Case Name: William J. MATHIAS, et al., Appellants, v. WALLING ENTERPRISES, INC., Appellee
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 1992-09-11
Citations: 609 So. 2d 1323
Docket Number: No. 90-2204
Parties: William J. MATHIAS, et al., Appellants, v. WALLING ENTERPRISES, INC., Appellee.
Judges: GOSHORN, C.J., and DAUKSCH, COBB, PETERSON and GRIFFIN, JJ., concur.
Reporter: Southern Reporter, Second Series
Volume: 609
Pages: 1323–1333

Head Matter:
William J. MATHIAS, et al., Appellants, v. WALLING ENTERPRISES, INC., Appellee.
No. 90-2204.
District Court of Appeal of Florida, Fifth District.
Sept. 11, 1992.
On Motion for Rehearing and Certification Dec. 31, 1992.
Fred A. Morrison, of McLin, Burnsed, Morrison, Johnson & Robuck, P.A., Lees-burg, for appellants.
Gary J. Cooney, of Austin, Lawrence & Landis, Leesburg, for appellee.

Opinion:
DIAMANTIS, Judge.
Mathias, Chandler and Ohnstad (investor group), appeal from a summary judgment which adjudicated that Walling Enterprises, Inc.'s landlord's lien for rent had priority over their perfected security interest in Chobe Investments, Inc.'s liquor license issued for Snaps Lounge, as well as in other items of equipment and fixtures. We affirm in part and reverse in part.
The record shows that originally Chandler, Mathias, and Ohnstad (and others) owned all the stock in Chobe Investments, Inc. They borrowed money from Citizens National Bank of Leesburg to open Snaps Lounge in Leesburg. A purchase money security agreement covering assets, inventory and equipment was executed on July 17, 1986. A UCC-1 filing was made on July 21, 1986.
An additional note for $60,000 and a security agreement covering a 4-COP liquor license was executed in the bank's favor by Chobe on August 28, 1986. At that point, Chobe had a temporary license for Snap's Lounge, issued August 27, 1986. On October 17, 1986 Citizens National Bank, pursuant to section 561.65(4), Florida Statutes (1985), recorded with the Division of Alcoholic Beverages and Tobacco the security agreement which described the liquor license. The bank on September 9, 1986 also filed with the Secretary of State's office a UCC-1 financing statement covering the liquor license.
The Division issued the permanent license on February 3, 1987. On February 6, 1987 the bank again recorded with the Division the security agreement involving the liquor license.
Chobe and Walling entered into a lease for Snap's Lounge on May 30, 1986. According to the terms of the lease, it was to run for three years beginning when the lounge opened. It opened for business on September 4,1986. Walling never attempted to file any document with either the Division or the Secretary of State.
In August of 1989 the investor group sold all of their stock in Chobe to the Bainters. Under the lease with Walling, this was deemed to be an assignment of the lease, to which Walling consented. When the new owners of Chobe began defaulting on their rent and bank loans, the investor group who had guaranteed the bank loans settled their obligations with the bank and took an assignment of the bank's security interests and filings. Thus, the investor group stepped into the bank's secured position.
The investor group then filed this lawsuit, seeking to enforce the bank's rights in the collateral and Walling intervened to assert its landlord's lien for rent. The trial court then adjudicated the relative priorities of Walling and the investor group.
I. Statutory Landlord's Lien Attaches to a Lessee's property Interest in a Liquor License.
Florida law has recognized that a landlord's statutory lien for rent under section 83.08(2) can attach to a lessee's liquor license located on the leased premises. G.M.C.A. Corporation v. Noni, Inc., 227 So.2d 891 (Fla. 3d DCA 1969); Yarbrough v. Villeneuve, 160 So.2d 747 (Fla. 1st DCA 1964). In Yarbrough, the court held that a liquor license is subject to the attachment of a landlord's lien, and stated that while a beverage license is but the grant of a privilege and is not property in the constitutional sense, it has been recognized and considered to be property in a commercial sense, citing House v. Cotton, 52 So.2d 340 (Fla.1951) and Kline v. State Beverage Department of Florida, 77 So.2d 872 (Fla.1955). The court in Yarbrough reasoned that because the statute creating a landlord's lien for rent provides that such lien shall attach to all property of the lessee kept on the property, and because vendors must display their licenses in conspicuous places on their licensed premises, the statutory landlord's lien attached to the license. Yarbrough, 160 So.2d at 748.
