APPLICABILITY OF PREPARER LIEN TO DAIRY LICENSES

AGRICULTURE ‑- DAIRIES AND FOODS ‑- LIENS ‑- APPLICABILITY OF PREPARER LIEN TO DAIRY LICENSES 

RCW 20.01.030 does not exempt persons or businesses licensed under the dairy laws of Washington from the "preparer lien" provided for in RCW 20.01.630.

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                                                                   June 13, 1984 

Honorable M. Keith Ellis, Director
Washington State Department
  of Agriculture, AX-41
General Administration Building
Olympia, Washington 98504

Cite as:  AGO 1984 No. 14                                                                                                                

 Dear Sir:

            By letter previously acknowledged you asked for our opinion on the following question.

             "Given the exemptions provided in RCW 20.01.030, are persons or businesses licensed under the dairy laws of Washington subject to the 'preparer lien' provided in RCW 20.01.630?"

             We answer your question in the affirmative for the reasons set forth in our analysis.

                                                                      ANALYSIS

             The Washington Commission Merchants Act, chapter 139, Laws of 1959, as amended, regulates businesses engaging in transactions relating to the marketing of agricultural commodities.  Specifically that law, which is currently codified by RCW 20.01.010 through 20.01.470, sets forth licensing and bonding requirements for commission merchants, dealers, limited dealers, brokers, buyers and agents.  The determination of precisely what agricultural marketing activities fall under the law has been a difficult process.  Over the years our office has issued numerous opinions on whether a particular agricultural marketing activity is, or is not,  [[Orig. Op. Page 2]] subject to the law.1/ Similarly, the legislature has been frequently requested to deal with the applicability of its requirements to a particular marketing activity.  In the past ten years alone, the exemption section of the law, RCW 20.01.030, has been amended six times2/ and currently reads as follows:

             "This chapter does not apply to:

             "(1) Any cooperative marketing associations or federations incorporated under, or whose articles of incorporation and bylaws are equivalent to, the requirements of chapter 23.86 RCW or chapter 24.32 RCW, except as to that portion of the activities of the association or federation that involve the handling or dealing in the agricultural products of nonmembers of the organization:  PROVIDED, That the associations or federations may purchase up to fifteen percent of their gross from nonmembers for the purpose of filling orders:  PROVIDED FURTHER, That if the cooperative or association acts as a processor as defined in RCW 20.01.500(2) and markets the processed agricultural crops on behalf of the grower or its own behalf, the association or federation is subject to the provisions of RCW 20.01.500 through 20.01.560 and the license provision of this chapter  [[Orig. Op. Page 3]] excluding bonding provisions:  PROVIDED FURTHER, That none of the foregoing exemptions in this subsection apply to any such cooperative or federation dealing in or handling grain in any manner, and not licensed under the provisions of chapter 22.09 RCW;

             "(2) Any person who sells exclusively his own agricultural products as the producer thereof;

             "(3) Any public livestock market operating under a bond required by law or a bond required by the United States to secure the performance of the public livestock market's obligation.  However, any such market operating as a livestock dealer or order buyer, or both, is subject to all provisions of this chapter except for the payment of the license fee required in RCW 20.01.040;

             "(4) Any retail merchant having a bona fide fixed or permanent place of business in this state;

             "(5) Any person buying farm products for his own use or consumption;

             "(6) Any warehouseman or grain dealer licensed under the state grain warehouse act, chapter 22.09 RCW, with respect to his operations as a licensee under that act;

             "(7) Any nurseryman who is required to be licensed under the horticultural laws of the state with respect to his operations as such licensee;

             "(8)Any person licensed under the now existing dairy laws of the state with respect to his operations as such licensee;

             "(9) Any producer who purchases less than fifteen percent of his volume to complete orders;

             "(10) Any person, association, or corporation regulated under chapter 67.16 RCW and the rules adopted thereunder while performing acts regulated by that chapter and the rules adopted thereunder;

            "(11) Any boom loader who loads exclusively his own hay or straw as the producer thereof."  (Emphasis supplied)

              [[Orig. Op. Page 4]]

            Your question stems from the fact that in 1983, by chapter 305, Laws of 1983, the legislature, in addition to expanding the law's licensing requirements and increasing bonding coverage3/ also created processor and preparer liens in favor of agricultural producers.  See § § 9-14, chapter 305,supra, now codified as RCW 20.01.620-20.01.670.  Under these lien provisions, an agricultural producer who sells a commodity to a processor, preparer, or conditioner is entitled to a first-priority statutory lien if he satisfies certain statutory filing and notice requirements.  RCW 22.01.620-670 [20.01.620-20.01.670].  The terms producer, processor, preparer and conditioner are defined for the purpose of those lien provisions as follows:

             RCW 20.01.010:

             ". . ."

