The debtor borrowed money from the creditor (the USDA Farm Service Agency) and granted a security interest in his crops to the creditor. The creditor perfected its security interest and remained perfected in the crops over the years, by filing continuation statements over a period of roughly ten years. The debtor rented land on which he farmed. Later, the debtor defaulted on the loan to the creditor and vacated the farmland. The debtor’s landlord sold the crops although the creditor had approached the landlord and suggested they settle with a 50/50 split in the proceeds from the sale of the crops. In this matter, the creditor seeks to recover the proceeds from the sale of the crops from the landlord.
In United States v. Forrest, No. 1:19-CV-564, 2025 WL 1919490, 2025 U.S. Dist. LEXIS 131664 (M.D. Pa. July 11, 2025), the court ruled for the creditor. The landlord claimed he was entitled to a super priority under Pennsylvania’s Landlord and Tenant Act of 1951, 68 Pa. Stat. Ann. 250.302 et. seq. (Purdon 1987), but the landlord had failed to comply with the technicalities of the statute and was therefore not entitled to a priority. Rather, he was guilty of conversion of the crops.
By: The Editors