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S1469.......................................by COMMERCE AND HUMAN RESOURCES
PRODUCTION-MONEY SECURITY INTERESTS - Amends existing law relating to
chapter 9 of the Uniform Commercial Code to provide for priority of
production-money security interests in production-money crops.
02/18 Senate intro - 1st rdg - to printing
02/21 Rpt prt - to Com/HuRes
03/01 Rpt out - to 14th Ord
Ret'd to Com/HuRes
S1469
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE SENATE
SENATE BILL NO. 1469
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO THE UNIFORM COMMERCIAL CODE; AMENDING SECTION 28-9-102, IDAHO
3 CODE, AS ADDED BY SENATE BILL 1395, AS ENACTED BY THE SECOND REGULAR SES-
4 SION OF THE FIFTY-FIFTH IDAHO LEGISLATURE, TO DEFINE ADDITIONAL TERMS;
5 AMENDING PART 1, CHAPTER 9, TITLE 28, IDAHO CODE, AS ADDED BY SENATE BILL
6 1395, AS ENACTED BY THE SECOND REGULAR SESSION OF THE FIFTY-FIFTH IDAHO
7 LEGISLATURE, BY THE ADDITION OF A NEW SECTION 28-9-103A, IDAHO CODE, TO
8 PROVIDE FOR A PRODUCTION-MONEY SECURITY INTEREST IN PRODUCTION-MONEY
9 CROPS; AMENDING SECTION 28-9-322, IDAHO CODE, AS ADDED BY SENATE BILL
10 1395, AS ENACTED BY THE SECOND REGULAR SESSION OF THE FIFTY-FIFTH IDAHO
11 LEGISLATURE, TO DELETE REFERENCE TO PRIORITY OF A PERFECTED SECURITY
12 INTEREST IN CROPS FOR NEW VALUE GIVEN; AMENDING PART 3, CHAPTER 9, TITLE
13 28, IDAHO CODE, AS ADDED BY SENATE BILL 1395, AS ENACTED BY THE SECOND
14 REGULAR SESSION OF THE FIFTY-FIFTH IDAHO LEGISLATURE, BY THE ADDITION OF A
15 NEW SECTION 28-9-324A, IDAHO CODE, TO PROVIDE THE PRIORITY OF PRODUCTION-
16 MONEY SECURITY INTERESTS AND AGRICULTURAL LIENS; AND PROVIDING AN EFFEC-
17 TIVE DATE.
18 Be It Enacted by the Legislature of the State of Idaho:
19 SECTION 1. That Section 28-9-102, Idaho Code, as added by Senate Bill
20 1395, as enacted by the Second Regular Session of the Fifty-fifth Idaho Legis-
21 lature, be, and the same is hereby amended to read as follows:
22 28-9-102. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In this chapter:
23 (1) "Accession" means goods that are physically united with other goods
24 in such a manner that the identity of the original goods is not lost.
25 (2) "Account," except as used in "account for," means a right to payment
26 of a monetary obligation, whether or not earned by performance: (i) for
27 property that has been or is to be sold, leased, licensed, assigned, or
28 otherwise disposed of, (ii) for services rendered or to be rendered, (iii)
29 for a policy of insurance issued or to be issued, (iv) for a secondary
30 obligation incurred or to be incurred, (v) for energy provided or to be
31 provided, (vi) for the use or hire of a vessel under a charter or other
32 contract, (vii) arising out of the use of a credit or charge card or
33 information contained on or for use with the card, or (viii) as winnings
34 in a lottery or other game of chance operated or sponsored by a state,
35 governmental unit of a state, or a person licensed or authorized to oper-
36 ate the game by a state or governmental unit of a state. The term includes
37 health care insurance receivables. The term does not include: (i) rights
38 to payment evidenced by chattel paper or an instrument, (ii) commercial
39 tort claims, (iii) deposit accounts, (iv) investment property, (v) letter
40 of credit rights or letters of credit, or (vi) rights to payment for money
41 or funds advanced or sold, other than rights arising out of the use of a
42 credit or charge card or information contained on or for use with the
43 card.
2
1 (3) "Account debtor" means a person obligated on an account, chattel
2 paper, or general intangible. The term does not include persons obligated
3 to pay a negotiable instrument, even if the instrument constitutes part of
4 chattel paper.
5 (4) "Accounting," except as used in "accounting for," means a record:
6 (A) authenticated by a secured party;
7 (B) indicating the aggregate unpaid secured obligations as of a date
8 not more than thirty-five (35) days earlier or thirty-five (35) days
9 later than the date of the record; and
10 (C) identifying the components of the obligations in reasonable
11 detail.
