09-cv-10-bbc (W.D. Wis. Aug. 11, 2009)

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U.S. v. Harris

United States District Court, W.D. Wisconsin

Aug 11, 2009

09-cv-10-bbc (W.D. Wis. Aug. 11, 2009)

Opinion

09-cv-10-bbc.

August 11, 2009

ORDER

BARBARA CRABB, District Judge

This is a civil action for foreclosure by sale brought by plaintiff United States of America on various financial documents, including a real estate mortgage, executed by defendant Richard J. Harris to secure promissory notes. The case is before the court on plaintiff's motion for summary judgment.

UNDISPUTED FACTS

Defendant Richard J. Harris executed certain real estate mortgages on June 1, 2005 and October 5, 2005 and perfected security agreements to secure promissory notes by him to the Farm Service Agency between January 5, 2005 to October 5, 2005.

Defendant Harris has defaulted and failed to comply with the terms of the promissory notes, security agreement and mortgages. None of the defendants have made any payments on the promissory notes since November 4, 2008, when a payment was made through offsets, not by voluntary payment.

Under the terms of the mortgages, when the borrower defaults, the government has the option of declaring the entire amount unpaid under the notes immediately due and payable, with or without notice. Alternatively, it may foreclose the mortgages as provided by law or exercise other options set forth in the mortgages. The security agreements provides that in the event of default, the government has the option of declaring the unpaid balance on the notes immediately due and payable, entering upon the premises and taking possession of the collateral and exercising any sale or other rights accorded by law.

Defendant Harris was served a Notice of Acceleration of Indebtedness and Demand for Payment on or about December 10, 2007.

There was and is due and unpaid on the notes, security agreement and mortgages described in the complaint, the following sum, with daily interest continuing to accrue from that date in the amount of $31,5487:

Principal: $227,943.57 Interest: $ 38,200.02 Expenses: Attorney fees $200.00 Filing fees $ 15.00 Title Search $ 60.00 Subtotal: $ 275.00 TOTAL: $266,418.59 The mortgaged premises are described in Attachment 1 to this order. The pledged collateral that is the subject of this action is described in Attachment 2 to this order.

The real estate is so situated that it cannot be sold in parcels without injury to the interest of the parties. The sale of the whole will be more beneficial to the parties. The mortgaged premises have not been abandoned.

Due notice of the pendency of this action was duly filed on January 21, 2009, in the office of the Register of Deeds for Columbia County, Wisconsin, in the manner and form required by law, after the filing of the complaint and more than twenty days before the trial in this action.

Defendant Cheryl Skenandore has advised the court that she does not oppose entry of judgment against her. Defendant Consumers Coop has failed to contest the allegations of the complaint.

CONCLUSION

I conclude from the undisputed facts that plaintiff is entitled to a judgment of foreclosure against defendant Richard J. Harris and that it is entitled to judgment of foreclosure against defendants Cheryl Skenandore and Consumers Coop.

ORDER

IT IS ORDERED that

1) Plaintiff is entitled to judgment of foreclosure and sale as prayed for in its complaint. It is entitled to recover from the principal defendant, Richrd J. Harris, the following sum, as of June 5, 2009, together with interest that will accumulate after that date:

Principal: $227,943.57 Interest: $ 38,200.02 Expenses: Attorney fees $200.00 Filing fees $ 15.00 Title Search $ 60.00 Subtotal: $ 275.00 TOTAL: $266,418.59 2) The mortgaged premises shall be sold as a whole and the amounts due plaintiff shall be paid out of the proceeds of the sale;

3) The mortgaged premises have not been abandoned;

4) Sale of the premises shall be conducted by or under the direction of the United States Marshal for the Western District of Wisconsin; notice shall be made by publication in The Vernon County Broadcaster, published in the City of Viroqua, County of Vernon, State of Wisconsin;

5) Plaintiff is entitled to immediate possession of the collateral, which may be sold individually or as a whole, at public or private sale, and the amounts due plaintiff shall be paid out of the proceeds of the sale, which shall be conducted by or under the direction of the United States Marshal for the Western District of Wisconsin or by Farm Service Agency;

6) After the filing of notice of the pendency of this action, defendant and his heirs, respectively, and all persons claiming under them, shall be barred and foreclosed forever of all right, title, interest and equity of redemption in said mortgaged premises and collateral so sold;

7) The clerk of court shall enter judgment of foreclosure and sale of said mortgaged premises and collateral in accordance with the findings of fact and this order and shall enter default judgment against defendants Cheryl Skenandore and Consumers Coop.

Exhibit

Position 5

FSA 1927-1 WI UNITED STATES DEPARTMENT OF AGRICULTURE MORTGAGE FOR WISCONSIN

(07-26-04) Farm Service Agency THIS MORTGAGE ("instrument") is made JUNE 1, 2005. The mortgagor is made and entered into by RICHARD J HARRIS ("Borrower") whose mailing address is95364 FAUSKE LANE; GENOA, WISCONSIN 54632-8773. This instrument is given to the United States of America, acting through the Farm Service Agency, United States Department of Agriculture ("Government") located at220 AIRPORT ROAD; VIROQUA, WISCONSIN 54665-1157.

