1.1 A bill for an act
1.2 relating to commerce; enacting revised article 9 of
1.3 the Uniform Commercial Code as adopted by the National
1.4 Conference of Commissioners on Uniform State Laws;
1.5 amending Minnesota Statutes 1998, sections 336.1-105;
1.6 336.1-201; 336.2-103; 336.2-210; 336.2-326; 336.2-502;
1.7 336.2-716; 336.2A-103; 336.2A-303; 336.2A-307;
1.8 336.2A-309; 336.4-210; 336.7-503; 336.8-103;
1.9 336.8-106; 336.8-110; 336.8-301; 336.8-302; and
1.10 336.8-510; proposing coding for new law in Minnesota
1.11 Statutes, chapter 336; repealing Minnesota Statutes
1.12 1998, sections 336.9-101; 336.9-102; 336.9-103;
1.13 336.9-104; 336.9-105; 336.9-106; 336.9-107; 336.9-108;
1.14 336.9-109; 336.9-110; 336.9-112; 336.9-113; 336.9-114;
1.15 336.9-115; 336.9-116; 336.9-201; 336.9-202; 336.9-204;
1.16 336.9-205; 336.9-206; 336.9-207; 336.9-208; 336.9-301;
1.17 336.9-302; 336.9-303; 336.9-304; 336.9-305; 336.9-306;
1.18 336.9-307; 336.9-308; 336.9-309; 336.9-310; 336.9-311;
1.19 336.9-312; 336.9-313; 336.9-314; 335.9-315; 336.9-316;
1.20 336.9-317; 336.9-318; 336.9-403; 336.9-404; 336.9-405;
1.21 336.9-406; 336.9-407; 336.9-408; 336.9-410; 336.9-412;
1.22 336.9-413; 336.9-501; 336.9-502; 336.9-503; 336.9-504;
1.23 336.9-505; 336.9-506; 336.9-507; and 336.9-508;
1.24 Minnesota Statutes 1999 Supplement, sections
1.25 336.9-203; 336.9-401; 336.9-402; and 336.9-411.
1.26 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.27 ARTICLE 1
1.28 Revised Article 9
1.29 SECURED TRANSACTIONS
1.30 Part 1
1.31 GENERAL PROVISIONS
1.32 SUBPART 1. SHORT TITLE, DEFINITIONS,
1.33 AND GENERAL CONCEPTS
1.34 Section 1. [336.9-101] [SHORT TITLE.]
1.35 This article may be cited as Uniform Commercial Code -
2.1 Secured Transactions.
2.2 Sec. 2. [336.9-102] [DEFINITIONS AND INDEX OF
2.3 DEFINITIONS.]
2.4 (a) [DEFINITIONS.] In this article:
2.5 (1) "Accession" means goods that are physically united with
2.6 other goods in such a manner that the identity of the original
2.7 goods is not lost.
2.8 (2) "Account," except as used in "account for," means a
2.9 right to payment of a monetary obligation, whether or not earned
2.10 by performance, (i) for property that has been or is to be sold,
2.11 leased, licensed, assigned, or otherwise disposed of, (ii) for
2.12 services rendered or to be rendered, (iii) for a policy of
2.13 insurance issued or to be issued, (iv) for a secondary
2.14 obligation incurred or to be incurred, (v) for energy provided
2.15 or to be provided, (vi) for the use or hire of a vessel under a
2.16 charter or other contract, (vii) arising out of the use of a
2.17 credit or charge card or information contained on or for use
2.18 with the card, or (viii) as winnings in a lottery or other game
2.19 of chance operated or sponsored by a state, governmental unit of
2.20 a state, or person licensed or authorized to operate the game by
2.21 a state or governmental unit of a state. The term includes
2.22 health-care-insurance receivables. The term does not include (i)
2.23 rights to payment evidenced by chattel paper or an instrument,
2.24 (ii) commercial tort claims, (iii) deposit accounts, (iv)
2.25 investment property, (v) letter of credit rights or letters of
2.26 credit, or (vi) rights to payment for money or funds advanced or
2.27 sold, other than rights arising out of the use of a credit or
2.28 charge card or information contained on or for use with the card.
2.29 (3) "Account debtor" means a person obligated on an
2.30 account, chattel paper, or general intangible. The term does
2.31 not include persons obligated to pay a negotiable instrument,
2.32 even if the instrument constitutes part of chattel paper.
2.33 (4) "Accounting," except as used in "accounting for," means
2.34 a record:
2.35 (A) authenticated by a secured party;
2.36 (B) indicating the aggregate unpaid secured obligations as
3.1 of a date not more than 35 days earlier or 35 days later than
3.2 the date of the record; and
3.3 (C) identifying the components of the obligations in
3.4 reasonable detail.
3.5 (5) "Agricultural lien" means an interest, other than a
3.6 security interest, in farm products:
3.7 (A) which secures payment or performance of an obligation
3.8 for:
3.9 (i) goods or services furnished in connection with a
3.10 debtor's farming operation; or
3.11 (ii) rent on real property leased by a debtor in connection
3.12 with its farming operation;
3.13 (B) which is created by statute in favor of a person that:
3.14 (i) in the ordinary course of its business furnished goods
3.15 or services to a debtor in connection with a debtor's farming
3.16 operation; or
3.17 (ii) leased real property to a debtor in connection with
3.18 the debtor's farming operation; and
3.19 (C) whose effectiveness does not depend on the person's
3.20 possession of the personal property.
3.21 (6) "As-extracted collateral" means:
3.22 (A) oil, gas, or other minerals that are subject to a
3.23 security interest that:
3.24 (i) is created by a debtor having an interest in the
3.25 minerals before extraction; and
3.26 (ii) attaches to the minerals as extracted; or
3.27 (B) accounts arising out of the sale at the wellhead or
3.28 minehead of oil, gas, or other minerals in which the debtor had
3.29 an interest before extraction.
3.30 (7) "Authenticate" means:
3.31 (A) to sign; or
3.32 (B) to execute or otherwise adopt a symbol, or encrypt or
3.33 similarly process a record in whole or in part, with the present
3.34 intent of the authenticating person to identify the person and
3.35 adopt or accept a record.
3.36 (8) "Bank" means an organization that is engaged in the
4.1 business of banking. The term includes savings banks, savings
4.2 and loan associations, credit unions, and trust companies.
4.3 (9) "Cash proceeds" means proceeds that are money, checks,
4.4 deposit accounts, or the like.
4.5 (10) "Certificate of title" means a certificate of title
4.6 with respect to which a statute provides for the security
4.7 interest in question to be indicated on the certificate as a
4.8 condition or result of the security interest's obtaining
4.9 priority over the rights of a lien creditor with respect to the
4.10 collateral.
4.11 (11) "Chattel paper" means a record or records that
4.12 evidence both a monetary obligation and a security interest in
4.13 specific goods, a security interest in specific goods and
4.14 software used in the goods, a security interest in specific
4.15 goods and license of software used in the goods, a lease of
4.16 specific goods, or a lease of specific goods and license of
4.17 software used in the goods. In this paragraph, "monetary
4.18 obligation" means a monetary obligation secured by the goods or
4.19 owed under a lease of the goods and includes a monetary
4.20 obligation with respect to software used in the goods. The term
4.21 does not include (i) charters or other contracts involving the
4.22 use or hire of a vessel or (ii) records that evidence a right to
4.23 payment arising out of the use of a credit or charge card or
4.24 information contained on or for use with the card. If a
4.25 transaction is evidenced by records that include an instrument
4.26 or series of instruments, the group of records taken together
4.27 constitutes chattel paper.
4.28 (12) "Collateral" means the property subject to a security
4.29 interest or agricultural lien. The term includes:
4.30 (A) proceeds to which a security interest attaches;
4.31 (B) accounts, chattel paper, payment intangibles, and
4.32 promissory notes that have been sold; and
4.33 (C) goods that are the subject of a consignment.
4.34 (13) "Commercial tort claim" means a claim arising in tort
4.35 with respect to which:
4.36 (A) the claimant is an organization; or
5.1 (B) the claimant is an individual and the claim:
5.2 (i) arose in the course of the claimant's business or
5.3 profession; and
5.4 (ii) does not include damages arising out of personal
5.5 injury to or the death of an individual.
5.6 (14) "Commodity account" means an account maintained by a
5.7 commodity intermediary in which a commodity contract is carried
5.8 for a commodity customer.
5.9 (15) "Commodity contract" means a commodity futures
5.10 contract, an option on a commodity futures contract, a commodity
5.11 option, or another contract if the contract or option is:
5.12 (A) traded on or subject to the rules of a board of trade
5.13 that has been designated as a contract market for such a
5.14 contract pursuant to federal commodities law; or
5.15 (B) traded on a foreign commodity board of trade, exchange,
5.16 or market, and is carried on the books of a commodity
5.17 intermediary for a commodity customer.
5.18 (16) "Commodity customer" means a person for which a
5.19 commodity intermediary carries a commodity contract on its books.
5.20 (17) "Commodity intermediary" means a person that:
5.21 (A) is registered as a futures commission merchant under
5.22 federal commodities law; or
5.23 (B) in the ordinary course of its business provides
5.24 clearance or settlement services for a board of trade that has
5.25 been designated as a contract market pursuant to federal
5.26 commodities law.
5.27 (18) "Communicate" means:
5.28 (A) to send a written or other tangible record;
5.29 (B) to transmit a record by any means agreed upon by the
5.30 persons sending and receiving the record; or
5.31 (C) in the case of transmission of a record to or by a
5.32 filing office, to transmit a record by any means prescribed by
5.33 filing office rule.
5.34 (19) "Consignee" means a merchant to which goods are
5.35 delivered in a consignment.
5.36 (20) "Consignment" means a transaction, regardless of its
6.1 form, in which a person delivers goods to a merchant for the
6.2 purpose of sale and:
6.3 (A) the merchant:
6.4 (i) deals in goods of that kind under a name other than the
6.5 name of the person making delivery;
6.6 (ii) is not an auctioneer; and
6.7 (iii) is not generally known by its creditors to be
6.8 substantially engaged in selling the goods of others;
6.9 (B) with respect to each delivery, the aggregate value of
6.10 the goods is $1,000 or more at the time of delivery;
6.11 (C) the goods are not consumer goods immediately before
6.12 delivery; and
6.13 (D) the transaction does not create a security interest
6.14 that secures an obligation.
6.15 (21) "Consignor" means a person that delivers goods to a
6.16 consignee in a consignment.
6.17 (22) "Consumer debtor" means a debtor in a consumer
6.18 transaction.
6.19 (23) "Consumer goods" means goods that are used or bought
6.20 for use primarily for personal, family, or household purposes.
6.21 (24) "Consumer goods transaction" means a consumer
6.22 transaction in which:
6.23 (A) an individual incurs an obligation primarily for
6.24 personal, family, or household purposes; and
6.25 (B) a security interest in consumer goods secures the
6.26 obligation.
6.27 (25) "Consumer obligor" means an obligor who is an
6.28 individual and who incurred the obligation as part of a
6.29 transaction entered into primarily for personal, family, or
6.30 household purposes.
6.31 (26) "Consumer transaction" means a transaction in which (i)
6.32 an individual incurs an obligation primarily for personal,
6.33 family, or household purposes, (ii) a security interest secures
6.34 the obligation, and (iii) the collateral is held or acquired
6.35 primarily for personal, family, or household purposes. The term
6.36 includes consumer goods transactions.
7.1 (27) "Continuation statement" means an amendment of a
7.2 financing statement which:
7.3 (A) identifies, by its file number, the initial financing
7.4 statement to which it relates; and
7.5 (B) indicates that it is a continuation statement for, or
7.6 that it is filed to continue the effectiveness of, the
7.7 identified financing statement.
7.8 (28) "Debtor" means:
7.9 (A) a person having an interest, other than a security
7.10 interest or other lien, in the collateral, whether or not the
7.11 person is an obligor;
7.12 (B) a seller of accounts, chattel paper, payment
7.13 intangibles, or promissory notes; or
7.14 (C) a consignee.
7.15 (29) "Deposit account" means a demand, time, savings,
7.16 passbook, or similar account maintained with a bank. The term
7.17 does not include investment property or accounts evidenced by an
7.18 instrument.
7.19 (30) "Document" means a document of title or a receipt of
7.20 the type described in section 336.7-201(2).
7.21 (31) "Electronic chattel paper" means chattel paper
7.22 evidenced by a record or records consisting of information
7.23 stored in an electronic medium.
7.24 (32) "Encumbrance" means a right, other than an ownership
7.25 interest, in real property. The term includes mortgages and
7.26 other liens on real property.
7.27 (33) "Equipment" means goods other than inventory, farm
7.28 products, or consumer goods.
7.29 (34) "Farm products" means goods, other than standing
7.30 timber, with respect to which the debtor is engaged in a farming
7.31 operation and which are:
7.32 (A) crops grown, growing, or to be grown, including:
7.33 (i) crops produced on trees, vines, and bushes; and
7.34 (ii) aquatic goods produced in aquacultural operations;
7.35 (B) livestock, born or unborn, including aquatic goods
7.36 produced in aquacultural operations;
8.1 (C) supplies used or produced in a farming operation; or
8.2 (D) products of crops or livestock in their unmanufactured
8.3 states.
8.4 (35) "Farming operation" means raising, cultivating,
8.5 propagating, fattening, grazing, or any other farming,
8.6 livestock, or aquacultural operation.
8.7 (36) "File number" means the number assigned to an initial
8.8 financing statement pursuant to section 336.9-519(a).
8.9 (37) "Filing office" means an office designated in section
8.10 336.9-501 as the place to file a financing statement.
8.11 (38) "Filing office rule" means a rule adopted pursuant to
8.12 section 139.
8.13 (39) "Financing statement" means a record or records
8.14 composed of an initial financing statement and any filed record
8.15 relating to the initial financing statement.
8.16 (40) "Fixture filing" means the filing of a financing
8.17 statement covering goods that are or are to become fixtures and
8.18 satisfying section 336.9-502(a) and (b). The term includes the
8.19 filing of a financing statement covering goods of a transmitting
8.20 utility which are or are to become fixtures.
8.21 (41) "Fixtures" means goods that have become so related to
8.22 particular real property that an interest in them arises under
8.23 real property law.
8.24 (42) "General intangible" means any personal property,
8.25 including things in action, other than accounts, chattel paper,
8.26 commercial tort claims, deposit accounts, documents, goods,
8.27 instruments, investment property, letter of credit rights,
8.28 letters of credit, money, and oil, gas, or other minerals before
8.29 extraction. The term includes payment intangibles and software.
8.30 (43) "Good faith" means honesty in fact and the observance
8.31 of reasonable commercial standards of fair dealing.
8.32 (44) "Goods" means all things that are movable when a
8.33 security interest attaches. The term includes (i) fixtures,
8.34 (ii) standing timber that is to be cut and removed under a
8.35 conveyance or contract for sale, (iii) the unborn young of
8.36 animals, (iv) crops grown, growing, or to be grown, even if the
9.1 crops are produced on trees, vines, or bushes, and (v)
9.2 manufactured homes. The term also includes a computer program
9.3 embedded in goods and any supporting information provided in
9.4 connection with a transaction relating to the program if the
9.5 program is associated with the goods in such a manner that it
9.6 customarily is considered part of the goods, or by becoming the
9.7 owner of the goods, a person acquires a right to use the program
9.8 in connection with the goods. The term does not include a
9.9 computer program embedded in goods that consist solely of the
9.10 medium in which the program is embedded. The term also does not
9.11 include accounts, chattel paper, commercial tort claims, deposit
9.12 accounts, documents, general intangibles, instruments,
9.13 investment property, letter of credit rights, letters of credit,
9.14 money, or oil, gas, or other minerals before extraction.
9.15 (45) "Governmental unit" means a subdivision, agency,
9.16 department, county, parish, municipality, or other unit of the
9.17 government of the United States, a state, or a foreign country.
9.18 The term includes an organization having a separate corporate
9.19 existence if the organization is eligible to issue debt on which
9.20 interest is exempt from income taxation under the laws of the
9.21 United States.
9.22 (46) "Health-care-insurance receivable" means an interest
9.23 in or claim under a policy of insurance which is a right to
9.24 payment of a monetary obligation for health-care goods or
9.25 services provided.
9.26 (47) "Instrument" means a negotiable instrument or any
9.27 other writing that evidences a right to the payment of a
9.28 monetary obligation, is not itself a security agreement or
9.29 lease, and is of a type that in ordinary course of business is
9.30 transferred by delivery with any necessary endorsement or
9.31 assignment. The term does not include (i) investment property,
9.32 (ii) letters of credit, or (iii) writings that evidence a right
9.33 to payment arising out of the use of a credit or charge card or
9.34 information contained on or for use with the card.
9.35 (48) "Inventory" means goods, other than farm products,
9.36 which:
10.1 (A) are leased by a person as lessor;
10.2 (B) are held by a person for sale or lease or to be
10.3 furnished under a contract of service;
10.4 (C) are furnished by a person under a contract of service;
10.5 or
10.6 (D) consist of raw materials, work in process, or materials
10.7 used or consumed in a business.
10.8 (49) "Investment property" means a security, whether
10.9 certificated or uncertificated, security entitlement, securities
10.10 account, commodity contract, or commodity account.
10.11 (50) "Jurisdiction of organization," with respect to a
10.12 registered organization, means the jurisdiction under whose law
10.13 the organization is organized.
10.14 (51) "Letter of credit right" means a right to payment or
10.15 performance under a letter of credit, whether or not the
10.16 beneficiary has demanded or is at the time entitled to demand
10.17 payment or performance. The term does not include the right of
10.18 a beneficiary to demand payment or performance under a letter of
10.19 credit.
10.20 (52) "Lien creditor" means:
10.21 (A) a creditor that has acquired a lien on the property
10.22 involved by attachment, levy, or the like;
10.23 (B) an assignee for benefit of creditors from the time of
10.24 assignment;
10.25 (C) a trustee in bankruptcy from the date of the filing of
10.26 the petition; or
10.27 (D) a receiver in equity from the time of appointment.
10.28 (53) "Manufactured home" means a structure, transportable
10.29 in one or more sections, which, in the traveling mode, is eight
10.30 body feet or more in width or 40 body feet or more in length,
10.31 or, when erected on site, is 320 or more square feet, and which
10.32 is built on a permanent chassis and designed to be used as a
10.33 dwelling with or without a permanent foundation when connected
10.34 to the required utilities, and includes the plumbing, heating,
10.35 air-conditioning, and electrical systems contained therein. The
10.36 term includes any structure that meets all of the requirements
11.1 of this paragraph except the size requirements and with respect
11.2 to which the manufacturer voluntarily files a certification
11.3 required by the United States Secretary of Housing and Urban
11.4 Development and complies with the standards established under
11.5 United States Code, title 42.
11.6 (54) "Manufactured home transaction" means a secured
11.7 transaction:
11.8 (A) that creates a purchase-money security interest in a
11.9 manufactured home, other than a manufactured home held as
11.10 inventory; or
11.11 (B) in which a manufactured home, other than a manufactured
11.12 home held as inventory, is the primary collateral.
11.13 (55) "Mortgage" means a consensual interest in real
11.14 property, including fixtures, which secures payment or
11.15 performance of an obligation.
11.16 (56) "New debtor" means a person that becomes bound as
11.17 debtor under section 336.9-203(d) by a security agreement
11.18 previously entered into by another person.
11.19 (57) "New value" means (i) money, (ii) money's worth in
11.20 property, services, or new credit, or (iii) release by a
11.21 transferee of an interest in property previously transferred to
11.22 the transferee. The term does not include an obligation
11.23 substituted for another obligation.
11.24 (58) "Noncash proceeds" means proceeds other than cash
11.25 proceeds.
11.26 (59) "Obligor" means a person that, with respect to an
11.27 obligation secured by a security interest in or an agricultural
11.28 lien on the collateral, (i) owes payment or other performance of
11.29 the obligation, (ii) has provided property other than the
11.30 collateral to secure payment or other performance of the
11.31 obligation, or (iii) is otherwise accountable in whole or in
11.32 part for payment or other performance of the obligation. The
11.33 term does not include issuers or nominated persons under a
11.34 letter of credit.
11.35 (60) "Original debtor", except as used in section
11.36 336.9-310(c), means a person that, as debtor, entered into a
12.1 security agreement to which a new debtor has become bound under
12.2 section 336.9-203(d).
12.3 (61) "Payment intangible" means a general intangible under
12.4 which the account debtor's principal obligation is a monetary
12.5 obligation.
12.6 (62) "Person related to," with respect to an individual,
12.7 means:
12.8 (A) the spouse of the individual;
12.9 (B) a brother, brother-in-law, sister, or sister-in-law of
12.10 the individual;
12.11 (C) an ancestor or lineal descendant of the individual or
12.12 the individual's spouse; or
12.13 (D) any other relative, by blood or marriage, of the
12.14 individual or the individual's spouse who shares the same home
12.15 with the individual.
12.16 (63) "Person related to," with respect to an organization,
12.17 means:
12.18 (A) a person directly or indirectly controlling, controlled
12.19 by, or under common control with the organization;
12.20 (B) an officer or director of, or a person performing
12.21 similar functions with respect to, the organization;
12.22 (C) an officer or director of, or a person performing
12.23 similar functions with respect to, a person described in
12.24 subparagraph (A);
12.25 (D) the spouse of an individual described in subparagraph
12.26 (A), (B), or (C); or
12.27 (E) an individual who is related by blood or marriage to an
12.28 individual described in subparagraph (A), (B), (C), or (D), and
12.29 shares the same home with the individual.
