The opinion of the court was delivered by: Presiding Justice Cook
Appeal from Circuit Court of Livingston County No. 92MR39 Honorable Charles E. Glennon, Judge Presiding.
The circuit court of Livingston County, sitting in administrative review, reversed a decision of the Department of Agriculture (Department). The Department had held that the assets of a failed grain dealer must be used to reimburse the Illinois Grain Insurance Fund for payments made by the fund to grain producers before the dealer's assets could be used to pay the balance of the producers' claims. However, the circuit court also awarded plaintiffs $27,015 in attorney fees and costs. Defendants, the Department and its Director, appeal the circuit court's ruling on the reimbursement issue (No. 4-97-1096) and the attorney fee award (No. 4-98-0268). In No. 4-97-1096, we reverse the decision of the circuit court and remand with instructions to affirm the decision of the Department; in No. 4-98-0268, we reverse.
In December 1991, the Department determined that the Blackstone-Sunbury-Nevada Grain Co., Inc. (Blackstone), located in Dwight, Illinois, did not have sufficient financial resources to guarantee payment to grain producers. The Department accordingly suspended Blackstone's grain dealer license and grain warehouse license.
On February 26, 1992, a Department hearing officer commenced a hearing to determine the validity, category, and amount of each claim filed against Blackstone. On April 29, 1992, the hearing officer issued his order, listing claimants and claims totaling $931,304.50 (the merchandising claimants). The order listed two categories of merchandising claimants, the first with claims totaling $654,752.64. A second category of merchandising claimants, whose claims totaled $276,551.86, was potentially barred under section 307 of the Grain Dealers Act (Ill. Rev. Stat. 1989, ch. 111, par. 307 (as amended, 225 ILCS 630/6.1 (West 1992)), which barred claims where the grain producer had not requested payment within 160 days of the date of sale or within 270 days after the date of delivery. The order also listed claimants who held warehouse receipts; those claims totaled $112,428.37.
As part of the process of enforcing statutory lien claims and distributing proceeds to grain producers, the Department opens a specific bank account, the Grain Indemnity Trust Fund (Trust Fund), for each failed grain dealer. Ill. Rev. Stat. 1989, ch. 114, par. 702 (defining "grain indemnity trust fund") (as amended, 240 ILCS 25/2 (West 1992)). The Department places the liquid grain assets of the failed grain dealer in this Trust Fund and, if other grain assets are subsequently liquidated, adds those assets to the Trust Fund. Ill. Rev. Stat. 1989, ch. 114, par. 702 (defining "grain assets") (as amended, 240 ILCS 25/2 (West 1992)). The Illinois Grain Insurance Act (Act) also created the Illinois Grain Insurance Fund (Insurance Fund), maintained by assessments on grain dealers, grain warehousemen, and other specified licensed entities. Ill. Rev. Stat. 1989, ch. 114, par. 705 (as amended, see 240 ILCS 25/5 (West 1992)).
The hearing officer held that the merchandising claimants were entitled to be compensated for 85% of their valid claims to a maximum of $100,000 pursuant to section 8(a) of the Act (Ill. Rev. Stat. 1991, ch. 114, par. 708(a) (now 240 ILCS 25/8(a) (West 1992)). The order also held that the second category of merchandising claimants, the claims totaling $276,551.86, was entitled to 85% compensation under section 8(a). The order concluded that the assets of the failed grain dealer were to be applied first to the valid claim amounts of merchandising claimants and warehouse receipts claimants under section 8. Any shortfall would then be requested from the Insurance Fund.
On May 28, 1992, many of the merchandising claimants, the plaintiffs in this case, filed a petition for reconsideration, arguing they should receive the 15% unpaid balances of their claims first, from any subsequently liquidated grain assets of Blackstone, prior to any payments from those assets to the Insurance Fund to reimburse the Insurance Fund for monies already advanced to the claimants. The Director denied that petition on June 29, 1992.
