By Haywood S.B. No. 941 74R3646 JRD-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to a lien in favor of a seller of agricultural chemicals 1-3 or agricultural seeds; providing penalties. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Title 5, Agriculture Code, is amended by adding 1-6 Subtitle H to read as follows: 1-7 SUBTITLE H. HORTICULTURAL LIENS 1-8 CHAPTER 128. AGRICULTURAL CHEMICAL AND SEED LIENS 1-9 SUBCHAPTER A. GENERAL PROVISIONS 1-10 Sec. 128.001. DEFINITIONS. In this chapter: 1-11 (1) "Agricultural chemical" includes fertilizer 1-12 material as defined under Section 63.001, pesticides as defined 1-13 under Section 76.001, plant regulators as defined under Section 1-14 76.001, lime, plant and soil amendments, plant food, herbicides, 1-15 and chemical compounds that are applied to crops or to land used 1-16 for growing crops. 1-17 (2) "Agricultural seed" has the meaning assigned under 1-18 Section 61.001. 1-19 (3) "Equipment" means machinery or equipment used by 1-20 the seller of the agricultural chemical or agricultural seed in the 1-21 application of the chemical or seed. The term does not include 1-22 machinery or equipment furnished by the buyer of the chemical or 1-23 seed. 1-24 (4) "Labor" means labor or services performed in the 2-1 application, delivery, or preparation of an agricultural chemical 2-2 or agricultural seed provided by the seller of the agricultural 2-3 chemical or agricultural seed. 2-4 (5) "Reasonable or agreed charges" means: 2-5 (A) any agreed price for agricultural chemicals 2-6 or agricultural seeds, including labor and the use of equipment, 2-7 sold to a lien debtor at the lien debtor's request; or 2-8 (B) the reasonable value of agricultural 2-9 chemicals or agricultural seeds, including labor and the use of 2-10 equipment, as of the date of application, delivery, or preparation, 2-11 if there is not an agreed price or an agreed method for determining 2-12 price. 2-13 Sec. 128.002. PROCEEDS. (a) For the purposes of this 2-14 chapter, proceeds are the amounts received by a lien debtor, before 2-15 a deduction for taxes, fees, or assessments or a deduction made 2-16 under a court order, from the sale of: 2-17 (1) the crop that existed at the time of application 2-18 on the land of the agricultural chemical sold by the lien 2-19 claimant; 2-20 (2) the first crop produced on the land after the 2-21 agricultural chemical sold by the lien claimant was applied, if 2-22 crops did not exist on the land at the time the agricultural 2-23 chemical was applied; or 2-24 (3) the crop produced from the agricultural seed 2-25 supplied by the lien claimant. 2-26 (b) For the purposes of this chapter, the following are not 2-27 included as proceeds: 3-1 (1) amounts due or owing to a cooperative association 3-2 under Chapter 51 or 52; or 3-3 (2) amounts retained by a cooperative association 3-4 under Chapter 51 or 52. 3-5 (Sections 128.003-128.005 reserved for expansion 3-6 SUBCHAPTER B. AGRICULTURAL CHEMICAL AND SEED LIEN 3-7 Sec. 128.006. REQUIRED NOTICE. Before a person may claim a 3-8 lien under this chapter, the person must send to the debtor by 3-9 certified mail written notice that states: 3-10 (1) that the payment of the reasonable or agreed 3-11 charges is more than 30 days overdue; 3-12 (2) the amount that is overdue; 3-13 (3) that the debtor has the following three 3-14 alternatives: 3-15 (A) to allow the lien to be filed; 3-16 (B) to enter into an agreement granting a 3-17 security interest in the proceeds described by Section 128.002 3-18 under the Business & Commerce Code; or 3-19 (C) to pay the reasonable or agreed charges; and 3-20 (4) in at least 10-point type, that: 3-21 (A) the debtor has until the 10th day after the 3-22 date on which the notice is received to select an alternative under 3-23 Subdivision (3), notify the claimant of the alternative selected, 3-24 and satisfy all the requirements of the selected alternative; and 3-25 (B) the claimant may file the notice of claim of 3-26 lien at any time after the 10th day after the date on which the 3-27 debtor receives the notice if the debtor does not comply with the 4-1 requirements of Paragraph (A). 