Chapter 409

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.

409.317(2) (2) Buyers that receive delivery. Except as otherwise provided in sub. (5), a buyer, other than a secured party, of tangible chattel paper, tangible documents, goods, instruments, or a certificated security takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

409.317(3) (3) Lessees that receive delivery. Except as otherwise provided in sub. (5), a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

409.317(4) (4) Licensees and buyers of certain collateral. A licensee of a general intangible or a buyer, other than a secured party, of collateral other than tangible chattel paper, tangible documents, goods, instruments, or a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.

409.317(5) (5) Purchase-money security interest. Except as otherwise provided in ss. 409.320 and 409.321, if a person files a financing statement with respect to a purchase-money security interest before or within 20 days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor which arise between the time the security interest attaches and the time of filing.

409.317 History History: 2001 a. 10; 2009 a. 322; 2011 a. 206.

409.318 409.318 No interest retained in right to payment that is sold; rights and title of seller of account or chattel paper with respect to creditors and purchasers.

409.318(1) (1) Seller retains no interest. A debtor that has sold an account, chattel paper, payment intangible, or promissory note does not retain a legal or equitable interest in the collateral sold.

409.318(2) (2) Deemed rights of debtor if buyer’s security interest unperfected. For purposes of determining the rights of creditors of, and purchasers for value of an account or chattel paper from, a debtor that has sold an account or chattel paper, while the buyer’s security interest is unperfected, the debtor is deemed to have rights and title to the account or chattel paper identical to those the debtor sold.

409.318 History History: 2001 a. 10.

409.319 409.319 Rights and title of consignee with respect to creditors and purchasers.

409.319(1) (1) Consignee has consignor’s rights. Except as otherwise provided in sub. (2), for purposes of determining the rights of creditors of, and purchasers for value of goods from, a consignee, while the goods are in the possession of the consignee, the consignee is deemed to have rights and title to the goods identical to those the consignor had or had power to transfer.

409.319(2) (2) Applicability of other law. For purposes of determining the rights of a creditor of a consignee, law other than this chapter determines the rights and title of a consignee while goods are in the consignee’s possession if, under this subchapter, a perfected security interest held by the consignor would have priority over the rights of the creditor.

409.319 History History: 2001 a. 10.

409.320 409.320 Buyer of goods.

409.320(1) (1) Buyer in ordinary course of business. Except as otherwise provided in sub. (5), a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence.

409.320(2) (2) Buyer of consumer goods. Except as otherwise provided in sub. (5), a buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys:

409.320(2)(a) (a) Without knowledge of the security interest;

409.320(2)(b) (b) For value;

409.320(2)(c) (c) Primarily for the buyer’s personal, family, or household purposes; and

409.320(2)(d) (d) Before the filing of a financing statement covering the goods.

409.320(3) (3) Effectiveness of filing for sub. (2). To the extent that it affects the priority of a security interest over a buyer of goods under sub. (2), the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by s. 409.316 (1) and (2).

409.320(4) (4) Buyer in ordinary course of business at wellhead or minehead. A buyer in ordinary course of business buying oil, gas, or other minerals at the wellhead or minehead or after extraction takes free of an interest arising out of an encumbrance.

409.320(5) (5) Possessory security interest not affected. Subsections (1) and (2) do not affect a security interest in goods in the possession of the secured party under s. 409.313.

409.320 History History: 2001 a. 10.

409.321 409.321 Licensee of general intangible and lessee of goods in ordinary course of business.

409.321(1) (1) Licensee in ordinary course of business. In this section, “licensee in ordinary course of business” means a person that becomes a licensee of a general intangible in good faith, without knowledge that the license violates the rights of another person in the general intangible, and in the ordinary course from a person in the business of licensing general intangibles of that kind. A person becomes a licensee in the ordinary course if the license to the person comports with the usual or customary practices in the kind of business in which the licensor is engaged or with the licensor’s own usual or customary practices.

409.321(2) (2) Rights of licensee in ordinary course of business. A licensee in ordinary course of business takes its rights under a nonexclusive license free of a security interest in the general intangible created by the licensor, even if the security interest is perfected and the licensee knows of its existence.

409.321(3) (3) Rights of lessee in ordinary course of business. A lessee in ordinary course of business takes its leasehold interest free of a security interest in the goods created by the lessor, even if the security interest is perfected and the lessee knows of its existence.

409.321 History History: 2001 a. 10.

409.322 409.322 Priorities among conflicting security interests in and agricultural liens on same collateral.

409.322(1) (1) General priority rules. Except as otherwise provided in this section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules:

409.322(1)(a) (a) Conflicting perfected security interests and agricultural liens rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest or agricultural lien is first perfected, if there is no period thereafter when there is neither filing nor perfection.

409.322(1)(b) (b) A perfected security interest or agricultural lien has priority over a conflicting unperfected security interest or agricultural lien.

409.322(1)(c) (c) The first security interest or agricultural lien to attach or become effective has priority if conflicting security interests and agricultural liens are unperfected.

409.322(2) (2) Time of perfection: proceeds and supporting obligations. For the purposes of sub. (1) (a):

409.322(2)(a) (a) The time of filing or perfection as to a security interest in collateral is also the time of filing or perfection as to a security interest in proceeds; and

409.322(2)(b) (b) The time of filing or perfection as to a security interest in collateral supported by a supporting obligation is also the time of filing or perfection as to a security interest in the supporting obligation.

409.322(3) (3) Special priority rules: proceeds and supporting obligations. Except as otherwise provided in sub. (6), a security interest in collateral which qualifies for priority over a conflicting security interest under s. 409.327, 409.328, 409.329, 409.330, or 409.331 also has priority over a conflicting security interest in:

409.322(3)(a) (a) Any supporting obligation for the collateral; and

409.322(3)(b) (b) Proceeds of the collateral if:

409.322(3)(b)1. 1. The security interest in proceeds is perfected;

409.322(3)(b)2. 2. The proceeds are cash proceeds or of the same type as the collateral; and

409.322(3)(b)3. 3. In the case of proceeds that are proceeds of proceeds, all intervening proceeds are cash proceeds, proceeds of the same type as the collateral, or an account relating to the collateral.

409.322(4) (4) First-to-file priority rule for certain collateral. Subject to sub. (5) and except as otherwise provided in sub. (6), if a security interest in chattel paper, deposit accounts, negotiable documents, instruments, investment property, or letter-of-credit rights is perfected by a method other than filing, conflicting perfected security interests in proceeds of the collateral rank according to priority in time of filing.

409.322(5) (5) Applicability of sub. (4). Subsection (4) applies only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable documents, instruments, investment property, or letter-of-credit rights.

409.322(6) (6) Limitations on subs. (1) to (5). Subsections (1) to (5) are subject to:

409.322(6)(a) (a) Subsection (7) and the other provisions of this subchapter;

409.322(6)(b) (b) Section 404.210 with respect to a security interest of a collecting bank;

409.322(6)(c) (c) Section 405.118 with respect to a security interest of an issuer or nominated person; and

409.322(6)(d) (d) Section 409.110 with respect to a security interest arising under ch. 402 or 411.

409.322(7) (7) Priority under agricultural lien statute. A perfected agricultural lien on collateral has priority over a conflicting security interest in or agricultural lien on the same collateral if the statute creating the agricultural lien so provides.

409.322 History History: 2001 a. 10.

409.322 Annotation A bank with a security interest perfected by filing a financing statements had priority over a chattel mortgage that was filed almost 2 years after the bank filed its financing statements, even though the bank subsequently refiled a financing statement. Burlington National Bank v. Strauss, 50 Wis. 2d 270, 184 N.W.2d 122 (1971).

409.322 Annotation A seller of goods on credit must perfect its claim to priority by filing the agreement and financing statements. House of Stainless, Inc. v. Marshall & Ilsley Bank, 75 Wis. 2d 264, 249 N.W.2d 561 (1977).

409.322 Annotation A lien creditor has priority over an unperfected security interest. Whether the lien creditor has knowledge of the security is immaterial. Muggli Dental Studio v. Taylor, 142 Wis. 2d 696, 419 N.W.2d 322 (Ct. App. 1987).

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

409.323 409.323 Future advances.

409.323(1) (1) When priority based on time of advance. Except as otherwise provided in sub. (3), for purposes of determining the priority of a perfected security interest under s. 409.322 (1) (a), perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that:

409.323(1)(a) (a) Is made while the security interest is perfected only:

409.323(1)(a)1. 1. Under s. 409.309 when it attaches; or

409.323(1)(a)2. 2. Temporarily under s. 409.312 (5), (6), or (7); and

409.323(1)(b) (b) Is not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under s. 409.309 or 409.312 (5), (6), or (7).

409.323(2) (2) Lien creditor. Except as otherwise provided in sub. (3), a security interest is subordinate to the rights of a person that becomes a lien creditor to the extent that the security interest secures an advance made more than 45 days after the person becomes a lien creditor unless the advance is made:

409.323(2)(a) (a) Without knowledge of the lien; or

409.323(2)(b) (b) Pursuant to a commitment entered into without knowledge of the lien.

409.323(3) (3) Buyer of receivables. Subsections (1) and (2) do not apply to a security interest held by a secured party that is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor.