Chapter 409

409.312(6)(a) (a) Ultimate sale or exchange; or

409.312(6)(b) (b) Loading, unloading, storing, shipping, transshipping, manufacturing, processing, or otherwise dealing with them in a manner preliminary to their sale or exchange.

409.312(7) (7) Temporary perfection: delivery of security certificate or instrument to debtor. A perfected security interest in a certificated security or instrument remains perfected for 20 days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of:

409.312(7)(a) (a) Ultimate sale or exchange; or

409.312(7)(b) (b) Presentation, collection, enforcement, renewal, or registration of transfer.

409.312(8) (8) Expiration of temporary perfection. After the 20-day period specified in sub. (5), (6), or (7) expires, perfection depends upon compliance with this chapter.

409.312 History History: 2001 a. 10; 2009 a. 322.

409.313 409.313 When possession by or delivery to secured party perfects security interest without filing.

409.313(1) (1) Perfection by possession or delivery. Except as otherwise provided in sub. (2), a secured party may perfect a security interest in tangible negotiable documents, goods, instruments, money, or tangible chattel paper by taking possession of the collateral. A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under s. 408.301.

409.313(2) (2) Goods covered by certificate of title. With respect to goods covered by a certificate of title issued by this state, a secured party may perfect a security interest in the goods by taking possession of the goods only in the circumstances described in s. 409.316 (4).

409.313(3) (3) Collateral in possession of person other than debtor. With respect to collateral other than certificated securities and goods covered by a document, a secured party takes possession of collateral in the possession of a person other than the debtor, the secured party, or a lessee of the collateral from the debtor in the ordinary course of the debtor’s business, when:

409.313(3)(a) (a) The person in possession authenticates a record acknowledging that the person holds possession of the collateral for the secured party’s benefit; or

409.313(3)(b) (b) The person takes possession of the collateral after having authenticated a record acknowledging that the person will hold possession of collateral for the secured party’s benefit.

409.313(4) (4) Time of perfection by possession; continuation of perfection. If perfection of a security interest depends upon possession of the collateral by a secured party, perfection occurs no earlier than the time the secured party takes possession and continues only while the secured party retains possession.

409.313(5) (5) Time of perfection by delivery; continuation of perfection. A security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under s. 408.301 and remains perfected by delivery until the debtor obtains possession of the security certificate.

409.313(6) (6) Acknowledgment not required. A person in possession of collateral is not required to acknowledge that it holds possession for a secured party’s benefit.

409.313(7) (7) Effectiveness of acknowledgment; no duties or confirmation. If a person acknowledges that it holds possession for the secured party’s benefit:

409.313(7)(a) (a) The acknowledgment is effective under sub. (3) or s. 408.301 (1), even if the acknowledgment violates the rights of a debtor; and

409.313(7)(b) (b) Unless the person otherwise agrees or law other than this chapter otherwise provides, the person does not owe any duty to the secured party and is not required to confirm the acknowledgment to another person.

409.313(8) (8) Secured party’s delivery to person other than debtor. A secured party having possession of collateral does not relinquish possession by delivering the collateral to a person other than the debtor or a lessee of the collateral from the debtor in the ordinary course of the debtor’s business if the person was instructed before the delivery or is instructed contemporaneously with the delivery:

409.313(8)(a) (a) To hold possession of the collateral for the secured party’s benefit; or

409.313(8)(b) (b) To redeliver the collateral to the secured party.

409.313(9) (9) Effect of delivery under sub. (8); no duties or confirmation. A secured party does not relinquish possession, even if a delivery under sub. (8) violates the rights of a debtor. A person to which collateral is delivered under sub. (8) does not owe any duty to the secured party and is not required to confirm the delivery to another person unless the person otherwise agrees or law other than this chapter otherwise provides.

409.313 History History: 2001 a. 10; 2009 a. 322.

409.314 409.314 Perfection by control.

409.314(1) (1) Perfection by control. A security interest in investment property, deposit accounts, letter-of-credit rights, electronic chattel paper, or electronic documents may be perfected by control of the collateral under s. 407.106, 409.104, 409.105, 409.106, or 409.107.

409.314(2) (2) Specified collateral: time of perfection by control; continuation of perfection. A security interest in deposit accounts, electronic chattel paper, letter-of-credit rights, or electronic documents is perfected by control under s. 407.106, 409.104, 409.105, or 409.107 when the secured party obtains control and remains perfected by control only while the secured party retains control.

