McClatchy v. Anthony Farms
| Docket Number: | 2005-CA-00512-COA | |
| Court of Appeals: |
Opinion Link Opinion Date: 08-15-2006 Opinion Author: SOUTHWICK, J. Holding: Reversed and Remanded |
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| Additional Case Information: |
Topic: Contract - Impairment of rights of surety - Necessary parties Judge(s) Concurring: KING, C.J., LEE AND MYERS, P.JJ., IRVING, CHANDLER, GRIFFIS, BARNES, ISHEE AND ROBERTS, JJ. Procedural History: Bench Trial Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 02-18-2005 Appealed from: SUNFLOWER COUNTY CHANCERY COURT Judge: Vicki Barnes Disposition: CROP LIEN VOIDED Case Number: 2001-0422 |
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| Party Name: | Attorney Name: | |||
| Appellant: | JEAN T. MCCLATCHY |
W. DEAN BELK |
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| Appellee: | ANTHONY FARMS, A PARTNERSHIP | JEFFREY A. LEVINGSTON |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Impairment of rights of surety - Necessary parties |
| Summary of the Facts: | From 1994 until 2000, Jean McClatchey entered annual farming leases on 400 acres with her nephew, Charles McClatchey. In 1999 the nephew stopped farming, and farming operations were conducted by his wife under the business name of Waltonia Farms. At the time that the nephew stopped farming, he was under a criminal investigation by federal authorities. In April 2000, he was sentenced to federal prison. In 2001, he declared bankruptcy. In 2003, his wife did the same. The final Waltonia Farms lease on the 400 acres was for the 2001 crop year. In 2001, Anthony Farms received a sublease from Waltonia Farms covering the 400 acres of farm land and other property not involved in this suit. Although Jean McClatchey signed an agreement for the sublease, she did not enter any contractual relationship with the sublessee Anthony. Anthony Farms paid Waltonia Farms the full lease amount of $43,232 on the day the sublease was executed. Also on that day, Waltonia Farms, through the nephew’s wife, paid $10,000 to its lessor and the landowner Jean McClatchey. Later that year, Jean McClatchey filed a lien on the 400 acres, stating in the filing that based on information and belief, Waltonia Farms had sublet the land to Anthony Farms. She alleged that the rent due her for the 2001 crop season was delinquent. Waltonia Farms had paid her $25,000 in 2001, but there is evidence that her nephew had not been timely in his payments of rent in previous crop years. Jean McClatchey allocated the 2001 payments to past due amounts from previous years. Anthony Farms brought suit to cancel the crop lien. McClatchey filed a counterclaim against Anthony Farms alleging that Anthony as sublessee was a surety for the outstanding rent due from the tenant, Waltonia Farms. In the chancellor’s written, the statutory lien that landowners have on crops grown on their property was voided because the landowner had failed first to seek the rent from her immediate lessees, either her nephew or Waltonia Farms under the management of his wife. McClatchey appeals. |
| Summary of Opinion Analysis: | This litigation was resolved below based simply on the fact that the landowner Jean McClatchey, after being sued for cancellation of the lien notice that she had filed, brought a counterclaim against Anthony without joining her own nephew, his wife, and perhaps their business entity Waltonia Farms. The mere bringing of a counterclaim against the surety without joining the landowner’s tenants as defendants does not act as an automatic cancellation of the obligations of a surety. Instead, before this suit can be dismissed because of impairment of the rights of the surety, there must be proof that those rights have actually been impaired. It is when the principal debtor and the creditor make a material change in the contract evidencing the indebtedness, that the surety is released. Resort must first be made by a creditor to the primarily liable party. Thus, the chancellor erred in ruling that the lien had been lost solely because a counterclaim was brought against Anthony alone and without joinder of the nephew and his wife. On remand, the chancellor should determine whether there has been a failure to join necessary parties or whether joinder would be futile. If the resolution of procedural issues allows the case to proceed, evidence can be taken on whether the surety’s rights were impaired sufficiently to justify voiding the lien because of Jean McClatchey’s failure to pursue a claim against the two other McClatchey family members and Waltonia Farms. If the lien remains in effect, the determination then must be made of what, if anything, is owed by the subtenant Anthony Farms to the landowner. |
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