Feliciana Bank v. Manuel & Sessions, L.L.C.

Decision Date21 November 2006
Docket NumberNo. 2005-CA-01296-COA.,2005-CA-01296-COA.
Citation943 So.2d 736
CourtMississippi Court of Appeals
PartiesFELICIANA BANK & TRUST, Appellant v. MANUEL & SESSIONS, L.L.C., Appellee.

Jay Max Kilpatrick, Jackson, attorney for appellant.

Bruce M. Kuehnle, Natchez, attorney for appellee.

EN BANC.

SOUTHWICK, J., for the Court.

¶ 1. A bank brought suit for damages resulting from the cutting of timber on land in which it held a deed of trust. The defendant was granted summary judgment because a deed of trust was found not to provide a security interest in timber. We disagree. Therefore we reverse and remand.

FACTS

¶ 2. Louis Owen Ducote owned approximately fifty-one acres of land in Wilkinson County, Mississippi. In 1995, Ducote borrowed $20,000 from Feliciana Bank & Trust, then in 1998 he borrowed $100,000 from the same bank. Each time he conveyed the Wilkinson County property in trust to Feliciana to secure the loan. The deeds of trust were then filed in the land records.

¶ 3. On August 19, 1999, Ducote signed a piecemeal timber sale contract with Pat Conerly Forestry Services. Under this contract Conerly was "to secure a logging contractor, to manage all logging activities, to perform all activities normally performed by a forester, to secure market price and to sell and disburse stumpage through Woodville Logging." Ducote warranted the title to the timber and agreed to hold Conerly harmless from any third party claim of ownership.

¶ 4. Woodville Logging Services is a Mississippi corporation. Tom Manuel and Jody Sessions are its principals. Woodville contracts with mills and then acts as a broker to acquire timber to be sold to the mills. The defendant's initial motion for summary judgment states that "Woodville Logging Services, Inc. is a corporation owned by the Defendant, Manuel & Sessions, L.L.C." That named defendant is a limited liability company owned solely by Tom Manuel and Jody Sessions.

¶ 5. Conerly's affidavit asserted that he asked Manuel & Sessions, L.L.C. to find a mill that would purchase the Ducote timber. Conerly also asked if it could recommend a logger to cut the trees. Manuel & Sessions recommended Benjamin Groom, who regularly obtains work from Manuel and Sessions. Conerly selected the trees to be cut. Groom cut and delivered the trees to a mill. The record implies that the timber was cut in the spring of 2001. Conerly states that the mill paid Manuel & Sessions, and the money was then disbursed to Groom, Conerly, and Ducote. Ducote received $13,500 for the timber.

¶ 6. At some point after the timber was cut, Feliciana foreclosed because Ducote defaulted on the loan. Feliciana purchased the property at the foreclosure sale and later sold the property to Bryan Development Company, but Feliciana did not recover the full amount of the debt.

¶ 7. In 2002, Feliciana filed a complaint against Manuel & Sessions, arguing that it had a valid security interest in the timber on Ducote's property. Feliciana sought $60,000 under the doctrine of waste. In 2005, Manuel & Sessions filed for summary judgment, arguing that no perfected security interest in the timber existed because Feliciana did not file in accordance with the Uniform Commercial Code. After a hearing, the motion was granted. Feliciana perfected this appeal.

DISCUSSION

¶ 8. We perform a de novo review of a trial court's decision on a motion for summary judgment. Wilner v. White, 929 So.2d 315, 318 (Miss.2006). We examine all the evidence in a light favorable to the non-moving party. If the moving party carries its burden of proving that there is no dispute of material fact and that it is by law entitled to judgment, we will affirm. Id.

1. Effect of Uniform Commercial Code on timber deed of trust

¶ 9. The trial court found that a Uniform Commercial Code section had altered the long-standing efficacy of deeds of trust on land as security interests in the timber that grows on the land. The interplay of the UCC with the common law of real property is not a new issue. The UCC itself recognizes that the codified commercial law might impact on traditional real property concepts. In a provision in the section on sales, the Code provides this:

Section 75-2-107. Goods to be severed from realty; recording.

(1) [Contract for the sale of minerals or of a structure to be removed from realty].

(2) A contract for the sale apart from the land of growing crops or other things attached to realty and capable of severance without material harm thereto but not described in subsection (1) or of timber to be cut is a contract for the sale of goods within this chapter whether the subject matter is to be severed by the buyer or by the seller even though it forms part of the realty at the time of contracting, and the parties can by identification effect a present sale before severance.

(3) The provisions of this section are subject to any third party rights provided by the law relating to realty records, and the contract for sale may be executed and recorded as a document transferring an interest in land and shall then constitute notice to third parties of the buyer's rights under the contract for sale.

Miss.Code Ann. § 75-2-107 (Rev.2002). How to read this section alongside other Mississippi law is one of the principal issues on this appeal.