             "(4) 'Producer' means any person engaged in the business of growing or producing any agricultural product, whether as the owner of the products, or producing the products for others holding the title thereof.

             ". . .

             "(14) 'Processor' means any person, firm, company, or other organization that purchases agricultural crops from a consignor and that cans, freezes, dries, dehydrates, cooks, presses, powders, or otherwise processes those crops in any manner whatsoever for eventual resale.

            ". . .

             "(18) 'Conditioner' means any person, firm, company, or other organization that receives turf, forage, or vegetable seeds from a consignor for drying or cleaning.

             ". . ."

             RCW 20.01.630:

             "For the purposes of this section and RCW 20.01.640 through 20.01.670, 'preparer' means a person engaged in the business of feeding livestock or preparing livestock  [[Orig. Op. Page 5]] products for market. . . ."

             Bearing this historical backdrop in mind we now turn to your immediate question.  You have asked whether, given the exemptions provided in RCW 20.01.030,supra, persons or businesses licensed under the dairy laws of this state may be subject to the preparer lien provided in RCW 20.01.630 which reads, in pertinent part, as follows:

             "Starting on the date a producer delivers grain, hay, or straw to a preparer, the producer has a first priority statutory lien, referred to as a 'preparer lien.'  This preparer lien shall continue until twenty days after payment for the product is due and remains unpaid, without filing any notice of lien, for the contract price, if any, or the fair market value of the products delivered.  The preparer lien attaches to the agricultural products delivered and to the preparer's accounts receivable."

             The issue thus raised may be fairly simply stated. RCW 20.01.030 speaks of exemptions from "This chapter."  Does the phrase "This chapter" mean all of chapter 20.01 RCW, including RCW 20.01.620-20.01.670 which were added to that RCW chapter by § § 9 through 19, chapter 305, Laws of 1983,supra?  Or does it, instead, mean only those portions of chapter 20.01 RCW which codify the Washington Commission Merchants Act, as amended; i.e., RCW 20.01.010 through RCW 20.01.470?4/

             We are guided in responding by various rules of statutory construction.  To begin with, legislative intent is primarily to be deduced, if possible, from what is said in a statute.  In re Estate of Lyons, 83 Wn.2d 105, 515 P.2d 1293 (1973).  Where, however, the intent of the legislature is not clear from the language in a statute, a court may resort to statutory construction.  The Department of Transportation v. State Employees Insurance Board, 97 Wn.2d 454, 645 P.2d 1076 (1982).  In turn, the sole objective of  [[Orig. Op. Page 6]] statutory construction is to carry out the intent of the legislature.  The Department of Transportation v. State Employees Insurance Board,supra.  And where doubt or uncertainty arises from words used by the legislature, the section under construction must be read in context with the entire act and given a meaning designed to avoid incongruous or absurd consequences.  Standing v. Department of Labor and Industries, 92 Wn.2d 463, 598 P.2d 725 (1979).  Occasionally, the literal expression of legislation may be inconsistent with the obvious objectives or policy behind it, and in such circumstances the spirit or intention of the law must prevail over the letter of the law.  State v. Brasel, 28 Wn.App. 303, 623 P.2d 696 (1981).  Finally, legislation should be construed to make it purposeful and objective.  City of Spokane v. Spokane Police Guild, 87 Wn.2d 457, 553 P.2d 1316 (1976).

             Here, a reading of the words "This chapter" in RCW 20.01.030,supra, to mean all of chapter 20.01 RCW would lead to some highly incongruous results.  To begin with, of course, it would mean that a licensee under the dairy laws would not only be exempt from the licensing and bonding requirements of the Commission Merchants Act, as such, but would also be immune from the preparer's lien now provided for (as a consequence of the subject 1983 legislation) in RCW 20.01.630.  By the same token, under that approach no part of chapter 20.01 RCW would apply to ". . . any person who sells exclusively his own agricultural products as the producer thereof."  RCW 22.01.030(2) [20.01.030(2)].  Likewise, thus read, the exemption language of RCW 22.01.030 [20.01.030] would mean that agricultural producers are not covered by any part of chapter 20.01 RCW when, in fact, the entire law was enacted for the purpose of protecting the agricultural producer.  Yet, under the foregoing analysis, chapter 20.01 RCW would not apply to the producer and he would not be entitled to file complaints with the Department of Agriculture, receive bond proceeds or even to claim the very preparer or processor liens which were created for his protection.  Such a construction would effectively render the law meaningless.

