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(h) A transfer of an interest in or an assignment of a claim under a policy of
20insurance, other than an assignment by or to a health-care provider of a
21health-care-insurance receivable and any subsequent assignment of the right to
22payment, but ss. 409.315 and 409.322 apply with respect to proceeds and priorities
23in proceeds;
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(i) An assignment of a right represented by a judgment, other than a judgment
25taken on a right to payment that was collateral;
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1(j) A right of recoupment or setoff, but:
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1. Section 409.340 applies with respect to the effectiveness of rights of
3recoupment or setoff against deposit accounts; and
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2. Section 409.404 applies with respect to defenses or claims of an account
5debtor;
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(k) The creation or transfer of an interest in or lien on real property, including
7a lease or rents thereunder, except to the extent that provision is made for:
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1. Liens on real property in ss. 409.203 and 409.308;
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2. Fixtures in s. 409.334;
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3. Fixture filings in ss. 409.501, 409.502, 409.512, 409.516, and 409.519; and
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4. Security agreements covering personal and real property in s. 409.604;
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(L) An assignment of a claim arising in tort, other than a commercial tort claim,
13but ss. 409.315 and 409.322 apply with respect to proceeds and priorities in proceeds;
14or
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(m) An assignment of a deposit account in a consumer transaction, but ss.
16409.315 and 409.322 apply with respect to proceeds and priorities in proceeds.
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17409.110 Security interests arising under ch. 402 or 411. A security
18interest arising under s. 402.401, 402.505, 402.711 (3), or 411.508 (5) is subject to this
19chapter. However, until the debtor obtains possession of the goods:
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20(1) The security interest is enforceable, even if s. 409.203 (2) (c) has not been
21satisfied;
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22(2) Filing is not required to perfect the security interest;
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23(3) The rights of the secured party after default by the debtor are governed by
24ch. 402 or 411; and
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1(4) The security interest has priority over a conflicting security interest created
2by the debtor.
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Subchapter II
4EFFECTIVENESS OF SECURITY
5
AGREEMENT; ATTACHMENT OF
6
SECURITY INTEREST; RIGHTS OF
7
PARTIES TO SECURITY AGREEMENT
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8409.201 General effectiveness of security agreement. (1) General
9effectiveness. Except as otherwise provided in chs. 401 to 411, a security agreement
10is effective according to its terms between the parties, against purchasers of the
11collateral, and against creditors.
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12(2) Applicable consumer laws and other law. A transaction subject to this
13chapter is subject to any applicable rule of law which establishes a different rule for
14consumers and to chs. 138, 421 to 427, and 429 and s. 182.025.
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15(3) Other applicable law controls. In case of conflict between this chapter
16and a rule of law, statute, or rule described in sub. (2), the rule of law, statute, or rule
17controls. Failure to comply with a statute or rule described in sub. (2) has only the
18effect the statute or rule specifies.
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19(4) Further deference to other applicable law. This chapter does not:
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(a) Validate any rate, charge, agreement, or practice that violates a rule of law,
21statute, or rule described in sub. (2); or
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(b) Extend the application of the rule of law, statute, or rule to a transaction
23not otherwise subject to the rule of law, statute, or rule.
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24409.202 Title to collateral immaterial. Except as otherwise provided with
25respect to consignments or sales of accounts, chattel paper, payment intangibles, or
1promissory notes, the provisions of this chapter with regard to rights and obligations
2apply whether title to collateral is in the secured party or the debtor.
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3409.203 Attachment and enforceability of security interest; proceeds;
4supporting obligations; formal requisites. (1) Attachment. A security interest
5attaches to collateral when it becomes enforceable against the debtor with respect
6to the collateral, unless an agreement expressly postpones the time of attachment.
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7(2) Enforceability. Except as otherwise provided in subs. (3) to (9), a security
8interest is enforceable against the debtor and 3rd parties with respect to the
9collateral only if:
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(a) Value has been given;
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(b) The debtor has rights in the collateral or the power to transfer rights in the
12collateral to a secured party; and
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(c) One of the following conditions is met:
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1. The debtor has authenticated a security agreement that provides a
15description of the collateral and, if the security interest covers timber to be cut, a
16description of the land concerned;
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2. The collateral is not a certificated security and is in the possession of the
18secured party under s. 409.313 pursuant to the debtor's security agreement;
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3. The collateral is a certificated security in registered form and the security
20certificate has been delivered to the secured party under s. 408.301 pursuant to the
21debtor's security agreement; or
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4. The collateral is deposit accounts, electronic chattel paper, investment
23property, or letter-of-credit rights, and the secured party has control under s.
24409.104, 409.105, 409.106, or 409.107 pursuant to the debtor's security agreement.
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1(3) Other uniform commercial code provisions. Subsection (2) is subject to s.
2404.210 on the security interest of a collecting bank, s. 405.118 on the security
3interest of a letter-of-credit issuer or nominated person, s. 409.110 on a security
4interest arising under ch. 402 or 411, and s. 409.206 on security interests in
5investment property.
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6(4) When person becomes bound by another person's security agreement. (a)
7A person becomes bound as debtor by a security agreement entered into by another
8person if, by operation of law other than this chapter or by contract:
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1. The security agreement becomes effective to create a security interest in the
10person's property; or
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2. The person becomes generally obligated for the obligations of the other
12person, including the obligation secured under the security agreement, and acquires
13or succeeds to all or substantially all of the assets of the other person.
