[Code of Federal Regulations]

[Title 9, Volume 2]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 9CFR205.208]



[Page 69-70]

 

                  TITLE 9--ANIMALS AND ANIMAL PRODUCTS

 

  CHAPTER II--GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION 

       (PACKERS AND STOCKYARDS PROGRAMS),DEPARTMENT OF AGRICULTURE

 

PART 205_CLEAR TITLE_PROTECTION FOR PURCHASERS OF FARM PRODUCTS--Table 

of Contents

 

Sec. 205.208  Distribution of portions of master list--registration--

information to non-registrants on request.



    (a) The provisions in the Section regarding registration of ``buyers 

of farm products, commission merchants, and selling agents,'' 

``regular'' distribution of ``portions'' of the master list, furnishing 

of ``oral confirmation * * * on request,'' and the effect of all this, 

that is, subsections (c)(2) (D), (E) and (F), (e) (2) and (3), and 

(g)(2) (C) and (D), must be read together.

    (b) The Section does not require such persons to register. Not 

registering with a particular system operator has the effect, under 

subsections (e)(2) and (g)(2)(C), of making such persons, whether they 

are inside or outside the State covered by that system, subject to 

security interests shown on that system's master list whether or not 

such persons know about them, so that such persons for their own 

protection will need to query the system operator about any seller 

``engaged in farming operations,'' of a farm product produced in the 

State covered by that system, with whom they deal.

    (c) The effect of registration by such persons with a particular 

system is to get them on the list for regular distribution of portions 

of that system's master list, the portions to be determined by the 

registration. They are subject only to security interests shown on the 

portions which they receive, and are not subject to such interests as 

are shown on the master list but not shown on portions which they 

receive. Also, if a particular security interest is shown on the master 

list, but has been placed on it since the last regular distribution of 

portions of that list to registrants, registrants would not be subject 

to that security interest. These conclusions are based on the provisions 

in subsections (e)(3)(A) and (g)(2)(D)(i) that such persons are subject 

to a security interest only if they receive ``written notice * * * that 

specifies both the seller and the farm product.''

    (d) A question arises as to the length of time for which a 

registration is effective, and whether a registrant, wishing to change 

registration as to county or product, can amend an existing registration 

or must file a new one. This is discretionary with the State since the 

Section is silent about it.

    (e) A question arises whether persons can register to receive only 

portions of the list for products in which they do not deal, and thus 

not be subject to security interests in products in which they deal 

because they are registrants but do not receive written notice of them. 

For example, can cattle dealers register to receive portions of the 

master list only for oranges, and thus take cattle free and clear of 

security interests shown on the master list, but as to which they do not 

receive written notice because they have not registered



[[Page 70]]



to receive the portion for cattle? Registrants will be deemed to be 

registered only as to those portions of the master list for which they 

register, and will be deemed to have failed to register as to those 

portions for which they do not register.

    (f) The Section requires ``regular'' distribution, to registrants, 

of portions of the master list as amended from time to time by the 

filing of EFS's and amendments to EFS's. The requirement that the 

distribution be ``regular'' necessarily refers to an interval specified 

in advance. The interval may vary according to product and region. The 

frequency of such distribution must be a consideration in review for 

certification since distribution must be timely to serve its purpose. 

While subsection (c)(2)(E) (providing that distribution be made 

``regularly as prescribed by the State'') gives each State discretion to 

choose the interval between distributions, whatever interval a State 

chooses will inevitably make possible some transactions in which 

security interests are filed in the system but registrants are not 

subject to them.

    (g) Legislative history of the Section shows that buyers, commission 

merchants, and selling agents are not intended to be liable for errors 

or other inaccuracies generated by the system. See Nov. 22, 1985 Cong. 

Rec., Senate, pg. S16300, and Dec. 18, 1985 Cong. Rec., House, pg. 

H12523.

    (h) In furnishing to non-registrants ``oral confirmation within 24 

hours of any [EFS] on request followed by written confirmation,'' by a 

system operator pursuant to subsection (c)(2)(F), any failure in use of 

a telephone caused by a ``busy signal'' could not be the basis of 

liability of the system operator. The basis for this is that subsection 

(c)(2)(F) does not mention telephones. Also, while it mentions 

furnishing information orally, it does not contain any provision as to 

how queries are to be received, that is, orally, in writing, or 

otherwise.

    (i) Of course it is to be expected that telephones would be used in 

most cases, but use of them is not required by the legislation and is 

discretionary with the State.

    (j) In the matter of receiving queries and giving oral replies to 

them, subsection (c)(2)(F) will be complied with if a system operator 

maintains an office and staff where a query can be received on business 

days and during business hours such as are regular in the State, and 

where an oral reply will be available on the regular business day 

following the day on which the query is received, at or before the time 

of day when it was received.

    (k) Written confirmation is required, by subsection (c)(2)(F), to be 

given to any non-registered buyer, commission merchant, or selling 

agent.

    (l) Such a written confirmation pursuant to subsection (c)(2)(F) 

does not alter the liability of the non-registrant querying the system 

and receiving information about a security interest recorded in it. The 

basis of this, as above, is that non-registrants are subject to security 

interests recorded in a system whether or not they know about them, and 

must query the system for their own protection.

    (m) The Section does not specify when or how the written 

confirmation must be furnished, but provides only that it must follow 

the oral information. Thus the time and method of furnishing written 

confirmation is discretionary with the State.