The opinion of the court was delivered by: Larimer, Chief Judge.
By prior order of June 23, 1997, this Court directed that
monies collected from accounts receivable of David Fishgold,
Inc. ("Fishgold"), be held in trust for the benefit of
Fishgold's suppliers under provisions of the Perishable
Agricultural Commodities Act ("PACA").
Fishgold originally commenced this action when it sought to
enjoin one of its creditors, OnBank & Trust Company ("OnBank"),
from seizing its accounts receivable to satisfy its loan, now
in default. Fishgold claimed that this seizure was in violation
of PACA. Eventually, numerous PACA creditors intervened and
filed claims to the trust's assets. A receiver was appointed to
marshal the assets and to make payment to creditors with
undisputed claims. The amount of money held in trust is
unquestionably insufficient to satisfy the claims of all PACA
suppliers, thus the trust will be distributed on a pro rata
basis to the eligible named PACA creditors.
The receiver sought to distribute $46,750 of the money held
in the trust account, roughly 85% of the account balance.
Pro rata distributions to five of the PACA creditors whose
claims were undisputed were ordered by this Court on August 13,
Key Produce Sales, Inc.: $3,478.20
Giumarra Vineyards, Corp.: $4,726.43
Cayuga Produce, Inc.: $4,511.37
Weis-Buy Service, Inc.: $1,991.55
Giorgio Foods, Inc.: $9,999.83
Cayuga Produce, Inc. ("Cayuga") has filed objections as to
the claims made by five of the remaining potential PACA
creditors: Genecco Produce, Inc. ("Genecco"), Oswego Growers
and Shippers, Inc. ("Oswego"), Brock's Fresh Foods, Inc.
("Brock"), Double Diamond Acres, Ltd. ("Double Diamond"), and
OnBank.*fn1 Obviously, to the extent these objections are
sustained, the trust corpus would increase, which would also
result in an increased pro rata share to Cayuga and those other
creditors whose claims to the funds are undisputed.
II. Cayuga's Specific Objections
A. Objection to Genecco and Oswego's Claims — Were the
Claimed Transactions in Interstate Commerce?
The PACA statute, at 7 U.S.C. § 499e(c)(2), creates a trust
for the benefit of sellers of "perishable agricultural
commodities received by a commission merchant, dealer, or
broker in all transactions. . . ." The PACA trust provision is
triggered when "in connection with any transaction in
interstate or foreign commerce . . . any commission merchant,
dealer, or broker . . . fail[s] . . . to . . . make full
payment. . . ." 7 U.S.C. § 499b(4). The term interstate
commerce is defined as "commerce between any State or
Territory, or the District of Columbia and any place outside
thereof; or between points within the same State or Territory,
or the District of Columbia but through any place outside
thereof; or within the District of Columbia."
7 U.S.C. § 499a(3). A transaction under the Act is considered to be in
interstate commerce if it "is part of that current of commerce
usual in the trade in that commodity whereby such commodity
and/or the products of such commodity are sent from one State
with the expectation that they will end their transit, after
purchase, in another. . . ." 7 U.S.C. § 499a(8).
This language has been interpreted broadly, and covers the
transactions conducted by Fishgold. In re Southland Keystone,
132 B.R. 632, 640 (B.A.P. 9th Cir. 1991) (The definition in
this section "is essentially consistent with the broad
definitions of interstate commerce developed by the Supreme
The D.C. Circuit poetically analyzed the Secretary of
Agriculture's interpretation of the language in section
499a(8), noting that:
In the spirit of the riverine metaphor used by the
Congress . . . the current of interstate commerce
should be thought of as akin to a great river that
may be used for both interstate and intrastate
shipping; imagine a little raft put into the
Mississippi River at Hannibal, Mo., among the big
barges bound for Memphis, New Orleans and ports
beyond, with St. Louis as the rafter's modest
destination. On this view, a shipment of
strawberries can enter the current of ...