Meyhoeffer v. Wallace - 35025 ( La. App. 2 Cir 07/11/01), 792 So. 2d 851

Rule:

Louisiana law provides that the lessor must exercise his privilege while the crops are still on the lessee's premises or within 15 days after they have been removed from the premises, provided the crops still remain in the lessee's possession. La. Civ. Code Ann. art. 2709.

Facts:

Defendant lessee leased 530 acres of farm land from the plaintiff lessor. As part of the lease agreement, the lessee granted a security interest in the crops to the lessor. The lease was recorded in the conveyance records, but the security interest was not perfected. The lessor obtained a loan from the defendant bank, for which he granted a security interest in the crops and crop proceeds. The bank perfected its security interest by filing a financing statement, as required by La. Rev. Stat. Ann. § 3:3654. When the lessee could not meet his obligation to the bank and pay rent to the lessor in 1998, the bank took possession of the proceeds from the 1998 crops. The lessor asserted a lessor's privilege on the crops produced, and the proceeds, to secure payment of the rent. The district court held that the bank's perfected security interest in crop proceeds was superior to the lessor's privilege. The lessor's suit was dismissed and he appealed.

Issue:

Under the circumstances, was the security interest of the bank superior to the lessor’s privilege? 

Answer:

Yes.

Conclusion:

The appellate court agreed with the trial court that the only means by which the lessor could have had a viable claim for the 1998 rent was if he had complied with the filing requirements of La. Rev. Stat. Ann. § 9:4521. As it was undisputed that the lessor did not take the necessary steps required, the trial court was correct in ruling that the bank's security interest was superior.