Chapter 409

409.102(1)(ps)4. 4. To the extent of the value of collateral, claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in, or damage to, the collateral; or

409.102(1)(ps)5. 5. To the extent of the value of collateral and to the extent payable to the debtor or the secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to, the collateral.

409.102(1)(ptm) (ptm) “Proceeds of a letter of credit” means the cash, check, accepted draft, or other item of value paid or delivered upon honor or giving of value by the issuer or any nominated person under the letter of credit. The term does not include a beneficiary’s drawing rights or documents presented by the beneficiary.

409.102(1)(pu) (pu) “Production-money crops” means crops that secure a production-money obligation incurred with respect to the production of those crops.

409.102(1)(pv) (pv) “Production-money obligation” means an obligation of an obligor incurred for new value given to enable the debtor to produce crops if the value is in fact used for the production of the crops.

409.102(1)(pw) (pw) “Production of crops” means the use of seed, fertilizer, or chemicals for growing crops or protecting them from damage or disease.

409.102(1)(q) (q) “Promissory note” means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds.

409.102(1)(qg) (qg) “Proposal” means a record authenticated by a secured party which includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures pursuant to ss. 409.620, 409.621, and 409.622.

409.102(1)(qm) (qm) “Public-finance transaction” means a secured transaction in connection with which:

409.102(1)(qm)1. 1. Debt securities are issued;

409.102(1)(qm)2. 2. All or a portion of the securities issued have an initial stated maturity of at least 20 years; and

409.102(1)(qm)3. 3. The debtor, obligor, secured party, account debtor or other person obligated on collateral, assignor or assignee of a secured obligation, or assignor or assignee of a security interest is a state or a governmental unit of a state.

409.102(1)(qp) (qp) “Public organic record” means a record that is available to the public for inspection and is:

409.102(1)(qp)1. 1. A record consisting of the record initially filed with or issued by a state or the United States to form or organize an organization and any record filed with or issued by the state or the United States which amends or restates the initial record;

409.102(1)(qp)2. 2. An organic record of a business trust consisting of the record initially filed with a state and any record filed with the state which amends or restates the initial record, if a statute of the state governing business trusts requires that the record be filed with the state; or

409.102(1)(qp)3. 3. A record consisting of legislation enacted by the legislature of a state or the Congress of the United States which forms or organizes an organization, any record amending the legislation, and any record filed with or issued by the state or the United States which amends or restates the name of the organization.

409.102(1)(qs) (qs) “Pursuant to commitment”, with respect to an advance made or other value given by a secured party, means pursuant to the secured party’s obligation, whether or not a subsequent event of default or other event not within the secured party’s control has relieved or may relieve the secured party from its obligation.

409.102(1)(r) (r) “Record,” except as used in “for record,” “of record,” “record or legal title,” and “record owner,” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

409.102(1)(rg) (rg) “Registered organization” means an organization formed or organized solely under the law of a single state or the United States by the filing of a public organic record with, the issuance of a public organic record by, or the enactment of legislation by the state or the United States. The term includes a business trust that is formed or organized under the law of a single state if a statute of the state governing business trusts requires that the business trust’s organic record be filed with the state.

409.102(1)(rm) (rm) “Secondary obligor” means an obligor to the extent that:

409.102(1)(rm)1. 1. The obligor’s obligation is secondary; or

409.102(1)(rm)2. 2. The obligor has a right of recourse with respect to an obligation secured by collateral against the debtor, another obligor, or property of either.

409.102(1)(rs) (rs) “Secured party” means:

409.102(1)(rs)1. 1. A person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;

409.102(1)(rs)2. 2. A person that holds an agricultural lien;

409.102(1)(rs)3. 3. A consignor;

409.102(1)(rs)4. 4. A person to which accounts, chattel paper, payment intangibles, or promissory notes have been sold;

409.102(1)(rs)5. 5. A trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for; or

409.102(1)(rs)6. 6. A person that holds a security interest arising under s. 402.401, 402.505, 402.711 (3), 404.210, 405.118, or 411.508 (5).

409.102(1)(s) (s) “Security agreement” means an agreement that creates or provides for a security interest.

409.102(1)(sg) (sg) “Send,” in connection with a record or notification, means:

409.102(1)(sg)1. 1. To deposit in the mail, deliver for transmission, or transmit by any other usual means of communication, with postage or cost of transmission provided for, addressed to any address reasonable under the circumstances; or

409.102(1)(sg)2. 2. To cause the record or notification to be received within the time that it would have been received if properly sent under subd. 1.

409.102(1)(sm) (sm) “Software” means a computer program and any supporting information provided in connection with a transaction relating to the program. The term does not include a computer program that is included in the definition of goods.

409.102(1)(ss) (ss) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

409.102(1)(t) (t) “Supporting obligation” means a letter-of-credit right or secondary obligation that supports the payment or performance of an account, chattel paper, a document, a general intangible, an instrument, or investment property.

409.102(1)(tg) (tg) “Tangible chattel paper” means chattel paper evidenced by a record or records consisting of information that is inscribed on a tangible medium.

