Chapter 409

409.607(1)(d) (d) If it holds a security interest in a deposit account perfected by control under s. 409.104 (1) (a), may apply the balance of the deposit account to the obligation secured by the deposit account; and

409.607(1)(e) (e) If it holds a security interest in a deposit account perfected by control under s. 409.104 (1) (b) or (c), may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.

409.607(2) (2) Nonjudicial enforcement of mortgage. If necessary to enable a secured party to exercise under sub. (1) (c) the right of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which a record of the mortgage is recorded:

409.607(2)(a) (a) A copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage; and

409.607(2)(b) (b) The secured party’s sworn affidavit in recordable form stating that:

409.607(2)(b)1. 1. A default has occurred with respect to the obligation secured by the mortgage; and

409.607(2)(b)2. 2. The secured party is entitled to enforce the mortgage nonjudicially.

409.607(3) (3) Commercially reasonable collection and enforcement. A secured party shall proceed in a commercially reasonable manner if the secured party:

409.607(3)(a) (a) Undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and

409.607(3)(b) (b) Is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.

409.607(4) (4) Expenses of collection and enforcement. A secured party may deduct from the collections made pursuant to sub. (3) reasonable expenses of collection and enforcement, including reasonable attorney fees and legal expenses incurred by the secured party.

409.607(5) (5) Duties to secured party not affected. This section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party.

409.607 History History: 2001 a. 10; 2011 a. 206.

409.608 409.608 Application of proceeds of collection or enforcement; liability for deficiency and right to surplus.

409.608(1) (1) Application of proceeds, surplus, and deficiency if obligation secured. If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:

409.608(1)(a) (a) A secured party shall apply or pay over for application the cash proceeds of collection or enforcement under s. 409.607 in the following order to:

409.608(1)(a)1. 1. The reasonable expenses of collection and enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party;

409.608(1)(a)2. 2. The satisfaction of obligations secured by the security interest or agricultural lien under which the collection or enforcement is made; and

409.608(1)(a)3. 3. The satisfaction of obligations secured by any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives an authenticated demand for proceeds before distribution of the proceeds is completed.

409.608(1)(b) (b) If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder complies, the secured party need not comply with the holder’s demand under par. (a) 3.

409.608(1)(c) (c) A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under s. 409.607 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.

409.608(1)(d) (d) A secured party shall account to and pay a debtor for any surplus, and the obligor is liable for any deficiency.

409.608(2) (2) No surplus or deficiency in sales of certain rights to payment. If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency.

409.608 History History: 2001 a. 10.

409.608 Annotation Attorney fees under [former] sub. (1) (a) relates to attorney fees incurred in liquidating collateral, not in a suit on a promissory note. Kohlenberg v. American Plumbing Supply Co. 82 Wis. 2d 384, 263 N.W.2d 496 (1974).

409.608 Note NOTE: The above annotated materials cite to the pre-2001 Wis. Act 10 version of ch. 409.

409.609 409.609 Secured party’s right to take possession after default.

409.609(1) (1) Possession; rendering equipment unusable; disposition on debtor’s premises. After default, a secured party:

409.609(1)(a) (a) May take possession of the collateral; and

409.609(1)(b) (b) Without removal, may render equipment unusable and dispose of collateral on a debtor’s premises under s. 409.610.

409.609(2) (2) Judicial and nonjudicial process. A secured party may proceed under sub. (1):

409.609(2)(a) (a) Pursuant to judicial process; or

409.609(2)(b) (b) Without judicial process, if it proceeds without breach of the peace.

409.609(3) (3) Assembly of collateral. If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties.

409.609 History History: 2001 a. 10.

409.610 409.610 Disposition of collateral after default.

409.610(1) (1) Disposition after default. After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing.

409.610(2) (2) Commercially reasonable disposition. Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.

409.610(3) (3) Purchase by secured party. A secured party may purchase collateral:

409.610(3)(a) (a) At a public disposition; or

409.610(3)(b) (b) At a private disposition only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.

409.610(4) (4) Warranties on disposition. A contract for sale, lease, license, or other disposition includes the warranties relating to title, possession, quiet enjoyment, and the like which by operation of law accompany a voluntary disposition of property of the kind subject to the contract.

409.610(5) (5) Disclaimer of warranties. A secured party may disclaim or modify warranties under sub. (4):

409.610(5)(a) (a) In a manner that would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition; or

409.610(5)(b) (b) By communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties.

409.610(6) (6) Record sufficient to disclaim warranties. A record is sufficient to disclaim warranties under sub. (5) if it indicates “There is no warranty relating to title, possession, quiet enjoyment, or the like in this disposition” or uses words of similar import.

