711 S.E.2d 912
S.C.2011Background
- Epstein purchased land in Horry County in 2004, deed recorded in 2004, near 120 acres and a large building.
- In 2006 Epstein financed Ascott Valley Development with two mortgages totaling $3.3 million, securing 45 acres and 70+ acres.
- Ascott conveyed to Coastal Timber a Timber Title in June 2006 for $115,000, authorizing removal of merchantable timber within 12 months; Coastal paid and removed timber.
- Ascott defaulted on Epstein’s mortgage; Epstein learned timber had been removed during foreclosure proceedings against Ascott.
- Epstein sued Coastal in 2009 seeking damages for timber removed, arguing his recorded mortgages secured the timber and were superior to Coastal’s Timber Title.
- The circuit court granted summary judgment to Coastal, holding UCC provisions convert standing timber to goods and extinguish Epstein’s lien unless perfected under the UCC; Epstein appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the UCC converts standing timber to goods and defeats preexisting liens | Epstein argues timber remained encumbered by his mortgage as real property. | Coastal argues timber to be cut is goods under UCC and must be secured under UCC perfection rules. | No; UCC did not cancel preexisting liens; standing timber remains subject to prior real property liens. |
| Whether Epstein’s mortgages secured the timber despite UCC requirements | Mortgages on real property included timber unless expressly excluded. | UCC security interests in timber to be cut require a financing statement or mortgage specifying the timber and land. | Epstein’s mortgage secured the timber; UCC perfection not required to defeat Coastal’s claim. |
| Priority between preexisting liens and later contracts for timber to be cut | Preexisting lien remains superior to later timber sale contracts. | Timber-to-be-cut contracts can create separate security interests that may be superior if properly perfected. | Preexisting liens remain senior to later UCC-type interests; rights are harmonized, not cancelled. |
Key Cases Cited
- First Carolinas Joint Stock Land Bank of Columbia v. N.Y. Title & Mortgage Co., 172 S.C. 446 (1934) (timber as realty unless severed; timber conveys with land)
- D.W. Alderman & Sons Co. v. Kirven, 209 S.C. 446 (1946) (trees growing on land are part of realty until severed)
- Simms v. Kearse, 42 S.C. 43 (1894) (mortgagee lien on mortgaged land secures timber as part of land)
- Feliciana Bank & Trust v. Manuel & Sessions, L.L.C., 943 So. 2d 736 (Miss. Ct. App. 2006) (bank's deed of trust secures timber; perfection under UCC not required for preexisting liens)
- Manios v. Nelson, Mullins, Riley & Scarborough, L.L.P., 389 S.C. 126 (Ct. App. 2010) (deed of trust is security interest; discussion cited in context)