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ACT No. 378
Regular Session, 2010
HOUSE BILL NO. 484
BY REPRESENTATIVE EDWARDS
(On Recommendation of the Louisiana State Law Institute)
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 Chapter 1 of Code Title XXI of Code Book III of Title 9 of the3
Louisiana Revised Statutes of 1950 and R.S. 9:4770, R.S. 10:9-102(d), 9-308(b), 9-4
309(13), 9-315(a)(introductory paragraph) and (1), 9-322(f)(introductory paragraph)5
and (5), and 9-501(a)(introductory paragraph) and (1), to enact R.S. 10:9-322(g) and6
9-501(a)(4), and to repeal R.S. 9:4521 and 4524 and R.S. 10:9-322(f)(6) and 9-7
501(a)(2), relative to security devices; to provide definitions; to provide for8
agricultural liens; to provide for perfection of liens; to provide for conflicts; to9
provide for rankings; and 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
* * *20
(15) "Security device" is means a written security agreement that establishes21
a creditor's security interest in farm products, as defined in Paragraph (8) of this22 ENROLLEDHB NO. 484
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Section to include standing timber, or any privilege described in R.S. 9:4521, or any1
agricultural lien as defined in R.S. 10:9-102(a)(5) whether or not evidenced by a2
written instrument.3
* * *4
§3653. Applicability 5
A. The provisions of this Chapter shall apply to any security device, as that6
term is defined in this Chapter, for which an effective financing statement is filed7
with any filing officer on or after January 1, 1991.8
B. The provisions of this Chapter shall apply to security devices affecting9
farm products, including timber.10
* * *11
§3656. Filing, amendment, assignment, partial release, termination, and cancellation12
of security devices and effective financing statements; effectiveness against13
third parties14
A.(1) The proper place to file effective financing statements is with the clerk15
of court of any parish, or, in the case of Orleans Parish, with the recorder of16
mortgages.17
* * *18
D. The central registry shall reflect the time and date each effective financing19
statement and other statement is filed. Only a security device with respect to which20
an effective financing statements and other statements, which are statement has been21
filed with the filing officer for inclusion in the central registry, as provided in this22
Chapter, shall be effective against third parties buyers in the ordinary course of23
business. Except as otherwise provided in this Section, each effective financing24
statement and other statement security device shall become effective against third25
parties buyers in the ordinary course of business on the date and at the time it an26
effective financing statement with respect to the security device is filed with the27
filing officer.28
* * *29 ENROLLEDHB NO. 484
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Section 2. The heading of Part XIV of Chapter 1 of Code Title XXI of Code Book1
III of Title 9 of the Louisiana Revised Statues of 1950 and R.S. 9:4770 are hereby amended2
and reenacted to read as follows: 3
PART XIV. RELATION TO CHAPTER 9 OF THE4
LOUISIANA COMMERCIAL LAWS UNIFORM COMMERCIAL CODE5
§4770. Conflicts in favor of with Chapter 9 of the Louisiana Commercial Laws6
Uniform Commercial Code7
A. This Code Title (Code Title XXI of Code Book III, R.S. 9:4501 et seq.),8
Part 8 of Chapter 7 of the Louisiana Mineral Code (R.S. 31:146 through 148), and9
Title XXI of Book III of the Louisiana Civil Code (Arts. 3182 through 3277) shall10
be interpreted and applied in a manner consistent with Chapter 9 of the Louisiana11
Commercial Laws Uniform Commercial Code. Other than as provided in R.S.12
9:4521 or as provided in Subsection B of this Section, any Any conflict between the13
priority ranking of privileges under this Title, Part 8 of Chapter 7 of the Louisiana14
Mineral Code, and under or Title XXI of Book III of the Louisiana Civil Code with15
the priority ranking rules of Chapter 9 of the Louisiana Commercial Laws Uniform16
Commercial Code shall be resolved in favor of the priority ranking by application17
of the priority rules of Chapter 9 with regard to secured transactions subject thereto18
of the Uniform Commercial Code.19
B. Whether a sale or lease was entered into before or after January 1, 1990,20
the The rights of a vendor under Civil Code Articles 2561, 3217(7), and 3227 or of21
a lessor under Civil Code Article 2707 or Mineral Code Article 146 are subordinate22
to the rights of a secured party with a security interest under Chapter 9 of the23
Louisiana Commercial Laws Uniform Commercial Code except as otherwise24
provided by R.S. 10:9-322(g).25
Section 3. R.S. 10:9-102(d), 9-308(b), 9-309(13), 9-315(a)(introductory paragraph)26
and (1), 9-322(f)(introductory paragraph) and (5), and 9-501(a)(introductory paragraph) and27
(1) are hereby amended and reenacted and R.S. 10:9-322(g) and 9-501(a)(4) are hereby28
enacted to read as follows: 29 ENROLLEDHB NO. 484
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§9-102. Definitions and index of definitions1
* * *2
(d) Additional definitions. In this Chapter:3
(1) "Agricultural laborer" means an individual holding an agricultural lien4
securing payment of wages due him for labor he performed as a worker,5
thresherman, combineman, grain drier, or overseer.6
(2) "Bailee" means a person having possession of the personal property7
belonging to another. "Bailor" means the owner of the personal property.8
(2) (3) "Collateral mortgage note" means an instrument that is secured by a9
collateral mortgage on real property located in this State state and executed for the10
purpose of being issued, pledged, or otherwise used as security for another11
obligation.12
(3) (4) "Intangible" means incorporeal.13
(4) (5) "Lease" means a contract by which one person gives to another the14
right of enjoyment and use of goods for a term in return for a stipulated price. But15
a usufruct or a sale, including a sale on approval or a sale or return, or a sale on view16
or trial, or retention or creation of a security interest, is not a lease. Unless the17
context clearly indicates otherwise, the term includes a sublease.18
(5) (6) "Leasehold interest" means the interest of the lessee under a lease.19
(6) (7) "Lessee" means a person to whom a lease is granted. Unless the20
context clearly indicates otherwise, the term includes a sublessee.21
(7) (8) "Lessee in ordinary course of business" means a person that becomes22
a lessee of goods in good faith, without knowledge that the lease violates the rights23
of another person in the goods, and in the ordinary course from a person, other than24
a pawnbroker, in the business of selling or leasing goods of that kind. A lessee in the25
ordinary course of business may lease for cash, or by exchange of other property, or26
on secured or unsecured credit, and may acquire goods or documents of title under27
a preexisting lease.28
(8) (9) "Lessor" means a person that grants a lease. Unless the context29
clearly indicates otherwise, the term includes a sublessor.30 ENROLLEDHB NO. 484
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(9) (10) "Lien" means a privilege on personal property created by operation1
of law that entitles the privileged creditor to be preferred before other creditors.2
(10) (11) "Lienholder" means a person that holds a lien.3
(11) (12) "Local law" means the law of a jurisdiction not including that4
jurisdiction's law of conflict of laws.5
(12) (13) "Merchant" means a person who deals in goods of the kind, or6
otherwise by his occupation holds himself out as having knowledge or skill particular7
to the practices or goods, involved in the transaction, or to whom such knowledge8
or skill may be attributed by his employment of an agent, broker, or other9
intermediary who by his occupation holds himself out as having such knowledge or10
skill.11
(13) (14) "Mineral rights" means a real right governed by Title 31 of the12
Louisiana Revised Statutes of 1950, including mineral servitudes, mineral leases,13
mineral royalties, overriding royalties, production payments, and net profits interests.14
(14) (15) "Personal property" means movable property.15
(15) (16) "Real property" means immovable property and real rights therein,16
including standing timber, mineral rights, and leases of immovables.17
(16) (17) "Recorded timber conveyance" means a written contract:18
(A) by which standing timber is conveyed to, or upon cutting will become19
owned by, an identified person other than an owner of the land upon which the20
timber is standing;.21
(B) which is executed by a record owner of the land ;.22
(C) which has been recorded in the conveyance records of the parish in23
which the land is situated; and.24
(D) which contains a legal description of the land that would be sufficient25
for purposes of making a conveyance of the land effective against third persons.26
(17) (18) "Sale" means a contract whereby a person transfers ownership of27
property to another person for a price in money.28
(18) (19) "Tangible" means corporeal.29 ENROLLEDHB NO. 484
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(19) (20) "Titled motor vehicle" means a vehicle subject to R.S. 32:701, et1
seq., which is required to have a certificate of title issued by the Department of2
Public Safety and Corrections, office of motor vehicles.3
Comments - 20104
The 2010 revision to Paragraph (d) of this Section adds a definition for5
"agricultural laborer", a term which is used in the perfection upon attachment rules6
of Section 9-309 and the crop ranking rules of Section 9-322(g), as revised in 2010.7
In this definition, the use of the word "individual" (which is used elsewhere in8
Chapter 9, e.g. Section 9-102(a)(24), to denote a natural person) is intentional, for9
only a natural person is entitled to claim an agricultural laborer's privilege, as the10
courts have held. See Bayou Pierre Farms v. Bat Farms Partners, III, 693 So. 2d11
1158 (La. 1997). The Bat Farms opinion twice placed the word "wages" in italics,12
