . . . has priority over a conflicting security
interest in or agricultural lien on the same collateral if the statute
creating the agricultural lien so provides.” (Emphasis added.)).
The language of section 570A.4 conflicts with the language of
section 554.9308(2). Although section 570A.4(2) refers to the “perfected
when effective” language of section 554.9308(2), that reference is followed
by the limiting phrase requiring a supply dealer to file a financing
statement “within thirty-one days after the date that the farmer
purchases the agricultural supply.” Id. § 570A.4(2). We conclude the
phrase “within thirty-one days after” creates a rule that is specific to
agricultural supply dealer liens and that modifies the general agricultural
lien rule. In other words, the phrase makes the second sentence of
section 554.9308(2) inapplicable to agricultural supply dealer liens.
Compare id., with id. § 554.9308(2). The context-specific rule defeats the 15
general rule when a conflict arises. Id. § 4.7; Oyens Feed, 808 N.W.2d at
194.
2. Legislative history. Having clarified the relationship between
Code chapters, we now turn to examine Oyens Feed’s assertion that the
billbook explanation for the 2003 amendments to chapter 570A supports
its position in this case. See Iowa Code § 4.6(3), (7) (permitting courts to
consider “legislative history” and a statute’s “preamble or statement of
policy” in resolving ambiguity). We conclude Oyens Feed’s reliance on
the explanation that states amendments to chapter 570A would
“maintain” the prior law is misplaced.
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 Iowa Code § 570A.4(1)(b)
(2001), with id. § 570A.4(2) (2009).
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 section 570A.4 advanced by Oyens Feed is
unpersuasive. Indeed, the interpretation advanced would in our view
substantially expand the priority afforded such dealers under the pre-
2003 framework. Under Oyens Feed’s interpretation of the statute as
amended, an agricultural supply dealer’s lien is transformed into a 16
temporally unbounded and indefinite superpriority not only for a
farmer’s purchases of supplies from the dealer within thirty-one days
before the dealer files a financing statement, but also for purchases made
any time thereafter.
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. Iowa Code § 570A.4(1) (2001). All lien statements
were required to include “[a]n itemized declaration of the . . . retail cost of
the agricultural [supply] which has been or may be furnished” and note
“[t]he last date through which the agricultural supply dealer . . . agreed
to furnish agricultural” supplies. Id. § 570A.4(1)(b)–(c). Thus,
agricultural supply dealers seeking superpriority over a previously
perfected security interest, see id. § 570A.5(3), before the 2003
amendment were required to disclose both the value and the clear
temporal limits of 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. § 554.9502(1) (2009); see id. § 570A.4 (“[A] financing statement filed
to perfect an agricultural supply dealer lien shall be governed by chapter
554, article 9, part 5 . . . .”). Unlike the lien statements required before
the 2003 amendment, financing statements required by current law do
not disclose the amount of the claimed lien or the chronological period
during which agricultural supplies were—or are in the future to be—sold.
This significant change in the substance of the notice required of
agricultural supply dealers is inconsistent with Oyens Feed’s assertion
that the legislature intended the 2003 amendment merely to integrate 17
chapter 554 and pre-2003 chapter 570A without making substantive
changes—unless section 570A.4 as amended includes a filing
requirement that maintains temporal and value limitations on supply
dealers’ liens. Put another way, if we were to assume, as Oyens Feed
urges, that the legislature intended the 2003 amendment would
“maintain” the priority framework previously enjoyed by agricultural
supply dealers, we conclude the assumption would augur in favor of
Primebank’s interpretation of section 570A.4. See Iowa Code § 4.6(4)
(permitting courts resolving statutory ambiguity to consider “former
statutory provisions, including laws upon the same or similar subjects”).
“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. 18
3. The word “within.” As we have noted, Oyens Feed asserts the
word “within” in section 570A.4 supports its contention that an
agricultural supply dealer’s lien can be perfected by filing a financing
statement either before or after a farmer purchases an agricultural
supply so long as the filing occurs within thirty-one days after the initial
purchase for which the lien is claimed. Although we do not resolve this
case solely with “plain language” analysis, we conclude the sometimes
elastic meaning of the word “within” would stretch beyond the breaking
point if applied as Oyens Feed suggests. See Farmers Coop. Elevator Co.
v. Union State Bank, 409 N.W.2d 178, 181 (Iowa 1987) (rejecting a
creditor’s argument that, “although creative, stretches the [statutory]
language . . . beyond our interpretation guideposts”).
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. 19
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, 20 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, 266
N.W.2d 208, 210 (Neb. 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 section 570A.4
is contrasted with other statutory language in chapter 554 governing
secured transactions in other contexts. Two provisions of chapter 554
require action within a certain number of days after some event—but by
necessity demarcate the event itself as a starting point. See Iowa Code
§ 554.9317(5) (giving priority to a purchase-money security interest
perfected with a financing statement filed “before or within twenty days
after the debtor receives delivery of the collateral”); id. § 554.9507(3)(a)
(providing a financing statement that becomes seriously misleading due
to a debtor’s name change still perfects an interest “in collateral acquired
by the debtor before, or within four months after, the change”).
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 section 570A.4. In both section 554.9317(5)
and section 554.9507(3), the legislature used both the word “before” and
the phrase “within . . . after.” This suggests only post-event occurrences 21
take place within a certain amount of time after the event; if that were
not the case, the word “before” would be superfluous. Put another way,
these two provisions indicate the legislature knows how to include pre-
event occurrences when it wants to do so, and the word “within” does not
alone effect such an inclusion. As we explained almost ninety years ago,
when we interpret statutory language, even “indulgence in the doctrine of
generous construction cannot be permitted to . . . extend[] the meaning
of words so far that it amounts to the addition of new ones.” Peterson
Co. v. Freeburn, 204 Iowa 644, 646, 215 N.W. 746, 748 (1927). Because
section 570A.4 does not say “before or within thirty-one days after the
date that the farmer purchases the agricultural supply,” we reject Oyens
Feed’s contention that a financing statement filed under the section can
perfect an agricultural supply lien for purchases of agricultural supplies
occurring after the financing statement is filed.
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 section 570A.4 for quantities of feed sold on credit
after the statement is filed. Instead, the agricultural supply dealer’s
financing statement only perfects a lien for the feed purchases occurring
during the thirty-one days preceding the filing of the financing
statement. 1 See Iowa Code § 570A.4(2). This interpretation of section
570A.4(2) best accommodates the interrelationship between chapter 554
and chapter 570A and the legislative compromise underlying the 2003
amendments incorporating chapter 570A into article 9.
1We do not suggest every sale must generate a new financing statement. For example, a supply dealer who sells feed on credit every week—say, on May 1, 8, 15, 22, and 29—could perfect a lien as to all amounts sold in that month by filing a financing statement on the last day of the month. 22
B. Question Two: Acquisition Price. Section 570A.5(3) limits a
feed supplier lien’s priority to “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.” Iowa Code § 570A.5(3). Chapter 570A “provides no definition of
the term acquisition price.” Coastal Plains Pork, 2012 WL 6571102, at *5
(applying Iowa law). Commentators writing soon after the original
enactment of chapter 570A suggested section 570A.5(3) “may cause
consternation in the financial institution community” because “it appears
that where there is existing livestock with no acquisition price, the
secured creditor will stand behind a verified lien to the full extent of the
value of the feed consumed.” Salsbery & Juhl, 34 Drake L. Rev. at 377–
78.
We agree with the commentators that section 570A.5(3) allows an
agricultural supply dealer with a perfected lien on a farrow-to-finish
producer’s herd to assert superpriority to the full extent of the value of
feed purchased because we conclude animals born and raised in the
farmer’s farrow-to-finish operation have no “acquisition price” as that
term is used in section 570A.5(3).
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 23
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. Section
6B.59 provides that if an acquiring agency uses eminent domain power
to acquire property and later sells that property “for more than the
acquisition price paid to the landowner,” the agency must pay the
landowner the difference between what it paid to acquire the land and
what it received in the sale. Iowa Code § 6B.59. In the eminent domain
context, the phrase “acquisition price” appears to refer only to the
amount of money that exchanged hands, not that amount plus the 24
acquiring agency’s other costs incurred for labor, inspectors’ services,
surveyor fees, appraiser charges, and the like. We reach a similar
conclusion with respect to the meaning of acquisition price in chapter
570A.
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 price for
purposes of Iowa Code section 570A.5(3).
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.