(REPRINTED WITH ADOPTED AMENDMENTS)

 

Senate Bill No. 88–Senators Rhoads and McGinness

 

February 8, 2001

____________

 

Referred to Committee on Judiciary

 

SUMMARY—Provides for creation and foreclosure of liens for farm products. (BDR 9‑643)

 

FISCAL NOTE:            Effect on Local Government: Yes.

                                    Effect on the State: No.

 

~

 

EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

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:

 

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

1-2  the provisions set forth as sections 2 to 17, inclusive, of this act.

1-3    Sec. 2.  As used in sections 2 to 17, inclusive, of this act, unless the

1-4  context otherwise requires, the words and terms defined in sections 3 to

1-5  7, inclusive, of this act have the meanings ascribed to them in those

1-6  sections.

1-7    Sec. 3. “Cash” means coin or currency of the United States. The

1-8  term does not include a check or money order.

1-9    Sec. 4. “Farm product” includes every agricultural, horticultural,

1-10  viticultural or vegetable product grown and harvested in this state. The

1-11  term does not include timber or a timber product.

1-12    Sec. 5. “Processed farm product” includes, without limitation, a

1-13  farm product in a preserved, manufactured or processed form.

1-14    Sec. 6.  1.  “Processor” means a person who:

1-15    (a) Is engaged in the business of processing or manufacturing farm

1-16  products; and

1-17    (b) Solicits, buys, contracts to buy or otherwise takes title to, or

1-18  possession or control of, farm products from the producer for the

1-19  purposes of processing, manufacturing, selling, reselling or redelivering

1-20  the farm product.

1-21    2.  The term does not include a retail merchant who:

1-22    (a) Has a fixed or established place of business in this state; and

1-23    (b) Does not sell at wholesale a farm product that is processed or

1-24  manufactured by him.

2-1    Sec. 7.  “Producer” means a person who is engaged in the business

2-2  of growing or producing a farm product in this state.

2-3    Sec. 8. 1.  In addition to all other rights and remedies which are

2-4  provided by law, a producer that delivers or sells a farm product which is

2-5  grown by him to a processor pursuant to a contract, express or implied,

2-6  has a lien for the labor, care and expense in growing and harvesting the

2-7  farm product upon:

2-8    (a) The farm product;

2-9    (b) The processed farm product derived from the farm product; and

2-10    (c) The proceeds of a sale of the farm product or the processed farm

2-11  product.

2-12    2.  A lien on a farm product, processed farm product, or proceeds

2-13  from the sale of a farm product or processed farm product extends to an

2-14  amount of the farm product, processed farm product or proceeds equal in

2-15  value to the agreed price or an agreed method for determining the price

2-16  for the farm product. For purposes of determining the extent of the lien,

2-17  the value of the farm product is the market value of the farm product on

2-18  the date of delivery of the farm product to the processor.

2-19    3.  Any portion of the farm product, processed farm product or

2-20  proceeds in excess of the amount necessary to satisfy the total amount

2-21  owed to a producer pursuant to a contract is free of the lien provided by

2-22  this section.

2-23    Sec. 9. 1.  Unless released by payment or by security which is given

2-24  for payment before attachment of a lien, the lien of a producer pursuant

2-25  to section 8 of this act:

2-26    (a) Attaches on the date of delivery of the farm product by a producer

2-27  to a processor; and

2-28    (b) Is a preferred lien and superior to all other liens, claims or

2-29  encumbrances, except:

2-30      (1) Claims for wages and salaries for personal services and labor

2-31  which are rendered by a person to a processor in connection with the

2-32  processing of the farm product after the delivery of the farm product to

2-33  the processor; or

2-34      (2) The lien of a warehouseman pursuant to chapter 104 of NRS.

2-35    2.  The lien of a producer for a series of deliveries of a farm product

2-36  attaches on the date of the last delivery.

2-37    Sec. 10. 1.  To perfect the lien provided for in section 8 of this act,

2-38  a producer must, not later than 45 days after the date on which the lien

2-39  attaches pursuant to section 9 of this act, file a notice of the lien in the

2-40  office of the secretary of state.