4-2 Sec. 128.007. ATTACHMENT OF LIEN. A lien established under 4-3 this chapter attaches to the proceeds described by Section 4-4 128.002. 4-5 Sec. 128.008. AMOUNT OF LIEN. The amount of a lien under 4-6 this chapter is equal to the sum of: 4-7 (1) the amount of the unpaid reasonable or agreed 4-8 charges for: 4-9 (A) agricultural chemicals furnished within the 4-10 60-day period ending on the day the lien attaches; and 4-11 (B) agricultural seeds furnished within the 4-12 45-day period ending on the day the lien attaches; and 4-13 (2) the costs of enforcing the lien as provided by 4-14 this chapter. 4-15 Sec. 128.009. PERSON ENTITLED TO FILE; EXCEPTION. (a) 4-16 Except as provided by Subsection (b) or by Section 128.047, a 4-17 person who provides an agricultural chemical or agricultural seed 4-18 may file a notice of claim of lien as provided by this chapter. 4-19 (b) A claimant may not file a notice of claim of lien if the 4-20 arbitration of a dispute between the claimant and the debtor is 4-21 pending or has not been resolved under Chapter 64. A claimant may 4-22 not file a notice of claim of lien if the settlement of a dispute 4-23 between the claimant and the debtor is pending or has not been 4-24 resolved under Section 128.012. 4-25 Sec. 128.010. PERFECTION OF LIEN. A lien created under this 4-26 chapter is perfected on the filing of a notice of claim of lien 4-27 with the secretary of state as provided by this chapter. 5-1 Sec. 128.011. DURATION OF NOTICE OF CLAIM OF LIEN. (a) 5-2 Except as otherwise provided by this chapter, the notice of claim 5-3 of lien is effective, and a new notice of claim of lien is not 5-4 required to maintain the lien, as long as the person who provides 5-5 the agricultural chemical or agricultural seed, including labor and 5-6 equipment, either: 5-7 (1) remains unpaid for the amount secured by the lien; 5-8 or 5-9 (2) continues to provide an agricultural chemical or 5-10 agricultural seed on a regular basis to the lien debtor. 5-11 (b) For purposes of this section, providing an agricultural 5-12 chemical or agricultural seed, including labor and equipment, is 5-13 not considered to be made on a regular basis if a period of more 5-14 than 45 days elapses between applications, deliveries, or 5-15 preparations. 5-16 Sec. 128.012. PROCEDURES FOR SETTLEMENT OF DISPUTES. (a) 5-17 The commissioner of agriculture by rule shall establish a procedure 5-18 to settle a dispute between a claimant supplying agricultural 5-19 chemicals and labor or the use of equipment and a debtor. The 5-20 procedures must provide: 5-21 (1) a time requirement for submitting the dispute to 5-22 the department; 5-23 (2) a time requirement within which a notice of the 5-24 dispute must be submitted to each party; and 5-25 (3) a process for evaluating the dispute. 5-26 (b) Each party to the dispute is equally liable for the 5-27 reasonable costs incurred by the department in carrying out this 6-1 section. 6-2 Sec. 128.013. CONTENTS OF NOTICE OF CLAIM OF LIEN. The 6-3 notice of claim of lien must include: 6-4 (1) the name and address of the lien claimant; 6-5 (2) the name and address of the lien debtor; 6-6 (3) the location of the property to which the 6-7 agricultural chemical or agricultural seed was provided; 6-8 (4) a statement that the payment of the reasonable or 6-9 agreed charges is more than 30 days overdue; 6-10 (5) the amount that is overdue; 6-11 (6) a statement, signed under penalty of perjury, 6-12 that: 6-13 (A) the lien claimant sent to the lien debtor 6-14 the notice required by Section 128.006; 6-15 (B) more than 10 days have elapsed since the 6-16 date on which the notice was received by the lien debtor; and 6-17 (C) the lien debtor has not complied with the 6-18 requirements of an alternative set out by Section 128.006; and 6-19 (7) a statement that the lien claimant has an 6-20 agricultural chemical or agricultural seed lien under this chapter. 6-21 Sec. 128.014. SIGNATURE. The notice of claim of lien shall 6-22 be signed by the lien claimant or by a person authorized to sign 6-23 documents of a similar kind on behalf of the claimant. 6-24 Sec. 128.015. FORM. (a) The notice of claim of lien must 6-25 be filed on a form that satisfies the requirements of a financing 6-26 statement under Section 9.402, Business & Commerce Code, except 6-27 that: 7-1 (1) the lien claimant may be identified either as a 7-2 lien claimant or as a secured party; 7-3 (2) the form must be signed by the lien claimant and 7-4 is not required to be signed by the lien debtor; and 7-5 (3) in the space for the description of the 7-6 collateral, the information specified in Sections 128.013(3), (4), 7-7 (5), and (7) must be entered. 7-8 (b) A separately signed statement containing the information 7-9 specified in Section 128.013(6) shall be attached to the form 7-10 required under Subsection (a). 7-11 Sec. 128.016. FILING AND MARKING IN OFFICE OF SECRETARY OF 7-12 STATE. The notice of claim of lien shall be filed and marked in 7-13 the office of the secretary of state in the same manner as a 7-14 financing statement is filed and marked under Section 9.403, 7-15 Business & Commerce Code. 7-16 Sec. 128.017. TIME OF WRITTEN NOTICE. The lien claimant 7-17 shall provide written notice of the claim of lien to the lien 7-18 debtor not later than the 10th day after the date the notice of 7-19 claim of lien is filed with the office of the secretary of state. 7-20 Sec. 128.018. RECOGNITION OF NOTICE AS FINANCING STATEMENT. 7-21 The secretary of state shall recognize a notice of claim of lien 7-22 under this subchapter as a financing statement under Section 9.402, 7-23 Business & Commerce Code. 7-24 (Sections 128.019-128.025 reserved for expansion 7-25 SUBCHAPTER C. PRIORITY OF LIEN 7-26 Sec. 128.026. TIME OF FILING. (a) A lien created under 7-27 this chapter has the same priority as a security interest perfected 8-1 by the filing of a financing statement on the date the notice of 8-2 claim of lien was filed. 8-3 (b) A lien created under this chapter does not have priority 8-4 over labor claims for wages and salaries for personal services that 8-5 are provided by an employee to a lien debtor in connection with the 8-6 production of agricultural products, the proceeds of which are 8-7 subject to the lien. 8-8 (Sections 128.027-128.030 reserved for expansion 8-9 SUBCHAPTER D. INFORMATION CONCERNING LIEN 8-10 Sec. 128.031. ISSUANCE OF CERTIFICATE TO MEMBER OF PUBLIC; 8-11 FEE. (a) A person may obtain a certificate identifying any lien 8-12 on file and any notice of claim of lien naming a particular debtor 8-13 and stating the date and time of filing of each notice and the 8-14 names and addresses of each lienholder in the certificate. 8-15 (b) The fee for a certificate under Subsection (a) shall be 8-16 established by the secretary of state in an amount necessary to 8-17 cover the cost of administering this section. 8-18 Sec. 128.032. COPIES OF NOTICES OF CLAIM OF LIEN AND OTHER 8-19 NOTICES; FEE. (a) A person may obtain a copy of any notice of 8-20 claim of an agricultural chemical or seed lien filed. 8-21 (b) The fee for a copy of a notice of claim of lien obtained 8-22 under Subsection (a) shall be established by the secretary of 8-23 state in an amount necessary to cover the cost of administering 8-24 this section. 8-25 (Sections 128.033-128.035 reserved for expansion 8-26 SUBCHAPTER E. ENFORCEMENT OF LIEN 8-27 Sec. 128.036. WRITTEN NOTICE TO SECURED CREDITORS BY LIEN 9-1 CLAIMANT. (a) A lien claimant shall provide written notice to any 9-2 secured creditor at least 30 days before the date the lien claimant 9-3 enforces a claim of lien. 9-4 (b) For purposes of this section, "secured creditor" means 9-5 any entity named as a secured party in a financing statement that 9-6 is filed regarding the debtor and that covers: 9-7 (1) a farm product, an account, or a crop subject to 9-8 the lien; 9-9 (2) a crop growing or grown on the land on which the 9-10 agricultural chemical was applied or for which the agricultural 9-11 seed was supplied; or 9-12 (3) the next crop to be grown on that land, if a crop 9-13 is not planted. 