409.314(3) (3) Investment property: time of perfection by control; continuation of perfection. A security interest in investment property is perfected by control under s. 409.106 from the time the secured party obtains control and remains perfected by control until:

409.314(3)(a) (a) The secured party does not have control; and

409.314(3)(b) (b) One of the following occurs:

409.314(3)(b)1. 1. If the collateral is a certificated security, the debtor has or acquires possession of the security certificate;

409.314(3)(b)2. 2. If the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner; or

409.314(3)(b)3. 3. If the collateral is a security entitlement, the debtor is or becomes the entitlement holder.

409.314 History History: 2001 a. 10; 2009 a. 322.

409.315 409.315 Secured party’s rights on disposition of collateral and in proceeds.

409.315(1) (1) Disposition of collateral: continuation of security interest or agricultural lien; proceeds. Except as otherwise provided in this chapter and in s. 402.403 (2):

409.315(1)(a) (a) A security interest or agricultural lien continues in collateral notwithstanding sale, lease, license, exchange, or other disposition thereof unless the secured party authorized the disposition free of the security interest or agricultural lien; and

409.315(1)(b) (b) A security interest attaches to any identifiable proceeds of collateral.

409.315(2) (2) When commingled proceeds identifiable. Proceeds that are commingled with other property are identifiable proceeds:

409.315(2)(a) (a) If the proceeds are goods, to the extent provided by s. 409.336; and

409.315(2)(b) (b) If the proceeds are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this chapter with respect to commingled property of the type involved.

409.315(3) (3) Perfection of security interest in proceeds. A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected.

409.315(4) (4) Continuation of perfection. A perfected security interest in proceeds becomes unperfected on the 21st day after the security interest attaches to the proceeds unless:

409.315(4)(a) (a) The following conditions are satisfied:

409.315(4)(a)1. 1. A filed financing statement covers the original collateral;

409.315(4)(a)2. 2. The proceeds are collateral in which a security interest may be perfected by filing in the office in which the financing statement has been filed; and

409.315(4)(a)3. 3. The proceeds are not acquired with cash proceeds;

409.315(4)(b) (b) The proceeds are identifiable cash proceeds; or

409.315(4)(c) (c) The security interest in the proceeds is perfected other than under sub. (3) when the security interest attaches to the proceeds or within 20 days thereafter.

409.315(5) (5) When perfected security interest in proceeds becomes unperfected. If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under sub. (4) (a) becomes unperfected at the later of:

409.315(5)(a) (a) When the effectiveness of the filed financing statement lapses under s. 409.515 or is terminated under s. 409.513; or

409.315(5)(b) (b) The 21st day after the security interest attaches to the proceeds.

409.315 History History: 2001 a. 10.

409.315 Annotation If a security agreement does not explicitly provide that transfer of collateral constitutes default and the secured party is not entitled to immediate possession, sale of collateral is not a conversion. Production Credit Association of Chippewa Falls v. Equity Coop Livestock, 82 Wis. 2d 5, 261 N.W.2d 127 (1978).

409.315 Annotation The rights of a security holder in collateral survive the transfer of the collateral under s. 409.311 made without the secured party’s consent. Production Credit Association of Madison v. Nowatzski, 90 Wis. 2d 344, 280 N.W.2d 118 (1979).

409.315 Annotation A condition imposed by a secured party on authorization to sell collateral is ineffective unless performance of the condition is within the buyer’s control. Production Credit Association of Baraboo v. Pillsbury Co. 132 Wis. 2d 243, 392 N.W.2d (Ct. App. 1986).

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

409.316 409.316 Effect of change in governing law.

409.316(1) (1) General rule: effect on perfection of change in governing law. A security interest perfected pursuant to the law of the jurisdiction designated in s. 409.301 (1) or 409.305 (3) remains perfected until the earliest of:

409.316(1)(a) (a) The time perfection would have ceased under the law of that jurisdiction;

409.316(1)(b) (b) The expiration of 4 months after a change of the debtor’s location to another jurisdiction; or

409.316(1)(c) (c) The expiration of one year after a transfer of collateral to a person that thereby becomes a debtor and is located in another jurisdiction.

409.316(2) (2) Security interest perfected or unperfected under law of new jurisdiction. If a security interest described in sub. (1) becomes perfected under the law of the other jurisdiction before the earliest time or event described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earliest time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

409.316(3) (3) Possessory security interest in collateral moved to new jurisdiction. A possessory security interest in collateral, other than goods covered by a certificate of title and as-extracted collateral consisting of goods, remains continuously perfected if:

409.316(3)(a) (a) The collateral is located in one jurisdiction and subject to a security interest perfected under the law of that jurisdiction;

409.316(3)(b) (b) Thereafter the collateral is brought into another jurisdiction; and

409.316(3)(c) (c) Upon entry into the other jurisdiction, the security interest is perfected under the law of the other jurisdiction.

409.316(4) (4) Goods covered by certificate of title from this state. Except as otherwise provided in sub. (5), a security interest in goods covered by a certificate of title which is perfected by any method under the law of another jurisdiction when the goods become covered by a certificate of title from this state remains perfected until the security interest would have become unperfected under the law of the other jurisdiction had the goods not become so covered.

409.316(5) (5) When sub. (4) security interest becomes unperfected against purchasers. A security interest described in sub. (4) becomes unperfected as against a purchaser of the goods for value and is deemed never to have been perfected as against a purchaser of the goods for value if the applicable requirements for perfection under s. 409.311 (2) or 409.313 are not satisfied before the earlier of:

409.316(5)(a) (a) The time the security interest would have become unperfected under the law of the other jurisdiction had the goods not become covered by a certificate of title from this state; or

409.316(5)(b) (b) The expiration of 4 months after the goods had become so covered.

409.316(6) (6) Change in jurisdiction of bank, issuer, nominated person, securities intermediary, or commodity intermediary. A security interest in deposit accounts, letter-of-credit rights, or investment property which is perfected under the law of the bank’s jurisdiction, the issuer’s jurisdiction, a nominated person’s jurisdiction, the securities intermediary’s jurisdiction, or the commodity intermediary’s jurisdiction, as applicable, remains perfected until the earlier of:

409.316(6)(a) (a) The time the security interest would have become unperfected under the law of that jurisdiction; or

409.316(6)(b) (b) The expiration of 4 months after a change of the applicable jurisdiction to another jurisdiction.

409.316(7) (7) Sub. (6) security interest perfected or unperfected under law of new jurisdiction. If a security interest described in sub. (6) becomes perfected under the law of the other jurisdiction before the earlier of the time or the end of the period described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

409.316(8) (8) Effect on filed financing statement of change in governing law. The following rules apply to collateral to which a security interest attaches within 4 months after the debtor changes its location to another jurisdiction:

409.316(8)(a) (a) A financing statement filed before the change pursuant to the law of the jurisdiction designated in s. 409.301 (1) or 409.305 (3) is effective to perfect a security interest in the collateral if the financing statement would have been effective to perfect a security interest in the collateral had the debtor not changed its location.

409.316(8)(b) (b) If a security interest perfected by a financing statement that is effective under par. (a) becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in s. 409.301 (1) or 409.305 (3) or the expiration of the 4-month period, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

409.316(9) (9) Effect of change in governing law on financing statement filed against original debtor. If a financing statement naming an original debtor is filed pursuant to the law of the jurisdiction designated in s. 409.301 (1) or 409.305 (3) and the new debtor is located in another jurisdiction, the following rules apply:

409.316(9)(a) (a) The financing statement is effective to perfect a security interest in collateral acquired by the new debtor before, and within 4 months after, the new debtor becomes bound under s. 409.203 (4), if the financing statement would have been effective to perfect a security interest in the collateral had the collateral been acquired by the original debtor.

409.316(9)(b) (b) A security interest perfected by the financing statement and which becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in s. 409.301 (1) or 409.305 (3) or the expiration of the 4-month period remains perfected thereafter. A security interest that is perfected by the financing statement but which does not become perfected under the law of the other jurisdiction before the earlier time or event becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

409.316 History History: 2001 a. 10; 2011 a. 206.

409.316 Annotation The 4-month period for reperfection provided by sub. (1) (b) does not apply to titled goods due to the applicability of ss. 409.301 (1) and 409.303. In re Baker, 430 F.3d 858 (2005).

409.317 409.317 Interests that take priority over or take free of security interest or agricultural lien.

409.317(1) (1) Conflicting security interests and rights of lien creditors. A security interest or agricultural lien is subordinate to the rights of:

409.317(1)(a) (a) A person entitled to priority under s. 409.322; and

409.317(1)(b) (b) Except as otherwise provided in sub. (5), a person that becomes a lien creditor before the earlier of the time:

409.317(1)(b)1. 1. The security interest or agricultural lien is perfected; or

409.317(1)(b)2. 2. One of the conditions specified in s. 409.203 (2) (c) is met and a financing statement covering the collateral is filed.