Riceland Foods, Inc. v. Pearson
Annotate this Case
Download PDF
Cite as 2009 Ark. 520
SUPREME COURT OF ARKANSAS
No.
08-999
RICELAND FOODS, INC.,
APPELLANT,
VS.
RANDY PEARSON, and CAROLYN
WALKER, CO-TRUSTEES OF THE
MOORE INTER VIVOS TRUST, and
BOB BURRESS,
APPELLEES/CROSS-APPELLANTS,
Opinion Delivered October
29, 2009
APPEAL FROM THE ST. FRANCIS
COUNTY CIRCUIT COURT,
NO. CV2006-38,
HON. BENTLEY EARL STORY,
JUDGE,
VS.
ST. FRANCIS COUNTY FARMERS
ASSOCIATION and RICELAND FOODS,
INC.,
CROSS-APPELLEES,
REVERSED AND REMANDED ON
DIRECT APPEAL; AFFIRMED ON
CROSS APPEAL.
JIM HANNAH, Chief Justice
This appeal requires us to consider whether, pursuant to Arkansas’s landlord-lien
statute, Arkansas Code Annotated section 18-41-101 (Repl. 2003), a purchaser of crops has
a duty to make a reasonable investigation or inquiry as to whether the seller of crops is a
tenant or owner of the farmland on which the crops were produced. The cross-appeal
concerns attorneys’ fees and the application of a setoff.
Appellant Riceland Foods, Inc., appeals the circuit court’s order holding Riceland
Cite as 2009 Ark. 520
liable for rent that tenant Bob Burress did not pay, under a farm lease that Burress entered into
with appellees Randy Pearson and Carolyn Walker, co-trustees of the Moore Inter Vivos
Trust (“the Trust”). Riceland contends that the circuit court erred as a matter of fact and law
when, pursuant to section 18-41-101, it entered judgment against Riceland. Riceland claims
that the Trust’s statutory lien is not enforceable against Riceland because Riceland bought rice
from Burress in good faith and without notice that Burress was a tenant who had failed to pay
rent to the Trust. Riceland also claims that the circuit court erred when it entered judgment
against Riceland and required Riceland to satisfy the judgment before separate appellant St.
Francis County Farmers Association (“SFCFA”) did so.
On cross-appeal, the Trust contends that the circuit court erred in failing to award the
Trust reasonable attorneys’ fees against Riceland and SFCFA. The Trust further contends that
the circuit court erred when it granted Riceland and SFCFA a setoff for a settlement paid by
Cargill, Inc., a former party to the suit.
We assumed jurisdiction of this case because it involves a substantial question of law
concerning the interpretation of an act of the General Assembly. Thus, our jurisdiction is
pursuant to Arkansas Supreme Court Rule 1-2(b)(6) (2009). We reverse and remand on
direct appeal and affirm on cross-appeal.
The Trust leased 1138 acres of farmland it owned in St. Francis County to Bob
Burress, for a period of five years commencing in 2005 for cash rent of $95,550 per year.
Burress did not pay $57,330 of the rent for the crop year 2005 that was due on January 10,
-2-
08-999
Cite as 2009 Ark. 520
2006. The Trust brought suit against Burress, SFCFA, Riceland, and Cargill. The Trust
sought judgment for the unpaid rent against tenant Burress and secured creditor, SFCFA,
which financed Burress’s crop and had obtained proceeds from the crop. In addition, the
Trust sought judgment from Riceland and Cargill, because they had purchased all the rice and
soybeans grown on the Trust’s land and paid the proceeds to Burress and SFCFA.
In an amended complaint, the Trust also sought attorneys’ fees and costs. Burress filed
a counterclaim against the Trust, and the Trust filed a second amended complaint against
Burress seeking damages for his farming methods.
