Bayou Pierre Farms v. Bat Farms Partners, III

• Decision Date: 20 May 1997
• Citation: 693 So.2d 1158
• Parties: 96-2826 La
• Court: Louisiana Supreme Court

Page 1158

693 So.2d 1158

96-2826 La. 5/20/97

BAYOU PIERRE FARMS v. BAT FARMS PARTNERS, III, et al.

No. 96-C-2826.

Supreme Court of Louisiana.

May 20, 1997.

C. Calvin Adams, Jr., Tallulah, for Applicant.

Ted David Hernandez, Natchitoches; McGlinchey, Stafford, Lang, Stephen Paul Strohschein, Baton Rouge; Michael H. Rubin, Baton Rouge, Daykins, Coyle, & Carter, William Shands Carter, Jr., Ruston; Kenneth D. McCoy, Jr., Natchitoches, Margaret Gravolet, McCoy & Hawthorne, Natchitoches, for Respondent.

[96-2826 La. 1] KIMBALL, Justice. ^*

We granted certiorari to determine whether Bayou Pierre Farms (Bayou Pierre), a Louisiana general partnership which contracted with Bat Farms Partners (Bat Farms), also a Louisiana general partnership, to pick all of the cotton grown by Bat Farms, qualifies as a laborer pursuant to La.R.S. 9:4521 and La.C.C. art. 3217 and would thus be ranked as the first privilege on the funds derived from the sale of that cotton now on deposit in the registry of the court. Though there were competing claimants for these funds, the district court, in accordance with La.R.S. 9:4521, ranked Bayou Pierre ahead of the other claimants. The court of appeal reversed, finding that Bayou Pierre was not a laborer and therefore was not entitled to a first ranking privilege on the funds on deposit in the registry of the court. For the reasons explained more fully below we affirm the judgment of the court of appeal.

FACTS

On April 5, 1993, Bat Farms leased land in Natchitoches Parish from T.L. James Company, Inc. (T.L. James) at a rental of $55,000. Bat Farms leased this land to grow cotton and corn. The parties executed an agricultural security agreement on the crops. On April 13, 1993, to secure the land lease, the parties filed a UCC-1F form pursuant to La.R.S. 3:3651 et seq. and [96-2826 La. 2] La.R.S. 10:9-101 et seq. T.L. James also leased farm equipment to S & E Planting Co., one of the partners of Bat Farms for $5,000.

After leasing the land from T.L. James, Bat Farms arranged a crop loan from Ag Services of America, Inc. (Ag Services) for $190,000. This loan was secured by an agricultural security agreement listing as collateral the crops on the land leased from T.L. James as well as crops on other leased lands. On May 3, 1993, to secure the loan, the parties filed a UCC-1F form pursuant to La.R.S. 3:3651 et seq. and La.R.S. 10:9-101 et seq.

T.L. James then sold the land subject to Bat Farms' land lease and equipment lease to Melrose Planting Company, Inc. (Melrose). T.L. James and Melrose agreed between themselves to a pro-rata distribution of the rents due under Bat Farms' lease. On July 12, 1993, to secure its interest, Melrose filed a UCC-1F form pursuant to La.R.S. 3:3651 et seq. and La.R.S. 10:9-101 et seq.

On July 28, 1993, by written contract, Bat Farms hired Bayou Pierre to pick the cotton grown by Bat Farms in Natchitoches Parish. Under the terms of the contract, Bayou Pierre, who is referred to as "Contractor" in the contract, was to receive ten cents per lint pound to pick the cotton the first time and if the cotton was required to be picked a second time, it was to receive twelve cents per lint pound. A minimum contract price of fifty-five dollars per acre was established in the event the price per lint pound times the number of pounds did not exceed $55.00 per acre. According to the terms of the contract, Bayou Pierre was to provide two four-row John Deere cotton pickers, two two-row John Deere cotton pickers, two module builders and one boll buggy, together with tractors and other equipment necessary to complete the contract. The contract also provided that Bat Farms was responsible to Bayou Pierre for reasonable attorney's fees, fixed in the amount of twenty-five percent of the amount due under the contract if it was necessary for Bayou Pierre to retain an attorney to collect any sums due under the contract. By an act of crop pledge, Bat Farms granted Bayou Pierre a security interest in the cotton and its proceeds. On July 29, 1993, Bayou Pierre perfected its security interest by filing a UCC-1F form pursuant to La.R.S. 3:3651 et seq. and La.R.S. 10:9-101 et seq.