2-41    2.  A notice of lien that is filed pursuant to subsection 1 must be

2-42  verified by the oath of the producer and must contain:

2-43    (a) The name of the producer;

2-44    (b) The name of the processor;

2-45    (c) A statement of the terms and conditions of the contract between

2-46  the producer and the processor; and

2-47    (d) The total amount owed to the producer by the processor under the

2-48  terms of the contract, after deducting any applicable credits or offsets.

3-1    3.  Not later than 24 hours after filing a notice of lien pursuant to this

3-2  section, a producer shall send a copy of the notice of lien to the processor

3-3  by certified mail.

3-4    Sec. 11.  1.  The lien provided for in section 8 of this act applies to

3-5  any farm product and any processed farm product in the possession of

3-6  the processor.

3-7    2.  For the purposes of this section, a farm product or a processed

3-8  farm product deposited by a processor with a warehouse, whether or not

3-9  warehouse receipts are given as security to a lender, shall be deemed to

3-10  be in the possession of the processor and subject to the lien of the

3-11  producer.

3-12    3.  As used in this section:

3-13    (a) “Lender” includes any person who advances new value to a

3-14  processor.

3-15    (b) “New value” includes a new advance or loan, whether in money or

3-16  property, that is made by a lender to a processor. The term does not

3-17  include an:

3-18      (1) Extension or renewal of an existing obligation of the processor;

3-19  or

3-20      (2) Obligation that is substituted for an existing obligation of the

3-21  processor.

3-22    Sec. 12. 1.  A lien on a farm product or processed farm product

3-23  may be released to the extent that the value of the claim upon the farm

3-24  product or processed farm product is secured by:

3-25    (a) A surety bond;

3-26    (b) A cash deposit; or

3-27    (c) Other security given and approved by a producer who holds a lien.

3-28    2.  A producer holding a lien may release a lien upon:

3-29    (a) Payment for the agreed amount or for the reasonable value of the

3-30  farm product that is sold or delivered; or

3-31    (b) Arrangements being made for payment of the agreed amount or

3-32  for the reasonable value of the farm product that is sold or delivered that

3-33  are satisfactory to the producer.

3-34    Sec. 13. 1.  Subject to the approval of a producer holding a lien, a

3-35  processor may obtain a release of the lien by:

3-36    (a) Paying the agreed or actual value of any farm product that is

3-37  delivered to or purchased by the processor within 20 days after the date

3-38  of delivery of the farm product, unless the date of payment is otherwise

3-39  agreed upon in writing or payment is secured by an instrument or

3-40  arrangement other than the lien.

3-41    (b) Obtaining a surety bond which is executed by the processor as the

3-42  principal and by a surety company which is authorized to do business in

3-43  this state as a surety in an amount equal to the current market value of

3-44  the farm product or processed farm product that the processor intends to

3-45  dispose of or sell. The bond must be conditioned that if the processor

3-46  fails to make payments to producers for the lawful claims of all

3-47  producers whose liens have been released by the bond in an amount

3-48  equal to or greater than the amount of the bond within 35 days after the

3-49  date of the bond, the surety will be liable to and shall pay the claimants

4-1  all lawful claims that may be covered by the amount of the bond and the

4-2  costs of suit if an action is filed on the bond.

4-3    (c) Depositing cash with a financial institution in this state in an

4-4  amount that is set apart by an instrument in writing which is signed by

4-5  the processor for the purpose of guaranteeing, to the extent of the

4-6  amount deposited, the payment of all existing claims of producers whose

4-7  liens are released by the deposit within 35 days after the date of the

4-8  deposit. The financial institution where a deposit is made pursuant to this

4-9  paragraph must be named as the trustee in the instrument to carry out

4-10  the provisions of the instrument.

4-11    (d) Designating, setting apart and depositing a quantity of a

4-12  nonproprietary processed farm product in a public warehouse, and

4-13  endorsing over and delivering the warehouse receipt to the producer for

4-14  a quantity of nonproprietary processed farm products in an amount that

4-15  is satisfactory to the producer for the purpose of guaranteeing, to the

4-16  extent of the value of the deposit, payment of the existing claims of

4-17  producers and labor claimants whose liens are released by the deposit

4-18  within 35 days after the date of the deposit.

4-19    (e) Securing a release after payment in full for the farm products.

4-20    2.  If a processor has paid all lawful claims of the producers in

4-21  compliance with this section, a processor may sell, transport or otherwise

4-22  dispose of any farm product for which the lien has been released.

4-23    3.  If a bond, cash deposit, warehouse deposit or other security is

4-24  given by a processor pursuant to this section, the processor may sell,

4-25  transport or otherwise dispose of an amount of the farm product or

4-26  processed farm product not exceeding the current market value

4-27  represented by the bond, cash deposit, warehouse deposit or other

4-28  security given by the processor.

4-29    4.  For the purposes of this section, the current market value of a

4-30  farm product or processed farm product may be based upon quotations

4-31  from the Federal-State Market News Service or a similar source agreed

4-32  to in writing by the parties to be determined, as appropriate, on the date:

4-33    (a) Of the bond;

4-34    (b) Of the deposit; or

4-35    (c) Other security is given.

4-36    Sec. 14. 1.  In an action commenced by a lien claimant, a

4-37  defendant processor may file a surety bond with the court in which the

4-38  action is pending in an amount that is sufficient to cover the demand of

4-39  the complaint of the plaintiff producer, including attorneys’ fees and

4-40  costs.

4-41    2.  Upon the filing of the bond described in subsection 1, the court, in

4-42  its discretion, may order the release of a portion of the farm product or

4-43  processed farm product upon which the lien of the plaintiff producer has

4-44  attached.

4-45    3.  A processor may move the court for a hearing to introduce

4-46  evidence to the court to demonstrate that he has sufficient security or

4-47  money on deposit to protect the lien or other rights of the plaintiff

4-48  producer.

5-1    4.  Upon proof of sufficient security, the court may order the release

5-2  of a portion or the whole of a farm product upon which the lien of the

5-3  plaintiff producer is attached and deny the plaintiff any recovery in the

5-4  action.

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

5-6  prejudiced by an order of the court for dismissal pursuant to

5-7  subsection 4.

5-8    Sec. 15.  1.  The judgment, if any, obtained by a plaintiff in a

5-9  personal action against a processor to obtain payment for farm products

5-10  does not impair or merge the lien rights or claims that are held by a

5-11  plaintiff.

5-12    2.  Any money collected from a personal judgment must be credited

5-13  against the amount of the lien or claim in an action that is brought to

5-14  enforce the lien or claim.

5-15    Sec. 16. 1.  The plaintiff in an action that is commenced to

5-16  foreclose a lien provided for in section 8 of this act may obtain a

5-17  preliminary injunction against the processor to restrain the processor

5-18  from removing a processed farm product in his possession or under his

5-19  control and upon which valid liens exist beyond the jurisdiction of the

5-20  court to the injury of the plaintiff.

5-21    2.  A presumption of irreparable harm to a plaintiff producer arises

5-22  when a processor removes or prepares to remove a farm product or

5-23  processed farm product in his possession or under his control and upon

5-24  which valid liens exist beyond the jurisdiction of the court.

5-25    Sec. 17. 1.  All actions commenced by a producer or producers

5-26  against a processor for the foreclosure of liens or other security provided

5-27  for in sections 2 to 17, inclusive, of this act may be consolidated by the

5-28  court and all persons that are necessary to a determination of the action

5-29  may be made parties to the action.

5-30    2.  All claims in an action in relation to an obligation of a processor

5-31  for payment secured by a lien pursuant to section 8 of this act must have

5-32  equal standing and, if applicable, be paid proportionately to the claim of

5-33  each claimant.

5-34    3.  A judgment in favor of a plaintiff producer to foreclose a lien must

5-35  state the exact amount due on the judgment from the defendant

5-36  processor.

5-37    4.  If in a court proceeding to foreclose a lien, the court finds that

5-38  there is no cash, bond, deposit or other security for the payment of the

5-39  claims of producers, the judgment of foreclosure must be against a

5-40  sufficient quantity in value of farm products or processed farm products

5-41  in the possession or under the control of the defendant processor as may

5-42  be necessary to satisfy the claim or judgment.

 

5-43  H