HOUSE BILL REPORT

ESB 5085

BYSenators Talmadge, Newhouse, Hansen, Sellar, Vognild and Barr

Revising provisions relating to warehousemen's liens.

House Committe on Judiciary

Majority Report:  Do pass.  (13)

      Signed by Representatives Armstrong, Chair; Crane, Vice Chair; Brough, Hargrove, Heavey, P. King, Locke, Moyer, Padden, Schmidt, Scott, Wang and Wineberry.

Minority Report:  Do not pass.  (2)

      Signed by Representatives Niemi and Patrick.

House Staff:Charlie Gavigan (786-7340)

AS PASSED HOUSE APRIL 8, 1987

BACKGROUND:

A lien is a claim or charge on property for the payment of a particular debt, obligation or duty.  Such a lien is possessory where the creditor is lawfully in possession of the specific property until there is satisfaction of the debt.  Under present law, a possessory lien is prior to a perfected security interest only if the lien is statutory and the statute expressly provides for priority.  The warehouseman's lien is statutory, but the statute is arguably silent with respect to priority.  Therefore, it is likely that the warehouseman's lien is inferior to perfected security interests.

The uniform version of the Uniform Commercial Code (UCC) used by most states grants possessory liens (such as a warehouseman's lien) priority over perfected security interests.  The UCC language encourages a business furnishing services or materials to preserve and enhance the property of others because the business recognizes that it is permitted to retain possession of the goods to secure payment for services and materials provided.

SUMMARY:

A warehouseman's lien is given priority over all other liens and perfected or unperfected security interests.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Mike Ryherd, Cold Storage Association; Brian McManus, Cold Storage Association.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    The bill brings Washington in conformity with the UCC and standard business practices.  It benefits both the warehouseman, the customer, and secured parties because the warehouseman has a greater interest in taking good care of the property even where payment is a problem.

House Committee - Testimony Against:      None Presented.