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. The term does not include a person who, as to the
1-21 transaction in question, is licensed and bonded under Chapter 14,
1-22 Agriculture Code, or the United States Warehouse Act (7 U.S.C.
1-23 Section 241 et seq.).
1-24 Sec. 70.402. LIEN CREATED. (a) An agricultural producer
1-25 who, under a written contract with a contract purchaser, is to
2-1 receive consideration for selling an agricultural crop grown,
2-2 produced, or harvested by the producer has a lien for the amount
2-3 owed under the contract, or for the reasonable value of the crop on
2-4 the date of transfer or delivery if there is no provision
2-5 concerning the amount owed in the agreement.
2-6 (b) A lien created under this subchapter is on every
2-7 agricultural crop, either in raw or processed form, that has been
2-8 transferred or delivered by the agricultural producer and is in the
2-9 possession of the contract purchaser. If the agricultural crop is
2-10 commingled after the crop has been transferred or delivered, a lien
2-11 created under this subchapter applies only to that portion of the
2-12 contract purchaser's inventory in an amount that is equal to the
2-13 amount of the crop transferred or delivered by the agricultural
2-14 producer.
2-15 (c) For purposes of this subchapter, an agricultural crop or
2-16 processed form of an agricultural crop deposited by a contract
2-17 purchaser with a warehouse, whether or not a warehouse receipt is
2-18 given as security, is considered to be in the possession of the
2-19 contract purchaser and subject to the lien.
2-20 Sec. 70.403. WHEN LIEN ATTACHES. A lien created under this
2-21 subchapter attaches to the agricultural crop on the date on which
2-22 physical possession of the crop is delivered or transferred by the
2-23 agricultural producer to the contract purchaser or the purchaser's
2-24 agent, or if there is to be a series of deliveries to the contract
2-25 purchaser or purchaser's agent, on the date of the last delivery of
2-26 the agricultural crop to the contract purchaser or purchaser's
3-1 agent.
3-2 Sec. 70.404. APPLICABILITY OF OTHER LAW. Chapter 9,
3-3 Business & Commerce Code, including applicable filing and
3-4 perfection requirements, applies to a lien created under this
3-5 subchapter.
3-6 Sec. 70.405. DURATION OF LIEN. A lien created under this
3-7 subchapter expires on the first anniversary of the date of
3-8 attachment.
3-9 Sec. 70.406. EFFECT OF LIEN; RECOVERY. (a) A buyer in
3-10 ordinary course of business of an agricultural crop, including a
3-11 person who buys any portion of an agricultural crop from a contract
3-12 purchaser, whether or not the agricultural crop has been
3-13 commingled, takes the agricultural crop free of a lien created
3-14 under this subchapter, and the lien created by this subchapter does
3-15 not pass to any subsequent claimant of the agricultural crop.
3-16 (b) An unequal pro rata recovery between agricultural
3-17 producers is not prohibited under this subchapter if the inequality
3-18 results from a lien on accounts receivable.
3-19 Sec. 70.407. DISCHARGE OF LIEN. (a) A lien created under
3-20 this subchapter is discharged when:
3-21 (1) the lienholder receives full payment for the
3-22 agricultural crop; or
3-23 (2) payment is tendered by the contract purchaser and
3-24 the lienholder, without coercion, defers payment.
3-25 (b) If payment for the agricultural crop is received in the
3-26 form of a negotiable instrument, full payment is received when the
4-1 negotiable instrument clears all financial institutions.
4-2 Sec. 70.408. JOINDER OF ACTIONS. Persons claiming a lien
4-3 against the same agricultural crop under this subchapter may join
4-4 in the same action, and if separate actions are commenced, the
4-5 court may consolidate them.
4-6 Sec. 70.409. RECOVERY OF COSTS. An agricultural producer
4-7 who prevails in an action brought to enforce a lien created under
4-8 this subchapter is entitled to recover:
4-9 (1) reasonable and necessary attorney's fees and court
4-10 costs; and
4-11 (2) interest on funds subject to the lien at the
4-12 judgment interest rate as provided by Chapter 304, Finance Code.
4-13 Sec. 70.410. WAIVER OF CERTAIN RIGHTS PROHIBITED. An
4-14 agricultural producer's agreement with a contract purchaser to
4-15 waive the producer's right to seek a remedy provided by this
4-16 subchapter is void.
4-17 SECTION 2. This Act takes effect September 1, 2001, and
4-18 applies only to a contract to purchase agricultural crops entered
4-19 into on or after the effective date of this Act. A contract to
4-20 purchase agricultural crops entered into before the effective date
4-21 of this Act is governed by the law in effect immediately before the
4-22 effective date of this Act, and that law is continued in effect for
4-23 that purpose.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 779 passed the Senate on
May 3, 2001, by the following vote: Yeas 30, Nays 0, one present,
not voting; and that the Senate concurred in House amendment on
May 24, 2001, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 779 passed the House, with
amendment, on May 18, 2001, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor