BILL NUMBER: SB 592 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 23, 2012
PASSED THE ASSEMBLY AUGUST 16, 2012
AMENDED IN ASSEMBLY AUGUST 6, 2012
AMENDED IN ASSEMBLY JULY 3, 2012
AMENDED IN ASSEMBLY MAY 15, 2012
AMENDED IN SENATE JANUARY 23, 2012
AMENDED IN SENATE MAY 17, 2011
AMENDED IN SENATE MAY 2, 2011
INTRODUCED BY Senator Harman
FEBRUARY 17, 2011
An act to amend Sections 57401, 57402, 57405, and 57413 of, to
repeal Section 57412 of, and to repeal and add Section 57406 of, the
Food and Agricultural Code, relating to dairy cattle supply liens.
LEGISLATIVE COUNSEL'S DIGEST
SB 592, Harman. Dairy cattle supply liens.
(1) Existing law provides that a person who provides feed or
materials to aid the raising or maintaining of dairy cattle has a
lien upon the proceeds of the milk or milk products produced from the
dairy cattle, for the reasonable or agreed charges for the feed or
materials provided and for the costs of enforcing the lien, not to
exceed an amount equal to charges for feed or material provided
within a 45-day period.
This bill would, in addition, provide that a person who provides
feed or materials to aid the offspring of the dairy cattle has a lien
on the proceeds of milk or milk products produced from the dairy
cattle, and would increase the limit of a lien to an amount equal to
charges for feed or material provided within a 60-day period. The
bill would establish a limit of one lien per dairy producer per
affiliated business entity.
(2) Existing law provides that the lien shall be perfected and
shall be effective upon the filing of a notice of claim of lien with
the Secretary of State, as specified. Existing law requires the
notice of claim of lien, among other things, to state the name and
address of the lien debtor. The notice of claim of lien is required
to be signed by the lien claimant or by a person authorized to sign
documents of a similar kind on behalf of the claimant.
This bill would instead require the lien to be perfected by filing
a notice of claim of lien with the Secretary of State and service of
the notice of claim of lien, as specified. The bill would require
the notice of claim of lien to state the last known name and address
of the lien debtor. The bill would also delete the language providing
that the notice of claim of lien shall be signed by the lien
claimant or by a person authorized to sign documents of a similar
kind on behalf of the claimant.
(3) Existing law requires the lien claimant to provide written
notice of the claim of the lien to the lien debtor within 10 days of
the date of filing with the Secretary of State.
This bill would require the notice to be provided to the lien
debtor, to any person from which the lien claimant has received,
before the lien claimant files the notice, notification of a claim of
interest in the proceeds, and to any other secured party or
lienholder that held a security interest in or other lien on the
proceeds, as specified, 10 days before the filing of the notice. The
bill would require notice to be served, as specified, depending on
whether the lien debtor is an entity, individual, or general
partnership. The bill would also require a lien claimant to send to a
lien debtor a termination statement for the notice of claim of lien
or to file the termination statement in the office of the Secretary
of State within 20 days after receiving a demand from a lien debtor
if the lien has terminated, as specified.
(4) Existing law requires these liens to have a certain priority,
as specified.
This bill would delete the requirement that the lien have priority
in accordance with the time the notice of claim of lien is filed.
The bill would instead make applicable to dairy cattle supply liens
specified statutes governing secured transactions generally,
including a provision requiring that conflicting perfected security
interests and agricultural liens rank according to priority in time
of filing or perfection, as specified.
(5) Existing law requires a lien claimant to provide written
notice to secured creditors, as defined, at least 30 days prior to
enforcing a claim of lien.
This bill would delete those provisions.
(6) Existing law requires the lien claimant to foreclose on a lien
only in an action to recover the reasonable or agreed charges for
feed and materials delivered and enforce a final judgment as
provided.
This bill would instead authorize the lien claimant to foreclose
on a lien, after payment default by the lien debtor, in an action to
recover the reasonable or agreed charges for feed and materials
delivered and authorize the lien claimant to enforce a final
judgment, as provided, and apply for a right to attach order and a
writ of attachment, or temporary protective order, through the court
in which the action is brought. The bill would authorize a lien
claimant to take certain actions after payment default by the lien
debtor, including notifying any person obligated on any proceeds
subject to the lien to make payment to the lien claimant. The bill
would define a "person obligated on any proceeds" for purposes of
provisions governing dairy cattle supply liens. The bill would
authorize a lien debtor to secure a release of a lien by paying the
amount secured by the lien or by depositing with the Secretary of
Food and Agriculture a bond, as specified. The bill would require a
lien claimant that receives proceeds pursuant to a notice that is
provided to a person who is obligated on the proceeds to account to,
and pay the lien debtor for, any surplus, and would require the lien
debtor to be liable for any deficiency.
(7) The bill would provide that the provisions described above
shall apply prospectively to all contracts entered into on or after
January 1, 2013.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 57401 of the Food and Agricultural Code is
amended to read:
57401. (a) The definitions in this section govern the
construction of this chapter.
