2004 Legislation
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HOUSE BILL NO. 775 – Agric commodity liens

HOUSE BILL NO. 775

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H0775.....................................................by WAYS AND MEANS
AGRICULTURAL COMMODITY LIENS - Amends, repeals and adds to existing law
relating to agricultural commodity producer and dealer liens; to revise
provisions relating to the creation, attachment, duration, priority and
discharge of certain liens; to provide that persons selling or agreeing to
sell any agricultural product for use as livestock feed may ask for and
obtain specified information from persons with certain security interests;
to provide for immunity from civil and criminal liability; and to require
that certain owners of livestock disclose specified information.
                                                                        
02/26    House intro - 1st rdg - to printing
02/27    Rpt prt - to Agric Aff

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-seventh Legislature                 Second Regular Session - 2004
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 775
                                                                        
                                BY WAYS AND MEANS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO AGRICULTURAL COMMODITY PRODUCER AND DEALER LIENS; AMENDING SECTION
  3        45-1801, IDAHO CODE, TO REVISE A DEFINITION AND TO DEFINE A TERM; AMENDING
  4        SECTION 45-1802, IDAHO CODE, TO REVISE PROVISIONS RELATING TO THE CREATION
  5        OF CERTAIN LIENS; AMENDING SECTION 45-1803, IDAHO CODE, TO  REVISE  PROVI-
  6        SIONS  RELATING  TO  THE  ATTACHMENT  OF  CERTAIN  LIENS; AMENDING SECTION
  7        45-1804, IDAHO CODE, TO REVISE PROVISIONS RELATING TO THE DURATION OF CER-
  8        TAIN LIENS; AMENDING SECTION 45-1805, IDAHO  CODE,  TO  REVISE  PROVISIONS
  9        RELATING TO THE PRIORITY OF CERTAIN LIENS; AMENDING SECTION 45-1806, IDAHO
 10        CODE,  TO  REVISE  PROVISIONS  RELATING TO THE DISCHARGE OF CERTAIN LIENS;
 11        REPEALING SECTION 45-1810, IDAHO CODE; AND AMENDING CHAPTER 18, TITLE  45,
 12        IDAHO  CODE, BY THE ADDITION OF A NEW SECTION 45-1811, IDAHO CODE, TO PRO-
 13        VIDE THAT PERSONS SELLING OR AGREEING TO SELL ANY AGRICULTURAL PRODUCT FOR
 14        USE AS LIVESTOCK FEED MAY ASK FOR AND OBTAIN  SPECIFIED  INFORMATION  FROM
 15        PERSONS  WITH  CERTAIN SECURITY INTERESTS, TO PROVIDE A FORM, TO PROVIDE A
 16        PROCEDURE, TO PROVIDE FOR IMMUNITY FROM CIVIL AND CRIMINAL  LIABILITY,  TO
 17        REQUIRE  THAT  CERTAIN  OWNERS OF LIVESTOCK DISCLOSE SPECIFIED INFORMATION
 18        AND TO PROVIDE FOR LIABILITY  IN  THE  EVENT  SUCH  OWNERS  FAIL  TO  MAKE
 19        REQUIRED DISCLOSURES.
                                                                        
 20    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 21        SECTION  1.  That  Section 45-1801, Idaho Code, be, and the same is hereby
 22    amended to read as follows:
                                                                        
 23        45-1801.  DEFINITIONS. As used in this chapter:
 24        (1)  "Agricultural product" means wheat, corn, oats, barley, rye, lentils,
 25    soybeans, grain sorghum, dry  beans  and  peas,  beans,  safflower,  sunflower
 26    seeds, tame mustards, rapeseed, flaxseed, leguminous seed or other small seed,
 27    or  any  other agricultural commodity, including any of the foregoing, whether
 28    cleaned, processed, treated, reconditioned or whether mixed,  rolled  or  com-
 29    bined in any fashion or by any means to create a product used as animal, poul-
 30    try or fish livestock feed.
 31        (2)  "Agricultural commodity dealer" means any person who contracts for or
 32    solicits  any agricultural product from an agricultural producer or negotiates
 33    the consignment or purchase of any agricultural product, or receives for sale,
 34    resale or shipment for storage, processing, cleaning  or  reconditioning,  any
 35    agricultural product, or who buys during any calendar year, at least ten thou-
 36    sand  dollars  ($10,000)  worth  of agricultural products from the producer or
 37    producers of the commodity. Agricultural commodity dealer  shall  not  mean  a
 38    person who purchases agricultural products for his own use as seed or feed.
 39        (3)  "Agricultural commodity producer" means the owner, tenant or operator
 40    of  land  who  receives  all or part of the proceeds from the sale, under con-
 41    tract, bailment or otherwise, or delivery under contract or bailment, of agri-
 42    cultural products produced on that land.
 43        (4)  "Livestock" means animals, poultry or fish  grown,  raised  or  main-
                                                                        