12.30 (64) "Proceeds", except as used in section 336.9-609(b),
12.31 means the following property:
12.32 (A) whatever is acquired upon the sale, lease, license,
12.33 exchange, or other disposition of collateral;
12.34 (B) whatever is collected on, or distributed on account of,
12.35 collateral;
12.36 (C) rights arising out of collateral;
13.1 (D) to the extent of the value of collateral, claims
13.2 arising out of the loss, nonconformity, or interference with the
13.3 use of, defects or infringement of rights in, or damage to, the
13.4 collateral; or
13.5 (E) to the extent of the value of collateral and to the
13.6 extent payable to the debtor or the secured party, insurance
13.7 payable by reason of the loss or nonconformity of, defects or
13.8 infringement of rights in, or damage to, the collateral.
13.9 (65) "Promissory note" means an instrument that evidences a
13.10 promise to pay a monetary obligation, does not evidence an order
13.11 to pay, and does not contain an acknowledgment by a bank that
13.12 the bank has received for deposit a sum of money or funds.
13.13 (66) "Proposal" means a record authenticated by a secured
13.14 party which includes the terms on which the secured party is
13.15 willing to accept collateral in full or partial satisfaction of
13.16 the obligation it secures pursuant to sections 336.9-620,
13.17 336.9-621, and 336.9-622.
13.18 (67) "Public-finance transaction" means a secured
13.19 transaction in connection with which:
13.20 (A) debt securities are issued;
13.21 (B) all or a portion of the securities issued have an
13.22 initial stated maturity of at least 20 years; and
13.23 (C) the debtor, obligor, secured party, account debtor or
13.24 other person obligated on collateral, assignor or assignee of a
13.25 secured obligation, or assignor or assignee of a security
13.26 interest is a state or a governmental unit of a state.
13.27 (68) "Pursuant to commitment," with respect to an advance
13.28 made or other value given by a secured party, means pursuant to
13.29 the secured party's obligation, whether or not a subsequent
13.30 event of default or other event not within the secured party's
13.31 control has relieved or may relieve the secured party from its
13.32 obligation.
13.33 (69) "Record," except as used in "for record," "of record,"
13.34 "record or legal title," and "record owner," means information
13.35 that is inscribed on a tangible medium or which is stored in an
13.36 electronic or other medium and is retrievable in perceivable
14.1 form.
14.2 (70) "Registered organization" means an organization
14.3 organized solely under the law of a single state or the United
14.4 States and as to which the state or the United States must
14.5 maintain a public record showing the organization to have been
14.6 organized.
14.7 (71) "Secondary obligor" means an obligor to the extent
14.8 that:
14.9 (A) the obligor's obligation is secondary; or
14.10 (B) the obligor has a right of recourse with respect to an
14.11 obligation secured by collateral against the debtor, another
14.12 obligor, or property of either.
14.13 (72) "Secured party" means:
14.14 (A) a person in whose favor a security interest is created
14.15 or provided for under a security agreement, whether or not any
14.16 obligation to be secured is outstanding;
14.17 (B) a person that holds an agricultural lien;
14.18 (C) a consignor;
14.19 (D) a person to which accounts, chattel paper, payment
14.20 intangibles, or promissory notes have been sold;
14.21 (E) a trustee, indenture trustee, agent, collateral agent,
14.22 or other representative in whose favor a security interest or
14.23 agricultural lien is created or provided for; or
14.24 (F) a person that holds a security interest arising under
14.25 section 336.2-401, 336.2-505, 336.2-711(3), 336.2A-508(5),
14.26 336.4-210, or 336.5-118.
14.27 (73) "Security agreement" means an agreement that creates
14.28 or provides for a security interest.
14.29 (74) "Send," in connection with a record or notification,
14.30 means:
14.31 (A) to deposit in the mail, deliver for transmission, or
14.32 transmit by any other usual means of communication, with postage
14.33 or cost of transmission provided for, addressed to any address
14.34 reasonable under the circumstances; or
14.35 (B) to cause the record or notification to be received
14.36 within the time that it would have been received if properly
15.1 sent under subparagraph (A).
15.2 (75) "Software" means a computer program and any supporting
15.3 information provided in connection with a transaction relating
15.4 to the program. The term does not include a computer program
15.5 that is included in the definition of goods.
15.6 (76) "State" means a state of the United States, the
15.7 District of Columbia, Puerto Rico, the United States Virgin
15.8 Islands, or any territory or insular possession subject to the
15.9 jurisdiction of the United States.
15.10 (77) "Supporting obligation" means a letter of credit right
15.11 or secondary obligation that supports the payment or performance
15.12 of an account, chattel paper, a document, a general intangible,
15.13 an instrument, or investment property.
15.14 (78) "Tangible chattel paper" means chattel paper evidenced
15.15 by a record or records consisting of information that is
15.16 inscribed on a tangible medium.
15.17 (79) "Termination statement" means an amendment of a
15.18 financing statement which:
15.19 (A) identifies, by its file number, the initial financing
15.20 statement to which it relates; and
15.21 (B) indicates either that it is a termination statement or
15.22 that the identified financing statement is no longer effective.
15.23 (80) "Transmitting utility" means a person primarily
15.24 engaged in the business of:
15.25 (A) operating a railroad, subway, street railway, or
15.26 trolley bus;
15.27 (B) transmitting communications electrically,
15.28 electromagnetically, or by light;
15.29 (C) transmitting goods by pipeline or sewer; or
15.30 (D) transmitting or producing and transmitting electricity,
15.31 steam, gas, or water.
15.32 (b) [DEFINITIONS IN OTHER ARTICLES.] The following
15.33 definitions in other articles apply to this article:
15.34 "Applicant" Section 336.5-102
15.35 "Beneficiary" Section 336.5-102
15.36 "Broker" Section 336.8-102
16.1 "Certificated security" Section 336.8-102
16.2 "Check" Section 336.3-104
16.3 "Clearing corporation" Section 336.8-102
16.4 "Contract for sale" Section 336.2-106
16.5 "Customer" Section 336.4-104
16.6 "Entitlement holder" Section 336.8-102
16.7 "Financial asset" Section 336.8-102
16.8 "Holder in due course" Section 336.3-302
16.9 "Issuer" (with respect to a
16.10 letter of credit or
16.11 letter of credit right) Section 336.5-102
16.12 "Issuer" (with respect to
16.13 a security) Section 336.8-201
16.14 "Lease" Section 336.2A-103
16.15 "Lease agreement" Section 336.2A-103
16.16 "Lease contract" Section 336.2A-103
16.17 "Leasehold interest" Section 336.2A-103
16.18 "Lessee" Section 336.2A-103
16.19 "Lessee in ordinary course
16.20 of business" Section 336.2A-103
16.21 "Lessor" Section 336.2A-103
16.22 "Lessor's residual interest" Section 336.2A-103
16.23 "Letter of credit" Section 336.5-102
16.24 "Merchant" Section 336.2-104
16.25 "Negotiable instrument" Section 336.3-104
16.26 "Nominated person" Section 336.5-102
16.27 "Note" Section 336.3-104
16.28 "Proceeds of a letter of
16.29 credit" Section 336.5-114
16.30 "Prove" Section 336.3-103
16.31 "Sale" Section 336.2-106
16.32 "Securities account" Section 336.8-501
16.33 "Securities intermediary" Section 336.8-102
16.34 "Security" Section 336.8-102
16.35 "Security certificate" Section 336.8-102
16.36 "Security entitlement" Section 336.8-102
17.1 "Uncertificated security" Section 336.8-102
17.2 (c) [ARTICLE 1 DEFINITIONS AND PRINCIPLES.] Article 1
17.3 contains general definitions and principles of construction and
17.4 interpretation applicable throughout this article.
17.5 Sec. 3. [336.9-103] [PURCHASE-MONEY SECURITY INTEREST;
17.6 APPLICATION OF PAYMENTS; BURDEN OF ESTABLISHING.]
17.7 (a) [DEFINITIONS.] In this section:
17.8 (1) "purchase-money collateral" means goods or software
17.9 that secures a purchase-money obligation incurred with respect
17.10 to that collateral; and
17.11 (2) "purchase-money obligation" means an obligation of an
17.12 obligor incurred as all or part of the price of the collateral
17.13 or for value given to enable the debtor to acquire rights in or
17.14 the use of the collateral if the value is in fact so used.
17.15 (b) [PURCHASE-MONEY SECURITY INTEREST IN GOODS.] A security
17.16 interest in goods is a purchase-money security interest:
17.17 (1) to the extent that the goods are purchase-money
17.18 collateral with respect to that security interest;
17.19 (2) if the security interest is in inventory that is or was
17.20 purchase-money collateral, also to the extent that the security
17.21 interest secures a purchase-money obligation incurred with
17.22 respect to other inventory in which the secured party holds or
17.23 held a purchase-money security interest; and
17.24 (3) also to the extent that the security interest secures a
17.25 purchase-money obligation incurred with respect to software in
17.26 which the secured party holds or held a purchase-money security
17.27 interest.
17.28 (c) [PURCHASE-MONEY SECURITY INTEREST IN SOFTWARE.] A
17.29 security interest in software is a purchase-money security
17.30 interest to the extent that the security interest also secures a
17.31 purchase-money obligation incurred with respect to goods in
17.32 which the secured party holds or held a purchase-money security
17.33 interest if:
17.34 (1) the debtor acquired its interest in the software in an
17.35 integrated transaction in which it acquired an interest in the
17.36 goods; and
18.1 (2) the debtor acquired its interest in the software for
18.2 the principal purpose of using the software in the goods.
18.3 (d) [CONSIGNOR'S INVENTORY PURCHASE-MONEY SECURITY
18.4 INTEREST.] The security interest of a consignor in goods that
18.5 are the subject of a consignment is a purchase-money security
18.6 interest in inventory.
18.7 (e) [APPLICATION OF PAYMENT IN NONCONSUMER GOODS
18.8 TRANSACTION.] In a transaction other than a consumer goods
18.9 transaction, if the extent to which a security interest is a
18.10 purchase-money security interest depends on the application of a
18.11 payment to a particular obligation, the payment must be applied:
18.12 (1) in accordance with any reasonable method of application
18.13 to which the parties agree;
18.14 (2) in the absence of the parties' agreement to a
18.15 reasonable method, in accordance with any intention of the
18.16 obligor manifested at or before the time of payment; or
18.17 (3) in the absence of an agreement to a reasonable method
18.18 and a timely manifestation of the obligor's intention, in the
18.19 following order:
18.20 (A) to obligations that are not secured; and
18.21 (B) if more than one obligation is secured, to obligations
18.22 secured by purchase-money security interests in the order in
18.23 which those obligations were incurred.
18.24 (f) [NO LOSS OF STATUS OF PURCHASE-MONEY SECURITY INTEREST
18.25 IN NONCONSUMER GOODS TRANSACTION.] In a transaction other than a
18.26 consumer goods transaction, a purchase-money security interest
18.27 does not lose its status as such, even if:
18.28 (1) the purchase-money collateral also secures an
18.29 obligation that is not a purchase-money obligation;
18.30 (2) collateral that is not purchase-money collateral also
18.31 secures the purchase-money obligation; or
18.32 (3) the purchase-money obligation has been renewed,
18.33 refinanced, consolidated, or restructured.
18.34 (g) [BURDEN OF PROOF IN NONCONSUMER GOODS TRANSACTION.] In
18.35 a transaction other than a consumer goods transaction, a secured
18.36 party claiming a purchase-money security interest has the burden
19.1 of establishing the extent to which the security interest is a
19.2 purchase-money security interest.
19.3 (h) [NONCONSUMER GOODS TRANSACTION; NO INFERENCE.] The
19.4 limitation of the rules in subsections (e), (f), and (g) to
19.5 transactions other than consumer goods transactions is intended
19.6 to leave to the court the determination of the proper rules in
19.7 consumer goods transactions. The court may not infer from that
19.8 limitation the nature of the proper rule in consumer goods
19.9 transactions and may continue to apply established approaches.
19.10 Sec. 4. [336.9-104] [CONTROL OF DEPOSIT ACCOUNT.]
19.11 (a) [REQUIREMENTS FOR CONTROL.] A secured party has control
19.12 of a deposit account if:
19.13 (1) the secured party is the bank with which the deposit
19.14 account is maintained;
19.15 (2) the debtor, secured party, and bank have agreed in an
19.16 authenticated record that the bank will comply with instructions
19.17 originated by the secured party directing disposition of the
19.18 funds in the deposit account without further consent by the
19.19 debtor; or
19.20 (3) the secured party becomes the bank's customer with
19.21 respect to the deposit account.
19.22 (b) [DEBTOR'S RIGHT TO DIRECT DISPOSITION.] A secured party
19.23 that has satisfied subsection (a) has control, even if the
19.24 debtor retains the right to direct the disposition of funds from
19.25 the deposit account.
19.26 Sec. 5. [336.9-105] [CONTROL OF ELECTRONIC CHATTEL PAPER.]
19.27 A secured party has control of electronic chattel paper if
19.28 the record or records comprising the chattel paper are created,
19.29 stored, and assigned in such a manner that:
19.30 (1) a single authoritative copy of the record or records
19.31 exists which is unique, identifiable, and, except as otherwise
19.32 provided in paragraphs (4), (5), and (6), unalterable;
19.33 (2) the authoritative copy identifies the secured party as
19.34 the assignee of the record or records;
19.35 (3) the authoritative copy is communicated to and
19.36 maintained by the secured party or its designated custodian;
20.1 (4) copies or revisions that add or change an identified
20.2 assignee of the authoritative copy can be made only with the
20.3 participation of the secured party;
20.4 (5) each copy of the authoritative copy and any copy of a
20.5 copy is readily identifiable as a copy that is not the
20.6 authoritative copy; and
20.7 (6) any revision of the authoritative copy is readily
20.8 identifiable as an authorized or unauthorized revision.
20.9 Sec. 6. [336.9-106] [CONTROL OF INVESTMENT PROPERTY.]
20.10 (a) [CONTROL UNDER SECTION 336.8-106.] A person has control
20.11 of a certificated security, uncertificated security, or security
20.12 entitlement as provided in section 336.8-106.
20.13 (b) [CONTROL OF COMMODITY CONTRACT.] A secured party has
20.14 control of a commodity contract if:
20.15 (1) the secured party is the commodity intermediary with
20.16 which the commodity contract is carried; or
20.17 (2) the commodity customer, secured party, and commodity
20.18 intermediary have agreed that the commodity intermediary will
20.19 apply any value distributed on account of the commodity contract
20.20 as directed by the secured party without further consent by the
20.21 commodity customer.
20.22 (c) [EFFECT OF CONTROL OF SECURITIES ACCOUNT OR COMMODITY
20.23 ACCOUNT.] A secured party having control of all security
20.24 entitlements or commodity contracts carried in a securities
20.25 account or commodity account has control over the securities
20.26 account or commodity account.
20.27 Sec. 7. [336.9-107] [CONTROL OF LETTER OF CREDIT RIGHT.]
20.28 A secured party has control of a letter of credit right to
20.29 the extent of any right to payment or performance by the issuer
20.30 or any nominated person if the issuer or nominated person has
20.31 consented to an assignment of proceeds of the letter of credit
20.32 under section 336.5-114(c) or otherwise applicable law or
20.33 practice.
20.34 Sec. 8. [336.9-108] [SUFFICIENCY OF DESCRIPTION.]
20.35 (a) [SUFFICIENCY OF DESCRIPTION.] Except as otherwise
20.36 provided in subsections (c), (d), and (e), a description of
21.1 personal or real property is sufficient, whether or not it is
21.2 specific, if it reasonably identifies what is described.
21.3 (b) [EXAMPLES OF REASONABLE IDENTIFICATION.] Except as
21.4 otherwise provided in subsection (d), a description of
21.5 collateral reasonably identifies the collateral if it identifies
21.6 the collateral by:
21.7 (1) specific listing;
21.8 (2) category;
21.9 (3) except as otherwise provided in subsection (e), a type
21.10 of collateral defined in the Uniform Commercial Code;
21.11 (4) quantity;
21.12 (5) computational or allocational formula or procedure; or
21.13 (6) except as otherwise provided in subsection (c), any
21.14 other method, if the identity of the collateral is objectively
21.15 determinable.
21.16 (c) [SUPERGENERIC DESCRIPTION NOT SUFFICIENT.] A
21.17 description of collateral as "all the debtor's assets" or "all
21.18 the debtor's personal property" or using words of similar import
21.19 does not reasonably identify the collateral.
21.20 (d) [INVESTMENT PROPERTY.] Except as otherwise provided in
21.21 subsection (e), a description of a security entitlement,
21.22 securities account, or commodity account is sufficient if it
21.23 describes:
21.24 (1) the collateral by those terms or as investment
21.25 property; or
21.26 (2) the underlying financial asset or commodity contract.
21.27 (e) [WHEN DESCRIPTION BY TYPE INSUFFICIENT.] A description
21.28 only by type of collateral defined in the Uniform Commercial
21.29 Code is an insufficient description of:
21.30 (1) a commercial tort claim; or
21.31 (2) in a consumer transaction, consumer goods, a security
21.32 entitlement, a securities account, or a commodity account.
21.33 SUBPART 2. APPLICABILITY OF ARTICLE
21.34 Sec. 9. [336.9-109] [SCOPE.]
21.35 (a) [GENERAL SCOPE OF ARTICLE.] Except as otherwise
21.36 provided in subsections (c) and (d), this article applies to:
22.1 (1) a transaction, regardless of its form, that creates a
22.2 security interest in personal property or fixtures by contract;
22.3 (2) an agricultural lien;
22.4 (3) a sale of accounts, chattel paper, payment intangibles,
22.5 or promissory notes;
22.6 (4) a consignment;
22.7 (5) a security interest arising under section 336.2-401,
22.8 336.2-505, 336.2-711(3), or 336.2A-508(5), as provided in
22.9 section 336.9-110; and
22.10 (6) a security interest arising under section 336.4-210 or
22.11 336.5-118.
22.12 (b) [SECURITY INTEREST IN SECURED OBLIGATION.] The
22.13 application of this article to a security interest in a secured
22.14 obligation is not affected by the fact that the obligation is
22.15 itself secured by a transaction or interest to which this
22.16 article does not apply.
22.17 (c) [EXTENT TO WHICH ARTICLE DOES NOT APPLY.] This article
22.18 does not apply to the extent that:
22.19 (1) a statute, regulation, or treaty of the United States
22.20 preempts this article;
22.21 (2) another statute of this state expressly governs the
22.22 creation, perfection, priority, or enforcement of a security
22.23 interest created by this state or a governmental unit of this
22.24 state;
22.25 (3) a statute of another state, a foreign country, or a
22.26 governmental unit of another state or a foreign country, other
22.27 than a statute generally applicable to security interests,
22.28 expressly governs creation, perfection, priority, or enforcement
22.29 of a security interest created by the state, country, or
22.30 governmental unit; or
22.31 (4) the rights of a transferee beneficiary or nominated
22.32 person under a letter of credit are independent and superior
22.33 under section 336.5-114.
22.34 (d) [INAPPLICABILITY OF ARTICLE.] This article does not
22.35 apply to:
22.36 (1) a landlord's lien, other than an agricultural lien;
23.1 (2) a lien, other than an agricultural lien, given by
23.2 statute or other rule of law for services or materials, but
23.3 section 336.9-333 applies with respect to priority of the lien;
23.4 (3) an assignment of a claim for wages, salary, or other
23.5 compensation of an employee;
23.6 (4) a sale of accounts, chattel paper, payment intangibles,
23.7 or promissory notes as part of a sale of the business out of
23.8 which they arose;
23.9 (5) an assignment of accounts, chattel paper, payment
23.10 intangibles, or promissory notes which is for the purpose of
23.11 collection only;
23.12 (6) an assignment of a right-to-payment under a contract to
23.13 an assignee that is also obligated to perform under the
23.14 contract;
23.15 (7) an assignment of a single account, payment intangible,
23.16 or promissory note to an assignee in full or partial
23.17 satisfaction of a preexisting indebtedness;
23.18 (8) a transfer of an interest in or an assignment of a
23.19 claim under a policy of insurance, other than an assignment by
23.20 or to a health-care provider of a health-care-insurance
23.21 receivable and any subsequent assignment of the
23.22 right-to-payment, but sections 336.9-315 and 336.9-322 apply
23.23 with respect to proceeds and priorities in proceeds;
23.24 (9) an assignment of a right represented by a judgment,
23.25 other than a judgment taken on a right-to-payment that was
23.26 collateral;
23.27 (10) a right of recoupment or set-off, but:
23.28 (A) section 336.9-340 applies with respect to the
23.29 effectiveness of rights of recoupment or set-off against deposit
23.30 accounts; and
23.31 (B) section 336.9-404 applies with respect to defenses or
23.32 claims of an account debtor;
23.33 (11) the creation or transfer of an interest in or lien on
23.34 real property, including a lease or rents thereunder, except to
23.35 the extent that provision is made for:
23.36 (A) liens on real property in sections 336.9-203 and
24.1 336.9-308;
24.2 (B) fixtures in section 336.9-334;
24.3 (C) fixture filings in sections 336.9-501, 336.9-502,
24.4 336.9-512, 336.9-516, and 336.9-519; and
24.5 (D) security agreements covering personal and real property
24.6 in section 336.9-604;
24.7 (12) an assignment of a claim arising in tort, other than a
24.8 commercial tort claim, but sections 336.9-315 and 336.9-322
24.9 apply with respect to proceeds and priorities in proceeds;
24.10 (13) an assignment of a deposit account in a consumer
24.11 transaction, but sections 336.9-315 and 336.9-322 apply with
24.12 respect to proceeds and priorities in proceeds;
24.13 (14) a claim or right to receive compensation for injuries
24.14 or sickness as described in United States Code, title 26,
24.15 section 104(a)(1) or (2), as amended from time to time; or
24.16 (15) a claim or right to receive benefits under a special
24.17 needs trust as described in United States Code, title 42,
24.18 section 1396p(d)(4), as amended from time to time.
