## Facts

- Mark R. and Kelly L. Janitell owned Colorado farmland and leased it to Janitell Grain & Cattle Company, Inc. (Janitell Grain) under a cash-rent lease providing that the Janitells retained no interest in crops grown on the land.
- The Janitells defaulted on a promissory note secured by a deed of trust on the property, and foreclosure proceedings began.
- While the foreclosure was pending, Janitell Grain planted a wheat crop on the leased land.
- State Bank of Wiley (State Bank) held a junior deed of trust. During the foreclosure proceedings, State Bank redeemed the property and became entitled to a public trustee’s deed.
- The Janitells filed suit against State Bank seeking to invalidate the foreclosure action. State Bank answered and Janitell Grain was joined as a party.
- The parties entered a court-approved settlement stipulation. It provided, among other things, that:
  - the stipulation was a full settlement of all claims among the Janitells, State Bank, and other parties to the action; and
  - upon issuance and recording of the public trustee’s deed, State Bank would have good and merchantable title to the premises.

- The stipulation granted the Janitells an option to purchase the property by a stated deadline. If they failed to exercise that option, the stipulation required the Janitells and Janitell Grain to vacate the property by a later date.
- The Janitells did not exercise the option and did not vacate. The trial court issued a writ of restitution and evicted the Janitells and Janitell Grain.
- State Bank sold the property to new owners, who later harvested the wheat that Janitell Grain had planted. The crop proceeds (and related government payments) were held pending resolution of competing claims.
- United Land Holdings, LLC (ULH) intervened, asserting entitlement to the wheat proceeds as assignee of Fidelity State Bank’s 1992 judgment and an earlier (1988) security agreement and financing statement describing, among other collateral, crops “now planted and/or hereafter to be planted and grown” on the land.
- On cross-motions for summary judgment, the trial court ruled that ULH had no enforceable security interest in the wheat and that Janitell Grain had no remaining interest in the wheat under the settlement stipulation. The court entered summary judgment for State Bank awarding the crop proceeds and associated government payments.

## Issues

1. Did ULH have a valid, enforceable security interest in the wheat crop (and related payments) that was superior to State Bank’s claim, where ULH’s rights were asserted through the Janitells and the lease gave the Janitells no interest in tenant-grown crops?
2. Did Janitell Grain retain any right to the wheat crop or its proceeds after the court-approved settlement stipulation, when the Janitells failed to exercise the purchase option and the tenant was required to vacate?

## Decision

- The Colorado Court of Appeals affirmed the summary judgment for State Bank.
- The court agreed that ULH could not establish an enforceable security interest in the wheat proceeds based on the assigned security agreement and financing statement.
- The court further agreed that Janitell Grain had no remaining interest in the crop in light of the settlement stipulation’s scope and purpose, coupled with the failure to exercise the purchase option and the ensuing eviction.
- State Bank was entitled to the wheat-crop proceeds and the related government support payments.

## Legal Principles

- Under U.C.C. § 9-203, a security interest attaches only if the debtor has rights in the collateral; a landowner-lessor who contracted for cash rent and disclaimed any crop interest has no rights in tenant-grown crops for attachment purposes.
- An assignee asserting rights through a creditor must prove the existence and continuing effectiveness of the claimed security interest; a prior judgment on the underlying obligation may defeat reliance on an earlier security agreement as the source of a current Article 9 interest.
- A court-approved settlement stipulation resolving all claims and providing for good and merchantable title to the premises can bar later assertions of rights inconsistent with that settlement, including claims to growing crops tied to continued possession of the land.

## Conclusion

The court affirmed judgment awarding the wheat proceeds to State Bank because ULH’s claimed crop lien could not attach through the Janitells, who had no crop rights under the cash-rent lease, and because Janitell Grain’s asserted interest in the wheat was foreclosed by the settlement stipulation and the failure to exercise the repurchase option followed by eviction.


Janitell v. State Bank of Wiley, 919 P.2d 921 (1996)