BP BHEAD INT S [atlas:bill]

AN ACT Relating to a central filing system for farm products; amending RCW 62A.9-307; adding new sections to Title 62A RCW; creating a new section; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. DEFINITIONS. The definitions in this section apply throughout this act unless the context clearly requires otherwise.

(1) "Buyer" means a person who, in the ordinary course of business, buys farm products from a person engaged in farming operations who is in the business of selling farm products.

(2) "Central filing system" means a system for filing effective financing statements on a state-wide basis that is operated by the department of licensing and has been certified by the secretary of the United States department of agriculture.

(3) "Commission merchant" means any person engaged in the business of receiving any farm product for sale, on commission, or for or on behalf of another person.

(4) "Effective financing statement" means a document filed with the department of licensing to register and describe farm products subject to a security interest created by a debtor or seller of farm products that is an effective financing statement under the provisions of section 1324 of the food security act of 1985, (7 U.S.C. 1631). An effective financing statement does not create or perfect a security interest.

(5) "Farm product" means an agricultural commodity including but not limited to wheat, corn, soybeans, or a species of fish or livestock such as cattle, hogs, sheep, horses, or poultry used or produced in farming operations, or a product of such crop, fish, or livestock in its unmanufactured state, including but not limited to wool clip, milk, and eggs, that is in the possession of a person engaged in farming operations.

(6) "Knows" or "knowledge" means actual knowledge.

(7) "Security interest" means an interest in farm products that secures payment or performance of an obligation.

(8) "Selling agent" means any person, other than a commission merchant, who is engaged in the business of negotiating the sale and purchase of any farm product on behalf of a person engaged in farming operations.

NEW SECTION. Sec. 2. ESTABLISHMENT OF CENTRAL FILING SYSTEM FOR FARM PRODUCTS. The department of licensing shall establish, implement, and operate the central filing system for farm products. The department of licensing shall ensure that the central filing system for farm products described in sections 1 through 10 of this act complies with the requirements for a central filing system as defined by 7 U.S.C. 1631 as that statute read on December 24, 1986. The department of licensing shall prescribe the rules, fees, and forms to implement and operate the central filing system. The fees prescribed by the department of licensing shall not exceed the cost of administering the central filing system.

NEW SECTION. Sec. 3. PROTECTION OF BUYERS OF FARM PRODUCTS, COMMISSION MERCHANTS, AND SELLING AGENTS‑-EXCEPTION. Except as provided in section 4 of this act, a buyer who in the ordinary course of business buys farm products from a seller engaged in farming operations shall take free of a security interest created by the seller, and a commission merchant or selling agent who sells in the ordinary course of business farm products for others shall not be subject to a security interest created by the seller in such products, even though the security interest is perfected and the buyer or commission merchant or selling agent knows of the existence of such interest.

NEW SECTION. Sec. 4. WHEN BUYER OF FARM PRODUCT, COMMISSION MERCHANT, AND SELLING AGENT SUBJECT TO SECURITY INTEREST IN FARM PRODUCT CREATED BY SELLER. Under the central filing system for farm products, a buyer of farm products or commission merchant or selling agent who sells farm products for others shall be subject to a security interest in such farm products created by the seller if:

(1) The buyer or commission merchant or selling agent has failed to register with the department of licensing prior to the purchase of farm products and the secured party has filed an effective financing statement that covers the farm products being sold;

(2) The buyer or commission merchant or selling agent has received from the department of licensing a copy of the master list of farm products or written notice, under section 6 or 7 of this act, that names the seller and specifies the farm products being sold by such seller as being subject to an effective financing statement and the buyer or commission merchant or selling agent does not secure a waiver or release of the security interest specified in such effective financing statement from the secured party by performing any payment obligation or otherwise; or

(3) The buyer or commission merchant or selling agent participates in the department of licensing's computer access program that names the seller and specifies the farm products being sold by such seller as being subject to an effective financing statement and the buyer or commission merchant or selling agent does not secure a waiver or release of the security interest specified in such effective financing statement from the secured party by performing any payment obligation or otherwise.

NEW SECTION. Sec. 5. FORMAL REQUISITES OF EFFECTIVE FINANCING STATEMENT‑-AMENDMENT‑-DURATION OF FILING‑-LAPSE OF FILING‑-FEE. (1) An effective financing statement for farm products is sufficient to register a security interest in a farm product if it:

(a) Contains the name and address of the secured party;

(b) Contains the name and address of the person indebted to the secured party;

(c) Contains the social security number of the debtor or, in the case of a debtor doing business other than as an individual, the internal revenue service taxpayer identification number of such debtor;

(d) Describes the farm products subject to the security interest created by the debtor, including the amount of such products where applicable, and describes the real property concerned, including the name of the county in this state in which the property is located;

(e) Is signed by the secured party;

(f) Is signed by the debtor;

(g) Is an original or reproduced copy thereof; and

(h) Is accompanied by the required filing fee.

(2) An effective financing statement must be amended in writing within three months, similarly signed and filed, to reflect material changes.

(3) An effective financing statement for farm products remains effective for a period of five years from the date of filing, subject to extensions for additional periods of five years each by refiling or filing a continuation statement within six months before the expiration of the five-year period.

(4) An effective financing statement for farm products lapses on either the expiration of the effective period of the statement or the filing of a notice signed by secured party that the statement has lapsed, whichever occurs first. Unless otherwise provided in writing between the secured party and the debtor, a statement that the effective financing statement has lapsed shall be filed within thirty days after there is no outstanding secured obligation and no commitment to make advances, incur obligations, or otherwise give value under the security interest.

(5) The department of licensing shall, by rule, prescribe the filing fee for each effective financing statement for farm products or change thereto and continuation thereof, and the filing fee for the notice that the effective financing statement has lapsed. Each effective financing statement may reflect more than one type of farm product. The filing fee shall be per debtor name.

(6) An effective financing statement is sufficient if it complies with this section even though it contains minor errors that are not seriously misleading.

(7) If financing statements under the uniform commercial code may be filed electronically without the signature of the debtor, then an effective financing statement may be filed electronically, or it may be a paper document. An electronically filed effective financing statement need not be a paper document and need not be signed. If an original or reproduced paper document of an effective financing statement is filed, it must be signed by both the secured party and the debtor and must be filed by the secured party.

NEW SECTION. Sec. 6. OPERATION OF CENTRAL FILING SYSTEM‑-MASTER LIST OF FARM PRODUCTS‑-LIST OF BUYERS, COMMISSION MERCHANTS, AND SELLING AGENTS‑-DISTRIBUTION OF MASTER LIST. (1) Under the central filing system for farm products, the department of licensing shall record the date and time of filing of effective financing statements or changes thereto, and compile this information into a master list organized according to farm products. The department of licensing shall by rule determine the categories of farm products.

(2) Within each category of farm products, the department of licensing shall arrange the master list:

(a) In alphabetical order by last name of the debtor or in the case of a debtor doing business other than as an individual, by the first word in the name of such debtor;

(b) In numerical order according to social security number of the individual debtor or internal revenue service taxpayer identification number of debtors doing business other than as individuals;

(d) By crop year.

(3) The master list shall contain all the information on all the effective financing statements filed in the system that have not lapsed. The master list shall be arranged to provide delivery to any registrant of any information relating to any product, produced in any county for any crop year covered by the system, and shall be available in a form that is readable by humans without special equipment.

(4) The department of licensing shall maintain a list of all buyers of farm products, commission merchants, and selling agents who register with the department of licensing on a form indicating:

(a) The name and address of each buyer, commission merchant, and selling agent;

(b) The interest of each buyer, commission merchant, or selling agent in receiving the master list on farm products; and

(5) The department of licensing shall distribute monthly to each buyer, commission merchant, and selling agent registered under this section a printed or micrographic copy of those portions of the master list that the buyer, commission merchant, or selling agent has registered an interest in receiving. The department of licensing shall by rule prescribe the yearly subscription fee for each type of the monthly master list.

NEW SECTION. Sec. 7. ORAL CONFIRMATION OF THE EXISTENCE OF ANY EFFECTIVE FINANCING STATEMENT. (1) On request, the department of licensing shall furnish to persons not registered under section 6 of this act oral confirmation within twenty-four hours of the existence of any effective financing statement followed by written confirmation to any buyer of farm products buying from a debtor or commission merchant or selling agent selling for a seller covered by such statement.

(2) The request for oral confirmation shall be in writing and shall be presented to the department of licensing during normal business hours.

(3) Information on an effective financing statement may be furnished by telephone to the requestor of an oral confirmation.

(4) Oral confirmation shall be followed by written confirmation from the department of licensing within forty-eight hours after the oral confirmation.

(5) The department of licensing shall by rule prescribe the service fees for processing oral and written confirmation requests on effective financing statements.

NEW SECTION. Sec. 8. COURTESY NOTICE. Nothing in sections 1 through 10 of this act shall prevent a secured party from providing a courtesy notice to any person regarding the secured party's security interests in farm products. The rights or obligations of the secured party or any other person shall not be affected by the failure of a secured party to give a courtesy notice or by the accuracy or completeness of the information given in such a notice.

NEW SECTION. Sec. 9. PLACE OF FILING EFFECTIVE FINANCING STATEMENT. The proper place to file an effective financing statement on farm products is in the office of the department of licensing.

NEW SECTION. Sec. 10. PLACE OF REGISTRATION AS BUYER OF FARM PRODUCT, COMMISSION MERCHANT, OR SELLING AGENT‑-DURATION OF REGISTRATION--FEE. The proper place to register under section 6 of this act as a buyer of farm products or a commission merchant or selling agent of farm products is in the office of the department of licensing. The registration is effective for one year following the date of registration. Registration may be amended by filing a new registration. The department of licensing shall, by rule, prescribe the registration fee.

NEW SECTION. Sec. 11. LIABILITY OF DEPARTMENT OF LICENSING FOR ADMINISTRATION. The department of licensing and the department's officers and employees shall not be liable to debtors, secured parties, or any other person in administering this chapter.

Sec. 12. RCW 62A.9-307 and 1987 c 393 s 15 are each amended to read as follows:

(1) Except as provided in sections 3 and 4 of this act with respect to certain buyers of farm products, a buyer in ordinary course of business (subsection (9) of RCW 62A.1-201) ((~~other than a person buying farm products from a person engaged in farming operations~~)) takes free of a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence.

(2) In the case of consumer goods, a buyer takes free of a security interest even though perfected if he buys without knowledge of the security interest, for value and for his own personal, family or household purposes unless prior to the purchase the secured party has filed a financing statement covering such goods.

(3) A buyer other than a buyer in ordinary course of business (subsection (1) of this section) takes free of a security interest to the extent that it secures future advances made after the secured party acquires knowledge of the purchase, unless made pursuant to a commitment entered into without knowledge of the purchase.

NEW SECTION. Sec. 13. Captions used in this act are not any part of the law.

NEW SECTION. Sec. 14. Sections 1 through 11 of this act are each added to Title 62A RCW.

NEW SECTION. Sec. 15. This act takes effect July 1, 2001.