§ 3:206 — Matters to be covered by contract for continuing credit loan

Louisiana § 3:206

• Jurisdiction: Louisiana
• Title 3: Agriculture and Forestry

Text

§206. Matters to be covered by contract for continuing credit loan
A. Corporations operating under this Chapter may contract with the
borrower applying for a continuing credit loan to advance him monies,
supplies, seeds, fertilizer, work animals, agricultural implements, livestock,
cows, and poultry for his successive annual operations, not exceeding in the
aggregate at any time the designated maximum amount. The maximum
amount plus attorney's fees and costs, as set forth in the contract, shall during
the entire period of the loan be the amount due by the borrower to the
corporation for the advances already made and to be made.
B. The mortgage and security agreement between the corporation and
the borrower shall contain in addition to rules, regulations, conditions, and
stipulations required by the corporation the following:
(1) A declaration by the borrower setting forth that he has applied to
the corporation for a continuing credit loan of $_____ (maximum amount), to
be made to him from time to time, not exceeding at any time in the aggregate
the maximum amount, to enable him to continue his agricultural operations
over a stated period not to exceed ten years, on a specifically described farm
of which he is the owner or lessee, by planting, cultivating, and harvesting
crops thereon and therefrom during the period of time.
(2) A declaration by the borrower:
(a) That the farm together with the presently planted crops and all the
crops proposed to be planted for that current year and all future crops
thereafter planted thereon of any nature or kind, and together with all livestock
and work animals and agricultural implements thereon, shall, for the purpose
of this Chapter and during the term of the continuing credit loan, be considered
and dealt with as a whole, as part and parcel of the realty.
(b) That during the period the borrower binds and obligates himself, his
heirs and assigns not to grant any additional security interest affecting any of
its crops, nor to obtain any advances for the crops, nor to grant any additional
security interest affecting any of the chattels thereon, to any one else than the
corporation, nor to do any act or thing to the prejudice of the corporation's
security interest securing the continuing credit loan and the advances made and
to be made thereunder.
C. The security agreement shall affect and include:
(1) All crops now planted and to be planted, cultivated, and harvested
on the farm during the period.
(2) All livestock and work animals and agricultural implements,
belonging to borrower.
(3) The pledge of the capital stock of the corporation of an aggregate
par value of not less than one tenth of the maximum amount of the loan.
(4) Such other collateral security as may be given and accepted by the
corporation.
D.(1) The security agreement shall further provide that during the
period of the continuing credit loan and in order to enable and facilitate the
corporation's ability to secure and to obtain the necessary funds to make the
advances to borrower as contracted for between them, the borrower shall from
time to time furnish and deliver to it his promissory notes. At no time shall the
sum of the principals of the notes exceed the maximum amount of the
continuing credit loan.
(2) The notes shall be consecutively numbered as issued, beginning
with number one to the number of the last note. They shall be drawn by the
maker upon a form approved by the corporation, payable to the order of the
corporation at such place and at such dates and providing for such attorney's
fees, if placed in the hands of an attorney for collection, as prescribed by the
corporation, and shall have endorsed on the reverse of each the following
words: "This is Note No. _____ of an indeterminate series of notes issued in
accordance with the provisions of Chapter 3 of Title 3 of the Revised Statutes
of Louisiana, providing for continuing credit loans by agricultural credit
corporations; notes previously issued, Nos. _____; of which notes Nos. _____
have been retired and cancelled, leaving the sum of the principals of this and
all the notes prior hereto, outstanding $_____", followed by signature of
maker.
(3) Each note thus issued shall be delivered to the corporation, and
shall be in its hands negotiable, for sale or discount to a third party. The
security interest and mortgages securing the continuing credit loan, shall inure
to the benefit of any holder thereof without the necessity of any notarial
assignment and the holder of the notes shall have the right to enforce the full
and punctual payment of each note in the order of its serial number for its full
amount, with interest and attorney's fees, in accordance with its tenor. In any
sale to enforce the payment of the continuing credit loan or of any of the notes
thus issued, of any of the property mortgaged, or pledged or on which a
security interest has been granted, and all proceeds of the sales shall be applied
first to the payment of all court costs, charges, and legal expenses, and
thereafter by preference and priority to the payment of all notes issued and not
retired and cancelled, for the full amount of each, with interest, attorney's fees,
and costs, in accordance with their tenor and in the order of their serial
numbers, so that the holder of any of the notes shall not be paid or receive any
of the proceeds until each note, issued prior thereto and at that time
outstanding and unpaid, shall have been fully satisfied, and thereafter the
corporation shall be paid from the proceeds the amount of any balance due it
on account of advances made, with interest, attorney's fees, and costs.
E. The security agreement shall further provide that, during the entire
period of the term of the continuing credit loan:
(1) The proceeds of all crops harvested shall be paid over to the
corporation, with recognition of its lien, up to the amount of all advances at
that time made and unsatisfied with interest, attorney's fees, and costs, in
accordance with the terms thereof.
(2) The proceeds shall be applied to the payment of the notes as
provided in this Section.
(3) The payment of the notes shall not operate to satisfy, diminish,
extinguish, or to cancel the continuing credit loan in whole or in part.
(4) The maximum contracted debt shall continue to exist as the
principal obligation and remain in full force for its full amount with interest,
attorney's fees, and costs, secured by the mortgage and the security agreement
affecting crops and pledge of stock and all such other collateral security
belonging thereto.
F. The security agreement may additionally provide that the continuing
credit loan may at the option of either party be terminated by written notice to
the other party and that thereafter the immobilization for the purposes of this
Chapter, as provided for in Paragraph (B)(2) of this Section, and the collateral
security given by borrower to corporation shall cease at such time as all the
notes issued and all advances made under this contract, remaining due and
unpaid, shall have been paid in full with interest, attorney's fees, and costs.
G. The security agreement may further provide that there shall be at all
times reserved to the corporation as lender the right to increase, diminish, or
discontinue entirely the advances whenever the condition of the crops or the
elements or the happening of events, in the opinion of the corporation, so
demand or warrant.
H. The security agreement may also provide that whenever notice of
the intention to terminate the continuing credit loan has been given by one
party to the other, then the corporation's continuing security interest as
affecting successive crops shall not operate to secure any deficit remaining
after all the proceeds of the crops planted, grown, and harvested during the
current year have been received, paid, and imputed as provided in this Chapter.

Legislative History

Acts 1991, No. 539, §1, eff. Jan. 1, 1992.