Bill Text: CA SB592 | 2011-2012 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Dairy cattle supply liens.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Passed) 2012-09-13 - Chaptered by Secretary of State. Chapter 309, Statutes of 2012. [SB592 Detail]

Download: California-2011-SB592-Amended.html

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BILL NUMBER: SB 592	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JULY 3, 2012
	AMENDED IN ASSEMBLY  MAY 15, 2012
	AMENDED IN SENATE  JANUARY 23, 2012
	AMENDED IN SENATE  MAY 17, 2011
	AMENDED IN SENATE  MAY 2, 2011

INTRODUCED BY   Senator Harman

                        FEBRUARY 17, 2011

   An act to amend Sections  57401,  57402, 57405, 
57406,  and 57413 of,  and  to repeal
Section 57412 of,  and to repeal and add Section 57406 of,
the Food and Agricultural Code, relating to dairy cattle supply
liens.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 592, as amended, Harman. Dairy cattle supply liens.
   (1) Existing law provides that a person who provides feed or
materials to aid the raising or maintaining of dairy cattle has a
lien upon the proceeds of the milk or milk products produced from the
dairy cattle, for the reasonable or agreed charges for the feed or
materials provided and for the costs of enforcing the lien, not to
exceed an amount equal to charges for feed or material provided
within a 45-day period.
   This bill would, in addition, provide that a person who provides
feed or materials to aid the offspring of the dairy cattle has a lien
on the proceeds of milk or milk products produced from the dairy
cattle, and would increase the limit of a lien to an amount equal to
charges for feed or material provided within a 60-day period. The
bill would establish a limit of one lien per dairy producer per
affiliated business entity.
   (2) Existing law provides that the lien shall be perfected and
shall be effective upon the filing of a notice of claim of lien with
the Secretary of State, as specified. Existing law requires the
notice of claim of lien, among other things, to state the name and
address of the lien debtor. The notice of claim of lien is required
to be signed by the lien claimant or by a person authorized to sign
documents of a similar kind on behalf of the claimant.
   This bill  would delete the requirement that the lien be
effective upon filing a notice of claim of lien with the Secretary of
State, and  would instead require the lien to be perfected
by filing a notice of claim of lien with the Secretary of State 
and service of the notice of   claim of lien  , as
specified. The bill would require the notice of claim of lien to
state the last known name and address of the lien debtor. The bill
would also delete the language providing that the notice of claim of
lien shall be signed by the lien claimant or by a person authorized
to sign documents of a similar kind on behalf of the claimant.
   (3) Existing law requires the lien claimant to provide written
notice of the claim of the lien to the lien debtor within 10 days of
the date of filing with the Secretary of State.
   This bill would require  the notice to be provided to the lien
debtor, to any person from which the lien claimant has received,
before the lien claimant files the notice, notification of a claim of
interest in the proceeds, and to any other secured party or
lienholder that held   a security interest in or other lien
on the proceeds, as specified, 10 days before the filing of the
notice. The bill would require  notice to be served, as
specified, depending on whether the lien debtor is an entity,
individual, or general partnership.  The bill would also
provide that failure to give written notice of the claim would not
affect the validity or priority of the lien.   The bill
would also require a lien claimant to send to a lien debtor a
termination statement for the notice of claim of lien or to file the
termination statement in the office of the Secretary of State within
20 days after receiving a demand from a lien debtor if the lien has
terminated, as specified. 
   (4) Existing law requires these liens to have a certain priority,
as specified.
   This bill would delete the requirement that the lien have priority
in accordance with the time the notice of claim of lien is filed.
 The bill would instead make applicable to dairy cattle supply
liens specified statutes governing secured transactions generally,
including a provision requiring that conflicting perfected security
interests and agricultural liens rank according to priority in time
of filing or perfection, as specified. 
   (5) Existing law requires a lien claimant to provide written
notice to secured creditors, as defined, at least 30 days prior to
enforcing a claim of lien.
   This bill would delete those provisions.
   (6) Existing law requires the lien claimant to foreclose on a lien
only in an action to recover the reasonable or agreed charges for
feed and materials delivered and enforce a final judgment as
provided.
   This bill would instead authorize the lien claimant to foreclose
on a lien  , after payment default by the lien debtor,  in
an action to recover the reasonable or agreed charges for feed and
materials delivered and authorize the lien claimant to enforce a
final judgment, as provided, and apply for a right to attach order
 or   and a  writ of attachment  , or
temporary protective order,  through the court in which the
action is brought. The bill would authorize a lien claimant to take
certain actions after payment default by the lien debtor, including