409.102(1)(tm) (tm) “Termination statement” means an amendment of a financing statement which:

409.102(1)(tm)1. 1. Identifies, by its file number, the initial financing statement to which it relates; and

409.102(1)(tm)2. 2. Indicates either that it is a termination statement or that the identified financing statement is no longer effective.

409.102(1)(ts) (ts) “Transmitting utility” means a person primarily engaged in the business of:

409.102(1)(ts)1. 1. Operating a railroad, subway, street railway, or trolley bus;

409.102(1)(ts)2. 2. Transmitting communications electrically, electromagnetically, or by light;

409.102(1)(ts)3. 3. Transmitting goods by pipeline or sewer; or

409.102(1)(ts)4. 4. Transmitting or producing and transmitting electricity, steam, gas, or water.

409.102(2) (2) Definitions in other chapters. The following definitions in other chapters apply to this chapter:

409.102(2)(b) (b) “Broker” — s. 408.102.

409.102(2)(bm) (bm) “Certificated security” — s. 408.102.

409.102(2)(c) (c) “Check” — s. 403.104.

409.102(2)(cm) (cm) “Clearing corporation” — s. 408.102.

409.102(2)(d) (d) “Contract for sale” — s. 402.106.

409.102(2)(df) (df) “Control” (with respect to a document of title) — s. 407.106.

409.102(2)(dm) (dm) “Customer” — s. 404.104.

409.102(2)(e) (e) “Entitlement holder” — s. 408.102.

409.102(2)(em) (em) “Financial asset” — s. 408.102.

409.102(2)(f) (f) “Holder in due course” — s. 403.302.

409.102(2)(g) (g) “Issuer” (with respect to a security) — s. 408.201.

409.102(2)(gm) (gm) “Lease” — s. 411.103.

409.102(2)(h) (h) “Lease agreement” — s. 411.103.

409.102(2)(hm) (hm) “Lease contract” — s. 411.103.

409.102(2)(i) (i) “Leasehold interest” — s. 411.103.

409.102(2)(im) (im) “Lessee” — s. 411.103.

409.102(2)(j) (j) “Lessee in ordinary course of business” — s. 411.103.

409.102(2)(jm) (jm) “Lessor” — s. 411.103.

409.102(2)(k) (k) “Lessor’s residual interest” — s. 411.103.

409.102(2)(L) (L) “Merchant” — s. 402.104.

409.102(2)(Lm) (Lm) “Negotiable instrument” — s. 403.104.

409.102(2)(mm) (mm) “Note” — s. 403.104.

409.102(2)(nm) (nm) “Prove” — s. 403.103.

409.102(2)(o) (o) “Sale” — s. 402.106.

409.102(2)(om) (om) “Securities account” — s. 408.501.

409.102(2)(p) (p) “Securities intermediary” — s. 408.102.

409.102(2)(pm) (pm) “Security” — s. 408.102.

409.102(2)(q) (q) “Security certificate” — s. 408.102.

409.102(2)(qm) (qm) “Security entitlement” — s. 408.102.

409.102(2)(r) (r) “Uncertificated security” — s. 408.102.

409.102(3) (3) Chapter 401 definitions and principles. Chapter 401 contains general definitions and principles of construction and interpretation applicable throughout this chapter.

409.102 History History: 2001 a. 10; 2003 a. 321; 2009 a. 322; 2011 a. 206; 2015 a. 196; 2017 a. 365 s. 111.

409.102 Annotation A security interest in all of a trucking company’s “equipment” reasonably identified trucks as collateral. Milwaukee Mack Sales v. First Wis. Nat. Bank, 93 Wis. 2d 589, 287 N.W.2d 708 (1980).

409.102 Annotation Goods classified as “inventory” while in the possession of a debtor remain “inventory” while on lease status in the possession of the lessee. In re Watertown Tractor & Equipment Company., Inc. 94 Wis. 2d 622, 289 N.W.2d 288 (1980).

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

409.102 Annotation There is a real difference between a claim from which proceeds arise and the proceeds themselves. Public policy does not prohibit the assignment of potential proceeds in a malpractice claim as a payment intangible. Concluding otherwise would contravene the clear meaning of provisions of ch. 409 and could be seen as favoring lawyers against whom legal malpractice claims are filed. Attorney’s Title Guaranty Fund, Inc. v. Town Bank, 2014 WI 63, 355 Wis. 2d 229, 850 N.W.2d 28, 11-2774.

409.103 409.103 Purchase-money security interest; application of payments; burden of establishing.

409.103(1) (1) Definitions. In this section:

409.103(1)(a) (a) “Purchase-money collateral” means goods or software that secures a purchase-money obligation incurred with respect to that collateral.

409.103(1)(b) (b) “Purchase-money obligation” means an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.

409.103(2) (2) Purchase-money security interest in goods. A security interest in goods is a purchase-money security interest:

409.103(2)(a) (a) To the extent that the goods are purchase-money collateral with respect to that security interest;

409.103(2)(b) (b) If the security interest is in inventory that is or was purchase-money collateral, also to the extent that the security interest secures a purchase-money obligation incurred with respect to other inventory in which the secured party holds or held a purchase-money security interest; and