Chapter Trans 140

Trans 140.20 Trans 140.20 Definitions. The terms used in this subchapter shall have the same meanings as in ch. 218, Stats., except as specifically provided below:

Trans 140.20(1) (1) “Claim arose against the bond or letter of credit of a licensee” means a situation in which a cause of action has accrued against the licensee. Unless otherwise provided by statute, a cause of action accrues where there exists a claim capable of present enforcement, a suable party against whom it may be enforced, and a party who has a present right to enforce it. A tort claim accrues when the injury is discovered or reasonably should have been discovered.

Trans 140.20 Note Note: See ch. 893, Stats., and cases thereunder, governing the applicable statutes of limitation, and determination of the date when a cause of action accrues.

Trans 140.20(2) (2) “Commercial customer” means a private person who buys or agrees to buy one or more motor vehicles from the licensee for the person’s business or commercial use. A private person who sells, trades, or consigns to the licensee a motor vehicle used by the person primarily for business or commercial purposes is also a commercial customer.

Trans 140.20(3) (3) “Financial institution” means any person or organization authorized to do business under any state or federal law relating to financial institutions, including, without limitation, banks and trust companies, savings banks, building and loan associations, savings and loan associations, credit unions and sales finance companies. A credit corporation or similar financing organization of a motor vehicle manufacturer, factory branch, distributor or dealer is a financial institution. Any person who floor plans motor vehicles is a financial institution.

Trans 140.20(4) (4) “Floor plan” means to make a financing arrangement for the lending of money to a motor vehicle dealer so that he or she may purchase a motor vehicle to include in his or her inventory; the loan being secured by the motor vehicle while in the dealer’s possession and to be repaid when the motor vehicle is sold.

Trans 140.20(5) (5) “Motor vehicle” shall have the same meaning as s. 218.0101 (22), Stats., and includes mobile homes as defined by s. 218.0114, Stats. For the purposes of this subchapter, a moped as defined by s. 218.40 (2), Stats., is also a motor vehicle.

Trans 140.20(6) (6) “New motor vehicle” shall have the same meaning as s. Trans 137.03 (7).

Trans 140.20(7) (7) “Private person” means a person not licensed under ch. 218, Stats., and not required to be so licensed, for the purpose of the transaction from which the person’s claim arises. A financial institution, or a motor vehicle manufacturer, factory branch, factory representative, distributor, distributor representative, or a motor vehicle, mobile home, moped, salvage, trailer or auction dealer or a salesperson employed by such dealer is not a private person.

Trans 140.20(7m) (7m) The “period covered by the security” is co-extensive with the biennial license, issued under ch. 218, Stats., which is conditioned on providing the security in question. If the biennial license is extended by operation of s. 227.51 (2), Stats., the period covered by the security also is extended and remains co-extensive unless sooner cancelled by the surety.

Trans 140.20 Note Note: Forms for bonds and letters of credit are available from the Dealer Section, Department of Transportation, P.O. Box 7909, Madison, Wisconsin 53707.

Trans 140.20(8) (8) “Retail customer” means a private person buying or agreeing to buy one or more motor vehicles from the bonded licensee for the private person’s personal, family or household use. A person buying or agreeing to buy a motor vehicle or mobile home to be used primarily for business or commercial purposes is not a retail customer. A private person who sells, trades, or consigns to the bonded licensee a motor vehicle used personally or by the person’s family or household, and not used primarily for business or commercial purposes, is a retail customer.

Trans 140.20(9) (9) “Secured party” means a lender, seller or other person, whose claim is based on a transaction in which there is, or was, a security agreement creating a security interest in the lender’s, seller’s or person’s favor, even if that interest is not sufficient to satisfy the claim. A person able to claim a lien under ss. 779.41, 779.415, or 779.43 (3), Stats., is a secured party.

Trans 140.20 History History: Emerg. cr. eff. 10-16-85; cr. Register, July, 1986, No. 367, eff. 8-1-86; r. (1), renum. (1m) to be (1) and am., am. (2) and (7m), Register, February, 1996, No. 482, eff. 3-1-96; corrections in (5) made under s. 13.92 (4) (b) 7., Stats., Register March 2012 No. 675; CR 22-048: am. (7) Register July 2023 No. 811, eff. 8-1-23.

Trans 140.21 Trans 140.21 Allowed claims.

Trans 140.21(1) (1) A claim is an allowable claim if it satisfies each of the following requirements and is not excluded by sub. (2) or (3):

Trans 140.21(1)(a) (a) The claim shall be for monetary damages in the amount of an actual loss suffered by the claimant.