and that word is also used in the definition to signal that no change in the law is13
intended as to the scope of persons entitled to the agricultural laborer's privilege or14
the debts secured thereby.15
* * *16
§9-308. When security interest or agricultural lien is perfected; continuity of17
perfection18
* * *19
(b) Perfection of agricultural lien. An agricultural lien is perfected if it has20
become effective and all of the applicable requirements for perfection in R.S. 10:9-21
309 or 10:9-310 have been satisfied. An agricultural lien is perfected when it22
becomes effective if the applicable requirements are satisfied before the agricultural23
lien becomes effective.24
* * *25
§9-309. Security interest perfected upon attachment26
The following security interests are perfected when they attach:27
* * *28
(13) An agricultural lien in favor of an agricultural laborer upon crops and29
upon their proceeds to the extent subject to the agricultural lien.30
Comments - 201031
1. The 2010 revision to this Section causes the agricultural laborer's privilege32
to be perfected upon attachment without the necessity of any filing. Agricultural33
laborer's privileges are usually small in amount and in any event attach only to the34
current year crop. Moreover, even under previous law, filing by an agricultural35
laborer after a Chapter 9 security interest had already been perfected still afforded36
his privilege priority over the security interest. Thus, a crop lender could not rely on37 ENROLLEDHB NO. 484
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the absence of a filing by an agricultural laborer at the time the crop lender perfected1
his security interest. For those reasons, little point is achieved by requiring an2
agricultural laborer to file an effective financing statement in order to perfect his3
privilege. However, even though the agricultural laborer's privilege is now perfected4
under Chapter 9 without the necessity of filing, both R.S. 3:3656 and the federal5
Food Security Act of 1985, 7 U.S.C. § 1631, allow a buyer in the ordinary course of6
business to take free of an agricultural laborer's privilege that is not the subject of a7
filing in the central agricultural registry.8
2. The inclusion of the reference to crops in Paragraph (13) is an intended9
limitation on the scope of the automatic perfection, because the laborer's privilege10
under Civil Code Article 3217 applies to other movables on the farm as well, and no11
automatic perfection is intended in the case of those other movables. 12
3. Paragraph (13) extends the automatic perfection of this Section to13
proceeds of crops, but only insofar as the law creating the agricultural lien provides14
that it attaches to proceeds. Notably, the rules of Chapter 9 relative to the attachment15
of a security interest to proceeds do not apply to agricultural liens. See R.S. 10:9-16
203(f) and 10:9-315.17
* * *18
§9-315. Secured party's rights on disposition of collateral and in proceeds19
(a) Disposition of collateral: continuation of security interest or agricultural20
lien; proceeds. Except as otherwise provided in this Chapter:21
(1) a security interest or agricultural lien continues in collateral22
notwithstanding sale, lease, license, exchange, or other disposition thereof unless the23
secured party authorized the disposition free of the security interest or agricultural24
lien;25
* * *26
Comments - 201027
The inclusion of agricultural liens within the scope of Section 9-315(a),28
which came about in the 2001 nationwide revision of Article 9 of the Uniform29
Commercial Code, appeared to have elevated agricultural privileges to the status of30
real rights, contrary to pre-existing Louisiana jurisprudence that severely limited the31
ability of privileged creditors to follow crops into the hands of third persons. See32
Loeb v. Collier, 59 So. 816 (La. 1912), in which the court held that allowing the33
privileged creditor to pursue the crop against third persons ad infinitum would34
"practically paralyze our entire commerce." As a general rule in Louisiana,35
privileges on movables are mere rights of preference that do not carry with them any36
right of pursuit. The 2010 revision is intended to restore Louisiana's longstanding37
jurisprudence limiting the right of pursuit of a creditor holding a privilege on crops.38
There is no need for national uniformity on a policy permitting a privileged creditor39
to enforce his privilege after the crop has left the hands of the producer.40
The inclusion of agricultural liens within the rule of this Section was41
somewhat hollow anyway, because both R.S. 3:3656 and the federal Food Security42 ENROLLEDHB NO. 484
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Act of 1985, 7 U.S.C. § 1631, limit the ability of unfiled interests to survive a sale1
to a buyer in the ordinary course of business.2
* * *3
§9-322. Priorities among conflicting security interests in and agricultural liens on4
same collateral5
* * *6