(b) "Feed or materials" means commercial feed, grain, forage, feed
ingredients, mineral feed, drugs, animal health products,
customer-formula feed, any mixture or preparation for feeding
animals, any of the constituent nutrients of an animal ration, or any
other food which is used for the feeding of dairy cattle.
(c) "Person obligated on any proceeds" means a handler, as defined
in Section 61826, who is in possession of proceeds.
(d) "Proceeds" means funds derived from the sale of milk or milk
products which are payable to the lien debtor by the possessor of the
funds, except for any of the following:
(1) Deductions for taxes, fees, and assessments.
(2) Funds due or owing milk processing cooperative associations
organized and operating pursuant to Chapter 1 (commencing with
Section 54001).
(3) Funds retained by the cooperative association.
(4) Deductions made pursuant to a court order.
(5) Deductions due or owing the buyer of the milk for hauling
services provided by the buyer pursuant to subdivision (e) of Section
62096 and deductions due or owing the buyer for the testing of milk
for purposes of payment pursuant to Section 34231.
(e) "Raising or maintaining of dairy cattle" means feeding,
pasturing, caring for, and managing dairy cattle kept or raised for
use or profit.
(f) "Reasonable or agreed charges" means the agreed price, if any,
for the feed and materials sold to the lien debtor, at the lien
debtor's request. If there is no agreed price or a method for
determining price which is agreed upon, "reasonable or agreed charges"
means the reasonable value of the feed or materials as of the date
of delivery.
SEC. 2. Section 57402 of the Food and Agricultural Code is amended
to read:
57402. A person who provides feed or materials to aid the raising
or maintaining of dairy cattle or offspring therefrom has a lien
upon the proceeds of the milk or milk products produced from the
dairy cattle, for the reasonable or agreed charges for the feed or
materials provided and for the costs of enforcing the lien. However,
the amount of charges secured by the lien cannot exceed an amount
equal to the reasonable or agreed charges for feed or material
provided within a 60-day period, and only two providers of feed or
materials shall have an enforceable lien at any time according to the
priority set forth in Section 57406. Only one lien under this
chapter per dairy producer is available per affiliated business
supplier.
SEC. 3. Section 57405 of the Food and Agricultural Code is amended
to read:
57405. The lien created by this chapter shall be perfected by the
filing of a notice of claim of lien with the Secretary of State and
service of the notice of claim of lien pursuant to subdivision (e).
(a) The person who provides feed or materials may, at any time,
file in the manner and at the place set forth in this section, the
notice of claim of lien.
(b) The notice of claim of lien shall, at a minimum, set forth all
of the following information:
(1) The name and address of the lien claimant.
(2) The last known name and address of the lien debtor.
(3) The location of the dairy to which the feed and materials were
provided.
(4) That the lien claimant has a dairy cattle supply lien pursuant
to Section 57402.
(c) The notice of claim of lien shall be filed on a form which is
the standard form of original financing statement prescribed by the
Secretary of State pursuant to Section 9521 of the Commercial Code.
The standard form shall be completed with the following changes:
(1) The lien claimant may be identified either as lien claimant or
as secured party.
(2) In the space for the description of the collateral there shall
instead be entered the statement substantially as set forth in
paragraphs (3) and (4) of subdivision (b).
(d) The notice of claim of lien shall be filed, indexed, and
marked in the office of the Secretary of State in the same manner as
a financing statement is filed, indexed, and marked pursuant to
Section 9519 of the Commercial Code.
(e) (1) The lien claimant shall provide written notice of the
claim of lien to the following persons within 10 days of the date of
the filing with the office of the Secretary of State:
(A) The lien debtor.
(B) Any person from which the lien claimant has received, before
the lien claimant files the notice, notification of a claim of an
interest in the proceeds.
(C) Any other secured party or lienholder that, 10 days before the
filing of the notice, held a security interest in or other lien on
the proceeds perfected by the filing of a financing statement that
satisfied all of the following conditions:
(i) The statement identified the proceeds by referring to all
assets, all personal property, goods, farm products, milk, or milk
products, or otherwise identified the proceeds by any other
description sufficient pursuant to Section 9108 of the Commercial
Code.
(ii) The statement was indexed under the debtor's name as of that
date.
(iii) The statement was filed against the debtor covering the
proceeds as of that date and was filed in the office or offices in
which a financing statement may be filed pursuant to Section 9501 of
the Commercial Code.
(D) Any other secured party that, 10 days before the filing of the
notice, held a security interest in the proceeds perfected by
compliance with a statute, regulation, or treaty described in
subdivision (a) of Section 9311 of the Commercial Code.
(2) If the lien debtor is an entity, notice shall be given to the
lien debtor's registered agent for service of process. If the lien
debtor is an individual or general partnership, the notice shall be
given at any address at which the individual conducts business.
(3) Any notice to be given to a person pursuant to subparagraph
(B) of paragraph (1) shall be given to that person at the address set
forth in the notification of claim of interest given by that person
or, if no address is set forth, to the person's registered agent for
service of process if the person is an entity or at any address at
which the person does business if the person is an individual or
general partnership.
(4) Notice given to a secured party pursuant to subparagraph (C)
of paragraph (1) shall be given to the secured party at the address
set forth in the financing statement on file for the secured party.
(5) Notice to be given to a secured party pursuant to subparagraph
(D) of paragraph (1) shall be given to the secured party at the
address set forth in the document creating the perfection and
compliance or, if no address is set forth, to the secured party's
registered agent for service of process if the secured party is an
entity or at an address at which the secured party does business if
the secured party is an individual or general partnership.
(f) For the purpose of the Secretary of State's index pursuant to
Sections 9515, 9516, and 9522 of the Commercial Code and for the
purpose of the issuance of a certificate pursuant to Section 9519 or
9528 of the Commercial Code, the Secretary of State shall identify a
notice pursuant to this section as a financing statement.
(g) Within 20 days after a lien claimant receives a demand from a
lien debtor, the lien claimant shall send to the lien debtor a
termination statement for the notice of claim of lien or file the
termination statement in the office of the Secretary of State, if the
lien perfected by the notice of claim of lien has terminated
pursuant to the provisions of Section 57403. Upon the filing of a
termination statement with the office of the Secretary of State, the
notice of claim of lien to which the termination statement relates
ceases to be effective.
SEC. 4. Section 57406 of the Food and Agricultural Code is
repealed.
SEC. 5. Section 57406 is added to the Food and Agricultural Code,
to read:
57406. The priority of conflicting interests, agricultural liens,
and the agricultural lien created under this chapter shall be
governed by subdivisions (a) to (f), inclusive, of Section 9322 of
the Commercial Code.
SEC. 6. Section 57412 of the Food and Agricultural Code is
repealed.
SEC. 7. Section 57413 of the Food and Agricultural Code is amended
to read:
57413. (a) After payment default by the lien debtor, the lien
claimant may foreclose on a lien created by this chapter in the
following manners:
(1) The lien claimant may foreclose in an action to recover the
reasonable or agreed charges for feed and materials delivered. In
such an action, the final judgment may be enforced pursuant to Title
9 (commencing with Section 680.010) of Part 2 of the Code of Civil
Procedure.
(2) Provided that the lien claimant provides concurrent notice to
the lien debtor and the parties set forth in subdivision (e) of
Section 57405, the lien claimant may notify any person obligated on
any proceeds subject to the lien created under this chapter to make
payment to, or otherwise render performance to or for the benefit of,
the lien claimant, provided that the lien claimant may not demand
that payment or performance be made at any time prior to 15 calendar
days following the date of notice.
(3) The lien claimant may enforce the obligations of any person
obligated on any proceeds subject to the lien created under this
chapter and exercise the rights of the lien debtor with respect to
the proceeds and any property that secures the right to the proceeds
subject to the lien created under this chapter.
(b) A lien claimant that receives proceeds pursuant to a notice
provided pursuant to paragraph (2) of subdivision (a) shall account
to, and pay the lien debtor for, any surplus, and the lien debtor
shall be liable for any deficiency.
(c) Nothing in this chapter shall prohibit a lien claimant from
applying pursuant to Title 6.5 (commencing with Section 481.010) of
Part 2 of the Code of Civil Procedure for a right to attach order and
a writ of attachment, or temporary protective order, by filing an
application for the order, writ, or temporary protective order with
the court in which the action is brought.
(d) Notwithstanding the receipt of a notice pursuant to paragraph
(2) of subdivision (a), a person obligated on any proceeds subject to
a lien created under this chapter shall have no liability to a lien
claimant for failure to comply with that notice to the extent that
the person obligated on the proceeds pays the proceeds subject to the
notice as follows:
(1) To a person holding a lien or security interest that is prior
to the lien of the lien claimant issuing the notice.
(2) In satisfaction of a contractual assignment or valid notice
provided pursuant to Section 9607 of the Commercial Code has been
received from the person obligated on the proceeds prior to the
receipt of the notice pursuant to paragraph (2) of subdivision (a).
(e) A person obligated on any proceeds subject to the lien created
under this chapter and who makes payment pursuant to the notice
required by paragraph (2) of subdivision (a) shall not be deemed, to
the extent of that payment, to be in violation of the applicable
provisions of law relating to failure to pay the amounts to the lien
debtor and shall not be deemed to have engaged in an unlawful trade
practice.
(f) A lien debtor may secure a release of a lien created under
this chapter by doing one of the following:
(1) Paying the amount secured by the lien.
(2) Depositing with the Secretary of Food and Agriculture a surety
bond that is executed by the lien debtor as principal and by a
surety company that is qualified and authorized to do business in
this state as a surety in an amount that equals the current amount
secured by the lien. If the lien debtor fails to pay the claims, up
to the amount of the bond, of the lien claimant within 35 days after
entry of final judgment in favor of the lien claimant, the surety
shall pay all lawful claims that are covered by the amount of the
lien, up to the amount of the bond, if an action is filed on the
bond.
SEC. 8. The provisions of this act shall apply prospectively to
all contracts entered into on or after January 1, 2013.