Trans 140.21(1)(b) (b) The claim arose during the period covered by the security.

Trans 140.21(1)(c) (c) The claimant’s loss shall be caused by an act of the licensee, or the claimant’s agents or employees, which is grounds for suspension or revocation of any of the following:

Trans 140.21(1)(c)1. 1. A salesperson license or a motor vehicle dealer license, in the case of a secured salesperson or motor vehicle dealer, pursuant to s. 218.0116 (1) (a) to (gm), (im) 2., (j), (jm), (k), (m) or (n) to (p), Stats.

Trans 140.21(1)(c)2. 2. A recreational vehicle dealer license, in the case of a bonded recreational vehicle dealer, pursuant to s. 218.11 (6), Stats.

Trans 140.21(1)(c)3. 3. A salvage dealer license, in the case of a bonded salvage dealer, pursuant to s. 218.22 (3), Stats.

Trans 140.21(1)(c)4. 4. An auction dealer license, in the case of a bonded auction dealer, pursuant to s. 218.32 (3), Stats.

Trans 140.21(1)(c)5. 5. Any other license issued by the department under ch. 218, Stats., in any other case, including that of a bonded manufacturer, distributor, distributor-wholesaler, or trailer dealer, pursuant to s. 218.0116 (1), Stats.

Trans 140.21(1)(d) (d) The claim must be made within 3 years of the last day of the period covered by the security. The department shall not approve or accept any surety bond or letter of credit which provides for a lesser period of protection.

Trans 140.21 Note Note: This paragraph does not supersede any applicable provision of ch. 893, Stats., and does not limit the liability of the licensee in any way.

Trans 140.21(2) (2) The following claims shall be disallowed:

Trans 140.21(2)(a) (a) Any claim by a claimant licensed under ch. 218, Stats., or required to be so licensed.

Trans 140.21(2)(b) (b) Any claim by the licensee, the licensee’s employing dealer, if any, or the licensee’s agents, partners, stockholders or employes.

Trans 140.21(2)(c) (c) Any claim arising from activities of the licensee which are not regulated by the department under ch. 218, Stats., specifically including, without limitation, claims for rent, mortgage payments, wages, commissions, personal services rendered and commercial transactions not directly related to the sale or purchase of a motor vehicle.

Trans 140.21(2)(d) (d) Any claim by a manufacturer, factory branch, factory representative, distributor or distributor representative involving the sale or delivery of a new motor vehicle to the licensee.

Trans 140.21(2)(e) (e) Any claim for interest or penalties, legal costs, attorney fees, or punitive damages except as otherwise expressly provided in sub. (5).

Trans 140.21(2)(f) (f) Any claim by a financial institution or secured party.

Trans 140.21(3) (3) Any of the following acts by a claimant, as determined by the department, may be grounds for disallowing a claim:

Trans 140.21(3)(a) (a) Making or offering a false statement, false or altered document, or other misrepresentation in support of a claim against the security;

Trans 140.21(3)(b) (b) Making a claim based in whole or in part upon a transaction or an act by the claimant which is unlawful or contrary to statute, regulation or administrative rule, as determined by the department.

Trans 140.21(3)(c) (c) Failing to make a claim in the manner provided by this subchapter.

Trans 140.21(3)(d) (d) Failure of the claimant to cooperate in the investigation of the claimant’s claim, including failure to provide additional supporting documentation or evidence for a claim or to provide other explanatory materials when that information is requested by the department and is readily available to, or known to, the claimant or is in the claimant’s possession or control.

Trans 140.21(4) (4) A claim may be allowed in part and disallowed in part.

Trans 140.21(5) (5) 

Trans 140.21(5)(a) (a) When a claimant is unable to obtain title to a motor vehicle because the licensee who held the vehicle for sale created a security interest in the motor vehicle and a manufacturer or financial institution is holding the title or Manufacturers Certificate of Origin (MCO) to ensure payment by the licensee at the time of sale, the claimant’s reasonable expenses, including legal costs and attorney fees, in obtaining requisite title documentation, are allowable claims against the security of the licensee.

Trans 140.21(5)(b) (b) As alternatives to making the claim described in par. (a), a claimant in such a case may instead do any of the following:

Trans 140.21(5)(b)1. 1. Rescind the purchase contract and make a claim against the security of the licensee for the full purchase price of the vehicle.