24.19 Sec. 10. [336.9-110] [SECURITY INTERESTS ARISING UNDER
24.20 ARTICLE 2 OR 2A.]
24.21 A security interest arising under section 336.2-401,
24.22 336.2-505, 336.2-711(3), or 336.2A-508(5) is subject to this
24.23 article. However, until the debtor obtains possession of the
24.24 goods:
24.25 (1) the security interest is enforceable, even if section
24.26 336.9-203(b)(3) has not been satisfied;
24.27 (2) filing is not required to perfect the security
24.28 interest;
24.29 (3) the rights of the secured party after default by the
24.30 debtor are governed by article 2 or 2A; and
24.31 (4) the security interest has priority over a conflicting
24.32 security interest created by the debtor.
24.33 Part 2
24.34 EFFECTIVENESS OF SECURITY AGREEMENT;
24.35 ATTACHMENT OF SECURITY INTEREST;
24.36 RIGHTS OF PARTIES TO SECURITY AGREEMENT
25.1 SUBPART 1. EFFECTIVENESS AND ATTACHMENT
25.2 Sec. 11. [336.9-201] [GENERAL EFFECTIVENESS OF SECURITY
25.3 AGREEMENT.]
25.4 (a) [GENERAL EFFECTIVENESS.] Except as otherwise provided
25.5 in the Uniform Commercial Code, a security agreement is
25.6 effective according to its terms between the parties, against
25.7 purchasers of the collateral, and against creditors.
25.8 (b) [APPLICABLE CONSUMER LAWS AND OTHER LAW.] A transaction
25.9 subject to this article is subject to any applicable rule of law
25.10 which establishes a different rule for consumers and (i) any
25.11 other statute or regulation that regulates the rates, charges,
25.12 agreements, and practices for loans, credit sales, or other
25.13 extensions of credit and (ii) any consumer protection statute or
25.14 rule.
25.15 (c) [OTHER APPLICABLE LAW CONTROLS.] In case of conflict
25.16 between this article and a rule of law, statute, or regulation
25.17 described in subsection (b), the rule of law, statute, or
25.18 regulation controls. Failure to comply with a statute or
25.19 regulation described in subsection (b) has only the effect the
25.20 statute or regulation specifies.
25.21 (d) [FURTHER DEFERENCE TO OTHER APPLICABLE LAW.] This
25.22 article does not:
25.23 (1) validate any rate, charge, agreement, or practice that
25.24 violates a rule of law, statute, or regulation described in
25.25 subsection (b); or
25.26 (2) extend the application of the rule of law, statute, or
25.27 regulation to a transaction not otherwise subject to it.
25.28 Sec. 12. [336.9-202] [TITLE TO COLLATERAL IMMATERIAL.]
25.29 Except as otherwise provided with respect to consignments
25.30 or sales of accounts, chattel paper, payment intangibles, or
25.31 promissory notes, the provisions of this article with regard to
25.32 rights and obligations apply whether title to collateral is in
25.33 the secured party or the debtor.
25.34 Sec. 13. [336.9-203] [ATTACHMENT AND ENFORCEABILITY OF
25.35 SECURITY INTEREST; PROCEEDS; SUPPORTING OBLIGATIONS; FORMAL
25.36 REQUISITES.]
26.1 (a) [ATTACHMENT.] A security interest attaches to
26.2 collateral when it becomes enforceable against the debtor with
26.3 respect to the collateral, unless an agreement expressly
26.4 postpones the time of attachment.
26.5 (b) [ENFORCEABILITY.] Except as otherwise provided in
26.6 subsections (c) through (i), a security interest is enforceable
26.7 against the debtor and third parties with respect to the
26.8 collateral only if:
26.9 (1) value has been given;
26.10 (2) the debtor has rights in the collateral or the power to
26.11 transfer rights in the collateral to a secured party; and
26.12 (3) one of the following conditions is met:
26.13 (A) the debtor has authenticated a security agreement that
26.14 provides a description of the collateral and, if the security
26.15 interest covers timber to be cut, a description of the land
26.16 concerned;
26.17 (B) the collateral is not a certificated security and is in
26.18 the possession of the secured party under section 336.9-313
26.19 pursuant to the debtor's security agreement;
26.20 (C) the collateral is a certificated security in registered
26.21 form and the security certificate has been delivered to the
26.22 secured party under section 336.8-301 pursuant to the debtor's
26.23 security agreement; or
26.24 (D) the collateral is deposit accounts, electronic chattel
26.25 paper, investment property, or letter of credit rights, and the
26.26 secured party has control under section 336.9-104, 336.9-105,
26.27 336.9-106, or 336.9-107 pursuant to the debtor's security
26.28 agreement.
26.29 (c) [OTHER UCC PROVISIONS.] Subsection (b) is subject to
26.30 section 336.4-210 on the security interest of a collecting bank,
26.31 section 336.5-118 on the security interest of a letter of credit
26.32 issuer or nominated person, section 336.9-110 on a security
26.33 interest arising under article 2 or 2A, and section 336.9-206 on
26.34 security interests in investment property.
26.35 (d) [WHEN PERSON BECOMES BOUND BY ANOTHER PERSON'S SECURITY
26.36 AGREEMENT.] A person becomes bound as debtor by a security
27.1 agreement entered into by another person if, by operation of law
27.2 other than this article or by contract:
27.3 (1) the security agreement becomes effective to create a
27.4 security interest in the person's property; or
27.5 (2) the person becomes generally obligated for the
27.6 obligations of the other person, including the obligation
27.7 secured under the security agreement, and acquires or succeeds
27.8 to all or substantially all of the assets of the other person.
27.9 (e) [EFFECT OF NEW DEBTOR BECOMING BOUND.] If a new debtor
27.10 becomes bound as debtor by a security agreement entered into by
27.11 another person:
27.12 (1) the agreement satisfies subsection (b)(3) with respect
27.13 to existing or after-acquired property of the new debtor to the
27.14 extent the property is described in the agreement; and
27.15 (2) another agreement is not necessary to make a security
27.16 interest in the property enforceable.
27.17 (f) [PROCEEDS AND SUPPORTING OBLIGATIONS.] The attachment
27.18 of a security interest in collateral gives the secured party the
27.19 rights to proceeds provided by section 336.9-315 and is also
27.20 attachment of a security interest in a supporting obligation for
27.21 the collateral.
27.22 (g) [LIEN SECURING RIGHT-TO-PAYMENT.] The attachment of a
27.23 security interest in a right-to-payment or performance secured
27.24 by a security interest or other lien on personal or real
27.25 property is also attachment of a security interest in the
27.26 security interest, mortgage, or other lien.
27.27 (h) [SECURITY ENTITLEMENT CARRIED IN SECURITIES
27.28 ACCOUNT.] The attachment of a security interest in a securities
27.29 account is also attachment of a security interest in the
27.30 security entitlements carried in the securities account.
27.31 (i) [COMMODITY CONTRACTS CARRIED IN COMMODITY ACCOUNT.] The
27.32 attachment of a security interest in a commodity account is also
27.33 attachment of a security interest in the commodity contracts
27.34 carried in the commodity account.
27.35 Sec. 14. [336.9-204] [AFTER-ACQUIRED PROPERTY; FUTURE
27.36 ADVANCES.]
28.1 (a) [AFTER-ACQUIRED COLLATERAL.] Except as otherwise
28.2 provided in subsection (b), a security agreement may create or
28.3 provide for a security interest in after-acquired collateral.
28.4 (b) [WHEN AFTER-ACQUIRED PROPERTY CLAUSE NOT EFFECTIVE.] A
28.5 security interest does not attach under a term constituting an
28.6 after-acquired property clause to:
28.7 (1) consumer goods, other than an accession when given as
28.8 additional security, unless the debtor acquires rights in them
28.9 within ten days after the secured party gives value; or
28.10 (2) a commercial tort claim.
28.11 (c) [FUTURE ADVANCES AND OTHER VALUE.] A security agreement
28.12 may provide that collateral secures, or that accounts, chattel
28.13 paper, payment intangibles, or promissory notes are sold in
28.14 connection with future advances or other value, whether or not
28.15 the advances or value are given pursuant to commitment.
28.16 Sec. 15. [336.9-205] [USE OR DISPOSITION OF COLLATERAL
28.17 PERMISSIBLE.]
28.18 (a) [WHEN SECURITY INTEREST NOT INVALID OR FRAUDULENT.] A
28.19 security interest is not invalid or fraudulent against creditors
28.20 solely because:
28.21 (1) the debtor has the right or ability to:
28.22 (A) use, commingle, or dispose of all or part of the
28.23 collateral, including returned or repossessed goods;
28.24 (B) collect, compromise, enforce, or otherwise deal with
28.25 collateral;
28.26 (C) accept the return of collateral or make repossessions;
28.27 or
28.28 (D) use, commingle, or dispose of proceeds; or
28.29 (2) the secured party fails to require the debtor to
28.30 account for proceeds or replace collateral.
28.31 (b) [REQUIREMENTS OF POSSESSION NOT RELAXED.] This section
28.32 does not relax the requirements of possession if attachment,
28.33 perfection, or enforcement of a security interest depends upon
28.34 possession of the collateral by the secured party.
28.35 Sec. 16. [336.9-206] [SECURITY INTEREST ARISING IN
28.36 PURCHASE OR DELIVERY OF FINANCIAL ASSET.]
29.1 (a) [SECURITY INTEREST WHEN PERSON BUYS THROUGH SECURITIES
29.2 INTERMEDIARY.] A security interest in favor of a securities
29.3 intermediary attaches to a person's security entitlement if:
29.4 (1) the person buys a financial asset through the
29.5 securities intermediary in a transaction in which the person is
29.6 obligated to pay the purchase price to the securities
29.7 intermediary at the time of the purchase; and
29.8 (2) the securities intermediary credits the financial asset
29.9 to the buyer's securities account before the buyer pays the
29.10 securities intermediary.
29.11 (b) [SECURITY INTEREST SECURES OBLIGATION TO PAY FOR
29.12 FINANCIAL ASSET.] The security interest described in subsection
29.13 (a) secures the person's obligation to pay for the financial
29.14 asset.
29.15 (c) [SECURITY INTEREST IN PAYMENT AGAINST DELIVERY
29.16 TRANSACTION.] A security interest in favor of a person that
29.17 delivers a certificated security or other financial asset
29.18 represented by a writing attaches to the security or other
29.19 financial asset if:
29.20 (1) the security or other financial asset:
29.21 (A) in the ordinary course of business is transferred by
29.22 delivery with any necessary endorsement or assignment; and
29.23 (B) is delivered under an agreement between persons in the
29.24 business of dealing with such securities or financial assets;
29.25 and
29.26 (2) the agreement calls for delivery against payment.
29.27 (d) [SECURITY INTEREST SECURES OBLIGATION TO PAY FOR
29.28 DELIVERY.] The security interest described in subsection (c)
29.29 secures the obligation to make payment for the delivery.
29.30 SUBPART 2. RIGHTS AND DUTIES
29.31 Sec. 17. [336.9-207] [RIGHTS AND DUTIES OF SECURED PARTY
29.32 HAVING POSSESSION OR CONTROL OF COLLATERAL.]
29.33 (a) [DUTY OF CARE WHEN SECURED PARTY IN POSSESSION.] Except
29.34 as otherwise provided in subsection (d), a secured party shall
29.35 use reasonable care in the custody and preservation of
29.36 collateral in the secured party's possession. In the case of
30.1 chattel paper or an instrument, reasonable care includes taking
30.2 necessary steps to preserve rights against prior parties unless
30.3 otherwise agreed.
30.4 (b) [EXPENSES, RISKS, DUTIES, AND RIGHTS WHEN SECURED PARTY
30.5 IN POSSESSION.] Except as otherwise provided in subsection (d),
30.6 if a secured party has possession of collateral:
30.7 (1) reasonable expenses, including the cost of insurance
30.8 and payment of taxes or other charges incurred in the custody,
30.9 preservation, use, or operation of the collateral, are
30.10 chargeable to the debtor and are secured by the collateral;
30.11 (2) the risk of accidental loss or damage is on the debtor
30.12 to the extent of a deficiency in any effective insurance
30.13 coverage;
30.14 (3) the secured party shall keep the collateral
30.15 identifiable, but fungible collateral may be commingled; and
30.16 (4) the secured party may use or operate the collateral:
30.17 (A) for the purpose of preserving the collateral or its
30.18 value;
30.19 (B) as permitted by an order of a court having competent
30.20 jurisdiction; or
30.21 (C) except in the case of consumer goods, in the manner and
30.22 to the extent agreed by the debtor.
30.23 (c) [DUTIES AND RIGHTS WHEN SECURED PARTY IN POSSESSION OR
30.24 CONTROL.] Except as otherwise provided in subsection (d), a
30.25 secured party having possession of collateral or control of
30.26 collateral under section 336.9-104, 336.9-105, 336.9-106, or
30.27 336.9-107:
30.28 (1) may hold as additional security any proceeds, except
30.29 money or funds, received from the collateral;
30.30 (2) shall apply money or funds received from the collateral
30.31 to reduce the secured obligation, unless remitted to the debtor;
30.32 and
30.33 (3) may create a security interest in the collateral.
30.34 (d) [BUYER OF CERTAIN RIGHTS TO PAYMENT.] If the secured
30.35 party is a buyer of accounts, chattel paper, payment
30.36 intangibles, or promissory notes or a consignor:
31.1 (1) subsection (a) does not apply unless the secured party
31.2 is entitled under an agreement:
31.3 (A) to charge back uncollected collateral; or
31.4 (B) otherwise to full or limited recourse against the
31.5 debtor or a secondary obligor based on the nonpayment or other
31.6 default of an account debtor or other obligor on the collateral;
31.7 and
31.8 (2) subsections (b) and (c) do not apply.
31.9 Sec. 18. [336.9-208] [ADDITIONAL DUTIES OF SECURED PARTY
31.10 HAVING CONTROL OF COLLATERAL.]
31.11 (a) [APPLICABILITY OF SECTION.] This section applies to
31.12 cases in which there is no outstanding secured obligation and
31.13 the secured party is not committed to make advances, incur
31.14 obligations, or otherwise give value.
31.15 (b) [DUTIES OF SECURED PARTY AFTER RECEIVING DEMAND FROM
31.16 DEBTOR.] Within ten days after receiving an authenticated demand
31.17 by the debtor:
31.18 (1) a secured party having control of a deposit account
31.19 under section 336.9-104(a)(2) shall send to the bank with which
31.20 the deposit account is maintained an authenticated statement
31.21 that releases the bank from any further obligation to comply
31.22 with instructions originated by the secured party;
31.23 (2) a secured party having control of a deposit account
31.24 under section 336.9-104(a)(3) shall:
31.25 (A) pay the debtor the balance on deposit in the deposit
31.26 account; or
31.27 (B) transfer the balance on deposit into a deposit account
31.28 in the debtor's name;
31.29 (3) a secured party, other than a buyer, having control of
31.30 electronic chattel paper under section 336.9-105 shall:
31.31 (A) communicate the authoritative copy of the electronic
31.32 chattel paper to the debtor or its designated custodian;
31.33 (B) if the debtor designates a custodian that is the
31.34 designated custodian with which the authoritative copy of the
31.35 electronic chattel paper is maintained for the secured party,
31.36 communicate to the custodian an authenticated record releasing
32.1 the designated custodian from any further obligation to comply
32.2 with instructions originated by the secured party and
32.3 instructing the custodian to comply with instructions originated
32.4 by the debtor; and
32.5 (C) take appropriate action to enable the debtor or its
32.6 designated custodian to make copies of or revisions to the
32.7 authoritative copy which add or change an identified assignee of
32.8 the authoritative copy without the consent of the secured party;
32.9 (4) a secured party having control of investment property
32.10 under section 336.8-106(d)(2) or 336.9-106(b) shall send to the
32.11 securities intermediary or commodity intermediary with which the
32.12 security entitlement or commodity contract is maintained an
32.13 authenticated record that releases the securities intermediary
32.14 or commodity intermediary from any further obligation to comply
32.15 with entitlement orders or directions originated by the secured
32.16 party; and
32.17 (5) a secured party having control of a letter of credit
32.18 right under section 336.9-107 shall send to each person having
32.19 an unfulfilled obligation to pay or deliver proceeds of the
32.20 letter of credit to the secured party an authenticated release
32.21 from any further obligation to pay or deliver proceeds of the
32.22 letter of credit to the secured party.
32.23 Sec. 19. [336.9-209] [DUTIES OF SECURED PARTY IF ACCOUNT
32.24 DEBTOR HAS BEEN NOTIFIED OF ASSIGNMENT.]
32.25 (a) [APPLICABILITY OF SECTION.] Except as otherwise
32.26 provided in subsection (c), this section applies if:
32.27 (1) there is no outstanding secured obligation; and
32.28 (2) the secured party is not committed to make advances,
32.29 incur obligations, or otherwise give value.
32.30 (b) [DUTIES OF SECURED PARTY AFTER RECEIVING DEMAND FROM
32.31 DEBTOR.] Within ten days after receiving an authenticated demand
32.32 by the debtor, a secured party shall send to an account debtor
32.33 that has received notification of an assignment to the secured
32.34 party as assignee under section 336.9-406(a) an authenticated
32.35 record that releases the account debtor from any further
32.36 obligation to the secured party.
33.1 (c) [INAPPLICABILITY TO SALES.] This section does not apply
33.2 to an assignment constituting the sale of an account, chattel
33.3 paper, or payment intangible.
33.4 Sec. 20. [336.9-210] [REQUEST FOR ACCOUNTING; REQUEST
33.5 REGARDING LIST OF COLLATERAL OR STATEMENT OF ACCOUNT.]
33.6 (a) [DEFINITIONS.] In this section:
33.7 (1) "Request" means a record of a type described in
33.8 paragraph (2), (3), or (4).
33.9 (2) "Request for an accounting" means a record
33.10 authenticated by a debtor requesting that the recipient provide
33.11 an accounting of the unpaid obligations secured by collateral
33.12 and reasonably identifying the transaction or relationship that
33.13 is the subject of the request.
33.14 (3) "Request regarding a list of collateral" means a record
33.15 authenticated by a debtor requesting that the recipient approve
33.16 or correct a list of what the debtor believes to be the
33.17 collateral securing an obligation and reasonably identifying the
33.18 transaction or relationship that is the subject of the request.
33.19 (4) "Request regarding a statement of account" means a
33.20 record authenticated by a debtor requesting that the recipient
33.21 approve or correct a statement indicating what the debtor
33.22 believes to be the aggregate amount of unpaid obligations
33.23 secured by collateral as of a specified date and reasonably
33.24 identifying the transaction or relationship that is the subject
33.25 of the request.
33.26 (b) [DUTY TO RESPOND TO REQUESTS.] Subject to subsections
33.27 (c), (d), (e), and (f), a secured party, other than a buyer of
33.28 accounts, chattel paper, payment intangibles, or promissory
33.29 notes or a consignor, shall comply with a request within 14 days
33.30 after receipt:
33.31 (1) in the case of a request for an accounting, by
33.32 authenticating and sending to the debtor an accounting; and
33.33 (2) in the case of a request regarding a list of collateral
33.34 or a request regarding a statement of account, by authenticating
33.35 and sending to the debtor an approval or correction.
33.36 (c) [REQUEST REGARDING LIST OF COLLATERAL; STATEMENT
34.1 CONCERNING TYPE OF COLLATERAL.] A secured party that claims a
34.2 security interest in all of a particular type of collateral
34.3 owned by the debtor may comply with a request regarding a list
34.4 of collateral by sending to the debtor an authenticated record
34.5 including a statement to that effect within 14 days after
34.6 receipt.
34.7 (d) [REQUEST REGARDING LIST OF COLLATERAL; NO INTEREST
34.8 CLAIMED.] A person that receives a request regarding a list of
34.9 collateral, claims no interest in the collateral when it
34.10 receives the request, and claimed an interest in the collateral
34.11 at an earlier time shall comply with the request within 14 days
34.12 after receipt by sending to the debtor an authenticated record:
34.13 (1) disclaiming any interest in the collateral; and
34.14 (2) if known to the recipient, providing the name and
34.15 mailing address of any assignee of or successor to the
34.16 recipient's interest in the collateral.
34.17 (e) [REQUEST FOR ACCOUNTING OR REGARDING STATEMENT OF
34.18 ACCOUNT; NO INTEREST IN OBLIGATION CLAIMED.] A person that
34.19 receives a request for an accounting or a request regarding a
34.20 statement of account, claims no interest in the obligations when
34.21 it receives the request, and claimed an interest in the
34.22 obligations at an earlier time shall comply with the request
34.23 within 14 days after receipt by sending to the debtor an
34.24 authenticated record:
34.25 (1) disclaiming any interest in the obligations; and
34.26 (2) if known to the recipient, providing the name and
34.27 mailing address of any assignee of or successor to the
34.28 recipient's interest in the obligations.
34.29 (f) [CHARGES FOR RESPONSES.] A debtor is entitled without
34.30 charge to one response to a request under this section during
34.31 any six-month period. The secured party may require payment of
34.32 a charge not exceeding $25 for each additional response.
34.33 Part 3
34.34 PERFECTION AND PRIORITY
34.35 SUBPART 1. LAW GOVERNING PERFECTION AND PRIORITY
34.36 Sec. 21. [336.9-301] [LAW GOVERNING PERFECTION AND
35.1 PRIORITY OF SECURITY INTERESTS.]
35.2 Except as otherwise provided in sections 336.9-303 through
35.3 336.9-306, the following rules determine the law governing
35.4 perfection, the effect of perfection or nonperfection, and the
35.5 priority of a security interest in collateral:
35.6 (1) Except as otherwise provided in this section, while a
35.7 debtor is located in a jurisdiction, the local law of that
35.8 jurisdiction governs perfection, the effect of perfection or
35.9 nonperfection, and the priority of a security interest in
35.10 collateral.
35.11 (2) While collateral is located in a jurisdiction, the
35.12 local law of that jurisdiction governs perfection, the effect of
35.13 perfection or nonperfection, and the priority of a possessory
35.14 security interest in that collateral.
35.15 (3) Except as otherwise provided in paragraph (4), while
35.16 negotiable documents, goods, instruments, money, or tangible
35.17 chattel paper is located in a jurisdiction, the local law of
35.18 that jurisdiction governs:
35.19 (A) perfection of a security interest in the goods by
35.20 filing a fixture filing;
35.21 (B) perfection of a security interest in timber to be cut;
35.22 and
35.23 (C) the effect of perfection or nonperfection and the
35.24 priority of a nonpossessory security interest in the collateral.
35.25 (4) The local law of the jurisdiction in which the wellhead
35.26 or minehead is located governs perfection, the effect of
35.27 perfection or nonperfection, and the priority of a security
35.28 interest in as-extracted collateral.
35.29 Sec. 22. [336.9-302] [LAW GOVERNING PERFECTION AND
35.30 PRIORITY OF AGRICULTURAL LIENS.]
35.31 While farm products are located in a jurisdiction, the
35.32 local law of that jurisdiction governs perfection, the effect of
35.33 perfection or nonperfection, and the priority of an agricultural
35.34 lien on the farm products.
35.35 Sec. 23. [336.9-303] [LAW GOVERNING PERFECTION AND
35.36 PRIORITY OF SECURITY INTERESTS IN GOODS COVERED BY A CERTIFICATE
36.1 OF TITLE.]
36.2 (a) [APPLICABILITY OF SECTION.] This section applies to
36.3 goods covered by a certificate of title, even if there is no
36.4 other relationship between the jurisdiction under whose
36.5 certificate of title the goods are covered and the goods or the
36.6 debtor.
36.7 (b) [WHEN GOODS COVERED BY CERTIFICATE OF TITLE.] Goods
36.8 become covered by a certificate of title when a valid
36.9 application for the certificate of title and the applicable fee
36.10 are delivered to the appropriate authority. Goods cease to be
36.11 covered by a certificate of title at the earlier of the time the
36.12 certificate of title ceases to be effective under the law of the
36.13 issuing jurisdiction or the time the goods become covered
36.14 subsequently by a certificate of title issued by another
36.15 jurisdiction.
36.16 (c) [APPLICABLE LAW.] The local law of the jurisdiction
36.17 under whose certificate of title the goods are covered governs
36.18 perfection, the effect of perfection or nonperfection, and the
36.19 priority of a security interest in goods covered by a
36.20 certificate of title from the time the goods become covered by
36.21 the certificate of title until the goods cease to be covered by
36.22 the certificate of title.
36.23 Sec. 24. [336.9-304] [LAW GOVERNING PERFECTION AND
36.24 PRIORITY OF SECURITY INTERESTS IN DEPOSIT ACCOUNTS.]
36.25 (a) [LAW OF BANK'S JURISDICTION GOVERNS.] The local law of
36.26 a bank's jurisdiction governs perfection, the effect of
36.27 perfection or nonperfection, and the priority of a security
36.28 interest in a deposit account maintained with that bank.
36.29 (b) [BANK'S JURISDICTION.] The following rules determine a
36.30 bank's jurisdiction for purposes of this part:
36.31 (1) If an agreement between the bank and the debtor
36.32 governing the deposit account expressly provides that a
36.33 particular jurisdiction is the bank's jurisdiction for purposes
36.34 of this part, this article, or this chapter, that jurisdiction
36.35 is the bank's jurisdiction.
36.36 (2) If paragraph (1) does not apply and an agreement
37.1 between the bank and its customer governing the deposit account
37.2 expressly provides that the agreement is governed by the law of
37.3 a particular jurisdiction, that jurisdiction is the bank's
37.4 jurisdiction.
37.5 (3) If neither paragraph (1) nor paragraph (2) applies and
37.6 an agreement between the bank and its customer governing the
37.7 deposit account expressly provides that the deposit account is
37.8 maintained at an office in a particular jurisdiction, that
37.9 jurisdiction is the bank's jurisdiction.
37.10 (4) If none of the preceding paragraphs applies, the bank's
37.11 jurisdiction is the jurisdiction in which the office identified
37.12 in an account statement as the office serving the customer's
37.13 account is located.
37.14 (5) If none of the preceding paragraphs applies, the bank's
37.15 jurisdiction is the jurisdiction in which the chief executive
37.16 office of the bank is located.
37.17 Sec. 25. [336.9-305] [LAW GOVERNING PERFECTION AND
37.18 PRIORITY OF SECURITY INTERESTS IN INVESTMENT PROPERTY.]
37.19 (a) [GOVERNING LAW: GENERAL RULES.] Except as otherwise
37.20 provided in subsection (c), the following rules apply:
37.21 (1) While a security certificate is located in a
37.22 jurisdiction, the local law of that jurisdiction governs
37.23 perfection, the effect of perfection or nonperfection, and the
37.24 priority of a security interest in the certificated security
37.25 represented thereby.
37.26 (2) The local law of the issuer's jurisdiction as specified
37.27 in section 336.8-110(d), governs perfection, the effect of
37.28 perfection or nonperfection, and the priority of a security
37.29 interest in an uncertificated security.
37.30 (3) The local law of the securities intermediary's
37.31 jurisdiction as specified in section 336.8-110(e), governs
37.32 perfection, the effect of perfection or nonperfection, and the
37.33 priority of a security interest in a security entitlement or
37.34 securities account.
37.35 (4) The local law of the commodity intermediary's
37.36 jurisdiction governs perfection, the effect of perfection or
38.1 nonperfection, and the priority of a security interest in a
38.2 commodity contract or commodity account.
38.3 (b) [COMMODITY INTERMEDIARY'S JURISDICTION.] The following
38.4 rules determine a commodity intermediary's jurisdiction for
38.5 purposes of this part:
38.6 (1) If an agreement between the commodity intermediary and
38.7 commodity customer governing the commodity account expressly
38.8 provides that a particular jurisdiction is the commodity
38.9 intermediary's jurisdiction for purposes of this part, this
38.10 article, or this chapter, that jurisdiction is the commodity
38.11 intermediary's jurisdiction.
38.12 (2) If paragraph (1) does not apply and an agreement
38.13 between the commodity intermediary and commodity customer
38.14 governing the commodity account expressly provides that the
38.15 agreement is governed by the law of a particular jurisdiction,
38.16 that jurisdiction is the commodity intermediary's jurisdiction.
38.17 (3) If neither paragraph (1) nor paragraph (2) applies and
38.18 an agreement between the commodity intermediary and commodity
38.19 customer governing the commodity account expressly provides that
38.20 the commodity account is maintained at an office in a particular
38.21 jurisdiction, that jurisdiction is the commodity intermediary's
38.22 jurisdiction.
38.23 (4) If none of the preceding paragraphs applies, the
38.24 commodity intermediary's jurisdiction is the jurisdiction in
38.25 which the office identified in an account statement as the
38.26 office serving the commodity customer's account is located.
38.27 (5) If none of the preceding paragraphs applies, the
38.28 commodity intermediary's jurisdiction is the jurisdiction in
38.29 which the chief executive office of the commodity intermediary
38.30 is located.
38.31 (c) [WHEN PERFECTION GOVERNED BY LAW OF JURISDICTION WHERE
38.32 DEBTOR LOCATED.] The local law of the jurisdiction in which the
38.33 debtor is located governs:
38.34 (1) perfection of a security interest in investment
38.35 property by filing;
38.36 (2) automatic perfection of a security interest in
39.1 investment property created by a broker or securities
39.2 intermediary; and
39.3 (3) automatic perfection of a security interest in a
39.4 commodity contract or commodity account created by a commodity
39.5 intermediary.
39.6 Sec. 26. [336.9-306] [LAW GOVERNING PERFECTION AND
39.7 PRIORITY OF SECURITY INTERESTS IN LETTER OF CREDIT RIGHTS.]
39.8 (a) [GOVERNING LAW: ISSUER'S OR NOMINATED PERSON'S
39.9 JURISDICTION.] Subject to subsection (c), the local law of the
39.10 issuer's jurisdiction or a nominated person's jurisdiction
39.11 governs perfection, the effect of perfection or nonperfection,
39.12 and the priority of a security interest in a letter of credit
39.13 right if the issuer's jurisdiction or nominated person's
39.14 jurisdiction is a state.
39.15 (b) [ISSUER'S OR NOMINATED PERSON'S JURISDICTION.] For
39.16 purposes of this part, an issuer's jurisdiction or nominated
39.17 person's jurisdiction is the jurisdiction whose law governs the
39.18 liability of the issuer or nominated person with respect to the
39.19 letter of credit right as provided in section 336.5-116.
39.20 (c) [WHEN SECTION NOT APPLICABLE.] This section does not
39.21 apply to a security interest that is perfected only under
39.22 section 336.9-308(d).
39.23 Sec. 27. [336.9-307] [LOCATION OF DEBTOR.]
39.24 (a) [PLACE OF BUSINESS.] In this section, "place of
39.25 business" means a place where a debtor conducts its affairs.
39.26 (b) [DEBTOR'S LOCATION: GENERAL RULES.] Except as
39.27 otherwise provided in this section, the following rules
39.28 determine a debtor's location:
39.29 (1) A debtor who is an individual is located at the
39.30 individual's principal residence.
39.31 (2) A debtor that is an organization and has only one place
39.32 of business is located at its place of business.
39.33 (3) A debtor that is an organization and has more than one
39.34 place of business is located at its chief executive office.
39.35 (c) [LIMITATION OF APPLICABILITY OF SUBSECTION
39.36 (B).] Subsection (b) applies only if a debtor's residence, place
40.1 of business, or chief executive office, as applicable, is
40.2 located in a jurisdiction whose law generally requires
40.3 information concerning the existence of a nonpossessory security
40.4 interest to be made generally available in a filing, recording,
40.5 or registration system as a condition or result of the security
40.6 interest's obtaining priority over the rights of a lien creditor
40.7 with respect to the collateral. If subsection (b) does not
40.8 apply, the debtor is located in the District of Columbia.
40.9 (d) [CONTINUATION OF LOCATION: CESSATION OF EXISTENCE,
40.10 ETC.] A person that ceases to exist, have a residence, or have a
40.11 place of business continues to be located in the jurisdiction
40.12 specified by subsections (b) and (c).
40.13 (e) [LOCATION OF REGISTERED ORGANIZATION ORGANIZED UNDER
40.14 STATE LAW.] A registered organization that is organized under
40.15 the law of a state is located in that state.
40.16 (f) [LOCATION OF REGISTERED ORGANIZATION ORGANIZED UNDER
40.17 FEDERAL LAW; BANK BRANCHES AND AGENCIES.] Except as otherwise
40.18 provided in subsection (i), a registered organization that is
40.19 organized under the law of the United States and a branch or
40.20 agency of a bank that is not organized under the law of the
40.21 United States or a state are located:
40.22 (1) in the state that the law of the United States
40.23 designates, if the law designates a state of location;
40.24 (2) in the state that the registered organization, branch,
40.25 or agency designates, if the law of the United States authorizes
40.26 the registered organization, branch, or agency to designate its
40.27 state of location; or
40.28 (3) in the District of Columbia, if neither paragraph (1)
40.29 nor paragraph (2) applies.
40.30 (g) [CONTINUATION OF LOCATION: CHANGE IN STATUS OF
40.31 REGISTERED ORGANIZATION.] A registered organization continues to
40.32 be located in the jurisdiction specified by subsection (e) or
40.33 (f) notwithstanding:
40.34 (1) the suspension, revocation, forfeiture, or lapse of the
40.35 registered organization's status as such in its jurisdiction of
40.36 organization; or
41.1 (2) the dissolution, winding up, or cancellation of the
41.2 existence of the registered organization.
41.3 (h) [LOCATION OF UNITED STATES.] The United States is
41.4 located in the District of Columbia.
41.5 (i) [LOCATION OF FOREIGN BANK BRANCH OR AGENCY IF LICENSED
41.6 IN ONLY ONE STATE.] A branch or agency of a bank that is not
41.7 organized under the law of the United States or a state is
41.8 located in the state in which the branch or agency is licensed,
41.9 if all branches and agencies of the bank are licensed in only
41.10 one state.
41.11 (j) [LOCATION OF FOREIGN AIR CARRIER.] A foreign air
41.12 carrier under the Federal Aviation Act of 1958, as amended, is
41.13 located at the designated office of the agent upon which service
41.14 of process may be made on behalf of the carrier.
41.15 (k) [SECTION APPLIES ONLY TO THIS PART.] This section
41.16 applies only for purposes of this part.
41.17 SUBPART 2. PERFECTION
41.18 Sec. 28. [336.9-308] [WHEN SECURITY INTEREST OR
41.19 AGRICULTURAL LIEN IS PERFECTED; CONTINUITY OF PERFECTION.]
41.20 (a) [PERFECTION OF SECURITY INTEREST.] Except as otherwise
41.21 provided in this section and section 336.9-309, a security
41.22 interest is perfected if it has attached and all of the
41.23 applicable requirements for perfection in sections 336.9-310
41.24 through 336.9-316 have been satisfied. A security interest is
41.25 perfected when it attaches if the applicable requirements are
41.26 satisfied before the security interest attaches.
41.27 (b) [PERFECTION OF AGRICULTURAL LIEN.] An agricultural lien
41.28 is perfected if it has become effective and all of the
41.29 applicable requirements for perfection in section 336.9-310 have
41.30 been satisfied. An agricultural lien is perfected when it
41.31 becomes effective if the applicable requirements are satisfied
41.32 before the agricultural lien becomes effective.
41.33 (c) [CONTINUOUS PERFECTION; PERFECTION BY DIFFERENT
41.34 METHODS.] A security interest or agricultural lien is perfected
41.35 continuously if it is originally perfected by one method under
41.36 this article and is later perfected by another method under this
42.1 article, without an intermediate period when it was unperfected.
42.2 (d) [SUPPORTING OBLIGATION.] Perfection of a security
42.3 interest in collateral also perfects a security interest in a
42.4 supporting obligation for the collateral.
42.5 (e) [LIEN SECURING RIGHT-TO-PAYMENT.] Perfection of a
42.6 security interest in a right-to-payment or performance also
42.7 perfects a security interest in a security interest, mortgage,
42.8 or other lien on personal or real property securing the right.
42.9 (f) [SECURITY ENTITLEMENT CARRIED IN SECURITIES
42.10 ACCOUNT.] Perfection of a security interest in a securities
42.11 account also perfects a security interest in the security
42.12 entitlements carried in the securities account.
42.13 (g) [COMMODITY CONTRACT CARRIED IN COMMODITY
42.14 ACCOUNT.] Perfection of a security interest in a commodity
42.15 account also perfects a security interest in the commodity
42.16 contracts carried in the commodity account.
42.17 Sec. 29. [336.9-309] [SECURITY INTEREST PERFECTED UPON
42.18 ATTACHMENT.] The following security interests are perfected when
42.19 they attach:
42.20 (1) a purchase-money security interest in consumer goods,
42.21 except as otherwise provided in section 336.9-311(b) with
42.22 respect to consumer goods that are subject to a statute or
42.23 treaty described in section 336.9-311(a);
42.24 (2) an assignment of accounts or payment intangibles which
42.25 does not by itself or in conjunction with other assignments to
42.26 the same assignee transfer a significant part of the assignor's
42.27 outstanding accounts or payment intangibles;
42.28 (3) a sale of a payment intangible;
42.29 (4) a sale of a promissory note;
42.30 (5) a security interest created by the assignment of a
42.31 health-care-insurance receivable to the provider of the
42.32 health-care goods or services;
42.33 (6) a security interest arising under section 336.2-401,
42.34 336.2-505, 336.2-711(3), or 336.2A-508(5), until the debtor
42.35 obtains possession of the collateral;
42.36 (7) a security interest of a collecting bank arising under
43.1 section 336.4-210;
43.2 (8) a security interest of an issuer or nominated person
43.3 arising under section 336.5-118;
43.4 (9) a security interest arising in the delivery of a
43.5 financial asset under section 336.9-206(c);
43.6 (10) a security interest in investment property created by
43.7 a broker or securities intermediary;
43.8 (11) a security interest in a commodity contract or a
43.9 commodity account created by a commodity intermediary;
43.10 (12) an assignment for the benefit of all creditors of the
43.11 transferor and subsequent transfers by the assignee thereunder;
43.12 and
43.13 (13) a security interest created by an assignment of a
43.14 beneficial interest in a decedent's estate.
43.15 Sec. 30. [336.9-310] [WHEN FILING REQUIRED TO PERFECT
43.16 SECURITY INTEREST OR AGRICULTURAL LIEN; SECURITY INTERESTS AND
43.17 AGRICULTURAL LIENS TO WHICH FILING PROVISIONS DO NOT APPLY.]
43.18 (a) [GENERAL RULE: PERFECTION BY FILING.] Except as
43.19 otherwise provided in subsection (b) and section 336.9-312(b), a
43.20 financing statement must be filed to perfect all security
43.21 interests and agricultural liens.
43.22 (b) [EXCEPTIONS: FILING NOT NECESSARY.] The filing of a
43.23 financing statement is not necessary to perfect a security
43.24 interest:
43.25 (1) that is perfected under section 336.9-308(d), (e), (f),
43.26 or (g);
43.27 (2) that is perfected under section 336.9-309 when it
43.28 attaches;
43.29 (3) in property subject to a statute, regulation, or treaty
43.30 described in section 336.9-311(a);
43.31 (4) in goods in possession of a bailee which is perfected
43.32 under section 336.9-312(d)(1) or (2);
43.33 (5) in certificated securities, documents, goods, or
43.34 instruments which is perfected without filing or possession
43.35 under section 336.9-312(e), (f), or (g);
43.36 (6) in collateral in the secured party's possession under
44.1 section 336.9-313;
44.2 (7) in a certificated security which is perfected by
44.3 delivery of the security certificate to the secured party under
44.4 section 336.9-313;
44.5 (8) in deposit accounts, electronic chattel paper,
44.6 investment property, or letter of credit rights which is
44.7 perfected by control under section 336.9-314;
44.8 (9) in proceeds which is perfected under section 336.9-315;
44.9 or
44.10 (10) that is perfected under section 336.9-316.
44.11 (c) [ASSIGNMENT OF PERFECTED SECURITY INTEREST.] If a
44.12 secured party assigns a perfected security interest or
44.13 agricultural lien, a filing under this article is not required
44.14 to continue the perfected status of the security interest
44.15 against creditors of and transferees from the original debtor.
44.16 Sec. 31. [336.9-311] [PERFECTION OF SECURITY INTERESTS IN
44.17 PROPERTY SUBJECT TO CERTAIN STATUTES, REGULATIONS, AND
44.18 TREATIES.]
44.19 (a) [SECURITY INTEREST SUBJECT TO OTHER LAW.] Except as
44.20 otherwise provided in subsection (d), the filing of a financing
44.21 statement is not necessary or effective to perfect a security
44.22 interest in property subject to:
44.23 (1) a statute, regulation, or treaty of the United States
44.24 whose requirements for a security interest's obtaining priority
44.25 over the rights of a lien creditor with respect to the property
44.26 preempt section 336.9-310(a);
44.27 (2) sections 86B.820 to 86B.920 and 168A.01 to 168A.31; but
44.28 during any period which collateral is inventory held for sale by
44.29 a person who is in the business of selling goods of that kind,
44.30 the filing provisions of this article (part 5) apply to a
44.31 security interest in the collateral created by the person as a
44.32 debtor; or sections 300.11 to 300.115; or
44.33 (3) a certificate-of-title statute of another jurisdiction
44.34 which provides for a security interest to be indicated on the
44.35 certificate as a condition or result of the security interest's
44.36 obtaining priority over the rights of a lien creditor with
45.1 respect to the property.
45.2 (b) [COMPLIANCE WITH OTHER LAW.] Compliance with the
45.3 requirements of a statute, regulation, or treaty described in
45.4 subsection (a) for obtaining priority over the rights of a lien
45.5 creditor is equivalent to the filing of a financing statement
45.6 under this article. Except as otherwise provided in subsection
45.7 (d) and sections 336.9-313 and 336.9-316(d) and (e) for goods
45.8 covered by a certificate of title, a security interest in
45.9 property subject to a statute, regulation, or treaty described
45.10 in subsection (a) may be perfected only by compliance with those
45.11 requirements, and a security interest so perfected remains
45.12 perfected notwithstanding a change in the use or transfer of
45.13 possession of the collateral.
45.14 (c) [DURATION AND RENEWAL OF PERFECTION.] Except as
45.15 otherwise provided in subsection (d) and section 336.9-316(d)
45.16 and (e), duration and renewal of perfection of a security
45.17 interest perfected by compliance with the requirements
45.18 prescribed by a statute, regulation, or treaty described in
45.19 subsection (a) are governed by the statute, regulation, or
45.20 treaty. In other respects, the security interest is subject to
45.21 this article.
45.22 (d) [INAPPLICABILITY TO CERTAIN INVENTORY.] During any
45.23 period in which collateral subject to a statute specified in
45.24 subsection (a)(2) is inventory held for sale or lease by a
45.25 person or leased by that person as lessor and that person is in
45.26 the business of selling goods of that kind, this section does
45.27 not apply to a security interest in that collateral created by
45.28 that person.