12 (5) "Agricultural lien" means an interest, other than a security inter-
13 est, in farm products:
14 (A) which secures payment or performance of an obligation for:
15 (i) goods or services furnished in connection with a debtor's
16 farming operation; or
17 (ii) rent on real property leased by a debtor in connection
18 with its farming operation;
19 (B) which is created by statute in favor of a person that:
20 (i) in the ordinary course of its business furnished goods or
21 services to a debtor in connection with a debtor's farming oper-
22 ation; or
23 (ii) leased real property to a debtor in connection with the
24 debtor's farming operation; and
25 (C) whose effectiveness does not depend on the person's possession
26 of the personal property.
27 (6) "As-extracted collateral" means:
28 (A) oil, gas, or other minerals that are subject to a security
29 interest that:
30 (i) is created by a debtor having an interest in the minerals
31 before extraction; and
32 (ii) attaches to the minerals as extracted; or
33 (B) accounts arising out of the sale at the wellhead or minehead of
34 oil, gas, or other minerals in which the debtor had an interest
35 before extraction.
36 (7) "Authenticate" means:
37 (A) to sign; or
38 (B) to execute or otherwise adopt a symbol, or encrypt or similarly
39 process a record in whole or in part, with the present intent of the
40 authenticating person to identify the person and adopt or accept a
41 record.
42 (8) "Bank" means an organization that is engaged in the business of bank-
43 ing. The term includes savings banks, savings and loan associations,
44 credit unions and trust companies.
45 (9) "Cash proceeds" means proceeds that are money, checks, deposit
46 accounts, or the like.
47 (10) "Certificate of title" means a certificate of title with respect to
48 which a statute provides for the security interest in question to be indi-
49 cated on the certificate as a condition or result of the security
50 interest's obtaining priority over the rights of a lien creditor with
51 respect to the collateral.
52 (11) "Chattel paper" means a record or records that evidence both a mone-
53 tary obligation and a security interest in specific goods, a security
54 interest in specific goods and software used in the goods, a security
55 interest in specific goods and license of software used in the goods, a
3
1 lease of specific goods, or a lease of specific goods and license of soft-
2 ware used in the goods. In this paragraph, "monetary obligation" means a
3 monetary obligation secured by the goods or owed under a lease of the
4 goods and includes a monetary obligation with respect to software used in
5 the goods. The term does not include charters or other contracts involv-
6 ing the use or hire of a vessel. If a transaction is evidenced by records
7 that include an instrument or series of instruments, the group of records
8 taken together constitutes chattel paper.
9 (12) "Collateral" means the property subject to a security interest or
10 agricultural lien. The term includes:
11 (A) proceeds to which a security interest attaches;
12 (B) accounts, chattel paper, payment intangibles, and promissory
13 notes that have been sold; and
14 (C) goods that are the subject of a consignment.
15 (13) "Commercial tort claim" means a claim arising in tort with respect to
16 which:
17 (A) the claimant is an organization; or
18 (B) the claimant is an individual and the claim:
19 (i) arose in the course of the claimant's business or profes-
20 sion; and
21 (ii) does not include damages arising out of personal injury to
22 or the death of an individual.
23 (14) "Commodity account" means an account maintained by a commodity inter-
24 mediary in which a commodity contract is carried for a commodity customer.
25 (15) "Commodity contract" means a commodity futures contract, an option on
26 a commodity futures contract, a commodity option, or another contract if
27 the contract or option is:
28 (A) traded on or subject to the rules of a board of trade that has
29 been designated as a contract market for such a contract pursuant to
30 federal commodities laws; or
31 (B) traded on a foreign commodity board of trade, exchange, or mar-
32 ket, and is carried on the books of a commodity intermediary for a
33 commodity customer.
34 (16) "Commodity customer" means a person for which a commodity intermedi-
35 ary carries a commodity contract on its books.
36 (17) "Commodity intermediary" means a person that:
37 (A) is registered as a futures commission merchant under federal
38 commodities law; or
39 (B) in the ordinary course of its business provides clearance or
40 settlement services for a board of trade that has been designated as
41 a contract market pursuant to federal commodities law.
42 (18) "Communicate" means:
43 (A) to send a written or other tangible record;
44 (B) to transmit a record by any means agreed upon by the persons
45 sending and receiving the record; or
46 (C) in the case of transmission of a record to or by a filing
47 office, to transmit a record by any means prescribed by filing office
48 rule.
49 (19) "Consignee" means a merchant to which goods are delivered in a con-
50 signment.