             In addition, such a reading of RCW 22.01.030 [20.01.030] would severely restrict the persons against whom the preparer and processor liens may be asserted.  For example, those liens would not be assertable against a preparer, processor or conditioner who also constitutes a cooperative (RCW 20.01.030(1)), a retail merchant (RCW 20.01.030(4)), a warehouseman or grain dealer (RCW 20.01.030(6) or a business, such as a dairy, licensed under the dairy laws (RCW 20.01.030(8)).  Yet in fact (for example), most warehousemen are also conditioners and most dairies are also preparers.  A seed grower would typically sell to a warehouseman.  A hay grower would  [[Orig. Op. Page 7]] typically sell to a dairy.  But under a literal reading of RCW 20.01.030, the lien would not be available in those common situations.  Similarly, public livestock markets exempted by RCW 22.01.030(3) [20.01.030(3)] commonly file complaints and bond claims with the department under the law.  Yet, under a literal reading of RCW 22.01.030 [20.01.030] no part of the RCW chapter would apply to them either.  And likewise, the chapter would not apply to any person buying farm products for his own use, an exemption which would read nearly everyone in the agriculture industry out of the act.  RCW 20.01.030(5).

             Fortunately, a reasonable interpretation of RCW 20.01.030 also exists which avoids such strained results.  Under this approach, RCW 20.01.030 is to be viewed as only exempting the listed persons and businesses from the licensing and bonding requirements of the Commission Merchants Act itself (RCW 20.01.010 through 20.01.470).  And it is based on the proposition that when that act was originally passed by the legislature it only affected parties which were to be licensed and bonded under its terms‑-long before the lien provisions were added to the RCW chapter.  Indeed, our review of the history of this legislation discloses that the words "This chapter" which now appear in RCW 20.01.030 actually read "This act" in the original session law text of the source of the Commission Merchants Act, chapter 139, Laws of 1959.  See, § 3 thereof.  Thereafter, it was changed to read "This chapter" by the Code Reviser upon codification of the act as chapter 20.01 RCW.  Later additions to that RCW chapter, however, need not necessarily be treated as additions to the act as well‑-particularly where, as here, such a treatment of those later additions would produce such incongruous consequences as we have heretofore noted.

             Our alternative interpretation of RCW 20.01.030, supra, is also supported by certain related observations.  First, our review of the legislative history of the 1983 amendments indicates that no effort was made by the legislature to create classes of preparers or processors against whom the lien may operate.  The above‑quoted language defining preparer, processor and conditioner is clear and without exceptions.  Under those definitions, a preparer, processor or conditioner may or may not be licensed under the act.  The language of those definitions thus indicates that the lien may attach against those who fall within the definition regardless of whether they are licensed under the Commission Merchants Act or any other act, such as the dairy laws or the warehousing laws.

             Second, most of the exemptions listed in RCW 20.01.030 are for persons and businesses licensed and regulated by other laws.  The  [[Orig. Op. Page 8]] apparent intent of those exemptions is to avoid duplicative licensing and bonding requirements.

            Finally, our interpretation of RCW 20.01.030 allows all of the provisions of chapter 20.01 RCW to be given proper effect.  The exemptions are read as exempting the listed entities from the licensing and bonding requirements.  The definitions of preparer and processor may be accepted as written and not as being subject to hidden exception.  And, under this view, the law does afford protections to agricultural producers.

             For the foregoing reasons, we thus conclude that the exemptions set forth in RCW 20.01.030 are exemptions from the provisions of RCW 20.01.010-20.01.470 only.  As such, these exemptions do not determine whether such entities may be the subject of a preparer or processor lien created by RCW 20.01.620-20.01.670.  We therefore answer your question (as above stated) in the affirmative.

             We trust that the foregoing will be of assistance.

 Very truly yours,
KENNETH O. EIKENBERRY
Attorney General

NIXON HANDY
Senior Assistant Attorney General