SB480: Bill Text

SB480,30,9 (c) If the document's original terms run to the order of a named person and it is delivered to the named person, the effect is the same as if the document had been negotiated.

SB480,30,11 (d) Negotiation of the document after it has been endorsed to a named person requires endorsement by the named person as well as delivery.

SB480,30,16 (e) A document is duly negotiated if it is negotiated in the manner stated in this subsection to a holder that purchases it in good faith, without notice of any defense against or claim to it on the part of any person, and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves receiving the document in settlement or payment of a monetary obligation.

SB480,30,17 (2) The following rules apply to a negotiable electronic document of title:

SB480,30,20 (a) If the document's original terms run to the order of a named person or to bearer, the document is negotiated by delivery of the document to another person. Endorsement by the named person is not required to negotiate the document.

SB480,30,23 (b) If the document's original terms run to the order of a named person and the named person has control of the document, the effect is the same as if the document had been negotiated.

SB480,31,3 (c) A document is duly negotiated if it is negotiated in the manner stated in this subsection to a holder that purchases it in good faith, without notice of any defense against or claim to it on the part of any person, and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves taking delivery of the document in settlement or payment of a monetary obligation.

SB480,31,5 (3) Endorsement of a nonnegotiable document of title neither makes it negotiable nor adds to the transferee's rights.

SB480,31,8 (4) The naming in a negotiable bill of lading of a person to be notified of the arrival of the goods does not limit the negotiability of the bill or constitute notice to a purchaser of the bill of any interest of that person in the goods.

SB480,31,11 407.502 Rights acquired by due negotiation. (1) Subject to ss. 407.205 and 407.503, a holder to which a negotiable document of title has been duly negotiated acquires thereby all of the following:

SB480,31,12 (a) Title to the document.

SB480,31,13 (b) Title to the goods.

SB480,31,15 (c) All rights accruing under the law of agency or estoppel, including rights to goods delivered to the bailee after the document was issued.

SB480,31,21 (d) The direct obligation of the issuer to hold or deliver the goods according to the terms of the document free of any defense or claim by the issuer except those arising under the terms of the document or under this chapter. In the case of a delivery order, the bailee's obligation accrues only upon the bailee's acceptance of the delivery order and the obligation acquired by the holder is that the issuer and any endorser will procure the acceptance of the bailee.

SB480,31,25 (2) Subject to s. 407.503, title and rights acquired by due negotiation are not defeated by any stoppage of the goods represented by the document of title or by surrender of the goods by the bailee and are not impaired even if any of the following apply:

SB480,32,2 (a) The due negotiation or any prior due negotiation constituted a breach of duty.

SB480,32,5 (b) Any person has been deprived of possession of a negotiable tangible document or control of a negotiable electronic document by misrepresentation, fraud, accident, mistake, duress, loss, theft, or conversion.

SB480,32,7 (c) A previous sale or other transfer of the goods or document has been made to a 3rd person.

SB480,32,11 407.503 Document of title to goods defeated in certain cases. (1) A document of title confers no right in goods against a person that before issuance of the document had a legal interest or a perfected security interest in the goods and that did not do any of the following:

SB480,32,16 (a) Deliver or entrust the goods or any document covering the goods to the bailor or the bailor's nominee with actual or apparent authority to ship, store, or sell; with power to obtain delivery under s. 407.403; or with power of disposition under s. 402.403, 409.320, 409.321 (3), 411.304 (2), or 411.305 (2), or other statute or rule of law.

SB480,32,17 (b) Acquiesce in the procurement by the bailor or its nominee of any document.

SB480,32,21 (2) Title to goods based upon an unaccepted delivery order is subject to the rights of any person to which a negotiable warehouse receipt or bill of lading covering the goods has been duly negotiated. That title may be defeated under s. 407.504 to the same extent as the rights of the issuer or a transferee from the issuer.

SB480,32,25 (3) Title to goods based upon a bill of lading issued to a freight forwarder is subject to the rights of any person to which a bill issued by the freight forwarder is duly negotiated. However, delivery by the carrier in accordance with subch. IV pursuant to its own bill of lading discharges the carrier's obligation to deliver.