This instrument secures the following promissory notes, assumption agreements, and/or shared appreciation agreements (collectively called "note"), which have been executed or assumed by the Borrower unless otherwise noted, are payable to the Government, and authorize acceleration of the entire debt upon any default:Date of Instrument Principal Amount of Interest

Annual Rate JANUARY 1, 2005 35,000.00 3.875 % MAY 6, 2005 10,000.00 4.250 % JUNE 1, 2005 170,000.00 5.375 %

(The interest rate for any limited resource farm ownership or limited resource operating loans secured by this instrument may be increased as provided in Government regulations and the note.)

By execution of this instrument, Borrower acknowledges receipt of all of the proceeds of the loan or loans evidenced by the above note,

This instrument secures to the Government: (1) payment of the note and all extensions, renewals, and modifications thereof; (2) recapture of any amount due under any Shared Appreciation Agreement entered into pursuant to 7 U.S.C. § 2001; (3) payment of all advances and expenditures, with interest, made by the Government, and (4) the obligations and covenants of Borrower set forth in this instrument, the note, and any other loan agreements.

In consideration of any loan made by the Government pursuant to the Consolidated Farm and Rural Development Act, 7 U.S.C. § 1921et seq. as evidenced by the note, Borrower irrevocably mortgages, grants and conveys to the Government the following described property situated in the State of Wisconsin, County or Counties of VERNON:

See Cover Sheet

together with all rights (including the rights to mining products, gravel, oil, gas, coal or other minerals), interests, easements, fixtures, hereditaments, appurtenances, and improvements now or later attached thereto, the rents, issues and profits thereof, revenues and income therefrom, all water, water rights, and water stock pertaining thereto, and all payments at any time owing to Borrower by virtue of any sale, lease, transfer, or condemnation of any part thereof or interest therein (collectively called "the property"). This instrument constitutes a security agreement and financing statement under the Uniform Commercial Code and creates a security interest in all items which may be deemed to be personal property, including but not limited to proceeds and accessions, that are now or hereafter included in, affixed, or attached to "the property."

Borrower COVENANTS that Borrower is lawfully seised of the estate hereby conveyed and has the right to mortgage, grant and convey the property and that the property is unencumbered, except for encumbrances of record. Borrower warrants and will defend the title to the property against all claims and demands, subject to any encumbrances of record.

This instrument combines uniform covenants for national use and non-uniform covenants with limited variations by jurisdiction to constitute a uniform mortgage covering real property.

UNIFORM COVENANTS. Borrower COVENANTS AND AGREES as follows:

1. Payment. Borrower shall pay promptly when due any indebtedness to the Government secured by this instrument.

2. Fees. Borrower shall pay to the Government such fees and other charges that may now or later be required by Government regulations.

3. Application of payments. Unless applicable law or Government's regulations provide otherwise, all payments received by Government shall be applied in the following order of priority: (a) to advances made under this instrument; (b) to accrued interest due under the note; (c) to principal due under the note; (d) to late charges and other fees and charges.

4. Taxes, liens, etc. Borrower shall pay when due all taxes, liens, judgments, encumbrances, and assessments lawfully attaching to or assessed against the property and promptly deliver to the Government without demand receipts evidencing such payments.

5. Assignment. Borrower grants and assigns as additional security all the right, title and interest in: (a) the proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or taking by eminent domain or otherwise of any part of the property, or for conveyance in lieu of condemnation; (b) all bonuses, rentals, royalties, damages, delay rentals and income that may be due or become due and payable to the Borrower or Borrower's assigns under any existing or future oil, gas, mining or mineral lease covering any portion of the property; and (c) all rents, issues, profits, income and receipts from the property and from all existing or future leases, subleases, licenses, guaranties and any other agreements for the use and occupancy of any portion of the property, including any extensions, renewals, modifications or substitutions of such agreements. Borrower warrants the validity and enforceability of this assignment.

Borrower authorizes and directs payment of such money to the Government until the debt secured by this instrument is paid in full. Such money may, at the option of the Government, be applied on the debt whether due or not. The Government shall not be obligated to collect such money, but shall be responsible only for amounts received by the Government. In the event any item so assigned is determined to be personal property, this instrument will also be regarded as a security agreement.

Borrower will promptly provide the Government with copies of all existing and future leases. Borrower warrants that as of the date of executing this instrument no default exists under existing leases. Borrower agrees to maintain, and to require the tenants to comply with, the leases and any applicable law. Borrower will obtain the Government's written authorization before Borrower consents to sublet, modify, cancel, or otherwise alter the leases, or to assign, compromise, or encumber the leases or any future rents. Borrower will hold the Government harmless and indemnify the Government for any and all liability, loss or damage that the Government may incur as a consequence of this assignment.

6. Insurance. Borrower shall keep the property insured as required by and under insurance policies approved by the Government and, at its request, deliver such policies to the Government. If property is located in a designated flood hazard area, Borrower also shall keep property insured as required by 42 U.S.C. § 4001 et seq. and Government regulations. All insurance policies and renewals shall include a standard mortgagee clause.

7. Advances by Government. The Government may at any time pay any other amounts required by this instrument to be paid by Borrower and not paid by Borrower when due, as well as any cost for the preservation, protection, or enforcement of this lien, as advances for the account of Borrower. Advances shall include, but not be limited to, advances for payments of real property taxes, special assessments, prior liens, hazard insurance premiums, and costs of repair, maintenance, and improvements. All such advances shall bear interest at the same rate as the note which has the highest interest rate. All such advances, with interest, shall be immediately due and payable by Borrower to the Government without demand. No such advance by the Government shall relieve Borrower from breach of Borrower's covenant to pay. Any payment made by Borrower may be applied on the note or any secured debt to the Government, in any order the Government determines.

