## Facts

- Dr. W. B. Cleveland and Katherine Cleveland owned farmland in Fayette County, Tennessee.
- On January 17, 1967, the Clevelands leased their land to Jack McNabb under a written five-year farm lease.
- The lease required annual rent of $50 per acre for acreage allotted to cotton by the government and $10 per acre for acreage actually planted in soybeans.
- For the 1968 crop year, the cotton allotment on the leased land was 352.5 acres, and McNabb planted 618.7 acres of soybeans.
- McNabb failed to pay all rent due for the 1968 crop year.
- The Clevelands claimed a Tennessee statutory landlord’s lien on crops grown on their land to secure the unpaid rent.
- McNabb delivered cotton grown on the Clevelands’ land to a cotton gin, which issued tickets indicating the cotton was produced on the Clevelands’ farm.
- After ginning, the cotton was taken directly to a warehouse, which issued negotiable warehouse receipts for the bales; the receipts referenced the gin tickets and listed McNabb as the producer.
- McNabb took the warehouse receipts to a local USDA office and obtained a Commodity Credit Corporation (CCC) loan, signing loan papers stating the cotton was free of liens.
- USDA regulations required cotton placed into the CCC loan program to be lien-free, but the USDA clerk did not ask where the cotton was grown or whether it was grown on leased land.
- A copy of McNabb’s lease was on file at the local USDA office.
- McNabb did not repay the loan, and under the loan terms the cotton became the property of the United States/CCC.
- The Clevelands sued McNabb for unpaid rent and sued CCC/United States and other crop recipients to enforce the landlord’s lien against the crops or their value to the extent needed to satisfy the rent debt.

## Issues

1. Whether McNabb proved an enforceable oral modification to the written five-year lease that reduced or eliminated rent on certain acreage.
2. Whether Tennessee law gave the Clevelands a valid statutory landlord’s lien on the 1968 crops grown on the leased premises to secure unpaid rent.
3. Whether the landlord’s lien could be enforced against third parties who received the crops or documents of title, including CCC/United States after taking negotiable warehouse receipts through the CCC loan program.
4. Whether waiver, estoppel, or lack of filing/recording defeated the landlord’s lien, and whether any waiver had to be in writing.

## Decision

- The court entered judgment against McNabb for unpaid 1968 rent in the amount of $23,812.00.
- The court rejected McNabb’s claimed oral modification as not proved and, in any event, unenforceable under the Tennessee Statute of Frauds.
- The court held the Clevelands had a valid Tennessee statutory landlord’s lien on crops grown on their land to secure payment of rent.
- The court held the lien arose by operation of law and did not depend on the landlords’ possession or control of the crops, nor on filing or recording the lease or lien.
- The court rejected defenses of waiver and estoppel because no written waiver of the landlord’s lien was shown.
- The court held CCC/United States did not take the cotton free of the landlord’s lien, given the lien-free requirement in the loan program, the lease’s presence in USDA files, and the failure to reasonably check for landlord interests before accepting the receipts.
- The court enforced the landlord’s lien against crops or proceeds in the hands of the non-tenant defendants, including CCC/United States, to the extent necessary to satisfy the rent judgment.

## Legal Principles

- A written multi-year lease controls rent obligations absent proof of a valid modification; a material oral modification is barred by the Statute of Frauds.
- Under Tennessee law, a landlord has a statutory lien on crops grown on leased land to secure payment of rent.
- The Tennessee landlord’s crop lien attaches automatically and is not conditioned on possession of the crops or on filing/recording.
- Waiver of a Tennessee statutory landlord’s lien must be in writing; landlord inaction during the tenant’s marketing of crops does not, by itself, extinguish the lien.
- A party that takes crops or negotiable warehouse receipts may remain subject to a statutory landlord’s lien where the party has notice, or where the transaction’s rules call for checking that collateral is lien-free and reasonable checks are not made.

## Conclusion

The court enforced the written lease’s rent terms, awarded the Clevelands $23,812.00 for unpaid 1968 rent, and held that Tennessee’s statutory landlord’s crop lien attached to crops grown on the leased land and could be enforced against CCC/United States and other crop recipients despite negotiable warehouse receipts, because no written waiver existed and CCC failed to reliably confirm the cotton was lien-free.


Cleveland v. McNabb, 312 F. Supp. 155 (1970)