THE EXCHANGE NATIONAL BANK OF TAMPA, APPELLANT,
v.
ALTURAS PACKING COMPANY, INC. AND CRITTENDEN FRUIT COMPANY, INC., APPELLEES
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Exchange National Bank appeals a lower court judgment holding that citrus crops sold by a debtor to two companies before the bank's attachment and judgment constituted constructively severed goods belonging to the purchasers, not subject to the bank's secured claims. The court affirmed, holding that sales of growing crops need not be recorded to give constructive notice and that the bank, as an unsecured creditor, failed to demonstrate reliance on public records.
The court held that the sale of citrus crops to the respective appellees constituted a constructive severance of the crops from the land, that Section 672.107(3) does not require recording of such sales to provide constructive notice, and that the bank, having failed to demonstrate reliance on public records in extending credit, could not enjoy the position of a secured creditor. The judgment for the appellees was affirmed.
[1] A sale of growing crops, such as citrus fruit, constitutes a constructive severance from the land, even if the crops remain unharvested.
[2] A creditor seeking secured creditor status must demonstrate reliance on public records when extending credit.
Previewing 2 of 4 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“It is our view that Section 672.107(3) as presently worded does not require the recording of a sale of citrus fruit in order to provide constructive notice to others of the nature of the buyer's interest in the crop.”
Establishes that recording is not required for constructive notice of crop sales under the UCC.
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Join FLexlaw to unlock all legal intelligenceIn August 1970, Crittenden Fruit Company and Alturas Packing Company purchased growing citrus crops from Nunn Growers for $13,000 and $15,000 respecti…
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The parties hereto have stipulated as to the facts in this case. It appears that during September and October, 1970, appellant, The Exchange National Bank of Tampa, obtained and' served writs of attachment prior to judgment on certain grove properties owned by Nunn Growers, Inc., David P. Nunn, Jr. and Bertilou Nunn. Notices of levy were thereafter filed in the public records of the counties in which the lands were situated. Summary judgment was subsequently entered in favor of appellant and against Nunn on November 13, 1970, and was thereafter recorded in the public records of the counties in which the lands were situated.
On August 21, 1970, prior to the attachments and recording of the summary judgments by appellant, appellee, Crittenden Fruit Company, Inc., contracted to buy certain citrus crops then growing on the lands later attached by appellant for the sum of $13,000, which was paid to and accepted by Nunn.
On August 26, 1970, prior to the attachments and recording of the summary judgments by appellant, appellee, Alturas Packing Company, Inc., entered into a “Bulk Purchase Agreement and Contract” for the purchase and sale of certain citrus crops then growing on the lands later attached by appellant for $15,000, which was paid to and accepted by Nunn.
The lower court by its order dated April 8, 1971, held that all right, title and inter*734est in the citrus crops and proceeds therefrom described in the stipulation passed to and vested in the appellees, respectively, free from any and all claims of appellant. From such order this appeal is taken.
In the final order of the court below, the court made the following findings:
“1. That the crops of citrus fruits sold by Nunn Growers, Inc., to Alturas Packing Company, Inc., and Crittenden Fruit Company, were goods within the definition of Section 672.2-107(2), Florida Statutes, F. S.A.
“2. That The Exchange National Bank of Tampa was an unsecured creditor of Nunn Growers, Inc., by virtue of its judgment entered in Case No. 70-3093 in this Court. The suit was filed after the sales by the defendant to Alturas Packing Company, Inc., and Crittenden Fruit Company, Inc.
“3. That there was no reliance by The Exchange National Bank of Tampa upon the public records to determine ownership of or encumbrances upon said crops of citrus fruits in extending credit to Nunn Growers, Inc.
“4. That there was no evidence of bad faith or fraudulent dealings between vendor Nunn Growers, Inc., and vendees Alturas Packing Company, Inc., and Crittenden Fruit Company, Inc., designed to defeat the claim of The Exchange National Bank of Tampa, or that vendees had knowledge of any claim of The Exchange National Bank of Tampa against the vendor.
