Opinion
Case No. 97-16456-SSM
January 2, 1998
Mr. Sheffield Edwards, Hunton Williams, Washington DC, for Debtor, Pro se
William McCarron, Esquire, Gold Stanley, P.C., Alexandria, VA, Of Counsel for Richard E. Curtis, trustee
Gerald M. O'Donnell, Esquire, Alexandria, VA, for Chapter 12 trustee
MEMORANDUM OPINION AND ORDER
This matter is before the court on the debtor's motion for an expedited hearing on his motion filed on December 18, 1997, "To Release the Potato Crop and Trellis Equipment." Pursuant to Local Rule 9013-1(L), the court determines that, as to the debtor's potato crop, a hearing is not necessary as the facts are adequately set forth in the debtor's motion. For the reasons stated in this opinion, the court concludes that under applicable state law the debtor is not entitled to harvest a potato crop he had planted on leased property where the lease was terminated prepetition due to his default. With regard to the trellis equipment, however, there is insufficient evidence in the record, and therefore, the court will set that issue for an evidentiary hearing.
Sheffield Edwards (the "debtor"), who is representing himself pro se, filed a voluntary petition for relief under chapter 12 of the Bankruptcy Code in this court on August 29, 1997. A plan has not yet been proposed. On September 18, 1997, Gerald M. O'Donnell was appointed as the chapter 12 trustee.
Prior to the filing of his petition, the debtor had been a tenant on approximately 32 acres of undeveloped land in Loudoun County, Virginia, on which the he conducted "farming" operations consisting of both commercial composting of organic materials and growing several crops. Sometime in early August 1997, Richard E. Curtis, trustee (the "landlord") obtained a judgment for possession of the property in an unlawful detainer action in the General District Court for Loudoun County due to the debtor's default under the lease.
On December 2, 1997, the court held a hearing on the trustee's motion to dismiss the case for failure to file schedules and an inability to formulate a plan of reorganization, which the court continued to January 20, 1998. At the December 2, 1997, hearing, the court expressed concern, but reserved ruling, as to whether the debtor's composting and other activities constitute a "farming operation" under § 101(21), Bankruptcy Code. At the December 2, 1997, hearing, the debtor represented to the court that he owns approximately 15 acres of land about 7 miles south of Leesburg, Virginia. The debtor also represented that he had about $60,000 of income derived from farming operations in 1996, with about 15% of this amount arising from farming vegetables and about 85% from his commercial composting operations.
At a hearing held on September 12, 1997, on the landlord's motion for relief from the automatic stay and for a preliminary injunction against the debtor from conducting his composting activities, Mr. Curtis testified that he is both the trustee and beneficial owner of a trust that technically owns the property in question.
The exact nature of the debtor's default is unclear from the record. None of the pleadings filed in either the debtor's main case or the adversary proceeding contain a copy of the judgment of possession nor has the court received evidence in prior hearings that would clarify the debtor's default. Thus, it is unclear whether the debtor's default under the lease is a failure to pay rent or the conducting of composting operations in violation of state environmental laws, or for some other reason. Suffice it to say, however, that the state court found that the lease clearly was terminated due to some default by the debtor.
The debtor's bankruptcy filing was precipitated by the imminent execution, scheduled for September 5, 1997, of a writ of possession in favor of the landlord. On September 5, 1997, about a week after the debtor filed for bankruptcy, the landlord filed a motion for relief from the automatic stay in order to enforce the writ of possession. With the motion, Mr. Curtis also filed a separate complaint for an injunction to prohibit the debtor from accepting any further waste on the property for composting. Curtis, Tr. v. Edwards (In re Edwards), Adv. Proc. No. 1323 (Bankr. E.D. Va., Sep. 5, 1997).
The court granted Mr. Curtis's motion for an expedited hearing, both on the motion for relief from the automatic stay and on the motion for a temporary restraining order or preliminary injunction. The hearing was set for September 12, 1997, at 9:30 a.m. The debtor, although served with the notice of hearing, was not present when the matter was called. The court took evidence in open court in the form of testimony and exhibits and found that relief from stay was appropriate. The court also found that proper grounds existed for issuance of a preliminary injunction. Orders were signed in open court granting relief from the automatic stay and enjoining the debtor from accepting any further waste on the property for composting.
