AB111: Bill Text

AB111,26,13 408.510 (1) An In a case not covered by the priority rules in ch. 409 or the rules stated in sub. (3), an action based on an adverse claim to a financial asset or security entitlement, whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against a person who purchases a security entitlement, or an interest therein, from an entitlement holder if the purchaser gives value, does not have notice of the adverse claim, and obtains control.

AB111, s. 76 Section 76. 408.510 (3) of the statutes is renumbered 408.510 (3) (intro.) and amended to read:

AB111,26,21 408.510 (3) (intro.) In a case not covered by the priority rules in ch. 409, a purchaser for value of a security entitlement, or an interest therein, who obtains control has priority over a purchaser of a security entitlement, or an interest therein, who does not obtain control. Purchasers Except as otherwise provided in sub. (4), purchasers who have control rank equally, except that a according to priority in time of:

AB111,26,23 (4) A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary.

AB111, s. 77 Section 77. 408.510 (3) (a) to (c) of the statutes are created to read:

AB111,27,3 408.510 (3) (a) The purchaser's becoming the person for whom the securities account, in which the security entitlement is carried, is maintained, if the purchaser obtained control under s. 408.106 (4) (a);

AB111,27,7 (b) The securities intermediary's agreement to comply with the purchaser's entitlement orders with respect to security entitlements carried or to be carried in the securities account in which the security entitlement is carried, if the purchaser obtained control under s. 408.106 (4) (b); or

AB111,27,10 (c) If the purchaser obtained control through another person under s. 408.106 (4) (c), the time on which priority would be based under this subsection if the other person were the secured party.

AB111, s. 78 Section 78. Chapter 409 of the statutes is repealed and recreated to read:

AB111,27,14 Chapter 409 uniform commercial code — secured transactions

AB111,27,16 Subchapter I GENERAL PROVISIONS

AB111,27,18 409.101 Short title. This chapter may be cited as uniform commercial code — secured transactions.

AB111,27,20 409.102 Definitions and index of definitions. (1) Chapter 409 definitions. In this chapter:

AB111,27,22 (a) "Accession" means goods that are physically united with other goods in such a manner that the identity of the original goods is not lost.

AB111,28,12 (ag) "Account", except as used in "account for", means a right to payment of a monetary obligation, whether or not earned by performance; for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of; for services rendered or to be rendered; for a policy of insurance issued or to be issued; for a secondary obligation incurred or to be incurred; for energy provided or to be provided; for the use or hire of a vessel under a charter or other contract; arising out of the use of a credit or charge card or information contained on or for use with the card; or as winnings in a lottery or other game of chance operated or sponsored by a state, governmental unit of a state, or person licensed or authorized to operate the game by a state or governmental unit of a state. The term includes health-care-insurance receivables. The term does not include rights to payment evidenced by chattel paper or an instrument; commercial tort claims; deposit accounts; investment property; letter-of-credit rights or letters of credit; or rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card.

AB111,28,15 (am) "Account debtor" means a person obligated on an account, chattel paper, or general intangible. The term does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper.

AB111,28,16 (as) "Accounting", except as used in "accounting for", means a record:

AB111,28,17 1. Authenticated by a secured party;

AB111,28,19 2. Indicating the aggregate unpaid secured obligations as of a date not more than 35 days earlier or 35 days later than the date of the record; and

AB111,28,20 3. Identifying the components of the obligations in reasonable detail.

AB111,28,22 (b) "Agricultural lien" means an interest, other than a security interest, in farm products:

AB111,28,23 1. Which secures payment or performance of an obligation for:

AB111,28,25 a. Goods or services furnished in connection with a debtor's farming operation; or

AB111,29,2 b. Rent on real property leased by a debtor in connection with its farming operation;

AB111,29,3 2. Which is created by statute in favor of a person that:

AB111,29,5 a. In the ordinary course of its business furnished goods or services to a debtor in connection with a debtor's farming operation; or

AB111,29,7 b. Leased real property to a debtor in connection with the debtor's farming operation; and

AB111,29,9 3. Whose effectiveness does not depend on the person's possession of the personal property.

AB111,29,13 (bcm) "Applicant" means a person at whose request or for whose account a letter of credit is issued. The term includes a person who requests an issuer to issue a letter of credit on behalf of another if the person making the request undertakes an obligation to reimburse the issuer.

AB111,29,14 (bg) "As-extracted collateral" means:

AB111,29,17 1. Oil, gas, or other minerals that are subject to a security interest that is created by a debtor having an interest in the minerals before extraction and which attaches to the minerals as extracted; or

AB111,29,19 2. Accounts arising out of the sale at the wellhead or minehead of oil, gas, or other minerals in which the debtor had an interest before extraction.

AB111,29,20 (bm) "Authenticate" means:

AB111,29,21 1. To sign; or

AB111,29,24 2. To execute or otherwise adopt a symbol, or encrypt or similarly process a record in whole or in part, with the present intent of the authenticating person to identify the person and adopt or accept a record.

AB111,30,3 (bs) "Bank" means an organization that is engaged in the business of banking. The term includes savings banks, savings and loan associations, credit unions, and trust companies.

