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Regular Session, 2010
HOUSE BILL NO. 484
BY REPRESENTATIVE EDWARDS
(On Recommendation of the Louisiana State Law Institute)
SECURITIES/NEG INSTRUMTS: Provides for the continuous revision of security devices
AN ACT1
To amend and reenact R.S. 3:3652(9) and (15), 3653, 3656(A)(1) and (D), the heading of2
Part XIV of Code Title XXI of Title 9 of the Louisiana Revised Statutes of 1950 and3
R.S. 9:4770, R.S. 10:9-102(d), 9-308(b), 9-309(13), 9-315(a)(introductory4
paragraph) and (1), 9-322(f)(introductory paragraph) and (5), and 9-5
501(a)(introductory paragraph) and (1), to enact R.S. 10:9-322(g) and 9-501(a)(4),6
and to repeal R.S. 9:4521 and 4524 and R.S. 10:9-322(f)(6) and 9-501(a)(2), relative7
to security devices; to provide definitions; to provide for agricultural liens; to8
provide for perfection of liens; to provide for conflicts; to provide for rankings; and9
to provide for related matters.10
Be it enacted by the Legislature of Louisiana:11
Section 1. R.S. 3:3652(9) and (15), 3653, 3656(A)(1) and (D) are hereby amended12
and reenacted to read as follows: 13
§3652. Definitions14
As used in this Chapter, the following words shall have the following15
meanings ascribed to them:16
* * *17
(9) "Filing officer" means the clerk of court of any parish , or, in the case of18
Orleans Parish, the recorder of mortgages.19
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(15) "Security device" is means a written security agreement that establishes1
a creditor's security interest in farm products, as defined in Paragraph (8) of this2
Section to include standing timber, or any privilege described in R.S. 9:4521, or any3
agricultural lien as defined in R.S. 10:9-102(a)(5) whether or not evidenced by a4
written instrument.5
* * *6
§3653. Applicability 7
A. The provisions of this Chapter shall apply to any security device, as that8
term is defined in this Chapter, for which an effective financing statement is filed9
with any filing officer on or after January 1, 1991.10
B. The provisions of this Chapter shall apply to security devices affecting11
farm products, including timber.12
* * *13
§3656. Filing, amendment, assignment, partial release, termination, and cancellation14
of security devices and effective financing statements; effectiveness against15
third parties16
A.(1) The proper place to file effective financing statements is with the clerk17
of court of any parish, or, in the case of Orleans Parish, with the recorder of18
mortgages.19
* * *20
D. The central registry shall reflect the time and date each effective financing21
statement and other statement is filed. Only a security device with respect to which22
an effective financing statements and other statements, which are statement has been23
filed with the filing officer for inclusion in the central registry, as provided in this24
Chapter, shall be effective against third parties buyers in the ordinary course of25
business. Except as otherwise provided in this Section, each effective financing26
statement and other statement security device shall become effective against third27
parties buyers in the ordinary course of business on the date and at the time it an28 HLS 10RS-953 ENGROSSED
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effective financing statement with respect to the security device is filed with the1
filing officer.2
* * *3
Section 2. The heading of Part XIV of Code Title XXI of Title 9 of the Louisiana4
Revised Statues of 1950 and R.S. 9:4770 is hereby amended and reenacted to read as5
follows: 6
PART XIV. RELATION TO CHAPTER 9 OF THE7
LOUISIANA COMMERCIAL LAWS UNIFORM COMMERCIAL CODE8
§4770. Conflicts in favor of with Chapter 9 of the Louisiana Commercial Laws9
Uniform Commercial Code10
A. This Code Title (Code Title XXI of Code Book III, R.S. 9:4501 et seq.),11
Part 8 of Chapter 7 of the Louisiana Mineral Code (R.S. 31:146 through 148), and12
Title XXI of Book III of the Louisiana Civil Code (Arts. 3182 through 3277) shall13
be interpreted and applied in a manner consistent with Chapter 9 of the Louisiana14
Commercial Laws Uniform Commercial Code. Other than as provided in R.S.15
9:4521 or as provided in Subsection B of this Section, any Any conflict between the16
priority ranking of privileges under this Title, Part 8 of Chapter 7 of the Louisiana17
Mineral Code, and under or Title XXI of Book III of the Louisiana Civil Code with18
the priority ranking rules of Chapter 9 of the Louisiana Commercial Laws Uniform19
Commercial Code shall be resolved in favor of the priority ranking by application20
of the priority rules of Chapter 9 with regard to secured transactions subject thereto21
of the Uniform Commercial Code.22
B. Whether a sale or lease was entered into before or after January 1, 1990,23
the The rights of a vendor under Civil Code Articles 2561, 3217(7), and 3227 or of24
a lessor under Civil Code Article 2707 or Mineral Code Article 146 are subordinate25
to the rights of a secured party with a security interest under Chapter 9 of the26
Louisiana Commercial Laws Uniform Commercial Code except as otherwise27
provided by R.S. 10:9-322(g).28 HLS 10RS-953 ENGROSSED
