                         IN THE SUPREME COURT OF MISSISSIPPI
                                  NO. 94-CA-00427-SCT
MIDSOUTH RAIL CORPORATION
v.
CITIZENS BANK & TRUST COMPANY, INC.

DATE OF JUDGMENT:                              04/04/94
TRIAL JUDGE:                                   HON. ROGER C. CLAPP
COURT FROM WHICH APPEALED:                     RANKIN COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT:                       EARNEST G. TAYLOR, JR.
                                               MICHAEL T. DAWKINS
ATTORNEY FOR APPELLEE:                         ROBERT S. MURPHREE
NATURE OF THE CASE:                            CIVIL - PROPERTY DAMAGE
DISPOSITION:                                   AFFIRMED ON DIRECT APPEAL; REVERSED
                                               AND RENDERED ON CROSS-APPEAL -
                                               7/24/97
MOTION FOR REHEARING FILED:
MANDATE ISSUED:                                8/14/97




     BEFORE SULLIVAN, P.J., PITTMAN AND BANKS, JJ.


     PITTMAN, JUSTICE, FOR THE COURT:


                                  STATEMENT OF THE CASE

¶1. On June 13, 1989, Citizens Bank & Trust Company, Inc. ("Citizens Bank") filed a declaratory
judgment action in the Chancery Court of Rankin County, Mississippi, against MidSouth Rail
Corporation ("MidSouth"). The suit was filed to determine the liability of Citizens Bank to MidSouth
for environmental clean-up costs incurred by MidSouth.

¶2. MidSouth removed the case to the United States District Court for the Southern District of
Mississippi, basing its cause of action against Citizens Bank on the federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"). After Citizens Bank filed a
motion to remand the case to the Chancery Court of Rankin County, to which the Federal Court
complied because of lack of a federal claim, MidSouth responded with an answer and counterclaim
asserting that Citizens Bank was liable to MidSouth for all of the clean-up costs and attorneys' fees,
pursuant to the express terms of the lease assigned to Citizens Bank by the bankrupt sulphur
processor, or, alternatively, that Citizens Bank was liable for a contribution of at least 50 percent of
the costs under Mississippi environmental and contribution statutes.

¶3. The Rankin County Chancery Court dismissed MidSouth's lease assignment claims finding that
the assignment was a collateral assignment not a general assignment, and therefore, Citizens Bank
was not liable under the terms of the lease. The trial court also found that the bank was not the owner
of the site or an operator of the business and, therefore, it was not liable for clean-up costs under
Miss. Code Ann. § 49-17-43(d).

¶4. The trial court did rule for MidSouth under Count 3 of its counterclaim finding that Citizens Bank
was responsible for creating the necessity for a clean-up as provided by Miss. Code Ann. § 17-17-
29(4) and, therefore, was responsible for paying its pro rata share of the clean-up costs. However,
the trial court found that $107,893.45 of MidSouth's claim, having been incurred before the effective
date of the contribution statute, Miss. Code Ann. § 85-5-7, was barred and assigned only ten percent
of the remaining guilt to Citizens Bank. The effect was to find Citizens Bank liable for $6,027.92 of
the $161,000 claim.

¶5. After the lower court dismissed two of MidSouth's three counterclaim issues and allowed for a
recovery of only $6,027.92, MidSouth filed an appeal to this Court. Citizens Bank has cross-
appealed, asking this Court to rule that Miss. Code Ann. § 17-17-29(4) does not create the cause of
action that the lower court indicated.

                                  STATEMENT OF THE ISSUES

¶6. MidSouth raises four issues on appeal, but this Court will discuss only one, as the other issues
were properly treated by the trial court and have no bearing on the decision.

     I. DID THE TRIAL COURT ERR BY FINDING THAT CITIZENS BANK, AS THE
     LESSEE'S ASSIGNEE, WAS NOT LIABLE FOR THE BREACH OF
     ENVIRONMENTAL COVENANTS IN THE LEASE?

                                  STATEMENT OF THE FACTS

¶7. On November 30, 1987, MidSouth executed a five-month lease for two acres of land bordering
its railway line in Rankin County to Gulf Coast Sulphur Production, Inc. ("GCSP"), a Florida
corporation. MidSouth was aware that GCSP sought to process raw sulphur on the site. The lease
required GCSP to abide by all environmental laws and to reimburse MidSouth if the railroad had to
pay for environmental remediation of the site. MidSouth, in addition to receiving a nominal rental fee
of $150 monthly, expected to make money shipping the processed sulphur to GCSP's customers.

