BILL ANALYSIS
H.B. 1463
By: Swinford (Haywood)
Agriculture
05-08-95
Senate Committee Report (Unamended)
BACKGROUND
Agricultural input suppliers often sell agricultural chemicals,
seed, and animal feed on credit, and they expect to be paid when an
operating loan is secured or when the farmer receives the proceeds
from selling a crop or livestock. Occasionally a supplier is not
paid, which causes the supplier to become an unsecured creditor.
Current law does not give a supplier the ability to file a notice
of lien against the debtor because the supplier does not have a
financing statement, a signed document from the debtor stating that
the supplier has a financial interest in the debtor's crops or
livestock.
PURPOSE
As proposed, H.B. 1463 establishes regulation of liens on
agricultural chemicals, seed, and labor and animal feed; grants
rulemaking authority for this regulation to the commissioner of
agriculture and the secretary of state. Provides penalties for
violations of the regulations.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is granted
to the commissioner of agriculture under SECTIONS 1 and 2 (Section
128.012(a) and Section 188.012(a), Agriculture Code) and the
secretary of the state under SECTIONS 1 and 2 (Section 128.046 and
Section 188.046, Agriculture Code) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Title 5, Agriculture Code, by adding Subtitle H,
as follows:
SUBTITLE H. HORTICULTURE LIENS
CHAPTER 128. AGRICULTURAL CHEMICAL AND SEED LIENS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 128.001. DEFINITIONS. Defines "agricultural chemical,"
"agricultural seed," "labor," and "reasonable or agreed
charges."
Sec. 128.002. PROCEEDS. (a) Provides that proceeds are the
amounts received by a lien debtor, before a deduction for
taxes, fees, or assessments or a deduction made under a court
order, from the sale of certain crops.
(b) Sets forth amounts that are not included as proceeds.
SUBCHAPTER B. AGRICULTURAL CHEMICAL AND SEED LIEN
Sec. 128.006. NOTICE BEFORE PURCHASE; REQUIRED NOTICE BEFORE
CLAIMING LIEN. (a) Requires a person claiming a lien to have
provided notice of the provisions of this chapter, before
purchase, either to purchasers of agricultural chemicals
(chemicals), agricultural seeds (seeds), or labor as a part of
the lien claimant's normal business practices or specifically
to the lien debtor. Sets forth the notice that must be read
to the extent applicable. Authorizes a potential lien
claimant to satisfy the requirements of this subsection by
printing or stamping the notice on credit applications and
invoices.
(b) Requires the person, before being authorized to claim a
lien, to send to the debtor by certified mail written notice
that states that a payment of the debtor is overdue, the
amount of the payment, and the debtor's alternatives.
Sec. 128.007. ATTACHMENT OF LIEN. Provides that a lien
established under this chapter attaches to proceeds described
by Section 128.002.
Sec. 128.008. AMOUNT OF LIEN. Provides that the amount of
a lien is equal to the sum of the amount of unpaid charges for
seeds, chemicals, labor, or any combination thereof for
certain time periods; and the filing fees for the lien.
Sec. 128.009. PERSON ENTITLED TO FILE; EXCEPTION. (a)
Authorizes a person who provides a chemical, seed, or labor to
file a notice of claim of lien.
(b) Prohibits a claimant from filing a notice of claim of
lien if the arbitration of a dispute between the claimant
and the debtor is pending or has not been resolved under
Chapter 64. Prohibits a claimant from filing a notice of
claim of lien if the settlement of a dispute between a
claimant and the debtor is pending or has not been resolved
under Section 128.012.
Sec. 128.010. PERFECTION OF LIEN. Provides that a lien
created under this chapter is perfected on the filing of a
notice of claim of lien with the secretary of state.
Sec. 128.011. DURATION OF NOTICE OF CLAIM OF LIEN. (a)
Provides that the notice of claim of lien is effective, and a
new notice is not required to maintain the lien, as long as
the person who provides the chemical, seed, or labor either
remains unpaid for the amount secured by the lien or continues
to provide a chemical, seed, or labor to the lien debtor.
