Case Title: J&M Cattle Co v. Farmers National Bank

Citation: 

Docket Number: 41023

State: idaho

Court: Idaho Supreme Court (civil)

Date: 2014-08-01T00:00:00Z

Document:
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IN THE SUPRME COURT OF THE STATE OF IDAHO 
Docket No. 41023 
 
 
J & M CATTLE COMPANY, LLC, an 
Idaho limited liability company, 
 
      Plaintiff-Counterdefendant-Respondent, 
 
v. 
 
FARMERS NATIONAL BANK, 
 
       Defendant-Counterclaimant-Appellant, 
 
and 
 
JOHN DOES 1-10, 
 
        Defendants. 
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Twin Falls, June 2014 Term 
 
2014 Opinion No. 74 
 
Filed:  August 1, 2014 
 
Stephen W. Kenyon, Clerk   
    
_________________________________________ 
 
 
Appeal from the District Court of the Fifth Judicial District of the State  
of Idaho, Twin Falls County. Hon. Randy J. Stoker, District Judge. 
 
The judgment of the district court in giving priority to agister’s lien 
over prior perfected security interests is affirmed. 
 
 
Coleman, Ritchie & Cluff, Twin Falls, attorneys for appellant. John 
 
Ritchie argued. 
 
 
Cosho Humphrey, LLP, Boise, attorneys for respondent. David M. 
 
