Planters Bank & Trust Co. v. Sklar
| Decision Date | 10 January 1990 |
| Docket Number | No. 07-58790,07-58790 |
| Citation | 555 So.2d 1024 |
| Parties | 11 UCC Rep.Serv.2d 251 PLANTERS BANK & TRUST COMPANY, C.E. Bowden, III, and Ruleville-Drew Elevator Company, Inc. v. Ben SKLAR, Executor of the Estate of Sylvia L. Sklar, Deceased. |
| Court | Mississippi Supreme Court |
William D. Belk, Jr., Clark Davis & Belk, Indianola, William A. Pepper, Jr., Cleveland, P.J. Townsend, Townsend McWilliams & Holladay, Drew, for appellant.
Alfred A. Levingston, Levingston & Levingston, Cleveland, for appellee.
Before ROY NOBLE LEE, C.J., and SULLIVAN and PITTMAN, JJ.
This cause begins with a July 2, 1986, complaint filed by Sylvia Sklar ("Landlord") to enforce a landlord's lien against defendants, C.E. Bowden III ("Cotton Buyer"), Ruleville-Drew Grain Elevator Company, Inc. ("Elevator"), Planters Bank and Trust Company ("Bank") and Gene Mitchell ("Mitchell"). Following a trial on the merits, the Chancery Court of the Second Judicial District Court of Bolivar County, the Honorable Harvey T. Ross, presiding, entered a decree in favor of the Landlord and against Cotton Buyer, Elevator and the Bank, in the principal sum of $4,488.52, and against Elevator and Bank in the additional principal sum of $2,573.48. The Chancellor further granted judgment against the Bank and in favor of the Cotton Buyer and the Elevator to the extent of their respective obligations to Landlord. From this decree, Cotton Buyer, Elevator and Bank appeal. Bank assigns as issues to be addressed:
1. The Chancellor erred in determining that the landlord had validly retained her landlord's lien.
2. The Chancellor erred in determining that the landlord's lien followed the proceeds from the sale of the tenant's crops.
3. The Chancellor erred in determining that the landlord had not waived her landlord's lien through her prior course of dealing.
4. The Chancellor erred in ordering the Bank to make restitution to Cotton Buyer and the Elevator.
Elevator and Cotton Buyer, as appellants and cross-appellees, assign additional issues:
1. Bank, having received the crop sale proceeds with full knowledge that its production loan, was subordinate to the landlord's lien should be required to pay the rent due.
2. There was a constructive trust relationship between the purchasers, Landlord and Bank.
The axis of this appeal is based on the lease of farmland, the tenant's sale of crops grown upon the leased premises, a lending institution's acquisition and use of the proceeds from that sale to satisfy the tenant's crop production loan, the tenant's partial payment of his rent, his subsequent bankruptcy, and the landlord's assertion of a statutory lien upon the proceeds of the crop sale.
In the years 1982, 1983, 1984, and 1985, Sylvia L. Sklar ("Landlord") leased approximately 353.1 acres of farm land in Sunflower County, Mississippi, to Gene Mitchell ("Mitchell"). Planters Bank & Trust ("Bank") financed Mitchell's farming operations for 1983, 1984, and 1985, taking as security a lien upon his crops, equipment and government payments.
The lease for the year at issue, 1985, was executed on December 27, 1984, and called for an annual rental fee of $14,124.00. The lease provided for semi-annual payments of $7,062.00 on February 10, 1985, and $7,062.00 on December 15, 1985, and pursuant to this Mitchell signed two promissory notes. The February payment was made timely, however, Mitchell failed to tender the December payment.
Mitchell sold his 1985 soybean crop to Ruleville-Drew Elevator Co. ("Elevator") and his 1985 cotton crop to E.W. Bowden & Company ("Cotton Buyer"). As payment for these crops, both Cotton Buyer and Elevator made their checks payable to Mitchell and the Bank, jointly, as directed by Mitchell. These checks were issued between November 11, 1985, and February 5, 1986. On or about January 21, 1986, Mitchell declared bankruptcy.
On July 21, 1986, Landlord filed suit against Bank, Cotton Buyer, Elevator and Mitchell, seeking discovery against all defendants and seeking judgment against Bank, Cotton Buyer and Elevator for $7,062.00 (one-half of the yearly rental rate) and accrued interest. Elevator and Cotton Buyer each cross-claimed against Bank seeking restitution for any sum they should be required to pay.
The chancellor entered a judgment against Elevator, Cotton Buyer and Bank in favor of Landlord for $7,854.53, plus interest, and rendered judgment in favor of Elevator and Cotton Buyer against Bank to the extent of payments by them to Landlord. The trial commenced on June 30, 1987.
DID THE CHANCELLOR ERR IN DETERMINING THAT THE LANDLORD'S
Before addressing this assignment of error, a preliminary matter must be resolved. Bank implies that its perfected security interest is superior to Landlord's statutory lien. Sec. 75-9-104(b) of the Mississippi Code clearly excludes landlord's liens from Chapter 9, the Secured Transactions Chapter of the Uniform Commercial Code. As such, the priorities created in Chapter 9 do not apply to landlord's liens. Unless a landlord has expressly or impliedly waived the statutory lien, its rights are superior to all other interests, including those created by Chapter 9. "This exemption has been recognized by the vast majority of courts across the nation." Dwyer v. Cooksville Grain Co., 117 Ill.App.3d 1001, 73 Ill.Dec. 497, 499-500, 454 N.E.2d 357, 359-360, 37 UCC Rep.Serv. 252 (Ill.App. 4 Dist.1983), and the cases cited therein.
