CHAPTER 163

FACTOR'S LIENS

AN ACT TO AMEND ARTICLE 3, CHAPTER 79, OF THE REVISED CODE OF DELAWARE OF 1935, RELATING TO LIENS, BY ADDING A NEW SUB-TITLE AND EIGHT NEW SECTIONS TO FOLLOW IMMEDIATELY AFTER 3340. SEC. 17; SAID NEW SUB-TITLE TO BE KNOWN AS "FACTORS' LIENS" AND SAID NEW SECTIONS DEFINING THE TERMS "FACTOR", "MERCHANDISE" AND "BORROWER", PROVIDING FOR A CONTINUING GENERAL LIEN OF FACTORS ON MERCHANDISE AND THE PROCEEDS OF THE SALE THEREOF AND THE MANNER IN WHICH SUCH LIENS SHALL BE CREATED AND RECORDED OR NOTICE THEREOF PLACED ON RECORD, AND PROVIDING FURTHER THAT SAID SUBTITLE SHALL BE CONSTRUED AS PROVIDING AN ADDITIONAL METHOD FOR FINANCING THE MANUFACTURE, PROCESSING OR SALE OF MERCHANDISE, AND IS NOT TO BE CONSTRUED AS AFFECTING THE VALIDITY OF LIENS HERETOFORE OR HEREAFTER ACQUIRED AS SECURITY FOR THE FINANCING OF THE MANUFACTURING OR PROCESSING OR SALE OF MERCHANDISE UNDER THE PROVISIONS OF ANY OTHER STATUTE OF THIS STATE OR UNDER THE PROVISIONS OF THE COMMON LAW IN EFFECT IN THIS STATE.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

Section 1. That Article 3 of Chapter 79 of the Revised Code of Delaware of 1935 be and the same is hereby amended by adding a new sub-title, to be known as "FACTORS' LIENS", immediately after 3340. Sec. 17 and eight new Sections designated as 3340A. Sec. 17A, 3340B. Sec. 17B, 3340C. Sec. 17C, 3340D. Sec. 17D, 3340E. Sec. 17E, 3340F. Sec. 17F, 3340G. Sec. 17G, 3340H. Sec. 1711.

FACTORS' LIENS

3340A. Sec. 17A. Factor, Merchandise and Borrower, Defined:--The term "factor", wherever used in this sub-title of this Article, shall mean persons, firms, banks, and other corporations, and their successors in interest, engaged, in whole or in part, in the business of lending or advancing money on the security of merchandise, or the proceeds of sale thereof, whether or not they are employed to sell such merchandise. The term "merchandise" wherever used in this sub-title of this Article, shall mean any personal property intended for sale, whether or not after further manufacturing or processing, and does not include fixtures or other trade or manufacturing equipment of any borrower. The term "borrower" whenever used in this sub-title of this Article, shall mean the owner of merchandise, or his agent, who creates a lien in favor of a factor.

3340B. Sec. 17B. Loans, Advances and Other Charges, a Continuing General Lien If So Provided in Written Agreement or Separate Written Statement:--If so provided by any written agreement with the borrower, a factor shall have a continuing general lien upon all merchandise described in such agreement or memoranda thereof, or if so provided in said agreement, all merchandise from time to time designated in separate written statements, dated, signed and delivered by the borrower to the factor, in which agreements, memoranda or statements is set forth the property to be covered by the lien, whether or not such merchandise is in the constructive, actual or exclusive occupancy or possession of the factor, and such lien shall secure the factor for all his loans and advances to or for the account of the borrower, together with interest thereon, and also for the commissions, obligations, indebtedness, charges and expenses properly chargeable against or due from said borrower, and for the amounts due or owing upon any notes or other obligations given to or received by a factor for or upon account of any such loans or advances, interest, commissions, obligations, indebtedness, charges and expenses.

