Straw, 010720 INAGO, AGO 2020-1

Docket Nº:AGO 2020-1
Case Date:January 07, 2020
Mr. Mark Straw, Executive Administrator
AGO 2020-1
Official Opinion 2020-1
Indiana Attorney General Opinion
State of Indiana Office of the Attorney General
January 7, 2020
         Mr. Mark Straw, Executive Administrator          Indiana State Egg Board          Purdue University, Creighton Hall of Animal Sciences          270 S. Russell Street          West Lafayette, Indiana 47907-2041          RE: Regulation of Online “Merchant Service Provider”          Dear Mr. Straw:          Pursuant to Ind. Code § 4-6-2-5, the Indiana State Egg Board (hereafter, the “Board”) requested the opinion of the Office of Attorney General (OAG) as to whether an entity engaged in the facilitation of the sale of eggs through online means is subject to regulation by the Board as a retailer under applicable State law, specifically Ind. Code § 16-42-11 et seq. and Title 370 of the Indiana Administrative Code.          QUESTION PRESENTED          Does the Board have the authority to regulate an online “merchant service provider” that “facilitates” the sale of eggs?          BRIEF ANSWER          No. The “merchant service provider” (hereafter, “Provider”) does not acquire or transfer title to eggs and, therefore, does not meet the definition of a retailer under Ind. Code § 16-42-11-1.1(6) and 370 I.A.C. 1-12-1(4). The Board’s statutory and regulatory provisions were not designed to address e-commerce1 situations such as the one presented here.          BACKGROUND          The Board’s statutory authority; the meaning of sell/sale; the passage of title; and rules of statutory construction.          The State of Indiana, through legislative enactments, vests power with the Board to, inter alia, “regulate the sale of and commerce in eggs sold.” The Board discharges its duty pursuant to Ind. Code § 16-42-11 and Title 370 of the Indiana Administrative Code (IAC). The Board may adopt rules necessary for or incident to discharging its duties, and can formulate definitions and specifications “for the care and handling of eggs that may be offered for sale at retail and wholesale.” Ind. Code § 16-42-11-5(b)(3), (5).          To regulate the sale of and commerce in eggs, the Board issues permits and provides registration to all “retailers.”2 Ind. Code § 16-42-11-5(b)(4). A “retailer” is defined as “any person who sells eggs for human consumption and not for resale.” Ind. Code § 16-42-11-1.1(6); 370 I.A.C. 1-12-1(4). “Person” includes business entities. See Ind. Code § 16-42-11-1.1(5); 370 I.A.C. 1-12-1(3).          Neither Ind. Code § 16-42-11 et seq. nor Title 370 of the I.A.C. defines “sell” or “sale.” The common and legal meaning of “sale” is one and the same—“the transfer of ownership of and title to property from one person to another for a price.”3 “Sell” is to transfer property by sale.4 One who completes a sale or engages in the act of selling is often referred to as a “seller.” See Uniform Commercial Code (U.C.C.), § 2-103(1)(d), defining “seller” as “a person who sells or contracts to sell goods.” However, one who sells a good may not always be the “seller” (e.g., a consignee may sell goods on behalf of a consignor). A consignment occurs when goods are delivered to another’s custody for sale or delivery.5 Under § 9-319 of the U.C.C., “consignment” means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and:
(A) the merchant:
(i) deals in goods of that kind under a name other than the name of the person making delivery;
(ii) is not an auctioneer; and
(iii) is not generally known by its creditors to be substantially engaged in selling the goods of others;
(B) with respect to each delivery, the aggregate value of the goods is $1,000 or more at the time of delivery;
(C) the goods are not consumer goods immediately before delivery; and
(D) the transaction does not create a security interest that secures an obligation.
         The divesture and passage of title to property, while not indicative of ownership, is indicative of a sale.6 Generally, title passes to the buyer at the time and place at which the seller completes his performance with respect to the physical delivery of goods. Ind. Code § 26-1-2-401(2). However:
Where goods are bought at one place to be consigned and transported to the purchaser at another place, in the absence of any arrangement or agreement to the contrary, the general rule is that delivery by the seller to a common carrier of such goods, duly consigned to the purchaser, is a delivery to the purchaser; for the carrier thereby becomes the agent of the purchaser, and title to the property passes to him at the time of such delivery. There are exceptions to this general rule, but, in the absence of facts showing a different agreement or arrangement, the presumption is that the general rule prevails.
Robbins v. Brazil Syndicate R. & B. Co., 114 N.E. 707, 709 (Ind.Ct.App. 1917).          Under judicial constructions for statutory interpretation, Ind. Code § 16-42-11-1.1(6) (and, for that matter, 370 I.A.C. 1-12-1(4)) need not be subject to interpretation should its words be unambiguous. Peoples State Bank v. Benton Twp. of Monroe Cnty, 28 N.E.3d 317, 322-23 (Ind.Ct.App. 2015). Rather, the words and phrases will be read in their plain, ordinary, and usual sense. Id. A statute should be construed so as to ascertain and give effect to the intention of the legislature as expressed in the statute. In so doing, the objects and purposes of the statute in question must be considered as well as the effect and consequences of such interpretation. State v. Eichorst, 957 N.E.2d 1010, 1012 (Ind.Ct.App. 2011). Lastly, when interpreting the words of a single section of a statute, the words must be construed with due regard for all other sections of the act and with regard for the legislative intent to carry out the spirit and purpose of the act itself. It is presumed that the legislature intended its language to be applied in a logical manner consistent with the statute’s underlying policy and goals. Id.          A review of the services of the Provider and the role it plays in the e-commerce of eggs is necessary to accurately analyze whether the Provider is a retailer as defined by Ind. Code § 16-42-11-1.1(6) and 370 I.A.C. 1-12-1(4)[7] or is actually some other concept altogether.          ANALYSIS          The Provider is an online marketplace.          The Provider, through its website, offers an online marketplace where farmers and vendors can sell food products, including eggs. The Provider monitors how products are advertised on its website, but vendors list the quantity and determine the...

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