W I S C O N S I N
M O V E R S A
S S O C I A T I O N, I
N C.
STEPS NECESSARY TO ENFORCE A WAREHOUSE KEEPER'S LIEN
ON STORED HOUSEHOLD GOODS PURSUANT TO
1987 WISCONSIN ACT 213 (A.B. 213)
(An Act to repeal and recreate 407.210(2) of the statutes,
relating to the foreclosure of a warehouse keeper's lien)
-
Notification.
The first step in the enforcement of a warehouse keeper's
lien on stored household goods is to notify the customer of the
intent to sell the goods.
The notice must be delivered personally or sent by either
certified or registered mail and goes to claim any interest in the
goods. Attached is
a sample notice, which meets the requirements of subsection (b)
of the legislation. Anyone
giving this notice should pay attention to the following details:
-
Itemized statement of Claim:
This should set forth in detail the total charges claimed.
If the charges are numerous and complex, it may be easier
to attach copies of invoices.
If the claim can be stated in simple terms, such as "October
of 1987 through June of 1988, nine (9) months at $225.00 per month,
total $2,025.00", the statement of claim can and should be
embodied in the notification.
-
Description of Goods Subject to Lien.
If only one or two items are being stored, such as a piano
and a piano bench, the description of the goods subject to the
lien can be stated in the body of the notification; otherwise,
the most sensible thing to do is to attach copies of the inventory
sheets.
-
Demand for Payment.
The total amount due should be stated, and the customer
must be told that he or she has 30 days in which to pay the delinquent
charges. Please note
that the 30 days runs from the date the customer receives
the notice. The law
does not specify what happens if the customer refuses to accept
the mail.
-
Conspicuous Statement.
The law requires a "conspicuous statement" warning
the customer of the consequences of ignoring the notification.
Full capitalization of the required wording, as set forth
in the sample notice, should satisfy this requirement.
NOTE: It is no longer necessary to inform the customer that the goods
will be advertised for sale and sold by auction at a specified time
and place. This eliminates
the old requirement of newspaper publication or posting at six locations
in the neighborhood of the sale.
In addition, it is no longer necessary to hold the sale "at
the nearest suitable place to that where the goods are held or stored",
nor is it obligatory that the sale take place at least 15 days after
publication, although it should be noted that the notice period has
been extended from ten (10) days to thirty (30) days.
-
Sale of the Goods.
The next step is to sell the goods, either at a public sale
(generally an auction, as in past practice) or at a private sale,
which can literally be to anyone, at any time after the thirty-day
notice period has expired.
The only limitation is that the terms of the sale must be
"commercially reasonable".
This is a legal term, which is used, in many different settings,
and lengthy treatises have been written by legal scholars trying
to define what "commercially reasonable" means.
In this case, the exact language of the statute provides
important guidelines.
-
Best Price Possible
Not Determinative.
The law provides that: "The fact that a better price
could have been obtained by a sale at a different time or in
a different method from that selected by the warehouseman is
not of itself sufficient to establish that the sale was not
made in a commercially reasonable manner.
If the warehouseman either sells the goods in the usual
manner in any recognized market therefore,
or if he sells at the price current in such market at the time
of his sale, or if he has otherwise sold in conformity with
commercially reasonable practices among dealers in the type
of goods sold, he has sold in a commercially reasonable manner.
A sale of more goods than apparently necessary to be
offered to insure satisfaction of the obligation is not commercially
reasonable except in cases covered by the preceding sentence."
(407.210(1) WI Stats.)
This deprives the
customer of the opportunity to "second guess" the warehouse
keeper's judgment
by showing that the goods could have been sold for more money at a different
time, or by a different method.
The burden of proof, in other words, is on the customer to prove
that the sale was not commercially reasonable - unless the sale price
was so ridiculously low that it could not be considered reasonable under
any circumstances.
-
Three Ways To Be "Commercially Reasonable."
The statute sets forth three different standards for what
kinds of practices are deemed "commercially reasonable."
Satisfying any of these three standards will meet
the test of commercial reasonableness.
-
Selling the goods
in the usual manner in any recognized market therefore.
This seems to suggest that a "garage sale"
approach would
be considered commercially reasonable.
-
Selling the goods at the price current in such market
at the time of sale.
This seems to suggest that the goods could be "wholesaled
out" to persons who customarily engage in the purchase
of used household goods at established prices.