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(b) A security agreement authenticated by one spouse is authenticated by the
15debtor under this section if that spouse acting alone has the right under s. 766.51 to
16manage and control the collateral, unless a marital property agreement or court
17decree that is binding on the secured party under s. 766.55 (4m) or 766.56 (2) (c)
18provides otherwise.
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19(5) Effect of new debtor becoming bound. If a new debtor becomes bound as
20debtor by a security agreement entered into by another person:
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(a) The agreement satisfies sub. (2) (c) with respect to existing or
22after-acquired property of the new debtor to the extent that the property is described
23in the agreement; and
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(b) Another agreement is not necessary to make a security interest in the
25property enforceable.
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1(6) Proceeds and supporting obligations. The attachment of a security
2interest in collateral gives the secured party the rights to proceeds provided by s.
3409.315 and is also attachment of a security interest in a supporting obligation for
4the collateral.
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5(7) Lien securing right to payment. The attachment of a security interest in
6a right to payment or performance secured by a security interest or other lien on
7personal or real property is also attachment of a security interest in the security
8interest, mortgage, or other lien.
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9(8) Security entitlement carried in securities account. The attachment of
10a security interest in a securities account is also attachment of a security interest in
11the security entitlements carried in the securities account.
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12(9) Commodity contracts carried in commodity account. The attachment of
13a security interest in a commodity account is also attachment of a security interest
14in the commodity contracts carried in the commodity account.
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15409.204 After-acquired property; future advances. (1)
After-acquired
16collateral. Except as otherwise provided in sub. (2), a security agreement may
17create or provide for a security interest in after-acquired collateral.
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18(2) When after-acquired property clause not effective. A security interest
19does not attach under a term constituting an after-acquired property clause to:
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(a) Consumer goods, other than an accession when given as additional security,
21unless the debtor acquires rights in them within 10 days after the secured party gives
22value; or
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(b) A commercial tort claim.
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24(3) Future advances and other value. A security agreement may provide that
25collateral secures, or that accounts, chattel paper, payment intangibles, or
1promissory notes are sold in connection with, future advances or other value,
2whether or not the advances or value are given pursuant to commitment.
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3409.205 Use or disposition of collateral permissible. (1) When security
4interest not invalid or fraudulent. A security interest is not invalid or fraudulent
5against 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
8or 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
13replace collateral.
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14(2) Requirements of possession not relaxed. This section does not relax the
15requirements of possession if attachment, perfection, or enforcement of a security
16interest depends upon possession of the collateral by the secured party.
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17409.206 Security interest arising in purchase or delivery of financial
18asset. (1) Security interest when person buys through securities intermediary. 19A security interest in favor of a securities intermediary attaches to a person's
20security entitlement if:
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(a) The person buys a financial asset through the securities intermediary in a
22transaction in which the person is obligated to pay the purchase price to the
23securities intermediary at the time of the purchase; and
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(b) The securities intermediary credits the financial asset to the buyer's
25securities account before the buyer pays the securities intermediary.
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1(2) Security interest secures obligation to pay for financial asset. The
2security interest described in sub. (1) secures the person's obligation to pay for the
3financial asset.
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4(3) Security interest in payment against delivery transaction. A security
5interest in favor of a person that delivers a certificated security or other financial
6asset 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
9necessary endorsement or assignment; and
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2. Is delivered under an agreement between persons in the business of dealing
11with such securities or financial assets; and
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(b) The agreement calls for delivery against payment.
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13(4) Security interest secures obligation to pay for delivery. The security
14interest described in sub. (3) secures the obligation to make payment for the delivery.
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15409.207 Rights and duties of secured party having possession or
16control of collateral. (1) Duty of care when secured party in possession. Except
17as otherwise provided in sub. (4), a secured party shall use reasonable care in the
18custody and preservation of collateral in the secured party's possession. In the case
19of chattel paper or an instrument, reasonable care includes taking necessary steps
20to preserve rights against prior parties unless otherwise agreed.
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21(2) Expenses, risks, duties, and rights when secured party in possession. 22Except as otherwise provided in sub. (4), if a secured party has possession of
23collateral:
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1(a) Reasonable expenses, including the cost of insurance and payment of taxes
2or other charges, incurred in the custody, preservation, use, or operation of the
3collateral 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
5deficiency in any effective insurance coverage;
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(c) The secured party shall keep the collateral identifiable, but fungible
7collateral 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
12by the debtor.
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13(3) Duties and rights when secured party in possession or control. Except
14as otherwise provided in sub. (4), a secured party having possession of collateral or
15control 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,
17received from the collateral;
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(b) Shall apply money or funds received from the collateral to reduce the
19secured obligation, unless remitted to the debtor; and
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(c) May create a security interest in the collateral.
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21(4) Buyer of certain rights to payment. If the secured party is a buyer of
22accounts, 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
24agreement:
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1. To charge back uncollected collateral; or
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12. Otherwise to full or limited recourse against the debtor or a secondary obligor
2based on the nonpayment or other default of an account debtor or other obligor on
3the collateral; and
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(b) Subsections (1) and (2) do not apply.
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5409.208 Additional duties of secured party having control of collateral.
6(1) Applicability of section. This section applies to cases in which there is no
7outstanding secured obligation and the secured party is not committed to make
8advances, incur obligations, or otherwise give value.