(b) Provides that providing a chemical, seed, or labor is
not considered to be made on the regular basis if more than
45 days passes between applications, deliveries, and
preparations.
Sec. 128.012. PROCEDURES FOR SETTLEMENT OF DISPUTES. (a)
Requires the commissioner of agriculture (commissioner), by
rule, to establish a procedure to settle a dispute between a
claimant supplying chemicals or labor in the application,
delivery, or preparation of chemicals and a debtor. Requires
the procedures to provide time requirements and an evaluation
process.
(b) Provides that each party to the dispute is equally
liable for the costs incurred by the Department of
Agriculture (department) in carrying out this section.
Sec. 128.013. CONTENTS OF NOTICE OF CLAIM OF LIEN. Sets
forth the contents of the notice of claim of lien.
Sec. 128.014. SIGNATURE. Requires the notice of claim of
lien to be signed by the lien claimant or by a person
authorized to sign documents of a similar kind on behalf of
the claimant.
Sec. 128.015. FORM. (a) Requires the notice of claim of
lien to be filed on a form that satisfies the requirements of
a financing statement under Section 9.402, Business and
Commerce Code, except that the lien claimant may be identified
as either a lien claimant or a secured party; the form must be
signed by the lien claimant and is not required to be signed
by the lien debtor; and for the description of the collateral,
the information in Sections 128.013(3)-(5) and (7) must be
entered.
(b) Requires a separately signed statement containing the
information in Section 128.013(6) to be attached to the
form.
Sec. 128.016. FILING AND MARKING IN OFFICE OF SECRETARY OF
STATE; FEE. (a) Requires the notice of claim of lien to be
filed and marked in the office of the secretary of state in
the same manner as a financing statement is filed and marked
under Section 9.403, Business and Commerce Code.
(b) Provides that the uniform fee for filing and indexing
and for stamping a copy furnished by the secured party is
the same as the fee assessed under Section 9.403, Business
and Commerce Code.
Sec. 128.017. TIME OF WRITTEN NOTICE. Requires the lien
claimant to provide written notice of the claim of lien to the
lien debtor by the 10th day after the date the notice of lien
is filed with the secretary of state's office.
Sec. 128.018. RECOGNITION OF NOTICE AS FINANCING STATEMENT.
Requires the secretary to recognize a notice of claim of lien
as a financing statement under Section 9.402, Business and
Commerce Code.
SUBCHAPTER C. PRIORITY OF LIEN
Sec. 128.026. TIME OF FILING. (a) Provides that a lien has
the same priority as a security interest perfected by the
filing of a financing statement on the date the notice of
claim of lien was filed.
(b) Provides that a lien does not have priority over labor
claims for wages and salaries for personal services that are
provided by an employee to a lien debtor connected with the
production of agricultural products, the proceeds of which
are subject to lien.
SUBCHAPTER D. INFORMATION CONCERNING LIEN
Sec. 128.031. ISSUANCE OF CERTIFICATE TO MEMBER OF PUBLIC;
FEE. (a) Authorizes a person to obtain a certificate
identifying any lien on file and any notice of claim of lien
naming a particular debtor and stating the date and time of
filing of each notice and the name and addresses of each
lienholder in the certificate.
(b) Requires the fee for a certificate to be established by
the secretary of state in an amount necessary to cover the
cost of administering this section.
Sec. 128.032. COPIES OF NOTICES OF CLAIM OF LIEN AND OTHER
NOTICES; FEES. (a) Authorizes a person to obtain a copy of
any notice of claim of a chemical or seed lien filed.
(b) Requires the fee for a copy of a notice of a claim of
lien to be established by the secretary of state in an
amount to cover the cost of administering this section.
SUBCHAPTER E. ENFORCEMENT OF LIEN
Sec. 128.036. WRITTEN NOTICE TO SECURED CREDITORS BY LIEN
CLAIMANT. (a) Requires a lien claimant to provide written
notice to any secured creditor at least 30 days before the
date the lien claimant enforces a claim of lien.