notifying any person obligated on any proceeds subject to the lien to
make payment to the lien claimant.  The bill would define a
"person obligated on any proceeds" for purposes of provisions
governing dairy cattle supply liens.  The bill would authorize a
lien debtor to secure a release of a lien  in one of 3 ways,
including  by  paying the amount secured by the lien or
by  depositing with the Secretary of State a  cash sum
that is expressly set apart by a written instrument in which the
Secretary of State is named as trustee   bond  , as
specified.  The bill would require a lien claimant that receives
proceeds pursuant to a notice that is provided to a person who is
obligated on the proceeds to account to, and pay the lien debtor for,
any surplus, and shall be liable for any deficiency.  
   (7) The bill would provide that the provisions described above
shall apply prospectively to all contracts entered into on or after
January 1, 2013. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 57401 of the   Food
and Agricultural Code   is amended to read: 
   57401.  (a) The definitions in this section govern the
construction of this chapter.
   (b) "Feed or materials" means commercial feed, grain, forage, feed
ingredients, mineral feed, drugs, animal health products,
customer-formula feed, any mixture or preparation for feeding
animals, any of the constituent nutrients of an animal ration, or any
other food which is used for the feeding of dairy cattle. 
   (c) "Person obligated on any proceeds" means a handler, as defined
in Section 61826, who is in possession of proceeds.  
   (c) 
    (d)  "Proceeds" means funds derived from the sale of
milk or milk products which are payable to the lien debtor by the
possessor of the funds, except for any of the following:
   (1) Deductions for taxes, fees, and assessments.
   (2) Funds due or owing milk processing cooperative associations
organized and operating pursuant to Chapter 1 (commencing with
Section 54001).
   (3) Funds retained by the cooperative association.
   (4) Deductions made pursuant to a court order.
   (5) Deductions due or owing the buyer of the milk for hauling
services provided by the buyer pursuant to subdivision (e) of Section
62096 and deductions due or owing the buyer for the testing of milk
for purposes of payment pursuant to Section 34231. 
   (d) 
    (e)  "Raising or maintaining of dairy cattle" means
feeding, pasturing, caring for, and managing dairy cattle kept or
raised for use or profit. 
   (e) 
    (f)  "Reasonable or agreed charges" means the agreed
price, if any, for the feed and materials sold to the lien debtor, at
the lien debtor's request. If there is no agreed price or a method
for determining price which is agreed upon, "reasonable or agreed
charges" means the reasonable value of the feed or materials as of
the date of delivery.
   SECTION 1.   SEC. 2.   Section 57402 of
the Food and Agricultural Code is amended to read:
   57402.  A person who provides feed or materials to aid the raising
or maintaining of dairy cattle or offspring therefrom has a lien
upon the proceeds of the milk or milk products produced from the
dairy cattle, for the reasonable or agreed charges for the feed or
materials provided and for the costs of enforcing the lien. However,
the amount of charges secured by the lien cannot exceed an amount
equal to the reasonable or agreed charges for feed or material
provided within a 60-day period, and only two providers of feed or
materials shall have an enforceable lien at any time according to the
priority set forth in Section 57406. Only one lien  under this
chapter  per dairy producer is available per affiliated business
 entity   supplier  .
   SEC. 2.   SEC. 3.   Section 57405 of the
Food and Agricultural Code is amended to read:
   57405.  The lien created by this chapter shall be perfected by the
filing of a notice of claim of lien with the Secretary of State 
and service of the notice of claim of lien  pursuant to all the
provisions of this section.
   (a) The person who provides feed or materials may, at any time,
file in the manner and at the place set forth in this section, the
notice of claim of lien.
   (b) The notice of claim of lien shall, at a minimum, set forth all
of the following information:
   (1) The name and address of the lien claimant.
   (2) The last known name and address of the lien debtor.
   (3) The location of the dairy to which the feed and materials were
provided.
   (4) That the lien claimant has a dairy cattle supply lien pursuant
to Section 57402.
   (c) The notice of claim of lien shall be filed on a form which is
the standard form of original financing statement prescribed by the
Secretary of State pursuant to Section 9521 of the Commercial Code.
The standard form shall be completed with the following changes:
   (1) The lien claimant may be identified either as lien claimant or
as secured party.
   (2) The form shall be signed by the lien claimant and need not be
signed by the debtor.
   (3) In the space for the description of the collateral there shall
instead be entered the statement substantially as set forth in
paragraphs (3) and (4) of subdivision (b).
   (d) The notice of claim of lien shall be filed, indexed, and
marked in the office of the Secretary of State in the same manner as
a financing statement is filed, indexed, and marked pursuant to
Section 9519 of the Commercial Code.
   (e) (1) The lien claimant shall provide written notice of the
claim of lien to the  lien debtor   following
persons  within 10 days of the date of the filing with the
office of the Secretary of  State.   State:
 