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Section 3. R.S. 10:9-102(d), 9-308(b), 9-309(13), 9-315(a)(introductory paragraph)1
and (1), 9-322(f)(introductory paragraph) and (5), and 9-501(a)(introductory paragraph) and2
(1) are hereby amended and reenacted and R.S. 10:9-322(g) and 9-501(a)(4) are hereby3
enacted to read as follows: 4
§9-102. Definitions and index of definitions5
* * *6
(d) Additional definitions. In this Chapter:7
(1) "Agricultural laborer" means an individual holding an agricultural lien8
securing payment of wages due him for labor he performed as a worker,9
thresherman, combineman, grain drier, or overseer.10
(2) "Bailee" means a person having possession of the personal property11
belonging to another. "Bailor" means the owner of the personal property.12
(2) (3) "Collateral mortgage note" means an instrument that is secured by a13
collateral mortgage on real property located in this State state and executed for the14
purpose of being issued, pledged, or otherwise used as security for another15
obligation.16
(3) (4) "Intangible" means incorporeal.17
(4) (5) "Lease" means a contract by which one person gives to another the18
right of enjoyment and use of goods for a term in return for a stipulated price. But19
a usufruct or a sale, including a sale on approval or a sale or return, or a sale on view20
or trial, or retention or creation of a security interest, is not a lease. Unless the21
context clearly indicates otherwise, the term includes a sublease.22
(5) (6) "Leasehold interest" means the interest of the lessee under a lease.23
(6) (7) "Lessee" means a person to whom a lease is granted. Unless the24
context clearly indicates otherwise, the term includes a sublessee.25
(7) (8) "Lessee in ordinary course of business" means a person that becomes26
a lessee of goods in good faith, without knowledge that the lease violates the rights27
of another person in the goods, and in the ordinary course from a person, other than28
a pawnbroker, in the business of selling or leasing goods of that kind. A lessee in the29 HLS 10RS-953 ENGROSSED
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ordinary course of business may lease for cash, or by exchange of other property, or1
on secured or unsecured credit, and may acquire goods or documents of title under2
a preexisting lease.3
(8) (9) "Lessor" means a person that grants a lease. Unless the context4
clearly indicates otherwise, the term includes a sublessor.5
(9) (10) "Lien" means a privilege on personal property created by operation6
of law that entitles the privileged creditor to be preferred before other creditors.7
(10) (11) "Lienholder" means a person that holds a lien.8
(11) (12) "Local law" means the law of a jurisdiction not including that9
jurisdiction's law of conflict of laws.10
(12) (13) "Merchant" means a person who deals in goods of the kind, or11
otherwise by his occupation holds himself out as having knowledge or skill particular12
to the practices or goods, involved in the transaction, or to whom such knowledge13
or skill may be attributed by his employment of an agent, broker, or other14
intermediary who by his occupation holds himself out as having such knowledge or15
skill.16
(13) (14) "Mineral rights" means a real right governed by Title 31 of the17
Louisiana Revised Statutes of 1950, including mineral servitudes, mineral leases,18
mineral royalties, overriding royalties, production payments, and net profits interests.19
(14) (15) "Personal property" means movable property.20
(15) (16) "Real property" means immovable property and real rights therein,21
including standing timber, mineral rights, and leases of immovables.22
(16) (17) "Recorded timber conveyance" means a written contract:23
(A) by which standing timber is conveyed to, or upon cutting will become24
owned by, an identified person other than an owner of the land upon which the25
timber is standing;26
(B) which is executed by a record owner of the land;27
(C) which has been recorded in the conveyance records of the parish in28
which the land is situated; and29 HLS 10RS-953 ENGROSSED
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(D) which contains a legal description of the land that would be sufficient1
for purposes of making a conveyance of the land effective against third persons.2
(17) (18) "Sale" means a contract whereby a person transfers ownership of3
property to another person for a price in money.4
(18) (19) "Tangible" means corporeal.5
(19) (20) "Titled motor vehicle" means a vehicle subject to R.S. 32:701, et6
seq., which is required to have a certificate of title issued by the Department of7
Public Safety and Corrections, office of motor vehicles.8
Comments - 20109
The 2010 revision to Paragraph (d) of this Section adds a definition for10
"agricultural laborer", a term which is used in the perfection upon attachment rules11
of Section 9-309 and the crop ranking rules of Section 9-322(g), as revised in 2010.12
In this definition, the use of the word "individual" (which is used elsewhere in13
Chapter 9, e.g. Section 9-102(a)(24), to denote a natural person) is intentional, for14
only a natural person is entitled to claim an agricultural laborer's privilege, as the15