51 (20) "Consignment" means a transaction, regardless of its form, in which a
52 person delivers goods to a merchant for the purpose of sale and:
53 (A) the merchant:
54 (i) deals in goods of that kind under a name other than the
55 name of the person making delivery;
4
1 (ii) is not an auctioneer; and
2 (iii) is not generally known by its creditors to be substan-
3 tially engaged in selling the goods of others;
4 (B) with respect to each delivery, the aggregate value of the goods
5 is one thousand dollars ($1,000) or more at the time of delivery;
6 (C) the goods are not consumer goods immediately before delivery;
7 and
8 (D) the transaction does not create a security interest that secures
9 an obligation.
10 (21) "Consignor" means a person that delivers goods to a consignee in a
11 consignment.
12 (22) "Consumer debtor" means a debtor in a consumer transaction.
13 (23) "Consumer goods" means goods that are used or bought for use primar-
14 ily for personal, family or household purposes.
15 (24) "Consumer goods transaction" means a consumer transaction in which:
16 (A) an individual incurs an obligation primarily for personal, fam-
17 ily or household purposes; and
18 (B) a security interest in consumer goods secures the obligation.
19 (25) "Consumer obligor" means an obligor who is an individual and who
20 incurred the obligation as part of a transaction entered into primarily
21 for personal, family or household purposes.
22 (26) "Consumer transaction" means a transaction in which: (i) an individ-
23 ual incurs an obligation primarily for personal, family or household pur-
24 poses, (ii) a security interest secures the obligation, and (iii) the col-
25 lateral is held or acquired primarily for personal, family or household
26 purposes. The term includes consumer goods transactions.
27 (27) "Continuation statement" means an amendment of a financing statement
28 which:
29 (A) identifies, by its file number, the initial financing statement
30 to which it relates; and
31 (B) indicates that it is a continuation statement for, or that it is
32 filed to continue the effectiveness of, the identified financing
33 statement.
34 (28) "Debtor" means:
35 (A) a person having an interest, other than a security interest or
36 other lien, in the collateral, whether or not the person is an obli-
37 gor;
38 (B) a seller of accounts, chattel paper, payment intangibles, or
39 promissory notes; or
40 (C) a consignee.
41 (29) "Deposit account" means a demand, time, savings, passbook, or similar
42 account maintained with a bank. The term does not include investment
43 property or accounts evidenced by an instrument.
44 (30) "Document" means a document of title or a receipt of the type
45 described in section 28-7-201(2).
46 (31) "Electronic chattel paper" means chattel paper evidenced by a record
47 or records consisting of information stored in an electronic medium.
48 (32) "Encumbrance" means a right, other than an ownership interest, in
49 real property. The term includes mortgages and other liens on real prop-
50 erty.
51 (33) "Equipment" means goods other than inventory, farm products or con-
52 sumer goods.
53 (34) "Farm products" means goods, other than standing timber, with respect
54 to which the debtor is engaged in a farming operation and which are:
55 (A) crops grown, growing, or to be grown, including:
5
1 (i) crops produced on trees, vines and bushes; and
2 (ii) aquatic goods produced in aquacultural operations;
3 (B) livestock, born or unborn, including aquatic goods produced in
4 aquacultural operations;
5 (C) supplies used or produced in a farming operation; or
6 (D) products of crops or livestock in their unmanufactured states.
7 (35) "Farming operation" means raising, cultivating, propagating, fatten-
8 ing, grazing, or any other farming, livestock, or aquacultural operation.
9 (36) "File number" means the number assigned to an initial financing
10 statement pursuant to section 28-9-519(a).
11 (37) "Filing office" means an office designated in section 28-9-501 as the
12 place to file a financing statement.
13 (38) "Filing office rule" means a rule adopted pursuant to section
14 28-9-526.
15 (39) "Financing statement" means a record or records composed of an ini-
16 tial financing statement and any filed record relating to the initial
17 financing statement.
18 (40) "Fixture filing" means the filing of a financing statement covering
19 goods that are or are to become fixtures and satisfying section
20 28-9-502(a) and (b). The term includes the filing of a financing statement
21 covering goods of a transmitting utility which are or are to become fix-
22 tures.
23 (41) "Fixtures" means goods that have become so related to particular real
24 property that an interest in them arises under real property law.
25 (42) "General intangible" means any personal property, including things in
26 action, other than accounts, chattel paper, commercial tort claims,
27 deposit accounts, documents, goods, instruments, investment property, let-
28 ter of credit rights, letters of credit, money, and oil, gas, or other
29 minerals before extraction. The term includes payment intangibles and
30 software.
