First Bank v. Eastern Livestock Co., Civ. A. No. 3:92cv469(L)(N).
| Court | United States District Courts. 5th Circuit. Southern District of Mississippi |
| Citation | 886 F. Supp. 1328 |
| Docket Number | Civ. A. No. 3:92cv469(L)(N). |
| Parties | FIRST BANK, Plaintiff, v. EASTERN LIVESTOCK COMPANY, Defendant. |
| Decision Date | 17 May 1995 |
886 F. Supp. 1328
FIRST BANK, Plaintiff,
v.
EASTERN LIVESTOCK COMPANY, Defendant.
Civ. A. No. 3:92cv469(L)(N).
United States District Court, S.D. Mississippi, Jackson Division.
May 17, 1995.
Dennis L. Horn, Horn & Payne, Jackson, MS, for plaintiff.
Denise F. Schreiber, Alston, Rutherford, Tardy & Vanslyke, Jackson, MS, for defendant.
MEMORANDUM OPINION AND ORDER
TOM S. LEE, District Judge.
This cause is before the court on the summary judgment motion of defendant Eastern Livestock Company (Eastern). Plaintiff First Bank has responded to the motion, and the court, having considered the memoranda of authorities along with exhibits presented by the parties, concludes for the following reasons that defendant's motion should be denied.1
Eastern is a livestock company engaged in the business of buying and selling cattle. From January through March of 1989, Eastern entered into a series of "buy back" agreements with Harry Wells, a cattle farmer in Amite County, Mississippi, pursuant to which Eastern agreed to deliver and/or sell
This case arises because, on May 23, 1989, Eastern paid Wells, as sole payee, a check in the amount of $253,647.92 for certain fattened cattle. First Bank contends that it held a valid security interest in the cattle for which the check was meant to pay, as it contends it did in all of Wells' cattle through an after-acquired property clause in its security agreements with Wells. Yet it never received any of the monies represented by this check. Thus, it brought this action against Eastern, alleging that Eastern's act of making a check to Wells as sole payee constituted conversion of the cattle in which it had a security interest.
I. Applicable Statute of Limitations
Eastern first argues that First Bank's claim is time-barred by the three-year statute of limitations of Miss.Code Ann. § 15-1-49. The parties agree that First Bank's cause of action accrued on or about May 23, 1989, when it paid the subject check to Wells; it filed this lawsuit on August 11, 1992, approximately three years and three months later. Were a three-year statute of limitations in fact applicable, as contended by Eastern, First Bank's claim would be untimely. The court concludes, however, that the applicable limitations period is the six-year period provided by § 15-1-49 at the time plaintiff's cause of action arose.
Tort actions for conversion are governed by § 15-1-49, Mississippi's residual statute of limitations. At the time plaintiff's claim accrued in May 1989, that statute provided a six-year limitations period. However, the Mississippi legislature amended the statute in 1989, reducing the limitations period from six to three years. The amended statute had an effective date of July 1, 1989, and included a "savings clause," providing that the new three-year period was to apply "only to causes of action accruing on or after July 1, 1989." The following year, the legislature again amended the statute, effective March 12, 1990, adding a section addressed to actions involving latent injury or disease.3 In reenacting the statute, the legislature omitted the savings language that had been part of the 1989 amendment. From that fact, Eastern reasons that for cases filed after the 1990 amendment, regardless of when the cause of action arose, the three-year limitations period applies.