The circuit court bifurcated the lien and rent issues from the rest of the case. The
court convened a jury trial, and the jury returned a verdict against Burress in the amount of
$4,125 for “other elements of damage.” Prior to trial, the Trust settled its claim against
Cargill, so the claims against Cargill were dismissed with prejudice.
The circuit court, sitting as trier of fact on equity matters, ordered:
That plaintiff recover judgment from defendant, Bob Burress, in the sum of
$4,125 plus interest thereon at the rate of ten percent (10%) per annum from
entry of judgment until paid and defendant, Bob Burress’s counterclaim against
plaintiff be and is dismissed with prejudice;
That plaintiff recover judgment from the defendant, Bob Burress, for $57,330
plus interest thereon from January 10, 2006 until entry of judgment at the rate
of 10.25% per annum, and post judgment interest on $57,330 plus accrued
interest less $2500 credit for settlement paid by Cargill, Inc. to plaintiff from
date of entry of judgment until paid at the rate of 10% per annum until paid,
together with attorney’s fees of $14,000 plus costs of $3,517.19, which shall also
accrue interest at the rate of 10% per annum from entry of judgment until paid,
for all of which execution may issue;
-3-
08-999
Cite as 2009 Ark. 520
That if the defendant, Bob Burress, does not pay the judgment for rent owing
of $57,330 less credit of $2500 plus interest on $57,330 at the rate of 10.25%
per annum from January 10, 2006 until entry of judgment, less credit from
$2500 paid by the defendant, Cargill, Inc., to plaintiff plus post judgment
interest on such sums until paid at the rate of 10% per annum, for all of which
execution may issue;
That if the defendant, Bob Burress, does not pay the sums awarded against him
herein within ten (10) days from the date of entry of judgment herein,
excluding the $4,125 awarded to plaintiff against defendant, Burress, and the
award of attorney’s fees and cost to plaintiff against defendant Burress, or if
defendant, Riceland Foods, Inc., does not pay the sums awarded against it
herein within ten (10) days after entry of judgment, then plaintiff is entitled to
judgment against defendant, St. Francis Farmers Association for $57,330 plus
pre-judgment interest at the rate of 6% per annum from January 10, 2006 until
entry of judgment, less credit for $2500 paid by the defendant, Cargill, Inc., to
plaintiff, plus post judgment interest on such sums until paid, for all of which
execution may issue.
Subsequent to these findings, SFCFA paid the Trust certain monies and received from
the Trust a satisfaction of judgment and release of all claims. Riceland appeals, and the Trust
cross-appeals against Riceland and SFCFA.1
I. Direct Appeal
A. Mootness
Before addressing the merits of Riceland’s arguments, we must determine whether this
appeal is moot. On appeal, Riceland claims that this court should reverse and vacate the
circuit court’s judgment requiring it to pay approximately $57,000 to the Trust if the
judgment was not first satisfied by Burress. Although Burress did not satisfy the judgment,
1
The Trust filed a motion to dismiss its cross-appeal against Burress. The court of appeals granted
the Trust’s motion on June 8, 2009.
-4-
08-999
Cite as 2009 Ark. 520
SFCFA has done so regarding the landlord-lien issues that affected Riceland. Riceland
contends that this satisfaction does not, however, moot this appeal because the satisfaction and
release of claims is expressly restricted to SFCFA and because Riceland now faces potential
contribution or indemnity claims from SFCFA based on the joint judgment that placed
Riceland ahead of SFCFA on the liability scale. Indeed, SFCFA has stated in its brief on
appeal that, depending on the outcome of this case, it will enforce its rights of contribution
and indemnity against Riceland.
As a general rule, the appellate courts of this state will not review issues that are moot.
Cotten v. Fooks, 346 Ark. 130, 55 S.W.3d 290 (2001). To do so would be to render advisory
opinions, which this court will not do. Id. We have generally held that a case becomes moot
when any judgment rendered would have no practical legal effect upon a then-existing legal
controversy. Id. In other words, a moot case presents no justiciable issue for determination
by the court. Shipp v. Franklin, 370 Ark. 262, 258 S.W.3d 744 (2007). Here, our judgment
in this case would have a practical legal effect upon an existing controversy, namely whether
Riceland could be liable to SFCFA. Accordingly, we turn to the arguments on appeal.