45.29 Sec. 32. [336.9-312] [PERFECTION OF SECURITY INTERESTS IN
45.30 CHATTEL PAPER, DEPOSIT ACCOUNTS, DOCUMENTS, GOODS COVERED BY
45.31 DOCUMENTS, INSTRUMENTS, INVESTMENT PROPERTY, LETTER OF CREDIT
45.32 RIGHTS, AND MONEY; PERFECTION BY PERMISSIVE FILING; TEMPORARY
45.33 PERFECTION WITHOUT FILING OR TRANSFER OF POSSESSION.]
45.34 (a) [PERFECTION BY FILING PERMITTED.] A security interest
45.35 in chattel paper, negotiable documents, instruments, or
45.36 investment property may be perfected by filing.
46.1 (b) [CONTROL OR POSSESSION OF CERTAIN COLLATERAL.] Except
46.2 as otherwise provided in section 336.9-315(c) and (d) for
46.3 proceeds:
46.4 (1) a security interest in a deposit account may be
46.5 perfected only by control under section 336.9-314;
46.6 (2) and except as otherwise provided in section
46.7 336.9-308(d), a security interest in a letter of credit right
46.8 may be perfected only by control under section 336.9-314; and
46.9 (3) a security interest in money may be perfected only by
46.10 the secured party's taking possession under section 336.9-313.
46.11 (c) [GOODS COVERED BY NEGOTIABLE DOCUMENT.] While goods are
46.12 in the possession of a bailee that has issued a negotiable
46.13 document covering the goods:
46.14 (1) a security interest in the goods may be perfected by
46.15 perfecting a security interest in the document; and
46.16 (2) a security interest perfected in the document has
46.17 priority over any security interest that becomes perfected in
46.18 the goods by another method during that time.
46.19 (d) [GOODS COVERED BY NONNEGOTIABLE DOCUMENT.] While goods
46.20 are in the possession of a bailee that has issued a
46.21 nonnegotiable document covering the goods, a security interest
46.22 in the goods may be perfected by:
46.23 (1) issuance of a document in the name of the secured
46.24 party;
46.25 (2) the bailee's receipt of notification of the secured
46.26 party's interest; or
46.27 (3) filing as to the goods.
46.28 (e) [TEMPORARY PERFECTION: NEW VALUE.] A security interest
46.29 in certificated securities, negotiable documents, or instruments
46.30 is perfected without filing or the taking of possession for a
46.31 period of 20 days from the time it attaches to the extent that
46.32 it arises for new value given under an authenticated security
46.33 agreement.
46.34 (f) [TEMPORARY PERFECTION: GOODS OR DOCUMENTS MADE
46.35 AVAILABLE TO DEBTOR.] A perfected security interest in a
46.36 negotiable document or goods in possession of a bailee, other
47.1 than one that has issued a negotiable document for the goods,
47.2 remains perfected for 20 days without filing if the secured
47.3 party makes available to the debtor the goods or documents
47.4 representing the goods for the purpose of:
47.5 (1) ultimate sale or exchange; or
47.6 (2) loading, unloading, storing, shipping, transshipping,
47.7 manufacturing, processing, or otherwise dealing with them in a
47.8 manner preliminary to their sale or exchange.
47.9 (g) [TEMPORARY PERFECTION: DELIVERY OF SECURITY
47.10 CERTIFICATE OR INSTRUMENT TO DEBTOR.] A perfected security
47.11 interest in a certificated security or instrument remains
47.12 perfected for 20 days without filing if the secured party
47.13 delivers the security certificate or instrument to the debtor
47.14 for the purpose of:
47.15 (1) ultimate sale or exchange; or
47.16 (2) presentation, collection, enforcement, renewal, or
47.17 registration of transfer.
47.18 (h) [EXPIRATION OF TEMPORARY PERFECTION.] After the 20-day
47.19 period specified in subsection (e), (f), or (g) expires,
47.20 perfection depends upon compliance with this article.
47.21 Sec. 33. [336.9-313] [WHEN POSSESSION BY OR DELIVERY TO
47.22 SECURED PARTY PERFECTS SECURITY INTEREST WITHOUT FILING.]
47.23 (a) [PERFECTION BY POSSESSION OR DELIVERY.] Except as
47.24 otherwise provided in subsection (b), a secured party may
47.25 perfect a security interest in negotiable documents, goods,
47.26 instruments, money, or tangible chattel paper by taking
47.27 possession of the collateral. A secured party may perfect a
47.28 security interest in certificated securities by taking delivery
47.29 of the certificated securities under section 336.8-301.
47.30 (b) [GOODS COVERED BY CERTIFICATE OF TITLE.] With respect
47.31 to goods covered by a certificate of title issued by this state,
47.32 a secured party may perfect a security interest in the goods by
47.33 taking possession of the goods only in the circumstances
47.34 described in section 336.9-316(e).
47.35 (c) [COLLATERAL IN POSSESSION OF PERSON OTHER THAN DEBTOR.]
47.36 With respect to collateral other than certificated securities
48.1 and goods covered by a document, a secured party takes
48.2 possession of collateral in the possession of a person other
48.3 than the debtor, the secured party, or a lessee of the
48.4 collateral from the debtor in the ordinary course of the
48.5 debtor's business, when:
48.6 (1) the person in possession authenticates a record
48.7 acknowledging that it holds possession of the collateral for the
48.8 secured party's benefit; or
48.9 (2) the person takes possession of the collateral after
48.10 having authenticated a record acknowledging that it will hold
48.11 possession of collateral for the secured party's benefit.
48.12 (d) [TIME OF PERFECTION BY POSSESSION; CONTINUATION OF
48.13 PERFECTION.] If perfection of a security interest depends upon
48.14 possession of the collateral by a secured party, perfection
48.15 occurs no earlier than the time the secured party takes
48.16 possession and continues only while the secured party retains
48.17 possession.
48.18 (e) [TIME OF PERFECTION BY DELIVERY; CONTINUATION OF
48.19 PERFECTION.] A security interest in a certificated security in
48.20 registered form is perfected by delivery when delivery of the
48.21 certificated security occurs under section 336.8-301 and remains
48.22 perfected by delivery until the debtor obtains possession of the
48.23 security certificate.
48.24 (f) [ACKNOWLEDGMENT NOT REQUIRED.] A person in possession
48.25 of collateral is not required to acknowledge that it holds
48.26 possession for a secured party's benefit.
48.27 (g) [EFFECTIVENESS OF ACKNOWLEDGMENT; NO DUTIES OR
48.28 CONFIRMATION.] If a person acknowledges that it holds possession
48.29 for the secured party's benefit:
48.30 (1) the acknowledgment is effective under subsection (c) or
48.31 section 336.8-301(a), even if the acknowledgment violates the
48.32 rights of a debtor; and
48.33 (2) unless the person otherwise agrees or law other than
48.34 this article otherwise provides, the person does not owe any
48.35 duty to the secured party and is not required to confirm the
48.36 acknowledgment to another person.
49.1 (h) [SECURED PARTY'S DELIVERY TO PERSON OTHER THAN DEBTOR.]
49.2 A secured party having possession of collateral does not
49.3 relinquish possession by delivering the collateral to a person
49.4 other than the debtor or a lessee of the collateral from the
49.5 debtor in the ordinary course of the debtor's business if the
49.6 person was instructed before the delivery or is instructed
49.7 contemporaneously with the delivery:
49.8 (1) to hold possession of the collateral for the secured
49.9 party's benefit; or
49.10 (2) to redeliver the collateral to the secured party.
49.11 (i) [EFFECT OF DELIVERY UNDER SUBSECTION (H); NO DUTIES OR
49.12 CONFIRMATION.] A secured party does not relinquish possession,
49.13 even if a delivery under subsection (h) violates the rights of a
49.14 debtor. A person to which collateral is delivered under
49.15 subsection (h) does not owe any duty to the secured party and is
49.16 not required to confirm the delivery to another person unless
49.17 the person otherwise agrees or law other than this article
49.18 otherwise provides.
49.19 Sec. 34. [336.9-314] [PERFECTION BY CONTROL.]
49.20 (a) [PERFECTION BY CONTROL.] A security interest in
49.21 investment property, deposit accounts, letter of credit rights,
49.22 or electronic chattel paper may be perfected by control of the
49.23 collateral under section 336.9-104, 336.9-105, 336.9-106, or
49.24 336.9-107.
49.25 (b) [SPECIFIED COLLATERAL: TIME OF PERFECTION BY CONTROL;
49.26 CONTINUATION OF PERFECTION.] A security interest in deposit
49.27 accounts, electronic chattel paper, or letter of credit rights
49.28 is perfected by control under section 336.9-104, 336.9-105, or
49.29 336.9-107 when the secured party obtains control and remains
49.30 perfected by control only while the secured party retains
49.31 control.
49.32 (c) [INVESTMENT PROPERTY: TIME OF PERFECTION BY CONTROL;
49.33 CONTINUATION OF PERFECTION.] A security interest in investment
49.34 property is perfected by control under section 336.9-106 from
49.35 the time the secured party obtains control and remains perfected
49.36 by control until:
50.1 (1) the secured party does not have control; and
50.2 (2) one of the following occurs:
50.3 (A) if the collateral is a certificated security, the
50.4 debtor has or acquires possession of the security certificate;
50.5 (B) if the collateral is an uncertificated security, the
50.6 issuer has registered or registers the debtor as the registered
50.7 owner; or
50.8 (C) if the collateral is a security entitlement, the debtor
50.9 is or becomes the entitlement holder.
50.10 Sec. 35. [336.9-315] [SECURED PARTY'S RIGHTS ON
50.11 DISPOSITION OF COLLATERAL AND IN PROCEEDS.]
50.12 (a) [DISPOSITION OF COLLATERAL: CONTINUATION OF SECURITY
50.13 INTEREST OR AGRICULTURAL LIEN; PROCEEDS.] Except as otherwise
50.14 provided in this article and in section 336.2-403(2):
50.15 (1) a security interest or agricultural lien continues in
50.16 collateral notwithstanding sale, lease, license, exchange, or
50.17 other disposition thereof unless the secured party authorized
50.18 the disposition free of the security interest or agricultural
50.19 lien; and
50.20 (2) a security interest attaches to any identifiable
50.21 proceeds of collateral.
50.22 (b) [WHEN COMMINGLED PROCEEDS IDENTIFIABLE.] Proceeds that
50.23 are commingled with other property are identifiable proceeds:
50.24 (1) if the proceeds are goods, to the extent provided by
50.25 section 336.9-336; and
50.26 (2) if the proceeds are not goods, to the extent that the
50.27 secured party identifies the proceeds by a method of tracing,
50.28 including application of equitable principles, that is permitted
50.29 under law other than this article with respect to commingled
50.30 property of the type involved.
50.31 (c) [PERFECTION OF SECURITY INTEREST IN PROCEEDS.] A
50.32 security interest in proceeds is a perfected security interest
50.33 if the security interest in the original collateral was
50.34 perfected.
50.35 (d) [CONTINUATION OF PERFECTION.] A perfected security
50.36 interest in proceeds becomes unperfected on the 21st day after
51.1 the security interest attaches to the proceeds unless:
51.2 (1) the following conditions are satisfied:
51.3 (A) a filed financing statement covers the original
51.4 collateral;
51.5 (B) the proceeds are collateral in which a security
51.6 interest may be perfected by filing in the office in which the
51.7 financing statement has been filed; and
51.8 (C) the proceeds are not acquired with cash proceeds;
51.9 (2) the proceeds are identifiable cash proceeds; or
51.10 (3) the security interest in the proceeds is perfected
51.11 other than under subsection (c) when the security interest
51.12 attaches to the proceeds or within 20 days thereafter.
51.13 (e) [WHEN PERFECTED SECURITY INTEREST IN PROCEEDS BECOMES
51.14 UNPERFECTED.] If a filed financing statement covers the original
51.15 collateral, a security interest in proceeds which remains
51.16 perfected under subsection (d)(1) becomes unperfected at the
51.17 later of:
51.18 (1) when the effectiveness of the filed financing statement
51.19 lapses under section 336.9-515 or is terminated under section
51.20 336.9-513; or
51.21 (2) the 21st day after the security interest attaches to
51.22 the proceeds.
51.23 Sec. 36. [336.9-316] [CONTINUED PERFECTION OF SECURITY
51.24 INTEREST FOLLOWING CHANGE IN GOVERNING LAW.]
51.25 (a) [GENERAL RULE: EFFECT ON PERFECTION OF CHANGE IN
51.26 GOVERNING LAW.] A security interest perfected pursuant to the
51.27 law of the jurisdiction designated in section 336.9-301(1) or
51.28 336.9-305(c) remains perfected until the earliest of:
51.29 (1) the time perfection would have ceased under the law of
51.30 that jurisdiction;
51.31 (2) the expiration of four months after a change of the
51.32 debtor's location to another jurisdiction; or
51.33 (3) the expiration of one year after a transfer of
51.34 collateral to a person that thereby becomes a debtor and is
51.35 located in another jurisdiction.
51.36 (b) [SECURITY INTEREST PERFECTED OR UNPERFECTED UNDER LAW
52.1 OF NEW JURISDICTION.] If a security interest described in
52.2 subsection (a) becomes perfected under the law of the other
52.3 jurisdiction before the earliest time or event described in that
52.4 subsection, it remains perfected thereafter. If the security
52.5 interest does not become perfected under the law of the other
52.6 jurisdiction before the earliest time or event, it becomes
52.7 unperfected and is deemed never to have been perfected as
52.8 against a purchaser of the collateral for value.
52.9 (c) [POSSESSORY SECURITY INTEREST IN COLLATERAL MOVED TO
52.10 NEW JURISDICTION.] A possessory security interest in collateral,
52.11 other than goods covered by a certificate of title and
52.12 as-extracted collateral consisting of goods, remains
52.13 continuously perfected if:
52.14 (1) the collateral is located in one jurisdiction and
52.15 subject to a security interest perfected under the law of that
52.16 jurisdiction;
52.17 (2) thereafter the collateral is brought into another
52.18 jurisdiction; and
52.19 (3) upon entry into the other jurisdiction, the security
52.20 interest is perfected under the law of the other jurisdiction.
52.21 (d) [GOODS COVERED BY CERTIFICATE OF TITLE FROM THIS
52.22 STATE.] Except as otherwise provided in subsection (e), a
52.23 security interest in goods covered by a certificate of title
52.24 which is perfected by any method under the law of another
52.25 jurisdiction when the goods become covered by a certificate of
52.26 title from this state remains perfected until the security
52.27 interest would have become unperfected under the law of the
52.28 other jurisdiction had the goods not become so covered.
52.29 (e) [WHEN SUBSECTION (D) SECURITY INTEREST BECOMES
52.30 UNPERFECTED AGAINST PURCHASERS.] A security interest described
52.31 in subsection (d) becomes unperfected as against a purchaser of
52.32 the goods for value and is deemed never to have been perfected
52.33 as against a purchaser of the goods for value if the applicable
52.34 requirements for perfection under section 336.9-311(b) or
52.35 336.9-313 are not satisfied before the earlier of:
52.36 (1) the time the security interest would have become
53.1 unperfected under the law of the other jurisdiction had the
53.2 goods not become covered by a certificate of title from this
53.3 state; or
53.4 (2) the expiration of four months after the goods had
53.5 become so covered.
53.6 (f) [CHANGE IN JURISDICTION OF BANK, ISSUER, NOMINATED
53.7 PERSON, SECURITIES INTERMEDIARY, OR COMMODITY INTERMEDIARY.] A
53.8 security interest in deposit accounts, letter of credit rights,
53.9 or investment property which is perfected under the law of the
53.10 bank's jurisdiction, the issuer's jurisdiction, a nominated
53.11 person's jurisdiction, the securities intermediary's
53.12 jurisdiction, or the commodity intermediary's jurisdiction, as
53.13 applicable, remains perfected until the earlier of:
53.14 (1) the time the security interest would have become
53.15 unperfected under the law of that jurisdiction; or
53.16 (2) the expiration of four months after a change of the
53.17 applicable jurisdiction to another jurisdiction.
53.18 (g) [SUBSECTION (F) SECURITY INTEREST PERFECTED OR
53.19 UNPERFECTED UNDER LAW OF NEW JURISDICTION.] If a security
53.20 interest described in subsection (f) becomes perfected under the
53.21 law of the other jurisdiction before the earlier of the time or
53.22 the end of the period described in that subsection, it remains
53.23 perfected thereafter. If the security interest does not become
53.24 perfected under the law of the other jurisdiction before the
53.25 earlier of that time or the end of that period, it becomes
53.26 unperfected and is deemed never to have been perfected as
53.27 against a purchaser of the collateral for value.
53.28 SUBPART 3. PRIORITY
53.29 Sec. 37. [336.9-317] [INTERESTS THAT TAKE PRIORITY OVER OR
53.30 TAKE FREE OF SECURITY INTEREST OR AGRICULTURAL LIEN.]
53.31 (a) [CONFLICTING SECURITY INTERESTS AND RIGHTS OF LIEN
53.32 CREDITORS.] A security interest or agricultural lien is
53.33 subordinate to the rights of:
53.34 (1) a person entitled to priority under section 336.9-322;
53.35 and
53.36 (2) except as otherwise provided in subsection (e), a
54.1 person that becomes a lien creditor before the earlier of the
54.2 time:
54.3 (A) the security interest or agricultural lien is
54.4 perfected; or
54.5 (B) one of the conditions specified in section
54.6 336.9-203(b)(3) is met
54.7 and a financing statement covering the collateral is filed.
54.8 (b) [BUYERS THAT RECEIVE DELIVERY.] Except as otherwise
54.9 provided in subsection (e), a buyer, other than a secured party,
54.10 of tangible chattel paper, documents, goods, instruments, or a
54.11 security certificate takes free of a security interest or
54.12 agricultural lien if the buyer gives value and receives delivery
54.13 of the collateral without knowledge of the security interest or
54.14 agricultural lien and before it is perfected.
54.15 (c) [LESSEES THAT RECEIVE DELIVERY.] Except as otherwise
54.16 provided in subsection (e), a lessee of goods takes free of a
54.17 security interest or agricultural lien if the lessee gives value
54.18 and receives delivery of the collateral without knowledge of the
54.19 security interest or agricultural lien and before it is
54.20 perfected.
54.21 (d) [LICENSEES AND BUYERS OF CERTAIN COLLATERAL.] A
54.22 licensee of a general intangible or a buyer, other than a
54.23 secured party, of accounts, electronic chattel paper, general
54.24 intangibles, or investment property other than a certificated
54.25 security takes free of a security interest if the licensee or
54.26 buyer gives value without knowledge of the security interest and
54.27 before it is perfected.
54.28 (e) [PURCHASE-MONEY SECURITY INTEREST.] Except as otherwise
54.29 provided in sections 336.9-320 and 336.9-321, if a person files
54.30 a financing statement with respect to a purchase-money security
54.31 interest before or within 20 days after the debtor receives
54.32 delivery of the collateral, the security interest takes priority
54.33 over the rights of a buyer, lessee, or lien creditor which arise
54.34 between the time the security interest attaches and the time of
54.35 filing.
54.36 Sec. 38. [336.9-318] [NO INTEREST RETAINED IN RIGHT TO
55.1 PAYMENT THAT IS SOLD; RIGHTS AND TITLE OF SELLER OF ACCOUNT OR
55.2 CHATTEL PAPER WITH RESPECT TO CREDITORS AND PURCHASERS.]
55.3 (a) [SELLER RETAINS NO INTEREST.] A debtor that has sold an
55.4 account, chattel paper, payment intangible, or promissory note
55.5 does not retain a legal or equitable interest in the collateral
55.6 sold.
55.7 (b) [DEEMED RIGHTS OF DEBTOR IF BUYER'S SECURITY INTEREST
55.8 UNPERFECTED.] For purposes of determining the rights of
55.9 creditors of, and purchasers for value of an account or chattel
55.10 paper from, a debtor that has sold an account or chattel paper,
55.11 while the buyer's security interest is unperfected, the debtor
55.12 is deemed to have rights and title to the account or chattel
55.13 paper identical to those the debtor sold.
55.14 Sec. 39. [336.9-319] [RIGHTS AND TITLE OF CONSIGNEE WITH
55.15 RESPECT TO CREDITORS AND PURCHASERS.]
55.16 (a) [CONSIGNEE HAS CONSIGNOR'S RIGHTS.] Except as otherwise
55.17 provided in subsection (b), for purposes of determining the
55.18 rights of creditors of, and purchasers for value of goods from,
55.19 a consignee, while the goods are in the possession of the
55.20 consignee, the consignee is deemed to have rights and title to
55.21 the goods identical to those the consignor had or had power to
55.22 transfer.
55.23 (b) [APPLICABILITY OF OTHER LAW.] For purposes of
55.24 determining the rights of a creditor of a consignee, law other
55.25 than this article determines the rights and title of a consignee
55.26 while goods are in the consignee's possession if, under this
55.27 part, a perfected security interest held by the consignor would
55.28 have priority over the rights of the creditor.
55.29 Sec. 40. [336.9-320] [BUYER OF GOODS.]
55.30 (a) [BUYER IN ORDINARY COURSE OF BUSINESS.] Except as
55.31 otherwise provided in subsection (e), a buyer in ordinary course
55.32 of business, other than a person buying farm products from a
55.33 person engaged in farming operations, takes free of a security
55.34 interest created by the buyer's seller, even if the security
55.35 interest is perfected and the buyer knows of its existence.
55.36 (b) [BUYER OF CONSUMER GOODS.] Except as otherwise provided
56.1 in subsection (e), a buyer of goods from a person who used or
56.2 bought the goods for use primarily for personal, family, or
56.3 household purposes takes free of a security interest, even if
56.4 perfected, if the buyer buys:
56.5 (1) without knowledge of the security interest;
56.6 (2) for value;
56.7 (3) primarily for the buyer's personal, family, or
56.8 household purposes; and
56.9 (4) before the filing of a financing statement covering the
56.10 goods.
56.11 (c) [EFFECTIVENESS OF FILING FOR SUBSECTION (B).] To the
56.12 extent that it affects the priority of a security interest over
56.13 a buyer of goods under subsection (b), the period of
56.14 effectiveness of a filing made in the jurisdiction in which the
56.15 seller is located is governed by section 336.9-316(a) and (b).
56.16 (d) [BUYER IN ORDINARY COURSE OF BUSINESS AT WELLHEAD OR
56.17 MINEHEAD.] A buyer in ordinary course of business buying oil,
56.18 gas, or other minerals at the wellhead or minehead or after
56.19 extraction takes free of an interest arising out of an
56.20 encumbrance.
56.21 (e) [POSSESSORY SECURITY INTEREST NOT
56.22 AFFECTED.] Subsections (a) and (b) do not affect a security
56.23 interest in goods in the possession of the secured party under
56.24 section 336.9-313.
56.25 Sec. 41. [336.9-321] [LICENSEE OF GENERAL INTANGIBLE AND
56.26 LESSEE OF GOODS IN ORDINARY COURSE OF BUSINESS.]
56.27 (a) [LICENSEE IN ORDINARY COURSE OF BUSINESS.] In this
56.28 section, "licensee in ordinary course of business" means a
56.29 person that becomes a licensee of a general intangible in good
56.30 faith, without knowledge that the license violates the rights of
56.31 another person in the general intangible, and in the ordinary
56.32 course from a person in the business of licensing general
56.33 intangibles of that kind. A person becomes a licensee in the
56.34 ordinary course if the license to the person comports with the
56.35 usual or customary practices in the kind of business in which
56.36 the licensor is engaged or with the licensor's own usual or
57.1 customary practices.
57.2 (b) [RIGHTS OF LICENSEE IN ORDINARY COURSE OF BUSINESS.] A
57.3 licensee in ordinary course of business takes its rights under a
57.4 nonexclusive license free of a security interest in the general
57.5 intangible created by the licensor, even if the security
57.6 interest is perfected and the licensee knows of its existence.
57.7 (c) [RIGHTS OF LESSEE IN ORDINARY COURSE OF BUSINESS.] A
57.8 lessee in ordinary course of business takes its leasehold
57.9 interest free of a security interest in the goods created by the
57.10 lessor, even if the security interest is perfected and the
57.11 lessee knows of its existence.
57.12 Sec. 42. [336.9-322] [PRIORITIES AMONG CONFLICTING
57.13 SECURITY INTERESTS IN AND AGRICULTURAL LIENS ON SAME
57.14 COLLATERAL.]
57.15 (a) [GENERAL PRIORITY RULES.] Except as otherwise provided
57.16 in this section, priority among conflicting security interests
57.17 and agricultural liens in the same collateral is determined
57.18 according to the following rules:
57.19 (1) Conflicting perfected security interests and
57.20 agricultural liens rank according to priority in time of filing
57.21 or perfection. Priority dates from the earlier of the time a
57.22 filing covering the collateral is first made or the security
57.23 interest or agricultural lien is first perfected, if there is no
57.24 period thereafter when there is neither filing nor perfection.
57.25 (2) A perfected security interest or agricultural lien has
57.26 priority over a conflicting unperfected security interest or
57.27 agricultural lien.
57.28 (3) The first security interest or agricultural lien to
57.29 attach or become effective has priority if conflicting security
57.30 interests and agricultural liens are unperfected.
57.31 (b) [TIME OF PERFECTION: PROCEEDS AND SUPPORTING
57.32 OBLIGATIONS.] For the purposes of subsection (a)(1):
57.33 (1) the time of filing or perfection as to a security
57.34 interest in collateral is also the time of filing or perfection
57.35 as to a security interest in proceeds; and
57.36 (2) the time of filing or perfection as to a security
58.1 interest in collateral supported by a supporting obligation is
58.2 also the time of filing or perfection as to a security interest
58.3 in the supporting obligation.
58.4 (c) [SPECIAL PRIORITY RULES: PROCEEDS AND SUPPORTING
58.5 OBLIGATIONS.] Except as otherwise provided in subsection (f), a
58.6 security interest in collateral which qualifies for priority
58.7 over a conflicting security interest under section 336.9-327,
58.8 336.9-328, 336.9-329, 336.9-330, or 336.9-331 also has priority
58.9 over a conflicting security interest in:
58.10 (1) any supporting obligation for the collateral; and
58.11 (2) proceeds of the collateral if:
58.12 (A) the security interest in proceeds is perfected;
58.13 (B) the proceeds are cash proceeds or of the same type as
58.14 the collateral; and
58.15 (C) in the case of proceeds that are proceeds of proceeds,
58.16 all intervening proceeds are cash proceeds, proceeds of the same
58.17 type as the collateral, or an account relating to the collateral.
58.18 (d) [FIRST-TO-FILE PRIORITY RULE FOR CERTAIN COLLATERAL.]
58.19 Subject to subsection (e) and except as otherwise provided in
58.20 subsection (f), if a security interest in chattel paper, deposit
58.21 accounts, negotiable documents, instruments, investment
58.22 property, or letter of credit rights is perfected by a method
58.23 other than filing, conflicting perfected security interests in
58.24 proceeds of the collateral rank according to priority in time of
58.25 filing.
58.26 (e) [APPLICABILITY OF SUBSECTION (D).] Subsection (d)
58.27 applies only if the proceeds of the collateral are not cash
58.28 proceeds, chattel paper, negotiable documents, instruments,
58.29 investment property, or letter of credit rights.
58.30 (f) [LIMITATIONS ON SUBSECTIONS (A) THROUGH
58.31 (E).] Subsections (a) through (e) are subject to:
58.32 (1) subsection (g) and the other provisions of this part;
58.33 (2) section 336.4-210 with respect to a security interest
58.34 of a collecting bank;
58.35 (3) section 336.5-118 with respect to a security interest
58.36 of an issuer or nominated person; and
59.1 (4) section 336.9-110 with respect to a security interest
59.2 arising under article 2 or 2A.
59.3 (g) [PRIORITY UNDER AGRICULTURAL LIEN STATUTE.] A perfected
59.4 agricultural lien on collateral has priority over a conflicting
59.5 security interest in or agricultural lien on the same collateral
59.6 if the statute creating the agricultural lien so provides.
59.7 Sec. 43. [336.9-323] [FUTURE ADVANCES.]
59.8 (a) [WHEN PRIORITY BASED ON TIME OF ADVANCE.] Except as
59.9 otherwise provided in subsection (c), for purposes of
59.10 determining the priority of a perfected security interest under
59.11 section 336.9-322(a)(1), perfection of the security interest
59.12 dates from the time an advance is made to the extent that the
59.13 security interest secures an advance that:
59.14 (1) is made while the security interest is perfected only:
59.15 (A) under section 336.9-309 when it attaches; or
59.16 (B) temporarily under section 336.9-312(e), (f), or (g);
59.17 and
59.18 (2) is not made pursuant to a commitment entered into
59.19 before or while the security interest is perfected by a method
59.20 other than under section 336.9-309 or 336.9-312(e), (f), or (g).
59.21 (b) [LIEN CREDITOR.] Except as otherwise provided in
59.22 subsection (c), a security interest is subordinate to the rights
59.23 of a person that becomes a lien creditor to the extent that the
59.24 security interest secures an advance made more than 45 days
59.25 after the person becomes a lien creditor unless the advance is
59.26 made:
59.27 (1) without knowledge of the lien; or
59.28 (2) pursuant to a commitment entered into without knowledge
59.29 of the lien.
59.30 (c) [BUYER OF RECEIVABLES.] Subsections (a) and (b) do not
59.31 apply to a security interest held by a secured party that is a
59.32 buyer of accounts, chattel paper, payment intangibles, or
59.33 promissory notes or a consignor.
59.34 (d) [BUYER OF GOODS.] Except as otherwise provided in
59.35 subsection (e), a buyer of goods other than a buyer in ordinary
59.36 course of business takes free of a security interest to the
60.1 extent that it secures advances made after the earlier of:
60.2 (1) the time the secured party acquires knowledge of the
60.3 buyer's purchase; or
60.4 (2) 45 days after the purchase.
60.5 (e) [ADVANCES MADE PURSUANT TO COMMITMENT: PRIORITY OF
60.6 BUYER OF GOODS.] Subsection (d) does not apply if the advance is
60.7 made pursuant to a commitment entered into without knowledge of
60.8 the buyer's purchase and before the expiration of the 45-day
60.9 period.
60.10 (f) [LESSEE OF GOODS.] Except as otherwise provided in
60.11 subsection (g), a lessee of goods, other than a lessee in
60.12 ordinary course of business, takes the leasehold interest free
60.13 of a security interest to the extent that it secures advances
60.14 made after the earlier of:
60.15 (1) the time the secured party acquires knowledge of the
60.16 lease; or
60.17 (2) 45 days after the lease contract becomes enforceable.
60.18 (g) [ADVANCES MADE PURSUANT TO COMMITMENT: PRIORITY OF
60.19 LESSEE OF GOODS.] Subsection (f) does not apply if the advance
60.20 is made pursuant to a commitment entered into without knowledge
60.21 of the lease and before the expiration of the 45-day period.
60.22 Sec. 44. [336.9-324] [PRIORITY OF PURCHASE-MONEY SECURITY
60.23 INTERESTS.]
60.24 (a) [GENERAL RULE: PURCHASE-MONEY PRIORITY.] Except as
60.25 otherwise provided in subsection (g), a perfected purchase-money
60.26 security interest in goods other than inventory or livestock has
60.27 priority over a conflicting security interest in the same goods,
60.28 and, except as otherwise provided in section 336.9-327, a
60.29 perfected security interest in its identifiable proceeds also
60.30 has priority, if the purchase-money security interest is
60.31 perfected when the debtor receives possession of the collateral
60.32 or within 20 days thereafter.
60.33 (b) [INVENTORY PURCHASE-MONEY PRIORITY.] Subject to
60.34 subsection (c) and except as otherwise provided in subsection
60.35 (g), a perfected purchase-money security interest in inventory
60.36 has priority over a conflicting security interest in the same
61.1 inventory, has priority over a conflicting security interest in
61.2 chattel paper or an instrument constituting proceeds of the
61.3 inventory and in proceeds of the chattel paper, if so provided
61.4 in section 336.9-330, and, except as otherwise provided in
61.5 section 336.9-327, also has priority in identifiable cash
61.6 proceeds of the inventory to the extent the identifiable cash
61.7 proceeds are received on or before the delivery of the inventory
61.8 to a buyer, if:
61.9 (1) the purchase-money security interest is perfected when
61.10 the debtor receives possession of the inventory;
61.11 (2) the purchase-money secured party sends an authenticated
61.12 notification to the holder of the conflicting security interest;
61.13 (3) the holder of the conflicting security interest
61.14 receives the notification within five years before the debtor
61.15 receives possession of the inventory; and
61.16 (4) the notification states that the person sending the
61.17 notification has or expects to acquire a purchase-money security
61.18 interest in inventory of the debtor and describes the inventory.
61.19 (c) [HOLDERS OF CONFLICTING INVENTORY SECURITY INTERESTS TO
61.20 BE NOTIFIED.] Subsection (b)(2) through (4) apply only if the
61.21 holder of the conflicting security interest had filed a
61.22 financing statement covering the same types of inventory:
61.23 (1) if the purchase-money security interest is perfected by
61.24 filing, before the date of the filing; or
61.25 (2) if the purchase-money security interest is temporarily
61.26 perfected without filing or possession under section
61.27 336.9-312(f), before the beginning of the 20-day period
61.28 thereunder.
61.29 (d) [LIVESTOCK PURCHASE-MONEY PRIORITY.] Subject to
61.30 subsection (e) and except as otherwise provided in subsection
61.31 (g), a perfected purchase-money security interest in livestock
61.32 that are farm products has priority over a conflicting security
61.33 interest in the same livestock, and, except as otherwise
61.34 provided in section 336.9-327, a perfected security interest in
61.35 their identifiable proceeds and identifiable products in their
61.36 unmanufactured states also has priority, if:
62.1 (1) the purchase-money security interest is perfected when
62.2 the debtor receives possession of the livestock;
62.3 (2) the purchase-money secured party sends an authenticated
62.4 notification to the holder of the conflicting security interest;
62.5 (3) the holder of the conflicting security interest
62.6 receives the notification within six months before the debtor
62.7 receives possession of the livestock; and
62.8 (4) the notification states that the person sending the
62.9 notification has or expects to acquire a purchase-money security
62.10 interest in livestock of the debtor and describes the livestock.
62.11 (e) [HOLDERS OF CONFLICTING LIVESTOCK SECURITY INTERESTS TO
62.12 BE NOTIFIED.] Subsection (d)(2) through (4) apply only if the
62.13 holder of the conflicting security interest had filed a
62.14 financing statement covering the same types of livestock:
62.15 (1) if the purchase-money security interest is perfected by
62.16 filing, before the date of the filing; or
62.17 (2) if the purchase-money security interest is temporarily
62.18 perfected without filing or possession under section
62.19 336.9-312(f), before the beginning of the 20-day period
62.20 thereunder.
62.21 (f) [SOFTWARE PURCHASE-MONEY PRIORITY.] Except as otherwise
62.22 provided in subsection (g), a perfected purchase-money security
62.23 interest in software has priority over a conflicting security
62.24 interest in the same collateral, and, except as otherwise
62.25 provided in section 336.9-327, a perfected security interest in
62.26 its identifiable proceeds also has priority, to the extent that
62.27 the purchase-money security interest in the goods in which the
62.28 software was acquired for use has priority in the goods and
62.29 proceeds of the goods under this section.
62.30 (g) [CONFLICTING PURCHASE-MONEY SECURITY INTERESTS.] If
62.31 more than one security interest qualifies for priority in the
62.32 same collateral under subsection (a), (b), (d), or (f):
62.33 (1) a security interest securing an obligation incurred as
62.34 all or part of the price of the collateral has priority over a
62.35 security interest securing an obligation incurred for value
62.36 given to enable the debtor to acquire rights in or the use of
63.1 collateral; and
63.2 (2) in all other cases, section 336.9-322(a) applies to the
63.3 qualifying security interests.
63.4 Sec. 45. [336.9-325] [PRIORITY OF SECURITY INTERESTS IN
63.5 TRANSFERRED COLLATERAL.]
63.6 (a) [SUBORDINATION OF SECURITY INTEREST IN TRANSFERRED
63.7 COLLATERAL.] Except as otherwise provided in subsection (b), a
63.8 security interest created by a debtor is subordinate to a
63.9 security interest in the same collateral created by another
63.10 person if:
63.11 (1) the debtor acquired the collateral subject to the
63.12 security interest created by the other person;
63.13 (2) the security interest created by the other person was
63.14 perfected when the debtor acquired the collateral; and
63.15 (3) there is no period thereafter when the security
63.16 interest is unperfected.
63.17 (b) [LIMITATION OF SUBSECTION (A)
63.18 SUBORDINATION.] Subsection (a) subordinates a security interest
63.19 only if the security interest:
63.20 (1) otherwise would have priority solely under section
63.21 336.9-322(a) or 336.9-324; or
63.22 (2) arose solely under section 336.2-711(3) or
63.23 336.2A-508(5).
63.24 Sec. 46. [336.9-326] [PRIORITY OF SECURITY INTERESTS
63.25 CREATED BY NEW DEBTOR.]
63.26 (a) [SUBORDINATION OF SECURITY INTEREST CREATED BY NEW
63.27 DEBTOR.] Subject to subsection (b), a security interest created
63.28 by a new debtor which is perfected by a filed financing
63.29 statement that is effective solely under section 336.9-508 in
63.30 collateral in which a new debtor has or acquires rights is
63.31 subordinate to a security interest in the same collateral which
63.32 is perfected other than by a filed financing statement that is
63.33 effective solely under section 336.9-508.
63.34 (b) [PRIORITY UNDER OTHER PROVISIONS; MULTIPLE ORIGINAL
63.35 DEBTORS.] The other provisions of this part determine the
63.36 priority among conflicting security interests in the same
64.1 collateral perfected by filed financing statements that are
64.2 effective solely under section 336.9-508. However, if the
64.3 security agreements to which a new debtor became bound as debtor
64.4 were not entered into by the same original debtor, the
64.5 conflicting security interests rank according to priority in
64.6 time of the new debtor's having become bound.
64.7 Sec. 47. [336.9-327] [PRIORITY OF SECURITY INTERESTS IN
64.8 DEPOSIT ACCOUNT.]
64.9 The following rules govern priority among conflicting
64.10 security interests in the same deposit account:
64.11 (1) A security interest held by a secured party having
64.12 control of the deposit account under section 336.9-104 has
64.13 priority over a conflicting security interest held by a secured
64.14 party that does not have control.
64.15 (2) Except as otherwise provided in paragraphs (3) and (4),
64.16 security interests perfected by control under section 336.9-314
64.17 rank according to priority in time of obtaining control.
64.18 (3) Except as otherwise provided in paragraph (4), a
64.19 security interest held by the bank with which the deposit
64.20 account is maintained has priority over a conflicting security
64.21 interest held by another secured party.
64.22 (4) A security interest perfected by control under section
64.23 336.9-104(a)(3) has priority over a security interest held by
64.24 the bank with which the deposit account is maintained.
64.25 Sec. 48. [336.9-328] [PRIORITY OF SECURITY INTERESTS IN
64.26 INVESTMENT PROPERTY.]
64.27 The following rules govern priority among conflicting
64.28 security interests in the same investment property:
64.29 (1) A security interest held by a secured party having
64.30 control of investment property under section 336.9-106 has
64.31 priority over a security interest held by a secured party that
64.32 does not have control of the investment property.
64.33 (2) Except as otherwise provided in paragraphs (3) and (4),
64.34 conflicting security interests held by secured parties each of
64.35 which has control under section 336.9-106 rank according to
64.36 priority in time of:
65.1 (A) if the collateral is a security, obtaining control;
65.2 (B) if the collateral is a security entitlement carried in
65.3 a securities account and:
65.4 (i) if the secured party obtained control under section
65.5 336.8-106(d)(1), the secured party's becoming the person for
65.6 which the securities account is maintained;
65.7 (ii) if the secured party obtained control under section
65.8 336.8-106(d)(2), the securities intermediary's agreement to
65.9 comply with the secured party's entitlement orders with respect
65.10 to security entitlements carried or to be carried in the
65.11 securities account; or
65.12 (iii) if the secured party obtained control through another
65.13 person under section 336.8-106(d)(3), the time on which priority
65.14 would be based under this paragraph if the other person were the
65.15 secured party; or
65.16 (C) if the collateral is a commodity contract carried with
65.17 a commodity intermediary, the satisfaction of the requirement
65.18 for control specified in section 336.9-106(b)(2) with respect to
65.19 commodity contracts carried or to be carried with the commodity
65.20 intermediary.
65.21 (3) A security interest held by a securities intermediary
65.22 in a security entitlement or a securities account maintained
65.23 with the securities intermediary has priority over a conflicting
65.24 security interest held by another secured party.
65.25 (4) A security interest held by a commodity intermediary in
65.26 a commodity contract or a commodity account maintained with the
65.27 commodity intermediary has priority over a conflicting security
65.28 interest held by another secured party.
65.29 (5) A security interest in a certificated security in
65.30 registered form which is perfected by taking delivery under
65.31 section 336.9-313(a) and not by control under section 336.9-314
65.32 has priority over a conflicting security interest perfected by a
65.33 method other than control.
65.34 (6) Conflicting security interests created by a broker,
65.35 securities intermediary, or commodity intermediary which are
65.36 perfected without control under section 336.9-106 rank equally.
66.1 (7) In all other cases, priority among conflicting security
66.2 interests in investment property is governed by sections
66.3 336.9-322 and 336.9-323.
66.4 Sec. 49. [336.9-329] [PRIORITY OF SECURITY INTERESTS IN
66.5 LETTER OF CREDIT RIGHT.]
66.6 The following rules govern priority among conflicting
66.7 security interests in the same letter of credit right:
66.8 (1) A security interest held by a secured party having
66.9 control of the letter of credit right under section 336.9-107
66.10 has priority to the extent of its control over a conflicting
66.11 security interest held by a secured party that does not have
66.12 control.
66.13 (2) Security interests perfected by control under section
66.14 336.9-314 rank according to priority in time of obtaining
66.15 control.
66.16 Sec. 50. [336.9-330] [PRIORITY OF PURCHASER OF CHATTEL
66.17 PAPER OR INSTRUMENT.]
66.18 (a) [PURCHASER'S PRIORITY: SECURITY INTEREST CLAIMED
66.19 MERELY AS PROCEEDS.] A purchaser of chattel paper has priority
66.20 over a security interest in the chattel paper which is claimed
66.21 merely as proceeds of inventory subject to a security interest
66.22 if:
66.23 (1) in good faith and in the ordinary course of the
66.24 purchaser's business, the purchaser gives new value and takes
66.25 possession of the chattel paper or obtains control of the
66.26 chattel paper under section 336.9-105; and
66.27 (2) the chattel paper does not indicate that it has been
66.28 assigned to an identified assignee other than the purchaser.
66.29 (b) [PURCHASER'S PRIORITY: OTHER SECURITY INTERESTS.] A
66.30 purchaser of chattel paper has priority over a security interest
66.31 in the chattel paper which is claimed other than merely as
66.32 proceeds of inventory subject to a security interest if the
66.33 purchaser gives new value and takes possession of the chattel
66.34 paper or obtains control of the chattel paper under section
66.35 336.9-105 in good faith, in the ordinary course of the
66.36 purchaser's business, and without knowledge that the purchase
67.1 violates the rights of the secured party.
67.2 (c) [CHATTEL PAPER PURCHASER'S PRIORITY IN
67.3 PROCEEDS.] Except as otherwise provided in section 336.9-327, a
67.4 purchaser having priority in chattel paper under subsection (a)
67.5 or (b) also has priority in proceeds of the chattel paper to the
67.6 extent that:
67.7 (1) section 336.9-322 provides for priority in the
67.8 proceeds; or
67.9 (2) the proceeds consist of the specific goods covered by
67.10 the chattel paper or cash proceeds of the specific goods, even
67.11 if the purchaser's security interest in the proceeds is
67.12 unperfected.
67.13 (d) [INSTRUMENT PURCHASER'S PRIORITY.] Except as otherwise
67.14 provided in section 336.9-331(a), a purchaser of an instrument
67.15 has priority over a security interest in the instrument
67.16 perfected by a method other than possession if the purchaser
67.17 gives value and takes possession of the instrument in good faith
67.18 and without knowledge that the purchase violates the rights of
67.19 the secured party.
67.20 (e) [HOLDER OF PURCHASE-MONEY SECURITY INTEREST GIVES NEW
67.21 VALUE.] For purposes of subsections (a) and (b), the holder of a
67.22 purchase-money security interest in inventory gives new value
67.23 for chattel paper constituting proceeds of the inventory.
67.24 (f) [INDICATION OF ASSIGNMENT GIVES KNOWLEDGE.] For
67.25 purposes of subsections (b) and (d), if chattel paper or an
67.26 instrument indicates that it has been assigned to an identified
67.27 secured party other than the purchaser, a purchaser of the
67.28 chattel paper or instrument has knowledge that the purchase
67.29 violates the rights of the secured party.
67.30 Sec. 51. [336.9-331] [PRIORITY OF RIGHTS OF PURCHASERS OF
67.31 INSTRUMENTS, DOCUMENTS, AND SECURITIES UNDER OTHER ARTICLES;
67.32 PRIORITY OF INTERESTS IN FINANCIAL ASSETS AND SECURITY
67.33 ENTITLEMENTS UNDER ARTICLE 8.]
67.34 (a) [RIGHTS UNDER ARTICLES 3, 7, AND 8 NOT LIMITED.] This
67.35 article does not limit the rights of a holder in due course of a
67.36 negotiable instrument, a holder to which a negotiable document
68.1 of title has been duly negotiated, or a protected purchaser of a
68.2 security. These holders or purchasers take priority over an
68.3 earlier security interest, even if perfected, to the extent
68.4 provided in articles 3, 7, and 8.
68.5 (b) [PROTECTION UNDER ARTICLE 8.] This article does not
68.6 limit the rights of or impose liability on a person to the
68.7 extent that the person is protected against the assertion of a
68.8 claim under article 8.
68.9 (c) [FILING NOT NOTICE.] Filing under this article does not
68.10 constitute notice of a claim or defense to the holders, or
68.11 purchasers, or persons described in subsections (a) and (b).
68.12 Sec. 52. [336.9-332] [TRANSFER OF MONEY; TRANSFER OF FUNDS
68.13 FROM DEPOSIT ACCOUNT.]
68.14 (a) [TRANSFEREE OF MONEY.] A transferee of money takes the
68.15 money free of a security interest unless the transferee acts in
68.16 collusion with the debtor in violating the rights of the secured
68.17 party.
68.18 (b) [TRANSFEREE OF FUNDS FROM DEPOSIT ACCOUNT.] A
68.19 transferee of funds from a deposit account takes the funds free
68.20 of a security interest in the deposit account unless the
68.21 transferee acts in collusion with the debtor in violating the
68.22 rights of the secured party.
68.23 Sec. 53. [336.9-333] [PRIORITY OF CERTAIN LIENS ARISING BY
68.24 OPERATION OF LAW.]
68.25 (a) [POSSESSORY LIEN.] In this section, "possessory lien"
68.26 means an interest, other than a security interest or an
68.27 agricultural lien:
68.28 (1) which secures payment or performance of an obligation
68.29 for services or materials furnished with respect to goods by a
68.30 person in the ordinary course of the person's business;
68.31 (2) which is created by statute or rule of law in favor of
68.32 the person; and
68.33 (3) whose effectiveness depends on the person's possession
68.34 of the goods.
68.35 (b) [PRIORITY OF POSSESSORY LIEN.] A possessory lien on
68.36 goods has priority over a security interest in the goods unless
69.1 the lien is created by a statute that expressly provides
69.2 otherwise.
69.3 Sec. 54. [336.9-334] [PRIORITY OF SECURITY INTERESTS IN
69.4 FIXTURES AND CROPS.]
69.5 (a) [SECURITY INTEREST IN FIXTURES UNDER THIS ARTICLE.] A
69.6 security interest under this article may be created in goods
69.7 that are fixtures or may continue in goods that become
69.8 fixtures. A security interest does not exist under this article
69.9 in ordinary building materials incorporated into an improvement
69.10 on land.
69.11 (b) [SECURITY INTEREST IN FIXTURES UNDER REAL PROPERTY
69.12 LAW.] This article does not prevent creation of an encumbrance
69.13 upon fixtures under real property law.
69.14 (c) [GENERAL RULE: SUBORDINATION OF SECURITY INTEREST IN
69.15 FIXTURES.] In cases not governed by subsections (d) through (h),
69.16 a security interest in fixtures is subordinate to a conflicting
69.17 interest of an encumbrancer or owner of the related real
69.18 property other than the debtor.
69.19 (d) [FIXTURES PURCHASE-MONEY PRIORITY.] Except as otherwise
69.20 provided in subsection (h), a perfected security interest in
69.21 fixtures has priority over a conflicting interest of an
69.22 encumbrancer or owner of the real property if the debtor has an
69.23 interest of record in or is in possession of the real property
69.24 and:
69.25 (1) the security interest is a purchase-money security
69.26 interest;
69.27 (2) the interest of the encumbrancer or owner arises before
69.28 the goods become fixtures; and
69.29 (3) the security interest is perfected by a fixture filing
69.30 before the goods become fixtures or within 20 days thereafter.
69.31 (e) [PRIORITY OF SECURITY INTEREST IN FIXTURES OVER
69.32 INTERESTS IN REAL PROPERTY.] A perfected security interest in
69.33 fixtures has priority over a conflicting interest of an
69.34 encumbrancer or owner of the real property if:
69.35 (1) the debtor has an interest of record in the real
69.36 property or is in possession of the real property and the
70.1 security interest:
70.2 (A) is perfected by a fixture filing before the interest of
70.3 the encumbrancer or owner is of record; and
70.4 (B) has priority over any conflicting interest of a
70.5 predecessor in title of the encumbrancer or owner;
70.6 (2) before the goods become fixtures, the security interest
70.7 is perfected by any method permitted by this article and the
70.8 fixtures are readily removable:
70.9 (A) factory or office machines;
70.10 (B) equipment that is not primarily used or leased for use
70.11 in the operation of the real property; or
70.12 (C) replacements of domestic appliances that are consumer
70.13 goods;
70.14 (3) the conflicting interest is a lien on the real property
70.15 obtained by legal or equitable proceedings after the security
70.16 interest was perfected by any method permitted by this article;
70.17 or
70.18 (4) the security interest is:
70.19 (A) created in a manufactured home in a manufactured home
70.20 transaction; and
70.21 (B) perfected pursuant to a statute described in section
70.22 336.9-311(a)(2).
70.23 (f) [PRIORITY BASED ON CONSENT, DISCLAIMER, OR RIGHT TO
70.24 REMOVE.] A security interest in fixtures, whether or not
70.25 perfected, has priority over a conflicting interest of an
70.26 encumbrancer or owner of the real property if:
70.27 (1) the encumbrancer or owner has, in an authenticated
70.28 record, consented to the security interest or disclaimed an
70.29 interest in the goods as fixtures; or
70.30 (2) the debtor has a right to remove the goods as against
70.31 the encumbrancer or owner.
70.32 (g) [CONTINUATION OF PARAGRAPH (F)(2) PRIORITY.] The
70.33 priority of the security interest under paragraph (f)(2)
70.34 continues for a reasonable time if the debtor's right to remove
70.35 the goods as against the encumbrancer or owner terminates.
70.36 (h) [PRIORITY OF CONSTRUCTION MORTGAGE.] A mortgage is a
71.1 construction mortgage to the extent that it secures an
71.2 obligation incurred for the construction of an improvement on
71.3 land, including the acquisition cost of the land, if a recorded
71.4 record of the mortgage so indicates. Except as otherwise
71.5 provided in subsections (e) and (f), a security interest in
71.6 fixtures is subordinate to a construction mortgage if a record
71.7 of the mortgage is recorded before the goods become fixtures and
71.8 the goods become fixtures before the completion of the
71.9 construction. A mortgage has this priority to the same extent
71.10 as a construction mortgage to the extent that it is given to
71.11 refinance a construction mortgage.
71.12 (i) [PRIORITY OF SECURITY INTEREST IN CROPS.] A perfected
71.13 security interest in crops growing on real property has priority
71.14 over a conflicting interest of an encumbrancer or owner of the
71.15 real property if the debtor has an interest of record in or is
71.16 in possession of the real property.
71.17 (j) [SUBSECTION (i) PREVAILS.] Subsection (i) prevails over
71.18 any inconsistent provisions of the following statutes:
71.19 (1) section 557.12; and
71.20 (2) section 559.2091.
71.21 Sec. 55. [336.9-335] [ACCESSIONS.]
71.22 (a) [CREATION OF SECURITY INTEREST IN ACCESSION.] A
71.23 security interest may be created in an accession and continues
71.24 in collateral that becomes an accession.
71.25 (b) [PERFECTION OF SECURITY INTEREST.] If a security
71.26 interest is perfected when the collateral becomes an accession,
71.27 the security interest remains perfected in the collateral.
71.28 (c) [PRIORITY OF SECURITY INTEREST.] Except as otherwise
71.29 provided in subsection (d), the other provisions of this part
71.30 determine the priority of a security interest in an accession.
71.31 (d) [COMPLIANCE WITH CERTIFICATE OF TITLE STATUTE.] A
71.32 security interest in an accession is subordinate to a security
71.33 interest in the whole which is perfected by compliance with the
71.34 requirements of a certificate of title statute under section
71.35 336.9-311(b).
71.36 (e) [REMOVAL OF ACCESSION AFTER DEFAULT.] After default,
72.1 subject to Part 6, a secured party may remove an accession from
72.2 other goods if the security interest in the accession has
72.3 priority over the claims of every person having an interest in
72.4 the whole.
72.5 (f) [REIMBURSEMENT FOLLOWING REMOVAL.] A secured party that
72.6 removes an accession from other goods under subsection (e) shall
72.7 promptly reimburse any holder of a security interest or other
72.8 lien on, or owner of, the whole or of the other goods, other
72.9 than the debtor, for the cost of repair of any physical injury
72.10 to the whole or the other goods. The secured party need not
72.11 reimburse the holder or owner for any diminution in value of the
72.12 whole or the other goods caused by the absence of the accession
72.13 removed or by any necessity for replacing it. A person entitled
72.14 to reimbursement may refuse permission to remove until the
72.15 secured party gives adequate assurance for the performance of
72.16 the obligation to reimburse.
72.17 Sec. 56. [336.9-336] [COMMINGLED GOODS.]
72.18 (a) [COMMINGLED GOODS.] In this section, "commingled goods"
72.19 means goods that are physically united with other goods in such
72.20 a manner that their identity is lost in a product or mass.
72.21 (b) [NO SECURITY INTEREST IN COMMINGLED GOODS AS SUCH.] A
72.22 security interest does not exist in commingled goods as such.
72.23 However, a security interest may attach to a product or mass
72.24 that results when goods become commingled goods.
72.25 (c) [ATTACHMENT OF SECURITY INTEREST TO PRODUCT OR
72.26 MASS.] If collateral becomes commingled goods, a security
72.27 interest attaches to the product or mass.
72.28 (d) [PERFECTION OF SECURITY INTEREST.] If a security
72.29 interest in collateral is perfected before the collateral
72.30 becomes commingled goods, the security interest that attaches to
72.31 the product or mass under subsection (c) is perfected.
72.32 (e) [PRIORITY OF SECURITY INTEREST.] Except as otherwise
72.33 provided in subsection (f), the other provisions of this part
72.34 determine the priority of a security interest that attaches to
72.35 the product or mass under subsection (c).
72.36 (f) [CONFLICTING SECURITY INTERESTS IN PRODUCT OR MASS.] If
73.1 more than one security interest attaches to the product or mass
73.2 under subsection (c), the following rules determine priority:
73.3 (1) A security interest that is perfected under subsection
73.4 (d) has priority over a security interest that is unperfected at
73.5 the time the collateral becomes commingled goods.
73.6 (2) If more than one security interest is perfected under
73.7 subsection (d), the security interests rank equally in
73.8 proportion to the value of the collateral at the time it became
73.9 commingled goods.
73.10 Sec. 57. [336.9-337] [PRIORITY OF SECURITY INTERESTS IN
73.11 GOODS COVERED BY CERTIFICATE OF TITLE.]
73.12 If, while a security interest in goods is perfected by any
73.13 method under the law of another jurisdiction, this state issues
73.14 a certificate of title that does not show that the goods are
73.15 subject to the security interest or contain a statement that
73.16 they may be subject to security interests not shown on the
73.17 certificate:
73.18 (1) a buyer of the goods, other than a person in the
73.19 business of selling goods of that kind, takes free of the
73.20 security interest if the buyer gives value and receives delivery
73.21 of the goods after issuance of the certificate and without
73.22 knowledge of the security interest; and
73.23 (2) the security interest is subordinate to a conflicting
73.24 security interest in the goods that attaches, and is perfected
73.25 under section 336.9-311(b), after issuance of the certificate
73.26 and without the conflicting secured party's knowledge of the
73.27 security interest.
73.28 Sec. 58. [336.9-338] [PRIORITY OF SECURITY INTEREST OR
73.29 AGRICULTURAL LIEN PERFECTED BY FILED FINANCING STATEMENT
73.30 PROVIDING CERTAIN INCORRECT INFORMATION.]
73.31 If a security interest or agricultural lien is perfected by
73.32 a filed financing statement providing information described in
73.33 section 336.9-516(b)(5) which is incorrect at the time the
73.34 financing statement is filed:
73.35 (1) the security interest or agricultural lien is
73.36 subordinate to a conflicting perfected security interest in the
74.1 collateral to the extent that the holder of the conflicting
74.2 security interest gives value in reasonable reliance upon the
74.3 incorrect information; and
74.4 (2) a purchaser, other than a secured party, of the
74.5 collateral takes free of the security interest or agricultural
74.6 lien to the extent that, in reasonable reliance upon the
74.7 incorrect information, the purchaser gives value and, in the
74.8 case of chattel paper, documents, goods, instruments, or a
74.9 security certificate, receives delivery of the collateral.
74.10 Sec. 59. [336.9-339] [PRIORITY SUBJECT TO SUBORDINATION.]
74.11 This article does not preclude subordination by agreement
74.12 by a person entitled to priority.
74.13 SUBPART 4. RIGHTS OF BANK
74.14 Sec. 60. [336.9-340] [EFFECTIVENESS OF RIGHT OF RECOUPMENT
74.15 OR SET-OFF AGAINST DEPOSIT ACCOUNT.]
74.16 (a) [EXERCISE OF RECOUPMENT OR SET-OFF.] Except as
74.17 otherwise provided in subsection (c), a bank with which a
74.18 deposit account is maintained may exercise any right of
74.19 recoupment or set-off against a secured party that holds a
74.20 security interest in the deposit account.
74.21 (b) [RECOUPMENT OR SET-OFF NOT AFFECTED BY SECURITY
74.22 INTEREST.] Except as otherwise provided in subsection (c), the
74.23 application of this article to a security interest in a deposit
74.24 account does not affect a right of recoupment or set-off of the
74.25 secured party as to a deposit account maintained with the
74.26 secured party.
74.27 (c) [WHEN SET-OFF INEFFECTIVE.] The exercise by a bank of a
74.28 set-off against a deposit account is ineffective against a
74.29 secured party that holds a security interest in the deposit
74.30 account which is perfected by control under section
74.31 336.9-104(a)(3), if the set-off is based on a claim against the
74.32 debtor.
74.33 Sec. 61. [336.9-341] [BANK'S RIGHTS AND DUTIES WITH
74.34 RESPECT TO DEPOSIT ACCOUNT.]
74.35 Except as otherwise provided in section 336.9-340(c), and
74.36 unless the bank otherwise agrees in an authenticated record, a
75.1 bank's rights and duties with respect to a deposit account
75.2 maintained with the bank are not terminated, suspended, or
75.3 modified by:
75.4 (1) the creation, attachment, or perfection of a security
75.5 interest in the deposit account;
75.6 (2) the bank's knowledge of the security interest; or
75.7 (3) the bank's receipt of instructions from the secured
75.8 party.
75.9 Sec. 62. [336.9-342] [BANK'S RIGHT TO REFUSE TO ENTER INTO
75.10 OR DISCLOSE EXISTENCE OF CONTROL AGREEMENT.]
75.11 This article does not require a bank to enter into an
75.12 agreement of the kind described in section 336.9-104(a)(2), even
75.13 if its customer so requests or directs. A bank that has entered
75.14 into such an agreement is not required to confirm the existence
75.15 of the agreement to another person unless requested to do so by
75.16 its customer.
75.17 Part 4
75.18 RIGHTS OF THIRD PARTIES
75.19 Sec. 63. [336.9-401] [ALIENABILITY OF DEBTOR'S RIGHTS.]
75.20 (a) [OTHER LAW GOVERNS ALIENABILITY; EXCEPTIONS.] Except as
75.21 otherwise provided in subsection (b) and sections 336.9-406,
75.22 336.9-407, 336.9-408, and 336.9-409, whether a debtor's rights
75.23 in collateral may be voluntarily or involuntarily transferred is
75.24 governed by law other than this article.
75.25 (b) [AGREEMENT DOES NOT PREVENT TRANSFER.] An agreement
75.26 between the debtor and secured party which prohibits a transfer
75.27 of the debtor's rights in collateral or makes the transfer a
75.28 default does not prevent the transfer from taking effect.
75.29 Sec. 64. [336.9-402] [SECURED PARTY NOT OBLIGATED ON
75.30 CONTRACT OF DEBTOR OR IN TORT.]
75.31 The existence of a security interest, agricultural lien, or
75.32 authority given to a debtor to dispose of or use collateral,
75.33 without more, does not subject a secured party to liability in
75.34 contract or tort for the debtor's acts or omissions.
75.35 Sec. 65. [336.9-403] [AGREEMENT NOT TO ASSERT DEFENSES
75.36 AGAINST ASSIGNEE.]
76.1 (a) [VALUE.] In this section, "value" has the meaning
76.2 provided in section 336.3-303(a).
76.3 (b) [AGREEMENT NOT TO ASSERT CLAIM OR DEFENSE.] Except as
76.4 otherwise provided in this section, an agreement between an
76.5 account debtor and an assignor not to assert against an assignee
76.6 any claim or defense that the account debtor may have against
76.7 the assignor is enforceable by an assignee that takes an
76.8 assignment:
76.9 (1) for value;
76.10 (2) in good faith;
76.11 (3) without notice of a claim of a property or possessory
76.12 right to the property assigned; and
76.13 (4) without notice of a defense or claim in recoupment of
76.14 the type that may be asserted against a person entitled to
76.15 enforce a negotiable instrument under section 336.3-305(a).
76.16 (c) [WHEN SUBSECTION (B) NOT APPLICABLE.] Subsection (b)
76.17 does not apply to defenses of a type that may be asserted
76.18 against a holder in due course of a negotiable instrument under
76.19 section 336.3-305(b).
76.20 (d) [OMISSION OF REQUIRED STATEMENT IN CONSUMER
76.21 TRANSACTION.] In a consumer transaction, if a record evidences
76.22 the account debtor's obligation, law other than this article
76.23 requires that the record include a statement to the effect that
76.24 the rights of an assignee are subject to claims or defenses that
76.25 the account debtor could assert against the original obligee,
76.26 and the record does not include such a statement:
76.27 (1) the record has the same effect as if the record
76.28 included such a statement; and
76.29 (2) the account debtor may assert against an assignee those
76.30 claims and defenses that would have been available if the record
76.31 included such a statement.
76.32 (e) [RULE FOR INDIVIDUAL UNDER OTHER LAW.] This section is
76.33 subject to law other than this article which establishes a
76.34 different rule for an account debtor who is an individual and
76.35 who incurred the obligation primarily for personal, family, or
76.36 household purposes.
77.1 (f) [OTHER LAW NOT DISPLACED.] Except as otherwise provided
77.2 in subsection (d), this section does not displace law other than
77.3 this article which gives effect to an agreement by an account
77.4 debtor not to assert a claim or defense against an assignee.
77.5 Sec. 66. [336.9-404] [RIGHTS ACQUIRED BY ASSIGNEE; CLAIMS
77.6 AND DEFENSES AGAINST ASSIGNEE.]
77.7 (a) [ASSIGNEE'S RIGHTS SUBJECT TO TERMS, CLAIMS, AND
77.8 DEFENSES; EXCEPTIONS.] Unless an account debtor has made an
77.9 enforceable agreement not to assert defenses or claims, and
77.10 subject to subsections (b) through (e), the rights of an
77.11 assignee are subject to:
77.12 (1) all terms of the agreement between the account debtor
77.13 and assignor and any defense or claim in recoupment arising from
77.14 the transaction that gave rise to the contract; and
77.15 (2) any other defense or claim of the account debtor
77.16 against the assignor which accrues before the account debtor
77.17 receives a notification of the assignment authenticated by the
77.18 assignor or the assignee.
77.19 (b) [ACCOUNT DEBTOR'S CLAIM REDUCES AMOUNT OWED TO
77.20 ASSIGNEE.] Subject to subsection (c) and except as otherwise
77.21 provided in subsection (d), the claim of an account debtor
77.22 against an assignor may be asserted against an assignee under
77.23 subsection (a) only to reduce the amount the account debtor owes.
