Opinion ID: 1762262
Heading Depth: 1
Heading Rank: 1

Heading: Did the bank waive its security?

Text: Strauss claims the bank was well aware Fleming was selling secured cattle and replacing them by buying from Strauss. It is contended that since the bank acquiesced in these transactions it waived its lien under its afteracquired clause. Strauss relies on the Bank of Ashippun v. Ells (1957), 274 Wis. 530, 80 N. W. 2d 357; but, this case is not in point. Ells involved a chattel mortgage on specific property with no after-acquired-property clause and was decided prior to the adoption of the Uniform Commercial Code. Prior to the code, it was almost impossible for a lender to maintain in farm financing a valid security on a herd of cattle which was being sold or renewed. See Helstad, Wisconsin UCC Handbook, sec. 17.12(2). In order to give more flexibility to such financing, the code freed the debtor from strict accountability to the secured creditor for the property secured, sec. 409.205, Stats., [1] and recognized the validity of a secured interest in after-acquired property, sec. 409.204(3). [2] Thus a debtor is now able to commingle his property and use it to his best interest, and the acquiescence of the secured creditor under an after-acquired clause in such a program by the debtor does not invalidate the security interest of the creditor. Sec. 409.205, Stats. See Helstad, supra, sec. 17.12(3). Consequently, the bank's knowledge that Fleming was dealing in cattle does not constitute a waiver of its security interest in afteracquired property.