Penny argued. 
________________________ 
W. JONES, Justice 
This appeal arises from the sale of dairy cattle subject to Appellant Farmers National 
Bank’s (FNB) perfected security interest and Respondent J&M Cattle Company’s (J&M) 
agister’s lien. The net sale proceeds received from the sale of the dairy cattle are insufficient to 
satisfy both FNB’s perfected security interest and J&M’s agister’s lien. J&M filed an action for 
declaratory relief to resolve FNB’s and J&M’s competing interests. Although FNB’s perfected 
security interest has a priority date that predates J&M’s agister’s lien, the district court 
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determined that J&M’s agister’s lien had priority over FNB’s perfected security interest. The 
district court entered a final judgment in favor of J&M, and FNB appeals to this Court. We 
affirm the judgment of the district court. 
I.  FACTUAL AND PROCEDURAL BACKGROUND 
The facts of this case are undisputed. On July 14, 2006, FNB loaned money to Green 
River Dairy, LLC, evidenced by promissory notes, security agreements, and UCC-1 and UCC-1F 
financing statements. FNB again loaned money to Green River Dairy in 2008. These loans were 
secured by dairy cattle, as well as other assets and collateral of Green River Dairy. Beginning in 
June of 2011, Green River Dairy delivered possession of some of the dairy cattle subject to 
FNB’s security agreement to J&M. Green River Dairy delivered the dairy cattle to J&M for the 
purpose of J&M providing food, care, and other services necessary to raise the dairy cattle. 
FNB’s perfected security interest in the dairy cattle has a priority date that predates J&M’s 
rendition of services to the cattle. 
Green River Dairy defaulted on its obligation to FNB. On December 12, 2011, FNB filed 
suit against Green River Dairy to collect on its obligation. J&M was not a party to that litigation. 
FNB was awarded $2,176,399.21 in an amended judgment and decree of foreclosure, which 
confirmed that FNB held a security agreement in the dairy cattle. J&M claims an agister’s lien in 
the amount of $751,602.35.  
On January 5, 2012, FNB and J&M entered into an agreement for the sale of the dairy 
cattle and deposit of the net sale proceeds in an interest bearing account without prejudice to 
either party’s claims or waiver of either party’s rights, priority, or interest in the dairy cattle. On 
April 3, 2012, J&M gave notice of the sale of the dairy cattle pursuant to its claim of an agister’s 
lien. The dairy cattle were sold and the net proceeds are held at FNB pursuant to the parties’ 
agreement. As of May 8, 2013, the amount of the deposit was $597,740.70. J&M’s agister’s lien 
and the amount owed to FNB pursuant to the judgment each exceed the amount of the deposit. 
On July 18, 2012, J&M filed a complaint seeking a declaratory judgment that its agister’s 
lien had priority over FNB’s prior perfected security interest. FNB answered and filed a 
counterclaim asserting that its prior perfected security interest had priority over J&M’s agister’s 
lien. On November 29, 2012, J&M moved for partial summary judgment on the issue of priority. 
The district court determined that J&M’s agister’s lien had priority over FNB’s prior perfected 
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security interest and therefore J&M was entitled to judgment as a matter of law on the issue of 
priority.  
Following the parties’ stipulation for an entry of final judgment, the district court entered 
a final judgment on May 9, 2013, finding in favor of J&M in the amount of $597,740.70 and 
dismissing FNB’s counterclaim. FNB timely appealed. 
II.  ISSUE ON APPEAL 
Whether Idaho law provides that an agister’s lien has priority over a prior perfected security 
interest. 
III.  STANDARD OF REVIEW 
“This Court reviews appeals from a grant of summary judgment using the same standard 
as is used by the district court ruling on the motion.” Teurlings v. Larson, 156 Idaho 65, 69, 320 
P.3d 1224, 1228 (2014). “Summary judgment is proper ‘if the pleadings, depositions, and 
admissions on file, together with the affidavits, if any, show that there is no genuine issue as to 
any material fact and that the moving party is entitled to a judgment as a matter of law.’” Id. 
(quoting Idaho Rule of Civil Procedure 56(c)). Statutory interpretation is a question of law 
subject to free review. Sanders v. Bd. of Trs. of Mountain Home Sch. Dist. No. 193, 156 Idaho 
269, 272, 322 P.3d 1002, 1005 (2014).  
IV.  ANALYSIS 
Idaho Code section 28-9-333(b) states: “A possessory lien on goods has priority over a 
security interest in the goods unless the lien is created by a statute that expressly provides 
otherwise.” I.C. § 28-9-333(b). As a possessory lien, an agister’s lien generally has priority over 
a prior perfected security interest pursuant to Idaho Code section 28-9-333(b). The issue in this 
case is whether the statute that creates the agister’s lien, Idaho Code section 45-805, “expressly 
provides otherwise” to alter the priority position of an agister’s lien. This Court concludes that it 
does not. 
Idaho Code section 45-805 has three sections. First, section (a) provides:  
Every person who, while lawfully in possession of an article of personal property, 
renders any service to the owner thereof, by labor, or skill, employed for the 
protection, improvement, safekeeping, or carriage thereof, has a special lien 
thereon, dependent on possession, for the compensation, if any, which is due him 
from the owner, for such service. . . .  
 
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I.C. § 45-805(a).1 Section (a) also outlines the notice procedures for a person with a personal 
property lien to sell the property to satisfy the lien. Among other things, it requires the person to 
send notice to the holder of a perfected security interest in the property. Id. In addition, section 
(a) provides the procedure for a person rendering services to personal property to obtain priority 
over a prior perfected security interest. It states: 
The person who is about to render any service to the owner of an article of 
personal property by labor or skill employed for the protection, improvement, 
safekeeping or carriage thereof may take priority over a prior perfected security 
interest by, before commencing any such service, giving notice of the intention to 
render such service to any holder of a prior perfected security interest at least 
three (3) days before rendering such service. If the holder of the security interest 
does not notify said person, within three (3) days that it does not consent to the 
performance of such services, then the person rendering such service may proceed 
and the lien provided for herein shall attach to the property as a superior lien. 
 
Id. In short, a person with a personal property lien may take priority over a prior perfected 
security interest by providing notice to the holder of that interest and receiving no objection from 
the holder. 
 
Second, section (b) creates a possessory lien for persons who care for, board, feed, or 
pasture livestock, also known as an agister’s lien. It provides: 
Livery or boarding or feed stable proprietors, and persons pasturing livestock of 
any kind, have a lien, dependent on possession, for their compensation in caring 
for, boarding, feeding or pasturing such livestock.  
 