                                           2
                                                                        
  1    tained for commercial purposes.
  2        (5)  "Person"  means  an individual, trust, partnership, limited liability
  3    company, corporation, or unincorporated association or any other legal or com-
  4    mercial entity.
                                                                        
  5        SECTION 2.  That Section 45-1802, Idaho Code, be, and the same  is  hereby
  6    amended to read as follows:
                                                                        
  7        45-1802.  LIEN CREATED -- WHO MAY HAVE. An agricultural commodity producer
  8    or  an  agricultural commodity dealer who sells, or delivers under contract or
  9    bailment, an agricultural product has a lien on the  agricultural  product  or
 10    and  the  proceeds of the sale of the agricultural product as provided in sec-
 11    tion 45-1804, Idaho Code. The lien created in this chapter may attach  regard-
 12    less  of  whether  the  purchaser  uses  the agricultural product purchased to
 13    increase the value of his livestock or whether he uses the agricultural  prod-
 14    uct purchased to maintain the value, health or status of his livestock without
 15    actually increasing the value of his agricultural product.
                                                                        
 16        SECTION  3.  That  Section 45-1803, Idaho Code, be, and the same is hereby
 17    amended to read as follows:
                                                                        
 18        45-1803.  WHEN LIEN ATTACHES. (1) Except as provided in subsection (2)  of
 19    this  section,  tThe  lien created by section 45-1802, Idaho Code, attaches to
 20    the agricultural product and to the proceeds of the  subsequent  sale  of  the
 21    agricultural product on the date the agricultural product is physically deliv-
 22    ered  to the purchaser or on the date any final payment is due, and unpaid, to
 23    the agricultural commodity producer or agricultural commodity dealer under any
 24    contract or bailment, whichever occurs last.
 25        (2)  The lien created by section 45-1802, Idaho Code, attaches to an agri-
 26    cultural product sold for use as livestock feed and the proceeds of the subse-
 27    quent sale of such agricultural product on the date the  agricultural  product
 28    is physically delivered to the purchaser.
                                                                        
 29        SECTION  4.  That  Section 45-1804, Idaho Code, be, and the same is hereby
 30    amended to read as follows:
                                                                        
 31        45-1804.  DURATION OF LIEN -- NOTICE OF LIEN. (1) The lien provided for by
 32    section 45-1802, Idaho Code, on agricultural products  not  sold  for  use  as
 33    livestock  feed,  remains  in  effect for a period of one hundred eighty (180)
 34    days after the date of attachment, except as provided in  subsection  (23)  of
 35    this section.
 36        (2)  The lien provided for by section 45-1802, Idaho Code, on agricultural
 37    products  sold  for  use  as livestock feed and the proceeds of the subsequent
 38    sale of such agricultural products, remains in effect for a period  of  ninety
 39    (90)  days  after the date of attachment, except as provided in subsection (3)
 40    of this section.
 41        (3)  The lien provided for by section 45-1802, Idaho  Code,  is  continued
 42    for  a  period  of one (1) year from the date of filing if a written notice of
 43    lien, on a form prescribed by the secretary of state, is filed with the secre-
 44    tary of state by the agricultural commodity producer or the agricultural  com-
 45    modity  dealer  (i)  within  one  hundred  eighty (180) days after the date of
 46    attachment for liens on agricultural products not sold for  use  as  livestock
 47    feed,  or  (ii) within ninety (90) days after the date of attachment for liens
 48    on agricultural products sold for use as livestock  feed.  The  form  for  the
 49    notice of lien shall require the following information:
                                                                        
