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12/28/88 Kaufman Grain Company, Inc v. the Director of the

December 28, 1988





534 N.E.2d 1259, 179 Ill. App. 3d 1040, 128 Ill. Dec. 654 1988.IL.1881

Appeal from the Circuit Court of Sangamon County; the Hon. Simon L. Friedman, Judge, presiding.


JUSTICE KNECHT delivered the opinion of the court. LUND and SPITZ, JJ., concur.


Plaintiff in administrative review, Kaufman Grain Company, Inc. (Kaufman Grain), appeals a decision of the Illinois Department of Agriculture (Department) which ordered Kaufman Grain to reduce its damage discount assessment for grain delivered to it on behalf of Kostbade Farms. We reverse the circuit court's decision which affirmed the decision of the Department.

This litigation arose out of a dispute between Capital Agricultural Property Services, Inc. , and Kaufman Grain concerning the quality of the landlord's share of the 1985 corn crop grown on the Kostbade Farms near Crown Point, Indiana. CAPS manages Kostbade Farms for its owner, and the landlord's share of the 1985 corn crop was delivered to Kaufman Grain on instructions of CAPS.

Following the delivery of the landlord's share of the 1985 Kostbade Farms corn crop, Kaufman Grain changed its assessment of the amount thereof which was damaged and eventually assessed a damage discount of $12,246.60 with respect to the corn. On April 22, 1987, CAPS wrote the Department, complaining of the amount of this damage discount assessment. On May 6, 1987, the Department forwarded a copy of CAPS' complaint to Kaufman Grain and invited it to submit a response thereto. On May 8, 1987, Kaufman Grain submitted to the Department a written response to CAPS' complaint. In a letter dated May 14, 1987, the Department informed Kaufman Grain in view of its response to CAPS' complaint, it appeared the matter would not be settled without a hearing. Therefore, "pursuant to Section 6 of The Illinois Grain Dealers Act (Ill. Rev. Stat., Chapter 111, Paragraph 301 et. seq.), Section 18a of The Public Grain Warehouse & Warehouse Receipts Act (Ill. Rev. Stat., Chapter 114, Paragraph 214.1 et. seq.), and the Administrative Procedures [ sic ] Act of Illinois (Ill. Rev. Stat., Chapter 127, Paragraph 1001, et seq.)," a hearing was scheduled on CAPS' complaint.

The first session of the hearing on CAPS' complaint was held on May 29, 1987. At that hearing, Kaufman Grain filed a written motion to dismiss the proceedings. The motion alleged (1) the Department had no subject matter jurisdiction over the dispute between Kaufman Grain and CAPS; (2) the May 14, 1987, notice of hearing cited no statute or rule which allows the Department to settle disputes between a grain producer and a grain dealer or a grain warehouse; and (3) the proceeding deprived Kaufman Grain of its right to a jury trial. In arguing against this motion, the Department's counsel, John L. Narmont, stated:

"[The] Department would have jurisdiction, I think, on two grounds to have the hearing. First one to determine in the course of this hearing that there is some regulatory or bookkeeping violation or licensing issue that might arise, but since -- but that may well result in a subsequent hearing, so the Department would be interested and, secondly, the Department is in a position to determine whether there has been a failure to pay for grain which has been sold to the facility."

In response to a statement by Kaufman Grain's counsel that it had received no notice of a bookkeeping or operations violation, Mr. Narmont stated:

"I believe that we cited in the notice [of hearing] Section 6. Section 6 empowers the Department to -- may upon its own motion and shall upon the verified complaint in writing of any person set forth facts, investigate. . . . I wanted to make clear from the beginning, from the standpoint of the Department, we view this more as an investigatory function here to determine if there's any violation under the statute or regulation which would give rise to a license revocation hearing and don't consider that this particular case as is set forth, that at this time, that's the posture of the case."

In denying Kaufman Grain's motion to dismiss, the hearing officer stated:

"I think Section 6 of the Grain Dealers Act does give statutory authority to proceed on this matter. I think -- I do agree with Mr. Narmont in the fact that the results of this hearing cannot be grounds for suspension or revocation of a license of Kaufman Grain Company. It would have to be a separate matter considered under a separate notice of hearing at a later date. The Department does have a lengthy precedent in holding hearings of this type to adjudicate claims filed by producers against licensees. These claims, if unresolved, would result probably in a claim that would have to be ...

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