Perry Moseanko was so stunned by the news coming over his tractor radio that he turned the big machine around and headed it back toward the house.
The radio told him that the Farmers Home Administration (FmHA), to which he owes about $200,000, was about to begin confiscating government crop subsidy payments to offset the debt that Moseanko and hundreds of other farmers owed the agency.
Moseanko called the Agriculture Department branch office that handled his payments and warned that he would not tolerate interception of his money by the FmHA. The $4,200 he expected was earmarked to pay off another government loan for a grain bin.
Moseanko also called Ervin Lee, a lawyer at Minot, N.D., and together they filed suit against the FmHA, charging the agency had violated its rules and federal law by moving against the farmers without advance notice and by depriving them of procedural protections.
"We know there's a debt," Moseanko said recently. "We're not trying to get out of it. I intend to pay, but it cannot be done overnight. The FmHA will use any tactic or procedure, legal or illegal, to make it hard for their borrowers who are delinquent in payments. They want to make you a past-farmer, history, a failure."
As Lee and Moseanko were moving with Dennis Dockter, another farmer who joined the suit, North Dakota Gov. George A. Sinner and attorney general Nicholas Spaeth were going in the same direction. Spaeth filed a suit in the name of all North Dakota farmers affected by FmHA's offsetting payments against debt.
"The FmHA did not carry out the offset in all states," Spaeth said. "But this state was hit hardest. The agricultural economy is a very sensitive thing and the offset creates a problem."
Spaeth and Sinner said the FmHA's offset policy had a ripple effect up and down Main Street, where many merchants were relying on farmers to repay debts with money they would receive from federal programs.
Added attorney Lee: "It really is not the farmers' money. It belongs to the local elevators, fuel suppliers, implement dealers, landlords, who make credit available to the farmers to keep operating. The effect of the offset is very serious."
But before Spaeth and Lee could go into U.S. District Court with a motion to stop the FmHA, the agency was backing away from its policy. After negotiations with the lawyers, FmHA agreed last month to a six-month moratorium in its efforts to intercept crop payments.
Spaeth agreed that the agency is within its legal rights to attempt to recover delinquent debt by confiscating other government payments being paid to FmHA borrowers. But, he said, that was not the issue.
"We didn't think they had given adequate notice and that they had not followed statutory and administrative methods that are required. We have a strong case," Spaeth said.
The FmHA has lost several other major court battles in recent years over loan-collection policies and its failure to follow agency rules in dealing with delinquent borrowers. The most notable of the cases also was in North Dakota, where a federal judge invoked a two-year halt to foreclosures.
After the latest skirmish in North Dakota, the FmHA extended its moratorium across the nation, but made it clear that it would not return the $4.3 million that it had seized from delinquent borrowers' crop payments. FmHA seized funds in 35 states, including $94,000 from 111 North Dakota farmers.
In Washington, FmHA spokesman Ron Ence said the offset was "an effective credit management tool" that the agency was pressured to use by the Office of Management and Budget and the General Accounting Office.
He said it was not clear what would happen after the moratorium ends. But, he said, provisions of a farm credit bill signed into law by President Reagan yesterday may block the agency from continuing the offset policy.
Spaeth and Lee, however, aren't planning to drop their suits. Spaeth said one of his aims is to force Farmers Home to repay the money it offset from checks intended for farmers such as Dennis Dockter.
Dockter continued farming last year with a loan from his bank at Cogswell, N.D. The loan was to be repaid with money coming in from the crop support program. "Farmers Home got $3,290 that was being paid to me . . . the bank is not happy about this and they won't finance me in 1988 unless they get their payment," he said.