409.610 History History: 2001 a. 10.

409.610 Annotation The burden of proving that a private sale was commercially reasonable is on the seller. Proof that the sale was made at the wholesale price does not establish reasonableness. Vic Hansen & Sons, Inc. v. Crowley, 57 Wis. 2d 106, 203 N.W.2d 728 (1973).

409.610 Annotation The primary focus of commercial reasonableness is not the proceeds from a sale, but procedures employed for the sale. Appleton State Bank v. Van Dyke Ford, Inc. 90 Wis. 2d 200, 279 N.W.2d 443 (1979).

409.610 Annotation The conduct of a debtor may be taken into account in determining the commercial reasonableness of a sale. First National Bank of Kenosha v. Hinrichs, 90 Wis. 2d 214, 279 N.W.2d 449 (1979).

409.610 Annotation A secured creditor can retain a debtor’s collateral while seeking an independent action for a money judgment. Dorman v. Morris, 185 Wis. 2d 845, 519 N.W.2d 685 (Ct. App. 1994).

409.610 Note NOTE: The above annotated materials cite to the pre-2001 Wis. Act 10 version of ch. 409.

409.611 409.611 Notification before disposition of collateral.

409.611(1) (1) Notification date. In this section, “notification date” means the earlier of the date on which:

409.611(1)(a) (a) A secured party sends to the debtor and any secondary obligor an authenticated notification of disposition; or

409.611(1)(b) (b) The debtor and any secondary obligor waive the right to notification.

409.611(2) (2) Notification of disposition required. Except as otherwise provided in sub. (4), a secured party that disposes of collateral under s. 409.610 shall send to the persons specified in sub. (3) a reasonable, authenticated notification of disposition.

409.611(3) (3) Persons to be notified. To comply with sub. (2), the secured party shall send an authenticated notification of disposition to:

409.611(3)(a) (a) The debtor;

409.611(3)(b) (b) Any secondary obligor; and

409.611(3)(c) (c) If the collateral is other than consumer goods:

409.611(3)(c)1. 1. Any other person from which the secured party has received, before the notification date, an authenticated notification of a claim of an interest in the collateral;

409.611(3)(c)2. 2. Any other secured party or lienholder that, 10 days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:

409.611(3)(c)2.a. a. Identified the collateral;

409.611(3)(c)2.b. b. Was indexed under the debtor’s name as of that date; and

409.611(3)(c)2.c. c. Was filed in the office in which to file a financing statement against the debtor covering the collateral as of that date; and

409.611(3)(c)3. 3. Any other secured party that, 10 days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in s. 409.311 (1).

409.611(4) (4) Subsection (2) inapplicable: perishable collateral; recognized market. Subsection (2) does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market.

409.611(5) (5) Compliance with sub. (3) (c) 2. A secured party complies with the requirement for notification prescribed by sub. (3) (c) 2. if:

409.611(5)(a) (a) Not later than 20 days or earlier than 30 days before the notification date, the secured party requests, in a commercially reasonable manner, information concerning financing statements indexed under the debtor’s name in the office indicated in sub. (3) (c) 2.; and

409.611(5)(b) (b) Before the notification date, the secured party:

409.611(5)(b)1. 1. Did not receive a response to the request for information; or

409.611(5)(b)2. 2. Received a response to the request for information and sent an authenticated notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral.

409.611 History History: 2001 a. 10.

409.612 409.612 Timeliness of notification before disposition of collateral.

409.612(1) (1) Reasonable time is question of fact. Except as otherwise provided in sub. (2), whether a notification is sent within a reasonable time is a question of fact.

409.612(2) (2) Ten-day period sufficient in nonconsumer transaction. In a transaction other than a consumer transaction, a notification of disposition sent after default and 10 days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition.

409.612 History History: 2001 a. 10.

409.613 409.613 Contents and form of notification before disposition of collateral: general. Except in a consumer-goods transaction, the following rules apply:

409.613(1) (1) Notification: when sufficient. The contents of a notification of disposition are sufficient if the notification:

409.613(1)(a) (a) Describes the debtor and the secured party;

409.613(1)(b) (b) Describes the collateral that is the subject of the intended disposition;

409.613(1)(c) (c) States the method of intended disposition;

409.613(1)(d) (d) States that the debtor is entitled to an accounting of the unpaid indebtedness and states the charge, if any, for an accounting; and

409.613(1)(e) (e) States the time and place of a public disposition or the time after which any other disposition is to be made.

409.613(2) (2) Notification: question of fact. Whether the contents of a notification that lacks any of the information specified in sub. (1) are nevertheless sufficient is a question of fact.

409.613(3) (3) Notification: other information or minor errors. The contents of a notification providing substantially the information specified in sub. (1) are sufficient, even if the notification includes:

409.613(3)(a) (a) Information not specified by sub. (1); or

409.613(3)(b) (b) Minor errors that are not seriously misleading.