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Czerkies v. AG Acceptance Corp.

December 9, 2004

EDWARD CZERKIES, AS TRUSTEE UNDER THE EDWARD CZERKIES DECLARATION OF TRUST DATED MAY 2, 1985, AND CZERKIES LIMITED PARTNERSHIP, PLAINTIFFS-APPELLEES,
v.
AG ACCEPTANCE CORPORATION; CROP PRODUCTION SERVICES; COMMODITY CREDIT CORPORATION; CARGIL, INC.; WILLIAM MYRE, SR.; WILLIAM MYRE, JR.; LYNDA MYRE; AND MELVA MYRE, DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of the 13th Judicial Circuit La Salle County, Illinois, No. 02-L-238, (Consolidated with 03--MR--10) Honorable Eugene P. Daugherity, Judge, Presiding.

The opinion of the court was delivered by: Justice Schmidt

PUBLISHED

This is a declaratory judgment action in which plaintiffs, Edward Czerkies, as trustee under the Edward Czerkies Declaration of Trust dated May 2, 1985, and Czerkies Limited Partnership, ask the court to declare that their landlord's crop lien has priority over all other liens, including the lien held by defendant, AG Acceptance Corporation (AGAC). The trial court found that the plaintiffs' lien had priority and granted plaintiffs' motion for summary judgment. Only AGAC appeals.

BACKGROUND

AGAC is the holder of a promissory note in the amount of $1.2 million which was executed by William Myre, Sr., William Myre, Jr., Lynda Myre and Melva Myre on March 6, 2000. This promissory note is secured by property owned by the plaintiffs and crops grown by the Myres. AGAC's security interest includes a lien on all crops growing or to be grown by the Myres on the property owned by the plaintiffs and the proceeds thereof. AGAC's lien existed prior to the planting of the 2002 crops.

The plaintiffs are owners of three parcels of farmland that were leased to William Myre, Sr., for the 2002 crop year. The lease ran from March 1, 2002, through February 28, 2003. The total rent of $124,847 for the three parcels was never paid. The plaintiffs have a statutory lien upon the crops grown on the property pursuant to section 9--316 of the Illinois Code of Civil Procedure (735 ILCS 5/9--316 (West 2002)).

A landlord's lien on crops and proceeds created by section 9--316 is a priority lien that secures the payment of rent and the faithful performance of other lease terms. Before July 1, 2001, it was not necessary to file a Uniform Commercial Code (UCC) (810 ILCS 5/1-1 et seq. (West 2000)) financing statement with the Secretary of State's office to perfect the lien. The landlord's lien was a priority lien that automatically trumped any other perfected security interests, even those pre-existing the landlord's lien. 735 ILCS 5/9--316 (West 2000).

Section 9--316 was amended twice during the relevant time period. The first amendment, effective July 1, 2001, required a landlord to perfect his lien by filing a financing statement with the Secretary of State in order for it to have priority over any other agricultural lien or any security interest filed pursuant to article IX of the UCC. 735 ILCS 5/9--316 (West 2002). This version of the statute was in effect at the time the crops were planted on plaintiffs' property.

A second amendment, effective on August 21, 2002, before the crops were harvested, deleted the requirement that the landlord must file a financing statement with the Secretary of State in order to perfect the lien. 735 ILCS 5/9--316 (West 2002). Essentially, on August 21, 2002, the law reverted to pre-July 1, 2001, status, and liens created by section 9--316 have priority without the need to file the UCC financing statement.

On January 14 and 28 of 2003, plaintiffs filed UCC financing statements with the Secretary of State.

On January 16, 2003, plaintiffs filed a three-count complaint for declaratory judgment, only two of which are at issue in this appeal. Count II requested the court to enter a finding that plaintiffs' statutory lien takes priority over any other liens on the 2002 crops or proceeds of the crops raised on the three properties owned by the plaintiffs. Count III requested the court to order Cargil, Inc., which accepted the crops grown by Myre and held the proceeds of the sale of the crops, to issue a check to plaintiffs in the sum of $123,387.11, which is the amount of rent due. The trial court granted the plaintiffs' motion for summary judgment on all counts.

ANALYSIS

A. Standard of Review

Since this case primarily deals with the interpretation of a statute and the granting of summary judgment, the proper standard of review is de novo. P.R.S. International, Inc., v. Shred Pax Corp., 184 Ill. 2d 224, 233-34, 703 N.E.2d 71, 75-76 (1998); Lucas v. Lakin, 175 Ill. 2d 166, 171, 676 N.E.2d 637, 640 (1997); ...


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