¶8. After obtaining the lease with MidSouth, GCSP shipped more than 5,000 tons of sulphur to the
site for processing. It also set up processing equipment which would heat the sulphur, convert it to a
liquid and remove dirt and other impurities. Then, it would ship the clean marketable sulphur to
customers in Tennessee and other locations by rail.

¶9. Soon after dumping the raw sulphur at the site, GCSP mismanaged its capital and began
experiencing financial difficulty while building the processing plant, prior to the beginning of
operations. In early 1988, GCSP approached John McCaskill, a local businessman who had been
constructing buildings on the site for GCSP. GCSP asked McCaskill about investing in the business.
McCaskill conferred with Ralph Lord, his financial advisor, about investing in GCSP. Lord was a
stockbroker at Kidder Peabody and a director of Citizens Bank. Lord researched the sulphur
processing market and advised McCaskill concerning investment possibilities with GCSP.

¶10. At this point GCSP was still struggling financially, and McCaskill loaned $50,000 to the
business. Due to a great deal of indebtedness, GCSP still needed cash. McCaskill approached
Citizens Bank about making a loan to the company for $50,000. The loan was based on McCaskill's
financial background, a net worth of more than $2,000,000, and his loan history, but the loan was in
the name of GCSP. It was agreed that GCSP would repay the loan to McCaskill when it received a
larger loan after securing its inventory at incorporation. Prior to making the loan to McCaskill for the
use of GCSP, Citizens Bank asked for no assurances that the company was in environmental
compliance, even though the raw sulphur was already at the site. McCaskill then secured three
separate loans for approximately $50,000 each on March 11, March 22, and April 19, 1988. On each
of these loans, McCaskill signed the note as GCSP's secretary/treasurer.

¶11. During this period, the Bank's loan officer, Bart Cannon, assembled the necessary lien
documentation. Citizens Bank secured its position with the personal guaranty of John McCaskill, the
guaranties of the other individuals in the company, and a lien on the equipment at the site. The Bank
had an appraisal on the plant equipment showing a value of $734,904.93. GCSP assigned its lease to
Citizens Bank and the bank requested and obtained a Landlord's Waiver from MidSouth. The Bank
sought to protect its interest in the equipment in case of default. Guaranteed access to the site
appeared to be the best way to secure the interest. Loan officer Bart Cannon made the decision to
create a collateral assignment, and he sent a letter to MidSouth asking for this assignment on
March 23, 1988. MidSouth signed and returned the assignment on April 15, 1988.

¶12. By this time, McCaskill was directing the operation of the GCSP plant. McCaskill was
concerned about the validity of the corporation, as it was not registered with the Mississippi
Secretary of State. McCaskill proposed, and the other owners of GCSP agreed, that a new
corporation be formed to take over the assets and liabilities of GCSP. McCaskill also negotiated to
receive voting stock from the new corporation for himself as well as Ralph Lord.

¶13. The new corporation, Gulf Coast Sulphur Corporation ("GCS"), was formed in early April
1988, and the Articles of Incorporation were filed with the Secretary of State on April 11, 1988. The
new corporation assumed both the assets and liabilities of GCSP. GCSP also assigned the remaining
sixteen days of its lease of the plant site property with MidSouth to GCS on April 14, 1988.

¶14. GCS requested a $200,000 loan from Citizens Bank to refinance the $150,000 of indebtedness
assumed by GCS from GCSP as well as cover an overdraft balance in its checking account. Citizens
Bank did consider the possibility of the loan being an "insider" loan because of the involvement of
Lord. McCaskill testified that Lord's stock was transferred to McCaskill without payment as part of
an agreement to protect McCaskill's interests in the new corporation.

¶15. When the lease came up for renewal, MidSouth wrote to GCSP asking about a renewal, and
GCSP indicated that it wanted the lease renewed. On May 2, 1988, Lee Hopper, president of GCS
executed a rider extending the lease until April 30, 1989. The Bank prepared a new collateral
assignment for Gulf Coast Sulphur, similar to the one the Bank had prepared for GCSP, and
forwarded it to MidSouth on May 10, 1988. However, MidSouth never executed the new
Assignment of Lease, nor was any new lease issued to GCS, specifically, after the first lease expired
on April 30, 1988. The trial court held that the failure by MidSouth to execute a new assignment
eliminated any liability of Citizens Bank for obligations under the lease.

