Request By:
The Honorable Alben W. Barkley, II
Commissioner
Department of Agriculture
Capital Plaza Tower
Frankfort, Kentucky 40601
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising a question concerning the applicability of sections of KRS Chapter 248 to tobacco companies buying tobacco directly from the farmers.
You state that in some areas of the Commonwealth some tobacco sales are being conducted other than by the traditional warehouse method. Tobacco companies in some instances are establishing prices on the farm and accepting delivery of tobacco at company facilities where it is weighed and the producers are paid on the basis of that weight.
These tobacco companies are not licensed warehouses and do not have bonded weighmen. In addition, the Department's Division of Weights and Measures has not in the past set tares for the equipment used in the weighing as is required in the case of a licensed warehouse. The division does certify the scales annually as it does with all commercial weighing devices.
Your specific question is whether these tobacco companies buying directly from the farmer must be licensed as warehouses, have bonded weighmen and have tares set prior to receiving tobacco.
There is no question that tobacco warehouses are now and have been for many years subject to state regulation. Section 206 of the Kentucky Constitution provides in part that the General Assembly shall enact laws for the inspection of grain, tobacco and other produce, and for the protection of producers, shippers and receivers of grain, tobacco and other produce. The General Assembly has enacted KRS Chapter 248, many sections of which concern the operation of tobacco warehouses and the duties and responsibilities of the Department of Agriculture relative thereto.
KRS 248.290 requires that each tobacco warehouse be licensed by the Department of Agriculture. KRS 248.300 requires that the Department administer KRS 248.290 to 248.440, excluding KRS 248.350, and it shall have general supervision over the sale of tobacco in warehouses throughout the state. The duties and powers of the Department's inspectors are set forth in KRS 248.310 and included therein is the authority to determine the weight of all containers used in the transport for the purpose of weighing tobacco on the warehouse floor and to establish a weight tare for each warehouse.
In connection with some of the history of this state's regulation of tobacco warehouses you may wish to read and consider the cases of Pannell v. Louisville Tobacco Warehouse Co., 113 Ky. 630, 68 S.W. 662 (1902); Jervell Tobacco Warehouse Co. v. Kemper, 206 Ky. 667, 268 S.W. 324 (1925); Germann v. Stanley, 300 Ky. 860, 190 S.W.2d 547 (1945).
In the situation you have presented we are not dealing with the general definition of a warehouse. For example, Black's Law Dictionary (4th Edition), at page 1755, defines a warehouse in part as, "A place adapted to the reception and storage of goods and merchandise." We are, however, concerned with and limited to the definitions of warehouse and warehousemen as those terms are defined in KRS Chapter 248.
KRS 248.010(4) states: "'Warehouse' means any tobacco warehouse operating as a place of sale for tobacco in this state." KRS 248.010(5) provides: "'Warehouseman' means the owner, operator, manager, lessee or proprietor of a warehouse engaged in selling tobacco or his agents or employees."
Thus, the questions to be resolved are whether those tobacco companies, dealing directly with the farmers by establishing prices at the farm and accepting delivery of tobacco at company facilities where the tobacco is weighed and paid for on the basis of that weight, are operating tobacco warehouses under the definition of that term as set forth in KRS 248.010(4) and whether those companies are functioning as warehousemen as that term is defined in KRS 248.010(5).
We have considered the fact situation as you have presented it and we have examined the provisions of KRS Chapter 248, particularly the definitions of "warehouse" and "warehousemen. " The companies involved are dealing directly with individual farmers at their farms and purchasing tobacco from them at an agreed upon price. They are apparently not selling tobacco to others at a public market nor are they apparently soliciting the delivery of tobacco from farmers generally for sale at a subsequent public auction.
In our opinion, therefore, those tobacco companies, dealing directly with individual farmers by establishing prices at the farm and accepting delivery of tobacco at company facilities where the tobacco is weighed and paid for on the basis of that weight, are not operating tobacco "warehouses" and are not functioning as "warehousemen" under the definition of those terms as set forth in KRS 248.010(4) and (5). Those companies are not subject to the Department of Agriculture's jurisdiction as tobacco warehouses which must operate pursuant to the requirements of KRS Chapter 248.