- 316- - TAYLOR V.-CRAWFORD; [187 TAYLOR V. CRAWFORD. 4-2944
Opinion delivered April 24,1933. i. BANKS AND BANKING—PREFERENCE ON INSOLVENCY.—Where a bank, with knowledge of landlord's liens, sold tenant's crops and collected and held the identical proceeds thereof, upon the bank's insolvency the landlord's liens constitute& a preferred claim under Acts 1929, No. 107, § 1 (6). 2. BANKS AND BANKING—PREFERRED CLAIMS.—Landlords are entitled in equity to enforce their liens on the proceeds of tenants' crops in the hands of an insolvent bank, which directed the sale of such crops and collected and retained the proceeds thereof. 3. LANDLORD AND TENANT—LIEN—LIMITATION. —A landlord's lien, not filed within six months after the rent became due, is barred by Crawford & Moses' Dig., § 6889. Appeal from Jefferson Chancery Court; Harvey R. Lucas, Chancellor ; affirmed. -
ARK.] TAYLOR V. CRAWFORD. STATEMENT BY THE COURT. This appeal is from a decree adjudging certain claims of .landlord's liens entitled to preferred payment out of the assets of.a failed bank in the hands of the Bank Commissioner for liquidation. , In the year 1930 the Merchants' & Planters' Bank & Trust Company of Pine Bluff made an agreement with W. E. Massey, of Gould, Arkansas, to furnish funds out of which to make and gather a cotton crop on lands -controlled and farmed by W. E. Massey. Massey executed a mortgage.to the bank on all of the'cotton grown by him on various tracts of land near Gould. The bank was taken over bY the Bank Conimissioner on November 22, 1930, as insolvent. At the time "the bank begun to furnish money , to him, it was advised and proceeded with full knowledge of the fact that Mrs. J. W. Crawford, William Zachrich, B. -F. Hatley and ,C. H. Holthoff were owners of lands rented -to'W. E. Massey and his tenants for the year 1930, and that said parties did not waive their landlord's lien on the crops for rent. During the fall of 1930, and before the crop was harvested, the - Merchants' &- Planters' Bank & Trust Company, through its president; J. W. Jones, and cashier, Jim McClelland, instructed W. E. Massey to gather the cotton on the rented lands, to pay . the expenses of gathering and ginning, to sell the cdtton and attach drafts for the sale price to bills of lading and send them to the Merchants'-& Planters' Bank & Trust Company for collection and credit to Massey's-account. The bank had supervision ovek the. making, gathering and sale of the.crops, and the cotton was gathered and sold under its direction. Massey.was authorized to draw checks payable ., to the , landlords for the amounts of rent due eaCh and his checks so drawn Were honored by the bank under its - agreement to , collect the. drafts, attached to bills of lading, and in that manner remitted , to the landlords by. Massey's checks the rent as the cotton was sold. . All of the . proceeds from the sale of the cotton mentioned and described in the several interventions were receiVed by the Merchants' & Planters' Bank, and a portion of the cotton was Sold prior to the time the bank failed, and the remainder of it sold afterwards.
318-- TAY-LOTtr:V;-CRAWFORb. - The Bank Commissioner. :denied any obligations for rent; denied any knowledge of any offidial of the-bank that the cotton received or the prOceeds , therefroin . was shb-:ject to the payment of rent; denied that any 'liability should be adjudged as preferred clainis . ; arid pleaded the statute of limithtions the six . inonths' statute as ,against the landlord lien in the B. F:Hatley claim.. - The several interventions alleged the renting of certain lands 'to W. E. Massey for the year 1930, the athount of rent. agreed to be paid, the amount of cotton produced and harvested from the lands and the value of it,. 'which, was delivered to the Merchants& Planters' Bank before it closed its • doors; that . the landlord' g lien: was ,nöt waived by intervener, and the, bank Alms notified' after it had closed and demand made for,the rent due, : and prayed that it be adjudged a Prior clairia: •, The liqUidation of the bank-was begiur NOVernber 22, 1930, and the Bank CommissiOrier fired thisc case and inventory on' November 29 . , 1930.: • . The interentiOns 'were conSolidated for trial,"and the chancellor found 'the-bank had charge of interveners' cotton with the full lmowledge of their ;prior' liens, that it collected and re'ceived all fund's :from. the- sale. of the cotton-, and that said bank .was , in . possession of the pro-- ceeds of the sale of the cotton at the time it became insolent and ceased to. .be a 'going concCrii, and decided in favOr Of the interveners* forithe. full .amOunt claimed' and1 adjudged same. to be a . prier and preferred• , claim, -fibm which decree this.appeal is prosecuted...T. Bridges; MeGdughgA-Bridge,s, for apPellant. E:-TV .:Brpeknidn, fbeAlipellee: KIM3Y; J., '(afier .gtating 'the'faets)'.' ft is f ini-siaa that the 6olirt erred in holdini; the Claim§ bf interveners for Has to be prior clairfis, • • The testimony is virtiially undisputed that W. E. Massey and the Merchant's' & Planters' Bank & Trust. Company furnished the tenants to work :the lands rented froth the interveners in 100; and that:the interY,eners_ did not Waive their landlord's liens for 'rent: That Ma. -- sey executed a statenient in writink,'Which was 'delivered' to and accepted by: the bank, showi • n g ., ' t • he , Athourit of .f •
