#### TOBACCO GROWERS CO-OPERATIVE ASSOCIATION v. S. S. BISSETT.

(Filed 20 February, 1924.)

Contracts — Co-operative Marketing — Landlord and Tenant — Statutes— Liens — Possession—Trusts—Nonnxemfoer Tenant — Penalties-.

Tbe landlord and tenant act (C. S., 2355) gives tbe landlord only a preferred lien on bis tenant’s crop on bis. rented lands for tbe payment of tbe rent; and unless and until tbe landlord bas acquired a part of his tenant’s crop for tbe rent, be bas acquired nq tobacco from bis tenant that comes within tbe provisions of his membership contract in tbe Tobacco Growers Cooperative Association, and is not liable for the penalty therein eontained'for failure to market tbe tobacco raised by Ms tenant.

Appeal by plaintiff from Connor, J., at chambers in Nashville, on 20 September, 1923, dissolving the restraining order.

Burgess & Joyner and Austin & Davenport for plaintiff.

Aaron Sapiro, Elystus L. Hayes, Theodore E. Bowen, and L. L. Levy of counsel for plaintiff.

Connor & Hill for defendant.

Clark, C. J.

This was an action by the plaintiff association, a nonprofit cooperative marketing association organized under chapter 7, Laws 1921. The defendant is a member of the association. By the *181terms of tbe marketing agreement embodied in tbe association agreement, signed by tbe defendant, be agreed to sell and deliver to tbe association all of bis tobacco during tbe term of bis contract. Tbe pertinent features of tbe contract so far as tbis appeal is concerned are as follows:

> “2. Tbe association agrees to buy and tbe grower agrees to sell and deliver to tbe association all of tbe tobacco produced by or for bim or acquired by bim as landlord or lessor, during tbe years 1921, 1922, 1923, 1924, 1925.”

> “3. Tbe grower expressly warrants tbat be has not heretofore contracted to sell, market, or deliver any of bis said tobacco to any person, firm or corporation, except as noted at tbe end of tbis agreement. Any tobacco covered by sucb existing contracts or crop mortgage shall be excluded from tbe terms hereof for tbe period and to tbe extent noted.”

> “11. Tbe grower shall have tbe right to stop growing tobacco and to grow anything else at any time at bis free discretion; but if be produce any tobacco, or acquires or Owns any interest in any tobacco, as landlord or lessor, during tbe term hereof, it shall all be included under tbe terms of tbis agreement, and must be sold only to tbe association.”

> “12. Nothing in tbis agreement shall be interpreted as compelling tbe grower to deliver any specified quantity of tobacco each year; but be shall deliver all tbe tobacco produced by or for bim.”

> “13. (a) Tbis agreement shall be binding upon tbe grower as long as be produces tobacco directly or indirectly, or has tbe legal right to exercise control of any commercial tobacco or any interest, therein as a producer or landlord during their term of tbis contract.”

> “18. (a) Tbe grower hereby agrees to pay to tbe association for all tobacco delivered, consigned or marketed or withheld by or for bim, other than in accordance with tbe terms hereof, tbe sum of five cents per pound as liquidated damages, averaged for all types and grades of tobacco for tbe breach of tbis contract.”

Tbe complaint alleges tbat tbe defendant bad violated bis agreement by selling all of bis 1922 crop of tobacco to persons other than to plaintiff, and bad announced tbat be would not. deliver any of bis tobacco of tbe 1923 crop to tbe association, and tbat tbe defendant bad sold 1,500 pounds of bis 1923 crop to persons other than tbe plaintiff, and prayed tbat be be required to perform tbe association agreement, and tbat be be restrained from delivering, selling or otherwise disposing of any tobacco produced by ox for bim or controlled by bim during tbe life of tbe contract to any person or persons other than tbe plaintiff, and asked for an injunction pendente lite.

An order was issued by tbe trial judge tbat tbe defendant appear and show cause why a restraining order should not be issued to tbe *182bearing, and a temporary restraining order was served upon tbe defendant from disposing of any of bis tobacco pending tbe bearing of tbe order to show cause.

Upon tbe sworn statement of tbe defendant tbat be bad sold no tobacco of tbe 1923 crop to persons other than plaintiff, and in view of bis sworn statement tbat be intended to deliver all of bis tobacco to it, tbe plaintiff consented to a dissolving of tbe restraining order theretofore issued, and did not seek a preliminary injunction. Tbe court then granted an injunction to tbe defendant against tbe plaintiff, as prayed, tbat it be'restrained from withholding from tbe defendant, and from any advancement to be made to tbe defendant, any sum of money on account of tbe sales by bis tenants, wbp were not members of tbe association, of their share of tbe tobacco.