¶16. GCS continued to lose money. In August of 1988, GCS filed a petition for bankruptcy in the
United States Bankruptcy Court for the Southern District of Mississippi. GCS abandoned the
processing site, leaving behind close to 5,000 tons of sulphur on the ground with no environmental
protection in place to prevent drainage runoff or a fire. There is evidence that both MidSouth and
Citizens Bank knew that leaving the sulphur on the ground could be a potential environmental
hazard.

¶17. On April 25, 1989, the sulphur caught fire. The emergency branch of the Mississippi Department
of Environmental Quality ("DEQ") responded to the fire, as did seven area fire departments.
MidSouth employees were also on the scene. After the fire was extinguished, the DEQ requested that
MidSouth, Citizens Bank and other interested parties attend a status conference at the DEQ. Bob
Rogers, the DEQ's emergency coordinator at the site, explained what had happened and discussed
the continuing danger that the open sulphur piles posed for creating acidic water runoff and fires.

¶18. The DEQ billed MidSouth, the landowner, for more than $7,000 in emergency costs incurred in
putting out the fire and removing contamination from the site. MidSouth made efforts to find another
processor to take over the site, but these efforts failed. The DEQ required MidSouth to remediate the
abandoned sulphur piles and ordered MidSouth to remove the sulphur from the site. MidSouth
effectively complied with the order from the DEQ and incurred more than $160,000 in expenses.

¶19. Since the clean-up, MidSouth has amassed attorneys' fees in an attempt to obtain reimbursement
from Citizens Bank. This reimbursement is the central issue in the case at hand. MidSouth asserts that
Citizens should be liable for at least half of the incurred costs based on Miss. Code Ann. § 85-5-7.
MidSouth asserts that the cause of action is created by Citizens's violation of both Miss. Code Ann.
§§ 49-17-43(d) and 17-17-29(4). In the alternative, MidSouth states that, as an assignee, Citizens
Bank is liable for any breach of the covenants of the lease made with GCSP. If true, Citizens would
be liable for the entire amount of remediation and clean-up costs.

                                            ANALYSIS


     I. DID THE TRIAL COURT ERR BY FINDING THAT CITIZENS BANK, AS THE
     LESSEE'S ASSIGNEE, WAS NOT LIABLE FOR THE BREACH OF
     ENVIRONMENTAL COVENANTS IN THE LEASE?

¶20. The trial court dismissed Counts 1 and 2 of MidSouth's counterclaim at trial. Count 1 suggested
that Citizens was liable for the clean-up costs because they took on the obligations of GCSP/GCS
under the lease through a general assignment. Count 2 claimed that even if the assignment between
Citizens and GCSP/GCS was collateral, rather than general, that the assignee was still responsible for
performance of lease covenants that run with the land. The trial court found that there was no valid
assignment in effect at the time of the fire.
¶21. The relevant sections of the assignment between Citizens Banks and GCSP are as follows:

     I. Assignment: In consideration of sums loaned or to be loaned, Borrower assigns, transfers and
     conveys to Lender, subject to the terms of this Assignment, all Borrower's rights, title, and
     interest, including any extensions or renewals thereof, of Borrower's lease of certain real
     property owned by MidSouth Rail Corporation (Lessor) . . .

     II. Representations and consents: . . .

     ...

     D. In the event of default, . . . Lender shall have and may exercise all the rights and remedies
     afforded under the Uniform Commercial Code and all other applicable statutes to realize upon
     its security.

     . . . any default . . . and Lender shall have the option of demanding immediate payment of the
     Note . . . or in the alternative performing such obligation or curing such breach or default . . .

     III. Assignment as security: This Assignment is made solely as to security for the repayment of
     the Note or notes made at the execution hereof or any renewals or extensions thereof, and shall
     remain in full force and effect as long as such indebtedness remains unpaid. Upon repayment in
     full of such indebtedness, Lender shall convey all rights hereunder back to Borrower.

¶22. There are two questions before the Court on this issue. First, does the assignment, whether
general or collateral, place liability on Citizens Bank, as assignee, through the obligations required of
GCSP/GCS under the lease from MidSouth? Second, did the failure of MidSouth to expressly accept
the new assignment following the creation of GCS eliminate any or all obligations of Citizens Bank
under the lease?