I.C. § 45-805(b). Similar to section (a), section (b) outlines the notice procedures for a person 
with an agister’s lien to sell the property to satisfy the lien. In this respect, section (b) provides:  
If the liens as herein provided are not paid within sixty (60) days after the work is 
done, service rendered, or feed or pasturing supplied, the person in whose favor 
such special lien is created may proceed to sell the property at a licensed public 
livestock auction market, or if the lien is on equines, to sell the animals at a sale 
offered to the public, after giving ten (10) days’ notice to the owner or owners of 
the livestock and the state brand inspector. The information contained in such 
notice shall be verified and contain the following: 
 
(1) The time, place and date of the licensed public livestock auction 
 
market, or in the case of equines, the time, place and date of the sale 
 
offered to the public;  
 
(2) The name, address and phone number of the person claiming the lien; 
 
                                                 
1 The Court notes that the Legislature has amended Idaho Code section 45-805 since the initiation of proceedings in 
this case, but these amendments are not dispositive. See Ch. 341, § 1, 2012 Idaho Sess. Laws 952; Ch. 18 § 1, 2013 
Idaho Sess. Laws 208. 
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(3) The name, address and phone number of the owner or owners of the 
 
livestock upon which the lien has been placed; 
 
(4) The number, breed and current brand of the livestock upon which the 
 
lien has been placed; and 
 
(5) A statement by the lienor that the requirements of this section have 
 
been met. 
 
I.C. § 45-805(b). In contrast to section (a), section (b) does not outline any specific procedure for 
an agister’s lien to obtain priority over a prior perfected security interest. Section (b) is silent 
with respect to the priority relationship between an agister’s lien and a prior perfected security 
interest.  
 
Finally, section (c) provides: 
Notices provided in subsections (a) and (b) of this section shall be made by 
personal service or by certified or registered mail to the last known address of the 
owner or owners and any holder of a prior perfected security interest. The 
proceeds of the sale must be applied to the discharge of any prior perfected 
security interest, the lien created by this section and costs; the remainder, if any, 
must be paid over to the owner. 
 
I.C. § 45-805(c). Due to section (a)’s focus on only personal property liens and section (b)’s 
silence on agister’s lien priority, this last sentence of section (c)—which states that the proceeds 
of the sale are applied to the prior perfected security interest, to the lien created by this section 
and costs, and then to the owner—is the relevant language for determining whether Idaho Code 
section 45-805 “expressly provides otherwise” regarding agister’s lien priority over a prior 
perfected security interest. 
 
Statutory interpretation begins with an examination of the literal words of a statute. 
Stonebrook Const., LLC, v. Chase Home Fin., LLC, 152 Idaho 927, 931, 277 P.3d 374, 378 
(2012). If the language of the statute is plain and unambiguous, “courts give effect to the statute 
as written, without engaging in statutory construction. Only where the language is ambiguous 
will this Court look to rules of construction for guidance and consider the reasonableness of 
proposed interpretations.” Id. (quoting Curlee v. Kootenai Cnty. Fire & Rescue, 148 Idaho 391, 
398, 224 P.3d 458, 465 (2008)). “A statute is ambiguous where the language is capable of more 
than one reasonable construction.” Porter v. Bd. of Trs., Preston Sch. Dist. No. 201, 141 Idaho 
11, 14, 105 P.3d 671, 674 (2004). “If the statute is ambiguous, then it must be construed to mean 
what the legislature intended for it to mean.” City of Sandpoint v. Sandpoint Indep. Highway 
Dist., 139 Idaho 65, 69, 72 P.3d 905, 909 (2003). The Court determines legislative intent by 
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examining “not only the literal words of the statute, but also the reasonableness of proposed 
constructions, the public policy behind the statute, and its legislative history.” Id.  
 