8. Protection of lien. Borrower shall pay or reimburse the Government for expenses reasonably necessary or incidental to the protection of the lien and its priority and the enforcement or compliance with this instrument and the note. Such expenses include, but are not limited to: costs of evidence of title to, and survey of, the property, costs of recording this and other instruments; attorneys' fees; trustees' fees, court costs; and expenses of advertising, selling, and conveying the property.

9. Authorized purposes. Borrower shall use the loan evidenced by the note solely for purposes authorized by the Government.

10. Repair and operation of property. Borrower shall: (a) maintain improvements in good repair; (b) make repairs required by the Government; (c) comply with all farm conservation practices and farm management plans required by the Government, and (d) operate the property in a good and husbandlike manner. Borrower shall not (e) abandon the property; (f) cause or permit waste, lessening or impairment of the property; or (g) cut, remove, or lease any timber, gravel, oil, gas, coal, or other minerals without the written consent of the Government, except as necessary for ordinary domestic purposes.

11. Legal compliance. Borrower shall comply with all laws, ordinances, and regulations affecting the property.

12. Transfer or encumbrance of property. Except as provided by Government regulations, the Borrower shall not lease, assign, sell, transfer, or encumber, voluntarily or otherwise, any of the property without the written consent of the Government. The Government may grant consents, partial releases, subordinations, and satisfactions in accordance with Government regulations.

13. Inspection. At all reasonable times the Government may inspect the property to ascertain whether the covenants and agreements contained in this instrument are being performed.

14. Hazardous substances. Borrower shall not cause or permit the presence, use, disposal, storage, or release of any hazardous substances on or in the property. The preceding sentence shall not apply to the presence, use, or storage on the property of small quantities of hazardous substances that are generally recognized to be appropriate to normal use and maintenance of the property. Borrower covenants that Borrower has made full disclosure of any such known, existing hazardous conditions affecting the property. Borrower shall not do, nor allow anyone else to do, anything affecting the property that is in violation of any federal, state, or local environmental law or regulation. Borrower shall promptly give the Government written notice of any investigation, claim, demand, lawsuit or other action by any governmental or regulatory agency or private party involving the property and any hazardous substance or environmental law or regulation of which Borrower has actual knowledge. If Borrower learns, or is notified by any governmental or regulatory authority, that any removal or other remediation of any hazardous substance affecting the property is necessary, Borrower shall promptly take all necessary remedial actions in accordance with applicable environmental law and regulations. As used in this paragraph, "hazardous substances" are those substances defined as toxic or hazardous substances by environmental law and the following substances: gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials. As used in this paragraph, "environmental law" means Federal laws and regulations and laws and regulations of the jurisdiction where the property is located that relate to health, safety or environmental protection.

15. Adjustment; release; waiver; forbearance. In accordance with Government regulations, the Government may (a) adjust the interest rate, payment, terms or balance due on the loan, (b) increase the mortgage by an amount equal to deferred interest on the outstanding principal balance, (c) extend or defer the maturity of, and renew and reschedule the payments on the note, (d) release any party who is liable under the note from liability to the Government, (e) release portions of the property and subordinate its lien, and (f) waive any other of its rights under this instrument. Any and all of this can and will be done without affecting the lien or the priority of this instrument or Borrower's liability to the Government for payment of the note secured by this instrument unless the Government provides otherwise in writing. HOWEVER, any forbearance by the Government — whether once or often — in exercising any right or remedy under this instrument, or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any such right or remedy.

16. Graduation. If the Government determines that Borrower may be able to obtain a loan from a responsible cooperative or private credit source at reasonable rates and terms for loans for similar purposes and periods of time, Borrower will, upon the Government's request, apply for and accept such a loan in sufficient amount to pay the note secured by this instrument and to pay for stock necessary to be purchased in a cooperative lending agency in connection with such loan.

17. Forfeiture. Borrower shall be in default if any forfeiture action or proceeding, whether civil or criminal, is begun that in the Government's good faith judgment could result in forfeiture of the property or otherwise materially impair the lien created by this instrument or the Government's security interest. Borrower may cure such default by causing the action or proceeding to be dismissed with a ruling that precludes forfeiture of the Borrower's interest in the property or other material impairment of the lien created by this security instrument or the Government's security interest.

18. False statement. Borrower also shall be in default if Borrower, during the loan application process, gave materially false or inaccurate information or statements to the Government (or failed to provide the Government with any material information) in connection with the loan evidenced by the note.

19. Cross Collateralization. Default under this instrument shall constitute default under any other security instrument held by the Government and executed or assumed by Borrower. Default under any other such security instrument shall constitute default under this instrument.

20. Highly erodible land; wetlands. Any loan secured by this instrument will be in default if Borrower uses any loan proceeds for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity as provided in 7 C.F.R. part 1940, subpart G, or any successor Government regulation.