¶23. As to the first question, both parties cite voluminous amounts of reference material regarding
lease covenants, assignments of contracts, and landlord/tenant law, in an attempt to solidify a position
regarding liability under the lease covenants. To clarify this vast cloud of legal rhetoric, a few rules
should be set forth. First, under Mississippi law, an assignee of a contract does not incur the
obligations of the assignor barring express agreement. Coggins v. Joseph, 504 So. 2d 211, 213
(Miss. 1987); see also, 32 Am.Jur. § 370 Landlord & Tenant (1960). Both parties appear to be in
agreement on that issue. The parties do not agree as to the effect of the assignment itself. The general
rule is that, in cases of general assignments involving leases, the assignee takes on the obligations of
the assignor when the lease covenants involved "run with the land," regardless of express agreement.
Coggins v. Joseph, 504 So. 2d at 214. Based on this Court decision, it can be inferred that if the
assignment is considered a general assignment, the burden of GCSP/GCS's lease obligations is
transferred from GCSP/GCS to the assignee, Citizens Bank, if the covenants "run with the land."
Provisions of the lease which affect the use, condition and value of the land are said to "run with the
land." 49 Am.Jur.2d § 452 Landlord & Tenant(1970). MidSouth goes to great lengths, citing case
after case, explaining what the Court has held as covenants "running with the land." MidSouth makes
a valid argument that the environmental covenants in the lease "run with the land," because they
enhance the value of the land, are incident to the surface estate, directly affect the land, and enhance
the reversionary interest of MidSouth.
¶24. However, is the argument advanced by MidSouth applicable to the case at hand? All of the law
cited by MidSouth involves a general assignment where the assignee assumes all the rights and
obligations of the assignor. Citizens Bank claims that the lease at hand was collateral, serving only to
secure its interest in the equipment on site and that it did not assume the rights or the obligations of
the assignor.

¶25. MidSouth asserts that the language of the lease makes Citizens Bank a general assignee with all
the rights and obligations of an assignee. They cite the following excerpt for the assignment between
GCSP and Citizens Bank:

     I. Assignment: In consideration of sums loaned or to be loaned, Borrower assigns, transfers and
     conveys to Lender, subject to the terms of this Assignment, all Borrower's rights, title, and
     interest, including any extensions or renewals thereof, of Borrower's lease of certain real
     property owned by MidSouth Rail Corporation (Lessor).

     ....

(Emphasis added).

¶26. According to MidSouth, this language gives Citizens Bank all the rights and obligations of a
general assignee, and therefore Citizens should be bound by the lease terms and covenants. Citizens
Bank points to another section of the assignment:

     III. Assignment as security: This Assignment is made solely as to security for the repayment of
     the Note or notes made at the execution hereof or any renewals or extensions thereof, and shall
     remain in full force and effect as long as such indebtedness remains unpaid. Upon repayment in
     full of such indebtedness, Lender shall convey all rights hereunder back to Borrower.

(Emphasis added.)

¶27. Citizens asserts that this language clearly indicates the purpose and intent of the parties with
regard to the assignment.

¶28. Because of perceived ambiguity in the assignment, the trial court considered testimony regarding
the intent of the parties. All parties involved, even those associated with MidSouth, testified that the
assignment was made by Citizens Bank to assure itself of a right to enter the property and reclaim the
equipment should there be a default on the loan. Citizens Bank and GCSP acted in accordance with
the assignment being merely collateral. Citizens never took over the processing of sulphur. Rather,
GCSP retained possession and continued to run the business as it pleased. Citizens also argues that
the actions of MidSouth prove that there was never a doubt as to the intentions of the parties.
MidSouth's corporate representative, W.O. Kelly, testified that MidSouth never sent lease bills to
Citizens, sent the lease extension agreement to GCSP rather than Citizens, and never anticipated
Citizens taking over the lease site and the sulphur processing facility.

¶29. The assignment itself seems to travel two distinctly separate paths. First, it grants full rights to
the assignee, and then it states that it is only for security purposes. Citizens claims that MidSouth
signed the assignment and, therefore, knew the intention of the parties. They also claim that there can
be no complete assignment where the assignor is still required to perform. Finally, Citizens argues
that it had an option rather than a duty to cure any breach. After reviewing the testimony of the
parties, the actions of the parties, and the assignment itself, the trial court found that there was no
assumption of obligations under the lease. However, the trial court wrote in its opinion that no lease
existed, for reasons to be discussed shortly. One thing does appear to be clear. From the testimony
and actions of the parties, it is obvious that the intent of the assignment was to secure Citizen's
interest in the property of GCSP. The intent of the parties determines whether the assignment is an
absolute assignment or only intended as a collateral security assignment. 6A CJS Assignments
Section 82.