31 (43) "Good faith" means honesty in fact and the observance of reasonable
32 commercial standards of fair dealing.
33 (44) "Goods" means all things that are movable when a security interest
34 attaches. The term includes: (i) fixtures, (ii) standing timber that is to
35 be cut and removed under a conveyance or contract for sale, (iii) the
36 unborn young of animals, (iv) crops grown, growing, or to be grown, even
37 if the crops are produced on trees, vines or bushes, and (v) manufactured
38 homes. The term also includes a computer program embedded in goods and any
39 supporting information provided in connection with a transaction relating
40 to the program if: (i) the program is associated with the goods in such a
41 manner that it customarily is considered part of the goods, or (ii) by
42 becoming the owner of the goods, a person acquires a right to use the pro-
43 gram in connection with the goods. The term does not include a computer
44 program embedded in goods that consist solely of the medium in which the
45 program is embedded. The term also does not include accounts, chattel
46 paper, commercial tort claims, deposit accounts, documents, general intan-
47 gibles, instruments, investment property, letter of credit rights, letters
48 of credit, money, or oil, gas, or other minerals before extraction.
49 (45) "Governmental unit" means a subdivision, agency, department, county,
50 parish, municipality, or other unit of the government of the United
51 States, a state, or a foreign country. The term includes an organization
52 having a separate corporate existence if the organization is eligible to
53 issue debt on which interest is exempt from income taxation under the laws
54 of the United States.
55 (46) "Health care insurance receivable" means an interest in or claim
6
1 under a policy of insurance which is a right to payment of a monetary
2 obligation for health care goods or services provided.
3 (47) "Instrument" means a negotiable instrument or any other writing that
4 evidences a right to the payment of a monetary obligation, is not itself a
5 security agreement or lease, and is of a type that in ordinary course of
6 business is transferred by delivery with any necessary indorsement or
7 assignment. The term does not include: (i) investment property, (ii) let-
8 ters of credit, or (iii) writings that evidence a right to payment arising
9 out of the use of a credit or charge card or information contained on or
10 for use with the card.
11 (48) "Inventory" means goods, other than farm products, which:
12 (A) are leased by a person as lessor;
13 (B) are held by a person for sale or lease or to be furnished under
14 a contract of service;
15 (C) are furnished by a person under a contract of service; or
16 (D) consist of raw materials, work in process, or materials used or
17 consumed in a business.
18 (49) "Investment property" means a security, whether certificated or
19 uncertificated, security entitlement, securities account, commodity con-
20 tract or commodity account.
21 (50) "Jurisdiction of organization," with respect to a registered organi-
22 zation, means the jurisdiction under whose law the organization is orga-
23 nized.
24 (51) "Letter of credit right" means a right to payment or performance
25 under a letter of credit, whether or not the beneficiary has demanded or
26 is at the time entitled to demand payment or performance. The term does
27 not include the right of a beneficiary to demand payment or performance
28 under a letter of credit.
29 (52) "Lien creditor" means:
30 (A) a creditor that has acquired a lien on the property involved by
31 attachment, levy, or the like;
32 (B) an assignee for benefit of creditors from the time of assign-
33 ment;
34 (C) a trustee in bankruptcy from the date of the filing of the peti-
35 tion; or
36 (D) a receiver in equity from the time of appointment.
37 (53) "Manufactured home" means a structure, transportable in one (1) or
38 more sections, which, in the traveling mode, is eight (8) body feet or
39 more in width or forty (40) body feet or more in length, or, when erected
40 on site, is three hundred twenty (320) or more square feet, and which is
41 built on a permanent chassis and designed to be used as a dwelling with or
42 without a permanent foundation when connected to the required utilities,
43 and includes the plumbing, heating, air conditioning, and electrical sys-
44 tems contained therein. The term includes any structure that meets all of
45 the requirements of this paragraph except the size requirements and with
46 respect to which the manufacturer voluntarily files a certification
47 required by the United States secretary of housing and urban development
48 and complies with the standards established under title 42 of the United
49 States Code.
50 (54) "Manufactured home transaction" means a secured transaction:
51 (A) that creates a purchase-money security interest in a manufac-
52 tured home, other than a manufactured home held as inventory; or
53 (B) in which a manufactured home, other than a manufactured home
54 held as inventory, is the primary collateral.
55 (55) "Mortgage" means a consensual interest in real property, including
7
1 fixtures, which secures payment or performance of an obligation.
2 (56) "New debtor" means a person that becomes bound as debtor under sec-
3 tion 28-9-203(d) by a security agreement previously entered into by
4 another person.
5 (57) "New value" means: (i) money, (ii) money's worth in property, ser-
6 vices or new credit, or (iii) release by a transferee of an interest in
7 property previously transferred to the transferee. The term does not
8 include an obligation substituted for another obligation.
9 (58) "Noncash proceeds" means proceeds other than cash proceeds.
10 (59) "Obligor" means a person that, with respect to an obligation secured
11 by a security interest in or an agricultural lien on the collateral: (i)
12 owes payment or other performance of the obligation, (ii) has provided
13 property other than the collateral to secure payment or other performance
14 of the obligation, or (iii) is otherwise accountable in whole or in part
15 for payment or other performance of the obligation. The term does not
16 include issuers or nominated persons under a letter of credit.
17 (60) "Original debtor" means a person that, as debtor, entered into a
18 security agreement to which a new debtor has become bound under section
19 28-9-203(d).
20 (61) "Payment intangible" means a general intangible under which the
21 account debtor's principal obligation is a monetary obligation.
22 (62) "Person related to," with respect to an individual, means:
23 (A) the spouse of the individual;
24 (B) a brother, brother-in-law, sister, or sister-in-law of the indi-
25 vidual;
26 (C) an ancestor or lineal descendant of the individual or the
27 individual's spouse; or
28 (D) any other relative, by blood or marriage, of the individual or
29 the individual's spouse who shares the same home with the individual.
30 (63) "Person related to," with respect to an organization, means:
31 (A) a person directly or indirectly controlling, controlled by, or
32 under common control with the organization;
33 (B) an officer or director of, or a person performing similar func-
34 tions with respect to, the organization;
35 (C) an officer or director of, or a person performing similar func-
36 tions with respect to, a person described in subparagraph (A) of this
37 paragraph;
38 (D) the spouse of an individual described in subparagraph (A), (B)
39 or (C) of this paragraph; or
40 (E) an individual who is related by blood or marriage to an individ-
41 ual described in subparagraph (A), (B), (C) or (D) of this paragraph
42 and shares the same home with the individual.
43 (64) "Proceeds" means the following property:
44 (A) whatever is acquired upon the sale, lease, license, exchange or
45 other disposition of collateral;
46 (B) whatever is collected on, or distributed on account of, collat-
47 eral;
48 (C) rights arising out of collateral;
49 (D) to the extent of the value of collateral, claims arising out of
50 the loss, nonconformity, or interference with the use of, defects or
51 infringement of rights in, or damage to, the collateral; or
52 (E) to the extent of the value of collateral and to the extent pay-
53 able to the debtor or the secured party, insurance payable by reason
54 of the loss or nonconformity of, defects or infringement of rights
55 in, or damage to, the collateral.
8
1 (65) "Production-money crops" means crops that secure a production-money
2 obligation incurred with respect to the production of those crops.
3 (66) "Production-money obligation" means an obligation of an obligor
4 incurred for new value given to enable the debtor to produce crops if the
5 value is in fact used for the production of the crops.
6 (67) "Production of crops" includes tilling and otherwise preparing land
7 for growing, planting, cultivating, fertilizing, irrigating, harvesting
8 and gathering crops, and protecting them from damage or disease.
9 (68) "Promissory note" means an instrument that evidences a promise to pay
10 a monetary obligation, does not evidence an order to pay, and does not
11 contain an acknowledgment by a bank that the bank has received for deposit
12 a sum of money or funds.
13 (669) "Proposal" means a record authenticated by a secured party which
14 includes the terms on which the secured party is willing to accept collat-
15 eral in full or partial satisfaction of the obligation it secures pursuant
16 to sections 28-9-620, 28-9-621 and 28-9-622.
17 (670) "Public-finance transaction" means a secured transaction in connec-
18 tion with which:
19 (A) debt securities are issued;
20 (B) all or a portion of the securities issued have an initial stated
21 maturity of at least twenty (20) years; and
22 (C) the debtor, obligor, secured party, account debtor or other per-
23 son obligated on collateral, assignor or assignee of a secured obli-
24 gation, or assignor or assignee of a security interest is a state or
25 a governmental unit of a state.
26 (6871) "Pursuant to commitment," with respect to an advance made or other
27 value given by a secured party, means pursuant to the secured party's
28 obligation, whether or not a subsequent event of default or other event
29 not within the secured party's control has relieved or may relieve the
30 secured party from its obligation.
31 (6972) "Record," except as used in "for record," "of record," "record or
32 legal title," and "record owner," means information that is inscribed on a
33 tangible medium or which is stored in an electronic or other medium and is
34 retrievable in perceivable form.
35 (703) "Registered organization" means an organization organized solely
36 under the law of a single state or the United States and as to which the
37 state or the United States must maintain a public record showing the orga-
38 nization to have been organized.
39 (714) "Secondary obligor" means an obligor to the extent that:
40 (A) the obligor's obligation is secondary; or
41 (B) the obligor has a right of recourse with respect to an obliga-
42 tion secured by collateral against the debtor, another obligor, or
43 property of either.
44 (725) "Secured party" means:
45 (A) a person in whose favor a security interest is created or pro-
46 vided for under a security agreement, whether or not any obligation
47 to be secured is outstanding;
48 (B) a person that holds an agricultural lien;
49 (C) a consignor;
50 (D) a person to which accounts, chattel paper, payment intangibles
51 or promissory notes have been sold;
52 (E) a trustee, indenture trustee, agent, collateral agent, or other
53 representative in whose favor a security interest or agricultural
54 lien is created or provided for; or
55 (F) a person that holds a security interest arising under section
9
1 28-2-401, 28-2-505, 28-2-711(3), 28-4-210, 28-5-120 or 28-12-508(5).
2 (736) "Security agreement" means an agreement that creates or provides for
3 a security interest.
4 (747) "Send," in connection with a record or notification, means:
5 (A) to deposit in the mail, deliver for transmission, or transmit by
6 any other usual means of communication, with postage or cost of
7 transmission provided for, addressed to any address reasonable under
8 the circumstances; or
9 (B) to cause the record or notification to be received within the
10 time that it would have been received if properly sent under subpara-
11 graph (A) of this paragraph.
12 (758) "Software" means a computer program and any supporting information
13 provided in connection with a transaction relating to the program. The
14 term does not include a computer program that is included in the defini-
15 tion of goods.
16 (769) "State" means a state of the United States, the District of Colum-
17 bia, Puerto Rico, the United States Virgin Islands, or any territory or
18 insular possession subject to the jurisdiction of the United States.
19 (7780) "Supporting obligation" means a letter of credit right or secondary
20 obligation that supports the payment or performance of an account, chattel
21 paper, a document, a general intangible, an instrument or investment prop-
22 erty.
23 (781) "Tangible chattel paper" means chattel paper evidenced by a record
24 or records consisting of information that is inscribed on a tangible
25 medium.
26 (7982) "Termination statement" means an amendment of a financing statement
27 which:
28 (A) identifies, by its file number, the initial financing statement
29 to which it relates; and
30 (B) indicates either that it is a termination statement or that the
31 identified financing statement is no longer effective.
32 (803) "Transmitting utility" means a person primarily engaged in the busi-
33 ness of:
34 (A) operating a railroad, subway, street railway, or trolley bus;
35 (B) transmitting communications electrically, electromagnetically or
36 by light;
37 (C) transmitting goods by pipeline or sewer; or
38 (D) transmitting or producing and transmitting electricity, steam,
39 gas or water.
40 (b) The following definitions in other chapters apply to this chapter:
41 "Applicant" section 28-5-102.
42 "Beneficiary" section 28-5-102.
43 "Broker" section 28-8-102.
44 "Certificated security" section 28-8-102.
45 "Check" section 28-3-104.
46 "Clearing corporation" section 28-8-102.
47 "Contract for sale" section 28-2-106.
48 "Customer" section 28-4-104.
49 "Entitlement holder" section 28-8-102.
50 "Financial asset" section 28-8-102.
51 "Holder in due course" section 28-3-302.
52 "Issuer" (with respect to a letter of credit
53 or letter of credit right) section 28-5-102.
54 "Issuer" (with respect to a security) section 28-8-201.
55 "Lease" section 28-12-103.
10
1 "Lease agreement" section 28-12-103.
2 "Lease contract" section 28-12-103.
3 "Leasehold interest" section 28-12-103.
4 "Lessee" section 28-12-103.
5 "Lessee in ordinary course of business" section 28-12-103.
6 "Lessor" section 28-12-103.
7 "Lessor's residual interest" section 28-12-103.
8 "Letter of credit" section 28-5-102.
9 "Merchant" section 28-2-104.
10 "Negotiable instrument" section 28-3-104.
11 "Nominated person" section 28-5-102.
12 "Note" section 28-3-104.
13 "Proceeds of a letter of credit" section 28-5-114.
14 "Prove" section 28-3-103.
15 "Sale" section 28-2-106.
16 "Securities account" section 28-8-501.
17 "Securities intermediary" section 28-8-102.
18 "Security" section 28-8-102.
19 "Security certificate" section 28-8-102.
20 "Security entitlement" section 28-8-102.
21 "Uncertificated security" section 28-8-102.
22 (c) Chapter 1, title 28, contains general definitions and principles of
23 construction and interpretation applicable throughout this chapter.
24 SECTION 2. That Part 1, Chapter 9, Title 28, Idaho Code, as added by Sen-
25 ate Bill 1395, as enacted by the Second Regular Session of the Fifty-fifth
26 Idaho Legislature, be, and the same is hereby amended by the addition thereto
27 of a NEW SECTION, to be known and designated as Section 28-9-103A, Idaho Code,
28 and to read as follows:
29 28-9-103A. PRODUCTION-MONEY CROPS -- PRODUCTION-MONEY OBLIGATION --
30 PRODUCTION-MONEY SECURITY INTEREST -- BURDEN OF ESTABLISHING. (a) A security
31 interest in crops is a production-money security interest to the extent that
32 the crops are production-money crops.
33 (b) If the extent to which a security interest is a production-money
34 security interest depends on the application of a payment to a particular
35 obligation, the payment must be applied:
36 (1) In accordance with any reasonable method of application to which the
37 parties agree;
38 (2) In the absence of the parties' agreement to a reasonable method, in
39 accordance with any intention of the obligor manifested at or before the
40 time of payment; or
41 (3) In the absence of an agreement to a reasonable method and a timely
42 manifestation of the obligor's intention, in the following order:
43 (A) to obligations that are not secured; and
44 (B) if more than one (1) obligation is secured, to obligations
45 secured by production-money security interests in the order in which
46 those obligations were incurred.
47 (c) A production-money security interest does not lose its status as
48 such, even if:
49 (1) The production-money crops also secure an obligation that is not a
50 production-money obligation;
51 (2) Collateral that is not production-money crops also secures the
52 production-money obligation; or
53 (3) The production-money obligation has been renewed, refinanced or
11
1 restructured.
2 (d) A secured party claiming a production-money security interest has the
3 burden of establishing the extent to which the security interest is a
4 production-money security interest.
5 SECTION 3. That Section 28-9-322, Idaho Code, as added by Senate Bill
6 1395, as enacted by the Second Regular Session of the Fifty-fifth Idaho Legis-
7 lature, be, and the same is hereby amended to read as follows:
8 28-9-322. PRIORITIES AMONG CONFLICTING SECURITY INTERESTS IN AND AGRICUL-
9 TURAL LIENS ON SAME COLLATERAL. (a) Except as otherwise provided in this sec-
10 tion, priority among conflicting security interests and agricultural liens in
11 the same collateral is determined according to the following rules:
12 (1) Conflicting perfected security interests and agricultural liens rank
13 according to priority in time of filing or perfection. Priority dates
14 from the earlier of the time a filing covering the collateral is first
15 made or the security interest or agricultural lien is first perfected, if
16 there is no period thereafter when there is neither filing nor perfection.
17 (2) A perfected security interest or agricultural lien has priority over
18 a conflicting unperfected security interest or agricultural lien.
19 (3) The first security interest or agricultural lien to attach or become
20 effective has priority if conflicting security interests and agricultural
21 liens are unperfected.
22 (b) For the purposes of subsection (a)(1) of this section:
23 (1) The time of filing or perfection as to a security interest in collat-
24 eral is also the time of filing or perfection as to a security interest in
25 proceeds; and
26 (2) The time of filing or perfection as to a security interest in collat-
27 eral supported by a supporting obligation is also the time of filing or
28 perfection as to a security interest in the supporting obligation.
29 (c) Except as otherwise provided in subsection (f) of this section, a
30 security interest in collateral which qualifies for priority over a conflict-
31 ing security interest under section 28-9-327, 28-9-328, 28-9-329, 28-9-330 or
32 28-9-331 also has priority over a conflicting security interest in:
33 (1) Any supporting obligation for the collateral; and
34 (2) Proceeds of the collateral if:
35 (A) the security interest in proceeds is perfected;
36 (B) the proceeds are cash proceeds or of the same type as the col-
37 lateral; and
38 (C) in the case of proceeds that are proceeds of proceeds, all
39 intervening proceeds are cash proceeds, proceeds of the same type as
40 the collateral, or an account relating to the collateral.
41 (d) Subject to subsection (e) of this section and except as otherwise
42 provided in subsection (f) of this section, if a security interest in chattel
43 paper, deposit accounts, negotiable documents, instruments, investment prop-
44 erty, or letter of credit rights is perfected by a method other than filing,
45 conflicting perfected security interests in proceeds of the collateral rank
46 according to priority in time of filing.
47 (e) Subsection (d) of this section applies only if the proceeds of the
48 collateral are not cash proceeds, chattel paper, negotiable documents, instru-
49 ments, investment property or letter of credit rights.
50 (f) Subsections (a) through (e) of this section are subject to:
51 (1) Subsection (g) of this section and the other provisions of this part;
52 (2) Section 28-4-210 with respect to a security interest of a collecting
53 bank;
12
1 (3) Section 28-5-120 with respect to a security interest of an issuer or
2 nominated person; and
3 (4) Section 28-9-110 with respect to a security interest arising under
4 chapter 2 or 12.
5 (g) A perfected agricultural lien on collateral has priority over a con-
6 flicting security interest in or agricultural lien on the same collateral if
7 the statute creating the agricultural lien so provides.
8 (h) A perfected security interest in crops for new value given to enable
9 the debtor to produce the crops during the production season and given not
10 more than three (3) months before the crops become growing crops by planting
11 or otherwise takes priority over an earlier perfected security interest to the
12 extent that such earlier interest secures obligations due more than six (6)
13 months before the crops become growing crops by planting or otherwise, even
14 though the person giving new value had knowledge of the earlier security
15 interest.
16 SECTION 4. That Part, 3, Chapter 9, Title 28, Idaho Code, as added by
17 Senate Bill 1395, as enacted by the Second Regular Session of the Fifty-fifth
18 Idaho Legislature, be, and the same is hereby amended by the addition thereto
19 of a NEW SECTION, to be known and designated as Section 28-9-324A, Idaho Code,
20 and to read as follows:
21 28-9-324A. PRIORITY OF PRODUCTION-MONEY SECURITY INTERESTS AND AGRICUL-
22 TURAL LIENS. (a) Except as otherwise provided in subsections (c), (d) and (e)
23 of this section, if the requirements of subsection (b) of this section are
24 satisfied, a perfected production-money security interest in production-money
25 crops has priority over a conflicting security interest in the same crops and,
26 except as otherwise provided in section 28-9-327, also has priority in their
27 identifiable proceeds.
28 (b) A production-money security interest has priority under subsection
29 (a) of this section if:
30 (1) The production-money security interest is perfected by filing when
31 the production-money secured party first gives new value to enable the
32 debtor to produce the crops;
33 (2) The production-money secured party sends an authenticated notifica-
34 tion to the holder of the conflicting security interest not less than ten
35 (10) or more than thirty (30) days before the production-money secured
36 party first gives new value to enable the debtor to produce the crops if
37 the holder had filed a financing statment covering the crops before the
38 date of the filing made by the production-money secured party; and
39 (3) The notification states that the production-money secured party has
40 or expects to acquire a production-money security interest in the debtor's
41 crops and provides a description of the crops.
42 (c) Except as otherwise provided in subsection (d) or (e) of this sec-
43 tion, if more than one (1) security interest qualifies for priority in the
44 same collateral under subsection (a) of this section, the security interests
45 rank according to priority in time of filing under section 28-9-322(a).
46 (d) To the extent that a person holding a perfected security interest in
47 production-money crops that are the subject of a production-money security
48 interest gives new value to enable the debtor to produce the production-money
49 crops and the value is in fact used for the production of the production-money
50 crops, the security interests rank according to priority in time of filing
51 under section 28-9-322(a).
52 (e) To the extent that a person holds both an agricultural lien and a
53 production-money security interest in the same collateral securing the same
13
1 obligations, the rules of priority applicable to agricultural liens govern
2 priority.
3 SECTION 5. This act shall be in full force and effect on and after July
4 1, 2001.
STATEMENT OF PURPOSE RS10036
The purpose of this legislation is to provide the suppliers of agricultural inputs
the ability to secure the risk they take when production credit is extended to a
grower, either prior to an operating loan being approved or when an operating
loan is not adequate to cover production costs.
Idaho's trade suppliers are facing more and more exposure each year as demands
for input credit increases. All businesses chose to minimize credit risk and these
provisions justifiably give the trade supplier, entering into a risky situation, a
security lien commensurate with the risk taken.
FISCAL NOTE
This legislation has no impact to the general fund.
CONTACT: Richard Garber
Idaho Crop Production Association
888-0988
STATEMENT OF PURPOSE/FISCAL IMPACT S 1469