Cooperative association mortgages.

(1) Hereafter, any mortgage or other instrument given by a cooperative association for the purpose of creating a lien on real or personal property, or both, may secure not only existing indebtedness, but also such future advances, whether obligatory or otherwise, as are made within 10 years from the date thereof. Such lien, as to third persons without actual notice thereof, shall be valid as to all such indebtedness and future advances from the time the mortgage or other instrument is filed for record as provided by law. The total amount of indebtedness that may be so secured may decrease or increase from time to time, but the total unpaid balance so secured at any one time shall not exceed a maximum principal amount which must be specified therein, plus interest thereon, and any disbursements made for the payment of taxes, levies, or insurance on the property covered by the lien, with interest on such disbursements.

(2) A “cooperative association” within the meaning of this section means any corporation formed, reorganized or brought under any general or special law of this or any other state as a cooperative association.

(3)(a) A mortgage executed by a cooperative association may cover and create a valid mortgage lien upon stocks or inventories of farm supplies and processed agricultural products, which stocks and inventories the mortgagor may be permitted to retain in possession and sell in the usual course of business. The lien of such mortgage shall be lost on such of the mortgaged property as is sold in the usual course of business up to the time a receiver, who shall be appointed as a matter of right upon application of the mortgagee by the court having jurisdiction of a proceeding instituted to foreclose said mortgage, shall have taken possession of the mortgaged property, and shall without further act, writing or formality attach to any proceeds of the sale thereof, including but not limited to accounts receivable arising from sale of the mortgaged property, but a purchaser of mortgaged property from any such mortgagor, not having actual notice of the attaching of such lien to said proceeds, shall not be liable for any payments made to the person who, except for the provisions of this subsection, would be entitled thereto; provided, however, that such lien as to said accounts receivable shall be subject and subordinate to assignments of any such accounts receivable which are protected assignments under the provisions of chapter 679. If so provided in the mortgage, the lien thereof shall, in addition to the stocks and inventories originally mortgaged, attach to farm supplies and processed agricultural products acquired after the execution and delivery of such mortgage.

(b) If so stipulated therein, such mortgage may secure not only existing indebtedness of the mortgagor to the mortgagee but also such future advances, whether obligatory or otherwise, as are made by the mortgagee to the mortgagor within 10 years from the date of such mortgage to the same extent as if such future advances were made on the date of the execution of such mortgage although there may be no advance made at the time of the execution of such mortgage and although there may be no indebtedness outstanding at the time any advance is made. Such lien shall be valid as to all such indebtednesses and future advances from the time the mortgage is filed for record as provided by law whether such stocks and inventories shall be in existence at the time of the execution of the mortgage or at the time of filing such mortgage for record or shall come into existence subsequent thereto or shall be subsequently acquired by the mortgagor.

(c) The total amount of the indebtedness that may be so secured may decrease or increase from time to time but the total unpaid balance so secured at the time shall not exceed a maximum principal amount which must be specified in such mortgage, plus interest thereon, together with costs and attorney’s fees, and any disbursements made for the payment of taxes, levies, assessments, or insurance on the property covered by the mortgage, with interest on such disbursements.

(d) Such mortgage shall not be invalid or fraudulent against creditors because the mortgagor is permitted to retain in possession and sell the mortgaged property in the usual course of business or by reason of liberty in the mortgagor to use, commingle, or dispose of any such stocks or inventories or the proceeds of the sale of such stocks or inventories or by reason of the failure of the mortgagee to require the mortgagor to account for such proceeds or to replace mortgaged property.

(e) The provisions of this subsection shall not be construed as impairing, limiting, or otherwise affecting the rights of a lender to, or other creditor of a mortgagor of such farm supplies or processed agricultural products, to deal with and make loans to such mortgagor upon the security of assignments of accounts receivable arising or to arise on account of the sale by the mortgagor of the mortgaged property.

(f) This subsection shall not apply to any mortgages made on or after the effective date in this state of the Uniform Commercial Code.