409.110 Annotation
A wrong statement of section, township, range and county where crops were grown was not minor, and, without directing further inquiry, was insufficient. Whether a party is misled by the description is not part of the inquiry under s. 409.110 or 409.402. Smith & Spindahl Enterprises, Inc. v. Lee,
206 Wis. 2d 662,
557 N.W.2d 865 (Ct. App. 1996).
409.111
409.111
Applicability of bulk transfer laws. The creation of a security interest is not a bulk transfer under
ch. 406 (see
s. 406.103).
409.112
409.112
Where collateral is not owned by debtor. Unless otherwise agreed, when a secured party knows that collateral is owned by a person who is not the debtor, the owner of the collateral is entitled to receive from the secured party any surplus under
s. 409.502 (2) or under
s. 409.504 (1), and is not liable for the debt or for any deficiency after resale, and the owner of the collateral has the same right as the debtor:
409.112(2)
(2) To receive notice of and to object to a secured party's proposal to retain the collateral in satisfaction of the indebtedness under
s. 409.505;
409.112 History
History: 1991 a. 316.
409.113
409.113
Security interests arising under ch. 402 or 411. A security interest arising solely under
ch. 402 or
411 is subject to the provisions of this chapter except that, to the extent that and so long as the debtor does not have or does not lawfully obtain possession of the goods, all of the following apply:
409.113(1)
(1) No security agreement is necessary to make the security interest enforceable.
409.113(2)
(2) No filing is required to perfect the security interest.
409.113(3)
(3) The rights of the secured party on default by the debtor are governed by
ch. 402 if a security interest arises solely under that chapter or by
ch. 411 if a security interest arises solely under that chapter.
409.113 History
History: 1991 a. 148.
409.114(1)(1) A person who delivers goods under a consignment which is not a security interest and who would be required to file under this chapter by
s. 402.326 (3) (c) has priority over a secured party who is or becomes a creditor of the consignee and who would have a perfected security interest in the goods if they were the property of the consignee, and also has priority with respect to identifiable cash proceeds received on or before delivery of the goods to a buyer, if:
409.114(1)(a)
(a) The consignor complies with the filing provision on sales with respect to consignments (
s. 402.326 (3) (c)) before the consignee receives possession of the goods; and
409.114(1)(b)
(b) The consignor gives notification in writing to the holder of the security interest if the holder has filed a financing statement covering the same types of goods before the date of the filing made by the consignor; and
409.114(1)(c)
(c) The holder of the security interest receives the notification before the consignee receives possession of the goods; and
409.114(1)(d)
(d) The notification states that the consignor expects to deliver goods on consignment to the consignee, describing the goods by item or type.
409.114(2)
(2) In the case of a consignment which is not a security interest and in which the requirements of
sub. (1) have not been met, a person who delivers goods to another is subordinate to a person who would have a perfected security interest in the goods if they were the property of the debtor.
409.114 History
History: 1973 c. 215;
1981 c. 390 s.
252.
409.114 Annotation
Legislative Council Note, 1973: Sub. (1) (c) was amended by the Special Committee to delete the words "within 5 years" which appear after "notification" in the official text. Under s. 409.403 (2), as amended by this proposal, the effectiveness of a filed financing statement lapses at the end of 5 years unless a continuation statement is filed prior to lapse. For this reason the official text requires that a new notice be made under this section and s. 409.312 (3) (c) every 5 years even though holders of conflicting security interests received notice when the financing statement was originally filed and will have constructive notice upon the filing of a continuation statement. The Special Committee felt this requirement of new notice every 5 years to be both unreasonable and unnecessary. (Bill 177-S)
409.115
409.115
Investment property. 409.115(1)(a)
(a) "Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer.
409.115(1)(b)
(b) "Commodity contract" means a commodity futures contract, an option on a commodity futures contract, a commodity option or other contract that, in each case, is:
409.115(1)(b)1.
1. Traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to the federal commodities laws; or
409.115(1)(b)2.
2. Traded on a foreign commodity board of trade, exchange or market, and is carried on the books of a commodity intermediary for a commodity customer.
409.115(1)(c)
(c) "Commodity customer" means a person for whom a commodity intermediary carries a commodity contract on its books.
409.115(1)(d)1.
1. A person who is registered as a futures commission merchant under the federal commodities laws; or
409.115(1)(d)2.
2. A person who in the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to the federal commodities laws.
409.115(1)(e)
(e) "Control" with respect to a certificated security, uncertificated security, or security entitlement has the meaning specified in
s. 408.106. A secured party has control over a commodity contract if, by agreement among the commodity customer, the commodity intermediary, and the secured party, the commodity intermediary has agreed that it will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer. If a commodity customer grants a security interest in a commodity contract to its own commodity intermediary, the commodity intermediary as secured party has control. A secured party has control over a securities account or commodity account if the secured party has control over all security entitlements or commodity contracts carried in the securities account or commodity account.
409.115(2)
(2) Attachment or perfection of a security interest in a securities account is also attachment or perfection of a security interest in all security entitlements carried in the securities account. Attachment or perfection of a security interest in a commodity account is also attachment or perfection of a security interest in all commodity contracts carried in the commodity account.
409.115(3)
(3) A description of collateral in a security agreement or financing statement is sufficient to create or perfect a security interest in a certificated security, uncertificated security, security entitlement, securities account, commodity contract or commodity account whether it describes the collateral by those terms, or as investment property, or by description of the underlying security, financial asset or commodity contract. A description of investment property collateral in a security agreement or financing statement is sufficient if it identifies the collateral by specific listing, by category, by quantity, by a computational or allocational formula or procedure, or by any other method, if the identity of the collateral is objectively determinable.
409.115(4)
(4) Perfection of a security interest in investment property is governed by the following rules:
409.115(4)(a)
(a) A security interest in investment property may be perfected by control.
409.115(4)(b)
(b) Except as otherwise provided in
pars. (c) and
(d), a security interest in investment property may be perfected by filing.
409.115(4)(c)
(c) If the debtor is a broker or securities intermediary, a security interest in investment property is perfected when it attaches. The filing of a financing statement with respect to a security interest in investment property granted by a broker or securities intermediary has no effect for purposes of perfection or priority with respect to that security interest.
409.115(4)(d)
(d) If a debtor is a commodity intermediary, a security interest in a commodity contract or a commodity account is perfected when it attaches. The filing of a financing statement with respect to a security interest in a commodity contract or a commodity account granted by a commodity intermediary has no effect for purposes of perfection or priority with respect to that security interest.
409.115(5)
(5) Priority between conflicting security interests in the same investment property is governed by the following rules:
409.115(5)(a)
(a) A security interest of a secured party who has control over investment property has priority over a security interest of a secured party who does not have control over the investment property.
409.115(5)(b)
(b) Except as otherwise provided in
pars. (c) and
(d), conflicting security interests of secured parties each of whom has control rank equally.
409.115(5)(c)
(c) Except as otherwise agreed by the securities intermediary, a security interest in a security entitlement or a securities account granted to the debtor's own securities intermediary has priority over any security interest granted by the debtor to another secured party.
409.115(5)(d)
(d) Except as otherwise agreed by the commodity intermediary, a security interest in a commodity contract or a commodity account granted to the debtor's own commodity intermediary has priority over any security interest granted by the debtor to another secured party.
409.115(5)(e)
(e) Conflicting security interests granted by a broker, a securities intermediary or a commodity intermediary which are perfected without control rank equally.
409.115(5)(f)
(f) In all other cases, priority between conflicting security interests in investment property is governed by
s. 409.312 (5),
(6) and
(7).
Section 409.312 (4) does not apply to investment property.
409.115(6)
(6) If a security certificate in registered form is delivered to a secured party pursuant to agreement, a written security agreement is not required for attachment or enforceability of the security interest, delivery suffices for perfection of the security interest, and the security interest has priority over a conflicting security interest perfected by means other than control, even if a necessary endorsement is lacking.
409.115 History
History: 1997 a. 297.
409.116
409.116
Security interest arising in purchase or delivery of financial asset. 409.116(1)
(1) If a person buys a financial asset through a securities intermediary in a transaction in which the buyer is obligated to pay the purchase price to the securities intermediary at the time of the purchase, and the securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary, the securities intermediary has a security interest in the buyer's security entitlement securing the buyer's obligation to pay. A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.
409.116(2)
(2) If a certificated security, or other financial asset represented by a writing which in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment is delivered pursuant to an agreement between persons in the business of dealing with such securities or financial assets and the agreement calls for delivery rather than payment, the person delivering the certificate or other financial asset has a security interest in the certificated security or other financial asset securing the seller's right to receive payment. A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.
409.116 History
History: 1997 a. 297.
VALIDITY OF SECURITY AGREEMENT
AND RIGHTS OF PARTIES THERETO
409.201
409.201
General validity of security interest. Except as otherwise provided by
chs. 401 to
411 a security agreement is effective according to its terms between the parties, against purchasers of the collateral and against creditors. Nothing in this chapter validates any charge or practice illegal under any statute or regulation thereunder governing usury, small loans, retail instalment sales, or the like, or under
chs. 421 to
427 and
429, or extends the application of any such statute or regulation to any transaction not otherwise subject thereto.
409.202
409.202
Title to collateral immaterial. Each provision of this chapter with regard to rights, obligations and remedies applies whether title to collateral is in the secured party or in the debtor.