Tbe Tobacco Growers Cooperative Association Act, chapter 87, Laws 1921, was construed and its validity sustained in Cooperative Association v. Jones, 185 N. C., 265. Tbe only point which arises on this appeal is tbe construction of tbe clauses of tbe contract above set out, especially of clause 11, upon tbe following facts:

Philip Bissett, who was not a member of tbe association, rented lands from tbe defendant in 1923 and planted four acres in tobacco, as did also Carey Eincb, who rented four acres from him, and William O’Neal, who rented three acres. All of tbe defendant’s tenants above enumerated pay as rent one-balf of tbe crops produced by them. It is admitted tbat of tbe tobacco produced by said Bissett, Eincb and O’Neal, tbe one-balf has been turned over to tbe defendant as rent, and has been or will be delivered by him to tbe plaintiff association, and all tbe tobacco produced by him upon lands which be cultivated in 1923 has been or will be delivered to tbe association.

It is also admitted tbat of tbe tobacco produced by tbe tenants, Philip Bissett, Eincb and O’Neal, tbe one-balf belonging to them will be by them marketed as they see fit, and as they are not members of tbe association, it is presumed tbat they sold their tobacco on what is known as tbe “open” or “auction” market; and it is admitted tbat as tbe above tenants of tbe defendant have prepared their tobacco for market tbe defendant bad met with them and tbe tobacco was divided, tbe defendant taking bis one-balf and tbe above tenants taking their one-balf.

Tbe question presented on appeal is simply this, as is admitted by tbe plaintiff and tbe defendant: Can tbe plaintiff association, from tbe advancements which it has agreed to make to its various members, upon tbe delivery of tobacco to it, deduct five cents per pound as liquidated damages for each and every pound of tobacco produced upon tbe lands of tbe member by tenants who are not members of tbe association, and *183wbo called for an actual division with tbe landlord, and wbo declined to have tbeir part of tbe tobacco delivered to tbe plaintiff association?

Tbe plaintiff’s brief admits that it cannot compel tbe delivery by tbe landlord or by tbe nonmember tenant to it of tbe portion of tbe crop produced by tbe nonmember tenant, wbicb is tbe property of the tenant and not of tbe landlord.

Under paragraph 2 of tbe contract tbe defendant agreed “to deliver to tbe association all of tbe tobacco produced by or for him or acquired by him as landlord or lessor.” Paragraph 11 of tbe contract provides: “If be (tbe member) produce any tobacco or acquire or own any interest in tobacco as landlord or lessor during tbe term hereof, it shall be included under tbe terms of this agreement, and must be sold only to tbe association.”

It would seem clear, therefore, that tbe only tobacco covered by this contract is tobacco of tbe member produced on lands either owned or rented by him. Neither tbe plaintiff nor tbe defendant agreed that tbe defendant would be compelled to either deliver tobacco belonging to a nonmember tenant nor to pay five cents a pound penalty for failure to do so.

It is significant that, though tbe act on its face has been carefully and skillfully drawn, it is nowhere stated in it that tbe landlord shall be compelled to deliver all tobacco produced upon bis lands by nonmember tenants. Such provision was made in tbe Kentucky statute and is tbe basis upon wbicb was decided tbe case in tbe Circuit Court of McCracken County of Tobacco Growers Cooperative Association v. Feagain, decided 19 January, 1924, and wbicb is cited by plaintiff.

Tbe landlord and tenant act, C. S., 2355, does not make tbe landlord of a cropper tbe owner nor give him) title to tbe tenant’s share of tbe crop. It merely provides that tbe landlord is “vested in possession of all tbe crops raised on tbe land until tbe rents for said land are paid”; and in tbe last sentence of that section it is said: “This lien shall be preferred to all other liens.” Tbe landlord therefore has a preferred lien on tbe crop and, so to speak, is a trustee in possession until tbe advances, if any, are paid, but be is not owner and has acquired no title to tbe tenant’s share wbo can therefore, with tbe permission of tbe landlord, move or sell bis share of tbe crop or can pay off tbe lien. Tbe tenant’s share of tbe tobacco in this case has not been “delivered, consigned to or marketed” by tbe landlord, and tbe landlord has not acquired and does not own any interest in tbe tenant’s share, but merely has a right of possession until bis lien has been paid off.

Tbe plaintiff frankly admits in bis brief that tbe tenant has a prior right to tbe association in bis share of tbe crop, and can insist upon a division and sell tbe tobacco to any one be chooses, but be claims that *184tbe defendant has breached his contract and is liable to the penalty of five cents per pound when he does not compel the tenant to deliver his half of the crop to the plaintiff.

It may well be, under section 11 of the contract, that if the landlord takes over any part of the tenant’s share in the crop and applies it under his statutory lien for advances, he can be justly said to acquire or own such interest in the tobacco as lessor, and it will be included within the terms of the agreement, and if not sold by the landlord only to the association, he is liable to the penalty of five cents.

But that is not the state of facts here under which it is agreed that the tenant demanded and received his one-half share of the tobacco. It may be that the tenant owed no advances to the landlord or that he was able to pay them off in cash.

Therefore, as under the agreement it appears that the tenant received his half of the tobacco,.the landlord has not, under the terms of section 11 of the contract, acquired nor owns any interest in the tenants’ half, and he is not liable to the penalty of five cents per pound to the plaintiff for the nondelivery of the same to the plaintiff.

Judgment of the court below is

Affirmed.