SB480,33,5 407.504 Rights acquired in absence of due negotiation; effect of diversion; stoppage of delivery. (1) A transferee of a document of title, whether negotiable or nonnegotiable, to which the document has been delivered but not duly negotiated, acquires the title and rights that its transferor had or had actual authority to convey.

SB480,33,8 (2) In the case of a nonnegotiable document of title, until but not after the bailee receives notice of the transfer, the rights of the transferee may be defeated by any of the following:

SB480,33,10 (a) Those creditors of the transferor that could treat the transfer as void under s. 402.402 or 411.308.

SB480,33,12 (b) A buyer from the transferor in ordinary course of business if the bailee has delivered the goods to the buyer or received notification of the buyer's rights.

SB480,33,14 (c) A lessee from the transferor in ordinary course of business if the bailee has delivered the goods to the lessee or received notification of the lessee's rights.

SB480,33,15 (d) As against the bailee, by good faith dealings of the bailee with the transferor.

SB480,33,20 (3) A diversion or other change of shipping instructions by the consignor in a nonnegotiable bill of lading which causes the bailee not to deliver the goods to the consignee defeats the consignee's title to the goods if the goods have been delivered to a buyer in ordinary course of business or a lessee in ordinary course of business and in any event defeats the consignee's rights against the bailee.

SB480,33,25 (4) Delivery of the goods pursuant to a nonnegotiable document of title may be stopped by a seller under s. 402.705 or a lessor under s. 411.526, subject to the requirements of due notification in those sections. A bailee honoring the seller's or lessor's instructions is entitled to be indemnified by the seller or lessor against any resulting loss or expense.

SB480,34,3 407.505 Endorser not guarantor for other parties. The endorsement of a tangible document of title issued by a bailee does not make the endorser liable for any default by the bailee or previous endorsers.

SB480,34,7 407.506 Delivery without endorsement; right to compel endorsement. The transferee of a negotiable tangible document of title has a specifically enforceable right to have its transferor supply any necessary endorsement, but the transfer becomes a negotiation only as of the time the endorsement is supplied.

SB480,34,12 407.507 Warranties on negotiation or delivery of document of title. If a person negotiates or delivers a document of title for value, otherwise than as a mere intermediary under s. 407.508, unless otherwise agreed, the transferor warrants to its immediate purchaser only in addition to any warranty made in selling or leasing the goods that all of the following apply:

SB480,34,13 (1) The document is genuine.

SB480,34,15 (2) The transferor does not have knowledge of any fact that would impair the document's validity or worth.

SB480,34,17 (3) The negotiation or delivery is rightful and fully effective with respect to the title to the document and the goods it represents.

SB480,34,23 407.508 Warranties of collecting bank as to documents of title. A collecting bank or other intermediary known to be entrusted with documents of title on behalf of another or with collection of a draft or other claim against delivery of documents warrants by the delivery of the documents only its own good faith and authority even if the collecting bank or other intermediary has purchased or made advances against the claim or draft to be collected.

SB480,35,3 407.509 Adequate compliance with commercial contract. Whether a document of title is adequate to fulfill the obligations of a contract for sale, a contract for lease, or the conditions of a letter of credit is determined by ch. 402, 405, or 411.

SB480,35,4 Subchapter VI

SB480,35,6 warehouse receipts and bills of lading: Miscellaneous provisions

SB480,35,16 407.601 Lost, stolen, or destroyed documents of title. (1) If a document of title is lost, stolen, or destroyed, a court may order delivery of the goods or issuance of a substitute document and the bailee may without liability to any person comply with the order. If the document was negotiable, a court may not order delivery of the goods or issuance of a substitute document without the claimant's posting security unless it finds that any person that may suffer loss as a result of nonsurrender of possession or control of the document is adequately protected against the loss. If the document was nonnegotiable, the court may require security. The court may also order payment of the bailee's reasonable costs and attorney fees in any action under this subsection.

SB480,35,22 (2) A bailee that without court order delivers goods to a person claiming under a missing negotiable document of title is liable to any person injured thereby. If the delivery is not in good faith, the bailee is liable for conversion. Delivery in good faith is not conversion if the claimant posts security with the bailee in an amount at least double the value of the goods at the time of posting to indemnify any person injured by the delivery which files a notice of claim within one year after the delivery.

SB480,36,7 407.602 Attachment of goods covered by negotiable document of title. Unless a document of title was originally issued upon delivery of the goods by a person that did not have power to dispose of them, a lien does not attach by virtue of any judicial process to goods in the possession of a bailee for which a negotiable document of title is outstanding unless possession or control of the document is first surrendered to the bailee or the document's negotiation is enjoined. The bailee may not be compelled to deliver the goods pursuant to process until possession or control of the document is surrendered to the bailee or to the court. A purchaser of the document for value without notice of the process or injunction takes free of the lien imposed by judicial process.

SB480,36,12 407.603 Conflicting claims; interpleader. If more than one person claims title to or possession of the goods, the bailee is excused from delivery until the bailee has a reasonable time to ascertain the validity of the adverse claims or to commence an action for interpleader. The bailee may assert an interpleader either in defending an action for nondelivery of the goods or by original action.

SB480, s. 23 Section 23. 408.103 (7) of the statutes is created to read:

SB480,36,15 408.103 (7) A document of title, as defined in s. 401.201 (15), is not a financial asset unless s. 408.102 (1) (i) 1. c. applies.

SB480, s. 24 Section 24. 409.102 (2) (df) of the statutes is created to read:

SB480,36,17 409.102 (2) (df) "Control" (with respect to a document of title) — s. 407.106.

SB480, s. 25 Section 25. 409.203 (2) (c) 4. of the statutes is amended to read:

SB480,36,22 409.203 (2) (c) 4. The collateral is deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights, or electronic documents, and the secured party has control under s. 407.106, 409.104, 409.105, 409.106, or 409.107 pursuant to the debtor's security agreement.

SB480, s. 26 Section 26. 409.207 (3) (intro.) of the statutes is amended to read:

SB480,37,2 409.207 (3) Duties and rights when secured party in possession or control. (intro.) Except as otherwise provided in sub. (4), a secured party having possession of collateral or control of collateral under s. 407.106, 409.104, 409.105, 409.106, or 409.107:

SB480, s. 27 Section 27. 409.208 (2) (d) of the statutes is amended to read:

SB480,37,9 409.208 (2) (d) A secured party having control of investment property under s. 408.106 (4) (b) or 409.106 (2) shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained an authenticated record that releases the securities intermediary or commodity intermediary from any further obligation to comply with entitlement orders or directions originated by the secured party; and

SB480, s. 28 Section 28. 409.208 (2) (e) of the statutes is amended to read:

SB480,37,15 409.208 (2) (e) A secured party having control of a letter-of-credit right under s. 409.107 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party an authenticated release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party.; and

SB480, s. 29 Section 29. 409.208 (2) (f) of the statutes is created to read:

SB480,37,18 409.208 (2) (f) A secured party having control of an electronic document shall do all of the following:

SB480,37,20 1. Give control of the electronic document to the debtor or its designated custodian.

SB480,38,2 2. If the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic document is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor.

SB480,38,5 3. Take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party.

SB480, s. 30 Section 30. 409.301 (3) (intro.) of the statutes is amended to read:

SB480,38,9 409.301 (3) Location of property. (intro.) Except as otherwise provided in sub. (4), while tangible negotiable documents, goods, instruments, money, or tangible chattel paper is located in a jurisdiction, the local law of that jurisdiction governs:

SB480, s. 31 Section 31. 409.310 (2) (e) of the statutes is amended to read:

SB480,38,13 409.310 (2) (e) In certificated securities, documents, goods, or instruments which is perfected without filing, control, or possession under s. 409.312 (5), (6), or (7);

SB480, s. 32 Section 32. 409.310 (2) (h) of the statutes is amended to read:

SB480,38,17 409.310 (2) (h) In deposit accounts, electronic chattel paper, electronic documents, investment property, or letter-of-credit rights which is perfected by control under s. 409.314;

SB480, s. 33 Section 33. 409.312 (5) of the statutes is amended to read:

SB480,38,23 409.312 (5) Temporary perfection: new value. A security interest in certificated securities, negotiable documents, or instruments is perfected without filing or the taking of possession or control for a period of 20 days from the time it attaches to the extent that it arises for new value given under an authenticated security agreement.

