Public Service Commission, Petitioner, Appellee, and Cross-Appellant
Grand Forks Bean Company, Inc., Respondent and Auto-Owners Insurance Company, Respondent, Appellee, and Cross-Appellant and Bremer Bank, National Association, Interested Party, Appellant, and Cross-Appellee and Curt Amundson, Interested Party, Appellee, and Cross-Appellant and Brent Baldwin, Baldwin Farms, Inc., Duane Altendorf, Ronald Adams, Nicholas Adams, Chuck Nelson, and WJS Nelson, Interested Parties and Appellees
from the District Court of Grand Forks County, Northeast
Central Judicial District, the Honorable Jon J. Jensen,
Mitchell D. Armstrong (argued), Illona A. Jeffcoat-Sacco (on
brief), and Brian Schmidt (on brief), Special Assistant
Attorneys General, Bismarck, N.D., for petitioner, appellee,
and cross-appellant Public Service Commission.
Michael J. Morley, Grand Forks, N.D., for respondent,
appellee, and cross-appellant Auto-Owners Insurance Company.
A. Kennedy (argued) and John D. Schroeder (on brief), Grand
Forks, N.D., for interested party, appellant, and
cross-appellee Bremer Bank, National Association.
Brakke, Fargo, N.D., for interested party, appellee, and
cross-appellant Curt Amundson.
L. Gaustad (argued) and Joseph E. Quinn (on brief), Grand
Forks, N.D., for interested parties and appellees Brent
Baldwin, Baldwin Farms, Inc., and Duane Altendorf.
Russell J. Melland, Grand Forks, N.D., for interested parties
and appellees Ronald Adams, Nicholas Adams, Chuck Nelson, and
1] Bremer Bank, the Public Service Commission
("PSC"), Auto-Owners Insurance Company, and Curt
Amundson appeal from a judgment in a grain warehouse
insolvency proceeding involving Grand Forks Bean Company
after the district court appointed the PSC as trustee for the
sale of dry edible beans from Grand Forks Bean's
warehouse, denied Bremer's motion to intervene in the
insolvency proceeding, and ordered distribution of the
proceeds of the sale of the beans to growers determined to be
noncredit-sale receiptholders. We conclude the district court
did not err in construing applicable statutory provisions for
insolvency proceedings and in applying those provisions. We
2] During the time period relevant to this proceeding, the
PSC licensed Grand Forks Bean as a public grain warehouse
under N.D.C.C. ch. 60-02, and Auto-Owners provided Grand
Forks Bean with a $100, 000 surety bond under N.D.C.C. §
60-02-09. Bremer loaned money to Grand Forks Bean, and Grand
Forks Bean executed a security agreement granting Bremer a
security interest in Grand Forks Bean's personal
property, including its inventory.
3] In November and December 2014, the PSC received complaints
from nine dry edible bean growers about difficulty in
obtaining payment or marketing services for beans delivered
to Grand Forks Bean's warehouse. The nine bean growers
were Amundson, Beth Nelson as assignee of the estate of Brad
Nelson, Duane Altendorf, Brent Baldwin, Baldwin Farms, Inc.,
Ronald Adams, Nicholas Adams, Chuck Nelson, and WSJ Nelson.
After determining the complaints could not be resolved
without an insolvency proceeding, the PSC issued a cease and
desist order against Grand Forks Bean. The beans in Grand
Forks Bean's warehouse were ultimately sold, and the
proceeds were deposited in an interest-bearing trust fund
account under N.D.C.C. § 60-04-08.
4] In February 2015, the PSC applied for appointment as the
trustee of the trust fund assets from the sale of the beans,
alleging Grand Forks Bean was insolvent under N.D.C.C. ch.
60-04 and seeking an order preserving trust assets. The
district court appointed the PSC as trustee of the trust
fund. According to Susan Richter, the licensing director at
the PSC, as of February 29, 2016, the trust fund had a
balance of $768, 053.24 from the sale of the beans.
