Chessport Millworks, Inc. v. Solie

522 P.2d 812, 86 N.M. 265
CourtNew Mexico Court of Appeals
DecidedMay 1, 1974
Docket1315
StatusPublished
Cited by10 cases

This text of 522 P.2d 812 (Chessport Millworks, Inc. v. Solie) is published on Counsel Stack Legal Research, covering New Mexico Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chessport Millworks, Inc. v. Solie, 522 P.2d 812, 86 N.M. 265 (N.M. Ct. App. 1974).

Opinions

OPINION

WOOD, Chief Judge.

The trial court held that a lien on personal property based on financing statements and security interests was superior to a landlord’s lien for rents due and to become due. It concluded that defendant had wrongfully withheld certain property from plaintiff, gave judgment for plaintiff in its replevin action but held that damages for the wrongful withholding had not been proved. Defendant appeals. The issues discussed are: (1) priority as between the statutory landlord’s lien and a security interest under the Uniform Commercial Code; (2) whether there was a landlord’s lien; and (3) the extent of the landlord’s lien.

Defendant leased real property to the partnership of Phillips and Kight, doing business as New Mexico Millworks. The term of the lease was November 1, 1965 to October 31, 1973. The rent was $225.00 per month.

Phillips incorporated the business in April, 1967; thereafter, it was known as New Mexico Millworks, Inc. This corporation occupied and used the premises covered by the lease and paid all rentals pursuant to the lease through September 1, 1971. This corporation is now defunct.

During the existence of New Mexico Millworks, Inc., Murdock advanced money to the corporation and took security interests in property owned by the corporation. The earliest security agreement and financing statement referred to in the trial court’s findings of fact is dated September 17, 1970.

On December 16, 1971, New Mexico Millworks, Inc. notified Murdock that it would be unable to pay the indebtedness and also notified Murdock of its decision to deliver possession of all collateral to Murdock.

On December 17, 1971, Murdock gave notice of private sale to be held on January 6, 1972. Defendant received this notice. The sale was held as scheduled. At the sale, Murdock purchased all inventory and assets of New Mexico Millworks, Inc. Thereafter, Murdock transferred title to the inventory and assets to plaintiff. Plaintiff is a corporation; Murdock is its sole stockholder.

On December 23, 1972, defendant, by letter, informed New Mexico Millworks, Inc. and Murdock that he claimed a landlord’s lien on property of New Mexico Mill-works, Inc. located in or on the leased premises.

On January 21, 1972, defendant prevented plaintiff from removing property from the leased premises. On that date he locked the leased premises. Some of the property on the premises had belonged to New Mexico Millworks, Inc. prior to the private sale.

On January 26, 1972, defendant gave notice that unless the indebtedness claimed to be owing from New Mexico Millworks, Inc. was paid within 10 days, [see § 61 — 3— 11, N.M.S.A.1953 (Repl.Vol. 9, pt. 1, Supp.1973)], the property held by defendant would be sold pursuant to § 61-3-12, N.M.S.A.1953 (Repl.Vol. 9, pt. 1).

Priority as between landlord’s lien and security interest.

This point assumes that defendant had a valid landlord’s lien against property of New Mexico Millworks, Inc. which was located on the leased premises. No attack is made on Murdock’s security interest, the private sale and the subsequent transfer of title of property purchased at the sale from Murdock to plaintiff. The issue is which lien was prior — the landlord’s lien or the lien based on the security interest.

The article of the Uniform Commercial Code dealing with secured transactions contains §§ 50A-9-101 through 50A-9-507, N.M.S.A.1953 (Repl.Vol. 8, pt. 1). Section 50A-9-104(b), supra, exempts a landlord’s lien from the article on secured transactions. Section 50A-9-104(c), supra, also exempts “a lien given by statute” except as provided in § 50A-9-310, supra. Compare § 50A-9-102(2), supra. Under the fact situation of § 50A-9-310, supra, there may be a lien having priority over a perfected security interest, such as Murdock’s. Defendant does not claim a priority on the basis of § 50A-9-310, supra.

The landlord’s lien is provided by § 61-3-4, N.M.S.A.1953 (Repl.Vol. 9, pt. 1). Section 61-3-8, N.M.S.A.1953 (Repl.Vol. 9, pt. 1) states: “The priorities of liens provided for by this act [61-3-1 to 61-3-13] shall be fixed as to several lien claimants as of the time of serving notice or of filing suit as provided in section * * * [61-3-11].” This provision pertains to priority between liens established by §§ 61-3-1 to 61-3-13, supra; it does not apply to liens not covered by these sections. Gathman v. First American Indian Land, Inc., 74 N.M. 729, 398 P.2d 57 (1965). Murdock’s security interest is not covered by these sections.

Accordingly, in this case, no statutory provision determines the priority between the landlord’s lien and the security interest.

In Gathman v. First American Indian Land, Inc., supra, the issue was the priority between a judgment lien which attached in February, 1962 and a landlord’s lien based on a lease entered in April, 1961. Gathman, supra, held the landlord’s lien to be prior, stating: “The landlord’s statutory lien attached at the beginning of the tenancy for rental due or to become due under the terms of the lease.”

New Mexico decisions, relied on by plaintiff, are not to the contrary. Owen v. Waukesha Engine and Equipment Company, 74 N.M. 59, 390 P.2d 439 (1964) does not involve a landlord’s lien. In Dees v. Dismuke et al., 30 N.M. 528, 240 P. 198 (1925), the landlord’s lien was conceded to be prior to a chattel mortgage entered subsequent to the original lease. The issue litigated was the priority between the chattel mortgage and a second lease executed subsequent to the chattel mortgage. Ross v. Overton, 29 N.M. 651, 226 P. 162 (1924) does not deal with priority of liens. In Ross, supra, a landlord forcibly took possession of a tenant’s property. The issue involved the enforcement of a landlord’s lien.

Under Gathman v. First American Indian Land, Inc., supra, defendant’s statutory landlord’s, lien attached on November 1, 1965. Murdock’s security interest was perfected September 17, 1970. The landlord’s lien should have been accorded priority.

Whether there was a landlord’s lien.

Plaintiff would avoid the priority to be accorded the landlord’s lien on the basis that no landlord’s lien existed. The several contentions, and our answers, follow.

(a) Plaintiff seems to contend that once the sale on January 6, 1972, occurred, title to the property was exclusively in Murdock. On this basis, it is asserted that defendant had no right to “seize” the property on January 21, 1972. The answer is that if defendant had a landlord’s lien it was prior to any security interest held by Murdock and the private sale to Murdock did not eliminate the prior landlord’s lien. See § 50A-9-504(4), supra.

(b) Relying on Ross v. Overton, supra, plaintiff asserts that defendant wrongfully seized the property on January 21, 1972. The answer is that there was no seizure. The property was on defendant’s premises—the leased land. What defendant did was to prevent plaintiff from removing the property. If defendant had consented to the removal of the property, he would have lost his lien. Section 61—3— 7, supra.

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Chessport Millworks, Inc. v. Solie
522 P.2d 812 (New Mexico Court of Appeals, 1974)

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522 P.2d 812, 86 N.M. 265, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chessport-millworks-inc-v-solie-nmctapp-1974.