   (A) The lien debtor.  
   (B) Any person from which the lien claimant has received, before
the lien claimant files the notice, notification of a claim of an
interest in the proceeds.  
   (C) Any other secured party or lienholder that, 10 days before the
filing of the notice, held a security interest in or other lien on
the proceeds perfected by the filing of a financing statement that
satisfied all of the following conditions:  
   (i) The statement identified the proceeds by referring to all
assets, all personal property, goods, farm products, milk, or milk
products, or otherwise identified the proceeds by any other
description sufficient pursuant to Section 9108 of the Commercial
Code.  
   (ii) The statement was indexed under the debtor's name as of that
date.  
   (iii) The statement was filed against the debtor covering the
proceeds as of that date and was filed in the office or offices in
which a financing statement may be filed pursuant to Section 9501 of
the Commercial Code.  
   (D) Any other secured party that, 10 days before the filing of the
notice, held a security interest in the proceeds perfected by
compliance with a statute, regulation, or treaty described in
subdivision (a) of Section 9311 of the Commercial Code. 
   (2) If the lien debtor is an entity, notice shall be given to the
lien debtor's registered agent for service of process. If the lien
debtor is an individual or general partnership, the notice shall be
given at any address at which the individual conducts business.

   (3) Failure to give written notice of the claim to the lien debtor
shall have no effect on the validity or priority of the lien.

   (f) For the purpose of the Secretary of State's index pursuant to
Sections 9515, 9516, and 9522 of the Commercial Code and for the
purpose of the issuance of a certificate pursuant to Section 9519 or
9528 of the Commercial Code, the Secretary of State shall identify a
notice pursuant to this section as a financing statement. 
   (g) Within 20 days after a lien claimant receives a demand from a
lien debtor, the lien claimant shall send to the lien debtor a
termination statement for the notice of claim of lien or file the
termination statement in the office of the Secretary of State, if the
lien perfected by the notice of claim of lien has terminated
pursuant to the provisions of Section 57403. Upon the filing of a
termination statement with the office of the Secretary of State, the
notice of claim of lien to which the termination statement relates
ceases to be effective.  
  SEC. 3.    Section 57406 of the Food and
Agricultural Code is amended to read:
   57406.  Notwithstanding Chapter 6.7 (commencing with Section 3080)
of Title 14 of Part 4 of Division 3 of the Civil Code, the lien
created by this chapter shall have the same priority as a security
interest perfected by the filing of a financing statement as of the
date the notice of claim of lien was filed. 
   SEC. 4.    Section 57406 of the   Food and
Agricultural Code   is repealed.  
   57406.  (a) The lien created by this chapter shall have priority
in accordance with the time the notice of claim of lien is filed.
   (b) The lien created by this chapter shall have the same priority
as a security interest perfected by the filing of a financing
statement as of the date the notice of claim of lien was filed.