                                           3
                                                                        
  1        (a)  A  statement of the amount claimed by the agricultural commodity pro-
  2        ducer or agricultural commodity dealer after  deducting  all  credits  and
  3        offsets;
  4        (b)  The  name,  address  and signature of the agricultural commodity pro-
  5        ducer  or agricultural commodity dealer claiming the lien;
  6        (c)  The name and address of the person  who  purchased  the  agricultural
  7        product from the agricultural commodity producer or agricultural commodity
  8        dealer;
  9        (d)  A  description  of  the  agricultural  product  charged with the lien
 10        including crop year; and
 11        (e)  Such other information as the form prescribed  by  the  secretary  of
 12        state may require.
 13        (34)  The  notice  of lien shall be entered in a searchable database main-
 14    tained by the secretary of state.
                                                                        
 15        SECTION 5.  That Section 45-1805, Idaho Code, be, and the same  is  hereby
 16    amended to read as follows:
                                                                        
 17        45-1805.  PRIORITY  OF  LIEN.  The  lien created by section 45-1802, Idaho
 18    Code, is preferred to a lien or has priority over a previously perfected  lien
 19    in  the  agricultural  product, with the exception of liens created by section
 20    45-1802, Idaho Code, and over a previously perfected security interest in  the
 21    agricultural  product  under article 9 of the uniform commercial code, chapter
 22    9, title 28, Idaho Code, in favor of a creditor of the purchaser.,  regardless
 23    of  whether  the creditor's lien or security interest attaches to the agricul-
 24    tural product or proceeds of the sale of the agricultural  product  before  or
 25    after  the  date  on which the lien As among liens created by section 45-1802,
 26    Idaho Code, attaches each lien has priority according to its time  of  attach-
 27    ment relative to competing liens.
                                                                        
 28        SECTION  6.  That  Section 45-1806, Idaho Code, be, and the same is hereby
 29    amended to read as follows:
                                                                        
 30        45-1806.  DISCHARGE OF LIEN. The lien created by  section  45-1802,  Idaho
 31    Code, is discharged when the lienholder receives full payment for the agricul-
 32    tural  product  or when the lien lapses due to the passage of time pursuant to
 33    section 45-1804, Idaho Code, whichever first occurs. If payment is received in
 34    the form of a negotiable instrument, full payment is received when  the  nego-
 35    tiable instrument clears banking channels.
                                                                        
 36        SECTION  7.  That  Section 45-1810, Idaho Code, be, and the same is hereby
 37    repealed.
                                                                        
 38        SECTION 8.  That Chapter 18, Title 45, Idaho Code, be,  and  the  same  is
 39    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 40    ignated as Section 45-1811, Idaho Code, and to read as follows:
                                                                        
 41        45-1811.  INFORMATION AVAILABLE TO SELLER OF AGRICULTURAL PRODUCT FOR  USE
 42    AS  LIVESTOCK  FEED. (1) A person who sells or agrees to sell any agricultural
 43    product for use as livestock feed, upon obtaining permission in  writing  from
 44    the  owner of the livestock which are to consume the agricultural product, may
 45    ask for and obtain the following information from any person with  a  security
 46    interest  under article 9 of the uniform commercial code, chapter 9, title 28,
 47    Idaho Code, hereinafter referred to as a "livestock secured  party,"  in  such
 48    livestock:
                                                                        
                                           4
                                                                        
  1        (a)  Whether  such  livestock secured party has credit currently available
  2        to the owner of such livestock of an appropriate type, and in a sufficient
  3        amount, after taking into account the owner's budget and other demands  on
  4        his  available  credit,  to  enable  the owner to pay for the agricultural
  5        product sold or proposed to be sold; and
  6        (b)  Whether the owner of such livestock is current in his financial obli-
  7        gations to such livestock secured party.
  8        (2)  Such inquiry and the livestock secured party's response thereto shall
  9    be made, and the livestock owner's consent evidenced, on a form prescribed  by
 10    the secretary of state substantially as follows:
 11    Name of Seller of Livestock Feed..............................................
 12    Address.......................................................................
 13    SSN/TIN.......................................................................
 14    Date Inquiry was prepared.....................................................
                                                                        
 15    Name of Livestock Secured Party...............................................
 16    Address.......................................................................
                                                                        
 17        Name of person to whom Livestock Secured Party's response to Seller should
 18    be addressed..................................................................
 19    Address.......................................................................
                                                                        
 20        Description  of  livestock feed and date (or anticipated date) of delivery
 21    of livestock feed.............................................................
                                                                        
 22        Purchase price of livestock feed, including any delivery charge...........
                                                                        
 23    Name of Owner of Livestock....................................................
 24    Address.......................................................................
 25    SSN/TIN.......................................................................
                                                                        
 26        Reasonable description of the location where the livestock feed is  to  be
 27    delivered.....................................................................
                                                                        
 28        1.  Does  Livestock  Secured  Party have credit currently available to the
 29    above-identified Owner of an appropriate type, and  in  a  sufficient  amount,
 30    after  taking  into account the Owner's budget and other demands on his avail-
 31    able credit, to enable the Owner to pay for the agricultural product  sold  or
 32    proposed to be sold as described above?
 33    Yes.........
 34    No..........
                                                                        
 35        2.  Is  the above-identified Owner current in his financial obligations to
 36    Livestock Secured Party?
 37    Yes.........
 38    No..........
                                                                        
 39    Signature of Seller...........................................................
                                                                        
 40    Signature of Owner of Livestock (evidencing permission  to  Livestock  Secured
 41    Party to provide information).................................................
 42    Signature of Livestock Secured Party..........................................
 43        (3)  Sellers  must  use  the form published by the secretary of state, and
 44    shall send such form, properly completed and signed by  both  seller  and  the
 45    owner  of  the  livestock  which are to consume the feed, to livestock secured
                                                                        
                                           5
                                                                        
  1    party at the livestock secured party's  address  as  shown  on  the  livestock
  2    secured party's most recent UCC-1F financing statement covering such livestock
  3    on file in the office of the secretary of state.
  4        (4)  A livestock secured party providing information pursuant to this sec-
  5    tion  shall be immune from all civil and criminal liability, if any, otherwise
  6    arising from the provision of such information. The preceding  sentence  shall
  7    not  be  construed  to  imply that any such liability would otherwise arise or
  8    exist.
  9        (5)  If requested by a person who sells or agrees to sell any agricultural
 10    product for use as livestock feed, the owner of the  livestock  which  are  to
 11    consume  the  agricultural  product shall disclose whether the owner currently
 12    owes any third party seller of livestock feed such that the third party seller
 13    has a potential lien right under section 45-1802, Idaho Code. Should the owner
 14    fail to disclose the existence of  any  such  unpaid  third  party  seller  if
 15    requested,  such  owner shall be liable for any actual, but not consequential,
 16    damages suffered by the inquiring seller due to such failure.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE
                             RS 14199

The purpose of this bill is to amend the agricultural commodity
dealer and producer lien law, Chapter 18, Title 45, Idaho Code,
but only as it relates to agricultural products sold for use as
livestock feed.

Under present law, it is difficult for a feed seller to determine
if the buyer has sufficient credit available to pay for the feed,
and to find out whether the buyer has already failed to pay
another feed seller, who may have an existing "secret" lien.

The primary intent of the amendments is to make it possible for
sellers of livestock feed to obtain certain credit information
from the buyer of the feed, and from the buyer's bank or other
lender, with the buyer's prior permission, so the seller can
decide whether to sell feed on credit, or to require cash payment
for the feed upon delivery.

It also provides that the feed seller can inquire of the buyer if
he already owes money for feed to other sellers.  If the buyer
fails to disclose such a debt, he can be liable to the inquiring
seller for damages.

The third component of the bill is to shorten the "secret" period
of a feed lien from 180 days to 90 days, to limit feed sellers'
exposure to other feed sellers' secret liens.  This still
provides sufficient time for the feed seller to determine whether
he will be paid timely, before filing a notice of lien.


                          FISCAL IMPACT

This bill will have no impact on the general fund.  The Secretary
of State will have to publish a form for feed sellers to use to
seek credit information, but the cost of producing the form
should be minimal.


Contact
Name: Speaker Bruce Newcomb 
      Rep. Mike Moyle
Phone: (208) 332-1000
      Dar Olberding, Idaho Grain Producers Assn.
       (208) 761-6012
      Dawn Justice, Idaho Bankers Assn.
       (208) 342-8282

STATEMENT OF PURPOSE/FISCAL NOTE                        H 775