Appeal from the United States District Court for the Central District of Illinois, Danville Division. No. 87 C 2014--Harold A. Baker, Chief Judge.
Cummings and Posner, Circuit Judges, and Eschbach, Senior Circuit Judge.
Central National Bank of Mattoon (the "Bank") as intervenor seeks to reverse the district court's affirmance of a bankruptcy court's order directing James R. Geekie, the trustee in bankruptcy, both to set aside a landlord's lien upon crops grown on forty acres leased by the debtors Max Leon and Marilyn L. Hilligoss from L.H. Monke and to take no action regarding 437 acres of crops in possession of Avey Farms, Inc. ("Avey"). We dismiss the appeal as to Monke's claim for lack of jurisdiction and affirm the appeal as to Avey's claim.
This case concerns whether Geekie should set aside two landlord's liens upon the corn and bean crops growing when Hilligoss filed his bankruptcy petition. When he filed for bankruptcy liquidation under Chapter 7 on September 9, 1985, Hilligoss was a farm tenant on land owned by Monke on a cash rent basis of forty acres for $5,800, half ($2,900) of which had already been paid. He was also a farm tenant on a crop share basis of approximately 437 acres of land owned by Avey and its vice president Richard A. Black.
On September 27, 1985, Geekie first filed his "Petition Authorizing Harvesting, Storage, and Sale of Crops" in the bankruptcy court. That court, on October 15, 1985, authorized Geekie to do "everything necessary" with the crops, and to hold the balance of the proceeds until the issues involved in the alleged security interest of the Bank, the largest unsecured creditor in the case, could be resolved. The Bank had taken a second mortgage on the HiIligoss residence during the Spring of 1985 to secure the sum of $14,400.
Section 545 of the bankruptcy code governs this case, of which the pertinent Sections 545(3) and (4) provide as follows:
The Trustee may avoid the fixing of a statutory lien on property of the debtor to the extent that such lien--
(4) is a lien of distress for rent.
11 U.S.C. §§ 545(3) and (4). Under Illinois law, a landlord's lien for rent due is a statutory lien, see Ill. Rev. Stat. ch. 110, para. 9-316 (1985), which could be set aside by Geekie as trustee. For a landlord's lien on crops to arise, there of course had to be a landlord-tenant relationship between the relevant parties. Such a relationship could be evidenced by a written lease containing words of demise and a description of the property to be leased. See, e.g., Nat'l Distillers v. First Nat'l Bank, 804 F.2d 978 (7th Cir. 1986) (construing ambiguities in lease under Illinois law). The bankruptcy court found a landlord-tenant relationship between Monke and Hilligoss but not between Avey and Hilligoss. Accordingly, the court ordered Geekie to set aside Monke's landlord's lien upon Hilligoss' crops on the forty acres leased by Monke. Furthermore, Monke was to petition the court for payment of the lease rental as a cost of administration. See 11 U.S.C. § 503(b)(1)(A). The court also held that since Avey had possession of one-half of the crops it was entitled to under its crop share arrangement with Hilligoss, there was no landlord's lien to be set aside. In reviewing the legal conclusions determined by the bankruptcy court de novo, we must defer to the factual findings of that court. Bankruptcy Rule 8013;*fn1 In re: Agnew, 818 F.2d 1284 (7th Cir. 1987). With that standard in mind we review the Bank's assertions of error on appeal.
Upon construing the lease between Monke and Hilligoss, the bankruptcy court determined that a landlord-tenant relationship existed between the two parties, and therefore that Monke had a landlord's lien on the forty acres of crops that could be set aside by the trustee pursuant to Section 545. The court made no order concerning the award of costs of administration to Monke. Rather, the court suggested that
the rent provided for in the [Monke] lease may well be a cost of administration under 11 U.S.C. 503(b)(1)(A), as an actual, necessary cost and expense of preserving the estate. See 15 Collier ...