3340C. Sec. 17C. Agreement Must Be Under Affidavit, When Recorded, Facts To Be Set Forth In Affidavit:--Every such written agreement must be under affidavit by the factor or his agent to the effect that the statements therein contained are true to the best of his knowledge and belief, and within fifteen (15) days after the execution thereof said written agreement or a brief memorandum thereof setting forth the following facts shall be recorded in the Recorder of Deeds Office of the several counties, as the case may be, where the merchandise subject to the lien, or any substantial part thereof, is or is intended to be located, kept or stored:

(a) The true name of the factor; the trade name of the factor in said business; if the factor be a partnership or an association, the names of the partners or members; and, if a corporation, the name of the State under whose laws it was incorporated; the principal place of business of the factor within this State or if factor has no place of business within this State, factor's principal place of business outside of this State;

(b) The name and address of the borrower, and the address of borrower's principal place of business, and if borrower is a partnership, the names and addresses of the several partners, and if the borrower is a corporation, the State of its incorporation, and the interest of the borrower in the merchandise, as far as known to the factor;

(c) The general character of merchandise subject to the lien, or which may become subject thereto, and the period of time during which such loans or advances may be made under the terms of the agreement providing for such loans or advances and for such lien. Said agreement shall contain a general description of the place where the merchandise or any substantial portion thereof is or intended to be located, kept or stored, and such other and additional terms and conditions as factors and borrowers may elect.

Amendments may be filed from time to time to record any changes in the agreement or recorded memorandum. Such lien shall be valid from the time of such recording, whether such merchandise shall be in existence at the time of the execution of the written agreement creating the lien or shall come into existence subsequently thereto, or shall subsequently thereto be acquired by the borrower. The Recorders of Deeds shall accept for recording every such agreement or memorandum presented for that purpose and shall endorse thereon the time of its receipt; such agreement or memorandum shall be recorded in a special for recording, and shall thereupon write the word "discharged" in the book where the agreement or memorandum is recorded, opposite the recording thereof, and the lien shall thereupon be discharged. For each recording of discharge, said Recorder of Deeds shall be entitled to receive the sum of Fifty Cents (50c). All agreements or memoranda recorded pursuant to this Act and not discharged by recording a certificate setting forth payment or satisfaction thereof shall be deemed to be and remain in full force and effect under this Act without further or other recording for a period of not more than three (3) years from the date of recording. At any time before the expiration of three (3) years from the date of original recording, a like agreement, memorandum or statement may be recorded in like manner as the original recording. Any recording of such further agreement, memorandum or statement shall be valid in like manner and for like period as an original recording, and shall also continue the rank of the factor's lien as against all junior interests.

3340F. Sec. 17F. Factor Has Continuing General Lien When Merchandise is in His Possession:--When the factor, or any third party for the account of any such factor, shall have possession of merchandise, such factor shall have a continuing general lien, as set forth in Section 17B of this Act, without recording the written agreement or memorandum thereof provided for in this Act.

3340G. Sec. 17G. Act, How Construed:--This Act is to be construed liberally to secure the beneficial interest and purposes thereof. A substantial compliance with its several provisions shall be sufficient for the validity of a lien and to give jurisdiction to the courts to enforce the same. Nothing in this Act shall be construed- as affecting or limiting any existing or future lien at common law or any rights at common law or any rights given by any other statute to the factor, and as to any transaction falling within the provisions both of this Act and of any other statute of this State requiring or permitting filing, recording, consent, publication, notices or formalities of execution, the factor shall not be required to comply with the provisions of any such other statute.

3340H. Sec. 17H. Act to be Construed as Providing An Additional Method for Financing, Manufacturing, Processing or Sale of Merchandise:--This sub-title shall be construed as providing an additional method for financing the manufacturing, processing or sale of merchandise and is not to be construed as affecting the validity of liens heretofore or hereafter acquired as security for the financing of the manufacturing, processing or sale of merchandise under the provisions of any other statutes of this State, or the common law in effect in this State.

Approved April 3, 1947.