Wis. Stat. chapter 779 sets forth several statutory liens. These liens arise by operation of law, without the consent of the debtor, when the specific requirements of the statute are met.
The most familiar type of statutory lien is Wisconsin’s construction lien law. A construction lien arises when a contractor provides material or labor to improve a building. Statutory liens, like a construction lien, are special, because the creditor does not need to obtain the debtor’s permission for the lien to attach or involve a court to obtain it.
Three types of statutory liens commonly arise in the agricultural industry.
In the early to mid-1900s, farmers would have another individual thresh their wheat. Threshing machines were very expensive and the amount of wheat grown by a typical farmer could not justify a farmer purchasing a machine for themselves. Today, many farmers still choose to have their crops harvested by a third party since modern harvesting equipment is still extremely expensive. The statute that gives a custom harvester a lien on his client/farmer’s crop which he harvested is found in Wis. Stat. section 779.50, and is as follows:
779.50 Lien for threshing, husking, baling; enforcement.
(1)(a) Every person who threshes grain, cuts, shreds, husks or shells corn or bales hay or straw by machine for another shall have a lien upon the grain, corn, hay or straw for the value of the services to the extent that the person contracting for the services has an interest in the grain, corn, hay or straw, from the date of the commencement of the service.
(1)(b) The lien given under par. (a) may be foreclosed at any time within 6 months from the date of the last charge for the services described in par. (a) as long as the charges remain unpaid. For the purpose of foreclosing the lien, the lien claimant may take possession of so much of the grain, corn, hay or straw as shall be necessary to pay for the services and the expenses of enforcing the lien, for the services, and sell the grain, corn, hay or straw at public auction. The auction shall be held upon notice of not less than 10 nor more than 15 days from the date of the seizure of the grain, corn, hay or straw under this paragraph.
(2) Notice of such sale shall be given personally and by posting in at least three public places in the town where the debtor resides, and also in the town where such sale is to be made; and if such debtor is a nonresident of the state, in the town where such grain, corn, hay or straw, or some part thereof, was threshed, cut, husked, shelled or baled, and apply the proceeds of such sale to the payment of such service, together with the expenses of such seizure and sale, returning the residue to the party entitled thereto.
(3) The lien created by this section shall be preferred to all other liens and encumbrances, but does not apply to an innocent purchaser for value unless such lien is recorded in the office of the register of deeds of the county where the services were performed within 15 days from the date of the completion of such service.
As you can see from statute, the lien is preferred to all other liens and encumbrances. In addition, a lien registered with the register of deeds office is effective against an innocent purchaser for value.
Custom Raiser’s Lien
Today, many farmers choose to have a portion of their livestock custom raised by a third party.
For example, dairy farmers may choose to have their young stock raised by a third party, because they wish to concentrate on the dairy cows, or they may not have sufficient labor, feed, or buildings for such young stock. Based upon a statute that has been on the books since the time of livery stables, Wisconsin law grants a custom raiser or feedlot operator a lien on the owner’s cattle for the feed and care of the cattle.
The statute that gives a custom heifer raiser or cattle feedlot operator a lien on his client/farmer’s cattle is found in Wis. Stat. section 779.43. The enforcement procedures of the lien are found in Wis. Stat. section 779.48. The statutes are:
779.43 Liens of keepers of hotels, livery stables, garages, marinas and pastures.
(3) Subject to sub. (4), every keeper of a garage, marina, livery or boarding stable, and every person pasturing or keeping any carriages, automobiles, boats, harness or animals, and every person or corporation, municipal or private, owning any airport, hangar or aircraft service station and leasing hangar space for aircraft, shall have a lien thereon and may retain the possession thereof for the amount due for the keep, support, storage or repair and care thereof until paid. But no garage or marina keeper shall exercise the lien upon any automobile or boat unless the keeper gives notice of the charges for storing automobiles or boats on a signed service order or by posting in some conspicuous place in the garage or marina a card that is easily readable at a distance of 15 feet.
(2) Every person given a lien by ss. 779.41 and 779.43 (3) may in case the claim remains unpaid for 2 months after the debt is incurred, and a person given a lien under s. 779.47 (2) may if the claim remains unpaid 90 days after the lien is perfected, enforce such lien by sale of the property substantially in conformity with subch. VI of ch. 409 and the lien claimant shall have the rights and duties of a secured party thereunder. When such sections are applied to the enforcement of such lien the word debtor or equivalent when used therein shall be deemed to refer to the owner of the property and any other person having an interest shown by instrument filed as required by law or shown in the records of the department of transportation, and the word indebtedness or equivalent shall include all claims upon which such lien is based.
As you can see, the statute is silent as to the lien’s priority.
In the case of Premier Community Bank v. Schuh,1 the defendant/father pastured his son's cattle, and the son failed to pay pasture rent and defaulted on his loan to the plaintiff/bank that had perfected security interest in the cattle. The court held that father's statutory lien under section 779.43(3) beat out the bank's perfected security interest.
Farmers typically have a third party company artificially inseminate their livestock. The statute that grants the breeding services company a lien on the serviced cattle and their offspring is found in Wis. Stat. section 779.49:
779.49 Lien of owner of breeding animal or methods.
(1)(a) Except as provided in par. (b), every owner of a stallion, jackass or bull, or semen from a stallion, jackass or bull, kept and used for breeding purposes shall have a lien upon any dam served and upon any offspring gotten by the animal, or by means of artificial insemination for the sum stipulated to be paid for the service of the dam. The owner of the stallion, jackass or bull, used to service, or semen used to artificially inseminate, the dam may seize and take possession of the dam and offspring or either without process at any time before the offspring is one year old, in case the price agreed upon for the service remains unpaid, and sell the offspring at public auction. The sale of the offspring shall be upon 10 days' notice, to be posted in at least 3 public places in the town where the service was rendered. The proceeds of the sale shall be applied to the payment of the amount due for the service and the expenses of the seizure and sale. The residue, if any, shall be returned to the party entitled to it.
(1)(b) No lien given under this subsection shall be effective for any purpose against an innocent purchaser or mortgagee of the offspring or the dam of the offspring for value unless the owner having a claim for the service records with the register of deeds of the county where the owner of the dam served resides a statement showing that the service has been rendered and the amount due for the service.
As you can see from the statute, a properly registered lien with the register of deeds office is effective against an innocent purchaser or a lender who has a filed security interest. It is also good practice to send an actual notice of the lien to all local cattle sale barns as well.
This article provides only a brief description of the most common statutory agricultural liens. If you wish to use these rights, you should be prepared to expect a rigorous defense against such liens from those who do not know of their existence.
This article was originally published on the State Bar of Wisconsin’s Agriculture Law and Rural Practice Blog of the Solo/Small Firm & General Practice Section. Visit the State Bar sections or the Solo/Small Firm & General Practice Section web pages to learn more about the benefits of section membership.
1 2010 WI App 111, 329 Wis. 2d 146, 789 N.W.2d 388, 09-1722.