In June 1992, $112,428.37 was paid out to the warehouse receipts claimants (100% of the amount claimed), and $791,608.83 was paid out to the merchandising claimants, a total of $904,037.20. The claims of the two categories of merchandising claimants totaled $931,304.50, and 85% of that total amounted to $791,608.83. The remaining 15%, which is in dispute in this case, amounts to $139,695.68 for all merchandising claimants, but not all of those claimants are plaintiffs. The total amount in dispute for plaintiffs is $118,530.98. Of the total of $904,037.20 paid to merchandising claimants and to warehouse receipts claimants, $711,000 was advanced by the Insurance Fund. Of that $904,037.20 total, $193,037.20 came from Blackstone's then-liquidated grain assets. If Blackstone's liquidated grain assets were applied first to the 15% unpaid balances, sufficient funds were accordingly immediately available to cover those unpaid balances. No evidence is in the record, but it is likely that additional Blackstone assets were subsequently liquidated and used to reimburse the Insurance Fund.
In July 1992, plaintiffs filed a complaint for administrative review in the circuit court of Livingston County. The circuit court reversed the Department's decision and in a later order awarded plaintiffs $27,015 in attorney fees and costs. The Director and the Department appeal.
An administrative agency's findings and conclusions on questions of fact are deemed to be prima facie true and correct, and a reviewing court is limited to ascertaining whether such findings are against the manifest weight of the evidence. An administrative agency's findings on a question of law, on the other hand, are not binding on a reviewing court and are reviewed de novo. City of Belvidere v. Illinois State Labor Relations Board, 181 Ill. 2d 191, 204-05, 692 N.E.2d 295, 302 (1998). However, based on an agency's experience and expertise, a court may give substantial weight and deference to the agency's interpretation of an ambiguous statute it administers and enforces. Gem Electronics of Monmouth, Inc. v. Department of Revenue, 183 Ill. 2d 470, 474, 702 N.E.2d 529, 531 (1998). We review this case as a question of law.
I. REIMBURSEMENT OF THE INSURANCE FUND
Plaintiffs quote language from section 8(a) of the Act to support their position that the Insurance Fund will pay 85% of the claim and the 15% balance shall be paid from the assets of the elevator:
"(a) Any claimant who has incurred a financial loss due to a failure of a grain dealer shall be entitled to be compensated for 85% of a valid claim, to a maximum of $100,000, with monies from the [Insurance Fund]. To the maximum extent that funds are or may be made available for such purpose, the remaining balance of such claim shall be paid by the Department from the assets and other security of the failed grain dealer ***." Ill. Rev. Stat. 1991, ch. 114, par. 708(a) (now 240 ILCS 25/8(a) (West 1992)).
Plaintiffs argue from this language that the Insurance Fund is the fund of first resort and the 85% figure is only a limitation on how much of the claim the Insurance Fund will pay quickly, not a limitation on how much of the claim will be eventually paid. Plaintiffs' argument ignores the language of section 8 preceding that of section 8(a), that within 90 days of the approval of a valid claim the Department shall compensate any claimant from the Trust Fund. The Trust Fund, the assets of the failed grain dealer, is the fund of first resort.
The Department's Director points to other language that indicates Insurance Fund monies cannot be used if the effect is to bring the recovery above 85%. Insurance Fund monies can only be used "when necessary for the purpose of compensating claimants in accordance with the provisions of Section 8." Ill. Rev. Stat. 1991, ch. 114, par. 709(b) (now 240 ILCS 25/9(b) (West 1992)). The Act in general and section 8 in particular provide compensation for only "85% of a valid claim." Ill. Rev. Stat. 1991, ch. 114, par. 708(a) (now 240 ILCS 25/8(a) (West 1992)). Insurance Fund monies "shall not be available for any purpose other than the payment of claims pursuant to this Act" and may only be transferred to the Trust Fund "when necessary to compensate claimants pursuant to this Act." Ill. Rev. Stat. 1989, ch. 114, par. 706 (declaring that if this provision is held invalid the entire Act is invalid) (as amended, see 240 ILCS 25/6 (West 1992)). The Director is required "to deposit into the [Trust Fund] any assets of a failed grain dealer or grain warehouseman for the purposes of repayment of the [Insurance Fund] monies used to pay claimants." (Emphasis added.) Ill. Rev. Stat. 1991, ch. 114, par. 709(c) (now 240 ILCS 25/9(c) (West 1992)).
Plaintiffs' argument that the Insurance Fund is the fund of first resort, and that the 85% limitation is a limitation only on what must be paid quickly, within 90 days, is not persuasive. The primary reason for adoption of the Act was not that claimants were being paid late but that they were not being paid at all. The Director tells us that, under the prior law, which required grain dealers to keep surety bonds or certificates of deposit in force to provide protection to grain producers (see Ill. Rev. Stat. 1981, ch. 111, par. 303), merchandising claimants recovered only 13% of their losses; warehouse receipt claimants recovered only 19% of their losses. The statute affords no justification for concluding that the 85% limitation is a limitation only on what the claimants will quickly recover and not upon what they will ultimately recover.
Plaintiffs argue that under the Department's interpretation "the 15% balance will never be paid if as little as one dollar of the Grain Insurance Fund is used." A more accurate statement is that merchandising claimants will never receive more than 85% of their claim unless the assets of the failed grain dealer are equal to more than 85% of their claim. If the liquidated assets of the failed grain dealer total 85% of the claim, less one dollar, the Insurance Fund will pay the one dollar. If additional assets are subsequently liquidated, the Insurance Fund will be reimbursed the dollar, and all the additional assets will go to the grain producer, until 100% of the claim is paid.
The Act is hardly a model of clarity. Nevertheless, some features of the Act are clear: (1) grain producers are entitled to payment of their claims, to the extent provided, within 90 days (Ill. Rev. Stat. 1991, ch. 114, par. 708 (now 240 ILCS 25/8 (West 1992))); (2) the initial source of payment is the assets of the failed grain dealer, the Trust Fund (Ill. Rev. Stat. 1991, ch. 114, par. 708 (now 240 ILCS 25/8 (West 1992))); (3) the Insurance Fund never comes into play if the assets of the failed grain dealer are available to pay 85% of the claims within 90 days (Ill. Rev. Stat. 1991, ch. 114, par. 708(a) (now 240 ILCS 25/8(a) (West 1992))); and (4) grain producers are never harmed by the Act and the Insurance Fund is repaid from the assets of the failed grain dealer only to the extent that the Fund's monies have been used to pay claimants (Ill. Rev. Stat. 1991, ch. 114, par. 709(c) (now 240 ILCS 25/9(c) (West 1992))).
We see no reason to interpret the Act to eliminate in most cases the 85% limitation on claims not supported by warehouse receipts. These claims, merchandising claims, include "price-later contracts," under which, when the grain producer sells his grain, title passes to the grain dealer but the price is not established until some later time of the grain producer's choosing. Ill. Rev. Stat. 1989, ch. 114, par. 702 (defining "claimant") (as amended, see 240 ILCS 25/2 (West 1992)). Plaintiffs recognize that "price laters" entail risk. The Department argues that the speculation inherent in "price laters" has been the primary reason for elevator failures. See Comment, Grain Elevator Bankruptcy--Has Illinois Successfully Provided Security to Farmers, 1983 S. Ill. U. L.J. 337, 341-42. The legislature rationally chose to limit coverage under the Act on these price-later contracts. Under plaintiffs' interpretation, claimants would receive 100%, not 85%, of their merchandising claims in all cases unless the assets of the failed grain dealer were less than 15% of the merchandising claims. Plaintiffs argue that, historically, merchandising claimants recovered only 13% of their losses, so claimants would usually receive less than ...