Summary of a Recent
Judicial Development in
Finance and Credit

Foreclosure Judgment on Landlord's
Lien Upheld

Eugenio A. Lomba
National AgLaw Center Graduate Fellow

In an action brought by a landlord seeking to foreclosure on a lien that it held in a tenant's crop, the Georgia Court of Appeals has affirmed in part, and reversed in part, a trial court's decision in favor of the landlord. Bitt Int'l. Co., Inc. v. Fletcher, 577 S.E.2d 276, 279-81 (Ga. Ct. App. 2003). The appeals court ruled that the tenant was not entitled to a jury trial, amounts owed for supplies and equipment furnished by landlord's corporation were not covered by the crop lien, and stakes furnished by the landlord were within the crop lien. See id. at 280-81. The court also ruled that the amount of judgment that exceeded the amount of a bond posted by the tenant was void because the tenant's crop had failed. See id. at 280.

Joe Fletcher, landlord, brought an action to foreclose on a landlord's lien that it held in crops grown by Bitt International Company ("Bitt"), tenant. See id. at *1. After a probable cause hearing the trial court "found probable cause for an evidentiary hearing, and [Bitt] posted a bond for $33,000 in lieu of the growing crop." Id. However, Bitt's entire crop was lost prior to the evidentiary hearing. See id.

The appeals court first examined Bitt's argument that the trial court erred in denying it a jury trial. See id. The court explained that the Georgia Crop Lien Foreclosure Statute "did not exist at common law and is a statutory creation of the General Assembly." Id. (citations omitted). It also explained that "[t]he foreclosure of liens on personalty was not known at common law and also is the creature of statute." Id. (citations omitted). It stated that "[n]either Act grants a right to jury trial but provides instead for a summary procedure before a judge." Id. (citation omitted). The appeals court concluded that

[T]hese statutes created no right to a trial by jury, and the rights created under these statutes did not exist at common law; thus, neither party has a right to trial by jury, because only those rights to a trial by jury existing at the time of the adoption of the Georgia Constitution in 1798 are entitled to a jury trial absent a statute conferring such right.

Id. (citations omitted).

The appeals court also examined Bitt's argument that the trial court erred when it granted Fletcher a lien "for items furnished by Joe Fletcher, Inc. without evidence that the supplies were at the request or with the consent of [Bitt], directed to be furnished to [Bitt] by an agent, with . . . [Fletcher] assuming sole liability for the debt thus created, as required by statute." Id. Bitt claimed that "Joe Fletcher, Inc. d/b/a Fresh Farm Products furnished $47,029.48 of the $80,669.92 which Fletcher asserted as a lien and that Fletcher furnished only $33,640.44." Id. Bitt also contended that "Fletcher, himself, furnished stakes for use for the crops that [Bitt] never agreed to buy or to use, which represented $18,556 of his claim." Id.

The court explained that for a crop lien to arise

(1) there must be a landlord and tenant relationship either by operation of law or by special written contract; (2) the landlord or his assignee brings the foreclosure of the lien; (3) the landlord furnished supplies, equipment, or other things necessary to make the crop to the tenant; and (4) the lien applies only to the crops raised during the year when supplies were furnished to make the crop.

Id. (citations omitted).
It also explained that "[i]f the articles are furnished by the landlord as an agent for another or if the supplies are furnished without the tenant's consent, then no lien arises."

With respect to Bitt's contention that Fletcher only furnished $33,640.44, the court stated that Fletcher failed to prove "an assignment of the $47,029.48 furnished by Joe Fletcher, Inc." Id. It also stated that "Fletcher failed to establish that [Bitt] consented to or requested that Joe Fletcher, Inc. furnish it such supplies and equipment on behalf of Fletcher as the debtor to bring such claims within the crop lien." Id. Therefore, the court concluded that $47,029.48 "did not come within the crop lien of the landlord and cannot be part of a lien foreclosure judgment." Id. With respect to Bitt's claim that Fletcher furnished stakes that Bitt never agreed to purchase or use, the court stated that "[t]he stakes were furnished by the landlord for use in making the crop, were necessary to making the crop, and were used by the tenant in making the crop; therefore, by operation of law without any agreement, such materials were supplies within the lien statute." Id.

The court also ruled that the special foreclosure judgment was limited to $33,000.00, which was the amount of the bond posted by Bitt. See id. The court explained that the "bond posted for the release of the lien against the crop stood in place of the crop so that [Bitt] could still have possession of the growing crop; had there been no bond, the loss of the crop would have terminated the lien on the crop, which crop failed and no longer existed." Id. (citation omitted). It added that once the crop failed, the bond "stood in its place as if the harvested crop was worth the face amount of the bond." Id. The court concluded that

[T]he foreclosure of a crop lien cannot be for more than the value of the crop, creating a deficiency, as here asserted, because there is no general judgment on a debt but a special judgment declaring the existence and amount of the lien on the crop and providing for its enforcement against specific property, whether or not the property has been replevied.

Id. (citation omitted).

Bitt also argued that the trial court erred "in finding that Fletcher was entitled to a lien . . . for items as to which no [written] agreement was ever reached between the landlord and tenant." Id. The appeals court explained that "[a] crop lien "arises by operation of law from the relationship of landlord and tenant where the landlord furnishes supplies, equipment, and articles necessary to the making of a crop; it can also arise from a written contract." Id. (citing Ga. Code Ann. § 44-14-340(1)). It stated that "[t]he fact that there was no agreement as to use of the stakes under the written contract does not govern, because the lien arose by operation of law from the furnishing of stakes by the landlord, the necessity of the stakes in making the crop, and by the use of the stakes by the tenant in making the crop." Id. (citation omitted). The court therefore rejected Bitt's argument and affirmed the trial court's decision with respect to this issue. See id.

The case was decided on February 3, 2003; this summary was posted April, 2003