“5. That the sales to the vendees were made in good faith and full consideration passed on execution of the contracts which identified the goods so as to preclude the claims of The Exachnge National Bank of Tampa under Section 672.2-402, Florida Statutes, F.S.A.
“6. That the sales were made in the current course of trade by the seller and the retention of possession by the seller was not fraudulent, since the goods, namely citrus fruit, could not thereafter be harvested by the vendees until mature.”
It is contended by appellant that in order for appellant to have notice of the sale of the citrus crops to appellees, the contracts for such sales should have been recorded as a document transferring an interest in land, and that having no such notice appellant was a secured creditor by reason of its attachment of the realty and summary judgment, all of which were entered of record after the sale of the citrus crops to the respective appellees.
It is contended by appellees that the sale of the citrus crops prior to notice of attachment constituted a constructive severance of the fruit crops from the realty, and that subsequent levy on the lands alone, without reference to the citrus crops growing thereon, did not include such citrus crops. Therefore, since the notice of levy did not include the citrus crops, such notice of levy was restricted to the land itself, the crops having been previously constructively severed.
It is our view that Section 672.107(3) as presently worded does not require the recording of a sale of citrus fruit in order to provide constructive notice to others of the nature of the buyer’s interest in the crop.
It is our further view that the sale of the citrus crops to the respective appellees constituted a constructive severance of the crops from the land.
In order to enjoy the position of a secured creditor the record should reveal that in extending credit to Nunn, appellant relied upon the public records. Inasmuch as such does not appear from the record before us, such position is denied the appellant. First Nat. Bank of Arcadia v. Savarese, 101 Fla. 408, 134 So. 501.
Finding no error in the judgment appealed from, the judgment is hereby affirmed.
*735HOBSON, Acting C. J., concurs.
McNULTY, J., concurs specially.
(concurring specially)-
I would affirm but solely on the ground that the writ of attachment merely sought to levy on the realty and not on the growing crop thereon which, pursuant to § 672.-107(2), F.S.A., i,s rendered “goods” or personalty. There may well have been another question here if the writ had sought to levy on the crop, but we are not called upon to answer it now.
McNULTY, Judge
(concurring specially)-
I would affirm but solely on the ground that the writ of attachment merely sought to levy on the realty and not on the growing crop thereon which, pursuant to § 672.-107(2), F.S.A., i,s rendered “goods” or personalty. There may well have been another question here if the writ had sought to levy on the crop, but we are not called upon to answer it now.
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Bornstein v. Somerson, 341 So. 2d 1043 (Fla. 2d DCA 1977)…ed and thus converted into personalty for the purposes of mortgage or sale, even though the fruit remains on the trees. Simmons, supra; Owen v. Commissioner, 192 F. 2d 1006 (5th Cir. 1951). Cf. Exchange National Bank of Tampa v. Alturas Packing Co., 269 So. 2d 733 (Fla.App.2d DCA 1972). Thus a sale or mortgage of the fruit, even though under a general mortgage of the realty, effectively removes the fruit from the realty and out of reach of the mortgagee unless the latter provides otherwise.7 The parties agree…
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Konas v. Coastal Lumber Co., 496 So. 2d 868 (Fla. 1st DCA 1986)….” Section 672.107(2), Florida Statutes. Florida cases dealing with the sale of citrus, decided under the UCC prior to the 1979 amendment, now pertain equally to the sale of timber.5 In The Exchange National Bank of Tampa v. Alturas Packing Company, 269 So. 2d 733 (Fla. 2d DCA 1972), the court held that a landowner’s sale of his growing citrus crop constituted a constructive severance of the crop from the realty at the time of contracting so that a creditor’s subsequent levy upon the land and recording did no…
Authorities Cited
- The First Nat'l Bank of Arcadia v. Savarese, 101 Fla. 480 (Fla. 1931)