courts have held. See Bayou Pierre Farms v. Bat Farms Partners, III, 693 So. 2d16
1158 (La. 1997). The Bat Farms opinion twice placed the word "wages" in italics,17
and that word is also used in the definition to signal that no change in the law is18
intended as to the scope of persons entitled to the agricultural laborer's privilege or19
the debts secured thereby.20
* * *21
§9-308. When security interest or agricultural lien is perfected; continuity of22
perfection23
* * *24
(b) Perfection of agricultural lien. An agricultural lien is perfected if it has25
become effective and all of the applicable requirements for perfection in R.S. 10:9-26
309 or 10:9-310 have been satisfied. An agricultural lien is perfected when it27
becomes effective if the applicable requirements are satisfied before the agricultural28
lien becomes effective.29
* * *30
§9-309. Security interest perfected upon attachment31
The following security interests are perfected when they attach:32
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(13) An agricultural lien in favor of an agricultural laborer upon crops and1
upon their proceeds to the extent subject to the agricultural lien.2
Comments - 20103
1. The 2010 revision to this Section causes the agricultural laborer's privilege4
to be perfected upon attachment without the necessity of any filing. Agricultural5
laborer's privileges are usually small in amount and in any event attach only to the6
current year crop. Moreover, even under previous law, filing by an agricultural7
laborer after a Chapter 9 security interest had already been perfected still afforded8
his privilege priority over the security interest. Thus, a crop lender could not rely on9
the absence of a filing by an agricultural laborer at the time the crop lender perfected10
his security interest. For those reasons, little point is achieved by requiring an11
agricultural laborer to file an effective financing statement in order to perfect his12
privilege. However, even though the agricultural laborer's privilege is now perfected13
under Chapter 9 without the necessity of filing, both R.S. 3:3656 and the federal14
Food Security Act of 1985, 7 U.S.C. § 1631, allow a buyer in the ordinary course of15
business to take free of an agricultural laborer's privilege that is not the subject of a16
filing in the central agricultural registry.17
2. The inclusion of the reference to crops in Paragraph (13) is an intended18
limitation on the scope of the automatic perfection, because the laborer's privilege19
under Civil Code Article 3217 applies to other movables on the farm as well, and no20
automatic perfection is intended in the case of those other movables. 21
3. Paragraph (13) extends the automatic perfection of this Section to22
proceeds of crops, but only insofar as the law creating the agricultural lien provides23
that it attaches to proceeds. Notably, the rules of Chapter 9 relative to the attachment24
of a security interest to proceeds do not apply to agricultural liens. See R.S. 10:9-25
203(f) and 10:9-315.26
* * *27
§9-315. Secured party's rights on disposition of collateral and in proceeds28
(a) Disposition of collateral: continuation of security interest or agricultural29
lien; proceeds. Except as otherwise provided in this Chapter:30
(1) a security interest or agricultural lien continues in collateral31
notwithstanding sale, lease, license, exchange, or other disposition thereof unless the32
secured party authorized the disposition free of the security interest or agricultural33
lien;34
* * *35
Comments - 201036
The inclusion of agricultural liens within the scope of Section 9-315(a),37
which came about in the 2001 nationwide revision of Article 9 of the Uniform38
Commercial Code, appeared to have elevated agricultural privileges to the status of39
real rights, contrary to pre-existing Louisiana jurisprudence that severely limited the40
ability of privileged creditors to follow crops into the hands of third persons. See41
Loeb v. Collier, 59 So. 816 (La. 1912), in which the court held that allowing the42 HLS 10RS-953 ENGROSSED
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privileged creditor to pursue the crop against third persons ad infinitum would1
"practically paralyze our entire commerce." As a general rule in Louisiana,2
privileges on movables are mere rights of preference that do not carry with them any3
right of pursuit. The 2010 revision is intended to restore Louisiana's longstanding4
jurisprudence limiting the right of pursuit of a creditor holding a privilege on crops.5
There is no need for national uniformity on a policy permitting a privileged creditor6
to enforce his privilege after the crop has left the hands of the producer.7
The inclusion of agricultural liens within the rule of this Section was8
somewhat hollow anyway, because both R.S. 3:3656 and the federal Food Security9
Act of 1985, 7 U.S.C. § 1631, limit the ability of unfiled interests to survive a sale10
to a buyer in the ordinary course of business.11
* * *12
§9-322. Priorities among conflicting security interests in and agricultural liens on13
same collateral14
* * *15
(f) Limitations on subsections Subsections (a) through (e). Subsections (a)16
through (e) are subject to all of the following:17
* * *18
(5) R.S. 9:4521 with respect to a security interest or an agricultural lien19
affecting unharvested crops; and20
(6) R.S. 9:5551 with respect to collateral mortgages.21
(g) Priority of agricultural liens and security interests affecting crops.22
Agricultural liens and security interests affecting crops and their proceeds rank23
according to the following order of priority:24
(1) Agricultural liens in favor of agricultural laborers, with equal rank among25
themselves.26
(2) Perfected agricultural liens securing payment of rent due to a person that27
has leased real property on which the crops are growing or from which they were28
produced.29
(3) Other perfected agricultural liens and perfected security interests, with30
priority among themselves as provided in this Section and Part.31
(4) Unperfected agricultural liens securing payment of rent due to a person32
who has leased real property on which the crops are growing or from which they33
were produced.34 HLS 10RS-953 ENGROSSED
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(5) Other unperfected agricultural liens and unperfected security interests,1
with priority among themselves in the order in which they become effective or2
attach.3
* * *4
Comments - 20105
1. The 2010 revision places the ranking rules on crops within Chapter 9 and6
changes in a number of important respects the ranking rules that were previously in7
R.S. 9:4521. Under Subsection (g) of this Section, (1) agricultural liens in favor of8
agricultural laborers outrank all other security interests and agricultural liens, without9
the necessity of any filing; (2) the crop ranking rules of Subsection (g) recognize and10
give ranking to security interests in crops that are properly perfected under the local11
laws of other states, in cases in which Chapter 9 provides that the issue of perfection12
is governed by the law of another state (e.g. when the debtor is located in another13
state); (3) the crop ranking rules of Subsection (g) apply to unharvested and14
harvested crops alike, and are not limited to unharvested crops as the literal wording15
of R.S. 9:4521 suggested; (4) unperfected liens and security interests in crops are16
given effect against unsecured creditors and a specified ranking among themselves;17
and (5) perfected agricultural liens inuring to the furnisher of supplies or money are18
no longer relegated to a position behind all security interests, even those perfected19
later. 20
2. Under former R.S. 9:4521, an agricultural laborer who made a filing in the21
central agricultural registry was given priority over all other secured claimants. With22
this revision, the same favored treatment is given to all agricultural laborers, without23
the necessity of filing. As under former R.S. 9:4521, the lien of the lessor of real24
estate, if perfected, has priority over all other agricultural liens except for those in25
favor of laborers and over all conflicting security interests in crops and their26
proceeds, regardless of the order of filing. 27
3. Unlike former R.S. 9:4521, the crop ranking rules of Subsection (g) focus28
upon perfection, not simply filing. Under Chapter 9, the possible means of perfecting29
security interests in harvested crops is not limited to filing. They can be perfected30
by possession of the crops themselves or negotiation of a negotiable warehouse31
receipt representing the stored crops. See R.S. 10:9-312 and 10:9-313. Moreover,32
proceeds of harvested crops may be subject to conflicting secured claims that did not33
involve the crops themselves. For instance, amounts due to a farmer from the sale34
of his crop, while constituting proceeds of the crop, also constitute accounts. Chapter35
9 has a rule to rank conflicting security interests in the two types of collateral against36
one another. See R.S. 10:9-322(a) and (b), and Example 5 in Official Comment 6.37
* * *38
§9-501. Filing office39
(a) Filing offices. If the local law of this state governs perfection of a40
security interest or agricultural lien, the office in which to file a financing statement41
to perfect the security interest or agricultural lien is:42 HLS 10RS-953 ENGROSSED
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(1) the The Department of Public Safety and Corrections, office of motor1
vehicles, if the collateral is a titled motor vehicle not held as inventory for sale or2
lease.3
* * *4
(4) The clerk of court of any parish, in all other cases, including when the5
collateral is as-extracted collateral or goods that are to become fixtures and the6
financing -statement is filed as a fixture filing.7
(b) [Reserved.]8
Section 4. R.S. 9:4521 and 4524 and R.S. 10:9-322(f)(6) and 9-501(a)(2) are hereby9
repealed in their entirety.10
Section 5. The provisions of R.S. 10:9-501 as provided in this Act shall become11
effective on January 1, 2011.12
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Edwards HB No. 484
Abstract: In accordance with HCR 122 of the 2008 R.S., amends laws relating to farm
laborers, security interest and agricultural liens, priorities among conflicting security
interests, filing requirements for perfection, and conflicts.