Trans 140.21(5)(b)2. 2. Make a claim against the security of the licensee for the cost of a title bond prescribed by s. 342.12 (3) (b), Stats.

Trans 140.21(5)(b)3. 3. Make any other allowable claim for damages.

Trans 140.21 History History: Emerg. cr. eff. 10-16-85; cr. Register, July, 1986, No. 367, eff. 8-1-86; am. (1) (a) to (c) 4., (d), (2) (a) to (e), (3) and (5) (a) to (b) 2., r. (1) (c) 5., renum. (1) (c) 6. to be 5., Register, February, 1996, No. 482, eff. 3-1-96; corrections in (1) (c) 1., 5. made under s. 13.92 (4) (b) 7., Stats., Register March 2012 No. 675.

Trans 140.22 Trans 140.22 Priority of claims. Allowable claims against the security shall be assigned to one of the following priority classes:

Trans 140.22(1) (1) Salesperson, motor vehicle and recreational vehicle dealer securities. The priority classes of allowable claims against the security of any licensee except a wholesaler, salvage or auction dealer, in order of their priority, are as follows:

Trans 140.22(1)(a) (a) Claims of retail customers including, without limitation, claims arising from a particular motor vehicle purchase from the licensee or from a particular motor vehicle sale by the licensee, claims for repairs warranted by the licensee, claims for failure to furnish title to a motor vehicle, claims for deposits against an uncompleted motor vehicle purchase transaction, and claims for the failure of the licensee to pay the claimant for a trade-in, a motor vehicle purchased by the licensee, or a consigned vehicle not returned to the consignor upon request.

Trans 140.22(1)(b) (b) Claims of commercial customers including, without limitation, claims arising from a particular motor vehicle purchase from the licensee or from a particular motor vehicle sale by the licensee, claims for repairs warranted by the licensee, claims for failure to furnish title to a motor vehicle, claims for deposits against an uncompleted motor vehicle purchase transaction, and claims for the failure of the licensee to pay the claimant for a trade-in, a motor vehicle purchased by the licensee, or a consigned vehicle not returned to the consignor upon request.

Trans 140.22(1)(c) (c) Claims of the department for title and registration fees.

Trans 140.22(2) (2) Wholesaler, salvage and auction dealer bonds. The priority classes of allowable claims against a wholesaler bond, a salvage dealer bond or an auction dealer bond, in order of their priority, are as follows:

Trans 140.22(2)(a) (a) Claims arising from transactions involving the sale or purchase of a particular motor vehicle, excluding the claims of a secured party, a financial institution, the department of revenue or the department of transportation.

Trans 140.22(2)(b) (b) All other allowable claims, including claims of the department for title and registration fees.

Trans 140.22 History History: Emerg. cr. eff. 10-16-85; cr. Register, July, 1986, No. 367, eff. 8-1-86; am. (intro.), (1) (intro.) to (b), (2) (intro.) and (b), r. (1) (d) to (f), Register, February, 1996, No. 482, eff. 3-1-96.

Trans 140.23 Trans 140.23 Payments on allowed claims.

Trans 140.23(1) (1) The amount paid on each allowed claim shall be determined by the priority class of the claim. All claims in the same priority class shall be treated alike, beginning with the claims of the first priority class, as follows:

Trans 140.23(1)(a) (a) The total amount necessary to pay all claims of the class in full shall be determined.

Trans 140.23(1)(b) (b) If enough funds are available under the bond or letter of credit to do so, all claims of the class shall be paid in full.

Trans 140.23(1)(c) (c) If, after all allowed claims of a class have been paid in full, funds remain available to pay additional claims, the allowed claims of the next priority class shall be paid, in accordance with pars. (a) to (d).

Trans 140.23(1)(d) (d) If insufficient funds are available to pay all claims in a class, then each claim of the class shall be prorated according to the following formula

:

Trans 140.23(2) (2) When a class of claims has been prorated because there are insufficient funds available to pay the claims of the class in full, no payments shall be made upon allowed claims of the successive priority classes.

Trans 140.23(3) (3) The aggregate total of all payments on all claims may not exceed the total amount of the bond or letter of credit available for payment of claims.

Trans 140.23 History History: Emerg. cr. eff. 10-16-85; cr. Register, July, 1986, No. 367, eff. 8-1-86; am. (1) (a) to (c) and (3), Register, February, 1996, No. 482, eff. 3-1-96.

Trans 140.24 Trans 140.24 Making claims.