Shortly after the conclusion of the hearing, the debtor arrived at court. Because Mr. Curtis and his attorney were still present in the courthouse, the court recalled the matter and permitted the debtor, who explained that he was late because of mechanical problems with his farm truck (which was his only means of traveling to court), to file in open court his pleadings objecting to the requested relief and to present argument. The court, after reviewing the pleadings and hearing from the debtor, concluded that sufficient grounds had not been shown under Fed.R.Civ.P. 59(e), as incorporated into bankruptcy proceedings under F.R.Bankr.P. 9023, for vacating or modifying either the order granting relief from the automatic stay or the preliminary injunction. The order granting relief from the automatic stay and the preliminary injunction were entered on the docket on September 15, 1997.
Attached as an exhibit to the debtor's answer to the motion for relief from the automatic stay was a copy of the lease between the parties. The lease is relatively short (about a page and a half) and is silent on most issues relevant to the present controversy. The lease was entered into on November 11, 1995, and granted the debtor the right to "use the premises for composting and any other agricultural use permitted by Loudoun County." In addition, the lease contains the following provision:
The term of this LEASE shall be two (2) years and it is understood that it will be extended subject to mutual agreement of the parties hereto. Should the LESSOR find it necessary to terminate this LEASE prior to its expiration of the term, the LESSOR agrees to give the LESSEE three (3) months advance notice if said notice is given from July through March and five (5) months advance notice if given in April, May or June. If this LEASE is terminated prior to its expiration, LESSOR grants rent free use for the final two (2) months.
The lease is otherwise silent as to which party owns whatever crops remain on the property at the end of the lease.
The debtor filed the present motion on December 18, 1997. In the motion, the debtor recites that he has attempted to negotiate with the landlord for him (the debtor) to harvest an approximately $10,000 fall tomato crop and to remove his trellis wires, posts, and poles on which the tomatoes grew; however, the motion alleges that the landlord has refused all such offers. The motion further recites that the tomato crop has since spoiled due to the first freeze that occurred in the first week of November. The debtor, however, would still like to recover the trellis equipment, worth approximately $1,000, and about $700 of "seed potatoes" that would be used to start the debtor's potato crop on his own land next year. The motion recites that the potato crop must be harvested before the "ground freezes to a depth of 4 or 5 inches" which usually occurs around the 5th to the 10th of January in this area. Neither the landlord nor the chapter 12 trustee has filed a response to the motion, but the time under Local Bankruptcy Rule 9013-1(H) for filing a response has not yet expired.
Conclusions of Law and Discussion I.
This court has jurisdiction of this motion under 28 U.S.C. § 1334 and 157(a) and the general order of reference entered by the United States District Court for the Eastern District of Virginia on August 15, 1984. Under 28 U.S.C. § 157(b)(2)(A) and (E), this is a core proceeding in which final orders and judgments may be entered by a bankruptcy judge, subject to the right of appeal under 28 U.S.C. § 158.
II.
The motion currently before the court essentially seeks two different kinds of relief — one to recover a potato crop on property that the debtor formally leased, and one to recover personal property that the debtor used in farming operations that remains on the landlord's property. Because each item requires a different legal analysis, the court will address each in turn.
A.
The court first addresses whether the debtor may harvest the potato crop on the property that he formerly leased. The debtor's motion implicates the common law doctrine of emblements under which a tenant under a lease of real property may possess a right to harvest crops remaining on the property at the end of the lease. The term "emblements" is defined as "[c]rops annually produced by labor of tenant. . . . The doctrine of emblements denotes the right of a tenant to take and carry away, after his tenancy has ended, such annual products of the land as have resulted from his own care and labor." Black's Law Dictionary 522 (6th ed. 1990). When the tenant possesses the right to emblements, the tenant has the right to harvest the "way-going crop." The doctrine of emblements developed at the common law as a means of protecting one who possesses land, either through a leasehold or life-tenancy, for an uncertain period of time. Scott v. Hyde, 440 N.W.2d 528, 531 (S.D. 1989); Leigh v. Lynch 493 N.E.2d 1040, 1042 (Ill. 1986); Hamilton v. Winter, 281 N.W.2d 54, 59 (N.D. 1979); Falk v. Amsberry, 569 P.2d 558, 561 (Or. 1977); Finley v. McClure, 567 P.2d 851, 853 (Kan. 1977); Koch v. Monaghan, 205 P.2d 652, 654 (Colo. 1949); Restatement (Second) of Property, § 12.3, comment h. (1977) ("The tenant is not entitled to harvest a crop, after the lease ends, that is planted at a time when the tenant can foresee the date the lease will terminate, if there is not sufficient time between the planting of the crop and such foreseeable termination date for the crop to mature, unless [equity requires a different result.]"). The purpose underlying the doctrine was to promote justice, encourage farming, protect the tenant's interest in being adequately compensated for his or her labor, and to prevent the tenant from being deterred from attempting to farm certain types of crops. Leigh, 493 N.E.2d at 1042; Finley, 567 P.2d at 853. Clearly, one who plants crops under a lease for a tenancy for years does so at his or her own risk that the crops will not be available for harvest before the end of the tenancy. Harris v. Carson, 34 Va. 632, 637 (7 Leigh 748) (1836).
"Way-going crop" has been defined as "[a] crop of grain sown by a tenant for a term certain, during his tenancy, but which will not ripen under after the expiration of his lease. In the absence of an express agreement to the contrary tenant is entitled thereto." Black's Law Dictionary 1593 (6th ed. 1990); see also Leigh v. Lynch 493 N.E.2d 1040, 1042 (Ill. 1986).
Under Va. Code Ann. § 55-249, "the right to emblements shall be as at common law" subject to exceptions not relevant here. In Virginia, where land is leased for a fixed number of years, and the lease is silent as to who is entitled to the crop growing on the land at the end of the term of the lease, the tenant whose lease term expires is not entitled to the "way-going crop." Harris v. Carson, 34 Va. 632, 637 (7 Leigh 748) (1836); cf. McCormack v. Terry, 147 Va. 448, 456, 137 S.E. 452, 454 (1927) (noting that if an owner of property mortgages land and then leases it to a tenant who plants crops, and the mortgage is foreclosed before harvest, a mortgagee's title to crops on the property is superior to that of the tenant, unless the tenant planted crops with the mortgagee's consent). However, when the lease can at least be implied to permit a tenant for a term of years to farm during the last year of the tenancy, the tenant is entitled to a way-going crop. Mason v. Moyers, 41 Va. 606, 611, 614-15 (2 Rob. 721, 723-25) (1844); see also Johnson v. Anderson Ranch Co., 384 P.2d 271, 272 (Mont. 1963) (noting that where the lease itself recognized the right to farm in the last year of the lease, the tenant is entitled to harvest the way-going crop, even where the lease is silent as to who is entitled to the crops).
In Mason, the tenant entered into a three year lease, with an annual rent to be paid at the end of the year. Mason, 41 Va. at 607 (2 Rob. at 722). The lease provided, however, that at least one-half of the land was to be clear at all times, and that if the land were sold by the landlord during the term of the lease, the tenant was to give up his possession of the property at the end of that year. Id. The land at issue in Mason was sold shortly after the third year of the lease commenced and the tenant requested from the purchasers that he be allowed to farm the property until the end of the year, as the lease provided. Id. at 608-09 (2 Rob. at 722-23). The purchasers refused, instead asserting a right to any crops that the tenant planted since the purchasers were now the owners of the property. Id. at 609 (2 Rob. at 723). The tenant then sued in equity for an abatement of the yearly rent in an amount that would compensate him for his loss of a way-going crop in the last year of the lease. Id. The then-Supreme Court of Appeals of Virginia held that the tenant was entitled to a reduction of rent because the lease impliedly allowed him a way-going crop. Id. at 611, 613-15 (2 Rob. at 723-25). The court reasoned that such a right could be implied by both the fact that the prior tenant was entitled to a way-going crop and because the lease required that only one-half of the land be clear of crops at any time, inferring that the tenant could farm the other half of the property and be entitled to a way-going crop. Id. Otherwise, the court reasoned, there would be no benefit under the lease for tenant. Id. at 611-12 (2 Rob. at 723-24).
Mason is an old case, and its continuing validity is uncertain. This court need not, however, reach the issue of how the Virginia Supreme Court today would determine whether an out-going tenant is entitled to emblements when the lease is silent on the matter, or whether a right to emblements could be inferred from the lease. It is well settled that a tenant is entitled to emblements only when the lease is terminated by no fault of the tenant. E.g., Finley, 567 P.2d at 851; Bolzer v. Hamilton, 103 N.W.2d 183, 186 (S.D. 1960); Taggart v. Battaglia, 915 P.2d 1001, 1003 (Ct.App.Or. 1996). One commentator has noted that:
As a general rule, when a tenancy comes to an end at a time that could not have been previously ascertained by the tenant, without his fault and without any action on his part to bring about such a termination, the tenant will ordinarily be entitled to take the annual crops planted by him before the lease terminated. . . .
