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9409.205 Use or disposition of collateral permissible. (1) When security
10interest not invalid or fraudulent. A security interest is not invalid or fraudulent
11against creditors solely because:
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(a) The debtor has the right or ability to:
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1. Use, commingle, or dispose of all or part of the collateral, including returned
14or repossessed goods;
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2. Collect, compromise, enforce, or otherwise deal with collateral;
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3. Accept the return of collateral or make repossessions; or
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4. Use, commingle, or dispose of proceeds; or
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(b) The secured party fails to require the debtor to account for proceeds or
19replace collateral.
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20(2) Requirements of possession not relaxed. This section does not relax the
21requirements of possession if attachment, perfection, or enforcement of a security
22interest depends upon possession of the collateral by the secured party.
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23409.206 Security interest arising in purchase or delivery of financial
24asset. (1) Security interest when person buys through securities intermediary.
1A security interest in favor of a securities intermediary attaches to a person's
2security entitlement if:
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(a) The person buys a financial asset through the securities intermediary in a
4transaction in which the person is obligated to pay the purchase price to the
5securities intermediary at the time of the purchase; and
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(b) The securities intermediary credits the financial asset to the buyer's
7securities account before the buyer pays the securities intermediary.
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8(2) Security interest secures obligation to pay for financial asset. The
9security interest described in sub. (1) secures the person's obligation to pay for the
10financial asset.
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11(3) Security interest in payment against delivery transaction. A security
12interest in favor of a person that delivers a certificated security or other financial
13asset represented by a writing attaches to the security or other financial asset if:
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(a) The security or other financial asset:
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1. In the ordinary course of business is transferred by delivery with any
16necessary endorsement or assignment; and
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2. Is delivered under an agreement between persons in the business of dealing
18with such securities or financial assets; and
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(b) The agreement calls for delivery against payment.
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20(4) Security interest secures obligation to pay for delivery. The security
21interest described in sub. (3) secures the obligation to make payment for the delivery.
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22409.207 Rights and duties of secured party having possession or
23control of collateral. (1) Duty of care when secured party in possession. Except
24as otherwise provided in sub. (4), a secured party shall use reasonable care in the
25custody and preservation of collateral in the secured party's possession. In the case
1of chattel paper or an instrument, reasonable care includes taking necessary steps
2to preserve rights against prior parties unless otherwise agreed.
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3(2) Expenses, risks, duties, and rights when secured party in possession. 4Except as otherwise provided in sub. (4), if a secured party has possession of
5collateral:
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(a) Reasonable expenses, including the cost of insurance and payment of taxes
7or other charges, incurred in the custody, preservation, use, or operation of the
8collateral are chargeable to the debtor and are secured by the collateral;
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(b) The risk of accidental loss or damage is on the debtor to the extent of a
10deficiency in any effective insurance coverage;
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(c) The secured party shall keep the collateral identifiable, but fungible
12collateral may be commingled; and
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(d) The secured party may use or operate the collateral:
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1. For the purpose of preserving the collateral or its value;
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2. As permitted by an order of a court having competent jurisdiction; or
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3. Except in the case of consumer goods, in the manner and to the extent agreed
17by the debtor.
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18(3) Duties and rights when secured party in possession or control. Except
19as otherwise provided in sub. (4), a secured party having possession of collateral or
20control of collateral under s. 409.104, 409.105, 409.106, or 409.107:
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(a) May hold as additional security any proceeds, except money or funds,
22received from the collateral;
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(b) Shall apply money or funds received from the collateral to reduce the
24secured obligation, unless remitted to the debtor; and
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(c) May create a security interest in the collateral.
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1(4) Buyer of certain rights to payment. If the secured party is a buyer of
2accounts, chattel paper, payment intangibles, or promissory notes or a consignor:
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(a) Subsection (1) does not apply unless the secured party is entitled under an
4agreement:
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1. To charge back uncollected collateral; or
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2. Otherwise to full or limited recourse against the debtor or a secondary obligor
7based on the nonpayment or other default of an account debtor or other obligor on
8the collateral; and
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(b) Subsections (1) and (2) do not apply.
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10409.208 Additional duties of secured party having control of collateral.
11(1) Applicability of section. This section applies to cases in which there is no
12outstanding secured obligation and the secured party is not committed to make
13advances, incur obligations, or otherwise give value.
