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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
]]]] 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
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