409.105(4)
(4) In addition
ch. 401 contains general definitions and principles of construction and interpretation applicable throughout this chapter.
409.106
409.106
Definitions: "account"; "general intangibles". "Account" means any right to payment for goods sold or leased or for services rendered which is not evidenced by an instrument or chattel paper, whether or not it has been earned by performance. "General intangibles" means any personal property (including things in action) other than goods, accounts, chattel paper, documents, instruments and money. All rights to payment earned or unearned under a charter or other contract involving the use or hire of a vessel and all rights incident to the charter or contract are accounts.
409.106 History
History: 1973 c. 215.
409.107
409.107
Definitions: "purchase money security interest". A security interest is a "purchase money security interest" to the extent that it is:
409.107(1)
(1) Taken or retained by the seller of the collateral to secure all or part of its price; or
409.107(2)
(2) Taken by a person who by making advances or incurring an obligation gives value to enable the debtor to acquire rights in or the use of collateral if such value is in fact so used.
409.108
409.108
When after-acquired collateral not security for antecedent debt. Where a secured party makes an advance, incurs an obligation, releases a perfected security interest, or otherwise gives new value which is to be secured in whole or in part by after-acquired property the secured party's security interest in the after-acquired collateral shall be deemed to be taken for new value and not as security for an antecedent debt if the debtor acquires the debtor's rights in such collateral either in the ordinary course of the debtor's business or under a contract of purchase made pursuant to the security agreement within a reasonable time after new value is given.
409.108 History
History: 1991 a. 316.
409.108 Annotation
Security interests in after-acquired property under the uniform commercial code. Skilton, 1974 WLR 925.
409.109
409.109
Classification of goods; "consumer goods"; "equipment"; "farm products"; "inventory". Goods are:
409.109(1)
(1) "Consumer goods" if they are used or bought for use primarily for personal, family or household purposes;
409.109(2)
(2) "Equipment" if they are used or bought for use primarily in business (including farming or a profession) or by a debtor who is a nonprofit organization or a governmental subdivision or agency or if the goods are not included in the definitions of inventory, farm products or consumer goods;
409.109(3)
(3) "Farm products" if they are crops or livestock or supplies used or produced in farming operations or if they are products of crops or livestock in their unmanufactured states (such as ginned cotton, wool-clip, maple syrup, milk and eggs), and if they are in the possession of a debtor engaged in raising, fattening, grazing or other farming operations. If goods are farm products they are neither equipment nor inventory;
409.109(4)
(4) "Inventory" if they are held by a person who holds them for sale or lease or to be furnished under contracts of service or if the person has so furnished them, or if they are raw materials, work in process or materials used or consumed in a business. Inventory of a person is not to be classified as the person's equipment.
409.109 History
History: 1991 a. 316.
409.109 Annotation
See note to 409.203, citing Milwaukee Mack Sales v. First Wis. Nat. Bank, 93 W (2d) 589, 287 NW (2d) 708 (1980).
409.109 Annotation
Goods classified as "inventory" under (4) while in possession of debtor remain "inventory" while on lease status in possession of lessee. Voluntary Assign. of Watertown Tr. & Equip. Co. 94 W (2d) 622, 289 NW (2d) 288 (1980).
409.110
409.110
Sufficiency of description. For the purposes of this chapter any description of personal property or real estate is sufficient whether or not it is specific if it reasonably identifies what is described.
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)
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 W (2d) 418, 500 NW (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,
s. 408.321 on security interests in securities 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, or the debtor has signed a security agreement which contains a description of the collateral and in addition, when the security interest covers crops growing or to be grown or 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
Security interest in all of trucking company's "equipment" reasonably identified trucks as collateral. Milwaukee Mack Sales v. First Wis. Nat. Bank, 93 W (2d) 589, 287 NW (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 W (2d) 385, 525 NW (2d) 737 (Ct. App. 1994).
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 clearly within the intent of the parties. John Miller Supply Co. v. Western State Bank, 55 W (2d) 385, 199 NW (2d) 161.
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 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; thus where 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, and the acquiescence of the secured creditor under an after-acquired clause in such a program by the debtor does not invalidate the security interest of the creditor. Burlington Nat. Bank v. Strauss, 50 W (2d) 270, 184 NW (2d) 122.
409.206
409.206
Agreement not to assert defenses against assignee; modification of sales warranties where security agreement exists. 409.206(1)
(1) Subject to any statute or decision which establishes a different rule for buyers or lessees of consumer goods, an agreement by a buyer or lessee not to assert against an assignee any claim or defense which the buyer or lessee may have against the seller or lessor is enforceable by an assignee who takes an assignment for value, in good faith and without notice of a claim or defense, except as to defenses of a type which may be asserted against a holder in due course of a negotiable instrument under
ch. 403. A buyer who as part of one transaction signs both a negotiable instrument and a security agreement makes such an agreement.
409.206(2)
(2) When a seller retains a purchase money security interest in goods
ch. 402 governs the sale and any disclaimer, limitation or modification of the seller's warranties.
409.206 History
History: 1991 a. 316.
409.207
409.207
Rights and duties when collateral is in secured party's possession. 409.207(1)
(1) A secured party must use reasonable care in the custody and preservation of collateral in the secured party's possession. In the case of an instrument or chattel paper reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.
409.207(2)
(2) Unless otherwise agreed, when collateral is in the secured party's possession:
409.207(2)(a)
(a) Reasonable expenses (including the cost of any insurance and payment of taxes or other charges) incurred in the custody, preservation, use or operation of the collateral are chargeable to the debtor and are secured by the collateral;
409.207(2)(b)
(b) The risk of accidental loss or damage is on the debtor to the extent of any deficiency in any effective insurance coverage;
409.207(2)(c)
(c) The secured party may hold as additional security any increase or profits (except money) received from the collateral, but money so received, unless remitted to the debtor, shall be applied in reduction of the secured obligation;
409.207(2)(d)
(d) The secured party must keep the collateral identifiable but fungible collateral may be commingled;
409.207(2)(e)
(e) The secured party may repledge the collateral upon terms which do not impair the debtor's right to redeem it.
409.207(3)
(3) A secured party is liable for any loss caused by the secured party's failure to meet any obligation imposed by
subs. (1) and
(2) but does not lose his or her security interest.
409.207(4)
(4) A secured party may use or operate the collateral for the purpose of preserving the collateral or its value or pursuant to the order of a court of appropriate jurisdiction or, except in the case of consumer goods, in the manner and to the extent provided in the security agreement.
409.207 History
History: 1991 a. 316.
409.207 Annotation
Pledged securities - the pledgee's duty to preserve value under the UCC. 62 MLR 391 (1979).
409.208
409.208
Request for statement of account or list of collateral. 409.208(1)(1) A debtor may sign a statement indicating what the debtor believes to be the aggregate amount of unpaid indebtedness as of a specified date and may send it to the secured party with a request that the statement be approved or corrected and returned to the debtor. When the security agreement or any other record kept by the secured party identifies the collateral a debtor may similarly request the secured party to approve or correct a list of the collateral.
