{
  "id": 5282603,
  "name": "FIRST NATIONAL BANK OF JOLIET, Plaintiff-Appellee, v. ASSOCIATED STOCKDALE COMPANIES, Defendant-Appellant",
  "name_abbreviation": "First National Bank of Joliet v. Associated Stockdale Companies",
  "decision_date": "1991-08-14",
  "docket_number": "No. 3-90-0730",
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  "last_updated": "2023-07-14T18:40:18.082759+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
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  "casebody": {
    "judges": [],
    "parties": [
      "FIRST NATIONAL BANK OF JOLIET, Plaintiff-Appellee, v. ASSOCIATED STOCKDALE COMPANIES, Defendant-Appellant."
    ],
    "opinions": [
      {
        "text": "JUSTICE GORMAN\ndelivered the opinion of the court:\nThe plaintiff, First National Bank of Joliet, brought an action for declaratory judgment against the defendant, Associated Stockdale Companies, Inc. (Stockdale), seeking a declaration of whose perfected security interest in certain crops was entitled to priority. The circuit court entered a declaratory judgment in favor of the bank. Stockdale now appeals. We affirm. Lyle Hecht, Kimberly Hecht, Edward Hecht, and Alice Hecht signed a security agreement dated June 1, 1983, giving the bank a security interest in crops growing or to be grown on specified parcels of land in Grundy County. The security interest was given to secure the payment of any and all indebtedness of Edward and Lyle Hecht to the bank, whether then existing or thereafter arising. On June 29, 1983, the bank filed with the recorder of deeds of Grundy County a financing statement noting the debtors, the secured party, and the collateral that had been the subject of the security agreement. (A continuation of this financing statement was filed on March 4, 1988.)\nThe Hechts signed two promissory notes dated August 22, 1985, with the bank as payee. Both notes were renewals of previously existing indebtedness, and both were due and payable on February 22, 1986. The principal amounts of the notes were $159,000 and $416,684.83. (The record indicates that the indebtedness represented by these notes has never been satisfied.)\nStockdale sold to the Hechts fertilizer and other supplies needed for production of the 1986 crops. It sold these supplies on open account between November 18, 1985, and June 23, 1986. On October 3, 1986, Stockdale obtained a security agreement from Lyle Hecht granting it a security interest in the 1986 crops to secure payment of the indebtedness for the supplies. A financing statement was duly filed with the recorder of deeds of Grundy County by Stockdale on October 6, 1986.\nThe Hechts planted their cash crops between April 25, 1986, and May 19, 1986.\nOn March 18, 1987, the bank brought this declaratory judgment action to determine whose security interest in the Hechts\u2019 1986 crops was superior, its or Stockdale\u2019s. The bank and Stockdale had previously agreed to hold in escrow some of the proceeds from the sale of the Hechts\u2019 1986 crops, with disposition of that sum to depend on the outcome of the declaratory judgment action. The bank and Stockdale entered into a stipulation of facts. Based on that stipulation and after considering the written briefs and arguments of the parties, the circuit court decided that the bank\u2019s security interest was superior, and entered judgment accordingly.\nThe sole issue presented is whether section 9 \u2014 312(2) of the Uniform Commercial Code (Ill. Rev. Stat. 1985, ch. 26, par. 9 \u2014 312(2)) gives Stockdale\u2019s perfected security interest in the Hechts\u2019 1986 crops priority over the bank\u2019s perfected security interest in those crops.\nSection 9 \u2014 312(2) of the Uniform Commercial Code states as follows:\n\u201cA perfected security interest in crops for new value given to enable the debtor to produce the crops during the production season and given not more than three months before the crops become growing crops by planting or otherwise takes priority over an earlier perfected security interest to the extent that such earlier interest secures obligations due more than six months before the crops become growing crops by planting or otherwise, even though the person giving new value had knowledge of the earlier security interest.\u201d (Emphasis added.) Ill. Rev. Stat. 1985, ch. 26, par. 9 \u2014 312(2).\nStockdale argues that in order to give this provision any practical effect, the time when an \u201cobligation\u201d is deemed \u201cdue\u201d ought to be the time when value is originally given to the debtor whereby the debtor incurs the obligation. Stockdale argues that the term \u201cobligations\u201d in this provision should not be interpreted to include promissory notes merely embodying antecedent debts. Stockdale reasons that since the original indebtedness to the bank (that eventually became embodied in the promissory notes) had been incurred long before six months prior to the planting of the 1986 crops, Stockdale\u2019s security interest for supplies provided in the three-month period prior to planting has priority over the bank\u2019s security interest for indebtedness represented by the promissory notes.