B. Brief Overview of Arkansas’s Landlord-Lien Statute
In 1868, the General Assembly enacted Arkansas’s landlord-lien statute, which
provided in relevant part: “That every landlord shall have a lien upon the crop grown upon
the demised premises in any year for rent that shall accrue for such year, and such lien shall
continue for six months after such rent shall become due and payable.” See Act of July 23,
-5-
08-999
Cite as 2009 Ark. 520
1868, No. 67, § 1, 1868 Ark. Acts 245, 245. The statute has remained mostly unchanged
since its inception.2 In 2001, the General Assembly enacted a revised Article 9 of the
Uniform Commercial Code. See Act of Apr. 10, 2001, No. 1439, 2001 Ark. Acts 5464. In
doing so, the legislature inadvertently changed the law regarding landlords’ liens, making such
liens subject to application of the Uniform Commercial Code. See Act of Feb. 3, 2003, No.
32, § 1, 2003 Ark. Acts 95, 96. Accordingly, in 2003, the General Assembly enacted Act 32,
titled “An Act to Restore this State’s Traditional System for Establishing Landlords’ Liens on
Crops and to Exempt Landlords’ Liens on Crops from the Uniform Commercial CodeSecured Transactions; and for Other Purposes.” Id. The General Assembly explained the
purpose of the Act as follows:
The General Assembly has determined that by the enactment of Act 1439 of
2001 it inadvertently changed the law regarding landlords’ liens on crops. It is
the intent of this act to correct that inadvertent change, remove landlords’ liens
on crops from the application of the Uniform Commercial Code, reestablish
Arkansas Code 18-41-101 and 18-41-103 as the law applicable to landlords’
liens on crops, and thereby make landlords’ liens under Arkansas Code 18-41101 and 18-41-103 superior to all other liens on the same collateral.
Id. at 96.
The current version of section 18-41-101 provides:
(a) Every landlord shall have a lien upon the crop grown on the demised
premises in any year for rent that shall accrue for the year.
(b)(1) The lien is perfected and shall have priority over a conflicting security
2
In 1875, the General Assembly enacted Act 29, repealing sections 4096 and 4099, of Gantt’s
Digest, which gave a laborer’s lien precedence over a landlord’s lien. See Act of January 8, 1875, No. 29, §
1, 1875 Ark. Acts 84, 84.
-6-
08-999
Cite as 2009 Ark. 520
interest in or agricultural lien on the crop regardless of when the conflicting
security interest or agricultural lien is perfected.
(2) The lien shall continue for six (6) months after the rent shall become due
and payable, and no longer.
C. Enforceability of Statutory Lien
Riceland asserts that the circuit court erred as a matter of fact and law when it entered
judgment against Riceland pursuant to Arkansas’s landlord-lien statute. Riceland contends
that the Trust’s statutory lien is not enforceable against Riceland because it bought rice from
Burress in good faith and without notice that Burress was a tenant who had failed to pay rent
to the Trust.
Riceland does not challenge that a landlord’s lien is perfected automatically, or that the
lien has priority over any other security interest in the same crop. Rather, Riceland maintains
that the landlord’s lien was not properly applied against Riceland, a good-faith buyer of
Burress’s crops.
At the hearing on the landlord’s lien issue, Randy Pearson, co-trustee of the Trust,
testified that he was not aware of any notice of a landlord’s lien given by the Trust to
Riceland. Tenant Burress testified that when he delivers rice that he has grown, he tells the
purchaser what farm the rice comes from and informs the purchaser of the Farm Service
Agency (“FSA”) farm number. Burress stated that he was unsure whether the FSA office
would inform a purchaser who owns the land. Finally, Burress testified that he did not inform
Riceland that the rice came from the Trust’s farm.
-7-
08-999
Cite as 2009 Ark. 520
Terry Richardson, Vice-President for Administration of Members Services and
Corporate Secretary for Riceland, testified that he did not know whether Riceland could
have contacted the FSA office to find out who owned the farm where Burress grew the rice
or whether he could have learned from the FSA office if rent had been paid. Richardson said
that he did not know whether the FSA office could provide this information because
Riceland does not ask for the information. Richardson further stated that he never received
notice from the landlord of any kind of lien filed against the 2005 crop.
The circuit court made the following findings:
Riceland received the rice produced by Mr. Burress on the plaintiff’s farmland.
Riceland did not inquire as to whether the rice was subject to a landlord’s lien.
Riceland did not inquire of Mr. Burress as to the presence of a landlord.
Riceland made the purchase price checks payable to Mr. Burress’s two
corporate entities and to the St. Francis County Farmers Association. The
question then, is what duty, if any, did Riceland have to make an inquiry as to
the presence of a landlord? Riceland paid out more than $296,000 without
inquiry. Riceland’s representative testified that, “Riceland does not ask.” . . . .
Is there a duty in the case at bar, and, if so, who has the duty? To what degree
is a purchaser of crops required to inquire as to the presence of a landlord and,
consequently, a landlord’s lien? To what degree is a landlord required to put
the “world” on notice of its statutory landlord’s lien. May a purchaser claim
“no notice” by simply asking no questions? Is there an affirmative duty on the
part of purchaser of crops to do something in order to make a defense of “no
notice?”
There is no evidence in the record as to past practices of the landlord, tenant,
and purchaser regarding notice, except that Mr. Burress testified that he had
sold rice to Riceland during some of the years covered by the prior lease
agreement between the plaintiff and him. There is no evidence in the record
as to whether the plaintiff or Mr. Burress had notified Riceland in past years of
the landlord’s lien.
This court finds that Riceland, as a purchaser of the rice, had a duty to make
-8-
08-999
Cite as 2009 Ark. 520
a reasonable investigation or inquiry as to whether Mr. Burress was a tenant or
owner of the farmland from which the rice was produced. A simple inquiry
of Mr. Burress would have placed Riceland on notice that Mr. Burress did not
own the farmland. With that knowledge, Riceland would have been on notice
of the landlord’s statutory right to a lien. For Riceland to do nothing more
than check the Farm Service Agency numbers and claim “no notice,” thereby
defeating the landlord’s lien, allows for an automatic and complete defeat of the
statutory letter and intent of Arkansas Code Annotated § 18-41-101. Under
Arkansas law, the landlord’s lien has priority all other liens and the landlord is
not required to give notice to anyone (as is required under liens pursuant to the
UCC). If a purchaser may simply state that he did nothing and received no
notice, thereby defeating the clear intent of Arkansas Code Annotated § 18-41101, that code section has no force. It may as well not exist in its present form.
It might as well require notice “to the world.” It makes little sense to allow
such non-action to defeat the intent of the statute.
....
This court finds that Riceland did not act in good faith in purchasing the rice.
Good faith requires a reasonable investigation or inquiry which would have
quickly and easily provided information which would have warned it that rice
is being offered for sale upon which there exists a landlord’s lien. Riceland had
to do something to investigate or inquire about the ownership of the land from
which the rice was produced. Riceland should not be allowed to claim “no
investigation, no notice” as a defense to the priority of the landlord’s lien when
the least bit of effort would have placed it on notice.
This court has held that if a tenant sells the crop to a purchaser without notice of the
landlord’s lien, the buyer takes title free of the lien. Holmes v. Riceland Foods, Inc., 261 Ark.
27, 546 S.W.2d 414 (1977); Van Etten v. Lesser-Goldman Cotton Co., 158 Ark. 432, 250 S.W.