We reject the argument that conceptually a liquor license does not have a "location" because it lacks substance and form and, therefore, it cannot be "brought onto" the leased premises. As in Yar-brough, a liquor license must be located in a conspicuous place in order for a business to lawfully open its doors to sell regulated alcoholic beverages. This requirement prevents a licensee from exercising the privilege of selling alcoholic beverages at two or more locations, and persons involved in the commercial sale of alcoholic beverages know and understand this requirement. Because the commercial world is aware of the need and real value of the physical license, to the licensee, the license itself has a possessory value even though it is a "general intangible." Consequently, the physical license, while it is located on the leased premises, can be subject to a statutory landlord's lien, which lien is in essence a possessory one.
The advent of the Uniform Commercial Code (UCC) in 1967 did not affect the Yar-brough principle of the landlord's statutory lien as attaching to a liquor license. A landlord's lien is expressly excluded from the provisions of the UCC. See § 679.-104(2), Florida Statutes (1991). Thus, we agree with the trial court that a landlord can have a statutory lien which attaches to a liquor license located on the leased premises.
II. Walling's Statutory Lien Did Not Have to be Perfected Pursuant to Either Section 561.65(4) or Section 679.401(c).
Prior to the Florida Supreme Court's opinion in United States v. McGurn, 596 So.2d 1038 (Fla.1992), applicable case law required dual filing under both sections 561.65(4) and section 679.401(1)(c) in order to perfect a security interest. See In re Seville Entertainment Complex of Pensacola, Inc., 79 B.R. 491, 493 (Bankr.N.D.Fla.1987). See also In re Coed Shop, Inc., 435 F.Supp. 472 (N.D.Fla.1977) affirmed, 567 F.2d 1367 (5th Cir.1978). In McGurn the Florida Supreme Court, in a certified question from the Eleventh Circuit, held that recording of a security interest with the Florida Division of Alcoholic Beverages and Tobacco pursuant to section 561.65(4) was sufficient under Florida law to perfect a security-interest in a liquor license as against a subsequent judgment lien and that filing under section 679.401(l)(c) of the UCC was unnecessary..
Section 561.65(4)-(7) was enacted in 1981 by Chapter 81-158, section 21, Laws of Florida. This chapter also amended 561.-65(1). Section 561.65(4)-(7) provides that: (1) a filing be made within ninety days of the date of creation of the security agreement or lien on appropriate forms to be filed with the Division; (2) any foreclosure shall be in the circuit court in the county in which the beverage license is issued; (3) the procedure for a foreclosure and sale and priority of payment; and (4) foreclosure or judicial transfer of the license does not prevent the Division from taking administrative action against the licensee, but a revocation shall only impair the qualifications of the licensee's officers, directors, or stockholders. Section 561.65(1) was amended to require notice by the Division to any lienholder who properly records its lien pursuant to subsection (4) of any pending revocation or suspension of a licensee's beverage license.
Section 561.65(4) provides in pertinent part:
561.65 Mortgagee's interest in license.—
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(4) In order to perfect a lien or security interest in a spirituous alcoholic beverage license which may be enforceable against the license, the party which holds the lien or security interest, within 90 days of the date of creation of the lien or security interest, shall record the same with the division on or with forms authorized by the division, which forms shall require the names of the parties and the terms of the obligation.
Historically, possessory liens such as a landlord's lien or a pledge did not have to be recorded in order to have priority over a subsequently acquired security interest or lien. See Lovett v. Lee, 141 Fla. 395, 193 So. 538 (1940); Spellman v. Beeman, 70 Fla. 575, 70 So. 589 (1915); United States v. S.K.A. Associates, Inc., 600 F.2d 513 (5th Cir.1979). The UCC recognizes this historic exception to the recording requirement. See e.g. § 679.104 and 679.305, Fla. Stat. (1991). Section 679.104 not only exempts a landlord's lien from the requirement of recording, but such section also exempts certain enumerated non-possesso-ry liens from this requirement.