(b) Defines "secured creditor."
Sec. 128.037. FORECLOSURE IN ACTION TO RECOVER REASONABLE OR
AGREED CHARGES. Authorizes the lien claimant to foreclose on
a lien only in an action to recover the reasonable or agreed
charges.
Sec. 128.038. TERMINATION STATEMENT. (a) Requires the lien
claimant to file a termination statement with the secretary of
state and to send the lien debtor a copy of the statement, if
a lien claimant receives payment for the total amount secured
by a lien and the lien claimant has not furnished a chemical,
seed, or labor during the 45-day period before the date the
payment is received. Requires the statement to state that the
lien claimant no longer claims a security interest under the
notice of claim of lien.
(b) Requires the notice of claim of lien to be identified in
the statement by the date, names of parties to the
agreement, and the file number of the original lien.
(c) Provides that the lien claimant is liable to the lien
debtor for actual damages suffered by the lien debtor as a
result of the failure, if the lien claimant does not send
the termination statement before the 11th day after the date
the claimant received payment. Provides that the lien
claimant is liable for an additional penalty of $100, if the
lien claimant acts in bad faith in failing to send the
statement.
(d) Requires the filing officer in the secretary of state's
office to mark each termination statement with the date and
time of filing and to index the statement under the name of
lien debtor and the original lien's file number. Authorizes
the filing officer to destroy the filed notice of claim of
lien after receiving the termination statement, if the
filing officer has a microfilm or other photographic record
of the lien and related filings. Authorizes the filing
officer to destroy the filed notice of claim of lien one
year after the date the filing officer received the
termination statement, if the filing officer does not have
a photographic record.
(e) Provides that the uniform filing fee for filing and
indexing the termination statement is the same as the fee
assessed under Section 9.404(c) Business and Commerce Code.
Sec. 128.039. RIGHT OF ASSIGNMENT OR TRANSFER; FILING OF
STATEMENT. (a) Authorizes a lien to be assigned by the
lienholder, with full rights of enforcement.
(b) Requires the lienholder to file a statement of
assignment with the secretary of state as provided by
Section 9.405, Business and Commerce Code.
SUBCHAPTER F. MISCELLANEOUS
Sec. 128.046. RULES. Authorizes the secretary of state to
adopt rules necessary to carry out the secretary's duties
under this chapter, including prescribing necessary forms.
Sec. 128.047. MAXIMUM NUMBER OF LIENS. Prohibits more than
four liens from being enforced against the same proceeds of a
lien debtor even if the liens are filed by different lien
claimants.
Sec. 128.048. APPLICABILITY OF OTHER LAW. Makes Chapter 9,
Business and Commerce Code, applicable to a lien created under
this chapter to the extent Chapter 9 is consistent with this
chapter.
SECTION 2. Amends Title 6, Agriculture Code, by adding Subtitle E,
as follows:
SUBTITLE E. LIENS ON ANIMAL PRODUCTS
CHAPTER 188. LIENS FOR ANIMAL FEED
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 188.001. DEFINITIONS. "animal feed," "labor,"
"livestock," and "reasonable or agreed charges."
Sec. 188.002. PROCEEDS. (a) Provides that proceeds are the
amounts received by a lien debtor, before a deduction for
taxes, fees, or assessments or a deduction made under a court
order for the sale of livestock, products of livestock, and
issue born to livestock.
(b) Sets forth amounts not included as proceeds.
SUBCHAPTER B. ANIMAL FEED LIEN
Sec. 188.006. NOTICE BEFORE PURCHASE; REQUIRED NOTICE BEFORE
CLAIMING LIEN. (a) Requires a person claiming a lien to have
provided notice of the provisions of this chapter, before
purchase, to purchasers of animal feed (feed) as a part of the
lien claimant's normal business practices or specifically to
the lien debtor. Sets forth the notice that must be read to
the extent applicable. Authorizes a potential lien claimant
to satisfy the requirements of this subsection by printing or
stamping the notice on credit applications and invoices.