5] Bremer and the nine growers filed claims against the trust
fund proceeds and Auto-Owners' surety bond. Bremer
alleged it was a secured creditor of Grand Forks Bean and the
proceeds from the sale of Grand Forks Bean's bean
inventory were subject to Bremer's security agreement and
superior lien in the principal amount of $641, 471.06, plus
interest. Bremer alternatively alleged it was entitled to
distribution from the trust fund assets after distribution to
any valid noncredit-sale receiptholders and the PSC was not
entitled to a distribution from trust fund assets for any
incurred expenses. The nine bean growers ultimately filed
amended claims alleging they were noncredit-sale
receiptholders of Grand Forks Bean, Grand Forks Bean's
date of insolvency was no later than October 15, 2013, and
the price per hundredweight of beans on the date of
insolvency was $38.
6] Bremer moved to intervene as a respondent in the
insolvency proceeding under N.D.R.Civ.P. 24 and to file an
answer, a counterclaim against the PSC, and a cross-claim
against Grand Forks Bean. Bremer asserted its perfected
security interest in Grand Forks Bean's beans had
priority over the other claimants' interest in the beans
and the disposition of the insolvency proceeding would impair
or impede its ability to protect its interest. Bremer sought
a declaratory judgment on the superiority of its lien and
foreclosure of its interest in Grand Forks Bean's assets.
7] The district court denied without prejudice Bremer's
motion to intervene, but allowed Bremer to participate in the
insolvency proceeding "to the full extent provided to
any other receiptholder/claimant." The court explained
that resolution of the issue of whether Bremer's formal
intervention was required was not necessary because the PSC,
Auto-Owners, and all the other claimants agreed Bremer could
participate in the proceeding as a claimant and assert
objections to any proposed distribution. The court said
intervention would be granted if there were any objection to
Bremer's participation, but any intervention would be
limited to claims within the scope of an insolvency
proceeding under N.D.C.C. ch. 60-04.
8] The PSC initially issued a trustee's report concluding
all nine bean growers were noncredit-sale receiptholders
entitled to participate in the trust fund proceeds and
recommending payment of $652, 747.92 to those receiptholders
based on a December 2014 insolvency date and a market price
of $23 per hundredweight on that date.
9] After an evidentiary hearing, the district court modified
the PSC's report and ordered payment of $770, 190 in
claims plus interest from the trust fund proceeds and payment
of the PSC's costs and expenses. The court ruled eight of
the bean growers were noncredit-sale receiptholders entitled
to participate in the insolvency trust fund proceeds. The
court concluded one grower, Amundson, had a credit-sale
contract with Grand Forks Bean under N.D.C.C. §
60-04-01(2) and was not entitled to participate in the trust
fund proceeds. The court also determined the date of Grand
Forks Bean's insolvency under N.D.C.C. § 60-04-02
was October 15, 2013, and the market price for beans on that
date was $38 per hundredweight. The court determined three
growers were entitled to a different price per hundredweight
for their beans because they had cash claims with Grand Forks
Bean for an agreed price. The court further concluded the PSC
was entitled to its costs and expenses under N.D.C.C.
§§ 60-04-03.1, 60-04-09, and 60-04-10. The court
ordered disbursement of the trust fund proceeds and
thereafter issued an order denying Auto-Owner's motion
for post-hearing relief. Bremer, the PSC, Auto-Owners, and
10] The issues raised in this appeal primarily involve the
interpretation and application of statutory provisions for
grain and seed warehouses and insolvent grain warehousemen.
Statutory interpretation is a question of law, fully
reviewable on appeal. Pub. Serv. Comm'n v. Minnesota
Grain, Inc., 2008 ND 184, ¶ 9, 756 N.W.2d 763. The
primary objective in interpreting statutes is to determine
legislative intent, as that intent is expressed in the
language of the statute. Pub. Serv. Comm'n v.
Wimbledon Grain Co., 2003 ND 104, ¶ 20, 663 N.W.2d
186. Statutory provisions and all proceedings under those
provisions "are to be construed liberally, with a view
to effecting its objects and to promoting justice."
N.D.C.C. § 1-02-01. Statutory provisions are given their
plain, ordinary, and commonly understood meaning, unless they
are specifically defined or a contrary intention plainly
appears. N.D.C.C. § 1-02-02. Words and phrases are
construed according to the context in which they are used,
and technical words defined by statute must be construed
according to that definition. N.D.C.C. § 1-02-03.
Statutes are construed as a whole and harmonized to give
meaning to related provisions. N.D.C.C. § 1-02-07.