SB480, s. 34 Section 34. 409.313 (1) of the statutes is amended to read:

SB480,39,6 409.313 (1) Perfection by possession or delivery. Except as otherwise provided in sub. (2), a secured party may perfect a security interest in tangible negotiable documents, goods, instruments, money, or tangible chattel paper by taking possession of the collateral. A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under s. 408.301.

SB480, s. 35 Section 35. 409.314 (1) of the statutes is amended to read:

SB480,39,11 409.314 (1) Perfection by control. A security interest in investment property, deposit accounts, letter-of-credit rights, or electronic chattel paper, or electronic documents may be perfected by control of the collateral under s. 407.106, 409.104, 409.105, 409.106, or 409.107.

SB480, s. 36 Section 36. 409.314 (2) of the statutes is amended to read:

SB480,39,18 409.314 (2) Specified collateral: time of perfection by control; continuation of perfection. A security interest in deposit accounts, electronic chattel paper, or letter-of-credit rights, or electronic documents is perfected by control under s. 407.106, 409.104, 409.105, or 409.107 when the secured party obtains control and remains perfected by control only while the secured party retains control.

SB480, s. 37 Section 37. 409.317 (2) of the statutes is amended to read:

SB480,39,25 409.317 (2) Buyers that receive delivery. Except as otherwise provided in sub. (5), a buyer, other than a secured party, of tangible chattel paper, tangible documents, goods, instruments, or a security certificate takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

SB480, s. 38 Section 38. 409.317 (4) of the statutes is amended to read:

SB480,40,7 409.317 (4) Licensees and buyers of certain collateral. A licensee of a general intangible or a buyer, other than a secured party, of accounts, electronic chattel paper, electronic documents, general intangibles, or investment property other than a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.

SB480, s. 39 Section 39. 409.338 (2) of the statutes is amended to read:

SB480,40,13 409.338 (2) A purchaser, other than a secured party, of the collateral takes free of the security interest or agricultural lien to the extent that, in reasonable reliance upon the incorrect information, the purchaser gives value and, in the case of tangible chattel paper, tangible documents, goods, instruments, or a security certificate, receives delivery of the collateral.

SB480, s. 40 Section 40. 409.601 (2) of the statutes is amended to read:

SB480,40,18 409.601 (2) Rights and duties of secured party in possession or control. A secured party in possession of collateral or control of collateral under s. 407.106, 409.104, 409.105, 409.106, or 409.107 has the rights and duties provided in s. 409.207.

SB480, s. 41 Section 41. 411.103 (1) (a) of the statutes is amended to read:

SB480,41,2 411.103 (1) (a) "Buyer in ordinary course of business" means a person who, in good faith and without knowledge that the sale to him or her is in violation of the ownership rights or security interest or leasehold interest of a 3rd party in the goods, buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. "Buying" may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving acquiring goods or documents of title under a preexisting contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

SB480, s. 42 Section 42. 411.103 (1) (o) of the statutes is amended to read:

SB480,41,12 411.103 (1) (o) "Lessee in ordinary course of business" means a person who in good faith and without knowledge that the lease to him or her is in violation of the ownership rights or security interest or leasehold interest of a 3rd party in the goods leases in ordinary course from a person in the business of selling or leasing goods of that kind but does not include a pawnbroker. "Leasing" may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving acquiring goods or documents of title under a preexisting lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

SB480, s. 43 Section 43. 411.514 (2) of the statutes is amended to read: