American Security Bank v. Farmers Drier & Storage Co. 544 So. 2d 1346

LABORDE, Judge.

Plaintiff, American Security Bank of Ville Platte (American Security Bank), sued defendant, Farmers Drier & Storage Co., Inc. (Farmers Drier), alleging that Farmers Drier sold crops pledged to the bank by a farmer named Richard Brunet, and wrongfully retained the proceeds. American Security Bank later amended its petition to name Bunge Corporation (Bunge) as an additional defendant, alleging that Farmers Drier sold Brunet’s crops to Bunge and that Bunge also wrongfully converted the *1347proceeds from the sale of the crops. Bunge then filed a cross claim against Farmers Drier seeking indemnification for any judgment against Bunge. Both Farmers Drier and Bunge subsequently filed motions for summary judgment, asserting that the crop pledge of American Security Bank was not properly recorded and, therefore, did not give sufficient notice to be effective against third parties. The trial court granted both motions. American Security Bank now appeals. We affirm the trial court’s decision granting summary judgment to Bunge. However, we reverse the judgment of the trial court awarding summary judgment in favor of Farmers Drier.

FACTS

On March 14, 1984, American Security Bank loaned money to Joseph Richard Brunet who executed a pledge of his 1984 crops as security for the loan. Thé crop pledge was executed in the name of Richard Brunet and thus, did not indicate the pledgor’s Christian name. Farmers Drier, a grain and storage company, apparently acted as Brunet’s agent in selling his crops. Its general manager, James Carroll Ardoin, was aware of Brunet’s crop pledge to American Security Bank. Nevertheless, Farmers Drier sold the crops to Bunge, without disclosing to Bunge that Brunet owned the crops or that the crops were pledged to American Security Bank. Farmers Drier kept the money it was paid by Bunge in order to liquidate a debt of Richard Brunet to Farmers Drier.1 When American Security Bank failed to receive payments from the crops that were sold, it filed suit and obtained a judgment against Richard Brunet. American Security Bank then brought this suit for trover and conversion against defendants, Bunge, and Farmers Drier.

THE EVANGELINE BANK CASE

The trial court granted defendants’ motions for summary judgment based on this court’s holding in Evangeline Bank and Trust Co. v. Deville, 367 So.2d 1252 (La.App. 3d Cir.1979). That case involved a crop pledge given to Evangeline Bank & Trust Company in the name of Boward Deville. In fact, the pledgor’s full name was Frank Boward Deville. At issue in Evangeline Bank was whether there existed a properly recorded crop pledge so as to give sufficient notice to third parties.2 The purchaser of the crop, Trappey’s, knew the grower only as Frank Deville. Trappey’s did not request a certificate from the Clerk of Court’s office to determine if Frank Boward Deville had any crop pledges recorded in his name. Furthermore, Trap-pey’s did not question Deville about his financial obligations regarding the crops. Nevertheless, this court concluded that Trappey’s failure to check the records, or to directly inquire of Deville whether there was a crop pledge affecting the purchased crop, was immaterial. The Evangeline Bank court held “that the crop pledge in question was not properly recorded, and, under the circumstances, B.F. Trappey’s Son, Inc. was not given sufficient notice of the existence of the privilege and pledge of the Deville crop.” Id. at 1255.

ISSUE ON APPEAL

At issue on appeal is the correctness of the trial court’s granting of defendants’ motion for summary judgment based on this court’s holding in Evangeline Bank. Firstly, we note that a motion for summary judgment should be granted only if the pleadings, depositions, answers to interrog*1348atories, admissions on file, together with supporting affidavits, show that there is no genuine issue of material fact and that the mover is entitled to judgment as a matter of law. LSA-C.C.P. art. 966. In the instant case, the record clearly demonstrates that Bunge had no actual knowledge it was purchasing crops that belonged to Brunet. In fact, American Security Bank admits in its brief that Bunge did not have actual notice of the crop pledge.3 Furthermore, the crop pledge at issue in this suit was not recorded in the full and complete name of the pledgor, Joseph Richard Brunet. Under Evangeline Bank, Bunge was not afforded sufficient constructive notice of the improperly recorded pledge and the pledge is not effective as to Bunge. Therefore, American Security Bank cannot recover against Bunge for conversion of the proceeds of the crops. Thus, we hold that the trial court’s grant of summary judgment as to Bunge was proper.4