Chapter 81-158, section 21, Laws of Florida, does not suggest that the legislature intended to abrogate this historic distinction between possessory and non-possesso-ry liens when it enacted section 561.65(4). The purpose of recording is to place subsequent lienors and holders of security interests on notice of the prior lien or security interest. Section 83.08(2) puts such subsequent lienors and holders of security interests on notice that a debtor's landlord has a lien upon the lessee's property superior to any lien acquired subsequent to the bringing of the property upon the leased premises. Failure to record a landlord's lien may very well abrogate the requirement of section 561.65(1) that the Division notify the lienholder of any pending revocation or suspension proceedings because notice from the Division is only required to lien-holders who have recorded their liens pursuant to section 561.65(4).
The Florida Supreme Court's decision in McGum does not affect the statutory landlord's lien. McGum dealt exclusively with a landlord's contractual security interest upon a lessee's alcoholic beverage license. A contractual security interest is broader in scope than a statutory landlord's lien in that a contractual security interest not only encompasses the alcoholic beverage license while it is located on the leased premises, but such interest follows the license in the event it is transferred to another location. In order to have such a perfected contractual security interest, recording is essential. This would not be true of a possessory statutory landlord's lien which only attaches to the alcoholic beverage license during its presence upon the leased premises. In other words, section 561.65(4) only changed the place of recording liens and security interests in liquor licenses which were required to be recorded in order to be perfected from the Secretary of State to the Division. Section 561.65(4) does not purport to affect posses-sory liens which did not require recording in order to be perfected. As we have pointed out, failure to record a statutory landlord's lien may result in loss of the right to receive notice from the Division under section 561.65(4) of any revocation or suspension proceedings.
III. The Investor Group's Security Interest is Superior to Walling's Statutory Landlord's Lien in the Liquor License.
The record reveals that the lease term began September 4, 1986, the day Snaps opened for business. Under the lease, Chobe's rent obligation began to accrue September 1, 1986. Thus, it was not until September 1, 1986 that there was a lease in effect which would give rise to a landlord's lien. On that date Chobe had the temporary license that is issued by the Division when an application for a beverage license is made. The permanent license was issued on February 3, 1987. Because the parties did not present any issue regarding whether the perfection of a security interest in a temporary license extends to the subsequently-issued permanent license, we express no opinion whether such double perfection is necessary. In the instant case, Citizens National Bank took separate action to perfect security interests in both the temporary and permanent licenses. On February 3, 1987 Citizens National Bank perfected a security interest in the permanent license by recording its security interest with the Division first on October 17, 1986 and then on February 6, 1987. Consequently, when the lessee later brought the permanent license onto the leased premises in February of 1987, the bank's security interest had been perfected.
Where a third party has already perfected a security interest before the landlord's lien arises, the prior perfected security interest takes precedence over the landlord's lien. See Lovett v. Lee, supra; Ruge v. Webb Press Co., 71 Fla. 536, 71 So. 627 (1916); Flowers v. Centrust Savings Bank, 556 So.2d 1123 (Fla. 3d DCA 1989); Geiger Mutual Agency, Inc. v. Wright, 233 So.2d 444 (Fla. 4th DCA 1970); United States v. S.K.A. Associates, Inc., supra.
Thus, Citizens National Bank's security interest under which the investor group claims is entitled to priority over the statutory landlord's lien. See Baer v. General Motors Acceptance Corporation, 101 Fla. 913, 132 So. 817 (1931); Edwards v. Baldwin Piano Co., 79 Fla. 143, 83 So. 915 (1920).