Present law (R.S. 3:3652(9)) provides that in situations involving filing requirements for
security devices affecting farm products, the filing officer, in the case of Orleans Parish, is
the recorder of mortgages.
Proposed law changes the law by providing that the filing officer in Orleans Parish, as in
every other parish, is the clerk of court.
Present law (R.S. 3:3652(15)) provides a definition of "security devices".
Proposed law retains present law and adds "agricultural lien" to the definition.
Present law (R.S. 3:3653) provides that Chapter 22-A of Title 3 applies to security devices
affecting farm products as to which an effective financing statement has been filed.
Proposed law provides that Chapter 22-A applies to all security devices affecting farm
products, regardless of filing.
Present law (R.S. 3:3656) provides that an unfiled security device is ineffective against third
persons. HLS 10RS-953 ENGROSSED
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Proposed law changes the law by providing that an unfiled financing statement is ineffective
against buyers in the ordinary course of business.
Present law (R.S. 9:4770) provides rules for the resolution of conflicts between Chapter 9
of the Uniform Commercial Code and La. law.
Proposed law makes several technical corrections and eliminates unnecessary references.
Present law (R.S. 10:9-102) provides definitions.
Proposed law adds a definition for "agricultural laborer".
Present law (R.S. 10:9-309) provides a list of security interests that are perfected upon
attachment.
Proposed law changes present law by adding an agricultural laborer's privilege to the
security interests that are perfected upon attachment which allows the agricultural laborer's
privilege to be perfected without the necessity of any filing.
Present law (R.S. 10:9-315(a)) includes agricultural liens among the interests that continue
notwithstanding sale or other disposition of the collateral.
Proposed law changes present law by deleting agricultural liens and restricting the ability
of privileged creditors to follow crops into the hands of third persons.
Present law (R.S. 10:9-322) provides for priorities among conflicting security interests in,
and agricultural liens on, the same collateral.
Proposed law places the ranking rules on crops within Chapter 9 of the UCC and places
emphasis for crop ranking rules upon perfection, not simply filing.
Present law (R.S. 10:9-501) provides for the proper filing offices in which to file a financing
statement to perfect a security interest.
Proposed law repeals special language referencing the recorder of mortgages of Orleans
Parish.
The provisions of R.S. 10:9-501 shall become effective on Jan. 1, 2011.
(Amends R.S. 3:3652(9) and (15), 3653, 3656(A)(1) and (D), the heading of Part XIV of
Code Title XXI of Title 9 of the L.R.S. and R.S. 9:4770, R.S. 10:9-102(d), 9-308(b), 9-
309(13), 9-315(a)(intro. para.) and (1), 9-322(f)(intro. para.) and (5) and 9-501(a)(intro.
para.) and (1); Adds R.S. 10:9-322(g) and 9-501(a)(4); Repeals R.S. 9:4521 and 4524 and
R.S. 10:9-322(f)(6) and 9-501(a)(2))
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Civil Law and Procedure
to the original bill.
1. Deleted unnecessary references and made other technical corrections.
2. Provided a special effective date for the provisions of R.S. 10:9-501.