State Bank of Cherry v. CGB Enterprises, Inc.

Summary

The Illinois Supreme Court held that the Food Security Act of 1985 governed notice of a secured party’s interest in farm products. It concluded that the Act requires strict compliance with its direct-notice requirements, including identifying the county where the products are produced or located. Because the bank’s notices omitted the county, the grain buyer took the crops free of the bank’s security interest, and the appellate court’s judgment was affirmed.

Holdings

1. A secured party must strictly comply with the direct-notice requirements of 7 U.S.C. § 1631(e)(1)(A) to cause a buyer of farm products to take subject to the secured party's security interest.
2. The notices were insufficient because they did not identify the county or parish where the secured crops were produced or located.
3. The circuit court erred in granting the bank summary judgment and denying CGB judgment on the pleadings because CGB purchased the crops free of the bank's security interest as a matter of law.

Questions Presented

1. Whether section 1631(e)(1)(A) of the Food Security Act of 1985 requires strict compliance or permits substantial compliance with the direct-notice requirements.
2. Whether notices that failed to identify the county or parish where the farm products were produced or located satisfied the Act's direct-notice requirements.
3. Whether the circuit court properly granted the secured party summary judgment and denied the buyer judgment on the pleadings.

Disposition

affirmed