-
Selling the goods in conformity with commercially reasonable
practices among dealers in the type of goods sold.
This appears to be a catch-all clause that suggests that
if some standards in the industry exist for the sale of stored
household goods, following those standards will satisfy the
"commercially reasonable" test.
-
Selling More Goods Than Necessary.
This is a difficult problem, which fortunately does not
appear to arise with great frequency.
The law does not allow the warehouse keeper to sell "more
goods than apparently necessary to be offered to insure satisfaction
of the obligation," except in cases covered by the
"three ways to be commercially reasonable" as previously
set forth. This seems
to offer more confusion than guidance; however, it would appear
that the best guide is simply common sense.
In a "garage sale" setting it may me necessary
to expose the entire lot for sale even if the sale of all the
goods would produce more than enough proceeds to satisfy the storage
obligation, simply because there is no way of knowing which items
will be sold. However,
since a "garage sale" approach seems to be sanctioned
as inherently commercially reasonable, this would seem to indicate
that a sale which happens to yield more than is needed to cover
the storage costs would not necessarily be commercially unreasonable.
-
Payment Before Sale.
If any person claiming an interest in the goods pays the
amount necessary to satisfy the lien and the reasonable expenses
incurred by the warehouse keeper, before the sale, the goods must
not be sold.
-
After The Sale.
The warehouse keeper may satisfy his lien from the proceeds
of the sale. However, if the proceeds of the sale are more than
sufficient to cover the lien and the expenses of the sale, the balance
must be held for delivery on demand to "any person to whom
he would have been found to deliver the goods."
-
Non-compliance With The Law.
A "purchaser in good faith" (i.e. someone who purchases
goods from a warehouse keeper for a fair price and without knowledge
of irregularities in the sale) gains title to the goods and the
former owner has no claim or recourse against the purchaser.
The former owner's remedies are with the warehouse keeper
who sold the goods in a manner that does not conform to these provisions.
If the violation(s) of the law by the warehouse keeper are
"willful", then the warehouse keeper is liable for conversion.
-
Possible legal pitfalls related to lien law as amended
by 1987 Wisconsin Act 213
-
Uncertainty.
There is some uncertainty regarding the "commercially
reasonable" nature of any sale.
In the case of abandoned goods, the likelihood of challenge
is probably minimal; however, if the customer has not abandoned
the goods but is merely unable or unwilling to pay, great care
should be exercised to insure that the "commercially reasonable"
test is satisfied. Just
because the law says that the fact that a higher price could
have been obtained does not defeat a claim that the sale is
commercially reasonable, never the less this should not be construed
as an open invitation to give the goods away.
The best guide is common sense, never forgetting that
the customer has rights that can be enforced in a court of law.
-
Notice Problems.
The 30-day period set forth in the notice does not commence
until the customer actually receives the notice.
This could present a problem in cases where the owner
is no where to be found, or for some reason cannot be personally
served or delivered by certified or registered mail.
Proof of actual receipt of the notice by the customer
would be crucial in a contested case, so it would not pay to
cut corners on the notice requirement.
The problem with the disappeared owner is that the lien
cannot be enforced. Lawyers who face this problem initiating
lawsuits have the option of publishing notice of the suit in
a newspaper, but legislature did not provide the warehouse keeper
with this option. If
this proves to be a recurring problem in the industry, perhaps
some corrective action by the legislature would be in order.
-
Sample letter of notification:
(company letterhead)
NOTIFICATION OF INTENT TO SELL GOODS
SUBJECT TO WAREHOUSE KEEPER'S LIEN
TO:
(name and last known address of customer)
DATE OF NOTIFICATION:____________________________
YOU ARE HEREBY NOTIFIED that this company claims a warehouse
keeper's lien on the goods described below, for accrued storage and
other charges totaling $_____________ as itemized below.
UNLESS THIS CLAIM IS PAID IN FULL WITHIN THIRTY (30) DAYS
AFTER YOUR RECEIPT OF THIS NOTIFICATION, THE GOODS WILL BE SOLD BY PUBLIC
OR PRIVATE SALE, as provided in Section 407.210 of the Wisconsin Statutes.
DESCRIPTION OF GOODS: (see attached inventories)________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
ITEMIZED STATEMENT OF CLAIM:_____________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Should you have any questions concerning this Notification,
please feel free to contact us during normal business hours.
Your cooperation is necessary to avoid the sale of your goods.
(signature of company official)