Statutes are construed to give effect to all of their
provisions so no part of a statute is rendered inoperative or
superfluous. N.D.C.C. § 1-02-38(2) and (4). "When
the wording of a statute is clear and free of all ambiguity,
the letter of it is not to be disregarded under the pretext
of pursuing its spirit." N.D.C.C. § 1-02-05.
11] A district court's findings of fact in a warehouse
insolvency proceeding are reviewed under the clearly
erroneous standard of N.D.R.Civ.P. 52(a). See N.D.
Pub. Serv. Comm'n v. Cent. States Grain, Inc., 371 N.W.2d
767, 777 (N.D. 1985); State ex rel. Pub. Serv. Comm'n
v. R. F. Gunkelman & Sons, Inc., 219 N.W.2d 853, 858
- 59 (N.D. 1974). A finding of fact is clearly erroneous if
it is induced by an erroneous view of the law, if there is no
evidence to support it, or if, after reviewing the entire
record, we are left with a definite and firm conviction a
mistake has been made. Matter of Estate of Johnson,
2017 ND 162, ¶ 9. In reviewing findings of fact, we do
not reweigh the evidence, and we "give due regard to the
trial court's opportunity to judge the witnesses'
credibility." N.D.R.Civ.P. 52(a)(6). Under N.D.R.Civ.P.
52(a), a choice between two permissible views of the evidence
is not clearly erroneous, and simply because we may have
viewed the evidence differently does not entitle us to
reverse the district court's findings. Knudson v.
Kyllo, 2012 ND 155, ¶ 9, 819 N.W.2d 511.
12] Bremer argues it was entitled to intervene in the
insolvency proceeding as a matter of right and as a matter of
permissive intervention under N.D.R.Civ.P. 24. Bremer claims
the district court's decision impeded its ability to
litigate the priority of its security interest in Grand Forks
Bean's inventory because the decision precluded
consideration of statutes outside N.D.C.C. ch. 60-04 in
determining the priority of Bremer's interest. The PSC
responds that the district court did not err in denying
Bremer's motion to intervene, and even if the court
erred, any error was harmless because the court allowed
Bremer to assert all arguments and participate fully in the
insolvency proceeding to determine whether the growers were
protected noncredit-sale receiptholders or had credit-sale
contracts with Grand Forks Bean.
13] Rule 24, N.D.R.Civ.P., allows for intervention as a
matter of right and for permissive intervention. White v.
T.P. Motel, L.L.C., 2015 ND 118, ¶ 19, 863 N.W.2d
915; Skogen v. Hemen Twp. Bd. of Twp. Supervisors,
2010 ND 92, ¶ 7, 782 N.W.2d 638. We construe
N.D.R.Civ.P. 24 liberally, and intervention historically has
been liberally granted in North Dakota. White, at
¶ 22; Eichhorn v. Waldo Twp. Bd. of
Supervisors, 2006 ND 214, ¶ 13, 723 N.W.2d 112;
Skogen, at ¶ 7; Braatelien v. Burns,
74 N.D. 29, 32, 19 N.W.2d 827, 828 (1945).
14] In White, 2015 ND 118, ¶ 20, 863 N.W.2d
915, we said N.D.R.Civ.P. 24 is derived from and is
substantially similar to Fed.R.Civ.P. 24, and when a state
rule is derived from a corresponding federal rule, the
federal courts' interpretation of the federal rule may be
persuasive authority when interpreting our rule. We said that
"[u]nder Fed.R.Civ.P. 24(a)(2), upon a timely motion, a
person is entitled to intervene as of right if: (1) the
person has a cognizable interest in the subject matter of the
litigation; (2) the interest may be impaired as a result of
the litigation; and (3) the interest is not adequately
represented by an existing party to the litigation."
