January 22, 2007, Introduced by Rep. Hansen and referred to the Committee on Agriculture.
A bill to provide for liens on agricultural products delivered
to processors in favor of the producers of the products; to provide
remedies; to prescribe the powers and duties of certain state
officers and agencies; and to impose a fee.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"agricultural producer's lien act".
Sec. 2. As used in this act:
(a) "Department" means the department of agriculture.
(b) "Director" means the director of the department or the
director's designee.
(c) "Person" means an individual, partnership, corporation,
association, governmental entity, or other legal entity.
(d) "Producer" includes a cooperative association of
producers.
(e) "Product" means an agricultural product.
Sec. 3. (1) A producer of products that sells a product grown
by the producer or, if the producer is a cooperative association of
producers, by a producer member of the cooperative association of
producers, to a processor under a contract, express or implied, has
a lien on the product and on all processed or manufactured forms of
the product for the labor, care, and expense of the producer in
growing and harvesting the product.
(2) The amount of the lien imposed by this act is the agreed
price for the product or, if there is no agreed price or agreed
method for determining the price, the value of the product as of
the date of delivery.
(3) Any portion of the product or the processed or
manufactured form of the product, in excess of the amount necessary
to satisfy the total amount owed to producers, under contract, is
not subject to the lien created by this section.
(4) A lien imposed by this act is in addition to all other
rights and remedies provided by law.
Sec. 4. Unless released sooner by payment or by security given
as provided in this act, a lien imposed by this act attaches on all
of the product delivered by a producer to a processor on the date
of delivery of the product or any portion of it.
Sec. 5. A lien imposed by this act is a preferred lien and has
priority over all other liens, claims, or encumbrances except the
following:
(a) Labor claims for wages and salaries for personal services
rendered by any person to a processor in connection with the
processor's business after the delivery of the product for
processing.
(b) The lien of a warehouseman under article 7 of the uniform
commercial code, 1962 PA 174, MCL 440.7101 to 440.7603.
Sec. 6. Subject to section 3(3), a lien imposed by this act
attaches on every product and any processed or manufactured form of
the product that is in the possession of the processor without
segregation of the product. For purposes of this act, all products
or processed or manufactured forms of products deposited by a
processor with a warehouse, whether or not warehouse receipts are
given as security to a lender, are in the possession of the
processor and subject to the lien.
Sec. 7. If a producer commences an action to enforce a lien
imposed by this act, the lien remains in effect until 1 of the
following occurs:
(a) Payment of the agreed price for or the value of the
product.
(b) Deposit, with the clerk of the court, of the amount of the
lien or the amount claimed by the producer.
(c) Final determination of the action.
Sec. 8. A lien on a product or processed product may be
released, to the extent the claim that gives rise to the lien is
secured, by giving a surety bond, cash deposit, or other security
as provided in this act. A producer may also release a lien on
payment of the agreed price or the reasonable value of the product
or on arrangements being made for payment that are satisfactory to
the producer.
Sec. 9. (1) A processor shall not remove from this state or
beyond the processor's ownership or control a product delivered to
the processor or a processed or manufactured form of the product to
which a lien under this act has attached.
(2) This section does not apply to a portion of the product or
processed or manufactured form of the product that exceeds a
quantity of sufficient value to satisfy all existing liens.
(3) This section does not prohibit the sale of a product or
processed or manufactured form of the product to which a lien has
attached if the total proceeds of the sale are used to satisfy
obligations to producers that are secured by a lien imposed by this
act.
Sec. 10. A processor may secure a release of 1 or more of the
liens on a product or processed or manufactured form of the product
in any of the following ways:
(a) By paying the agreed price or actual value of a product
purchased by the processor within 20 days after the delivery of the
product, unless the date of payment is otherwise agreed to in
writing or payment is secured other than by lien.
(b) By depositing with the director a surety bond executed by
the processor as principal and by a surety company qualified and
authorized to do business in this state as surety in an amount that
equals the current market value of the product or processed product
that the processor intends to sell or otherwise dispose of if the
processor makes a sworn statement of that value according to
quotations from the federal-state market news service or other
evidence satisfactory to the director. The bond shall provide that
if the processor fails within 35 days after the date of the bond to
pay, up to the amount of the bond, the lawful claims of all
producers whose liens are released by the bond, the surety shall be
liable to and shall pay to the director on behalf of the claimants
all lawful claims covered by the amount of the bond and the costs
of suit if an action is filed on the bond.
(c) By depositing with the director an amount of money and a
written instrument signed by the processor that guarantees, to the
extent of the money deposited, payment within 35 days after the
date of the deposit of all existing claims of producers whose liens
are released by the deposit. The director shall be named in the
instrument as trustee to carry out the purpose and intent of the
instrument.
(d) By designating, setting apart, and depositing in a public
warehouse a quantity of processed or manufactured products and
endorsing over to the director and delivering to the director the
warehouse receipt for the products for the purpose of guaranteeing,
to the extent of the value of the products deposited, payment
within 35 days from the date of the deposit of all existing claims
of producers and labor claimants whose liens are released by the
deposit.
(e) By securing a release from the director after payment in
full for the product.
Sec. 11. If all lawful claims of producers have been paid by a
processor in accordance with this act, any product that is released
from lien by the payment may be sold, transported, or otherwise
disposed of.
Sec. 12. If a bond, money deposit, or warehouse receipt is
given to the director by a processor as provided in this act, the
processor may sell, transport, or otherwise dispose of the product
or processed or manufactured form of the product up to a value
determined as follows:
(a) The value stated in the sworn statement of the processor
in accordance with quotations from the federal-state market news
service or other evidence satisfactory to the director.
(b) The amount of money deposited.
(c) The value of the product deposited in the warehouse and
represented in the warehouse receipt.
Sec. 13. If a bond is given as security, the director shall
notify the principal and surety of any default by the principal
under the bond and demand payment on behalf of the unpaid
claimants. If payment is not made, the director may take any legal
action the director deems necessary to enforce payment under the
bond.
Sec. 14. If payment of claims as guaranteed in a written
instrument accompanying the deposit of money with the director is
not made in accordance with the terms of the instrument, the
director may, on proof being made to the director's satisfaction of
the amount due to the claimants, pay the unpaid claims to the
extent possible from the deposited money or the proceeds from the
sale by the director of processed or manufactured products given as
security.
Sec. 15. If the director receives a warehouse receipt for a
processed or manufactured form of a product as security and the
processor fails to pay the claims secured in accordance with the
terms of the security, the director may sell the product with or
without notice and in the manner the director determines is best.
Sec. 16. All claims for payment that are secured by a lien
under this act have equal standing, and payment shall be prorated
if necessary among the claimants.
Sec. 17. (1) If in the director's opinion the rights of all
claimants are fully protected as provided for in this act, the
director may issue a certificate in the name of the department and
signed by the director releasing any specific lot or quantity of a
product or processed or manufactured form of a product from all
liens of the claimants. The director shall not release any form of
security held by the director to a processor unless the director is
satisfied that all claims secured have been fully paid or that the
rights of all claimants are fully protected.
(2) A fee of $5.00 shall be paid to the director for issuing a
certificate or release under this section.
Sec. 18. (1) This act does not affect the right of a lien
claimant to bring an action against a processor to collect the
claim, either as part of an action to foreclose the lien or as a
separate action.
(2) A money judgment for a lien claimant against a processor
for a claim does not impair or merge the right of the claimant to a
lien under this act. Any money collected on the judgment shall be
credited on the amount of the lien or of the claim in an action
brought to enforce the lien, or filed under this act by the
director.
Sec. 19. In an action filed by a lien claimant, a defendant
processor may file with the court a surety bond sufficient to cover
the amount requested in the complaint, including costs. If a bond
is filed under this section, the court may order the release of a
portion or the whole of any product or processed or manufactured
form of the product subject to the lien.
Sec. 20. If the court in an action to foreclose a lien under
this act, on motion by a defendant processor, finds from the
evidence presented that the processor has sufficient security or
money on deposit with the director to protect the lien or other
rights of the plaintiff, the court may order the release of a
portion or all of the product subject to the lien and deny
plaintiff any recovery in the action. Such an order by the court
does not prejudice any other rights or remedies of the plaintiff.
Sec. 21. The plaintiff in an action to foreclose a lien
imposed by this act may, in a proper case and on proper
allegations, secure an injunction against the defendant processor
in accordance with Michigan court rules to restrain the processor
from doing any acts designed to or that would, in effect, remove
any processed or manufactured form of the product in the
processor's possession or under the processor's control that is
subject to the lien beyond the process of the court to the
plaintiff's injury.
Sec. 22. If the court in an action to foreclose a lien under
this act determines that a bond, money, warehouse receipt, or
another form of security has not been deposited with the director
as security for the payment of claims that are secured by the lien,
the court shall enter a judgment of foreclosure against a
sufficient quantity in value of the product or processed or
manufactured form of the product in the possession or under the
control of the defendant processor that is necessary to satisfy the
claims, or enter a judgment declaring any bond deposited with the
court by the processor to secure the claims forfeited.
Sec. 23. (1) A court may consolidate all actions filed by the
director or producers against a processor for the foreclosure of a
lien or other security provided for in this act. A judgment entered
in a consolidated action shall determine the lawfulness and the
amount of each claim contained in the pleadings.
(2) A court may order that any person that is necessary to the
determination of an action for the foreclosure of a lien or other
security provided for in this act be joined as a party to the
action.