SB88_EN

Senate Bill No. 88–Senators Rhoads and McGinness

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AN ACT relating to statutory liens; providing for the creation and foreclosure of a lien for farm products; and providing other matters properly relating thereto.

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1. Chapter 108 of NRS is hereby amended by adding thereto

the provisions set forth as sections 2 to 17, inclusive, of this act.

Sec. 2. As used in sections 2 to 17, inclusive, of this act, unless the

context otherwise requires, the words and terms defined in sections 3 to

7, inclusive, of this act have the meanings ascribed to them in those

sections.

Sec. 3. “Cash” means coin or currency of the United States. The

term does not include a check or money order.

Sec. 4. “Farm product” includes every agricultural, horticultural,

viticultural or vegetable product grown and harvested in this state. The

term does not include timber or a timber product.

Sec. 5. “Processed farm product” includes, without limitation, a

farm product in a preserved, manufactured or processed form.

Sec. 6. 1. “Processor” means a person who:

(a) Is engaged in the business of processing or manufacturing farm

products; and

(b) Solicits, buys, contracts to buy or otherwise takes title to, or

possession or control of, farm products from the producer for the

purposes of processing, manufacturing, selling, reselling or redelivering

the farm product.

2. The term does not include a retail merchant who:

(a) Has a fixed or established place of business in this state; and

(b) Does not sell at wholesale a farm product that is processed or

manufactured by him.

Sec. 7. “Producer” means a person who is engaged in the business

of growing or producing a farm product in this state.

Sec. 8. 1. In addition to all other rights and remedies which are

provided by law, a producer that delivers or sells a farm product which is

grown by him to a processor pursuant to a contract, express or implied,

has a lien for the labor, care and expense in growing and harvesting the

farm product upon:

(a) The farm product;

(b) The processed farm product derived from the farm product; and

product.

2. A lien on a farm product, processed farm product, or proceeds

from the sale of a farm product or processed farm product extends to an

amount of the farm product, processed farm product or proceeds equal

in value to the agreed price or an agreed method for determining the

price for the farm product. For purposes of determining the extent of the

lien, the value of the farm product is the market value of the farm

product on the date of delivery of the farm product to the processor.

3. Any portion of the farm product, processed farm product or

proceeds in excess of the amount necessary to satisfy the total amount

owed to a producer pursuant to a contract is free of the lien provided by

this section.

Sec. 9. 1. Unless released by payment or by security which is given

for payment before attachment of a lien, the lien of a producer pursuant

to section 8 of this act:

(a) Attaches on the date of delivery of the farm product by a producer

to a processor; and

(b) Is a preferred lien and superior to all other liens, claims or

encumbrances, except:

(1) Claims for wages and salaries for personal services and labor

which are rendered by a person to a processor in connection with the

processing of the farm product after the delivery of the farm product to

the processor; or

(2) The lien of a warehouseman pursuant to chapter 104 of NRS.

2. The lien of a producer for a series of deliveries of a farm product

attaches on the date of the last delivery.

Sec. 10. 1. To perfect the lien provided for in section 8 of this act,

a producer must, not later than 45 days after the date on which the lien

attaches pursuant to section 9 of this act, file a notice of the lien in the

office of the secretary of state.

2. A notice of lien that is filed pursuant to subsection 1 must be

verified by the oath of the producer and must contain:

(a) The name of the producer;

(b) The name of the processor;

the producer and the processor; and

(d) The total amount owed to the producer by the processor under the

terms of the contract, after deducting any applicable credits or offsets.

3. Not later than 24 hours after filing a notice of lien pursuant to this

section, a producer shall send a copy of the notice of lien to the

processor by certified mail.

Sec. 11. 1. The lien provided for in section 8 of this act applies to

any farm product and any processed farm product in the possession of

the processor.

2. For the purposes of this section, a farm product or a processed

farm product deposited by a processor with a warehouse, whether or not

warehouse receipts are given as security to a lender, shall be deemed to

be in the possession of the processor and subject to the lien of the

producer.

3. As used in this section:

(a) “Lender” includes any person who advances new value to a

processor.

(b) “New value” includes a new advance or loan, whether in money or

property, that is made by a lender to a processor. The term does not

include an:

(1) Extension or renewal of an existing obligation of the processor;

(2) Obligation that is substituted for an existing obligation of the

processor.

Sec. 12. 1. A lien on a farm product or processed farm product

may be released to the extent that the value of the claim upon the farm

product or processed farm product is secured by:

(a) A surety bond;

(b) A cash deposit; or

2. A producer holding a lien may release a lien upon:

(a) Payment for the agreed amount or for the reasonable value of the

farm product that is sold or delivered; or

(b) Arrangements being made for payment of the agreed amount or

for the reasonable value of the farm product that is sold or delivered that

are satisfactory to the producer.