White, at ¶ 21 (citing Chiglo v. City of
Preston, 104 F.3d 185, 187 (8th Cir. 1997); Kansas
Pub. Emp. Ret. Sys. v. Reimer & Koger Assoc., Inc.,
60 F.3d 1304, 1307 (8th Cir. 1995)).
15] The ultimate question of whether a party may intervene as
a matter of right under N.D.R.Civ.P. 24(a) is a question of
law that is fully reviewable on appeal. White, 2015
ND 118, ¶ 23, 863 N.W.2d 915; Fisher v. Fisher,
546 N.W.2d 354, 355, 546 N.W.2d 354 (N.D. 1996);
Skogen, 2010 ND 92, ¶ 7, 782 N.W.2d 638. In
considering a party's motion to intervene under
N.D.R.Civ.P. 24(a), we review any findings of fact made by
the district court under the clearly erroneous standard of
review in N.D.R.Civ.P. 52(a). White, at ¶ 23;
Skogen, at ¶ 7.
16] A district court's decision on permissive
intervention will not be reversed on appeal absent an abuse
of discretion. White, 2015 ND 118, ¶ 23, 863
N.W.2d 915; Fisher, 546 N.W.2d at 356. A court
abuses its discretion if it acts in an arbitrary,
unreasonable, or unconscionable manner, its decision is not
the product of a rational mental process leading to a
reasoned determination, or it misinterprets or misapplies the
law. City of Bismarck v. Mariner Constr., Inc., 2006
ND 108, ¶ 8, 714 N.W.2d 484.
17] The district court denied without prejudice Bremer's
motion to intervene in this insolvency proceeding to litigate
the priority of its security interest, but allowed Bremer to
participate in the proceeding "to the full extent
provided to any other receiptholder/claimant." The court
[R]esolution of the issue of whether or not formal
intervention is required is not necessary. The PSC, the
surety and all of the other claimants agree that Bremer may
proceed in this action as a claimant and assert objections to
any of the proposed distributions. Under these circumstances
intervention is unnecessary. In the event that an objection
to Bremer's participation in these proceedings were to be
asserted, intervention would be granted, but limited to
proceedings within the scope of Chapter 60-04 (limited to
objections to the commissioner's report and proposed
18] In N.D. Pub. Serv. Comm'n v. Valley Farmers Bean
Ass'n, 365 N.W.2d 528, 537-40 (N.D. 1985), this
Court considered a claim by three Banks as a secured creditor
in the context of a grain warehouse insolvency proceeding
under N.D.C.C. ch. 60-04. The Banks had a security interest
in the warehouseman's inventory, and as the Banks
disbursed loan funds to the warehouseman on a line of credit,
the warehouseman prepared and delivered to the Banks
documents identified as "warehouse receipts."
Id. at 537. This Court said the purpose of a
warehouse insolvency proceeding was to create a trust fund
for the receiptholders of the warehouseman and held labeling
the documents issued to the Banks as "warehouse
receipts" did not change the Banks' status from a
secured creditor to a "receiptholder." Id.
at 537 - 38. This Court held the Banks were not entitled to
participate in trust fund assets on the basis of the
warehouse receipts. Id. In addressing the Banks'
claim that they were entitled to participate in the trust
fund assets on the basis of their security interest, this
Court rejected the Banks' claim and concluded valid
receiptholders had priority over the Banks' secured claim
to the warehouseman's inventory under the applicable
statutory insolvency provisions. Id. at 539 - 40.
19] The relevant statutory framework has not changed since
Valley Farmers. Under N.D.C.C. § 60-02-25, the
delivery of grain to a public warehouse for an unconverted
scale ticket or warehouse receipt is a bailment, and the
grain is not subject to seizure by court process in an action
against the bailee. Under N.D.C.C. § 60-02-25.1, the
grain in a warehouse is subject to a first priority lien in
favor of outstanding receiptholders, and the lien shall be
preferred to any lien or security interest in favor of any
warehouseman creditor regardless of when the creditor's
lien attached to the grain. Section 60-04-03.1, N.D.C.C.,
provides that upon the insolvency of any warehouseman, a
trust fund is established for the benefit of noncredit-sale
receiptholders and for costs incurred by the PSC in the
administration of N.D.C.C. ch. 60-04. Under those provisions,
a secured creditor's claim to a warehouseman's grain
is not superior to claims by noncredit-sale receiptholders or
by the PSC for costs and expenses for administration of trust
fund proceeds. Nevertheless, a secured creditor's
interest in a warehouseman's grain may be intertwined
with a noncredit-sale receiptholder's claim to the same
grain in an insolvency proceeding under N.D.C.C. ch. ...