Oregon farmers have prevailed in a legal dispute with a bank over the ownership of radish seed they’d grown but hadn’t been paid for.
Multiple farms in Oregon’s Willamette Valley grew the radish seed in 2014 for Cover Crop Solutions, a Pennsylvania company that became insolvent before taking delivery of the crop.
Last year, the company’s creditor — Northwest Bank of Warren, Pa. — filed a lawsuit against the growers, claiming to own the radish seed they’d produced because it served as collateral for a $7 million loan.
U.S. District Judge Michael Mosman has now dismissed Northwest Bank’s arguments that growers relinquished ownership of the seed when they delivered it to a cleaner.
The June 6 ruling effectively means they can sell the crop rather than turn it over to the bank.
“It was a total victory,” said Paul Conable, attorney for the farms.
James Ray Streinz, attorney for Northwest Bank, said his client did not wish to comment on the ruling.
The bank had claimed that several seed cleaners effectively acted as “agents” of Cover Crop Solutions, so the radish seed they were storing was that company’s inventory.
When Cover Crops Solutions became insolvent, the inventory became the bank’s collateral because its liens on the crop were of a higher priority than liens taken out by farmers, according to Northwest Bank’s attorneys.
Conable said Mosman’s rejection of this claim shows he understands the functioning of the seed industry.
“It would have changed the seed business if by turning over seed to the cleaner to get cleaned, you were turning it over to the purchaser without getting paid,” he said.
Before reaching a decision on the question of whether seed cleaners were “agents” of Cover Crop Solutions, Mosman dismissed the bank’s lawsuit against several growers who had retained possession of the seed.
In May, the CHS cooperative announced it would license the radish seed variety in question now that Cover Crop Solutions is being liquidated or dissolved.
Future production of the variety will be controlled by CHS, which will also “facilitate purchasing of current inventories and production contracts,” according to a letter the cooperative sent to growers.
Conable said he doesn’t have information about whether CHS will buy the radish seed grown by his clients.