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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 - 2004IN 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 asanimal, poul-30try or fishlivestock 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 productor10 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-12less of whether the purchaser uses the agricultural product purchased to13increase the value of his livestock or whether he uses the agricultural prod-14uct purchased to maintain the value, health or status of his livestock without15actually 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 orhas 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., regardless23of whether the creditor's lien or security interest attaches to the agricul-24tural product or proceeds of the sale of the agricultural product before or25after the date on which the lienAs among liens created by section 45-1802, 26 Idaho Code,attacheseach 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