Praxair, Inc. v. Vereen , 34 F. App'x 918 ( 2002 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
PRAXAIR, INCORPORATED, 
Plaintiff-Appellant,
v.
FRANK VEREEN, d/b/a Vereen
Fertilizer, individually,
Defendant & Third Party  No. 01-2107
Plaintiff-Appellee,
v.
BURNS PHILP FOOD, INCORPORATED,
Third Party Defendant.

Appeal from the United States District Court
for the District of South Carolina, at Florence.
Patrick Michael Duffy, District Judge.
(CA-00-1061-23-4)
Argued: April 4, 2002
Decided: May 14, 2002
Before WIDENER, WILKINS, and KING, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Thomas S. Tisdale, Jr., YOUNG, CLEMENT, RIVERS
& TISDALE, L.L.P., Charleston, South Carolina, for Appellant.
2 PRAXAIR, INC. v. VEREEN
Michael Mark McAdams, THE THOMPSON LAW FIRM, P.A.,
Conway, South Carolina, for Appellee. ON BRIEF: Stephen L.
Brown, YOUNG, CLEMENT, RIVERS & TISDALE, L.L.P.,
Charleston, South Carolina, for Appellant.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Praxair, Incorporated appeals the entry of summary judgment in
favor of Frank Vereen in Praxair’s suit to recover property situated on
land purchased by Vereen. We affirm.
I.
Praxair is in the business of collecting, packaging, and selling car-
bon dioxide generated by other companies’ manufacturing operations.
In 1993, Praxair contracted with Burns Philp Food, Inc. ("BP Food")
to collect carbon dioxide at a BP Food factory in Kingstree, South
Carolina. In conjunction with this contract, Praxair leased a small par-
cel of land ("the Premises") from BP Food. The lease allowed Praxair
to install equipment on the Premises and further provided:
The parties hereto understand and agree that title to all
buildings, equipment and other improvements installed, con-
structed or located by [Praxair] upon the Premises shall
remain personal property regardless of the nature of fixation
to the Premises. [Praxair] shall remove such buildings,
equipment and other improvements that [Praxair] has
installed, constructed or located upon the Premises within
twelve (12) months after the termination or cancellation of
this Lease or any extension thereof, and restore the Premises
to ground level. In the event [Praxair] fails to remove its
PRAXAIR, INC. v. VEREEN 3
buildings, equipment and improvements and restore the
Premises within the twelve (12) month period, then [BP
Food] shall have the right to do it at [Praxair’s] expense.
J.A. 36. Pursuant to these agreements, Praxair erected a building on
the Premises and installed equipment worth more than $1 million.
In late 1994 or early 1995, BP Food ceased operations at its Kings-
tree site. The 1993 agreement required BP Food to pay Praxair
$200,000 as a result of this shutdown. Praxair demanded such pay-
ment on November 2, 1995.
It appears that BP Food neither met this demand nor resumed oper-
ations. In 1996, BP Food sold the Premises and other land to Vereen
for $200,000. The contract between BP Food and Vereen allowed BP
Food to remove "fixtures, machinery and equipment" from the land
for two years following the sale; after two years, any equipment left
on the site became Vereen’s property. Id. at 185-86.
Praxair did not learn of the sale to Vereen for three years. In Octo-
ber 1999, Praxair employees visited the Premises to begin the process
of moving the equipment there to another site, only to discover that
Vereen now owned the site and claimed title to Praxair’s equipment.
When Vereen refused Praxair’s demand for the property, Praxair filed
this suit. The district court found that Vereen had acquired valid title
to Praxair’s equipment as a bona fide purchaser for value without
notice of Praxair’s interest. After the court denied Praxair’s motion
for reconsideration, Praxair appealed.
II.
On summary judgment, the district court determined that Vereen,
in purchasing the Premises from BP Food, also acquired the equip-
ment on the Premises as a bona fide purchaser for value (BFP). We
review the entry of summary judgment de novo. See Figgie Int’l, Inc.
v. Destileria Serralles, Inc., 190 F.3d 252, 255 (4th Cir. 1999).