338 (1923). In Van Etten, we explained:
For the law is that, while one buying [a crop] subject to a landlord’s lien is not
liable as for conversion if he has no knowledge of the lien, yet if the purchaser
is in possession of facts sufficient to put him upon notice that the [crop] is
subject to the lien of a landlord, good faith requires him to pursue the inquiry
to the extent of investigating the facts of which he has knowledge, and, if
-9-
08-999
Cite as 2009 Ark. 520
reasonable diligence in the investigation of these facts would have led to the
knowledge of the actual existence of the lien, then the purchaser is liable for a
conversion, just as he would have been had he possessed the actual knowledge.
The act of purchasing the [crop] destroys the landlord’s lien, and one cannot
do this and escape liability for so doing except when he has acted in good faith
in making the purchase, and good faith requires a reasonable investigation of
any information of which the purchaser has possession calculated to warn him
that he is being offered [a crop] upon which there exists a landlord’s lien.
Van Etten, 158 Ark. at 433-34, 250 S.W. at 338.
To address Riceland’s argument on appeal, we must determine whether, as the circuit
court concluded, pursuant to section 18-41-101, a purchaser of crops has a duty to make a
reasonable investigation or inquiry as to whether the seller of crops is a tenant or owner of
the farmland from which the crops were produced. This court reviews issues of statutory
interpretation de novo, because it is for this court to determine the meaning of a statute.
McMickle v. Griffin, 369 Ark. 318, 254 S.W.3d 729 (2007). Our standard of review for issues
of statutory construction is well settled:
The basic rule of statutory construction is to give effect to the intent of the
legislature. Where the language of a statute is plain and unambiguous, we
determine legislative intent from the ordinary meaning of the language used.
In considering the meaning of a statute, we construe it just as it reads, giving
the words their ordinary and usually accepted meaning in common language.
We construe the statute so that no word is left void, superfluous or
insignificant, and we give meaning and effect to every word in the statute, if
possible.
Great Lakes Chem. Corp. v. Bruner, 368 Ark. 74, 82, 243 S.W.3d 285, 291 (2006) (internal
citations omitted).
As previously noted, section 18-41-101 provides:
-10-
08-999
Cite as 2009 Ark. 520
(a) Every landlord shall have a lien upon the crop grown on the demised
premises in any year for rent that shall accrue for the year.
(b)(1) The lien is perfected and shall have priority over a conflicting security
interest in or agricultural lien on the crop regardless of when the conflicting
security interest or agricultural lien is perfected.
(2) The lien shall continue for six (6) months after the rent shall become due
and payable, and no longer.
No words in the landlord-lien statute specifically refer to a duty on the part of the purchaser;
however, it is clear from our case law interpreting the statute that we have held, in certain
situations, purchasers have a duty to make a reasonable investigation regarding whether crops
are subject to the lien of a landlord. See, e.g., Holmes, supra; Merchants & Planters Bank v.
Meyer, 56 Ark. 499, 20 S.W. 406 (1892).
In Holmes, we concluded that Riceland, a purchaser of rice and soybeans from Frank
and Louis Alpe and Alpe Farms, Inc., was “unquestionably on notice” of a landlord’s lien
where Louis Alpe informed Riceland that the crops had been grown by the Alpes as tenants,
attached to an FHA security agreement were waivers by which the various lenders to some
extent subordinated their liens to the FHA’s advances, and Riceland checked the records
every summer to discover liens against its members. Holmes, 261 Ark. at 28, 30, 546 S.W.2d
at 415. We stated that “Riceland had more than sufficient information to require it to make
a reasonable inquiry, which would have disclosed the landlord-tenant relationship.” Id. at 28,