This Court holds that the relevant language in section (c) of Idaho Code section 45-805 is 
ambiguous regarding agister’s lien priority. The section is ambiguous because its statement that 
the proceeds of the sale are applied to the prior perfected security interest, to the lien, and then to 
the owner could be reasonably construed in more than one way. This statement could be 
interpreted as a directive on lien priority in the precise order that each interest is paid with the 
sale proceeds. Conversely, it could be interpreted as a mere list of potential interests to be paid 
by the sale proceeds with no regard to priority. Although “any prior perfected security interest” is 
listed first, section (c) does not necessarily indicate that a prior perfected security interest takes 
priority over an agister’s lien without more express language, such as an explicit statement that 
one lien has priority over the other, like that stated in Idaho Code section 45-805(a) (“may take 
priority over a prior perfected security interest”).  
 
This ambiguous provision in section (c) does not satisfy the requirement in Idaho Code 
section 28-9-333(b) that the statute creating the agister’s lien “expressly provides otherwise” 
regarding priority. An ambiguous provision is not an “expressly provided” provision. A 
provision is express if “manifested by direct and appropriate language.” Sweeney v. Otter, 119 
Idaho 135, 140, 804 P.2d 308, 313 (1990) (quoting BLACK’S LAW DICTIONARY 691 (Rev. 4th ed. 
1968)). “Express” is defined as “[c]lear; definite; explicit; plain; direct; unmistakable; not 
dubious or ambiguous. Declared in terms; set forth in words. Directly and distinctly stated. Made 
known distinctly and explicitly, and not left to inference.” Saint Alphonsus Diversified Care, Inc. 
v. MRI Assocs., LLP, 148 Idaho 479, 488, 224 P.3d 1068, 1077 (2009) (alteration in original) 
(quoting Sweeney, 119 Idaho at 140, 804 P.2d at 313). In Saint Alphonsus, the Court interpreted 
a contract provision, which was required by statute to be express, and the Court reasoned that 
any doubt as to the meaning of the provision must be resolved against the provision providing an 
express rule. 148 Idaho at 488, 224 P.3d at 1077. Applying this reasoning, the ambiguity in 
section (c) must be resolved against it having an express rule on the priority scheme between an 
agister’s lien and a prior perfected security interest. Put another way, section (c) simply cannot 
expressly provide otherwise on the issue of priority without express language. Therefore, this 
Court holds that section (c) of Idaho Code section 45-805 lacks an express provision to override 
the grant of priority to an agister’s lien in Idaho Code section 28-9-333(b).   
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The legislative history of section (c) supports this Court’s determination that section (c) is 
ambiguous on agister’s lien priority. Prior to the Legislature’s amendment of Idaho Code section 
45-805 in 1990, section (c) read:   
Notice shall be made by personal service or by certified or registered mail to the 
last known address of the owner or owners. The proceeds of the sale must be 
applied to the discharge of the lien and costs; the remainder, if any, must be paid 
over to the owner. 
 
Ch. 236, § 1, 1990 Idaho Sess. Laws 672, 673–74. Absent from this earlier version is the 
reference to “any prior perfected security interest.” Without a reference to perfected security 
interests, this earlier version of Idaho Code section 45-805 offered no basis for the holder of a 
perfected security interest to satisfy its lien with the sale proceeds. This version of the statute 
authorized the payment of sale proceeds to only the lien created by Idaho Code section 45-805 
and costs and the owner. Thus, the holder of a perfected security interest was required to pursue 
a claim against the owner to satisfy its lien.  
 
