Opinion ID: 1722937
Heading Depth: 1
Heading Rank: 2

Heading: Exemption sections 542.14 and 543.38. Section 542.14 of the grain dealer's act and section 543.38 of the warehouse act provide:

Text: Nothing in this chapter shall be construed to imply any guarantee or obligation on the part of the state of Iowa, or any of its agencies, employees or officials, either elective or appointive, in respect to any agreement or undertaking to which the provisions of this chapter relate. The State contends that these provisions are liability disclaimers and reinstate the State's immunity with regard to negligence claims under chapters 542 and 543. The trial court found that this language relates to the agreements and undertaking which the Commission was authorized to enter into such as those provided for specifically in Section 543.2 of the Code [contracts with federal government regarding inspections] .... [T]he very words guarantee obligation, agreement and undertaking are all the language of contract and not of tort. The Court finds that the legislature did not intend to alter the State's tort liability for the Commission's negligence under the Iowa Tort Claims Act by inserting the above language in the Grain Dealer and Warehouse Act. This court, however, is the final arbiter of the meaning of these provisions. American States Insurance Co. v. Estate of Tollari, 362 N.W.2d 519, 521 (Iowa 1985). We are not bound by a trial court's statutory construction, as such construction presents a question of law. Asmann v. Board of Trustees, 345 N.W.2d 136, 138 (Iowa 1984). Our goal here is to determine the legislature's intent in enacting sections 542.14 and 543.38. See Hansen v. State, 298 N.W.2d 263, 265 (Iowa 1980). Plaintiffs urge that the legislative intent was to protect the State from liability relating to contractual obligations. They base their interpretation of sections 542.14 and 543.38 on the words guarantee, obligation, agreement, and undertaking, arguing as the trial court concluded that these are words of contract rather than tort. The words are clearly not unique, however, to the language of contract. The State invites our attention to a multitude of circumstances in which these words are used in a tort context. Plaintiffs also rely on section 4.1(19) of the Code defining undertaking as a promise or security in any form. Read in context, however, this definition applies when the term is used in a documentary sense. To determine legislative intent in each of the two sections we must consider the entire act and attempt to harmonize these sections with the rest of the two acts respectively. Matter of Estate of Bliven, 236 N.W.2d 366, 369 (Iowa 1975). The only contractual reference found and relied on by plaintiffs in chapter 543 is contained in section 543.2: The commission may make available to the United States government, or any of its agencies, including the commodity credit corporation, the results of inspections made and inspection reports submitted to it by employees of the commission,... The commission may enter into contracts and agreements for such purpose and shall keep a record of all money thus received. The grain dealer's act, chapter 542, contains no corresponding provision at all. As to that act, therefore, plaintiffs are unable to justify their contractual interpretation of the exemption section. The State argues that no basis exists even under chapter 543 to connect the exemption section with the federal government contract provision in section 543.2. It contends that the language of sections 542.14 and 543.38 referring to any agreement or undertaking to which the provisions of this chapter relate is not limited to an isolated provision, but is much broader in scope. Viewing the two chapters in their entirety, we think the most reliable indicator of the legislature's objective in the exemption sections lies in the following words from the sections which we have emphasized: in respect of any agreement or undertaking to which the provisions of this chapter relate. What are the agreements and undertakings to which the two chapters relate? The basic purpose of chapter 542 is protection of persons who deal with grain dealers, to make as certain as reasonably possible that those persons get their money for their grain. The sections of chapter 542 are directed to the end of making agreements and undertakings of grain dealers reliable. Section 542.2 gives ICC general supervision over the business operations of grain dealers. Section 542.3 requires a grain dealer to obtain a license, specifies the contents of a license application, and requires a specified net worth of the applicant and a financial statement. Section 542.4 requires that the dealer post a bond conditioned that the applicant will pay the purchase price of any grain to the producer.... Section 542.9 has to do with inspection of grain dealers by ICC. Section 542.15 regulates credit purchases by dealers. The other sections of the chapter fill in the details. Thus the agreements and undertakings by grain dealers with customers appear to be the agreements and undertakings to which the provisions of chapter 542 relate. The same rationale applies to chapter 543 relating to warehouses. The evident purpose of the General Assembly in enacting the exemption sections was to make certain that the State made no guarantee of and had no obligation on the agreements and undertakings of grain dealers and grain warehouses which the chapters seek to make reliable and to which the two chapters relate, including dealer and warehouse bonds. Those are the agreements and undertakings of Prairie Grain for grain purchased and grain stored which are in default in this case (except for its bonds, which were not in default). By virtue of the exemption sections, and other things being equal, the State has no liability on such of those agreements and undertakings as were made when the exemption sections were respectively in force. If we held that plaintiffs could nonetheless recover for tort as to those losses, plaintiffs could accomplish by indirection what they cannot accomplish directly.