IV. Issues of Material Fact Concerning Furniture, Equipment and Fixtures.
Whether the statutory landlord's lien is superior to the investor group's security interest in the furniture, equipment and fixtures cannot be determined from this record for purposes of resolving this issue by summary judgment. A resolution of this question depends on whether Citizens National Bank perfected its security interest in such property before it was brought onto the leased premises, or, if such property was present there when the lease term commenced, whether such security interest was perfected at that time. Because these factual matters cannot be determined, we must remand this cause for further proceedings.
Y. Conclusion.
Accordingly, we affirm the lower court's conclusions that Walling's statutory landlord's lien attached to the liquor license located upon the leased premises and that Walling did not have to perfect its posses-sory lien pursuant to the provisions of section 561.65(4). However, we reverse the trial court's holding that Walling's landlord's lien on the liquor license was superi- or to the investor group's perfected security interest in such license and we remand this cause to the trial court to enter a summary judgment in favor of the investor group on the issue of the priority of the parties' respective claims to the license. We also reverse the lower court's ruling that Walling's landlord's lien was superior to the investor group's security interest in the furniture, equipment and fixtures and remand for further proceedings to determine this issue of priority.
AFFIRMED in part; REVERSED in part; REMANDED.
GOSHORN, C.J., and DAUKSCH, COBB, PETERSON and GRIFFIN, JJ., concur.
W. SHARP, J., concurs specially, with opinion in which HARRIS, J., concurs.
COWART, J., concurs in conclusion only.
. Section 83.08(2) states:
83.08 Landlord's lien for rent. — Every person to whom rent may be due, his heirs, executors, administrators or assigns, shall have a lien for such rent upon the property found upon or off the premises leased or rented, and in the possession of any person, as follows:
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(2) Upon all other property of the lessee or his sublessee or assigns, usually kept on the premises. This lien shall be superior to any lien acquired subsequent to the bringing of the property on the premises leased.
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. § 561.23(2), Fla.Stat. (1985). In the commercial world, the statutory requirement of conspicuous placement has come to mean "on the wall" of the business.
. There is a peculiar propriety in a landlord having a possessory lien on a liquor license. While regulatory permission to move a liquor license with its attendant right of use to another location may sometimes be obtained, the license, in the instant case, can only be used on the leased premises. Thus, when the lessee defaults in payment of its rent and the security of the license is needed to cover such default, the lien interest can be judicially converted to a title interest. At that time the landlord, being the owner of the permitted premises, is in the unique position to apply to use it at that location or to transfer its title interest to a new tenant who may gain such permission. See § 561.32, Fla.Stat. (1985).
.We note that in G.M.C.A. Corporation v. Noni, Inc., 227 So.2d 891 (Fla. 3d DCA 1969) the tenancy commenced on January 2, 1968 which was after the January 1, 1967 effective date of the Uniform Commercial Code. In G.M.C.A., the court followed Yarbrough v. Villeneuve, 160 So.2d 747 (Fla. 1st DCA 1964).
. In United States v. McGurn, 596 So.2d 1038 (Fla.1992), the Florida Supreme Court pointed out that it was dealing with the issue of perfecting a security interest in a liquor license when it stated:
We note it is not in dispute that, in order to perfect a security interest in a liquor license, that interest must be recorded in the Division of Alcoholic Beverages in accordance with the provisions of section 561.65(4), Florida Statutes (1987). The issue in this case is whether a filing is also required under the Uniform Commercial Code, specifically, section 679.-401, Florida Statutes (1987). (Emphasis in original.)
Id., at 1040.
This statement of the Florida Supreme Court comports with the certified question from the Eleventh Circuit:
WHETHER THE RECORDING OF A SECURITY INTEREST WITH THE FLORIDA DIVISION OF ALCOHOLIC BEVERAGES AND TOBACCO PURSUANT TO SECTION 561.65, FLA. STAT., IS SUFFICIENT UNDER FLORIDA LAW TO PERFECT THAT INTEREST AGAINST A SUBSEQUENT JUDGMENT LIEN.
Id., at 1038.
. The filings of October 17, 1986 and February 6, 1987 with the Division of Alcoholic Beverages and Tobacco refer to "license #45-00054 4-COP" which is the alcoholic beverage license involved in the instant case.