Sec. 13. 1. Subject to the approval of a producer holding a lien, a

processor may obtain a release of the lien by:

(a) Paying the agreed or actual value of any farm product that is

delivered to or purchased by the processor within 20 days after the date

of delivery of the farm product, unless the date of payment is otherwise

agreed upon in writing or payment is secured by an instrument or

arrangement other than the lien.

(b) Obtaining a surety bond which is executed by the processor as the

principal and by a surety company which is authorized to do business in

this state as a surety in an amount equal to the current market value of

the farm product or processed farm product that the processor intends to

dispose of or sell. The bond must be conditioned that if the processor

fails to make payments to producers for the lawful claims of all

producers whose liens have been released by the bond in an amount

equal to or greater than the amount of the bond within 35 days after the

date of the bond, the surety will be liable to and shall pay the claimants

all lawful claims that may be covered by the amount of the bond and the

costs of suit if an action is filed on the bond.

amount that is set apart by an instrument in writing which is signed by

the processor for the purpose of guaranteeing, to the extent of the

amount deposited, the payment of all existing claims of producers whose

liens are released by the deposit within 35 days after the date of the

deposit. The financial institution where a deposit is made pursuant to

this paragraph must be named as the trustee in the instrument to carry

out the provisions of the instrument.

(d) Designating, setting apart and depositing a quantity of a

nonproprietary processed farm product in a public warehouse, and

endorsing over and delivering the warehouse receipt to the producer for

a quantity of nonproprietary processed farm products in an amount that

is satisfactory to the producer for the purpose of guaranteeing, to the

extent of the value of the deposit, payment of the existing claims of

producers and labor claimants whose liens are released by the deposit

within 35 days after the date of the deposit.

(e) Securing a release after payment in full for the farm products.

2. If a processor has paid all lawful claims of the producers in

compliance with this section, a processor may sell, transport or otherwise

dispose of any farm product for which the lien has been released.

3. If a bond, cash deposit, warehouse deposit or other security is

given by a processor pursuant to this section, the processor may sell,

transport or otherwise dispose of an amount of the farm product or

processed farm product not exceeding the current market value

represented by the bond, cash deposit, warehouse deposit or other

security given by the processor.

4. For the purposes of this section, the current market value of a

farm product or processed farm product may be based upon quotations

from the Federal-State Market News Service or a similar source agreed

to in writing by the parties to be determined, as appropriate, on the date:

(a) Of the bond;

(b) Of the deposit; or

Sec. 14. 1. In an action commenced by a lien claimant, a

defendant processor may file a surety bond with the court in which the

action is pending in an amount that is sufficient to cover the demand of

the complaint of the plaintiff producer, including attorneys’ fees and

costs.

2. Upon the filing of the bond described in subsection 1, the court, in

its discretion, may order the release of a portion of the farm product or

processed farm product upon which the lien of the plaintiff producer has

attached.

3. A processor may move the court for a hearing to introduce

evidence to the court to demonstrate that he has sufficient security or

money on deposit to protect the lien or other rights of the plaintiff

producer.

4. Upon proof of sufficient security, the court may order the release

of a portion or the whole of a farm product upon which the lien of the

plaintiff producer is attached and deny the plaintiff any recovery in the

action.

5. The other rights and remedies of a lien claimant, if any, are not

prejudiced by an order of the court for dismissal pursuant to

subsection 4.

Sec. 15. 1. The judgment, if any, obtained by a plaintiff in a

personal action against a processor to obtain payment for farm products

does not impair or merge the lien rights or claims that are held by a

plaintiff.

2. Any money collected from a personal judgment must be credited

against the amount of the lien or claim in an action that is brought to

enforce the lien or claim.

Sec. 16. 1. The plaintiff in an action that is commenced to

foreclose a lien provided for in section 8 of this act may obtain a

preliminary injunction against the processor to restrain the processor

from removing a processed farm product in his possession or under his

control and upon which valid liens exist beyond the jurisdiction of the

court to the injury of the plaintiff.

2. A presumption of irreparable harm to a plaintiff producer arises

when a processor removes or prepares to remove a farm product or

processed farm product in his possession or under his control and upon

which valid liens exist beyond the jurisdiction of the court.

Sec. 17. 1. All actions commenced by a producer or producers

against a processor for the foreclosure of liens or other security provided

for in sections 2 to 17, inclusive, of this act may be consolidated by the

court and all persons that are necessary to a determination of the action

may be made parties to the action.

2. All claims in an action in relation to an obligation of a processor

for payment secured by a lien pursuant to section 8 of this act must have

equal standing and, if applicable, be paid proportionately to the claim of

each claimant.

3. A judgment in favor of a plaintiff producer to foreclose a lien must

state the exact amount due on the judgment from the defendant

processor.

4. If in a court proceeding to foreclose a lien, the court finds that

there is no cash, bond, deposit or other security for the payment of the

claims of producers, the judgment of foreclosure must be against a

sufficient quantity in value of farm products or processed farm products

in the possession or under the control of the defendant processor as may

be necessary to satisfy the claim or judgment.

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