9-14 Sec. 128.037. FORECLOSURE IN ACTION TO RECOVER REASONABLE OR 9-15 AGREED CHARGES. The lien claimant may foreclose on a lien under 9-16 this chapter only in an action to recover the reasonable or agreed 9-17 charges. 9-18 Sec. 128.038. TERMINATION STATEMENT. (a) If a lien 9-19 claimant receives payment for the total amount secured by a lien 9-20 under this chapter and the lien claimant has not furnished an 9-21 agricultural chemical or agricultural seed during the 45-day period 9-22 before the date on which payment is received, the lien claimant 9-23 shall file a termination statement with the secretary of state and 9-24 shall send the lien debtor a copy of the statement as provided by 9-25 this section. The statement shall state that the lien claimant no 9-26 longer claims a security interest under the notice of claim of 9-27 lien. 10-1 (b) The notice of claim of lien must be identified in the 10-2 statement under Subsection (a) by the date, names of parties to the 10-3 agreement, and file number of the original lien. 10-4 (c) If the lien claimant does not send the termination 10-5 statement required by this section before the 11th day after the 10-6 date on which the lien claimant received payment, the lien claimant 10-7 is liable to the lien debtor for actual damages suffered by the 10-8 lien debtor as a result of the failure. If the lien claimant acts 10-9 in bad faith in failing to send the statement, the lien claimant is 10-10 liable for an additional penalty of $100. 10-11 (d) The filing officer in the secretary of state's office 10-12 shall mark each termination statement with the date and time of 10-13 filing and shall index the statement under the name of the lien 10-14 debtor and under the file number of the original lien. If the 10-15 filing officer has a microfilm or other photographic record of the 10-16 lien and related filings, the filing officer may destroy the filed 10-17 notice of claim of lien at any time after receiving the termination 10-18 statement. If the filing officer does not have a photographic 10-19 record, the filing officer may destroy the filed notice of claim of 10-20 lien at any time after the first anniversary of the date on which 10-21 the filing officer received the termination statement. 10-22 Sec. 128.039. RIGHT OF ASSIGNMENT OR TRANSFER; FILING OF 10-23 STATEMENT. (a) A lien created under this chapter may be assigned 10-24 by the holder of the lien, with full rights of enforcement. 10-25 (b) The lienholder shall file a statement of assignment with 10-26 the secretary of state as provided by Section 9.405, Business & 10-27 Commerce Code. 11-1 (Sections 128.040-128.045 reserved for expansion 11-2 SUBCHAPTER F. MISCELLANEOUS 11-3 Sec. 128.046. RULES. The secretary of state may adopt rules 11-4 necessary to carry out the secretary's duties under this chapter, 11-5 including prescribing necessary forms. 11-6 Sec. 128.047. MAXIMUM NUMBER OF LIENS. Not more than two 11-7 liens may be enforced under this chapter against the same proceeds 11-8 of a lien debtor even if the liens are filed by different lien 11-9 claimants. 11-10 Sec. 128.048. APPLICABILITY OF OTHER LAW. Chapter 9, 11-11 Business & Commerce Code, applies to a lien created under this 11-12 chapter to the extent Chapter 9 is consistent with this chapter. 11-13 SECTION 2. Chapter 128, Agriculture Code, as added by this 11-14 Act, applies to an agricultural chemical or agricultural seed and 11-15 labor and equipment supplied on or after the effective date of this 11-16 Act. 11-17 SECTION 3. This Act takes effect September 1, 1995. 11-18 SECTION 4. The importance of this legislation and the 11-19 crowded condition of the calendars in both houses create an 11-20 emergency and an imperative public necessity that the 11-21 constitutional rule requiring bills to be read on three several 11-22 days in each house be suspended, and this rule is hereby suspended.