AB111,30,6 (btm) "Beneficiary" means a person who under the terms of a letter of credit is entitled to have its complying presentation honored. The term includes a person to whom drawing rights have been transferred under a transferable letter of credit.

AB111,30,8 (c) "Cash proceeds" means proceeds that are money, checks, deposit accounts, or the like.

AB111,30,12 (cg) "Certificate of title" means a certificate of title with respect to which a statute provides for the security interest in question to be indicated on the certificate as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral.

AB111,30,24 (cm) "Chattel paper" means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods, or a lease of specific goods and license of software used in the goods. The term does not include charters or other contracts involving the use or hire of a vessel. The term does not include records that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card. If a transaction is evidenced by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper. In this paragraph, "monetary obligation" means a monetary obligation secured by the goods or owned under a lease of the goods and includes a monetary obligation with respect to software used in the goods.

AB111,31,2 (cs) "Collateral" means the property subject to a security interest or agricultural lien. The term includes:

AB111,31,3 1. Proceeds to which a security interest attaches;

AB111,31,5 2. Accounts, chattel paper, payment intangibles, and promissory notes that have been sold; and

AB111,31,6 3. Goods that are the subject of a consignment.

AB111,31,7 (d) "Commercial tort claim" means a claim arising in tort with respect to which:

AB111,31,8 1. The claimant is an organization; or

AB111,31,9 2. The claimant is an individual and the claim:

AB111,31,10 a. Arose in the course of the claimant's business or profession; and

AB111,31,12 b. Does not include damages arising out of personal injury to or the death of an individual.

AB111,31,14 (dg) "Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer.

AB111,31,17 (dm) "Commodity contract" means a commodity futures contract, an option on a commodity futures contract, a commodity option, or another contract if the contract or option is:

AB111,31,19 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 federal commodities laws; or

AB111,31,21 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.

AB111,31,23 (ds) "Commodity customer" means a person for which a commodity intermediary carries a commodity contract on its books.

AB111,31,24 (e) "Commodity intermediary" means a person that:

AB111,32,2 1. Is registered as a futures commission merchant under federal commodities law; or

AB111,32,5 2. 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 federal commodities law.

AB111,32,6 (eg) "Communicate" means:

AB111,32,7 1. To send a written or other tangible record;

AB111,32,9 2. To transmit a record by any means agreed upon by the persons sending and receiving the record; or

AB111,32,11 3. In the case of transmission of a record to or by a filing office, to transmit a record by any means prescribed by filing-office rule.

AB111,32,13 (em) "Consignee" means a merchant to which goods are delivered in a consignment.

AB111,32,15 (es) "Consignment" means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and:

AB111,32,16 1. The merchant:

AB111,32,18 a. Deals in goods of that kind under a name other than the name of the person making delivery;

AB111,32,19 b. Is not an auctioneer; and

AB111,32,21 c. Is not generally known by its creditors to be substantially engaged in selling the goods of others;

AB111,32,23 2. With respect to each delivery, the aggregate value of the goods is $1,000 or more at the time of delivery;

AB111,32,24 3. The goods are not consumer goods immediately before delivery; and

AB111,32,25 4. The transaction does not create a security interest that secures an obligation.

AB111,33,2 (f) "Consignor" means a person that delivers goods to a consignee in a consignment.

AB111,33,3 (fg) "Consumer debtor" means a debtor in a consumer transaction.

AB111,33,5 (fm) "Consumer goods" means goods that are used or bought for use primarily for personal, family, or household purposes.

AB111,33,6 (fs) "Consumer-goods transaction" means a consumer transaction in which:

AB111,33,8 1. An individual incurs an obligation primarily for personal, family, or household purposes; and

AB111,33,9 2. A security interest in consumer goods secures the obligation.

AB111,33,12 (g) "Consumer obligor" means an obligor who is an individual and who incurred the obligation as part of a transaction entered into primarily for personal, family, or household purposes.

AB111,33,17 (gg) "Consumer transaction" means a transaction in which an individual incurs an obligation primarily for personal, family, or household purposes; a security interest secures the obligation; and the collateral is held or acquired primarily for personal, family, or household purposes. The term includes consumer-goods transactions.

AB111,33,19 (gm) "Continuation statement" means an amendment of a financing statement which:

AB111,33,21 1. Identifies, by its file number, the initial financing statement to which it relates; and

AB111,33,23 2. Indicates that it is a continuation statement for, or that it is filed to continue the effectiveness of, the identified financing statement.

AB111,33,24 (gs) "Debtor" means:

AB111,34,2 1. A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor;

AB111,34,4 2. A seller of accounts, chattel paper, payment intangibles, or promissory notes; or

AB111,34,5 3. A consignee.

AB111,34,8 (h) "Deposit account" means a demand, time, savings, passbook, or similar account maintained with a bank. The term does not include investment property or accounts evidenced by an instrument.

AB111,34,10 (hg) "Document" means a document of title or a receipt of the type described in s. 407.201 (2).

AB111,34,12 (hm) "Electronic chattel paper" means chattel paper evidenced by a record or records consisting of information stored in an electronic medium.

AB111,34,14 (hs) "Encumbrance" means a right, other than an ownership interest, in real property. The term includes mortgages and other liens on real property.