The relevant amendment to Idaho Code section 45-805 occurred in 1990. At the time of 
these amendments, Idaho Code section 28-9-3102 provided that a possessory lien had priority 
over a perfected security interest unless the statute creating the possessory lien “expressly 
provides otherwise.” I.C. § 28-9-310 (West 1990); Ch. 161, § 9-310, 1967 Idaho Sess. Laws 351, 
551. The Legislature altered section (c) to read as follows, by adding the underlined language: 
Notices provided in subsections (a) and (b) of this section shall be made by 
personal service or by certified or registered mail to the last known address of the 
owner or owners and any holder of a prior perfected security interest. The 
proceeds of the sale must be applied to the discharge of any prior perfected 
security interest, the lien created by this section and costs; the remainder, if any, 
must be paid over to the owner.  
 
Ch. 236, § 1, 1990 Idaho Sess. Laws at 673–74. The Legislature also added the current notice 
requirements to section (a). Ch. 236, § 1, 1990 Idaho Sess. Laws at 673.  
 
This legislative history of Idaho Code section 45-805 does not resolve the ambiguity in 
section (c) because the legislative history, too, is ambiguous and capable of more than one 
reasonable interpretation. The Legislature’s addition of “any prior perfected security interest” 
before “the lien . . . and costs” in section (c) could show that the Legislature intended to give 
prior perfected security interests priority over agister’s liens. This position is supported by the 
                                                 
2 The Legislature replaced Idaho Code section 28-9-310 with Idaho Code section 28-9-333(b) in 2001. Ch. 208, §§ 
1–2, 2001 Idaho Sess. Laws 704, 708, 752. 
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fact that the Legislature also added notice procedures in section (a), which indicates that the 
Legislature may have intended only for personal property liens to obtain priority over prior 
perfected security interests. On the other hand, we must assume that the Legislature “was aware 
of all other statutes and legal precedence at the time the statute was passed.” Druffel v. State, 
Dep’t of Transp., 136 Idaho 853, 856, 41 P.3d 739, 742 (2002). As such, the Legislature was 
aware that a statute had to be express to change agister’s lien priority, and therefore the 
Legislature would have promulgated express language in section (b), as it did in section (a), if it 
wanted to change the priority scheme. The fact that the Legislature left section (b) untouched, 
but added specific procedures for priority in section (a), indicates that the Legislature meant to 
retain agister’s lien priority. Looking at the 1990 amendment this way, the addition of “any prior 
perfected security interest” in section (c) could have been intended to provide a statutory basis 
for the holder of a perfected security interest to satisfy its lien with the sale proceeds without 
altering the priority scheme. The amendment simply authorized the holder of a prior perfected 
security interest be paid by the sale proceeds, thus alleviating the burden on the holder to pursue 
a separate claim against the owner. Based on the above reasons, this Court finds that the 
legislative history supports its determination that section (c) is ambiguous and therefore not 
express. 
 
Finally, this Court’s interpretation of section (c) is harmonious with the structure of Idaho 
Code section 45-805 as a whole. Section (a) provides that a personal property lien is subject to 
different requirements to obtain priority than the automatic grant of priority in Idaho Code 
section 28-9-333(b). Section (b) is silent with respect to priority procedures or requirements, 
indicating that an agister’s lien retains the grant of priority from Idaho Code section 28-9-333(b). 
Section (c)’s inclusion of “any prior perfected security interest” in its list of payable liens 
recognizes that it is permissible for the holder of a prior perfected security interest to be paid by 
the sale proceeds, which was not the case before the Legislature’s amendment in 1990. 
Construing Idaho Code section 45-805 in this manner, section (c) allows for the holder of the 
prior perfected security interest to be paid by the sale proceeds, but leaves issues of priority to be 
determined by section (a) of Idaho Code section 45-805 or Idaho Code section 28-9-333(b), 
depending on the type of lien.  
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In summary, this Court holds that an agister’s lien has priority over a prior perfected 
security interest due to the lack of express language in Idaho Code section 45-805 to alter the 
position of priority given to an agister’s lien by Idaho Code section 28-9-333(b). 
V.  CONCLUSION 
The judgment of the district court is affirmed. Costs to Respondent. 
Justices EISMANN, J. JONES, HORTON and Justice pro tem KIDWELL, CONCUR.