Bank argues that because paragraph 16 of the lease contract does not specifically refer to the landlord's lien statute, Landlord, in effect, waived her right to this statutory lien. The crux of the assignment of error centers on an apparent typographical error contained in paragraph 16 of Landlord's lease which states:
16. Lessor reserves her Landlord's lien as provided by Section 85-7-51 of the Mississippi Code of 1972....
Reference to the Mississippi Code reveals that Sec. 85-7-51 is entitled "Death of a party not to abate suit." Bank argues that because this referenced section is unrelated to the reservation of a landlord's lien, the landlord failed to validly retain her lien. This argument ignores the fact that a landlord's lien is a creature of statutory law.
49 Am.Jur.2d, Landlord and Tenant, Sec. 675 at 641 (1970) states:
[A] lien in favor of the landlord ... arises only from a statute creating such a lien, or from the agreement of the tenant giving a lien.
See also, 13 Harl, Agricultural Law, Farm Leases, Sec. 121.05 (1989).
In Mississippi, Sec. 89-7-51, Mississippi Code Annotated (1972), as Amended, creates the statutory crop lien. Couched in mandatory and unequivocal terms, this statute states:
(1) Every lessor of land shall have a lien on the agricultural products of the leased premises, however and by whomsoever produced, to secure the payment of the rent and of money advanced to the tenant. This lien shall be paramount to all other liens, claims, or demands upon such products. (Emphasis supplied).
(2) All articles of personal property, except stock of merchandise sold in the normal course of business, owned by the lessee of real property and situated on the leased premises shall be subject to a lien in favor of the lessor to secure the payment of rent. Such lien shall be subject to all prior liens or other security interest perfected according to law.
By arguing that Landlord did not retain her statutory lien, Bank chooses to ignore a basic tenet of statutory construction; that "shall" is mandatory and "may" is discretionary. Murphy v. State, 253 Miss. 644, 178 So.2d 692 (1965). Obviously, the Mississippi Legislature intended for a landlord's lien to be the rule and not the exception. Statutory language indicates that the legislature designed the landlord's lien to be superior to all other claims. This Court has stated that the landlord's lien exists by positive law and "that the lien created by law exists without writing or record." Newman v. Bank of Greenville, 66 Miss. 323, 337, 5 So. 753, 757 (1889).
"Without doubt, a landlord may expressly or impliedly, waive his right to claim a statutory lien upon the property of his tenant." 49 Am Jur 2d, Landlord and Tenant, Sec. 693 at 654 (1970). In Mississippi, the burden is upon Bank to prove that Landlord expressly waived her landlord's lien. Thompson v. Hill, 147 Miss. 489, 112 So. 697 (1927).
The specific terms of this lease in no way imparts an intent by Landlord to expressly waive the protection afforded by this statutory creature. Bank's argument is shallow, frivolous, devoid of logic and totally without merit.
As its second assignment of error, Bank asserts that a landlord's lien extends only to the crops which are grown on the leased premises and not to proceeds derived from their sale. Its position appears to be that because it was not actively involved in the sale, it is not obligated to account to Landlord for the unpaid rent.
The chancellor determined that the landlord's lien attached to the crop sale proceeds which Bank received and applied to Mitchell's crop production loan. As this determination answered a question of law and not fact, the familiar manifest error/substantial evidence rule does not prevent this Court from conducting a de novo review of the chancellor's finding. Cole v. National Life Insurance Co., 549 So.2d 1301, 1303 (Miss.1989); Boggs v. Eaton, 379 So.2d 520, 522 (Miss.1980).
In this case, Mitchell grew crops on Landlord's property and sold them to Cotton Buyer and Elevator. These purchasers, at Bank's and/or Mitchell's insistence, made their checks payable to Bank and Mitchell jointly. The proceeds were applied by Bank to the balance due on Mitchell's crop production loan, thus, excluding Landlord's claim for rent.
In its brief, Bank asserts that the landlord's lien extends only as...
To continue reading
Request your trial
-
Flowers v. State
...word “may” is discretionary in nature. American Sand and Gravel Co. v. Tatum, 620 So.2d 557, 563 (Miss.1993) ; Planters Bank & Trust Co. v. Sklar, 555 So.2d 1024, 1027 (Miss.1990). In this case, the State could have brought a multi-count indictment but was not required to do so.Id. at 610 (......
-
Flowers v. State
..."may" is discretionary in nature. American Sand and Gravel Co. v. Tatum, 620 So. 2d 557, 563 (Miss. 1993); Planters Bank & Trust Co. v. Sklar, 555 So. 2d 1024, 1027 (Miss. 1990). In this case, the State could have brought a multi-count indictment but was not required to do so. Id. at 610 (¶......
-
McNeil v. Hester, No. 97-CA-00048-SCT
...223 Miss. 684, 690, 78 So.2d 758, 760 (1955). See also Alvarez v. Coleman, 642 So.2d 361, 367 (Miss.1994); Planters Bank & Trust Co. v. Sklar, 555 So.2d 1024, 1034 (Miss.1990); Sojourner v. Sojourner, 247 Miss. 342, 153 So.2d 803, 807 (1963). ¶ 25. Clear and convincing proof is necessary to......
-
Flowers v. State
..."may" is discretionary in nature. American Sand and Gravel Co. v. Tatum , 620 So.2d 557, 563 (Miss. 1993) ; Planters Bank & Trust Co. v. Sklar , 555 So.2d 1024, 1027 (Miss. 1990). In this case, the State could have brought a multi-count indictment but was not required to do so. Id. at 610 (......