As to the trial court’s grant of summary judgment to Farmers Drier, we conclude that it should not have been granted on the basis of Evangeline Bank. That case is clearly distinguishable from the instant case as its facts apply to Farmers Drier. In Evangeline Bank, the central question was whether Trappey’s, the crop purchaser, had constructive notice of the privilege and pledge of the crop. It did not address the issue of the liability of Deville, the crop owner and seller, as Deville’s debt to the Bank was discharged in bankruptcy, thus eliminating him from the case.

In the case sub judice, Joseph Richard Brunet did not sell his crops and is not before this court. Rather, Farmers Drier, apparently acting as Brunet’s agent, sold his crops. Accordingly, when it did not receive payments from the crops that were sold, American Security Bank brought this suit for trover and conversion. Clearly, Farmers Drier’s sale of the crops in spite of Brunet’s pledge does not place it in the position of a good faith purchaser protected by the constructive notice rule of Evangeline Bank. Furthermore, even assuming that Farmers Drier had some contractual authority to sell the crop or had some lien rights over it, we refuse to accord Farmers Drier the same status as a purchaser protected by the Evangeline Bank rule. Thus, we conclude that Evangeline Bank may not be extended to a party, like Farmers Drier, which simply appropriates or sells the crop as it sees fit.

For the foregoing reasons, we hold that the trial court properly granted defendant, Bunge’s, motion for summary judgment on the basis of Evangeline Bank and affirm that portion of its judgment. However, we hold that the trial court erroneously granted defendant, Farmers Drier’s, motion for summary judgment. We thus reverse that portion of the trial court’s judgment and remand for further proceedings. Costs of this appeal are to be shared equally by Farmers Drier and American Security Bank.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

GUIDRY, J., concurs in the result.

KING, J., dissents and assigns written reasons.

*1349KING, Judge,

concurring in part and dissenting in part.

I respectfully concur with the opinion of the majority that affirms the trial court judgment finding Bunge Corporation (hereinafter Bunge) not liable to American Security Bank (hereinafter plaintiff) on the basis that the crop pledge given by Joseph Richard Brunet (hereinafter Brunet) to plaintiff was not properly recorded. Since the crop pledge given by Brunet to plaintiff was not in his full name, I agree that under these circumstances Bunge, as a third party, could not be given sufficient constructive notice of the existence of the crop pledge.

I disagree with the opinion of the majority reversing the trial court judgment in favor of Farmers Drier and Storage Co., Inc. (hereinafter Farmers Drier).