21. Non-discrimination. If any part of the loan for which this instrument is given shall be used to finance the purchase, construction or repair of property to be used as an owner-occupied dwelling (herein called "the dwelling") and if Borrower intends to sell or rent the dwelling and has obtained the Government's consent to do so (a) neither Borrower nor anyone authorized to act for Borrower will, after receipt of a bona fide offer, refuse to negotiate for the sale or rental of the dwelling or will otherwise make unavailable or deny the dwelling to anyone because of race, color, religion, sex, national origin, disability, familial status or age, and (b) Borrower recognizes as illegal and hereby disclaims, and will not comply with or attempt to enforce any restrictive covenants on the dwelling relating to race, color, religion, sex, national origin, disability, familial status or age.

22. Notices. Notices gives under this instrument shall be sent by certified mail unless otherwise required by law. Such notices shall be addressed, unless and until some other address is designated in a notice, in the case of the Government to the State Executive Director of the Farm Service Agency at the mailing address shown above, and in the case of Borrower at the address shown in the Government's Finance Office records (which normally will be the same as the mailing address shown above).

23. Governing law; severability. This instrument shall be governed by Federal law. If any provision of this instrument or the note or its application to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this instrument or the note which can be given effect without the invalid provision or application. The provisions of this instrument are severable. This instrument shall be subject to the present regulations of the Government, and to its future regulations not inconsistent with the express provisions hereof. All powers and agencies granted in this instrument are coupled with an interest and are irrevocable by death or otherwise, and the rights and remedies provided in this instrument are cumulative to remedies provided by law.

24. Successors and assigns; joint and several covenants. The covenants and agreements of this instrument shall bind and benefit the successors and assigns of Government and Borrower. Borrower's covenants and agreements shall be joint and several. Any Borrower who co-signs this instrument but does not execute the Note: (a) is co-signing this instrument only to mortgage, grant and convey that Borrower's interest in the property under this instrument; (b) is not personally obligated to pay the sums secured by this instrument; and (c) agrees that the Government and any other Borrower may agree to extend, modify, forbear or make any accommodations with regard to the terms of this instrument or the note without that Borrower's consent.

25. No merger. If this instrument is on a leasehold, Borrower shall comply with all the provisions of the lease. If Borrower acquires fee title to the property, the leasehold and the fee title shall not merge unless the Government agrees to the merger in writing. If the property is conveyed to the Government, title shall not merge (unless the Government elects otherwise) and the lien provided under this instrument shall not be affected by such conveyance.

26. Time is of the essence. Time is of the essence in the Borrower's performance of all duties and obligations under this instrument.

NON-UNIFORM COVENANTS. Borrower further COVENANTS AND AGREES as follows:

27. Default; death; incompetence; bankruptcy. Should default occur in the performance or discharge of any obligation in this instrument or secured by this instrument, or should the Borrower die or be declared incompetent, or should the Borrower be discharged in bankruptcy or declared an insolvent or make an assignment for the benefit of creditors, the Government, at its option, with or without notice, may: (a) declare the entire amount unpaid under the note and any debt to the Government hereby secured immediately due and payable, (b) for the account of Borrower incur and pay reasonable expenses for repair or maintenance of, and take possession of, operate or rent the property, (c) upon application by it and production of this instrument, without other evidence and without notice of hearing of said application, have a receiver appointed for the property, with the usual powers of receivers in like cases, (d) foreclose this instrument and sell the property as prescribed by law, and (e) enforce any and all other rights and remedies provided herein or by present or future law.

28. State law. Borrower agrees that the Government will not be bound by any present or future State laws, (a) providing for valuation, appraisal, homestead or exemption of the property, (b) prohibiting maintenance of any action for a deficiency judgment or limiting the amount thereof or the time within which such action must be brought, (c) prescribing any other statute of limitations, (d) allowing any right of redemption or possession following any foreclosure sale, or (e) limiting the conditions which the Government may by regulation impose, including the interest it may charge, as a condition of approving a transfer of the property to a new Borrower. Borrower expressly waives the benefit of any such State laws.

29. Assignment of leases and rents. Borrower agrees that the assignment of leases and rents in this instrument is immediately effective on the recording of this instrument Upon default, the Borrower will receive any rents in trust for the Government, and Borrower will not commingle the rents with any other funds. Any amounts collected shall be applied at the Government's discretion first to costs of managing, protecting and preserving the property, and to any other necessary related expenses. Any remaining amounts shall be applied to reduce the debt evidenced by the note(s). Borrower agrees that the Government may demand that Borrower and Borrower's tenants pay all rents due or to become due directly to the Government if the Borrower defaults and the Government notifies Borrower of the default. Upon such notice, Borrower will endorse and deliver to the Government any payments of rents. If the Borrower becomes subject to a bankruptcy, then Borrower agrees that the Government is entitled to receive relief from the automatic stay in bankruptcy for the purpose of enforcing this assignment.

30. Application of foreclosure proceeds. The proceeds of foreclosure sale shall be applied in the following order to the payment of: (a).costs and expenses incident to enforcing or complying with this instrument, (b) any prior liens required by law or a competent court to be so paid, (c) the debt evidenced by the note and all other debt to the Government secured by this instrument, (d) inferior liens of record required by law or a competent court to be so paid, (e) at the Government's option, any other debt of Borrower to the Government, and (f) any balance to Borrower. If the Government is the successful bidder at foreclosure or other sale of all or any part of the property, the Government may pay its share of the purchase price by crediting such amount on any debts of Borrower owing to the Government in the order prescribed above.

By signing below, Borrower accepts and agrees to the terms and covenants contained in this instrument and in any rider executed by Borrower and recorded with this instrument.VERNON ss.

_________________________(SEAL) ________________ (SEAL) RICHARD J HARRIS _________________________(SEAL) ________________ (SEAL) ACKNOWLEDGMENTS STATE OF WISCONSIN ) COUNTY OF ___________) (Individual) On this FIRST day of JUNE, 2005, before me, the undersigned, personally appeared RICHARD J HARRIS to be known to me to be same whose name is subscribed to the foregoing instrument, and acknowledged that (he or she) signed and delivered the instrument as (his or her) free and voluntary acts, for the uses and purposes set forth.

My commission expires:12/03/06

_____________________ NOTARY PUBLIC Note: Page 6 of 6 applies to entities only and will not be recorded for individuals.

Exhibit

Position 5

FSA 1927-1 WI UNITED STATES DEPARTMENT OF AGRICULTURE MORTGAGE FOR WISCONSIN

(02-25-05) Farm Service Agency THIS MORTGAGE ("instrument") is made October 5, 2005. The mortgagor is made and executed by Richard J Harris ("Borrower") whose mailing address is S5364 Fauske Lane; Genoa, Wisconsin 54632-8773.

This instrument is given to the United States of America, acting through the Farm Service Agency, United States Department of Agriculture ("Government") located at220 Airport Road; Viroqua, Wisconsin 54665-1157.

Annual Rate January 5, 2005 $ 35,000.00 3.875% May 6, 2005 $ 10,000.00 4.250% June 1, 2005 $170,000,00 5.375% October 5, 2005 $ 26,000.00 4.375%

(The interest rate for any limited resource farm ownership or limited resource operating loans secured by this instrument may be increased as provided in Government regulations and the note.)

By execution of this instrument, Borrower acknowledges receipt of all of the proceeds of the loan or loans evidenced by the above note.

See Title Page

This instrument combines uniform covenants for national use and non-uniform covenants with limited variations by jurisdiction to constitute a uniform mortgage covering real property.

UNIFORM COVENANTS. Borrower COVENANTS AND AGREES as follows:

1. Payment. Borrower shall pay promptly when due any indebtedness to the Government secured by this instrument.

2. Fees. Borrower shall pay to the Government such fees and other charges that may now or later be required by Government regulations.

Borrower authorizes and directs payment of such money to the Government until the debt secured by this instrument is paid in full. Such money may, at the option of the Government, be applied on the debt whether due or not The Government shall not be obligated to collect such money, but stall be responsible only for amounts received by the Government. In the event any item so assigned is determined to be personal property, this instrument will also be regarded as a security agreement.

9. Authorized purposes. Borrower shall use the loan evidenced by the note solely for purposes authorized by the Government

11. Legal compliance. Borrower shall comply with all laws, ordinances, and regulations affecting the property.

13. Inspection. At all reasonable times the Government may inspect the property to ascertain whether the covenants and agreements contained in this instrument are being performed.

15. Adjustment; release; waiver; forbearance. In accordance with Government regulations, the Government may (a) adjust the interest rate, payment, terms or balance due on the loan, (b) increase the mortgage by an amount equal to deferred interest on the outstanding principal balance, (c) extend or defer the maturity of, and renew and reschedule the payments on the note, (d) release any party who is liable under the note from liability to the Government, (e) release portions of the property and subordinate its lien, and (f) waive any other of its rights under this instrument Any and all of this can and will be done without affecting the lien or the priority of this instrument or Borrower's liability to the Government for payment of the note secured by this instrument unless the Government provides otherwise in writing. HOWEVER, any forbearance by the Government — whether once or often — in exercising any right or remedy under this instrument, or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any such right or remedy.

22. Notices. Notices given under this instrument shall be sent by certified mail unless otherwise required by law. Such notices shall be addressed, unless and until some other address is designated in a notice, in the case of the Government to the State Executive Director of the Farm Service Agency at the mailing address shown above, and in the case of Borrower at the address shown in the Government's Finance Office records (which normally will be the same as the mailing address shown above).

26. Time is of the essence. Time is of the essence in the Borrower's performance of all duties and obligations under this instrument.

NON-UNIFORM COVENANTS. Borrower further COVENANTS AND AGREES as follows:

29. Assignment of leases and rents. Borrower agrees that the assignment of leases and rents in this instrument is immediately effective on the recording of this instrument. Upon default, the Borrower will receive any rents in trust for the Government, and Borrower will not commingle the rents with any other funds. Any amounts collected shall be applied at the Government's discretion first to costs of managing, protecting and preserving the property, and to any other necessary related expenses. Any remaining amounts shall be applied to reduce the debt evidenced by the note(s). Borrower agrees that the Government may demand that Borrower and Borrower's tenants pay all rents due or to become due directly to the Government if the Borrower defaults and the Government notifies Borrower of the default Upon such notice, Borrower will endorse and deliver to the Government any payments of rents. If the Borrower becomes subject to a bankruptcy, then Borrower agrees that the Government is entitled to receive relief from the automatic stay in bankruptcy for the purpose of enforcing this assignment.

30. Application of foreclosure proceeds. The proceeds of foreclosure sale shall be applied in the following order to the payment of: (a) costs and expenses incident to enforcing or complying with this instrument, (b) any prior liens required by law or a competent court to be so paid, (c) the debt evidenced by the note and all other debt to the Government secured by this instrument, (d) inferior liens of record required by law or a competent court to be so paid, (e) at the Government's option, any other debt of Borrower to the Government, and (f) any balance to Borrower. If the Government is the successful bidder at foreclosure or other sale of all or any part of the property, the Government may pay its share of the purchase price by crediting such amount on any debts of Borrower owing to the Government in the order prescribed above.

By signing below, Borrower accepts and agrees to the terms and covenants contained in this instrument and in any rider executed by Borrower and recorded with this instrument.VERNON ss.

__________________________(SEAL) ________________ (SEAL) BORROWER/RICHARD J HARRIS __________________________(SEAL) ________________ (SEAL) ACKNOWLEDGMENTS STATE OF WISCONSIN ) COUNTY OF ___________) (Individual) On this 5th day of October, 2005, before me, the undersigned, personally appeared Richard J Harris to be known to me to be same whose name is subscribed to the foregoing instrument, and acknowledged that (he or she) signed and delivered the instrument as (his or her) free and voluntary acts, for the uses and purposes set forth.

My commission expires:September 27, 2009

_____________________ Ginger S Jacobs NOTARY PUBLIC Note: Page 6 of 6 applies to entities only and will not be recorded for individuals.

Attachment 2

Exhibit

FOR VALUE RECEIVED, the undersigned Borrower and any cosigners jointly and severally promise to pay to the order of the United States of America, acting through the Farm Service Agency, United States Department of Agriculture, (herein called the "Government"), or its assigns, at its office in VERNON COUNTY FARM SERVICE AGENCY; 220 AIRPORT ROAD; VIROQUA, WISCONSIN 54665-1157, or at such other place as the Government may later designate in writing, the principal sum of THIRTY FIVE THOUSAND AND 00/100 ---------------------------------------------------------------- dollars ($35,000.00 ---------------------------------------------), plus interest on the unpaid principal balance at the RATE of THREE AND SEVEN EIGHTHS ------------------------------------------------------------ percent (-- 3.8750 --%) per annum and----------------------------------- ZERO ------------------------------------------------------- dollars ($---------- 0 ----------) of Noncapitalized interest. If this note is for a Limited Resource loan (indicated in the "Kind of Loan" box above) the Government may CHANGE THE RATE OF INTEREST, in accordance with regulations of the Farm Service Agency, not more often than quarterly, by giving the Borrower thirty (30) days prior written notice by mail to the Borrower's last known address. The new interest rate shall not exceed the highest rate established in regulations of the Farm Service Agency for the type of loan indicated above.

Principal and interest shall be paid in EIGHT installments as indicated below, except as modified by a different rate of interest, on or before the following dates:2,466.00 ---------------- JANUARY 1, 2006 3,287.00 ---------------- JANUARY 1, 2007 3,287.00 ---------------- JANUARY 1, 2008 ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ----------

$ on __________; $ on ; $ on __________; $ on ; $ on ; $ on ; $ on ; $ on ; $ on ; $ on ; $ on ; $ on ; and $3, 287.00 --------------- thereafter on JANUARY FIRST of each YEAR until the principal and interest are fully paid except that the final installment of the entire debtedness evidenced hereby, if not sooner paid, shall be due and payable SEVEN years from the date of this note, and except that prepayments may be made as provided below. The consideration for this note shall also support any agreement modifying the foregoing schedule of payments.

If the total amount of the Ioan is not advanced at the time of loan closing, the loan funds shall be advanced to the Borrower as requested by Borrower and approved by the Government. Approval by the Government will be given provided the advance is requested for a purpose authorized by the Government. Interest shall accrue on the amount of each advance from its actual date as shown in the Record of Advances at the end of this note. Borrower authorized the Government to enter the amount(s) and date(s) of such advance(s) in the Record of Advances.

For each rescheduled, reamortized or consolidated note for applications for Primary and Preservation Loan Service Programs received prior to November 28, 1990, interest accrued to the date of this instrument which is more than 90 days overdue shall be added to principal and such new principal shall accrue interest at the rate evidenced by this instrument. For applications for Primary and Preservation Loan Service Programs received on or after November 28, 1990, all unpaid interest accrued to the date of this instrument shall be added to the principal and such new principal shall accrue interest at the rate evidenced by this instrument.

Every payment made on any indebtedness evidenced by this note shall be applied first to a portion of any interest which accrues during the deferral period, second to accrued interest to the date of the payment on the note account and then to the principal. Nonprogram loans are not eligible for deferral.

Prepayments of scheduled installments, or any portion of these installments, may be made at any time at the option of the Borrower. Refunds and extra payments, as defined in the regulations ( 7 CFR § 1951.8) of the Farm Service Agency according to the source of funds involved, shall, after payment of interest, be applied to the last installments to become due under this note and shall not affect the obligation of Borrower to pay the remaining installments as scheduled in this note.

If the Government at any time assigns this note and insures the payment of it, Borrower shall continue to make payments to the Government as collection agent for the holder. While this note is held by an insured holder, prepayments made by Borrower may, at the option of the Government, be remitted by the Government to the holder promptly or, except for final payment, be retained by the Government and remitted to the holder on an installment due date basis. The effective date of every payment made by Borrower, except payments retained and remitted by the Government on an installment due date basis, shall be the date of the United States Treasury check by which the Government remits the payment to the holder. The effective date of any prepayment retained and remitted by the Government to the holder on an installment due date basis shall be the date of the prepayment by Borrower, and the Government will pay the interest to which the holder is entitled accruing between such date and the date of the Treasury check to the holder.

