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  REVISOR of STATUTES

  

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84-7-210. Enforcement of warehouse's lien. (a) Except as otherwise provided in subsection (b), a warehouse's lien may be enforced by public or private sale of the goods, in bulk or in packages, at any time or place and on any terms that are commercially reasonable, after notifying all persons known to claim an interest in the goods. The notification must include a statement of the amount due, the nature of the proposed sale, and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a method different from that selected by the warehouse is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. The warehouse sells in a commercially reasonable manner if the warehouse sells the goods in the usual manner in any recognized market therefor, sells at the price current in that market at the time of the sale, or otherwise sells in conformity with commercially reasonable practices among dealers in the type of goods sold. A sale of more goods than apparently necessary to be offered to ensure satisfaction of the obligation is not commercially reasonable, except in cases covered by the preceding sentence.

(b) A warehouse may enforce its lien on goods, other than goods stored by a merchant in the course of its business, only if the following requirements are satisfied:

(1) All persons known to claim an interest in the goods must be notified;

(2) the notification must include an itemized statement of the claim, a description of the goods subject to the lien, a demand for payment within a specified time not less than 10 days after receipt of the notification, and a conspicuous statement that unless the claim is paid within that time the goods will be advertised for sale and sold by auction at a specified time and place;

(3) the sale must conform to the terms of the notification;

(4) the sale must be held at the nearest suitable place to where the goods are held or stored; and

(5) after the expiration of the time given in the notification, an advertisement of the sale must be published once a week for two weeks consecutively in a newspaper of general circulation where the sale is to be held. The advertisement must include a description of the goods, the name of the person on whose account the goods are being held, and the time and place of the sale. The sale must take place at least 15 days after the first publication. If there is no newspaper of general circulation where the sale is to be held, the advertisement must be posted at least 10 days before the sale in not fewer than six conspicuous places in the neighborhood of the proposed sale.

(c) Before any sale pursuant to this section, any person claiming a right in the goods may pay the amount necessary to satisfy the lien and the reasonable expenses incurred in complying with this section. In that event, the goods may not be sold but must be retained by the warehouse subject to the terms of the receipt and this article.

(d) A warehouse may buy at any public sale held pursuant to this section.

(e) A purchaser in good faith of goods sold to enforce a warehouse's lien takes the goods free of any rights of persons against which the lien was valid, despite the warehouse's noncompliance with this section.

(f) A warehouse may satisfy its lien from the proceeds of any sale pursuant to this section but shall hold the balance, if any, for delivery on demand to any person to which the warehouse would have been bound to deliver the goods.

(g) The rights provided by this section are in addition to all other rights allowed by law to a creditor against a debtor.

(h) If a lien is on goods stored by a merchant in the course of its business, the lien may be enforced in accordance with subsection (a) or (b).

(i) A warehouse is liable for damages caused by failure to comply with the requirements for sale under this section and, in case of willful violation, is liable for conversion.

History: L. 2007, ch. 90, § 16; July 1, 2008.

KANSAS COMMENT, 1996

This section is virtually identical to 84-7-308. Subsection (1) spells out procedures for enforcing the warehouseman's lien when the goods have been stored by a merchant in the course of his business. See also subsection (8), which gives warehousemen the option of proceeding under the commercially reasonable standards of subsection (1) or the stricter, but more defined, standards of subsection (2), in enforcing the lien on nonbusiness goods. Article 7 does not define the term "merchant," but it would seem that the drafters intended the definition in 84-2-104 to apply. Unlike former K.S.A. 82-133, subsection (1) does not expressly require written notification. However, written notice is required under K.S.A. 34-272, and it would seem to be the most prudent course for any warehouseman. In cases where it is not clear whether the bailor was a merchant, the warehouseman should adopt the procedures set forth in subsection (2), which establishes procedures for enforcing the lien where the goods were not deposited by a merchant in the ordinary course of business. Although the sale must be commercially reasonable for both subsections (1) and (2), the stricter and more detailed procedure for enforcement is spelled out in subsection (2), which may require more than commercial reasonableness. If the procedures detailed in 84-7-210(2) are not followed, the warehouseman may be liable for conversion. See Owen v. Treadwell, 11 K.A.2d 127, 716 P.2d 585 (1986). When grain is the subject in storage, the warehouseman must also comply with K.S.A. 34-272.

Subsection (3) establishes a means of redemption by any person claiming a right in the goods. See also K.S.A. 34-274.

Subsection (4) makes it clear that a warehouseman may buy the goods if the sale is public. This provision is analogous to 84-2-706(4)(d), which permits a reselling seller to buy, and 84-9-504(3), which permits a secured party to buy at a public foreclosure sale, and those sections may be useful for precedent.

Subsection (5) is designed to encourage high bidding at foreclosure sales. The protection given to good faith purchasers corresponds to the protection given those same purchasers under 84-2-706, on seller's resale, and 84-9-504, on foreclosure of security interests.

Subsection (6) merely provides for the disposition of the proceeds. See also K.S.A. 34-274 and 34-276. Subsection (7) establishes that this section is not exclusive, and the warehouseman, acting as creditor, may exercise any other rights granted him by law. See also K.S.A. 34-271 and 34-275.

The distinction drawn in subsection (9) is apparently new.

The constitutionality of this section has been upheld by the United States Supreme Court in Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 98 S. Ct. 1729, 56 L.Ed.2d 185 (1978). However, the New York court, in Svendsen v. Smith's Moving & Trucking Co., 76 App. Div.2d 504, 431 N.Y.S.2d 94 (1980), aff'd 54 N.Y.2d 865, 444 N.Y.S.2d 904, 429 N.E.2d 411 (1981), cert. den., 455 U.S. 927 (1982), has held this section unconstitutional as a violation of the due process clause of the New York State Constitution.

Revisor's Note:

Former section 84-7-210 repealed by L. 2007, ch. 90, § 78 and the number reassigned to the current text.

CASE ANNOTATIONS

1. Subsection (2) requires strict compliance to enforce statutory lien on household goods; commercial reasonableness in subsection (1) also required. Owen v. Treadwell, 11 Kan. App. 2d 127, 132, 716 P.2d 585 (1986).

2. By choosing to pursue a warehouseman's lien under 84-7-210, warehouseman is precluded from seeking a second remedy under 84-7-206. Connery v. Jones Storage & Moving, Inc., 27 Kan. App. 2d 55, 997 P.2d 745 (2000).

3. Notice of sale by warehouse man not in compliance with 84-7-210(b). Snider v. MidFirst Bank, 42 Kan. App. 2d 265, 211 P.3d 179 (2009).


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