INTRODUCED
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HOUSE COMMITTEE
SUBSTITUTE
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SECTION 1. Section 70.401,
Property Code, is amended by amending Subdivisions (1) and (4) and adding
Subdivisions (3-a), (5), (6), and (7) to read as follows:
(1)
"Agricultural crop" means a plant product that is grown,
produced, or harvested as a result of an agricultural producer's farm
operation and includes a processed product of an agricultural crop.
(3-a) "Company-owned
crop" means an agricultural crop:
(A) that is received for storage by a warehouse or delivered or transferred to a contract
purchaser located in this state;
(B) that is not an open
storage crop; and
(C) for which the
agricultural producer has been fully and
finally paid.
(4) "Contract
purchaser" means a person who has agreed under a contract to purchase
an agricultural crop or otherwise pay the agricultural producer for
growing, producing, or harvesting the agricultural crop. [The term does not include a person who, as
to the transaction in question, is licensed and bonded under Chapter 14,
Agriculture Code, or the United States Warehouse Act (7 U.S.C. Section 241
et seq.).]
(5) "Open storage
crop" means an agricultural crop that:
(A) an agricultural
producer delivers or transfers to:
(i) a warehouse for
storage; or
(ii) a contract purchaser
located in this state;
(B) is not covered by a negotiable or nonnegotiable warehouse
receipt; and
(C) is not owned by the
lessee, owner, or operator of the warehouse in which the crop is stored or
the contract purchaser to which the crop is delivered or transferred.
(6) "Warehouse"
means a facility that stores or handles any agricultural crop after the
crop is harvested, including a facility operated by a person who, as to the
transaction in question, is licensed and bonded under Chapter 14,
Agriculture Code, or the United States Warehouse Act (7 U.S.C. Section 241
et seq.).
(7) "Warehouse operator" means a person
engaged in the business of operating a warehouse.
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SECTION 1. Section 70.401,
Property Code, is amended by amending Subdivision (4) and adding
Subdivisions (5), (6), (7), and (8) to read as follows:
(4) "Company-owned
crop" means an agricultural crop:
(A) that is in the possession of a warehouse or
contract purchaser located in this state and
for which the agricultural producer has received full payment;
(B) that is not an open
storage crop; or
(C) for which the warehouse or the contract purchaser tenders
payment and the agricultural producer,
without coercion, defers payment.
(5) "Contract
purchaser" means a person who has agreed under a contract to purchase
an agricultural crop or otherwise pay the agricultural producer for
growing, producing, or harvesting the agricultural crop. The term includes [does not include]
a person who, as to the transaction in question, is licensed and bonded
under Chapter 14, Agriculture Code, or the United States Warehouse Act (7
U.S.C. Section 241 et seq.).
(6) "Open storage
crop" means an agricultural crop that:
(A) an agricultural
producer delivers or transfers to:
(i) a warehouse for
storage; or
(ii) a contract purchaser
located in this state;
(B) is not covered by a
warehouse receipt; and
(C) is not owned by the
lessee, owner, or operator of the warehouse in which the crop is stored or
the contract purchaser to which the crop is delivered or transferred.
(7) "Secured lender" means a person that:
(A) has loaned money to a warehouse or a contract purchaser;
and
(B) holds a perfected secured lien against a company-owned
crop.
(8) "Warehouse"
means a facility that stores or handles any agricultural crop after the
crop is harvested, including a facility operated by a person who, as to the
transaction in question, is licensed and bonded under Chapter 14,
Agriculture Code, or the United States Warehouse Act (7 U.S.C. Section 241
et seq.).
The term includes a person engaged in the business of
operating a warehouse.
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SECTION 2. Section 70.402,
Property Code, is amended by amending Subsections (b) and (c) and adding Subsection
(d) to read as follows:
(b) An agricultural
producer who delivers or transfers an agricultural crop grown, produced, or
harvested by the producer to a warehouse has a lien for the reasonable value of the crop on the
date of delivery or transfer:
(1) whether or not a negotiable or nonnegotiable
warehouse receipt is issued by the warehouse; and
(2) whether or not the crop is placed in open storage.
(c) A lien created
under this subchapter is on every agricultural crop, either in raw or
processed form, that has been transferred or delivered by the agricultural
producer and is in the possession of the warehouse or contract
purchaser, and if the warehouse or contract purchaser sells all or
part of the crop, on the proceeds of the sale. If an open storage [the
agricultural] crop is commingled with a company-owned crop by a
warehouse or contract purchaser after the crop has been transferred or
delivered, a lien created under this subchapter applies only to that
portion of the contract purchaser's
inventory in an amount that is equal to the amount of the crop
transferred or delivered by the agricultural producer.
(d) [(c)] For
purposes of this subchapter, an agricultural crop or processed form of an
agricultural crop deposited by a contract purchaser with a warehouse,
whether or not a warehouse receipt is given as security, is considered to
be in the possession of the contract purchaser and subject to the lien created
by this subchapter.
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SECTION 2. Section 70.402,
Property Code, is amended to read as follows:
Sec.
70.402. LIEN CREATED. (a) An agricultural producer who, under a contract
with a contract purchaser, is to receive consideration for selling an
agricultural crop grown, produced, or harvested by the producer has a lien against
that crop for the amount owed under the contract, or for the market
[reasonable] value of the crop on the date of transfer or delivery
if there is no agreement concerning the amount owed under the contract.
(b) An agricultural
producer who delivers or transfers an agricultural crop grown, produced, or
harvested by the producer to a warehouse has a lien against that agricultural crop for the market value of the agricultural crop:
(1) on the date of
delivery or transfer; or
(2) if there is to be a series of deliveries to the warehouse,
on the date of the first delivery of the agricultural crop to the warehouse.
(c) A lien created
under this subchapter is on every agricultural crop, either in raw or
processed form, that has been transferred or delivered by the agricultural
producer and is in the possession of the warehouse or the contract
purchaser, and if the warehouse or the contract purchaser sells all
or part of the crop, on the proceeds of the sale. If an open storage
[the agricultural] crop is commingled with a company-owned crop
by a warehouse or a contract purchaser after the crop has been
transferred or delivered, a lien created under this subchapter applies only
to that portion of the agricultural
crop in the possession of the warehouse or the contract purchaser [purchaser's
inventory] in an amount that is equal to the amount of the crop
transferred or delivered by the agricultural producer.
(d) [(c)] For
purposes of this subchapter, an agricultural crop or processed form of an
agricultural crop deposited by a contract purchaser with a warehouse,
whether or not a warehouse receipt is given as security, is considered to
be in the possession of the contract purchaser and subject to the lien created
by this subchapter.
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SECTION 3. Section 70.403,
Property Code, is amended.
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SECTION 3. Same as introduced
version.
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SECTION 4. Section 70.404,
Property Code, is amended to read as follows:
Sec. 70.404. APPLICABILITY
OF OTHER LAW; EFFECT ON OTHER LAW. (a) Except as provided
by Section 70.4045 of this code, Chapter 9, Business & Commerce
Code, including applicable filing and perfection requirements, applies to a
lien created under this subchapter.
(b) This subchapter does not diminish or abridge any protections afforded to an agricultural producer by:
(1) Chapter 14,
Agriculture Code;
(2) Chapter 7, Business
& Commerce Code; or
(3) the United States
Warehouse Act (7 U.S.C. Section 241 et seq.).
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SECTION 4. Section 70.404,
Property Code, is amended to read as follows:
Sec. 70.404. APPLICABILITY
OF OTHER LAW; EFFECT ON OTHER LAW. (a) Except as provided
by Section 70.4045 of this code, Chapter 9, Business & Commerce
Code, including applicable filing and perfection requirements, applies to a
lien created under this subchapter.
(b) Except as provided by Subsection (c), to the extent of a
conflict, this subchapter controls over any other law.
(c) This subchapter does
not abridge the protections afforded
by any applicable law, including:
(1) Chapter 14,
Agriculture Code;
(2) Chapter 7, Business
& Commerce Code;
(3) the United States
Warehouse Act (7 U.S.C. Section 241 et seq.); or
(4) common law, including the law of bailment.
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SECTION 5. Sections
70.4045(a) and (c), Property Code, are amended to read as follows:
(a) Notwithstanding Chapter
9, Business & Commerce Code, a lien created under this subchapter is
perfected at the time the lien attaches under Section 70.403 and continues
to be perfected if a financing statement covering the agricultural crop is
filed on or before the 90th day after the date:
(1) the physical possession
of the crop is delivered or transferred by the agricultural producer to the
warehouse or the contract purchaser or the purchaser's agent, if
there is only one delivery [under the contract]; or
(2) of the last delivery of
the crop to the warehouse or the contract purchaser or the
purchaser's agent, if there is a series of deliveries [under the
contract].
(c) Notwithstanding Chapter
9, Business & Commerce Code, a lien created and perfected under this
subchapter has priority over a conflicting security interest in or lien on
the agricultural crop or the proceeds from the sale of the crop created by
the warehouse operator or
contract purchaser in favor of a third party,
other
than a cotton ginner's lien created under Section 70.003(d) or a
marketing pool contract agreement with an agricultural producer,
regardless of the date the
security interest or lien created by the warehouse operator or contract purchaser
attached.
This subsection does not
affect a security interest or lien created and perfected to secure a loan
directly to the agricultural producer.
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SECTION 5. Section 70.4045,
Property Code, is amended to read as follows:
Sec. 70.4045. PERFECTION AND
PRIORITY OF AGRICULTURAL LIEN ON CROPS.
(a) Notwithstanding Chapter
9, Business & Commerce Code, a lien created under this subchapter is
perfected at the time the lien attaches under Section 70.403 and continues
to be perfected if a financing statement covering the agricultural crop is
filed on or before the 90th day after the date:
(1) the physical possession
of the crop is delivered or transferred by the agricultural producer to the
warehouse or the contract purchaser or the purchaser's agent, if
there is only one delivery [under the contract]; or
(2) of the last delivery of
the crop to the warehouse or the contract purchaser or the
purchaser's agent, if there is a series of deliveries [under the
contract].
(b)
If a financing statement covering the agricultural crop is not filed within
the time prescribed by Subsection (a)(1) or (2), as applicable, the lien is
considered unperfected [on the date the lien attached until the date the
financing statement is filed or the lien is perfected under Chapter 9,
Business & Commerce Code].
(c) Notwithstanding Chapter
9, Business & Commerce Code, and
except as provided by Subsection (d), a lien created and
perfected under this subchapter has priority over a conflicting security
interest in or lien on the agricultural crop or the proceeds from the sale
of the crop created by the warehouse or the contract purchaser in
favor of a third party,
[other
than a cotton ginner's lien created under Section 70.003(d),]
regardless of the date the
security interest or lien created by the warehouse or the contract
purchaser attached.
This subsection does not
affect:
(1) the validity or priority of a security interest
or lien:
(A) created and
perfected to secure a loan directly to the agricultural producer; or
(B) created and perfected under Chapter 9, Business &
Commerce Code, to secure a loan to a warehouse or a contract purchaser on a
company-owned crop in favor of a secured lender;
(2) the validity or priority of a cotton ginner's lien created
under Section 70.003(d); or
(3) the rights of a holder of a negotiable warehouse receipt.
(d) Subsection (c) does not apply to a contract purchaser who
purchases an agricultural crop from an agricultural producer under a marketing
contract created under:
(1) Section 52.016, Agriculture Code; or
(2) regulations adopted by the United States Department of
Agriculture under Title 7 of the United States Code.
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SECTION 6. Section
70.406(a), Property Code, is amended to read as follows:
(a) A buyer in ordinary
course of business of an agricultural crop, including a person who buys any
portion of an agricultural crop from a warehouse operator or contract purchaser, whether or not the
agricultural crop has been commingled, takes the agricultural crop free of
a lien created under this subchapter, and the lien created by this
subchapter does not pass to any subsequent claimant of the agricultural
crop.
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SECTION 6. Section
70.406(a), Property Code, is amended to read as follows:
(a) A buyer in ordinary
course of business of an agricultural crop, including a person who buys any
portion of an agricultural crop from a warehouse or a contract
purchaser, whether or not the agricultural crop has been commingled, takes
the agricultural crop free of a lien created under this subchapter, and the
lien created by this subchapter does not pass to any subsequent claimant of
the agricultural crop.
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SECTION 7. Section
70.407(a), Property Code, is amended to read as follows:
(a) A lien created under
this subchapter is discharged when:
(1) the lienholder receives
full payment for the agricultural crop; or
(2) payment is tendered by
the warehouse operator or
contract purchaser, as applicable, and the lienholder, without
coercion, defers payment.
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SECTION 7. Section
70.407(a), Property Code, is amended to read as follows:
(a) A lien created under
this subchapter is discharged when:
(1) the lienholder receives
full payment for the agricultural crop; or
(2) payment is tendered by
the warehouse or the contract purchaser, as applicable, and
the lienholder, without coercion, defers payment.
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SECTION 8. Section 70.410,
Property Code, is amended to read as follows:
Sec. 70.410. WAIVER OF
CERTAIN RIGHTS PROHIBITED. An agricultural producer's agreement with a warehouse
operator or contract
purchaser to waive the producer's right to seek a remedy provided by this
subchapter is void.
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SECTION 8. Section 70.410,
Property Code, is amended to read as follows:
Sec. 70.410. WAIVER OF
CERTAIN RIGHTS PROHIBITED. An agricultural producer's agreement with a warehouse
or a contract purchaser to waive the producer's right to seek a remedy
provided by this subchapter is void.
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SECTION 9. The changes in
law made by this Act apply only to an agricultural producer who delivers or
transfers an agricultural crop grown, produced, or harvested by the
producer to a warehouse on or after the effective date of this Act. An
agricultural producer who delivers or transfers an agricultural crop grown,
produced, or harvested by the producer to a warehouse before the effective
date of this Act is governed by the law as it existed immediately before
that date, and that law is continued in effect for that purpose.
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SECTION 9. The changes in
law made by this Act apply only to an agricultural producer who delivers or
transfers an agricultural crop grown, produced, or harvested by the
producer to a warehouse or a contract
purchaser on or after the effective date of this Act. An agricultural
producer who delivers or transfers an agricultural crop grown, produced, or
harvested by the producer to a warehouse or
a contract purchaser before the effective date of this Act is
governed by the law as it existed immediately before that date, and that
law is continued in effect for that purpose.
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SECTION 10. This Act takes
effect September 1, 2017.
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SECTION 10. Same as
introduced version.
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