Any amount advanced or expended by the Government for the collection of this note or to preserve or protect any security for the loan or otherwise expended under the terms of any security agreement or other instrument executed in connection with the loan evidenced by this note, at the option of the Government shall become a part of and bear interest at the same rate as the principal of the debt evidenced by this note and be immediately due and payable by Borrower to the Government without demand.

Property constructed, improved, purchased, or refinanced in whole or in part with the loan evidenced by this note shall not be leased, assigned, sold, transferred, or encumbered, voluntarily or otherwise, without the written consent of the Government Unless the Government consents otherwise in writing, Borrower will operate such property as a farm if this is a Farm Ownership loan.

If "Consolidation and subsequent loan," "Debt write down," "Consolidation," "Rescheduling," or "Reamortization" is indicated in the "Action Requiring Note" block in Item 9 above, this note is given to consolidate, reschedule or reamortize, but not in satisfaction of the unpaid principal and interest on the following described note(s) or assumption agreement(s) (new terms): (include year) (include year)

FUND CODE/ INTEREST DATE LAST INSTALL DUE FACE AMOUNT ORIGINAL BORROWER LOAN NO. RATE $ % $ % $ % $ % $ % $ % $ % Security instruments taken in connection with the loans evidenced by these described notes and other related obligations are not affected by this consolidating, rescheduling or reamortizing. These security instruments shall continue to remain in effect and the security given for the loans evidenced by the described notes shall continue to remain as security for the loan evidenced by this note, and for any other related obligations.

REFINANCING (GRADUATION) AGREMENT: If at any time it shall appear to the Government that the Borrower may be able to obtain financing from a responsible cooperative or private credit source at reasonable rates and terms for loans for similar purposes and period of time, Borrower will, at the Government's request, apply for and accept a loan(s) in sufficient amount to pay this note in full and, if the lender is a cooperative, to pay for any necessary stock. The provisions of this paragraph do not apply if the loan represented by this promissory note was made to the Borrower as a non-program loan.

HIGHLY ERODIBLE LAND AND WETLAND CONSERVATION AGREEMENT:

Borrower recognizes that the loan described in this note will be in default should any loan proceeds be used for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity as further explained in 7 CFR Part 1940, Subpart G, Exhibit M. If (1) the term of the loan exceeds January 1, 1990, but not January 1, 1995, and (2) Borrower intends to produce an agricultural commodity on highly erodible land that is exempt from the restrictions of Exhibit M until either January 1, 1990, or two years after the Natural Resources Conservation Service (NRCS) has completed a soil survey for the Borrower's land, whichever is later, the Borrower further agrees that, prior to the loss of the exemption from the highly erodible land conservation restrictions found in 7 CFR Part 12, Borrower must demonstrate that Borrower is actively applying on that land which has been determined to be highly erodible, a conservation plan approved by the NRCS or the appropriate conservation district in accordance with NRCS's requirements. Furthermore, if the term of the loan exceeds January 1, 1995, Borrower further agrees that Borrower must demonstrate prior to January 1, 1995, that any production of an agricultural commodity on highly erodible land after that date will be done in compliance with a conservation system approved by NRCS or the appropriate conservation district in accordance with NRCS's requirements.

DEFAULT: Failure to pay when due any debt evidenced by this note or perform any covenant of agreement under this note shall constitute default under this and any other instrument evidencing a debt of Borrower owing to, insured or Guaranteed by the Government or securing or otherwise relating to such debt; and default under any such other instrument shall constitute default under this note. UPON ANY SUCH DEFAULT, the Government at its option may declare all or any part of any such indebtedness immediately due and payable.

This Note is given as evidence of a loan to Borrower made or insured by the Government pursuant to the Consolidated Farm and Rural Development Act, or the Emergency Agricultural Credit Adjustment Act of 1978 and for the type of loan as indicated in the "Kind of Loan" block above. This Note shall be subject to the present regulations of the Farm Service Agency and to its future regulations not inconsistent with the express provisions of this note.

Presentment, protest, and notice are waived. (Borrower) 864 NORTH JEFFERSON STREET RICHLAND CENTER, WISCONSIN 53581 RECORD OF ADVANCES TOTAL

(SEAL) _________________________________________ RICHARD J HARRIS _________________________________________ AMOUNT DATE AMOUNT DATE AMOUNT DATE $ 35,000.00 01-10-2005 $ $ $ $ $ $ $ $ $ $ $ $ 35,000.00

Exhibit

FOR VALUE RECEIVED, the undersigned Borrower and any cosigners jointly and severally promise to pay to the order of the United States of America, acting through the Farm Service Agency, United States Department of Agriculture, (herein called the "Government"), or its assigns, at its office in Vernon County Farm Service Agency; 220 Airport Road; Viroqua, Wisconsin 54665-1157, or at such other place as the Government may later designate in writing, the principal sum of Twenty Six Thousand and 00/100 ---------------------------------------------------------------- dollars ($26,000.00 ---------------------------------------------), plus interest on the unpaid principal balance at the RATE of Four and Three Eighths ------------------------------------------------------------ percent (-- 4.375 --%) per annum and----------------------------------- Zero ------------------------------------------------------- dollars ($---------- 0 ----------) of Noncapitalized interest. If this note is for a Limited Resource loan (indicated in the "Kind of Loan" box above) the Government may CHANGE THE RATE OF INTEREST, in accordance with regulations of the Farm Service Agency, not more often than quarterly, by giving the Borrower thirty (30) days prior written notice by mail to the Borrower's last known address. The new interest rate shall not exceed the highest rate established in regulations of the Farm Service Agency for the type of loan indicated above.

Principal and interest shall be paid in Eight installments as indicated below, except as modified by a different rate of interest, on or before the following dates:275.00 ------------------ January 1, 2006 2,523.00 ---------------- January 1, 2007 2,523.00 ---------------- January 1, 2008 ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ---------- ---------- N/A ----------

$ on __________; $ on ; $ on __________; $ on ; $ on ; $ on ; $ on ; $ on ; $ on ; $ on ; $ on ; $ on ; and $2,523.00 --------------- thereafter on January First of each Year until the principal and interest are fully paid except that the final installment of the entire debtedness evidenced hereby, if not sooner paid, shall be due and payable Seven years from the date of this note, and except that prepayments may be made as provided below. The consideration for this note shall also support any agreement modifying the foregoing schedule of payments.

If the total amount of the loan is not advanced at the time of loan closing, the loan funds shall be advanced to the Borrower as requested by Borrower and approved by the Government. Approval by the Government will be given provided the advance is requested for a purpose authorized by the Government. Interest shall accrue on the amount of each advance from its actual date as shown in the Record of Advances at the end of this note. Borrower authorized the Government to enter the amount(s) and date(s) of such advance(s) in the Record of Advances.

For each rescheduled, reamortized or consolidated note for applications for Primary and Preservation Loan Service Programs received prior to November 28, 1990, interest accrued to the date of this instrument which is more than 90 days overdue shall be added to principal and such new principal shall accrue interest at the rate evidenced by this instrument For applications for Primary and Preservation Loan Service. Programs received on or after November 28, 1990, all unpaid interest accrued to the date of this instrument shall be added to the principal and such new principal shall accrue interest at the rate evidenced by this instrument.

Property constructed, improved, purchased, or refinanced in whole or in part with the loan evidenced by this note shall not be leased, assigned, sold, transferred, or encumbered, voluntarily or otherwise, without the written consent of the Government. Unless the Government consents otherwise in writing, Borrower will operate such property as a farm if this is a Farm Ownership loan.

REFINANCING (GRADUATION) AGREEMENT: If at any time it shall appear to the Government that the Borrower may be able to obtain financing from a responsible cooperative or private credit source at reasonable rates and terms for loans for similar purposes and period of time, Borrower will, at the Government's request, apply for and accept a loan(s) in sufficient amount to pay this note in full and, if the lender is a cooperative, to pay for any necessary stock. The provisions of this paragraph do not apply if the loan represented by this promissory note was made to the Borrower as a non-program loan.

HIGHLY ERODIBLE LAND AND WETLAND CONSERVATION AGREEMENT:

Borrower recognizes that the loan described in this note will be in default should any loan proceeds be used for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity as further explained in 7 CFR Part 1940, Subpart G, Exhibit M. If (1) the term of the loan exceeds January 1, 1990, but not January 1, 1995, and (2) Borrower intends to produce an agricultural commodity on highly erodible land that is exempt from the restrictions of Exhibit M until either January 1, 1990, or two years after the Natural Resources Conservation Service (NRCS) has completed a soil survey for the Borrower's land, whichever is later, the Borrower further agrees that, prior to the loss of the exemption from the highly erodible land conservation restrictions found in 7 CFR Part 12, Borrower must demonstrate that Borrower is actively applying on that land which has been determined to be highly erodible, a conservation plan approved by the NRCS or the appropriate conservation district in accordance with NRCS's requirements. Furthermore, if the term of the loan exceeds January 1, 1995, Borrower farther agrees that Borrower must demonstrate prior to January 1, 1995, that any production of an agricultural commodity on highly erodible land after that date will be done in compliance with a conservation system approved by NRCS or the appropriate conservation district in accordance with NRCS's requirements.

Presentment, protest, and notice are waived. (Borrower) S5364 Fauske Lane Genoa, Wisconsin 54632-8773 RECORD OF ADVANCES TOTAL

(SEAL) _________________________________________ Richard J Harris _________________________________________ _________________________________________ AMOUNT DATE AMOUNT DATE AMOUNT DATE $ 26,000.00 10-07-2005 $ $ $ $ $ $ $ $ $ $ $ $ 26,000.00

U.S. v. Harris

Opinion

ORDER

UNDISPUTED FACTS

CONCLUSION

ORDER

Position 5

Position 5

Attachment 2

HIGHLY ERODIBLE LAND AND WETLAND CONSERVATION AGREEMENT:

HIGHLY ERODIBLE LAND AND WETLAND CONSERVATION AGREEMENT:

U.S. v. Harris

U.S. v. Harris

Case Details

Citations

U.S. v. Harris

Opinion

ORDER

UNDISPUTED FACTS

CONCLUSION

ORDER

Position 5

Position 5

Attachment 2

HIGHLY ERODIBLE LAND AND WETLAND CONSERVATION AGREEMENT:

HIGHLY ERODIBLE LAND AND WETLAND CONSERVATION AGREEMENT:

U.S. v. Harris

U.S. v. Harris

Case Details

CitationsCopy Citation

Citations