The cotton crop was raised, picked, moduled, ginned, baled, and sold. However, the proceeds were insufficient to satisfy all the claims of Bat Farms' creditors. Bayou Pierre, the first [96-2826 La. 3] to file suit, petitioned for a writ of sequestration on the warehouse receipts or proceeds from the sale of the cotton and prayed that there be judgment recognizing its entitlement to $47,700 of the proceeds and attorney's fees. Melrose, T.L. James, and Ag Services each answered the suit and filed a reconventional demand against Bayou Pierre. A proliferation of cross-claims, third-party demands, and oblique actions followed. After the proceeds from the sale of the cotton, $124,412.05, were deposited into the registry of the court, T.L. James, Melrose, and Bayou Pierre filed motions for summary judgment and rules to rank the liens.

By stipulation, the parties agreed to consolidate the motions for summary judgment and rules regarding the security interests and their ranking. The parties also stipulated as to the facts and evidence and consented that the district court could render a final judgment on the evidence in the summary proceedings.

The district court granted T.L. James' and Melrose's motions for summary judgment and awarded them rent for the land in the amount of $55,000, plus interest and attorney's fees. In addition, the district court awarded them $5,000 plus interest against S & E Planting Co. and others for rent under the equipment lease. The district court also granted Bayou Pierre's motion for summary judgment and awarded it $39,264.50 plus interest and attorney's fees. A final judgment was signed ranking the priorities of the liens in the following order in accordance with La.R.S. 9:4521:(1) Bayou Pierre; (2) T.L. James and Melrose; and (3) Ag Services.

T.L. James, Melrose, and Ag Services appealed the district court's judgment. The court of appeal affirmed the money judgments but modified the ranking order as follows: (1) T.L. James; (2) Ag Services; (3) Bayou Pierre; and (4) Melrose. ¹ According to the court of appeal, Bayou Pierre did not qualify as a laborer under La.R.S. 9:4521, thus it was not entitled to a first ranking privilege over the proceeds of the crop. The court of appeal determined that Bayou Pierre did not pick the cotton itself, rather, it only hired people who operated the mechanical cotton pickers that picked the cotton. By strictly construing La.C.C. art. 3217, the court of appeal [96-2826 La. 4] concluded the laborer's privilege was intended to protect the workers who actually ran the machines that picked the cotton and not the contractor who hired the workers to pick the cotton. Thus, the court of appeal ruled that Bayou Pierre did not have a laborer's privilege and was not entitled to a first ranking privilege over the proceeds of the cotton crop.

We granted Bayou Pierre's application for certiorari, Bayou Pierre Farms v. Bat Farms Partners, III, et al., 96-2826 (La.1/24/97); 686 So.2d 853, to determine whether Bayou Pierre qualified as a laborer entitled to a first ranking privilege under La.C.C. art. 3217 and La.R.S. 9:4521. La.Sup.Ct.R. X, § 1(a)(2).

LAW

All of the financing statements involved in this case were filed under both Louisiana's version of Article 9 of the UCC (La.R.S. 10:9-101 et seq.) and its laws regarding security devices affecting farm products (La.R.S. 3:3651 et seq.). La.R.S. 10:9-312(5) is the normal rule for ranking UCC interests and provides, in pertinent part:

[p]riority between conflicting security interests in the same collateral shall be determined according to the following rules:

(a) Conflicting security interests rank according to priority in time of filing or perfection. Priority dates from the time a filing is first made covering the collateral or the time the security interest is first perfected, whichever is earlier, provided that there is no period thereafter when there is neither filing nor perfection.

A parallel provision is found in Louisiana's farm products legislation, La.R.S. 3:3651 et seq. La.R.S. 3:3656(D) provides, in pertinent part:

Except as otherwise provided in this Section, each effective financing statement and other statement shall become effective against third parties on the date and at the time it is filed with the filing officer.

Both La.R.S. 10:9-312(5) and La.R.S. 3:3656(D) provide that liens should rank in the order of their recordation. However, an exception to this normal ranking rule is found in La.R.S. 9:4521 and La.C.C. art. 3217. ² La.R.S. 9:4521 provides:

[96-2826 La. 5] As a specific exception to R.S. 9:4770 and R.S. 10:9-201, the following statutory privileges and perfected security interests as affecting unharvested crops shall be ranked in the following order of preference, provided that such privileges and security interests have been properly filed and maintained in accordance with the central registry provisions of R.S. 3:3651 et seq.:

(1) Privilege of the laborer, the thresherman, combineman, grain driver, and the overseer.

(2) Privilege of the lessor.

(3) Perfected security interests under Chapter 9 of the Louisiana Commercial Laws in the order of filing, as provided by R.S. 3:3651 et seq.

(4) Privilege of the furnisher of supplies and of money, of the furnisher of water, and of the physician.

La.C.C. art. 3217 provides, in pertinent part, that the following debts are privileged on certain movables:

(3) The rents of immovables and the wages of laborers employed in working the same, on the crops of the year, and on the furniture, which is found in the house let, or on the farm, and on every thing which serves to the working of the farm.

....

(9) The privileges granted by this article, on the growing crop, in favor of the classes of persons mentioned shall be concurrent, except the...