¶30. MidSouth insists that the ambiguity of the assignment is irrelevant and urges this Court to
require collateral assignees to assume the obligations of their assignors for covenants that run with
the land, without the need for express agreement.

¶31. This Court rejects MidSouth's assertion for two reasons. First, it has been held that a mortgagee
assumes no lease obligations from an assignment that is for collateral security. Kroger Co. v.
Chimneyville Prop. Ltd., 784 F.Supp. 331, 340 (S.D. Miss. 1991). Kroger leased property from
Sunflower Development Corp. Jefferson Standard Life Insurance Company (presently Jefferson-
Pilot) ("JP") issued a loan to finance the property development secured by a deed of trust and further
secured by an assignment. Kroger's business was unprofitable, and it left the premises. Kroger sought
a new tenant but could not find one because of the condition of the property. Kroger sued
Chimneyville and JP claiming that the lease was violated because the property was untenantable,
uninhabitable, and unfit for the purpose for which it was leased. The Court held that JP's assignment
was simply additional security for the loan. Id. at 339. Although JP had the right to collect rent, that
provision was only invoked upon default, and JP had the option of proceeding with that course of
action. Id. The Court held that this assignment was conditional, and where the assignee's rights were
conditional, so were its obligations. Id. at 340.

¶32. Kroger is comparable to the case sub judice. In both cases, a wronged party seeks to recover
from a deep-pocket who has done nothing to create direct liability. Much like the environmental
compliance covenant in the present case, the covenant in Kroger did affect the physical use or
enjoyment of the property. As MidSouth argued earlier, these types of covenants have been held to
run with the land. In Kroger, the Court did not look to the type of covenants. The Court did not ask
if the covenants run with the land. Instead, the Court decided the case purely on the fact that the
assignment was collateral. Id.

¶33. Although the cases do have similarities, there is one distinguishable difference. The assignment
provisions in Kroger, although not presented in the case, do not appear to have any character of a
general assignment. The lease in the case sub judice does have characteristics of a general
assignment, and this could be distinguishable from Kroger. The language used in the assignment
attempting to protect the interests of Citizens Bank is over broad and could be read to convey the
obligations of a general assignment. However, the actions of the parties involved clearly indicates that
the intent of the agreement was to create a collateral assignment for security purposes only, despite
the broadness of the language used.

¶34. The second reason for rejecting MidSouth's breach of contract assertion is public policy. In
today's society, banks must secure their loans to insure payment. An assignment agreement allowing
a bank to enter property to repossess secured items should not create liability arising from the action
or inaction of the assignor. As pointed out by Citizens Bank and the Mississippi Bankers Association
(MBA), a decision to hold Citizens Bank liable would have significant consequences. For example,
many banks today buy loans from other banks across the country. Often, this is done by assignment.
There could potentially be a series of assignments between banks. Following that line of thought, a
lessor such as MidSouth could charge a bank with liability under the terms of the lease, when the
bank's representatives have had no contact with the land or assignor in question, the bank and the
land in question are in different states or countries, and the only involvement by the bank was to buy
a group of loans from another lender. There is no culpability, no control of the enterprise in violation,
and possibly no contact. This situation differs from an active assignment where a person takes
possession, active control, and all the benefits of the assignment. A general assignee has a much
closer nexus to the action which causes the breach.

¶35. The trial court ruled that there was no valid, executed assignment at the date of the fire. The
trial court held that MidSouth's failure to sign the new assignment applying to the lease extension
following the creation of GCS acted to void the agreement. This Court gives deference to the finder
of fact. Madden v. Rhodes, 626 So. 2d 608, 616 (Miss. 1993).

¶36. MidSouth makes a strong argument as to this point. MidSouth argues that the assignment is
enforceable because MidSouth waived its rights to object by its actions. In other words, MidSouth
would be estopped from objecting to the assignment after its actions appeared to accept it.
Acquiescence by a lessor to a provision specifically barred in the lease operates to estop the lessor
from making a claim based on that provision if he is aware of the violation and takes no action.
Adams v. Graham Stave & Heading Co., 160 Miss. 266, 135 So. 198 (1931). In Robertson v.
Fuller, 212 Miss. 888, 56 So.2d 74 (1952), a lessee assigned its lease to another party and the lessor
was aware of the situation and accepted rents. When the lessor attempted to declare the lease
forfeited, the court held that the breach had been waived. Id. at 76.

