## Facts

- Dr. Klaus Meyhoeffer owned approximately 530 acres of farmland in Franklin Parish, Louisiana, and leased the land to David Wallace, a farmer.
- The lease required Wallace to pay annual rent equal to the greater of (a) $32,000 or (b) one-fifth of the proceeds from the sale of crops grown on the leased land.
- Meyhoeffer recorded the lease in the parish conveyance records, but he did not record or file notice in Louisiana’s agricultural central registry.
- In 1998, Wallace borrowed operating funds from Winnsboro State Bank & Trust Company (the bank) to finance his farming activities.
- The bank took a security interest in Wallace’s crops and/or the proceeds of those crops and perfected that interest by filing in the agricultural central registry as required by Louisiana law.
- Wallace failed to pay both his 1998 rent to Meyhoeffer and his 1998 obligation to the bank.
- The bank took possession of the 1998 crop proceeds and applied the proceeds to Wallace’s outstanding debt.
- Meyhoeffer sued Wallace and the bank, claiming his rights as lessor gave him a superior claim to the crop proceeds for payment of the unpaid 1998 rent.
- The trial court held the bank’s perfected interest had priority over Meyhoeffer’s claim because the bank filed in the central registry and Meyhoeffer did not. Meyhoeffer appealed.

## Issues

1. Does a lessor’s privilege or claim to crops and crop proceeds for unpaid rent take priority over a lender’s security interest when the lender perfected by filing in Louisiana’s agricultural central registry but the lessor did not?

## Decision

- The Louisiana Court of Appeal, Second Circuit, affirmed.
- The bank’s perfected security interest, filed in the agricultural central registry, ranked ahead of Meyhoeffer’s unfiled lessor claim.
- Meyhoeffer was not entitled to collect the 1998 rent from the 1998 crop proceeds taken by the bank and applied to Wallace’s debt.

## Legal Principles

- Louisiana’s statutory scheme governing security interests and privileges in farm products uses the agricultural central registry as the key public notice mechanism for priority against third parties.
- A creditor that properly perfects a security interest in crops and crop proceeds through the central registry obtains priority over competing interests that are not perfected through that system.
- Recording a farm lease only in parish conveyance records does not provide the type of notice required to gain priority in crops or crop proceeds against a third-party secured creditor that perfected in the central registry.
- A lessor’s privilege for agricultural rent may arise under Louisiana law, but its ranking against a perfected secured creditor is affected by whether the lessor provided the statutory central-registry notice.

## Conclusion

Meyhoeffer v. Wallace holds that, in a priority contest over crop proceeds, a bank that perfects its security interest by filing in Louisiana’s agricultural central registry is paid ahead of a lessor who recorded the lease only in parish records and failed to file in the central registry, leaving the lessor to pursue the tenant rather than the encumbered proceeds.


Meyhoeffer v. Wallace, 792 So. 2d 851 (2001)