Eastern's argument flows from an erroneous premise, that the 1989 amendment shortening the limitations period would have applied retroactively to causes of action that had already accrued had it not been for the savings clause. Many states as a general rule apply shortened limitations periods retroactively so long as the plaintiff is given a reasonable time period in which to file his claim after the announcement of the new period. See, e.g., Fust v. Arnar-Stone Laboratories, Inc., 736 F.2d 1098, 1100 (5th Cir. 1984) (applying Louisiana law). The Mississippi Supreme Court, however, has not embraced this rule, and has instead held that the courts "may not give retroactive effect to newly enacted statutes of limitations shortening the period within which a claim arising prior to enactment must be brought." Kilgore v. Barnes, 508 So.2d 1042, 1044-45 (Miss.1987); see also Bankston v. Pass Road Tire Center, Inc., 611 So.2d 998, 1004 (Miss. 1992) (concluding that "the six-year limitation
The court recognizes that the legislature may effect retroactive application of a shortened limitations period by so providing in the statute itself, or otherwise clearly expressing its intent that the new period apply to causes of action that have already accrued. Here, however, upon amending the statute to shorten the limitations period to three years, the legislature expressed a contrary intent, and one which this court views as consistent with Mississippi case law on the point: the shorter period would apply "only to causes of action accruing" on or after the effective date of the statute. Eastern maintains that by omitting the savings language in the 1990 amendment, the legislature thereby "clearly expressed an intent" that the shorter limitations period apply to already-accrued actions, and "clearly intended" to make the three-year period retroactive. This court infers no such intent from the mere failure of the legislature to retain the savings language, and therefore, rejects Eastern's position. Accordingly, the court concludes that First Bank's conversion claim was timely commenced.
II. First Bank's Consent to the Sale
Eastern next argues that irrespective of whether First Bank had a valid perfected security interest in Wells' cattle, its purchase of cattle from Wells was not subject to that security interest for the reason that First Bank authorized and/or acquiesced in Wells' sale of cattle to Eastern. The usual rule under Mississippi's Commercial Code is that
a security interest continues in collateral notwithstanding sale, exchange or other disposition thereof by the debtor unless his action was authorized by the secured party in the security agreement or otherwise, and also continues in any identifiable proceeds including collections received by the debtor.
Miss.Code Ann. § 75-9-306(2). Under the Code, a buyer in ordinary course of business takes free of a security interest created by his seller. See Miss.Code Ann. § 75-9-307. However, excepted from this usual rule are "persons buying farm products from a person engaged in farming operations." Id. In that circumstance, the secured party's interest follows the collateral into the hands of the buyer unless the seller has consented to the sale in accordance with § 75-9-306(2).
In the case at bar, Eastern submits that First Bank not only authorized Wells to sell cattle to it, but in fact intended for him to do so. It contends that in view of the bank's consent, it must be concluded under § 75-9-306(2) that the sale cut off First Bank's security interest in the collateral. First Bank argues that Eastern's argument on this point is foreclosed by Mississippi law.
In Oxford Production Credit Association v. Dye, 368 So.2d 241 (Miss.1979), the Mississippi Supreme Court rejected the contention of the defendant cotton purchaser that the seller's lender, which had a security interest in the cotton, had "waived" its right to proceed against her by acquiescing in its debtor's sale of the cotton to her. The court concluded that because the security agreement expressly prohibited the debtor's sale of the collateral without the lender's written consent, then in the absence of proof of the lender's written consent, the sale did not cut off the lender's security interest and the lender could maintain its claim against the buyer "for sums paid to the farmer ... for cotton to the extent that such sums were not then paid over to the secured party." Id. at 242-43. See also United States v. Harrell's Stockyards, Inc., 652 F.Supp. 452 (S.D.Miss.1987).
In the case at bar, as in Dye, the security agreement provided that the collateral could not be sold without the written consent of the secured party, First Bank.4 And here, as in Dye, there is no evidence of written consent. Id. But in Dye, as distinguished from this case, there was no suggestion that the lender
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...be commenced within three (3) years next after the cause of such action accrued, and not after.”); First Bank v. Eastern Livestock Co., 886 F.Supp. 1328, 1330 (S.D.Miss.1995). Mississippi law provides that “[a] conversion occurs when a person exercises an unauthorized act of dominion or own......
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...be commenced within three (3) years next after the cause of such action accrued, and not after."); First Bank v. Eastern Livestock Co., 886 F. Supp. 1328, 1330 (S.D. Miss. 1995). Mississippi law provides that "[a] conversion occurs when a person exercises an unauthorized act of dominion or ......
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