By:  Duncan                                            S.B. No. 779
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the creation of an agricultural lien.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Chapter 70, Property Code, is amended by adding
 1-5     Subchapter E to read as follows:
 1-6                      SUBCHAPTER E.  AGRICULTURAL LIENS
 1-7           Sec. 70.401.  DEFINITIONS.  In this subchapter:
 1-8                 (1)  "Agricultural crop" means a plant product that is
 1-9     grown, produced, or harvested as a result of an agricultural
1-10     producer's farm operation.
1-11                 (2)  "Agricultural producer" means a person who is
1-12     engaged in the business of growing, producing, or harvesting an
1-13     agricultural crop.
1-14                 (3)  "Buyer in ordinary course of business" has the
1-15     meaning assigned by Section 1.201, Business & Commerce Code.
1-16                 (4)  "Contract purchaser" means a person who, before
1-17     the planting of an agricultural crop, has agreed under a written
1-18     contract to purchase the crop or otherwise pay the agricultural
1-19     producer for growing, producing, or harvesting the agricultural
1-20     crop.
1-21           Sec. 70.402.  LIEN CREATED.  (a)  An agricultural producer
1-22     who, under a written contract with a contract purchaser, is to
1-23     receive consideration for selling an agricultural crop grown,
1-24     produced, or harvested by the producer has a lien for the amount
1-25     owed under the contract, or for the reasonable value of the crop on
 2-1     the date of transfer or delivery if there is no provision
 2-2     concerning the amount owed in the agreement.
 2-3           (b)  A lien created under this subchapter is on every
 2-4     agricultural crop, either in raw or processed form, in the
 2-5     possession of the contract purchaser and on the entire inventory of
 2-6     the contract purchaser with which the agricultural crop may have
 2-7     been commingled.
 2-8           (c)  For purposes of this subchapter, an agricultural crop or
 2-9     processed form of an agricultural crop deposited by a contract
2-10     purchaser with a warehouse, whether or not a warehouse receipt is
2-11     given as security, is considered to be in the possession of the
2-12     contract purchaser and subject to the lien.
2-13           Sec. 70.403.  WHEN LIEN ATTACHES.  A lien created under this
2-14     subchapter attaches to the agricultural crop on the date on which
2-15     physical possession of the crop is delivered or transferred by the
2-16     agricultural producer to the contract purchaser or the purchaser's
2-17     agent, or if there is to be a series of deliveries to the contract
2-18     purchaser or purchaser's agent, on the date of the last delivery of
2-19     the agricultural crop to the contract purchaser or purchaser's
2-20     agent.
2-21           Sec. 70.404.  APPLICABILITY OF OTHER LAW.  Chapter 9,
2-22     Business & Commerce Code, including applicable filing and
2-23     perfection requirements, applies to a lien created under this
2-24     subchapter to the extent Chapter 9 is consistent with this
2-25     subchapter.
2-26           Sec. 70.405.  DURATION OF LIEN.  A lien created under this
 3-1     subchapter expires on the first anniversary of the date of
 3-2     attachment.
 3-3           Sec. 70.406.  EFFECT OF LIEN; RECOVERY.  (a)  A buyer in
 3-4     ordinary course of business of an agricultural crop, including a
 3-5     person who buys any portion of an agricultural crop from a contract
 3-6     purchaser, whether or not the agricultural crop has been
 3-7     commingled, takes the agricultural crop free of a lien created
 3-8     under this subchapter, and the lien created by this subchapter does
 3-9     not pass to any subsequent claimant of the agricultural crop.
3-10           (b)  An unequal pro rata recovery between agricultural
3-11     producers is not prohibited under this subchapter if the inequality
3-12     results from a lien on accounts receivable.
3-13           Sec. 70.407.  DISCHARGE OF LIEN.  A lien created under this
3-14     subchapter is discharged when the lienholder receives full payment
3-15     for the agricultural crop.  If payment is received in the form of a
3-16     negotiable instrument, full payment is received when the negotiable
3-17     instrument clears all financial institutions.
3-18           Sec. 70.408.  JOINDER OF ACTIONS.  Persons claiming a lien
3-19     against the same agricultural crop under this subchapter may join
3-20     in the same action, and if separate actions are commenced, the
3-21     court may consolidate them.
3-22           Sec. 70.409.  RECOVERY OF COSTS.  An agricultural producer
3-23     who prevails in an action brought to enforce a lien created under
3-24     this subchapter is entitled to recover:
3-25                 (1)  reasonable and necessary attorney's fees and court
3-26     costs; and
 4-1                 (2)  interest on funds subject to the lien at the
 4-2     judgment interest rate as provided by Chapter 304, Finance Code.
 4-3           Sec. 70.410.  WAIVER OF CERTAIN RIGHTS PROHIBITED.  An
 4-4     agricultural producer's agreement with a contract purchaser to
 4-5     waive the producer's right to seek a remedy provided by this
 4-6     subchapter is void.
 4-7           SECTION 2.  This Act takes effect September 1, 2001, and
 4-8     applies only to a contract to purchase agricultural crops entered
 4-9     into on or after the effective date of this Act.  A contract to
4-10     purchase agricultural crops entered into before the effective date
4-11     of this Act is governed by the law in effect immediately before the
4-12     effective date of this Act, and that law is continued in effect for
4-13     that purpose.