¶37. On the other hand, both of the cases, supra, involve lessors who accepted rents from the
assignee. Citizens never paid any rent, as it was not in possession of the property. The record is
unclear as to the actions of the parties between the creation of GCS and the fire.

¶38. In conclusion, MidSouth argues that the Court must decide whether an assignee assumes all
liabilities arising from covenants that run with the land. This Court will not extend the general rule of
assignments (assignee assumes obligations of covenants that run with the land) to collateral
assignees. It appears clear from the record that Citizens Bank is not a general assignee based on the
testimony and the actions of the parties involved. The trial court was correct in considering evidence
to clarify the contradictions included in the assignment itself. As to a collateral assignee, the
obligations of the lease are not enforceable. Kroger, at 204. Forcing the obligations of the lease onto
a collateral assignee also violates public policy. The trial court concluded that there was not a valid
assignment in effect at the time of the fire, and we give deference to the trial court's decision.
Regardless of the status of the assignment, the collateral assignee should not be burdened with the
obligations of the assignor.

                                          CROSS-APPEAL

¶39. Citizens Bank asserts five points of error on cross-appeal. We find only one to be of merit.
                                              ANALYSIS


     IV. DID THE LOWER COURT ERR IN FINDING A LENDER HAS
     RESPONSIBILITY OR LIABILITY UNDER MISS. CODE ANN. § 17-17-29(4)?

¶40. Citizens argues that the trial court was in error both legally and factually by using Miss. Code
Ann. § 17-17-29(4) to attach liability to Citizens Bank. The trial court found that Citizens Bank was
liable under the statute as "any person creating, or responsible for creating, . . . an immediate
necessity for remedial or clean-up action." Miss. Code Ann. § 17-17-29(4). Citizens argues that this
is manifest error.

¶41. The relevant portions of the statute are as follows:

     (4) Any person creating, or responsible for creating, through misadventure, happenstance, or
     otherwise, an immediate necessity for remedial or clean-up action involving solid waste shall be
     liable for the cost of such remedial or clean-up action and the commission may recover the cost
     of the same by a civil action brought in the circuit court of the county in which venue may lie.
     This penalty may be recovered in lieu of or in addition to the penalties provided in subsection
     (1), (2) and/or (3) of this section.

Miss. Code Ann. § 17-17-29(4)

¶42. The trial court properly noted that the statute is penal in nature requiring that the statute be
narrowly construed. It is a general rule of statutory construction that penal statutes are to be strictly
construed. Mississippi Insurance Commission v. Savery, 204 So. 2d 278 (Miss. 1964).

¶43. Citizens Bank argues that the lower court ignored this rule in its interpretation of the statute, by
deciding that the Bank would be liable for clean-up costs. Since Citizens Bank loaned money to the
business creating the environmental problems and the loan enabled the business to operate, the trial
court found Citizens Bank to be "responsible for creating . . . an immediate necessity for remedial or
clean-up action." Citizens Bank argues that the trial court's interpretation is an erroneous
interpretation of the law and urges this Court to reverse the chancellor after reviewing the question of
law de novo. A question of law is reviewed de novo by the Court, and the Court may reverse for an
erroneous interpretation. Matter of the Estate of Mason, 616 So. 2d 322 (Miss. 1993); Bank of
Mississippi v. Hollingsworth, 609 So. 2d 422 (Miss. 1992).

¶44. Citizens Bank asserts that a lender is not the type of person that the statute intended to be liable
for "creating or responsible for creating, through misadventure, happenstance, or otherwise" the
necessity for a clean-up by the commission. This broad application of the statute by the trial court
could have serious ramifications. As stated by the Bank, if a lender can be considered under this
statute, so can any other person or company whose actions make the business possible. Citizens
Banks suggests that the truck drivers who brought in the raw sulphur, the company who leased
GCSP the boiler, the power company who supplied electricity, and MidSouth would all be liable
under the trial court's interpretation of the statute. "But for" the actions of all of the above-named
parties, the sulphur processing business would not be able to function. All of these businesses
"enabled" GCSP/GCS to operate, using the language of the trial court. Although some of the
examples above are rather distant, they still show the broadness of the interpretation of the trial
court.