Trans 140.24(1) (1) Each claim shall be in writing and shall include all of the following:

Trans 140.24(1)(a) (a) The name and address of the claimant and a telephone number where the claimant can be reached during normal business hours.

Trans 140.24(1)(b) (b) A description of the nature of the claim and the transaction from which the claim arose, including any specific acts of the dealer which are grounds for suspension or revocation of the dealer’s license under ch. 218, Stats.

Trans 140.24(1)(c) (c) The date on which the claim arose.

Trans 140.24(1)(d) (d) The dollar amount of each separate loss or item of damage included in the total amount of the claim.

Trans 140.24(1)(e) (e) Copies of all documents related to the transaction from which the claim arose.

Trans 140.24(1)(f) (f) A statement of the status of any lawsuit regarding the claim and filed by the claimant against the licensee, including the name of the case, case number, court and a copy of any judgment entered.

Trans 140.24(1)(g) (g) A description of the security interest, if any, held by the claimant including a copy of any security agreement related to the transaction from which the claim arose and a description of the secured property.

Trans 140.24(1)(h) (h) A description of any licenses held by the claimant, if the claimant is licensed under ch. 218, Stats.

Trans 140.24(1)(i) (i) A statement of whether the claimant is a retail customer, commercial customer, motor vehicle manufacturer, factory branch, factory representative, distributor, distributor representative, dealer, salesperson or a financial institution.

Trans 140.24(1)(j) (j) A statement of whether the claimant is the licensee, the claimant’s employer agent or employee.

Trans 140.24(2) (2) The department may adopt and provide forms for use by claimants.

Trans 140.24 Note Note: Copies of the form for making claims, MV-2542, Claim Against Bond of Licensee, are available from the Dealer License Section, Department of Transportation, P.O. Box 7909, Madison, Wisconsin 53707.

Trans 140.24 History History: Emerg. cr. eff. 10-16-85; cr. Register, July, 1986, No. 367, eff. 8-1-86; am. (1), Register, February, 1996, No. 482, eff. 3-1-96.

Trans 140.25 Trans 140.25 Payment by surety or financial institution.

Trans 140.25(1) (1) The surety or financial institution may, at any time, pay the amount of the bond or letter of credit to the department.

Trans 140.25(2) (2) The department shall hold all payments on a particular bond or letter of credit in a separate account. This separate account may be interest bearing. The department may retain interest earned, if any, but shall not otherwise make any charges against the bond or letter of credit for administering the bond or letter of credit and determining claims against it.

Trans 140.25(3) (3) If payment from the surety or financial institution is not received prior to, or during, the determination of claims by the department as provided in s. Trans 140.26, the department shall, after the final determination of timely claims, demand payment on the bond or letter of credit from the surety in an amount equal to the lesser of the face value of the bond or the aggregate total of the claims determined to be allowed. The surety or financial institution shall pay the amount demanded to the department within 30 days. The department may execute an appropriate written release for the surety or financial institution, if the surety or financial institution so requests, after payment is received.

Trans 140.25(4) (4) If a surety or financial institution fails to tender the amount of the bond or letter of credit to the state, or to make timely payment of the amount demanded as provided in sub. (3), or otherwise fails to observe the provisions of this chapter, then the department may, in addition to any other available remedy, revoke its acceptance of the surety or financial institution as adequate to provide any bond or letter of credit of any persons secured under any statute or rule administered by the department. The department shall notify the surety company or financial institution of its intent to revoke its acceptance of the surety or financial institution. The surety company or financial institution may, within 30 days of such notice, request a hearing before the secretary or the secretary’s designee, prior to revocation of the department’s acceptance of the surety or financial institution.

Trans 140.25 Note Note: Final determinations of the department are subject to judicial review pursuant to ss. 227.15 to 227.21, Stats.

Trans 140.25 History History: Emerg. cr. eff. 10-16-85; cr. Register, July, 1986, No. 367, eff. 8-1-86; am. Register, February, 1996, No. 482, eff. 3-1-96.

Trans 140.26 Trans 140.26 Procedure for determination of claims against the dealer bond or letter of credit.

Trans 140.26(1) (1) Petition for ruling.

Trans 140.26(1)(a) (a) Any claim made against the bond or letter of credit of a licensee, any request by a surety for a department determination of a claim, any notification of the department by a licensee of the licensee’s termination of business, any filing of a bankruptcy petition by a licensee, or any payment of any part of a bond or letter of credit by the surety or financial institution to the department may be regarded by the department as a petition for declaratory ruling under s. 227.41, Stats.