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DEMETER, INC. v. WERRIES

January 7, 1988

DEMETER, INC., AN INDIANA CORP., CARGILL, INC., A DELAWARE CORP., CONTINENTAL GRAIN CO., A DELAWARE CORP., BUNGE CORPORATION, A NEW YORK CORP., THE PILLSBURY COMPANY, A DELAWARE CORP., ILLINOIS CEREAL MILLS, INC., A DELAWARE CORP., FASCO MILLS CO., AN ILLINOIS CORP., MCLAY GRAIN CO., AN ILLINOIS CORP., GERSTENBERG AND TUCKER, INC., AN ILLINOIS CORP., PLAINTIFFS,
v.
LARRY WERRIES, DIRECTOR OF THE DEPARTMENT OF AGRICULTURE OF THE STATE OF ILLINOIS, DEFENDANT.



The opinion of the court was delivered by: Mills, District Judge:

OPINION

We must declare an act of the Illinois General Assembly to be unconstitutional.

The Plaintiffs are nine federally licensed warehousemen engaged in grain warehousing activities in Illinois. The Defendant is Director of the Department of Agriculture of the State of Illinois and is entrusted by state statute*fn1 with ensuring the participation of federally licensed warehousemen in the Illinois grain insurance program.

Here, Plaintiffs seek to enjoin the Director from commencing any action against the Plaintiffs for Plaintiffs' failure to comply with amendments made to Ill.Rev.Stat. ch. 114, ¶ 704 & ch. 111, ¶ 306 (1985), by Illinois Public Act No. 84-156. Plaintiffs maintain that these amendments to the Illinois Grain Insurance Act and the Illinois Grain Dealers Act are unconstitutional as they are preempted by the United States Warehouse Act and, therefore, must be struck down as violative of the Supremacy Clause of the United States Constitution.

At a preliminary hearing before this Court, it was ordered that the Department of Agriculture be preliminarily enjoined from enforcing the provisions of the amendments to the acts as against the Plaintiffs and from revoking or suspending their grain dealers' licenses or taking any action against them for failure to pay assessments under the Illinois Grain Insurance Act. It was further ordered that an escrow account be established into which the Plaintiffs were to pay their assessments pending disposition of this suit on the merits.

Plaintiffs now move for summary judgment on the record before the Court.

It is allowed.

I. FACTS

A. Plaintiffs

Plaintiffs are grain warehousemen licensed under the United States Warehouse Act (USWA). 7 U.S.C. § 241 (1982). All Plaintiffs operate within the State of Illinois. Plaintiffs have held federal warehouse licenses under the USWA for a number of years prior to the enactment of the amendments to the Illinois Grain Dealers Act and the Illinois Grain Insurance Act. All Plaintiffs are in good standing under the federal licenses and are bonded pursuant to the federal statute to secure performance of their obligations as warehousemen.*fn2 In addition to being federally licensed grain warehousemen, all Plaintiffs are grain dealers licensed under the Illinois Grain Dealers Act. Ill.Rev.Stat. ch. 111, ¶ 301 (1985).

B. Background Legislation

To obtain a license in Illinois, a grain dealer must join the Illinois Grain Insurance Fund by the payment of an amount based on the percentage of the aggregate dollar amount paid by the dealer to producers during the dealer's past fiscal year. See Ill.Rev.Stat. ch. 111, ¶ 303 (1985); Id. ch. 114, ¶ 705. Prior to 1985, the Illinois Grain Dealers Act did not subject federal warehousemen to the Illinois Grain Insurance Act. However, by Public Act 84-156, the Illinois legislature amended § 6 (Ill.Rev.Stat. ch. 111, ¶ 306) of the Grain Dealers Act to read:

  If the Department [of Agriculture] finds that a
  grain dealer is licensed as a grain warehouse
  under the United States Warehouse Act and does
  not satisfy the requirements of Section 4
  [Ill.Rev.Stat. ch. 114, ΒΆ 704] of The Illinois
  Grain Insurance Act the Director shall suspend or
  revoke such license until such time as ...

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