546 S.W.2d at 416.
In Meyer, we held that a grocery company that had bought cotton acquired notice of
-11-
08-999
Cite as 2009 Ark. 520
a lien so that it could be held liable to the landlord for damages suffered by him due to the
destruction of the lien. The court wrote:
Did the Hammett Grocer Company have notice of the fact that Meyer held a
lien on the ninety-seven bales of cotton delivered to it by Ritchie & Fitzhugh
at the time it received and sold them? It had notice of every fact necessary to
show that he had such a lien, except, perhaps, actually knowing that the rent
was unpaid; but it had knowledge of enough to put it on inquiry to ascertain
the fact in that regard, and that was sufficient notice of whatever an inquiry
would have revealed. It knew that Ritchie & Fitzhugh were tenants of Meyer,
and that he had a lien on the crops grown by them, because the statute gave it
to him, and every one is presumed to know the law. It also had reason to
believe that they were unable to grow the crops without financial aid from
others, because they applied to it for such assistance. The reasonable
apprehension was that the rent was unpaid, and good faith and a proper regard
for the rights of another demanded an inquiry as to the payment of the rent
before making any sale or disposition of the cotton which would likely impair
or destroy the landlord’s lien. That inquiry, properly made, would have
discovered the lien. It, therefore, had notice.
Meyer, 56 Ark. at 504-505, 20 S.W. at 407.
In Lesser-Goldman Cotton Co. v. Miller, 169 Ark. 1099, 277 S.W. 865 (1925),
we concluded that the following facts gave rise to a duty to inquire on the part of the
purchaser:
[A]ppellant had information that a part of the cotton it got from Williamson
Brothers in 1920 and 1921 was raised on the Murrell farm, and that Mrs.
Murrell had a landlord’s lien thereon for the rent. It paid the rent drafts for
these two years to Mrs. Murrell upon the cotton, which Williamson Brothers
shipped to it under the mark “M”. Cotton marked in the same way was
shipped to it by Williamson Brothers in 1922, and this information was
sufficient to put it upon inquiry. Had appellants made inquiry, it would have
ascertained that the 21 bales of cotton marked “M” were raised on Mrs.
Murrell’s farm, and that under her lease she was entitled to a landlord’s lien
thereon for $850. Good faith required that it make an investigation.
-12-
08-999
Cite as 2009 Ark. 520
Miller, 169 Ark. at 1101, 277 S.W. at 865-66.
The instant case is distinguishable from Holmes, Meyer, and Miller. Prior versions of the
landlord-lien statute were at issue in those cases; however, the language regarding the liens
remains virtually unchanged, save the reiteration of the landlord’s priority in 18-40-101(b)(1),
as amended in 2003.3
In contrast to Holmes, Meyer, and Miller, there is no evidence in the instant case that
Riceland had any knowledge which would require it to make an investigation regarding a
landlord’s lien. The circuit court specifically found that “no notice was given by anyone to
Riceland” of the existence of a landlord’s lien. Burress testified that he did not inform
Riceland that he was a tenant or that there was a lien on the crops. Riceland’s representative,
Terry Richardson, testified that Riceland had no knowledge of the lien. In none of our prior
cases have we held that purchasers have an affirmative duty to inquire about a landlord’s lien
in every transaction. It was only when the surrounding facts put the purchaser on notice that
it might be purchasing crops from leased land that a duty arose to make further investigation.
Here, there are no facts in the record that put Riceland on notice that it might be purchasing
rice from leased land. Accordingly, based on our precedent, Riceland had no duty to
investigate. In this case, Riceland was an innocent purchaser. Therefore, the circuit court
3
The legislature is presumed to know the decisions of the supreme court, and it will not be
presumed in construing a statute that the legislature intended to require the court to pass again upon a
subject where its intent is not expressed in unmistakable language. Martin v. Pierce, 370 Ark. 53, 257
S.W.3d 82 (2007). The statute, amended in 2003, contains no language stating that the legislature
intended to create an affirmative duty on the part of purchasers to inquire about whether crops were
subject to a landlord’s lien.
