85R11330 BEE-F
By: Kacal H.B. No. 3063
A BILL TO BE ENTITLED
AN ACT
relating to agricultural liens.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 70.401, Property Code, is amended by
amending Subdivisions (1) and (4) and adding Subdivisions (3-a),
(5), (6), and (7) to read as follows:
(1) "Agricultural crop" means a plant product that is
grown, produced, or harvested as a result of an agricultural
producer's farm operation and includes a processed product of an
agricultural crop.
(3-a) "Company-owned crop" means an agricultural
crop:
(A) that is received for storage by a warehouse
or delivered or transferred to a contract purchaser located in this
state;
(B) that is not an open storage crop; and
(C) for which the agricultural producer has been
fully and finally paid.
(4) "Contract purchaser" means a person who has agreed
under a contract to purchase an agricultural crop or otherwise pay
the agricultural producer for growing, producing, or harvesting the
agricultural crop. [The term does not include a person who, as to
the transaction in question, is licensed and bonded under Chapter
14, Agriculture Code, or the United States Warehouse Act (7 U.S.C.
Section 241 et seq.).]
(5) "Open storage crop" means an agricultural crop
that:
(A) an agricultural producer delivers or
transfers to:
(i) a warehouse for storage; or
(ii) a contract purchaser located in this
state;
(B) is not covered by a negotiable or
nonnegotiable warehouse receipt; and
(C) is not owned by the lessee, owner, or
operator of the warehouse in which the crop is stored or the
contract purchaser to which the crop is delivered or transferred.
(6) "Warehouse" means a facility that stores or
handles any agricultural crop after the crop is harvested,
including a facility operated by a person who, as to the transaction
in question, is licensed and bonded under Chapter 14, Agriculture
Code, or the United States Warehouse Act (7 U.S.C. Section 241 et
seq.).
(7) "Warehouse operator" means a person engaged in the
business of operating a warehouse.
SECTION 2. Section 70.402, Property Code, is amended by
amending Subsections (b) and (c) and adding Subsection (d) to read
as follows:
(b) An agricultural producer who delivers or transfers an
agricultural crop grown, produced, or harvested by the producer to
a warehouse has a lien for the reasonable value of the crop on the
date of delivery or transfer:
(1) whether or not a negotiable or nonnegotiable
warehouse receipt is issued by the warehouse; and
(2) whether or not the crop is placed in open storage.
(c) A lien created under this subchapter is on every
agricultural crop, either in raw or processed form, that has been
transferred or delivered by the agricultural producer and is in the
possession of the warehouse or contract purchaser, and if the
warehouse or contract purchaser sells all or part of the crop, on
the proceeds of the sale. If an open storage [the agricultural]
crop is commingled with a company-owned crop by a warehouse or
contract purchaser after the crop has been transferred or
delivered, a lien created under this subchapter applies only to
that portion of the contract purchaser's inventory in an amount
that is equal to the amount of the crop transferred or delivered by
the agricultural producer.
(d) [(c)] For purposes of this subchapter, an agricultural
crop or processed form of an agricultural crop deposited by a
contract purchaser with a warehouse, whether or not a warehouse
receipt is given as security, is considered to be in the possession
of the contract purchaser and subject to the lien created by this
subchapter.
SECTION 3. Section 70.403, Property Code, is amended to
read as follows:
Sec. 70.403. WHEN LIEN ATTACHES. A lien created under this
subchapter attaches on the date on which physical possession of the
agricultural crop is delivered or transferred by the agricultural
producer to the warehouse or to the contract purchaser or the
purchaser's agent, or if there is to be a series of deliveries [to
the contract purchaser or purchaser's agent], on the date of the
first delivery of the agricultural crop [to the contract purchaser
or purchaser's agent].
SECTION 4. Section 70.404, Property Code, is amended to
read as follows:
Sec. 70.404. APPLICABILITY OF OTHER LAW; EFFECT ON OTHER
LAW. (a) Except as provided by Section 70.4045 of this code,
Chapter 9, Business & Commerce Code, including applicable filing
and perfection requirements, applies to a lien created under this
subchapter.
(b) This subchapter does not diminish or abridge any
protections afforded to an agricultural producer by:
(1) Chapter 14, Agriculture Code;
(2) Chapter 7, Business & Commerce Code; or
(3) the United States Warehouse Act (7 U.S.C. Section
241 et seq.).
SECTION 5. Sections 70.4045(a) and (c), Property Code, are
amended to read as follows:
(a) Notwithstanding Chapter 9, Business & Commerce Code, a
lien created under this subchapter is perfected at the time the lien
attaches under Section 70.403 and continues to be perfected if a
financing statement covering the agricultural crop is filed on or
before the 90th day after the date:
(1) the physical possession of the crop is delivered
or transferred by the agricultural producer to the warehouse or the
contract purchaser or the purchaser's agent, if there is only one
delivery [under the contract]; or
(2) of the last delivery of the crop to the warehouse
or the contract purchaser or the purchaser's agent, if there is a
series of deliveries [under the contract].
(c) Notwithstanding Chapter 9, Business & Commerce Code, a
lien created and perfected under this subchapter has priority over
a conflicting security interest in or lien on the agricultural crop
or the proceeds from the sale of the crop created by the warehouse
operator or contract purchaser in favor of a third party, other than
a cotton ginner's lien created under Section 70.003(d) or a
marketing pool contract agreement with an agricultural producer,
regardless of the date the security interest or lien created by the
warehouse operator or contract purchaser attached. This
subsection does not affect a security interest or lien created and
perfected to secure a loan directly to the agricultural producer.
SECTION 6. Section 70.406(a), Property Code, is amended to
read as follows:
(a) A buyer in ordinary course of business of an
agricultural crop, including a person who buys any portion of an
agricultural crop from a warehouse operator or contract purchaser,
whether or not the agricultural crop has been commingled, takes the
agricultural crop free of a lien created under this subchapter, and
the lien created by this subchapter does not pass to any subsequent
claimant of the agricultural crop.
SECTION 7. Section 70.407(a), Property Code, is amended to
read as follows:
(a) A lien created under this subchapter is discharged when:
(1) the lienholder receives full payment for the
agricultural crop; or
(2) payment is tendered by the warehouse operator or
contract purchaser, as applicable, and the lienholder, without
coercion, defers payment.
SECTION 8. Section 70.410, Property Code, is amended to
read as follows:
Sec. 70.410. WAIVER OF CERTAIN RIGHTS PROHIBITED. An
agricultural producer's agreement with a warehouse operator or
contract purchaser to waive the producer's right to seek a remedy
provided by this subchapter is void.
SECTION 9. The changes in law made by this Act apply only to
an agricultural producer who delivers or transfers an agricultural
crop grown, produced, or harvested by the producer to a warehouse on
or after the effective date of this Act. An agricultural producer
who delivers or transfers an agricultural crop grown, produced, or
harvested by the producer to a warehouse before the effective date
of this Act is governed by the law as it existed immediately before
that date, and that law is continued in effect for that purpose.
SECTION 10. This Act takes effect September 1, 2017.