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14(2) Duties of secured party after receiving demand from debtor. Within 10
15days after receiving an authenticated demand by the debtor:
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(a) A secured party having control of a deposit account under s. 409.104 (1) (b)
17shall send to the bank with which the deposit account is maintained an
18authenticated statement that releases the bank from any further obligation to
19comply with instructions originated by the secured party;
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(b) A secured party having control of a deposit account under s. 409.104 (1) (c)
21shall:
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1. Pay the debtor the balance on deposit in the deposit account; or
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2. Transfer the balance on deposit into a deposit account in the debtor's name;
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(c) A secured party, other than a buyer, having control of electronic chattel
25paper under s. 409.105 shall:
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11. Communicate the authoritative copy of the electronic chattel paper to the
2debtor or its designated custodian;
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2. If the debtor designates a custodian that is the designated custodian with
4which the authoritative copy of the electronic chattel paper is maintained for the
5secured party, communicate to the custodian an authenticated record releasing the
6designated custodian from any further obligation to comply with instructions
7originated by the secured party and instructing the custodian to comply with
8instructions originated by the debtor; and
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3. Take appropriate action to enable the debtor or its designated custodian to
10make copies of or revisions to the authoritative copy which add or change an
11identified assignee of the authoritative copy without the consent of the secured party;
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(d) A secured party having control of investment property under s. 408.106 (4)
13(b) or 409.106 (2) shall send to the securities intermediary or commodity
14intermediary with which the security entitlement or commodity contract is
15maintained an authenticated record that releases the securities intermediary or
16commodity intermediary from any further obligation to comply with entitlement
17orders or directions originated by the secured party; and
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(e) A secured party having control of a letter-of-credit right under s. 409.107
19shall send to each person having an unfulfilled obligation to pay or deliver proceeds
20of the letter of credit to the secured party an authenticated release from any further
21obligation to pay or deliver proceeds of the letter of credit to the secured party.
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22409.209 Duties of secured party if account debtor has been notified of
23assignment.
(1) Applicability of section. Except as otherwise provided in sub. (3),
24this section applies if:
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(a) There is no outstanding secured obligation; and
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1(b) The secured party is not committed to make advances, incur obligations, or
2otherwise give value.
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3(2) Duties of secured party after receiving demand from debtor. Within 10
4days after receiving an authenticated demand by the debtor, a secured party shall
5send to an account debtor that has received notification of an assignment to the
6secured party as assignee under s. 409.406 (1) an authenticated record that releases
7the account debtor from any further obligation to the secured party.
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8(3) Inapplicability to sales. This section does not apply to an assignment
9constituting the sale of an account, chattel paper, or payment intangible.
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10409.210 Request for accounting; request regarding list of collateral or
11statement of account. (1) Definitions. In this section:
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(a) "Request" means a record of a type described in par. (b), (c), or (d).
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(b) "Request for an accounting" means a record authenticated by a debtor
14requesting that the recipient provide an accounting of the unpaid obligations secured
15by collateral and reasonably identifying the transaction or relationship that is the
16subject of the request.
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(c) "Request regarding a list of collateral" means a record authenticated by a
18debtor requesting that the recipient approve or correct a list of what the debtor
19believes to be the collateral securing an obligation and reasonably identifying the
20transaction or relationship that is the subject of the request.
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(d) "Request regarding a statement of account" means a record authenticated
22by a debtor requesting that the recipient approve or correct a statement indicating
23what the debtor believes to be the aggregate amount of unpaid obligations secured
24by collateral as of a specified date and reasonably identifying the transaction or
25relationship that is the subject of the request.
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1(2) Duty to respond to requests. Subject to subs. (3) to (6), a secured party,
2other than a buyer of accounts, chattel paper, payment intangibles, or promissory
3notes or a consignor, shall comply with a request within 14 days after receipt:
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(a) In the case of a request for an accounting, by authenticating and sending
5to the debtor an accounting; and
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(b) In the case of a request regarding a list of collateral or a request regarding
7a statement of account, by authenticating and sending to the debtor an approval or
8correction.
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9(3) Request regarding list of collateral; statement concerning type of
10collateral. A secured party that claims a security interest in all of a particular type
11of collateral owned by the debtor may comply with a request regarding a list of
12collateral by sending to the debtor an authenticated record including a statement to
13that effect within 14 days after receipt.
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14(4) Request regarding list of collateral; no interest claimed. A person that
15receives a request regarding a list of collateral, claims no interest in the collateral
16when it receives the request, and claimed an interest in the collateral at an earlier
17time shall comply with the request within 14 days after receipt by sending to the
18debtor an authenticated record:
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(a) Disclaiming any interest in the collateral; and
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(b) If known to the recipient, providing the name and mailing address of any
21assignee of or successor to the recipient's interest in the collateral.
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22(5) Request for accounting or regarding statement of account; no interest
23in obligation claimed. A person that receives a request for an accounting or a request
24regarding a statement of account, claims no interest in the obligations when it
25receives the request, and claimed an interest in the obligations at an earlier time
1shall comply with the request within 14 days after receipt by sending to the debtor
2an authenticated record:
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(a) Disclaiming any interest in the obligations; and
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(b) If known to the recipient, providing the name and mailing address of any
5assignee of or successor to the recipient's interest in the obligations.
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6(6) Charges for responses. A debtor is entitled without charge to one response
7to a request under this section during any 6-month period. The secured party may
8require payment of a charge not exceeding $25 for each additional response.
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subchapter III
10PERFECTION AND PRIORITY
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11409.301 Law governing perfection and priority of security interests. 12Except as otherwise provided in ss. 409.303 to 409.306, the following rules determine
13the law governing perfection, the effect of perfection or nonperfection, and the
14priority of a security interest in collateral:
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15(1) Location of debtor. Except as otherwise provided in this section, while a
16debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection,
17the effect of perfection or nonperfection, and the priority of a security interest in
18collateral.
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19(2) Location of collateral. While collateral is located in a jurisdiction, the
20local law of that jurisdiction governs perfection, the effect of perfection or
21nonperfection, and the priority of a possessory security interest in that collateral.
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22(3) Location of property. Except as otherwise provided in sub. (4), while
23negotiable documents, goods, instruments, money, or tangible chattel paper is
24located in a jurisdiction, the local law of that jurisdiction governs:
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(a) Perfection of a security interest in the goods by filing a fixture filing;
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1(b) Perfection of a security interest in timber to be cut; and
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(c) The effect of perfection or nonperfection and the priority of a nonpossessory
3security interest in the collateral.
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4(4) Location of wellhead or minehead. The local law of the jurisdiction in
5which the wellhead or minehead is located governs perfection, the effect of perfection
6or nonperfection, and the priority of a security interest in as-extracted collateral.
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7409.302 Law governing perfection and priority of agricultural liens. 8While farm products are located in a jurisdiction, the local law of that jurisdiction
9governs perfection, the effect of perfection or nonperfection, and the priority of an
10agricultural lien on the farm products.
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11409.303 Law governing perfection and priority of security interests in
12goods covered by a certificate of title. (1) Applicability of section. This section
13applies to goods covered by a certificate of title, even if there is no other relationship
14between the jurisdiction under whose certificate of title the goods are covered and the
15goods or the debtor.
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16(2) When goods covered by certificate of title. Goods become covered by a
17certificate of title when a valid application for the certificate of title and the
18applicable fee are delivered to the appropriate authority. Goods cease to be covered
19by a certificate of title at the earlier of the time the certificate of title ceases to be
20effective under the law of the issuing jurisdiction or the time the goods become
21covered subsequently by a certificate of title issued by another jurisdiction.
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22(3) Applicable law. The local law of the jurisdiction under whose certificate of
23title the goods are covered governs perfection, the effect of perfection or
24nonperfection, and the priority of a security interest in goods covered by a certificate
1of title from the time the goods become covered by the certificate of title until the
2goods cease to be covered by the certificate of title.
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3409.304 Law governing perfection and priority of security interests in
4deposit accounts.
(1) Law of bank's jurisdiction governs. The local law of a bank's
5jurisdiction governs perfection, the effect of perfection or nonperfection, and the
6priority of a security interest in a deposit account maintained with that bank.
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7(2) Bank's jurisdiction. The following rules determine a bank's jurisdiction for
8purposes of this subchapter:
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(a) If an agreement between the bank and the debtor governing the deposit
10account expressly provides that a particular jurisdiction is the bank's jurisdiction for
11purposes of this subchapter, this chapter, or chs. 401 to 411, that jurisdiction is the
12bank's jurisdiction.
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(b) If par. (a) does not apply and an agreement between the bank and its
14customer governing the deposit account expressly provides that the agreement is
15governed by the law of a particular jurisdiction, that jurisdiction is the bank's
16jurisdiction.
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(c) If neither par. (a) nor par. (b) applies and an agreement between the bank
18and its customer governing the deposit account expressly provides that the deposit
19account is maintained at an office in a particular jurisdiction, that jurisdiction is the
20bank's jurisdiction.
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(d) If none of pars. (a) to (c) applies, the bank's jurisdiction is the jurisdiction
22in which the office identified in an account statement as the office serving the
23customer's account is located.
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(e) If none of pars. (a) to (d) applies, the bank's jurisdiction is the jurisdiction
25in which the chief executive office of the bank is located.