(b) Requires the person, before being authorized to claim a
lien, to send to the debtor by certified mail written notice
that states that a payment of the debtor is overdue, the
amount that is overdue, and the debtor's alternatives.
Sec. 188.007. ATTACHMENT OF LIEN. Provides that a lien
established under this chapter attaches to proceeds described
by Section 188.002.
Sec. 188.008. AMOUNT OF LIEN. Provides that the amount of
a lien is equal to the sum of the amount of charges for feed
furnished within a certain time period, and the filing fees
for the lien.
Sec. 188.009. PERSON ENTITLED TO FILE; EXCEPTION. (a)
Authorizes a person who provides feed to file a notice of
claim of lien.
(b) Prohibits a claimant from filing a notice of claim of
lien if the settlement of a dispute between the claimant and
the debtor is pending or has not been resolved under Section
188.012.
Sec. 188.010. PERFECTION OF LIEN. Provides that a lien
created under this chapter is perfected on the filing of a
notice of claim of lien with the secretary of state.
Sec. 188.011. DURATION OF NOTICE OF CLAIM OF LIEN. (a)
Provides that the notice of claim of lien is effective, and a
new notice is not required to maintain the lien, as long as
the person who provides the feed, including labor, either
remains unpaid for the amount secured by the lien or continues
to provide feed to the lien debtor.
(b) Provides that providing feed, including labor, is not
considered to be made on a regular basis if more than 45
days elapses between deliveries or preparations.
Sec. 188.012. PROCEDURES FOR SETTLEMENT OF DISPUTES. (a)
Requires the commissioner, by rule, to establish a procedure
to settle a dispute between a claimant supplying feed and
labor and a debtor. Requires the procedures to provide time
requirements and an evaluation process.
(b) Provides that each party to the dispute is equally
liable for the costs incurred by the department in carrying
out this section.
Sec. 188.013. CONTENTS OF NOTICE OF CLAIM OF LIEN. Sets
forth the contents of the notice of claim of lien.
Sec. 188.014. SIGNATURE. Requires the notice of claim of
lien to be signed by the lien claimant or by a person
authorized to sign documents of a similar kind on behalf of
the claimant.
Sec. 188.015. FORM. (a) Requires the notice of claim of
lien to be filed on a form that satisfies the requirements of
a financing statement under Section 9.402, Business and
Commerce Code, except that the lien claimant may be identified
as either a lien claimant or a secured party; the form must be
signed by the lien claimant and is not required to be signed
by the lien debtor; and for the description of the collateral,
the information in Sections 188.013(3)-(5) and (7) must be
entered.
(b) Requires a separately signed statement containing the
information in Section 188.013(6) to be attached to the
form.
Sec. 128.016. FILING AND MARKING IN OFFICE OF SECRETARY OF
STATE; FEE. (a) Requires the notice of claim of lien to be
filed and marked in the office of the secretary of state in
the same manner as a financing statement is filed and marked
under Section 9.403, Business and Commerce Code.
(b) Provides that the uniform fee for filing and indexing
and for stamping a copy furnished by the secured party is
the same as the fee assessed under Section 9.403, Business
and Commerce Code.
Sec. 188.017. TIME OF WRITTEN NOTICE. Requires the lien
claimant to provide written notice of the claim of lien to the
lien debtor by the 10th day after the date the notice of lien
is filed with the secretary of state's office.
Sec. 188.018. RECOGNITION OF NOTICE AS FINANCING STATEMENT.
Requires the secretary of state to recognize a notice of claim
of lien as a financing statement under Section 9.402, Business
and Commerce Code.
SUBCHAPTER C. PRIORITY OF LIEN
Sec. 188.026. TIME OF FILING. (a) Provides that a lien has
the same priority as a security interest perfected by the
filing of a financing statement on the date the notice of
claim of lien was filed.
(b) Provides that a lien does not have priority over labor
claims for wages and salaries for personal services that are
provided by an employee to a lien debtor connected with the
livestock, the production of animal products derived from
livestock, or claims for charges for care of the livestock,
the proceeds of which are subject to lien.