The majority specifically finds that the crop pledge in question was not properly recorded as to Bunge, since it was not in Brunet’s full name and did not give sufficient constructive notice to third parties so as to be effective against them, relying on Evangeline Bank & Trust Co. v. Deville, 367 So.2d 1252 (La.App. 3 Cir.1979). A crop pledge is not properly recorded when it is not in the correct name of the pledgor. Evangeline Bank & Trust Co. v. Deville, supra; Dixie Savings & Loan Assoc. v. Sharp, 505 So.2d 157 (La.App. 4 Cir.1987); First Financial Bank, F.S.B. v. Johnson, 477 So.2d 1267 (La.App. 4 Cir.1985). When properly recorded, a crop pledge is effective against third persons, so that the immediate purchaser of a pledged crop has constructive notice of the pledge and is personally liable to the crop pledgee, at least up to the value of the crop purchased by him. City Bank and Trust Co. v. Marksville Elevator Co., 221 So.2d 853 (La.App. 3 Cir.), writ den., 254 La. 468, 223 So.2d 872 (1969). The majority then refuses to give Farmers Drier the same status as a purchaser, such as Bunge, protected against a pledgee of an improperly recorded crop pledge by the rule of law set forth in the Evangeline Bank case. The majority opinion recognizes and states that Farmers Drier sold Brunet’s pledged crops and was apparently acting as Brunet’s agent in selling his crops. Plaintiff alleged in its original petition that Farmers Drier sold the crops for Brunet and, in answers to interrogatories propounded to it by plaintiff, Farmers Drier answered that it had not purchased Brunet’s crops. Plaintiff, in its supplemental and amending petition against Bunge, alleged that Bunge purchased Brunet’s crops through Farmers Drier. Plaintiff, in answers to interrogatories of Bunge, admitted that they knew Brunet sold his crops to Bunge through Farmers Drier. The written demand for payment made by plaintiff’s lawyer upon Farmers Drier acknowledged and recognized that Brunet’s crops were sold by Brunet through the Farmers Drier facility. The deposition of James Ardoin, a representative of Farmers Drier, clearly shows that Farmers Drier only acted with Brunet’s permission as his agent in selling his crops. All of these facts were before the trial court on Farmers Drier’s Motion For Summary Judgment and clearly show that Farmers Drier was only the agent for Brunet in selling his pledged crops and was not the purchaser of Brunet’s pledged crops. As Farmers Drier is not a purchaser of Brunet’s pledged crops, the situation is the same as if Brunet had personally sold his pledged crops to Bunge and had then used the money or check or draft, representing the proceeds of the sale of his pledged crops, to pay his debt to Farmers Drier. Suppose Brunet had sold part of his pledged crops and, with the same money or check or draft received for the purchase price, had paid a merchant to whom he owed an unsecured debt. Would the merchant therefore be personally liable to plaintiff in this suit for the proceeds received from the sale of Brunet’s pledged crops? If so, then so would the butcher, the baker, and the candlestick maker — every individual — to whom Brunet may have paid a debt with a part of the proceeds of the sale of his pledged crops, be liable to the plaintiff in this suit. This means it would be unsafe for anyone to ever be paid with the proceeds from the sale of an agricultural crop if the pledge on the crops had not been paid to the pledgee. To entitle a *1350pledgee to his pledge he would only have to establish the identity of the proceeds from the sale of the pledged agricultural crops. Yet the majority concedes that the pledge, not being properly recorded, is not effective to third party purchasers such as Bunge. How then can the pledge be effective as to the proceeds of the sale of the pledged crops which were paid to Farmers Drier when Farmers Drier was not even the purchaser of the pledged crops? Even where there is a valid crop pledge or privilege, the pledgee cannot reach the proceeds of the sale of the pledged crop in the hands of a third party as the pledgee has no personal right of action against such third party. Cf. Roger v. Milliken & Fanvell, 150 La. 657, 91 So. 143 (1922); Union Seed & Fertilizer Co. v. J. Supple’s Sons Planting Co., 139 La. 692, 71 So. 949 (1916). Apparently the majority believes that the plaintiff should be able to reach the proceeds of the sale of the pledged crops which Farmers Drier retained and applied to Brunet’s debt owed to them. If the majority does this just because Farmers Drier had actual knowledge of plaintiffs improperly recorded crop pledge, this is contrary to well established jurisprudence. It is a well established principle of Louisiana law that even actual knowledge is not a substitute for the requirement to properly record privileges. McDuffie v. Walker, 125 La. 152, 51 So. 100 (1910); Horang v. Plattsmier, 21 La.Ann. 426 (1869); Alison Mtg. Inv. Trust v. BPB Contractors, Inc., 362 So.2d 1203 (La.App. 4 Cir.1978); Wood v. Morvant, 321 So.2d 914 (La.App. 1 Cir.1975).

There is a dichotomy in the opinion of the majority in finding that an improperly recorded crop pledge is not legally effective as to the purchaser of the pledged crops but is legally effective as to the proceeds of the sale of the pledged crops in the hands of a third party who received the proceeds for payment of a debt.

For these reasons I respectfully dissent from the opinion of the majority reversing the trial court judgment in favor of Farmers Drier and against plaintiff.