A.
Praxair initially contends that Vereen cannot be the lawful owner
of the property located on the premises because even a BFP cannot
4 PRAXAIR, INC. v. VEREEN
obtain title from a seller who does not have title to convey. We dis-
agree.
The BFP doctrine applies in at least two different situations. One
situation is when Owner has legal title to property, Lienholder has an
equitable interest in the same property, and Buyer purchases the prop-
erty from Owner in good faith and without notice of Lienholder’s
interest. In that event, the BFP doctrine will prevent Lienholder from
asserting his interest against Buyer. See 77 Am. Jur. 2d Vendor &
Purchaser §§ 425, 426 (1997). However, as noted by Praxair, Buyer
can acquire title to the property (and thereby negate Lienholder’s
equitable interest) only if Owner actually has legal title to convey. See
id. § 426.
A second scenario in which the BFP doctrine may apply also
involves Owner and Buyer, but this time the third party is Possessor
rather than Lienholder, and it is Possessor rather than Owner who
conveys the property to Buyer. In this scenario, Owner will be estop-
ped from reclaiming the property if (1) Buyer bought the property in
good faith and without notice that Owner was the true titleholder and
(2) Owner was negligent in allowing Buyer to gain the impression
that Possessor had title to the property. See Russell Willis, Inc. v.
Page, 48 S.E.2d 627, 632 (S.C. 1948).
This case fits the second scenario. Like Possessor, BP Food
appeared to be the rightful owner of the property in question, since
BP Food had title to the land on which the property was situated and
the property appeared to be fixtures that would ordinarily be con-
veyed with the land. See Liddell Co. v. Cork, 113 S.E. 327, 328 (S.C.
1922). Moreover, it was foreseeable that this erroneous impression
would arise. See id. at 329. Praxair did not attempt to dispel this
impression by recording its lease (including the designation of fix-
tures on the Premises as personal property belonging to Praxair) pur-
suant to S.C. Code Ann. § 30-7-10 (Law. Co-op. Supp. 2001). Nor
did Praxair maintain even the barest semblance of possession; indeed,
no Praxair personnel visited the Premises for roughly five years.
Because Praxair did not exercise reasonable care to dispel the impres-
sion that its equipment was real property affixed to the Premises, that
equipment was subject to acquisition by a BFP.
PRAXAIR, INC. v. VEREEN 5
B.
Although it does not dispute that its own inaction contributed to the
unfortunate situation that exists today, Praxair contends that Vereen
does not qualify as a BFP because he had notice that BP Food was
not the lawful owner of the equipment on the Premises. Praxair relies
on two circumstances to support its claim of notice, but neither will
sustain Praxair’s arguments.
Praxair initially relies on the provision of Vereen’s contract with
BP Food allowing BP Food to remove unspecified equipment for two
years following the sale. According to Praxair, this undermines any
claim by Vereen that he expected to acquire the equipment on the
Premises. There is a difference, however, between Vereen’s expecta-
tions and his knowledge—actual or constructive—regarding the own-
ership of the equipment in question. In other words, Vereen may have
believed that he was not likely to acquire this equipment, but it does
not follow that he knew or should have known that BP Food did not
own that equipment.
Praxair further asserts that Vereen had a duty to investigate the
substantial difference between the amount he paid for the land he
bought from BP Food ($200,000) and the value of Praxair’s equip-
ment (over $1 million). There is no indication in the record, however,
that Vereen knew or should have known the value of Praxair’s equip-
ment. Moreover, even if he had the requisite knowledge concerning
value, he did not know that he would retain the equipment on the
Premises; on the contrary, in light of the contractual provision cited
by Praxair in its first argument, Vereen could reasonably have
believed that he would acquire the land without the equipment.
III.
In sum, Vereen did not have actual or constructive notice of Prax-
air’s title to the property on the Premises, and he therefore qualifies
as a BFP. Moreover, because Praxair was not diligent in protecting its
property, it is now estopped from recovering that property from Ver-
een. Accordingly, we affirm the decision of the district court.
AFFIRMED