-13-
08-999
Cite as 2009 Ark. 520
erred when it enforced the landlord’s lien against Riceland.
D. Satisfaction of Judgment—Priority
Because we have concluded that the circuit court erred in enforcing the landlord’s lien
against Riceland, we need not address Riceland’s argument regarding the priority of satisfying
the judgment.
II. Cross-Appeal
A. Attorneys’ Fees—SFCFA
The Trust contends that the circuit court erred when it failed to award the Trust
reasonable attorneys’ fees against SFCFA in favor of the Trust. SFCFA contends that the
Trust is not entitled to pursue a claim for attorneys’ fees against SFCFA because the Trust
gave to SFCFA a satisfaction of judgment and release of all claims after SFCFA paid the
judgment. We agree.
The satisfaction, captioned “Satisfaction of Judgments and Release of All Claims As to
St. Francis County Farmers Association Only,” provides that the Trust was given judgment
against SFCFA in the sum of $57,330, as of May 19, 2008, plus prejudgment interest at six
percent per annum from January 10, 2006, to May 19, 2008, and post-judgment interest at
seven and one-quarter percent per annum from May 19, 2008, less $2500 paid by Cargill.
The satisfaction noted that the Trust was “not granted judgment for attorneys fee or costs
against Defendant SFC Co-op.”
Finally, the satisfaction also provides that the Trust
“release[s] any and all claims they have or may have against St. Francis County Co-op arising
-14-
08-999
Cite as 2009 Ark. 520
from this litigation.” Because the satisfaction released SFCFA from any and all claims arising
from the litigation, and the attorneys’ fees sought by the Trust arise from the litigation, the
Trust is barred from seeking fees from SFCFA.
B. Attorneys’ Fees—Riceland
We need not consider the Trust’s argument concerning the circuit court’s denial of
the Trust’s request for attorneys’ fees from Riceland because we have concluded that the
circuit court erred in enforcing the landlord’s lien against Riceland. Even assuming attorneys’
fees pursuant to Arkansas Code Annotated section 16-22-308 (Repl. 1999) would be allowed
for the claims in this case, the Trust is no longer the prevailing party and is, therefore, not
entitled to fees. Id.
C. Setoff
The Trust contends that the circuit court erred when it awarded Riceland and SFCFA
a setoff for the settlement paid by Cargill. We need not consider the Trust’s argument as it
relates to Riceland, as we have concluded that the circuit court erred in enforcing the
landlord’s lien against Riceland. We also do not consider the Trust’s argument as it relates
to SFCFA because the satisfaction released SFCFA from any and all claims arising from this
litigation.
Reversed and remanded on direct appeal; affirmed on cross-appeal.
DANIELSON, J., dissents.
-15-
08-999
Cite as 2009 Ark. 520
DANIELSON, J., dissenting. Because the majority disregards the entirety of the General
Assembly’s 2003 amendment of Arkansas Code Annotated § 18-41-101, I respectfully dissent.
While the bulk of the landlord-lien statute has remained virtually unchanged since its
inception, Act 32 of 2003, § 3 did amend the substance of the statute. In that amendment,
the legislature not only attempted to restore the prior landlord-lien statutory scheme, as
acknowledged by the majority, but it also took pains to add language regarding the perfection
of a landlords’ lien. Specifically, the “2003 amendment inserted the present second sentence.”
See Ark. Code Ann. § 18-41-101 Amendments. That second sentence provides:
(b)(1) The lien is perfected and shall have priority over a conflicting
security interest in or agricultural lien on the crop regardless of when the
conflicting security interest or agricultural lien is perfected.
Ark. Code Ann. § 18-41-101(b)(1) (Repl. 2003) (emphasis added).
