409.315 Secured party's rights on disposition of collateral and in proceeds.

(1) Disposition of collateral: continuation of security interest or agricultural lien; proceeds. Except as otherwise provided in this chapter and in s. 402.403 (2):

(a) A security interest or agricultural lien continues in collateral notwithstanding sale, lease, license, exchange, or other disposition thereof unless the secured party authorized the disposition free of the security interest or agricultural lien; and

(b) A security interest attaches to any identifiable proceeds of collateral.

(2) When commingled proceeds identifiable. Proceeds that are commingled with other property are identifiable proceeds:

(a) If the proceeds are goods, to the extent provided by s. 409.336; and

(b) If the proceeds are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this chapter with respect to commingled property of the type involved.

(3) Perfection of security interest in proceeds. A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected.

(4) Continuation of perfection. A perfected security interest in proceeds becomes unperfected on the 21st day after the security interest attaches to the proceeds unless:

(a) The following conditions are satisfied:

1. A filed financing statement covers the original collateral;

2. The proceeds are collateral in which a security interest may be perfected by filing in the office in which the financing statement has been filed; and

3. The proceeds are not acquired with cash proceeds;

(b) The proceeds are identifiable cash proceeds; or

(c) The security interest in the proceeds is perfected other than under sub. (3) when the security interest attaches to the proceeds or within 20 days thereafter.

(5) When perfected security interest in proceeds becomes unperfected. If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under sub. (4) (a) becomes unperfected at the later of:

(a) When the effectiveness of the filed financing statement lapses under s. 409.515 or is terminated under s. 409.513; or

(b) The 21st day after the security interest attaches to the proceeds.

History: 2001 a. 10.

If a security agreement does not explicitly provide that transfer of collateral constitutes default and the secured party is not entitled to immediate possession, sale of collateral is not a conversion. Production Credit Association of Chippewa Falls v. Equity Coop Livestock, 82 Wis. 2d 5, 261 N.W.2d 127 (1978).

The rights of a security holder in collateral survive the transfer of the collateral under s. 409.311 made without the secured party's consent. Production Credit Association of Madison v. Nowatzski, 90 Wis. 2d 344, 280 N.W.2d 118 (1979).

A condition imposed by a secured party on authorization to sell collateral is ineffective unless performance of the condition is within the buyer's control. Production Credit Association of Baraboo v. Pillsbury Co. 132 Wis. 2d 243, 392 N.W.2d (Ct. App. 1986).

NOTE: The above annotated materials cite to the pre-2001 Wis. Act 10 version of ch. 409.