On the other hand, where the tenant terminated the tenancy by his own acts or misconduct, he is not entitled to the emblements. Similarly, a tenant for years would not be entitled to emblements since the termination of the lease is certain and he can take measures accordingly.
2 Powell on Real Property § 18.01[7], at 18-22 to 23 (Patrick J. Rohan, ed. 1997) (emphasis added) (footnotes omitted). The underlying policy justifying this exception is that the judicially created right to emblements is an equitable remedy that sought to curb the injustice that could occur when a tenant farmed property under a lease that had an indefinite time period which could be terminated at any time. When the tenant is the party who has caused the lease to terminate, there simply is no reason for the tenant to be protected in equity by the right to emblements.
Turning to the present case, the court concludes that the debtor simply does not possess any right to emblements, and consequently, he does not have the right to access the landlord's property to harvest his potato crop. While the exact nature of the debtor's default under the lease — whether nonpayment of rent or noncompliance with state environmental laws — is unclear from the record, what is clear is that the landlord obtained a valid, lawful writ of possession in state court prior to the expiration of the lease due to some fault that the state court found on the debtor's part. Because the debtor is the one at fault with respect to the termination of the lease, the debtor is not entitled to emblements. Accordingly, the court will deny that portion of the debtor's motion.
B.
The court now turns to the debtor's personal property that remains on the landlord's property — the trellis equipment consisting of wires, posts and poles that the debtor estimates has a value of approximately $1,000. At the conclusion of a lease, a tenant retains ownership of all his or her personal property, and is generally permitted to remove all such items from the leased premises. See Mullins v. Sturgill, 192 Va. 653, 660, 66 S.E.2d 483, 487-88 (1951) (holding that failure to remove personal property from leased premises within the time specified in the lease does not divest the tenant of title to the property). However, a different situation arises when personal property is in some way attached or annexed to the leased property. Simply stated, when the parties to the lease intend property to become a permanent part of the leased premises — commonly referred to as a "fixture" — such personal property "becomes" part of the real property and title passes to the landlord at the conclusion of the lease. The controlling case in Virginia on whether personal property becomes, or has the attributes of a fixture, is Danville Holding Corp. v. Clement, Jr., 178 Va. 223, 16 S.E.2d 345 (1941). In Danville, the then — Supreme Court of Appeals reasoned that while it is difficult to set forth a clear rule for determining whether an item is a fixture and that each case must be decided on its own facts, it noted that the nature of the article and its uses or purposes are important factors to consider. Id. at 231-32, 16 S.E.2d at 348-49. In attempting to formulate some type of test for determining when an item can be considered a fixture, the court set forth the following factors to consider, which can be briefly summarized as follows: (1) whether the personal property is either actually or constructively attached to the real property; (2) how both the personal and real property has adapted to the purpose for which the personal property was connected to the real property; and (3) whether the owner of the personal property intended to make it a permanent addition to the real property. Id. at 232, 16 S.E.2d at 349.
A "fixture" is defined as "[a]n article in the nature of personal property which has been so annexed to the realty that it is regarded as part of the real property." Black's Law Dictionary 638 (6th ed. 1990).
Having considered the applicable law and the facts recited in the motion, the court concludes that it cannot decide this portion of the motion as the record now stands. The test for determining whether personal property has developed the attributes of a fixture is a fact intensive analysis requires the taking of evidence. Additionally, the court can perceive no reason why that portion of the motion, unlike the part to recover the potato crop, would need to be heard on an expedited basis. Accordingly, the court will set this part of the motion for an evidentiary hearing on January 20, 1998, at 1:30 p.m. to be heard at the same time as the chapter 12 trustee's motion to dismiss the case.
ORDER
For the foregoing reasons, it is ORDERED:
1. The debtor's motion to release the potato crop is DENIED.
2. The debtor's motion to release trellis equipment is set for hearing on January 20. 1998. at 1:30 p.m. in Courtroom III, United States Bankruptcy Court, 200 South Washington Street, Alexandria, Virginia.
3. The clerk will mail a copy of this memorandum opinion and order to the debtor,