SUBCHAPTER D. INFORMATION CONCERNING LIEN
Sec. 188.031. ISSUANCE OF CERTIFICATE TO MEMBER OF PUBLIC;
FEE. (a) Authorizes a person to obtain a certificate
identifying any lien on file and any notice of claim of lien
naming a particular debtor and stating the date and time of
filing of each notice and the name and addresses of each
lienholder in the certificate.
(b) Requires the fee for a certificate to be established by
the secretary of state in an amount to cover the cost of
administering this section.
Sec. 188.032. COPIES OF NOTICES OF CLAIM OF LIEN AND OTHER
NOTICES; FEE. (a) Authorizes a person to obtain a copy of any
notice of claim of feed lien filed.
(b) Requires the fee for a copy of a notice of a claim of
lien to be established by the secretary of state in an
amount to cover the cost of administering this section.
SUBCHAPTER E. ENFORCEMENT OF LIEN
Sec. 188.036. WRITTEN NOTICE TO SECURED CREDITORS BY LIEN
CLAIMANT. (a) Requires a lien claimant to provide written
notice to any secured creditor at least 30 days before the
date the lien claimant enforces a claim of lien.
(b) Defines "secured creditor."
Sec. 188.037. FORECLOSURE IN ACTION TO RECOVER REASONABLE OR
AGREED CHARGES. Authorizes the lien claimant to foreclose on
a lien only in an action to recover the reasonable or agreed
charges.
Sec. 188.038. TERMINATION STATEMENT. (a) Requires the lien
claimant to file a termination statement with the secretary of
state and to send the lien debtor a copy of the statement, if
a lien claimant receives payment for the total amount secured
by a lien and the lien claimant has not furnished feed during
the 45-day period before the date the payment is received.
Requires the statement to state that the lien claimant no
longer claims a security interest under the notice of claim of
lien.
(b) Requires the notice of claim of lien to be identified in
the statement by the date, names of parties to the
agreement, and the file number of the original lien.
(c) Provides that the lien claimant is liable to the lien
debtor for actual damages suffered by the lien debtor as a
result of the failure, if the lien claimant does not send
the termination statement before the 11th day after the date
the claimant received payment. Provides that the lien
claimant is liable for an additional penalty of $100, if the
lien claimant acts in bad faith in failing to send the
statement.
(d) Requires the filing officer in the secretary of state's
office to mark each termination statement with the date and
time of filing and to index the statement under the name of
lien debtor and the original lien's file number. Authorizes
the filing officer to destroy the filed notice of claim of
lien after receiving the termination statement, if the
filing officer has a microfilm or other photographic record
of the lien and related filings. Authorizes the filing
officer to destroy the filed notice of claim of lien one
year after the date the filing officer received the
termination statement, if the filing officer does not have
a photographic record.
(e) Provides that the uniform filing fee for filing and
indexing the termination statement is the same as the fee
assessed under Section 9.404(c), Business and Commerce Code.
Sec. 188.039. RIGHT OF ASSIGNMENT OR TRANSFER; FILING OF
STATEMENT. (a) Authorizes a lien to be assigned by the
lienholder, with full rights of enforcement.
(b) Requires the lienholder to file a statement of
assignment with the secretary of state as provided by
Section 9.405, Business and Commerce Code.
SUBCHAPTER F. MISCELLANEOUS
Sec. 188.046. RULES. Authorizes the secretary of state to
adopt rules necessary to carry out the secretary's duties
under this chapter, including prescribing necessary forms.
Sec. 188.047. MAXIMUM NUMBER OF LIENS. Prohibits more than
four liens from being enforced against the same proceeds of a
lien debtor even if the liens are filed by different lien
claimants.
Sec. 188.048. APPLICABILITY OF OTHER LAW. Makes Chapter 9,
Business and Commerce Code, applicable to a lien created under
this chapter to the extent Chapter 9 is consistent with this
chapter.
SECTION 3. Makes application of this Act prospective.
SECTION 4. Effective date: September 1, 1995.
SECTION 5. Emergency clause.