Chapter 409

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.

409.323(4) (4) Buyer of goods. Except as otherwise provided in sub. (5), a buyer of goods other than a buyer in ordinary course of business takes free of a security interest to the extent that it secures advances made after the earlier of:

409.323(4)(a) (a) The time the secured party acquires knowledge of the buyer’s purchase; or

409.323(4)(b) (b) Forty-five days after the purchase.

409.323(5) (5) Advances made pursuant to commitment: priority of buyer of goods. Subsection (4) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer’s purchase and before the expiration of the 45-day period.

409.323(6) (6) Lessee of goods. Except as otherwise provided in sub. (7), a lessee of goods, other than a lessee in ordinary course of business, takes the leasehold interest free of a security interest to the extent that it secures advances made after the earlier of:

409.323(6)(a) (a) The time the secured party acquires knowledge of the lease; or

409.323(6)(b) (b) Forty-five days after the lease contract becomes enforceable.

409.323(7) (7) Advances made pursuant to commitment: priority of lessee of goods. Subsection (6) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the 45-day period.

409.323 History History: 2001 a. 10.

409.324 409.324 Priority of purchase-money security interests.

409.324(1) (1) General rule: purchase-money priority. Except as otherwise provided in sub. (7), a perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in s. 409.327, a perfected security interest in its identifiable proceeds also has priority, if the purchase-money security interest is perfected when the debtor receives possession of the collateral or within 20 days thereafter.

409.324(2) (2) Inventory purchase-money priority. Subject to sub. (3) and except as otherwise provided in sub. (7), a perfected purchase-money security interest in inventory has priority over a conflicting security interest in the same inventory, has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper, if so provided in s. 409.330, and, except as otherwise provided in s. 409.327, also has priority in identifiable cash proceeds of the inventory to the extent that the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer, if:

409.324(2)(a) (a) The purchase-money security interest is perfected when the debtor receives possession of the inventory;

409.324(2)(b) (b) The purchase-money secured party sends an authenticated notification to the holder of the conflicting security interest;

409.324(2)(c) (c) The holder of the conflicting security interest receives the notification within 5 years before the debtor receives possession of the inventory; and

409.324(2)(d) (d) The notification states that the person sending the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describes the inventory.

409.324(3) (3) Holders of conflicting inventory security interests to be notified. Subsection (2) (b) to (d) applies only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:

409.324(3)(a) (a) If the purchase-money security interest is perfected by filing, before the date of the filing; or

409.324(3)(b) (b) If the purchase-money security interest is temporarily perfected without filing or possession under s. 409.312 (6), before the beginning of the 20-day period thereunder.

409.324(4) (4) Livestock purchase-money priority. Subject to sub. (5) and except as otherwise provided in sub. (7), a perfected purchase-money security interest in livestock that are farm products has priority over a conflicting security interest in the same livestock, and, except as otherwise provided in s. 409.327, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if:

409.324(4)(a) (a) The purchase-money security interest is perfected when the debtor receives possession of the livestock;

409.324(4)(b) (b) The purchase-money secured party sends an authenticated notification to the holder of the conflicting security interest;

409.324(4)(c) (c) The holder of the conflicting security interest receives the notification within 6 months before the debtor receives possession of the livestock; and

409.324(4)(d) (d) The notification states that the person sending the notification has or expects to acquire a purchase-money security interest in livestock of the debtor and describes the livestock.

409.324(5) (5) Holders of conflicting livestock security interests to be notified. Subsection (4) (b) to (d) applies only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock:

409.324(5)(a) (a) If the purchase-money security interest is perfected by filing, before the date of the filing; or

409.324(5)(b) (b) If the purchase-money security interest is temporarily perfected without filing or possession under s. 409.312 (6), before the beginning of the 20-day period thereunder.

409.324(6) (6) Software purchase-money priority. Except as otherwise provided in sub. (7), a perfected purchase-money security interest in software has priority over a conflicting security interest in the same collateral, and, except as otherwise provided in s. 409.327, a perfected security interest in its identifiable proceeds also has priority, to the extent that the purchase-money security interest in the goods in which the software was acquired for use has priority in the goods and proceeds of the goods under this section.

409.324(7) (7) Conflicting purchase-money security interests. If more than one security interest qualifies for priority in the same collateral under sub. (1), (2), (4), or (6):

409.324(7)(a) (a) A security interest securing an obligation incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the use of collateral; and

409.324(7)(b) (b) In all other cases, s. 409.322 (1) applies to the qualifying security interests.

409.324 History History: 2001 a. 10.

409.3245 409.3245 Priority of production-money security interests and agricultural liens.

409.3245(1) (1) Except as otherwise provided in subs. (3), (4), and (5), if the requirements of sub. (2) are satisfied, a perfected production-money security interest in production-money crops has priority over a conflicting security interest in the same crops to the extent of the production-money obligation secured by the production-money security interest and, except as otherwise provided in s. 409.327, also has priority in their identifiable proceeds.

409.3245(2) (2) A production-money security interest has priority under sub. (1) if:

409.3245(2)(a) (a) The production-money security interest is perfected by filing when the production-money secured party first gives new value to enable the debtor to produce the crops;

409.3245(2)(b) (b) The production-money secured party sends an authenticated notification by certified mail to the holder of the conflicting security interest not less than 20 or more than 30 days before the production-money secured party first gives new value to enable the debtor to produce the crops if the holder had filed a financing statement covering the crops before the date of the filing made by the production-money secured party; and

409.3245(2)(c) (c) The notification states that the production-money secured party has or expects to acquire a production-money security interest in the debtor’s crops and provides a description of the crops, the name and mailing address of the production-money secured party giving the notice, the name and mailing address of the debtor, the name and mailing address of the lender to whom notice is being sent, the date on which the transaction would take place, and the maximum amount of new value to be provided.

409.3245(3) (3) Except as otherwise provided in sub. (4) or (5), if more than one security interest qualifies for priority in the same collateral under sub. (1), the security interests rank according to priority in time of filing under s. 409.322 (1).

409.3245(4) (4) To the extent that a person holding a perfected security interest in production-money crops that are the subject of a production-money security interest gives new value to enable the debtor to produce the production-money crops and the value is in fact used for the production of the production-money crops, the security interests rank according to priority in time of filing under s. 409.322 (1).

409.3245(5) (5) To the extent that a person holds both an agricultural lien and a production-money security interest in the same collateral securing the same obligations, the rules of priority applicable to agricultural liens govern priority.

409.3245 History History: 2001 a. 10.

409.325 409.325 Priority of security interests in transferred collateral.

409.325(1) (1) Subordination of security interest in transferred collateral. Except as otherwise provided in sub. (2), a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if:

409.325(1)(a) (a) The debtor acquired the collateral subject to the security interest created by the other person;

409.325(1)(b) (b) The security interest created by the other person was perfected when the debtor acquired the collateral; and

409.325(1)(c) (c) There is no period thereafter when the security interest is unperfected.

409.325(2) (2) Limitation of sub. (1) subordination. Subsection (1) subordinates a security interest only if the security interest:

409.325(2)(a) (a) Otherwise would have priority solely under s. 409.322 (1) or 409.324; or

409.325(2)(b) (b) Arose solely under s. 402.711 (3) or 411.508 (5).

409.325 History History: 2001 a. 10.

409.326 409.326 Priority of security interests created by new debtor.

409.326(1) (1) Subordination of security interest created by new debtor. Subject to sub. (2), a security interest that is created by a new debtor in collateral in which the new debtor has or acquires rights and is perfected solely by a filed financing statement that would be ineffective to perfect the security interest but for the application of s. 409.316 (9) (a) or 409.508 is subordinate to a security interest in the same collateral which is perfected other than by such a filed financing statement.

409.326(2) (2) Priority under other provisions; multiple original debtors. The other provisions of this subchapter determine the priority among conflicting security interests in the same collateral perfected by filed financing statements described in sub. (1). However, if the security agreements to which a new debtor became bound as debtor were not entered into by the same original debtor, the conflicting security interests rank according to priority in time of the new debtor’s having become bound.

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

409.327 409.327 Priority of security interests in deposit account. The following rules govern priority among conflicting security interests in the same deposit account:

409.327(1) (1) Control by secured party. A security interest held by a secured party having control of the deposit account under s. 409.104 has priority over a conflicting security interest held by a secured party that does not have control.

409.327(2) (2) Priority in time of control. Except as otherwise provided in subs. (3) and (4), security interests perfected by control under s. 409.314 rank according to priority in time of obtaining control.

409.327(3) (3) Priority of bank regarding deposit account. Except as otherwise provided in sub. (4), a security interest held by the bank with which the deposit account is maintained has priority over a conflicting security interest held by another secured party.

409.327(4) (4) Priority over bank regarding deposit account. A security interest perfected by control under s. 409.104 (1) (c) has priority over a security interest held by the bank with which the deposit account is maintained.

409.327 History History: 2001 a. 10.

409.328 409.328 Priority of security interests in investment property. The following rules govern priority among conflicting security interests in the same investment property:

409.328(1) (1) Control by secured party. A security interest held by a secured party having control of investment property under s. 409.106 has priority over a security interest held by a secured party that does not have control of the investment property.

409.328(2) (2) Priority in time of control. Except as otherwise provided in subs. (3) and (4), conflicting security interests held by secured parties each of which has control under s. 409.106 rank according to priority in time of:

409.328(2)(a) (a) If the collateral is a security, obtaining control;

409.328(2)(b) (b) If the collateral is a security entitlement carried in a securities account and:

409.328(2)(b)1. 1. If the secured party obtained control under s. 408.106 (4) (a), the secured party’s becoming the person for which the securities account is maintained;

409.328(2)(b)2. 2. If the secured party obtained control under s. 408.106 (4) (b), the securities intermediary’s agreement to comply with the secured party’s entitlement orders with respect to security entitlements carried or to be carried in the securities account; or

409.328(2)(b)3. 3. If the secured party obtained control through another person under s. 408.106 (4) (c), the time on which priority would be based under this subsection if the other person were the secured party; or

409.328(2)(c) (c) If the collateral is a commodity contract carried with a commodity intermediary, the satisfaction of the requirement for control specified in s. 409.106 (2) (b) with respect to commodity contracts carried or to be carried with the commodity intermediary.

409.328(3) (3) Priority of securities intermediary regarding entitlement or account. A security interest held by a securities intermediary in a security entitlement or a securities account maintained with the securities intermediary has priority over a conflicting security interest held by another secured party.

409.328(4) (4) Priority of securities intermediary regarding contract or account. A security interest held by a commodity intermediary in a commodity contract or a commodity account maintained with the commodity intermediary has priority over a conflicting security interest held by another secured party.

409.328(5) (5) Priority in certificated securities. A security interest in a certificated security in registered form which is perfected by taking delivery under s. 409.313 (1) and not by control under s. 409.314 has priority over a conflicting security interest perfected by a method other than control.

409.328(6) (6) Priority of conflicting security interests; intermediaries. Conflicting security interests created by a broker, securities intermediary, or commodity intermediary which are perfected without control under s. 409.106 rank equally.