Chapter 409

409.105(2m) (2m) Specific facts giving control. Without limiting the generality of sub. (1m), a system satisfies sub. (1m) if the record or records comprising the chattel paper are created, stored, and assigned in such a manner that:

409.105(2m)(a) (a) A single authoritative copy of the record or records exists which is unique, identifiable, and, except as otherwise provided in pars. (d) to (f), unalterable;

409.105(2m)(b) (b) The authoritative copy identifies the secured party as the assignee of the record or records;

409.105(2m)(c) (c) The authoritative copy is communicated to and maintained by the secured party or its designated custodian;

409.105(2m)(d) (d) Copies or amendments that add or change an identified assignee of the authoritative copy can be made only with the consent of the secured party;

409.105(2m)(e) (e) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and

409.105(2m)(f) (f) Any amendment of the authoritative copy is readily identifiable as authorized or unauthorized.

409.105 History History: 2001 a. 10, 416; 2011 a. 206.

409.106 409.106 Control of investment property.

409.106(1) (1) Control under s. 408.106. A person has control of a certificated security, uncertificated security, or security entitlement as provided in s. 408.106.

409.106(2) (2) Control of commodity contract. A secured party has control of a commodity contract if:

409.106(2)(a) (a) The secured party is the commodity intermediary with which the commodity contract is carried; or

409.106(2)(b) (b) The commodity customer, secured party, and commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer.

409.106(3) (3) Effect of control of securities account or commodity account. A secured party having control of all security entitlements or commodity contracts carried in a securities account or commodity account has control over the securities account or commodity account.

409.106 History History: 2001 a. 10.

409.107 409.107 Control of letter-of-credit right. A secured party has control of a letter-of-credit right to the extent of any right to payment or performance by the issuer or any nominated person if the issuer or nominated person has consented to an assignment of proceeds of the letter of credit under ch. 405 or otherwise applicable law or practice.

409.107 History History: 2001 a. 10.

409.108 409.108 Sufficiency of description.

409.108(1) (1) Sufficiency of description. Except as otherwise provided in subs. (3) to (5), a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described.

409.108(2) (2) Examples of reasonable identification. Except as otherwise provided in sub. (4), a description of collateral reasonably identifies the collateral if it identifies the collateral by:

409.108(2)(a) (a) Specific listing;

409.108(2)(b) (b) Category;

409.108(2)(c) (c) Except as otherwise provided in sub. (5), a type of collateral defined in chs. 401 to 411;

409.108(2)(d) (d) Quantity;

409.108(2)(e) (e) Computational or allocational formula or procedure; or

409.108(2)(f) (f) Except as otherwise provided in sub. (3), any other method, if the identity of the collateral is objectively determinable.

409.108(3) (3) Supergeneric description not sufficient. A description of collateral as “all the debtor’s assets” or “all the debtor’s personal property” or using words of similar import does not reasonably identify the collateral.

409.108(4) (4) Investment property. Except as otherwise provided in sub. (5), a description of a security entitlement, securities account, or commodity account is sufficient if it describes:

409.108(4)(a) (a) The collateral by those terms or as investment property; or

409.108(4)(b) (b) The underlying financial asset or commodity contract.

409.108(5) (5) When description by type insufficient. A description only by type of collateral defined in chs. 401 to 411 is an insufficient description of:

409.108(5)(a) (a) A commercial tort claim; or

409.108(5)(b) (b) In a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity account.

409.108 History History: 2001 a. 10.

409.108 Annotation A wrong statement of section, township, range, and county where crops were grown was not minor, and, without directing further inquiry, was insufficient. Whether a party is misled by the description is not part of the inquiry under s. 409.110 or 409.402. Smith & Spindahl Enterprises, Inc. v. Lee, 206 Wis. 2d 663, 557 N.W.2d 865 (Ct. App. 1996), 96-0882.

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

409.109 409.109 Scope.

409.109(1) (1) General scope of chapter. Except as otherwise provided in subs. (3) and (4), and s. 16.63 (4) on transactions involving tobacco settlement revenues, this chapter applies to:

409.109(1)(a) (a) A transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;

409.109(1)(b) (b) An agricultural lien;

409.109(1)(c) (c) A sale of accounts, chattel paper, payment intangibles, or promissory notes;

409.109(1)(d) (d) A consignment;

409.109(1)(e) (e) A security interest arising under s. 402.401, 402.505, 402.711 (3), or 411.508 (5), as provided in s. 409.110; and

409.109(1)(f) (f) A security interest arising under s. 404.210 or 405.118.

409.109(2) (2) Security interest in secured obligation. The application of this chapter to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this chapter does not apply.

409.109(3) (3) Extent to which chapter does not apply. This chapter does not apply to the extent that:

409.109(3)(a) (a) A statute, regulation, or treaty of the United States preempts this chapter;

409.109(3)(b) (b) Another statute of this state expressly governs the creation, perfection, priority, or enforcement of a security interest created by this state or a governmental unit of this state;

409.109(3)(c) (c) A statute of another state, a foreign country, or a governmental unit of another state or a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority, or enforcement of a security interest created by the state, country, or governmental unit; or

409.109(3)(d) (d) The rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under ch. 405.

409.109(4) (4) Inapplicability of chapter. This chapter does not apply to:

409.109(4)(a) (a) A landlord’s lien, other than an agricultural lien;

409.109(4)(b) (b) A lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but s. 409.333 applies with respect to priority of the lien;

409.109(4)(c) (c) An assignment of a claim for wages, salary, or other compensation of an employee;

409.109(4)(cm) (cm) An assignment of a claim or right to receive compensation for injuries or sickness under a worker’s compensation or worker’s disability statute of any state;

409.109(4)(d) (d) A sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;

409.109(4)(e) (e) An assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of collection only;

409.109(4)(f) (f) An assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract;

409.109(4)(g) (g) An assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;

409.109(4)(h) (h) A transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health-care provider of a health-care-insurance receivable and any subsequent assignment of the right to payment, but ss. 409.315 and 409.322 apply with respect to proceeds and priorities in proceeds;

409.109(4)(i) (i) An assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;

409.109(4)(j) (j) A right of recoupment or setoff, but:

409.109(4)(j)1. 1. Section 409.340 applies with respect to the effectiveness of rights of recoupment or setoff against deposit accounts; and

409.109(4)(j)2. 2. Section 409.404 applies with respect to defenses or claims of an account debtor;

409.109(4)(k) (k) The creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:

409.109(4)(k)1. 1. Liens on real property in ss. 409.203 and 409.308;

409.109(4)(k)2. 2. Fixtures in s. 409.334;

409.109(4)(k)3. 3. Fixture filings in ss. 409.501, 409.502, 409.512, 409.516, and 409.519; and

409.109(4)(k)4. 4. Security agreements covering personal and real property in s. 409.604;

409.109(4)(L) (L) An assignment of a claim arising in tort, other than a commercial tort claim, but ss. 409.315 and 409.322 apply with respect to proceeds and priorities in proceeds; or

409.109(4)(m) (m) An assignment of a deposit account in a consumer transaction, but ss. 409.315 and 409.322 apply with respect to proceeds and priorities in proceeds.

409.109 History History: 2001 a. 10, 64.

409.109 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.

409.110 409.110 Security interests arising under ch. 402 or 411. A security interest arising under s. 402.401, 402.505, 402.711 (3), or 411.508 (5) is subject to this chapter. However, until the debtor obtains possession of the goods:

409.110(1) (1) The security interest is enforceable, even if s. 409.203 (2) (c) has not been satisfied;

409.110(2) (2) Filing is not required to perfect the security interest;

409.110(3) (3) The rights of the secured party after default by the debtor are governed by ch. 402 or 411; and

409.110(4) (4) The security interest has priority over a conflicting security interest created by the debtor.

409.110 History History: 2001 a. 10.

subch. II of ch. 409 SUBCHAPTER II

EFFECTIVENESS OF SECURITY AGREEMENT; ATTACHMENT OF SECURITY INTEREST; RIGHTS OF PARTIES TO SECURITY AGREEMENT

409.201 409.201 General effectiveness of security agreement.

409.201(1) (1) General effectiveness. Except as otherwise provided in chs. 401 to 411, a security agreement is effective according to its terms between the parties, against purchasers of the collateral, and against creditors.

409.201(2) (2) Applicable consumer laws and other law. A transaction subject to this chapter is subject to any applicable rule of law which establishes a different rule for consumers and to chs. 138, 421 to 427, and 429 and s. 182.025.

409.201(3) (3) Other applicable law controls. In case of conflict between this chapter and a rule of law, statute, or rule described in sub. (2), the rule of law, statute, or rule controls. Failure to comply with a statute or rule described in sub. (2) has only the effect the statute or rule specifies.

409.201(4) (4) Further deference to other applicable law. This chapter does not:

409.201(4)(a) (a) Validate any rate, charge, agreement, or practice that violates a rule of law, statute, or rule described in sub. (2); or

409.201(4)(b) (b) Extend the application of the rule of law, statute, or rule to a transaction not otherwise subject to the rule of law, statute, or rule.

409.201 History History: 2001 a. 10.