Since essentially the beginning of Arkansas jurisprudence, but prior to the 2003
amendment, this court had held that it was settled that “if a tenant sells the crop to a purchaser
without notice of the landlord’s lien, the buyer takes title free of the lien.” Holmes v. Riceland
Foods, Inc., 261 Ark. 27, 546 S.W.2d 414 (1977) (citing Van Etten v. Lesser-Goldman Cotton
Co., 158 Ark. 432, 250 S.W. 338 (1923); Puckett v. Reed, 31 Ark. 131 (1876)). And, as the
majority acknowledges, we observed in 1923:
For the law is that, while one buying cotton subject to a landlord’s lien is not
liable as for conversion if he has no knowledge of the lien, yet if the purchaser
is in possession of facts sufficient to put him upon notice that the cotton is
subject to the lien of a landlord, good faith requires him to pursue the inquiry
to the extent of investigating the facts of which he has knowledge, and, if
reasonable diligence in the investigation of these facts would have led to the
-16-
08-999
Cite as 2009 Ark. 520
knowledge of the actual existence of the lien, then the purchaser is liable for a
conversion, just as he would have been had he possessed the actual knowledge.
The act of purchasing the cotton destroys the landlord’s lien, and one cannot
do this and escape liability for so doing except when he has acted in good faith
in making the purchase, and good faith requires a reasonable investigation of
any information of which the purchaser has possession calculated to warn him
that he is being offered cotton upon which there exists a landlord’s lien.
Van Etten v. Lesser-Goldman Cotton Co., 158 Ark. at ___, 250 S.W. at 338. The question,
then, is whether this caselaw is still controlling after 2003, when the General Assembly added
language regarding the perfection of a landlord lien. I cannot say that it is.
Our caselaw has always provided that a landlord lien is had and that one without notice
of the lien is an innocent purchaser of crops. Despite this well-settled doctrine, however, the
General Assembly saw fit to add the additional language contained in (b)(1). While the
majority deems that subsection a reiteration of the landlord’s priority, I believe that the
amendment is much more significant.
We have long held that the General Assembly is presumed to be aware of this court’s
decisions. See Smith v. Shelter Mut. Ins. Co., 327 Ark. 208, 937 S.W.2d 180 (1997).
Therefore, had the General Assembly simply sought to reestablish the landlord-lien law as it
was prior to 2001 and reiterate the priority of such a lien, it could have so stated without
further change to the statute. But, it did not; instead, it added the language stating that a lien
is perfected. Accordingly, we cannot ignore that language, because when this court construes
a statute, it does so such that no word is left void, superfluous or insignificant, giving meaning
and effect to every word in the statute, if possible. See Osborn v. Bryant, 2009 Ark. 358, ___
-17-
08-999
Cite as 2009 Ark. 520
S.W.3d ___.
The added language provides that the landlord lien is perfected. “Perfect” is defined
as:
To take all legal steps needed to complete, secure, or record (a
claim, right, or interest); to provide necessary public notice in
final conformity with the law <perfect a security interest><
perfect the title>
Black’s Law Dictionary 1173 (8th ed. 2004). See also Wright v. City of Little Rock, 366 Ark. 96,
233 S.W.3d 644 (2006) (“Perfected means that all legal steps have been taken which are
necessary to complete the action undertaken. See Black’s Law Dictionary 1173 (8th ed.
2004”)). With the import of the term “perfect” in mind, it is clear that since 2003, the
landlord-lien statute, by its plain language, has provided that, once a landlord has a lien, it is
perfected. In other words, the landlord has done all that is necessary to secure his interest and
provided the necessary notice.
It would seem, then, that a purchaser is now charged with notice, or notice is
presumed, once the landlord has his lien. That being the case, a purchaser would then have
a duty to inquire or investigate as to the owner of the land before paying for the crop.
Therefore, the circuit court did not err in finding a duty to inquire. Accordingly, neither
actual nor constructive notice was necessary, as claimed by Riceland, as notice was presumed
and automatic upon the establishment of the Trust’s lien. Because Riceland was charged with
notice but failed to make an inquiry, I would affirm the circuit court’s order.
-18-
08-999
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.