'ARK.] TAYLOR V. CRAWFORD. 319 -rents , due each respective , interVener foF rerit-updn his 'lands for that year, and : that the landlord l 's; •len-had: not been waived thereon; that the bank, : acting with'Massey .in;pUrsuance of its oral-agreemerit and with fulli i knowledge of the -interveners' ; prior ; Claims; 'Turnished the money with .; which to; make"and gather ;the cotton;; arid sold the crop s -- off ' the interveners" lands , as ,' alleged ;and received the procOds 'of the sale thereof; agreeing td pa, 7 the rents . out 'of 'Such proceeds;Wheri collected; . that tlie proceeds of f 'the' sales had not been remitted -when the -bank- was' deelared insolVent; and og aid preceeds' have had 'distinctive' identity iii the'hands 6f s'aid . bank,; have ac-tually4nd-eased its assetS arid 'did nrit ; result : from shifting its liability from One of its creditors to ! another; and , that the interveners at the time were 'ndt indebted: tb - the bank. No error *as committed in holding : the. claims -of
interveners for la „ nd lercl lien's 'for rent as priOr: claims. Section'', aalo7 of 1927, italeseribing the Clas'se's' preferred creditors on a bank's insolvency, in party rea& ' . „. (6) the'Owner of fhe -;6611e`Ciipi4 Made' bYsaid bank and nOt i emitted by it, oi 6k 'Willa remittance has not been paid, when such collec , tion was made othei : Wi§e than , by honoHng a check bi- other order upOri said bank di by a charge:again§t . the adedmit . Of' the depositor of said : bank; , and the; said:Ceilectidn ha'S had' a di§tinctiVe identity in the handS'of , 'Said hank; liaS'actual13- inerea g ed it'S"eh''aSTet,' and has not i csiilted in inei-ery 'sliatink its liability upon its hdofK fi om one' of mis : Creditors to anOther oi neiv creditOr.": Wheri the bank iindertObk' tO and . dire . oted the sale arid disPositirin of-the cotton groWn on interven . er g' lands and erillected the 'drafts drawn on the purchasers for the sale price and to pay ther'efrOrri.the rents due and.after7 wards became insolyent . and, was taken oVer by the Ban.ic 'CommissiOnei, all pidn:Or , edAiclifik' into ifs hands as CO1- tections on the rents ConStifuted preferred claims in favor of the landlordS.,Ifo'ine Li:fe 1* : s.:Co. v. Taylor,180 Ark. 768; Tayloi-. v. Corniltg Bank 7:rtct Ca., 183 Ark. 757, 38 S. W. (2d) 567.
320 TAYLOR V. CRAWFORD. [187 - It is true the appellees were not the owners of the' cotton which the bank sold, but they had a lien thereon of which the bank had knowledge, and the . appellees'pursued the proper remedy to impress their liens on the proceeds of the crops raised on their lands which equity will fix on. the proceeds in the hands of the bank. Judge-v. Curtis, 72 Ark. 132, 78 S. W. 746; and Murphy v. •Myar, 95 Ark. 32, 128 S. W. 359, In the latter case it was said: " The appellee had a lien on this cotton for the payment of the rent of the land; and, after appellants had, with notice of his rights, purchased the cotton from his tenant, and by sale had wrongfully converted it, , the ap-pellee had a right to fix his lien on the proceeds thereof in equity, and in the court to obtain judgment against appellant therefor." Appellees did not seek to enforce a lien against the ' property of the bank, but only to fix their statutory lien on the proceeds of the cotton raised on their lands, which cotton the b -ank took charge of and sold with notice of their lien. • Massey was operating under orders 'from the bank in making the sales of the cotton and having the collec: tions made by the bank, and, while they were deposited in his account there in his name, he was restricted in his right to check on such account by stipulation that the checks would not be honored except for the payment-of the rents on the lands due for that Year. It is true the appellees were not depositors in the bank, but it had full knowledge of the appellees' first lien:, undertook with Massey to sell the crops, the bank being allowed to make the collections, and necessarily in, creased its assets to the amount of appellees ' rents, and afterwards closed its doors, ceasing to function, with the amount of appellees' rents still in its possession. The bank recognized that the interveners had a prior claim for the payment of their rents due out of the amounts collected for the cotton sold, upon which they had a lien for payment of the rents, and honored all the checks drawn by Massey in payment of such rents oirt of such account and proceeds, having agreed to do so before the money was , collected by them and placed in the accolint to Massey's credit.
The bank knew that the proceeds of the sale .of the cotton by it and credited to the account of -Massey was subject to the payment of his check on such account for the rents "of the lands or farms cultivatediby hina, as the bank also understo6d to be the , case . when the credii of the collections was Made. The collections from the gale of the cotton had a . distinctive identity in the hands of the bank, actually increased its cash assets, not resulting from merely shifting its liability ufion . its books froin one of its creditorS to another or to a neW creditor, and, under the proi r isions of the statute and the circumstances of this case, the clainis of the interveners, the .claim of B.*F. Halley excepted , as already . stated, were . entitled to priority 'of -payment : and- the chancellor did-not err in so . holding. The decree is aedordingly affirmed.' The, B. F. Haley claim, in the , sum , Of ,$350, alloWed by thei,chancelior in the sum of $199.07 as.a prior claim, was barred by the six months' statute of limitations. The rent , note was due November 15,- 1930, and . the landlord's lien 'only continue& for six 'months after the rent became due and payable, and, the claini- not' being 'filed until March 12, 1932, the lien.was long barred and the:claim. not entitled to payment, and the court erred in not so holding. , Section 6889, Crawford & Moses' Digest. Cooke v. ClaUsen, 67 Ark. 455, '55 S. W. 846. - The d „ e c , r ee a . s tp the Hatley claim is reversed, .and said claim dismissed. . ;
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.