¶ 10. In Mississippi, timber is part of the realty until cut. South Miss. Electric Power Ass'n v. J.F. Miller Timber Co., Inc., 314 So.2d 346, 348 (Miss.1975). The adoption of the Uniform Commercial Code in Mississippi and specifically the just-quoted section 75-2-107(2) altered some traditional principles. This code is a nationally-created, nationally-adopted set of statutes that after enactment by this state's legislature is to be interpreted within the entire legal environment. Pre-existing law inconsistent with the Code would be replaced; consistent law would not be.

¶ 11. A deed of trust may specifically refer to timber and create explicit obligations such as not to cut without authorization. Taylor v. Fed. Land Bank of New Orleans, 162 Miss. 653, 656, 138 So. 596, 597 (1932). Conveyances of real property, though, without further elaboration and whether the conveyance is in trust, in fee simple or otherwise, grant everything that is part of the realty. Albritton v. Williams, 198 So. 573, 574 (Miss.1940). In Albritton, several deeds of trust either specifically on timber or specifically excluding timber had been executed. Id.; Albritton v. Williams, 184 Miss. 857, 186 So. 324 (1939). The Mississippi Supreme Court held that when a deed of trust was executed "without reserving the timber, [it] thereby conveyed the timber, for ordinarily timber is a part of the land on which it stands." Albritton, 198 So. at 574. Since growing timber is part of the realty, a conveyance of the realty without excepting the timber will also convey that timber.

¶ 12. The deed of trust in issue conveyed to the trustee "the land described," as well as "improvements and appurtenances now or hereafter erected on, and fixtures," which is sufficient language to cover everything that is by law part of the realty. The Code section quoted above is "subject to any third party rights provided by the law relating to realty records . . . ." Miss.Code Ann. § 75-2-107(3) (Rev.2002). That certainly appears to be a legislative effort to make the UCC rest peaceably alongside real property law.

¶ 13. What the trial court found had undermined these long-existing rules was that in addition to the previously quoted section on sales, the Mississippi Legislature had also adopted a section that defined "standing timber that is to be cut and removed under a conveyance or contract for sale" as "goods." Miss.Code Ann. § 75-9-102(a)(44) (Rev.2002). Security interests in "goods" are created by a filing under Article 9 of the UCC. The bank argues that it complied with the financing statement filing obligations. Feliciana's compliance with the UCC filing procedures is questionable, but we conclude that a traditional deed of trust filing was sufficient.

¶ 14. The trial court in essence concluded that the Mississippi commercial code displaced the common law on the securing of interests on timber. Under that view, either a deed of trust no longer applies to timber at all, or the security is lost as soon as a conveyance or contract for sale of timber occurs. The legislature has certainly defined standing timber as personal property upon the execution of a contract for its cutting. Someone involved in that cutting may make a UCC filing to secure the interest that has been obtained. Prior to such a contract, though, the UCC does not cause timber to be classified as "goods." Absent any statutory forcing of a change in the common law, the timber prior to a contract for its cutting would remain real property. The UCC does not purport to cancel the reach of a pre-existing deed of trust which at least would secure timber that is not subject to a contract for harvesting. Consequently, the most the UCC would have done is cancel the lien of a deed of trust as soon as a contract for a timber sale occurs. If cancellation is the result of the Code, there would be no lasting security over timber created by a deed of trust.

¶ 15. We conclude that the proper analysis is not one of cancellation but of priority. Historically, a deed of trust granted a security interest in all property that was part of the realty. Under the UCC, though, if a typical deed of trust is executed after a contract for the cutting of the timber has been executed but before the actual harvesting of the trees, the deed of trust will either not apply to the timber at all because the timber is now personalty, or else the deed of trust will be subordinate to a prior UCC filing. Conversely, if the deed of trust predates any contract to cut the timber, the security interest vests in timber and cannot be divested simply by a contract for sale. Again, the matter is one of priority. A related statute makes clear that...

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3 cases
  • Epstein v. Coastal Timber Co. Inc., 26997.
    • United States
    • United States State Supreme Court of South Carolina
    • July 11, 2011
    ...and such interests would be subject to Epstein's previously-recorded interest. In a similar case, Feliciana Bank & Trust v. Manuel & Sessions, L.L.C., 943 So.2d 736 (Miss.Ct.App.2006), the plaintiff, a bank, brought an action for damages after standing timber was sold and removed from land ......
  • Mayberry v. Hardwoods
    • United States
    • Court of Appeals of Mississippi
    • November 8, 2022
    ...... Hardwoods LLC, BLC Trucking Inc., [ 1 ] and Ernest Moore. The. ... property (citing Feliciana Bank & Trust v. Manuel. & Sessions LLC , 943 So.2d ......
  • Mayberry v. Hardwoods
    • United States
    • Court of Appeals of Mississippi
    • November 8, 2022
    ...... Hardwoods LLC, BLC Trucking Inc., [ 1 ] and Ernest Moore. The. ... property (citing Feliciana Bank & Trust v. Manuel. & Sessions LLC , 943 So.2d ......

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