409.202 Annotation
A person with a voidable title in property, having the power to pass title to a good faith purchaser under s. 402.403, may transfer a security interest in that property. Return of Property in State v. Pippin,
176 Wis. 2d 418,
500 N.W.2d 407 (Ct. App. 1993).
409.203
409.203
Attachment and enforceability of security interest; proceeds; formal requisites. 409.203(1)
(1) Subject to
s. 404.210 on the security interest of a collecting bank,
ss. 409.115 and
409.116 on security interests in investment property, and
s. 409.113 on a security interest arising under
ch. 402 or
411, a security interest is not enforceable against the debtor or 3rd parties with respect to the collateral and does not attach unless:
409.203(1)(a)
(a) The collateral is in the possession of the secured party pursuant to agreement, the collateral is investment property and the secured party has control pursuant to agreement, or the debtor has signed a security agreement which contains a description of the collateral and in addition, when the security interest covers timber to be cut, a description of the land concerned;
409.203(2)
(2) A security agreement signed by one spouse is signed by the debtor under this section if that spouse acting alone has the right under
s. 766.51 to manage and control the collateral, unless a marital property agreement or court decree which is binding on the secured party under
s. 766.55 (4m) or
766.56 (2) (c) provides otherwise.
409.203(3)
(3) A security interest attaches when it becomes enforceable against the debtor with respect to the collateral. Attachment occurs as soon as all of the events specified in
sub. (1) have taken place unless explicit agreement postpones the time of attaching.
409.203(4)
(4) Unless otherwise agreed a security agreement gives the secured party the rights to proceeds under
s. 409.306.
409.203(5)
(5) A transaction, although subject to this chapter, is also subject to
chs. 138,
421 to
427 and
429 and
s. 182.025, or any other similar statute which may be applicable to the particular transaction, and in the case of conflict between this chapter and any such statute, such statute controls. Failure to comply with any applicable statute has only the effect which is specified therein.
409.203 Annotation
A security interest in all of a trucking company's "equipment" reasonably identified trucks as collateral. Milwaukee Mack Sales v. First Wis. Nat. Bank,
93 Wis. 2d 589,
287 N.W.2d 708 (1980).
409.203 Annotation
A provision in an instrument prohibiting transfer of the instrument did not render a security interest in the instrument unenforceable under sub. (1) (c). Belke v. M & I First National Bank of Stevens Point,
189 Wis. 2d 385,
525 N.W.2d 737 (Ct. App. 1994).
409.203 Annotation
If the terms of a security agreement establish that attachment is contingent on subsequent specification of the collateral, the secured party has no security interest before the satisfaction of the contingency. A security agreement requiring the designation of the accounts to serve as collateral gave no security interest when no designation was made. Sierra Finance Corp. v. Excel Laboratories, LLC,
223 Wis. 2d 694,
589 N.W.2d 432 (Ct. App. 1998).
409.204
409.204
After-acquired property; future advances. 409.204(1)(1) Except as provided in
sub. (2), a security agreement may provide that any or all obligations covered by the security agreement are to be secured by after-acquired collateral.
409.204(2)
(2) No security interest attaches under an after-acquired property clause to consumer goods other than accessions under
s. 409.314 when given as additional security unless the debtor acquires rights in them within 10 days after the secured party gives value.
409.204(3)
(3) Obligations covered by a security agreement may include future advances or other value whether or not the advances or value are given pursuant to commitment (
s. 409.105 (1)).
409.204 History
History: 1973 c. 215.
409.204 Annotation
A security agreement covering money lent "and all other obligations and liabilities" will not extend to obligations arising out of contract violations unless they were clearly within the intent of the parties. John Miller Supply Co. v. Western State Bank,
55 Wis. 2d 385,
199 N.W.2d 161 (1972).
409.204 Annotation
Priorities of "future advances" under previously perfected security interests and article 9 of the U.C.C. 58 MLR 759.
409.204 Annotation
Security interests in after-acquired property under the uniform commercial code. Skilton, 1974 WLR 925.
409.205
409.205
Use or disposition of collateral without accounting permissible. A security interest is not invalid or fraudulent against creditors by reason of liberty in the debtor to use, commingle or dispose of all or part of the collateral (including returned or repossessed goods) or to collect or compromise accounts or chattel paper, or to accept the return of goods or make repossessions, or to use, commingle or dispose of proceeds, or by reason of the failure of the secured party to require the debtor to account for proceeds or replace collateral. This section does not relax the requirements of possession where perfection of a security interest depends upon possession of the collateral by the secured party or by a bailee.
409.205 History
History: 1973 c. 215.
409.205 Annotation
Under s. 409.205 the debtor is freed from strict accountability to the secured creditor for the property secured and the validity of a secured interest in after-acquired property specifically recognized. When a creditor has a security interest in the debtor's after-acquired property the debtor is able to commingle his property and use it to his best interest. The acquiescence of the secured creditor under an after-acquired clause by the debtor does not invalidate the security interest of the creditor. Burlington National Bank v. Strauss,
50 Wis. 2d 270,
184 N.W.2d 122 (1971).