   SEC. 5.    Section 57406 is added to the  
Food and Agricultural Code   , to read:  
   57406.  The priority of conflicting interests, agricultural liens,
and the agricultural lien created under this chapter shall be
governed by subdivisions (a) to (f), inclusive, of Section 9322 of
the Commercial Code. 
   SEC. 4.   SEC. 6.   Section 57412 of the
Food and Agricultural Code is repealed.
   SEC. 5.   SEC. 7.  Section 57413 of the
Food and Agricultural Code is amended to read:
   57413.  (a)  The   After payment default by
the lien debtor, the  lien claimant may foreclose on a lien
created by this chapter in the following manners:
   (1) The lien claimant may foreclose in an action to recover the
reasonable or agreed charges for feed and materials delivered. In
such an action, the final judgment may be enforced pursuant to Title
9 (commencing with Section 680.010) of Part 2 of the Code of Civil
Procedure. 
   (2) In such an action, the lien claimant may apply pursuant to
Title 6.5 (commencing with Section 481.010) of Part 2 of the Code of
Civil Procedure for a right to attach order and a writ of attachment
by filing an application for the order and writ with the court in
which the action is brought.  
   (b) After payment default by the lien debtor, the lien claimant
may do all of the following, provided that the lien creditor provides
concurrent notice to the lien debtor:  
   (1) Notify 
    (2)     Provided that the lien claimant
provides concurrent notice to the lien debtor and the parties set
forth in subdivision (e) of Section 57405, the lien claimant may
notify  any person obligated on any proceeds subject to the lien
created under this chapter to make payment to, or otherwise render
performance to or for the benefit of, the lien claimant, provided
that the lien claimant may not demand that payment or performance be
made at any time prior to 15 calendar days following the date of
notice.  Notice of lien shall be given by certified mail.
 
   (2) Enforce 
    (3)     The lien claimant may enforce 
the obligations of any person obligated on any proceeds subject to
the lien created under this chapter and exercise the rights of the
lien debtor with respect to the proceeds and any property that
secures the right to the proceeds subject to the lien created under
this chapter. 
   (b) A lien claimant that receives proceeds pursuant to a notice
provided pursuant to paragraph (2) of subdivision (a) shall account
to, and pay the lien debtor for, any surplus, and shall be liable for
any deficiency.  
   (c) Nothing in this chapter shall prohibit a lien claimant from
applying pursuant to Title 6.5 (commencing with Section 481.010) of
Part 2 of the Code of Civil Procedure for a right to attach order and
a writ of attachment, or temporary protective order, by filing an
application for the order, writ, or temporary protective order with
the court in which the action is brought.  
   (d) Notwithstanding the receipt of a notice pursuant to paragraph
(2) of subdivision (a), a person obligated on any proceeds subject to
a lien created under this chapter shall have no liability to a lien
claimant for failure to comply with that notice to the extent that
the person obligated on the proceeds pays the proceeds subject to the
notice as follows:  
   (1) To a person holding a lien or security interest that is prior
to the lien of the lien claimant issuing the notice.  
   (2) In satisfaction of a contractual assignment or valid notice
provided pursuant to Section 9607 of the Commercial Code has been
received from the person obligated on the proceeds prior to the
receipt of the notice pursuant to paragraph (2) of subdivision (a).
 
   (e) A person obligated on any proceeds subject to the lien created
under this chapter and who makes payment pursuant to the notice
required by paragraph (2) of subdivision (a) shall not be deemed, to
the extent of that payment, to be in violation of the applicable
provisions of law relating to failure to pay the amounts to the lien
debtor and shall not be deemed to have engaged in an unlawful trade
practice.  
   (c) 
    (f)  A lien debtor may secure a release of a lien
created under this chapter by doing one of the following:
   (1) Paying the amount secured by the lien.
   (2) Depositing with the Secretary of State a surety bond that is
executed by the lien debtor as principal and by a surety company that
is qualified and authorized to do business in this state as a surety
in an amount that equals the current amount secured by the lien. If
the lien debtor fails to pay the claims, up to the amount of the
bond, of the lien  creditor   claimant 
within 35 days after entry of final judgment in favor of the lien
 creditor   claimant  , the  surety
shall be liable   bond shall be in an amount sufficient
to cover the liability  to the lien  creditor 
 claimant  , and shall pay all lawful claims that are
covered by the amount of the lien  and the legal costs
 if an action is filed on the bond. 
   (3) Depositing with the Secretary of State a cash sum that is
expressly set apart by a written instrument that is signed by the
lien debtor for the purpose of guaranteeing payment of the full
amount secured by the lien within 35 days from the date of entry of
final judgment in favor of the lien creditor. The Secretary of State
shall be named in the instrument as trustee to carry out the purpose
and intent of the instrument. 
   SEC. 8.    The provisions of this act shall apply
prospectively to all contracts entered into on or after January 1,
2013.