\nStockdale argues alternatively that \u201cdue\u201d should simply be interpreted as \u201cdue and owing\u201d rather than \u201cdue and payable.\u201d Stockdale reasons that since the bank\u2019s promissory notes were \u201cdue and owing\u201d on August 22, 1985, more than six months before the 1986 crops were planted, Stockdale\u2019s security interest for supplies provided in the three-month period prior to planting has priority over the bank\u2019s security interest for indebtedness represented by the promissory notes.\nA number of Federal and sister State cases have applied section 9 \u2014 312(2) of the Uniform Commercial Code and have consistently interpreted the term \u201cdue\u201d therein as meaning \u201coverdue.\u201d (See, e.g., Salem National Bank v. Smith (7th Cir. 1989), 890 F.2d 22; In re Connor (8th Cir. 1984), 733 F.2d 523; United States v. Minster Farmers Cooperative Exchange, Inc. (N.D. Ohio 1977), 430 F. Supp. 566; McCoy v. Steffen (1987), 227 Neb. 72, 416 N.W.2d 16.) In Decatur Production Credit Association v. Murphy (1983), 119 Ill. App. 3d 277, 456 N.E.2d 267, the appellate court implicitly adopted the position that the term \u201cdue\u201d in section 9 \u2014 312(2) means \u201coverdue.\u201d None of these opinions discusses the purposes the drafters of section 9 \u2014 312(2) sought to achieve by this section, and the present parties do not present any authority to shed light on why the drafters chose the words they chose.\nWe recognize that if \u201cdue\u201d in section 9 \u2014 312(2) means \u201coverdue,\u201d that section gives less benefit to farmers seeking crop production financing (and those wishing to provide such financing) than if \u201cdue\u201d means \u201cdue and owing.\u201d While previously secured lenders are placed at great advantage in this situation, farmers are not without business options to counter an unscrupulous lender in most instances. On the other hand, a contrary interpretation would probably make it harder to get credit in the first instance, and would probably require lenders to be more aggressive in enforcing their rights in collateral and in doing so at an earlier time. In short, we see no happy medium interpretation here, and no particular policy reason to interpret the term one way or the other.\nGiven that courts have consistently interpreted \u201cdue\u201d in section 9 \u2014 312(2) as meaning \u201coverdue,\u201d that the legislature has not seen fit to amend this provision at any time since it was first adopted in 1962, that there has been no showing that the drafters of this provision had a purpose for it inconsistent with this interpretation, and that the drafters could have easily chosen another word (such as \u201ccreated\u201d) to make clear a contrary interpretation, the trial court correctly interpreted \u201cdue\u201d as meaning \u201coverdue\u201d in this provision.\nSince the due dates of the bank\u2019s promissory notes at issue fell within the six-month period prior to the planting of the Heehts\u2019 1986 crops, Stockdale cannot claim that its security interest has priority over that of the bank by virtue of section 9 \u2014 312(2). As no other basis for priority has been argued by Stockdale, the general priority rule of section 9 \u2014 312(5)(a) (Ill. Rev. Stat. 1985, ch. 26, par. 9 \u2014 312(5)(a)) applies. This rule, as applied to the facts of the present case, gives priority to the security interest of the first of two secured creditors to file a financing statement covering the collateral. Since the bank filed its financing statement earlier than did Stockdale, the trial court did not err in entering its declaratory judgment in favor of the bank.\nAffirmed.\nSTOUDER, P.J., and HAASE, J., concur.",
        "type": "majority",
        "author": "JUSTICE GORMAN"
      }
    ],
    "attorneys": [
      "Gomien, Root & Rigazio, of Morris (Paul E. Root, of counsel), for appellant.",
      "Herschbach, Tracy, Johnson, Bertani & Wilson, of Joliet (A. Michael Wojtak, of counsel), for appellee."
    ],
    "corrections": "",
    "head_matter": "FIRST NATIONAL BANK OF JOLIET, Plaintiff-Appellee, v. ASSOCIATED STOCKDALE COMPANIES, Defendant-Appellant.\nThird District\nNo. 3-90-0730\nOpinion filed August 14, 1991.\nGomien, Root & Rigazio, of Morris (Paul E. Root, of counsel), for appellant.\nHerschbach, Tracy, Johnson, Bertani & Wilson, of Joliet (A. Michael Wojtak, of counsel), for appellee."
  },
  "file_name": "0384-01",
  "first_page_order": 406,
  "last_page_order": 409
}