Court Opinion

ID: 9632896
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:27:39.975633+00
Date Added: 2024-06-11T13:02:05.349485
License: Public Domain

DENECKE, C. J.,
dissenting.
I concur in the majority decision except for that portion disallowing 3-D Sales, Inc.’s lien on the proceeds.
In February 1978 the defendant 3-D Sales, Inc., which is located in Walhalla, North Dakota, furnished seed potatoes to Heritage Farms. Within 60 days after furnishing the seed potatoes, 3-D Sales filed a notice of claim of lien. The crop was harvested in the second week of August 1978 and sold to OPI, the agent for Heritage, who, in turn, immediately sold and shipped the potatoes to various out-of-state purchasers and OPI retained the proceeds. In this proceeding 3-D Sales claims a lien on the proceeds. The defendant Dunn contends 3-D Sales has no right to a lien on the proceeds because it did not file a notice of claim of lien after the crop was sold or delivered to OPI.
ORS 87.236(2) provides:
“The liens created by ORS 87.226 and 87.232 shall also attach to the proceeds of the sale of the chattels subject to those liens if:
*434“(a) Prior to the filing of the notice of claim of lien, the chattels or any part thereof are sold or delivered to an agent, broker, cooperative agency or other person to be sold or otherwise disposed of; and
“(b) At the time the purchaser, agent, broker, cooperative agency or other person is notified of the filing of the claim of lien by delivery to him of a true copy thereof, the proceeds that were received or will be received from the sale or other disposal of the chattels have not been delivered to the owner of the chattels.”
As the defendant Dunn points out, the court stated in Paulk v. Van Cleve, 210 Or 218, 223, 309 P2d 176 (1957):
“A lien may attach to proceeds only if the crop is sold prior to the filing of the lien or ‘possession delivered’, etc. as provided * *
However, as the Court of Appeals observed in the opinion in the present case, the facts in Paulk were different, and it could not be determined when the notice of claim of lien was filed or that the party claimed the lien ever gave notice to the defendant. In any event, I am of the opinion that the purpose of the above-quoted statute was to extend the lien holder’s rights, not restrict them, and that the statement in Paulk is incorrect.
If the defendant is correct in his contention, persons performing labor, supplying material or providing services which necessarily have to be done more than 60 days before the crop would be ready to sell or be delivered could never claim a lien on the proceeds. In the present case the crop was sold or delivered to OPI at least 150 days after the seed was furnished to Heritage. ORS 87.242 provides that the notice of claim of lien must be filed “not later than 60 days after the close of the furnishing of the labor, services or materials.” In this case, if 3-D Sales had waited until after the crop had been sold or delivered to OPI to file its notice of claim of lien, the filing would have been ineffective as not timely.
The lien asserted is a statutory lien and its existence, its extent and certain other incidents of it are controlled by statute. However, the Oregon statutes creating statutory liens do not purport to govern all the incidents of the liens. For example, the statutes do not provide answers *435for most issues of lien priority or the rights of bona fide purchasers for value of property on which the lienholder claims a lien. In the absence of an applicable statute, the rules of equity govern the incidents of statutory liens. Liens are subjects of equitable jurisdiction.
“And it is now generally recognized that it is the peculiar province of a court of equity to protect liens.” Platte County State Bank v. Frantz, 239 P 531, 534 (Wyo. 1925).
“* * * Equity courts have general jurisdiction to adjust priorities among conflicting liens when the parties are before the court.” East Gadsden Bank v. Bagwell, 143 So 2d 438, 440 (Ala 1962).
In equity when goods subject to a lien have been sold and the lien cannot be foreclosed on the goods, the proceeds of the sale, if available, are subject to a lien.
“The nature of suit here pursued is available to a lien-holder whose lien was destroyed by defendant while in possession of the property with the legal title or holding under it and who sold without authority and received value for it. Having the possession supported by the legal title, and plaintiff having a lien, defendant was in the status of a trustee holding for the benefit of plaintiff to the extent of his interest. And when such a person sells the property and destroys plaintiffs lien and receives value for it, the lien attaches to such value and the trust is transferred to it. * * *” Ex Parte Morton, 261 Ala 581, 75 So 2d 500, 509 (1954).
“It is true that where a chattel (here an automobile) is sold in the ordinary course of trade so as to destroy a lien on it, the lien will, under certain conditions, attach to the proceeds of the sale (here the conditional sales contract). Whether the conditions were met in the instant case need not be decided, since the lien — if any attached — is merely an equitable lien which, though valid against certain persons, would not follow the conditional sales contract into the hands of a bona fide purchaser such as CIT in the instant case.” Price v. Universal C.I.T. Credit Corporation, 102 Ariz 227, 427 P2d 919 (1964).