¶45. The trial court felt that Citizens Bank "clearly enabled the operator of the facility to continue its
business, and being motivated largely by its need for the operator to succeed so as to pay back earlier
indebtedness, and being charged with knowledge of the hazardous nature of the enterprise, should
incur liability under MCA § 17-17-29(4)." The trial court held that as a matter of public policy:

     No one should be permitted to encourage or enable an enterprise (by infusion of capital or
     otherwise) which eventually results in immediate necessity for remedial or clean-up action
     involving solid waste and nevertheless be absolved of any responsibility, if the enabler knew or
     should have known of the hazardous nature (potential for solid waste problems) of the
     enterprise, and particularly if, as in this case, the enterprise would not have proceeded without
     such enabling action.

¶46. The trial court found this to be a matter of public policy without necessity for case precedent.
MidSouth agrees. They argue that the trial court's ruling holds lenders accountable for
environmentally irresponsible projects.

¶47. Citizens Bank suggests its own public policy, which was also considered by the trial court.
Citizens Bank and the MBA assert that extending the scope of the statute would negatively impact
lenders and their customers across the state. By placing liability on lenders for "enabling" business
operations, banks would be subject to liability for environmental contamination to which they did not
cause or contribute. The liability would arise not when the bank takes title to foreclosed property and
takes possession, but rather the liability would arise when the financial transaction was closed. This
liability would serve to discourage business development and to apply the consequences of one
party's act to a more financially sound party with no fault. An innocent lender could become subject
to liability in virtually any type of loan. The MBA uses many examples to prove its point that the
scope of liability is too broad. Assuming the arguments of the MBA and Citizens Bank are valid, the
only reasonable conclusions are an increase in the cost of loan transactions, a decrease in business
capital due to stricter loan guidelines, and a corresponding decrease in business development.

¶48. In conclusion, the trial court's broad interpretation of Miss. Code Ann. § 17-17-29(4), holding
Citizens Bank liable for "creating" an environmental hazard, violates the requirement that statutes be
construed narrowly. Mississippi Insurance Comm'n v. Savery, 204 So. 2d 278 (Miss. 1964). By
assigning liability to Citizens Bank, the trial court has opened the door, allowing a plethora of
lawsuits to be brought against innocent lenders. As explained by the MBA, public policy prevents this
Court from accepting the ruling of the trial court. The alleged public policy cited by the chancellor is
subordinated to a contrasting public policy and vastly outweighed by the economic ramifications
presented by the MBA. Therefore, it is the holding of this Court that Miss. Code Ann. § 17-17-29(4)
does not impose liability on lenders as "any person creating, or responsible for creating, . . . an
immediate necessity for remedial or clean-up action."

¶49. AFFIRMED ON DIRECT APPEAL; REVERSED AND RENDERED ON CROSS-
APPEAL.

SULLIVAN, P.J., BANKS, ROBERTS, SMITH AND MILLS, JJ., CONCUR. LEE, C.J.,
CONCURS IN RESULT ONLY. McRAE, J., DISSENTS WITH SEPARATE WRITTEN
OPINION. PRATHER, P.J., NOT PARTICIPATING.


     McRAE, JUSTICE, DISSENTING:


¶50. In this case, Citizens Bank, as assignee, should be held responsible to perform all covenants
included in the lease. The language within the lease makes Citizens Bank a general assignee with all
the rights and obligations of any assignee. Further, under Mississippi's environmental responsibility
statutes, Citizens is liable for the cost of cleanup of the site in question. Because the majority
interprets the lease and our statutes differently, I dissent.

¶51. When it received the lease, Citizens Bank "stepped into the shoes" of Gulf Coast Sulphur
Production, thus becoming a potentially responsible party. As an assignee, the bank became
responsible for assuming liabilities arising from the environmental covenants that "run with the land."
The covenants in the lease under review enhance the value of the land, are incident to the surface
estate, directly affect the land, and enhance MidSouth's reversionary interest. Therefore, Citizens
Bank is obligated to assume liability from these covenants.

¶52. Additionally, the loans from Citizens Bank allowed the operator of the site to continue business.
It follows that Citizens Bank acquired an interest in seeing the site succeed so that the bank would
receive its money back. In this case, Citizens Bank was clearly aware of the hazardous nature of the
site's business, and it encouraged the enterprise to continue, even when financial ruin drew near.
Under Miss. Code Ann. § 17-17-29(4), then, the bank must incur liability.

¶53. It is for these reasons that I dissent.
