The Illinois Supreme Court took an unexpected turn in its second civil decision of Friday morning, using State Bank of Cherry v. CGB Enterprises, Inc. [pdf] as a vehicle to clarify the standard which Illinois state courts should use to decide Federal law issues. In an opinion written by Justice Rita B. Garman, the Court affirmed the Third District’s holding that the Food Security Act of 1985 requires strict compliance with statutory requirements in crop financing instruments. Our pre-argument preview of State Bank of Cherry is here. Our report on the oral argument is here.

State Bank of Cherry started with an Illinois farmer executing a note in plaintiff’s favor, using certain crops as security. He then sells the crop to the defendant, a grain elevator. The plaintiff sent the Notice of Security Interest, citing the Food Security Act, to the defendant, but the defendant paid the farmer, not the plaintiff. So the plaintiff sued.

The defendant moved to dismiss, citing Farm Credit Midsouth, PCA v. Farm Fresh Catfish Co. to argue that strict compliance was mandatory under the Food Security Act. Since the plaintiff’s Notice omitted the required statement of the county where the crops were located, the buyer took free of the security interest. The plaintiff responded by arguing that the Illinois Commercial Code governed, and cited First National Bank v. Effingham-Clay Service Co. for the proposition that substantial compliance was good enough. The trial court concluded that the Illinois Appellate Court decision governed and granted the plaintiff’s motion for judgment on the pleadings. A divided panel of the Appellate Court reversed, holding that the state Commercial Code was preempted by the Food Security Act.

The Supreme Court unanimously affirmed. The Court had little trouble dismissing First National Bank; the case was decided ten years before Farm Fresh and Federal law governed the case. The Court then turned to the question of how Illinois courts should resolve questions of Federal law when there were Federal decisions on point. For years, the Court noted, Illinois courts had considered Federal circuit decisions persuasive but not binding, absent a decision from the United States Supreme Court. On the other hand, the Court pointed out, where federal courts are not split, maintaining a uniform body of law is an important value. The Court concluded that while the Court is bound only by decisions of the United States Supreme Court, the Court would "give considerable weight" (the emphasis is the court’s) to a uniform federal interpretation of an issue. The Court distinguished two cases cited by plaintiff and concluded that Farm Fresh was the only Federal case on the question of substantial compliance in "direct notice" cases — where the security instrument is delivered directly to the buyer, rather than being filed in a central repository.

So should the Illinois courts routinely follow a uniform Federal construction of Federal law? Well, not where the uniform line of cases is "wrongly decided." This doesn’t mean that the court can follow its own inclinations; if that were the rule, the value of uniformity would be lost. Rather, uniform Federal lines of authority should be applied by state court to Federal law questions unless the decisions are outside "logic" and "reason." Where Federal courts are split – then the Illinois courts can follow their own judgment.

Following that lengthy foundation, the ultimate issue in State Bank of Cherry was quickly resolved. The strict construction analysis in Farm Fresh was sound, the Supreme Court found, and matched the Illinois Supreme Court’s own law on statutory construction. So the Court followed Farm Fresh, holding that strict compliance with the Federal statute was essential for a buyer to take crops subject to a security interest. Since the plaintiff’s notice omitted the mandatory designation of county, the Notice was ineffective and the plaintiff’s case failed.

Justice Charles E. Freeman specially concurred. Justice Freeman opined that the majority’s decision, "as I understand it," merely reaffirmed long-standing Illinois law on the treatment of Federal cases on an issue of Federal law. Justice Freeman wrote separately to object to the Court’s "complicated and needless discussion of the concept of uniformity." The concept had no place in the opinion in Justice Freeman’s view. Farm Fresh was not a "uniform and uncontradicted" view of Federal law — a single opinion could not be "uniform and uncontradicted" with itself. "[A] single on-point decision, even if uncontradicted, does not constitute a ‘uniform’ body of precedent."