The rules of equity govern the incidents of statutory liens not governed by statute when the lien is sought to be enforced by foreclosure as foreclosure is an equitable remedy. This was the reasoning in Farmer’s Feed v. Industrial Leasing, 286 Or 311, 594 P2d 397 (1979). There we interpreted the agricultural lien statute in effect at that *436time which has the same provision with which we are now concerned. The facts were that Industrial Leasing Company leased cows to Hulbert. Hulbert bought feed from plaintiff which timely filed a notice of lien. Thereafter, the leasing corporation took possession of the cows and sold them. We held:
“As previously noted, during the trial it appeared that defendant ILC had removed the cows from the jurisdiction of the court, after plaintiffs lien had been filed, and sold or released them to a third party in the state of Washington. The defendant’s actions in removing the cows from the state would have the effect of preventing plaintiff from foreclosing its lien and recovering the sums due plaintiff. Where the owner of lien-subject property wrongfully disposes of it, the proceeds stand in the place of the property sold. In such cases, where equity jurisdiction attaches, the court will dispose of the entire controversy and render a money judgment.” Farmer’s Feed v. Industrial Leasing, 286 Or 311, 317, 594 P2d 397 (1979).
We thus held that an agricultural lien can be imposed on the proceeds of the sale of the animals on which the lien was claimed although the claim of notice of lien was filed before the cows were sold.
On the other hand, the rule of equity is clear:
“A lien is binding on all persons who acquire property with notice of the lien by reason of its recordation, but unless otherwise provided by statute, it is not binding on bona fide purchasers for value and without notice. * * *” Kshensky v. Pioneer Nat. Title Ins. Co., 22 Wash App 817, 592 P2d 667, 669 (1979).
Except for ORS 87.236(2), a person claiming a lien who did not file the notice of claim of lien before the sale by Heritage to OPI would not have a lien.
I am of the opinion that the most reasonable interpretation of the statutory scheme for agricultural liens is as follows: The statute is silent on whether a lienholder who timely filed a notice of lien before the crop was sold or delivered can impress the lien on the proceeds held by the buyer. The reason the statute is silent is because the usual rules of equity provide that the lienholder can reach the proceeds of the sale of property on which a lien is claimed if the creditor can no longer satisfy its claim out of the liened property. Under the usual rules of equity, however, one *437seeking a lien cannot have a lien either on the property or the proceeds of the sale of the property if notice of lien was not filed before the sale of the property. ORS 87.236(2), however, has enlarged the rights of one seeking a lien under these circumstances. It provides the lienholder can have a lien on the proceeds of the sale if the purchaser, agent, broker, etc., is notified of the filing of the claim of lien which has been filed after the sale or delivery and the proceeds have not been delivered to the owner of the crops. Under these circumstances, the purchaser or agent is protected even though it had no notice of the lien at the time it purchased or took delivery of the crop, and the party claiming a lien is able to apply the security, the lien, in payment of the debt.
The majority concur that pursuant to the rules of equity under some circumstances a lienholder can enforce a lien against the proceeds of a sale of the liened property. The majority is of the opinion, however, that 3-D Sales cannot have a lien against the proceeds in this case because it did not plead or prove that its lien had been destroyed such as by wrongful conversion of the potatoes or by a sale to a bona fide purchaser.
3-D Sales had no occasion to plead that its lien on the potatoes had been destroyed. Neither Roy Dunn, who is now asserting that 3-D Sales cannot claim a lien on the proceeds, nor its assignor, made this assertion in the pleadings. Their contention in the pleadings was that Dunn’s assignor’s lien had priority over the other liens.
The proof was that within a week after harvesting the potatoes OPI commenced shipping them to buyers all over the United States. The invoices contained no information on who grew the potatoes or where they were grown. Most of the invoices and shipments commingled potatoes grown on the Heritage Farms with potatoes purchased by OPI from other growers. Based upon the evidence, we could probably infer that the persons buying from OPI were bona fide purchasers and 3-D Sales could not enforce its lien against the potatoes. It is not necessary to make that inference, however, because it is clear that almost all the potatoes were sent out of state and, therefore, 3-D Sales’ lien on the potatoes themselves was destroyed. That was *438the basis of our decision in Farmer’s Feed v. Industrial Leasing, 286 Or 311, 317, 594 P2d 397 (1979), that the lienholder could have a lien on the proceeds. We stated: “The defendant’s actions in removing the cows from the state would have the effect of preventing plaintiff from foreclosing its lien and recovering the sums due plaintiff.”
I would affirm the judgment of the trial court and the decision of the Court of Appeals impressing 3-D Sales’ lien on the proceeds of the sale which are held by OPI.
Peterson and Tanzer, JJ., join in this dissenting opinion.