(f) Limitations on subsections Subsections (a) through (e). Subsections (a)7
through (e) are subject to all of the following:8
* * *9
(5) R.S. 9:4521 with respect to a security interest or an agricultural lien10
affecting unharvested crops; and11
(6) R.S. 9:5551 with respect to collateral mortgages.12
(g) Priority of agricultural liens and security interests affecting crops.13
Agricultural liens and security interests affecting crops and their proceeds rank14
according to the following order of priority:15
(1) Agricultural liens in favor of agricultural laborers, with equal rank among16
themselves.17
(2) Perfected agricultural liens securing payment of rent due to a person that18
has leased real property on which the crops are growing or from which they were19
produced.20
(3) Other perfected agricultural liens and perfected security interests, with21
priority among themselves as provided in this Section and Part.22
(4) Unperfected agricultural liens securing payment of rent due to a person23
who has leased real property on which the crops are growing or from which they24
were produced.25
(5) Other unperfected agricultural liens and unperfected security interests,26
with priority among themselves in the order in which they become effective or27
attach.28
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Comments - 20101
1. The 2010 revision places the ranking rules on crops within Chapter 9 and2
changes in a number of important respects the ranking rules that were previously in3
R.S. 9:4521. Under Subsection (g) of this Section, (1) agricultural liens in favor of4
agricultural laborers outrank all other security interests and agricultural liens, without5
the necessity of any filing; (2) the crop ranking rules of Subsection (g) recognize and6
give ranking to security interests in crops that are properly perfected under the local7
laws of other states, in cases in which Chapter 9 provides that the issue of perfection8
is governed by the law of another state (e.g. when the debtor is located in another9
state); (3) the crop ranking rules of Subsection (g) apply to unharvested and10
harvested crops alike, and are not limited to unharvested crops as the literal wording11
of R.S. 9:4521 suggested; (4) unperfected liens and security interests in crops are12
given effect against unsecured creditors and a specified ranking among themselves;13
and (5) perfected agricultural liens inuring to the furnisher of supplies or money are14
no longer relegated to a position behind all security interests, even those perfected15
later. 16
2. Under former R.S. 9:4521, an agricultural laborer who made a filing in the17
central agricultural registry was given priority over all other secured claimants. With18
this revision, the same favored treatment is given to all agricultural laborers, without19
the necessity of filing. As under former R.S. 9:4521, the lien of the lessor of real20
estate, if perfected, has priority over all other agricultural liens except for those in21
favor of laborers and over all conflicting security interests in crops and their22
proceeds, regardless of the order of filing. 23
3. Unlike former R.S. 9:4521, the crop ranking rules of Subsection (g) focus24
upon perfection, not simply filing. Under Chapter 9, the possible means of perfecting25
security interests in harvested crops is not limited to filing. They can be perfected26
by possession of the crops themselves or negotiation of a negotiable warehouse27
receipt representing the stored crops. See R.S. 10:9-312 and 10:9-313. Moreover,28
proceeds of harvested crops may be subject to conflicting secured claims that did not29
involve the crops themselves. For instance, amounts due to a farmer from the sale30
of his crop, while constituting proceeds of the crop, also constitute accounts. Chapter31
9 has a rule to rank conflicting security interests in the two types of collateral against32
one another. See R.S. 10:9-322(a) and (b), and Example 5 in Official Comment 6.33
* * *34
§9-501. Filing office35
(a) Filing offices. If the local law of this state governs perfection of a36
security interest or agricultural lien, the office in which to file a financing statement37
to perfect the security interest or agricultural lien is:38
(1) the The Department of Public Safety and Corrections, office of motor39
vehicles, if the collateral is a titled motor vehicle not held as inventory for sale or40
lease.41
* * *42 ENROLLEDHB NO. 484
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(4) The clerk of court of any parish, in all other cases, including when the1
collateral is as-extracted collateral or goods that are to become fixtures and the2
financing statement is filed as a fixture filing.3
(b) [Reserved.]4
Section 4. R.S. 9:4521 and 4524 and R.S. 10:9-322(f)(6) and 9-501(a)(2) are hereby5
repealed in their entirety.6
Section 5. The provisions of R.S. 10:9-501 as provided in this Act shall become7
effective on January 1, 2011.8
SPEAKER OF THE HOUSE OF REPRESENTATI VES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: