Chapter 409

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

409.103(2)(c) (c) Also to the extent that the security interest secures a purchase-money obligation incurred with respect to software in which the secured party holds or held a purchase-money security interest.

409.103(3) (3) Purchase-money security interest in software. A security interest in software is a purchase-money security interest to the extent that the security interest also secures a purchase-money obligation incurred with respect to goods in which the secured party holds or held a purchase-money security interest if:

409.103(3)(a) (a) The debtor acquired its interest in the software in an integrated transaction in which it acquired an interest in the goods; and

409.103(3)(b) (b) The debtor acquired its interest in the software for the principal purpose of using the software in the goods.

409.103(4) (4) Consignor’s inventory purchase-money security interest. The security interest of a consignor in goods that are the subject of a consignment is a purchase-money security interest in inventory.

409.103(5) (5) Application of payment in nonconsumer-goods transaction. In a transaction other than a consumer-goods transaction, if the extent to which a security interest is a purchase-money security interest depends on the application of a payment to a particular obligation, the payment must be applied:

409.103(5)(a) (a) In accordance with any reasonable method of application to which the parties agree;

409.103(5)(b) (b) In the absence of the parties’ agreement to a reasonable method, in accordance with any intention of the obligor manifested at or before the time of payment; or

409.103(5)(c) (c) In the absence of an agreement to a reasonable method and a timely manifestation of the obligor’s intention, in the following order:

409.103(5)(c)1. 1. To obligations that are not secured; and

409.103(5)(c)2. 2. If more than one obligation is secured, to obligations secured by purchase-money security interests in the order in which those obligations were incurred.

409.103(6) (6) No loss of status of purchase-money security interest in nonconsumer-goods transaction. In a transaction other than a consumer-goods transaction, a purchase-money security interest does not lose its status as such, even if:

409.103(6)(a) (a) The purchase-money collateral also secures an obligation that is not a purchase-money obligation;

409.103(6)(b) (b) Collateral that is not purchase-money collateral also secures the purchase-money obligation; or

409.103(6)(c) (c) The purchase-money obligation has been renewed, refinanced, consolidated, or restructured.

409.103(7) (7) Burden of proof in nonconsumer-goods transaction. In a transaction other than a consumer-goods transaction, a secured party claiming a purchase-money security interest has the burden of establishing the extent to which the security interest is a purchase-money security interest.

409.103(8) (8) Nonconsumer-goods transactions; no inference. The limitation of the rules in subs. (5) to (7) to transactions other than consumer-goods transactions is intended to leave to the court the determination of the proper rules in consumer-goods transactions. The court may not infer from that limitation the nature of the proper rule in consumer-goods transactions and may continue to apply established approaches.

409.103 History History: 2001 a. 10.

409.1035 409.1035 Production-money crops; production-money obligation; production-money security interest; burden of establishing.

409.1035(1) (1) A security interest in crops is a production-money security interest to the extent that the crops are production-money crops.

409.1035(2) (2) If the extent to which a security interest is a production-money security interest depends on the application of a payment to a particular obligation, the payment must be applied in the following order until fully applied:

409.1035(2)(a) (a) First, to all production-money obligations secured by production-money crops, in the order in which those obligations were incurred;

409.1035(2)(b) (b) Second, to all obligations secured by conflicting security interests in the production-money crops referred to in par. (a), in the order in which those obligations were incurred; and

409.1035(2)(c) (c) Third, to all unsecured obligations of the debtor making the payment, in the order in which those obligations were incurred.

409.1035(3) (3) A production-money security interest does not lose its status as such, even if:

409.1035(3)(a) (a) The production-money crops also secure an obligation that is not a production-money obligation;

409.1035(3)(b) (b) Collateral that is not production-money crops also secures the production-money obligation; or

409.1035(3)(c) (c) The production-money obligation has been renewed, refinanced, or restructured.

409.1035(4) (4) A secured party claiming a production-money security interest has the burden of establishing the extent to which the security interest is a production-money security interest.

409.1035(5) (5) This section does not affect any right to proceeds under s. 409.315.

409.1035(6) (6) A person may not claim a purchase-money security interest in crops grown, growing, or to be grown.

409.1035 History History: 2001 a. 10.

409.104 409.104 Control of deposit account.

409.104(1) (1) Requirements for control. A secured party has control of a deposit account if:

409.104(1)(a) (a) The secured party is the bank with which the deposit account is maintained;