77.24 (c) [RULE FOR INDIVIDUAL UNDER OTHER LAW.] This section is
77.25 subject to law other than this article which establishes a
77.26 different rule for an account debtor who is an individual and
77.27 who incurred the obligation primarily for personal, family, or
77.28 household purposes.
77.29 (d) [OMISSION OF REQUIRED STATEMENT IN CONSUMER
77.30 TRANSACTION.] In a consumer transaction, if a record evidences
77.31 the account debtor's obligation, law other than this article
77.32 requires that the record include a statement to the effect that
77.33 the account debtor's recovery against an assignee with respect
77.34 to claims and defenses against the assignor may not exceed
77.35 amounts paid by the account debtor under the record, and the
77.36 record does not include such a statement, the extent to which a
78.1 claim of an account debtor against the assignor may be asserted
78.2 against an assignee is determined as if the record included such
78.3 a statement.
78.4 (e) [INAPPLICABILITY TO HEALTH-CARE-INSURANCE
78.5 RECEIVABLE.] This section does not apply to an assignment of a
78.6 health-care-insurance receivable.
78.7 Sec. 67. [336.9-405] [MODIFICATION OF ASSIGNED CONTRACT.]
78.8 (a) [EFFECT OF MODIFICATION ON ASSIGNEE.] A modification of
78.9 or substitution for an assigned contract is effective against an
78.10 assignee if made in good faith. The assignee acquires
78.11 corresponding rights under the modified or substituted
78.12 contract. The assignment may provide that the modification or
78.13 substitution is a breach of contract by the assignor. This
78.14 subsection is subject to subsections (b) through (d).
78.15 (b) [APPLICABILITY OF SUBSECTION (A).] Subsection (a)
78.16 applies to the extent that:
78.17 (1) the right to payment or a part thereof under an
78.18 assigned contract has not been fully earned by performance; or
78.19 (2) the right to payment or a part thereof has been fully
78.20 earned by performance and the account debtor has not received
78.21 notification of the assignment under section 336.9-406(a).
78.22 (c) [RULE FOR INDIVIDUAL UNDER OTHER LAW.] This section is
78.23 subject to law other than this article which establishes a
78.24 different rule for an account debtor who is an individual and
78.25 who incurred the obligation primarily for personal, family, or
78.26 household purposes.
78.27 (d) [INAPPLICABILITY TO HEALTH-CARE-INSURANCE
78.28 RECEIVABLE.] This section does not apply to an assignment of a
78.29 health-care-insurance receivable.
78.30 Sec. 68. [336.9-406] [DISCHARGE OF ACCOUNT DEBTOR;
78.31 NOTIFICATION OF ASSIGNMENT; IDENTIFICATION AND PROOF OF
78.32 ASSIGNMENT; RESTRICTIONS ON ASSIGNMENT OF ACCOUNTS, CHATTEL
78.33 PAPER, PAYMENT INTANGIBLES, AND PROMISSORY NOTES INEFFECTIVE.]
78.34 (a) [DISCHARGE OF ACCOUNT DEBTOR; EFFECT OF NOTIFICATION.]
78.35 Subject to subsections (b) through (i), an account debtor on an
78.36 account, chattel paper, or a payment intangible may discharge
79.1 its obligation by paying the assignor until, but not after, the
79.2 account debtor receives a notification, authenticated by the
79.3 assignor or the assignee, that the amount due or to become due
79.4 has been assigned and that payment is to be made to the
79.5 assignee. After receipt of the notification, the account debtor
79.6 may discharge its obligation by paying the assignee and may not
79.7 discharge the obligation by paying the assignor.
79.8 (b) [WHEN NOTIFICATION INEFFECTIVE.] Subject to subsection
79.9 (h), notification is ineffective under subsection (a):
79.10 (1) if it does not reasonably identify the rights assigned;
79.11 (2) to the extent that an agreement between an account
79.12 debtor and a seller of a payment intangible limits the account
79.13 debtor's duty to pay a person other than the seller and the
79.14 limitation is effective under law other than this article; or
79.15 (3) at the option of an account debtor, if the notification
79.16 notifies the account debtor to make less than the full amount of
79.17 any installment or other periodic payment to the assignee, even
79.18 if:
79.19 (A) only a portion of the account, chattel paper, or
79.20 payment intangible has been assigned to that assignee;
79.21 (B) a portion has been assigned to another assignee; or
79.22 (C) the account debtor knows that the assignment to that
79.23 assignee is limited.
79.24 (c) [PROOF OF ASSIGNMENT.] Subject to subsection (h), if
79.25 requested by the account debtor, an assignee shall seasonably
79.26 furnish reasonable proof that the assignment has been made.
79.27 Unless the assignee complies, the account debtor may discharge
79.28 its obligation by paying the assignor, even if the account
79.29 debtor has received a notification under subsection (a).
79.30 (d) [TERM RESTRICTING ASSIGNMENT GENERALLY
79.31 INEFFECTIVE.] Except as otherwise provided in subsection (e) and
79.32 sections 336.2A-303 and 336.9-407, and subject to subsection
79.33 (h), a term in an agreement between an account debtor and an
79.34 assignor or in a promissory note is ineffective to the extent
79.35 that it:
79.36 (1) prohibits, restricts, or requires the consent of the
80.1 account debtor or person obligated on the promissory note to the
80.2 assignment or transfer of, or the creation, attachment,
80.3 perfection, or enforcement of a security interest in, the
80.4 account, chattel paper, payment intangible, or promissory note;
80.5 or
80.6 (2) provides that the assignment or transfer or the
80.7 creation, attachment, perfection, or enforcement of the security
80.8 interest may give rise to a default, breach, right of
80.9 recoupment, claim, defense, termination, right of termination,
80.10 or remedy under the account, chattel paper, payment intangible,
80.11 or promissory note.
80.12 (e) [INAPPLICABILITY OF SUBSECTION (D) TO CERTAIN SALES.]
80.13 Subsection (d) does not apply to the sale of a payment
80.14 intangible or promissory note.
80.15 (f) [LEGAL RESTRICTIONS ON ASSIGNMENT GENERALLY
80.16 INEFFECTIVE.] Except as otherwise provided in sections
80.17 336.2A-303 and 336.9-407, and subject to subsections (h) and
80.18 (i), a rule of law, statute, or regulation, that prohibits,
80.19 restricts, or requires the consent of a government, governmental
80.20 body or official, or account debtor to the assignment or
80.21 transfer of, or creation of a security interest in, an account
80.22 or chattel paper is ineffective to the extent that the rule of
80.23 law, statute, or regulation:
80.24 (1) prohibits, restricts, or requires the consent of the
80.25 government, governmental body or official, or account debtor to
80.26 the assignment or transfer of, or the creation, attachment,
80.27 perfection, or enforcement of a security interest in, the
80.28 account or chattel paper; or
80.29 (2) provides that the assignment or transfer or the
80.30 creation, attachment, perfection, or enforcement of the security
80.31 interest may give rise to a default, breach, right of
80.32 recoupment, claim, defense, termination, right of termination,
80.33 or remedy under the account or chattel paper.
80.34 (g) [SUBSECTION (B)(3) NOT WAIVABLE.] Subject to subsection
80.35 (h), an account debtor may not waive or vary its option under
80.36 subsection (b)(3).
81.1 (h) [RULE FOR INDIVIDUAL UNDER OTHER LAW.] This section is
81.2 subject to law other than this article which establishes a
81.3 different rule for an account debtor who is an individual and
81.4 who incurred the obligation primarily for personal, family, or
81.5 household purposes.
81.6 (i) [INAPPLICABILITY TO HEALTH-CARE-INSURANCE
81.7 RECEIVABLE.] This section does not apply to an assignment of a
81.8 health-care-insurance receivable.
81.9 Sec. 69. [336.9-407] [RESTRICTIONS ON CREATION OR
81.10 ENFORCEMENT OF SECURITY INTEREST IN LEASEHOLD INTEREST OR IN
81.11 LESSOR'S RESIDUAL INTEREST.]
81.12 (a) [TERM RESTRICTING ASSIGNMENT GENERALLY
81.13 INEFFECTIVE.] Except as otherwise provided in subsection (b), a
81.14 term in a lease agreement is ineffective to the extent that it:
81.15 (1) prohibits, restricts, or requires the consent of a
81.16 party to the lease to the assignment or transfer of, or the
81.17 creation, attachment, perfection, or enforcement of a security
81.18 interest in, an interest of a party under the lease contract or
81.19 in the lessor's residual interest in the goods; or
81.20 (2) provides that the assignment or transfer or the
81.21 creation, attachment, perfection, or enforcement of the security
81.22 interest may give rise to a default, breach, right of
81.23 recoupment, claim, defense, termination, right of termination,
81.24 or remedy under the lease.
81.25 (b) [EFFECTIVENESS OF CERTAIN TERMS.] Except as otherwise
81.26 provided in section 336.2A-303(7), a term described in
81.27 subsection (a)(2) is effective to the extent that there is:
81.28 (1) a transfer by the lessee of the lessee's right of
81.29 possession or use of the goods in violation of the term; or
81.30 (2) a delegation of a material performance of either party
81.31 to the lease contract in violation of the term.
81.32 (c) [SECURITY INTEREST NOT MATERIAL IMPAIRMENT.] The
81.33 creation, attachment, perfection, or enforcement of a security
81.34 interest in the lessor's interest under the lease contract or
81.35 the lessor's residual interest in the goods is not a transfer
81.36 that materially impairs the lessee's prospect of obtaining
82.1 return performance or materially changes the duty of or
82.2 materially increases the burden or risk imposed on the lessee
82.3 within the purview of section 336.2A-303(4) unless, and then
82.4 only to the extent that, enforcement actually results in a
82.5 delegation of material performance of the lessor. Even in that
82.6 event, the creation, attachment, perfection, and enforcement of
82.7 the security interest remain effective.
82.8 Sec. 70. [336.9-408] [RESTRICTIONS ON ASSIGNMENT OF
82.9 PROMISSORY NOTES, HEALTH-CARE-INSURANCE RECEIVABLES, AND CERTAIN
82.10 GENERAL INTANGIBLES INEFFECTIVE.]
82.11 (a) [TERM RESTRICTING ASSIGNMENT GENERALLY
82.12 INEFFECTIVE.] Except as otherwise provided in subsection (b), a
82.13 term in a promissory note or in an agreement between an account
82.14 debtor and a debtor which relates to a health-care-insurance
82.15 receivable or a general intangible, including a contract,
82.16 permit, license, or franchise, and which term prohibits,
82.17 restricts, or requires the consent of the person obligated on
82.18 the promissory note or the account debtor to, the assignment or
82.19 transfer of, or creation, attachment, or perfection of a
82.20 security interest in, the promissory note, health-care-insurance
82.21 receivable, or general intangible, is ineffective to the extent
82.22 that the term:
82.23 (1) would impair the creation, attachment, or perfection of
82.24 a security interest; or
82.25 (2) provides that the assignment or transfer or the
82.26 creation, attachment, or perfection of the security interest may
82.27 give rise to a default, breach, right of recoupment, claim,
82.28 defense, termination, right of termination, or remedy under the
82.29 promissory note, health-care-insurance receivable, or general
82.30 intangible.
82.31 (b) [APPLICABILITY OF SUBSECTION (A) TO SALES OF CERTAIN
82.32 RIGHTS TO PAYMENT.] Subsection (a) applies to a security
82.33 interest in a payment intangible or promissory note only if the
82.34 security interest arises out of a sale of the payment intangible
82.35 or promissory note.
82.36 (c) [LEGAL RESTRICTIONS ON ASSIGNMENT GENERALLY
83.1 INEFFECTIVE.] A rule of law, statute, or regulation, that
83.2 prohibits, restricts, or requires the consent of a government,
83.3 governmental body or official, person obligated on a promissory
83.4 note, or account debtor to the assignment or transfer of, or
83.5 creation of a security interest in, a promissory note,
83.6 health-care-insurance receivable, or general intangible,
83.7 including a contract, permit, license, or franchise between an
83.8 account debtor and a debtor, is ineffective to the extent that
83.9 the rule of law, statute, or regulation:
83.10 (1) would impair the creation, attachment, or perfection of
83.11 a security interest; or
83.12 (2) provides that the assignment or transfer or the
83.13 creation, attachment, or perfection of the security interest may
83.14 give rise to a default, breach, right of recoupment, claim,
83.15 defense, termination, right of termination, or remedy under the
83.16 promissory note, health-care-insurance receivable, or general
83.17 intangible.
83.18 (d) [LIMITATION ON INEFFECTIVENESS UNDER SUBSECTIONS (A)
83.19 AND (C).] To the extent that a term in a promissory note or in
83.20 an agreement between an account debtor and a debtor which
83.21 relates to a health-care-insurance receivable or general
83.22 intangible or a rule of law, statute, or regulation described in
83.23 subsection (c) would be effective under law other than this
83.24 article but is ineffective under subsection (a) or (c), the
83.25 creation, attachment, or perfection of a security interest in
83.26 the promissory note, health-care-insurance receivable, or
83.27 general intangible:
83.28 (1) is not enforceable against the person obligated on the
83.29 promissory note or the account debtor;
83.30 (2) does not impose a duty or obligation on the person
83.31 obligated on the promissory note or the account debtor;
83.32 (3) does not require the person obligated on the promissory
83.33 note or the account debtor to recognize the security interest,
83.34 pay or render performance to the secured party, or accept
83.35 payment or performance from the secured party;
83.36 (4) does not entitle the secured party to use or assign the
84.1 debtor's rights under the promissory note, health-care-insurance
84.2 receivable, or general intangible, including any related
84.3 information or materials furnished to the debtor in the
84.4 transaction giving rise to the promissory note,
84.5 health-care-insurance receivable, or general intangible;
84.6 (5) does not entitle the secured party to use, assign,
84.7 possess, or have access to any trade secrets or confidential
84.8 information of the person obligated on the promissory note or
84.9 the account debtor; and
84.10 (6) does not entitle the secured party to enforce the
84.11 security interest in the promissory note, health-care-insurance
84.12 receivable, or general intangible.
84.13 Sec. 71. [336.9-409] [RESTRICTIONS ON ASSIGNMENT OF LETTER
84.14 OF CREDIT RIGHTS INEFFECTIVE.]
84.15 (a) [TERM OR LAW RESTRICTING ASSIGNMENT GENERALLY
84.16 INEFFECTIVE.] A term in a letter of credit or a rule of law,
84.17 statute, regulation, custom, or practice applicable to the
84.18 letter of credit which prohibits, restricts, or requires the
84.19 consent of an applicant, issuer, or nominated person to a
84.20 beneficiary's assignment of or creation of a security interest
84.21 in a letter of credit right is ineffective to the extent that
84.22 the term or rule of law, statute, regulation, custom, or
84.23 practice:
84.24 (1) would impair the creation, attachment, or perfection of
84.25 a security interest in the letter of credit right; or
84.26 (2) provides that the assignment or the creation,
84.27 attachment, or perfection of the security interest may give rise
84.28 to a default, breach, right of recoupment, claim, defense,
84.29 termination, right of termination, or remedy under the letter of
84.30 credit right.
84.31 (b) [LIMITATION ON INEFFECTIVENESS UNDER SUBSECTION
84.32 (A).] To the extent that a term in a letter of credit is
84.33 ineffective under subsection (a) but would be effective under
84.34 law other than this article or a custom or practice applicable
84.35 to the letter of credit, to the transfer of a right to draw or
84.36 otherwise demand performance under the letter of credit, or to
85.1 the assignment of a right to proceeds of the letter of credit,
85.2 the creation, attachment, or perfection of a security interest
85.3 in the letter of credit right:
85.4 (1) is not enforceable against the applicant, issuer,
85.5 nominated person, or transferee beneficiary;
85.6 (2) imposes no duties or obligations on the applicant,
85.7 issuer, nominated person, or transferee beneficiary; and
85.8 (3) does not require the applicant, issuer, nominated
85.9 person, or transferee beneficiary to recognize the security
85.10 interest, pay or render performance to the secured party, or
85.11 accept payment or other performance from the secured party.
85.12 Part 5
85.13 FILING
85.14 SUBPART 1. FILING OFFICE; CONTENTS AND EFFECTIVENESS
85.15 OF FINANCING STATEMENT
85.16 Sec. 72. [336.9-501] [FILING OFFICE.]
85.17 (a) [FILING OFFICES.] Except as otherwise provided in
85.18 subsection (b), if the local law of this state governs
85.19 perfection of a security interest or agricultural lien, the
85.20 office in which to file a financing statement to perfect the
85.21 security interest or agricultural lien is:
85.22 (1) the office designated for the filing or recording of a
85.23 record of a mortgage on the related real property, if:
85.24 (A) the collateral is as-extracted collateral or timber to
85.25 be cut; or
85.26 (B) the financing statement is filed as a fixture filing
85.27 and the collateral is goods that are or are to become fixtures;
85.28 or
85.29 (2) the central filing system operated by the office of the
85.30 secretary of state, in all other cases, including a case in
85.31 which the collateral is goods that are or are to become fixtures
85.32 and the financing statement is not filed as a fixture filing.
85.33 (b) [FILING OFFICE FOR TRANSMITTING UTILITIES.] The office
85.34 in which to file a financing statement to perfect a security
85.35 interest in collateral, including fixtures, of a transmitting
85.36 utility is the central filing system operated by the office of
86.1 the secretary of state. The financing statement also
86.2 constitutes a fixture filing as to the collateral indicated in
86.3 the financing statement which is or is to become fixtures.
86.4 Sec. 73. [336.9-502] [CONTENTS OF FINANCING STATEMENT;
86.5 RECORD OF MORTGAGE AS FINANCING STATEMENT; TIME OF FILING
86.6 FINANCING STATEMENT.]
86.7 (a) [SUFFICIENCY OF FINANCING STATEMENT.] Subject to
86.8 subsection (b), a financing statement is sufficient only if it:
86.9 (1) provides the name of the debtor;
86.10 (2) provides the name of the secured party or a
86.11 representative of the secured party; and
86.12 (3) indicates the collateral covered by the financing
86.13 statement.
86.14 (b) [REAL PROPERTY-RELATED FINANCING STATEMENTS.] Except as
86.15 otherwise provided in section 336.9-501(b), to be sufficient, a
86.16 financing statement that covers as-extracted collateral or
86.17 timber to be cut, or which is filed as a fixture filing and
86.18 covers goods that are or are to become fixtures, must satisfy
86.19 subsection (a) and also:
86.20 (1) indicate that it covers this type of collateral;
86.21 (2) indicate that it is to be filed for record in the real
86.22 property records;
86.23 (3) provide a description of the real property to which the
86.24 collateral is related sufficient to give constructive notice of
86.25 a mortgage under the law of this state if the description were
86.26 contained in a record of the mortgage of the real property; and
86.27 (4) if the debtor does not have an interest of record in
86.28 the real property, provide the name of a record owner.
86.29 (c) [RECORD OF MORTGAGE AS FINANCING STATEMENT.] A record
86.30 of a mortgage is effective, from the date of recording, as a
86.31 financing statement filed as a fixture filing or as a financing
86.32 statement covering as-extracted collateral or timber to be cut
86.33 only if:
86.34 (1) the record indicates the goods or accounts that it
86.35 covers;
86.36 (2) the goods are or are to become fixtures related to the
87.1 real property described in the record or the collateral is
87.2 related to the real property described in the record and is
87.3 as-extracted collateral or timber to be cut;
87.4 (3) the record satisfies the requirements for a financing
87.5 statement in this section other than an indication that it is to
87.6 be filed in the real property records; and
87.7 (4) the record is recorded in the office of the county
87.8 recorder or registrar of titles in the county where the real
87.9 property is located.
87.10 (d) [FILING BEFORE SECURITY AGREEMENT OR ATTACHMENT.] A
87.11 financing statement may be filed before a security agreement is
87.12 made or a security interest otherwise attaches.
87.13 Sec. 74. [336.9-503] [NAME OF DEBTOR AND SECURED PARTY.]
87.14 (a) [SUFFICIENCY OF DEBTOR'S NAME.] A financing statement
87.15 sufficiently provides the name of the debtor:
87.16 (1) if the debtor is a registered organization, only if the
87.17 financing statement provides the name of the debtor indicated on
87.18 the public record of the debtor's jurisdiction of organization
87.19 which shows the debtor to have been organized;
87.20 (2) if the debtor is a decedent's estate, only if the
87.21 financing statement provides the name of the decedent and
87.22 indicates that the debtor is an estate;
87.23 (3) if the debtor is a trust or a trustee acting with
87.24 respect to property held in trust, only if the financing
87.25 statement:
87.26 (A) provides the name specified for the trust in its
87.27 organic documents or, if no name is specified, provides the name
87.28 of the settlor and additional information sufficient to
87.29 distinguish the debtor from other trusts having one or more of
87.30 the same settlors; and
87.31 (B) indicates, in the debtor's name or otherwise, that the
87.32 debtor is a trust or is a trustee acting with respect to
87.33 property held in trust; and
87.34 (4) in other cases:
87.35 (A) if the debtor has a name, only if it provides the
87.36 individual or organizational name of the debtor; and
88.1 (B) if the debtor does not have a name, only if it provides
88.2 the names of the partners, members, associates, or other persons
88.3 comprising the debtor.
88.4 (b) [ADDITIONAL DEBTOR-RELATED INFORMATION.] A financing
88.5 statement that provides the name of the debtor in accordance
88.6 with subsection (a) is not rendered ineffective by the absence
88.7 of:
88.8 (1) a trade name or other name of the debtor; or
88.9 (2) unless required under subsection (a)(4)(B), names of
88.10 partners, members, associates, or other persons comprising the
88.11 debtor.
88.12 (c) [DEBTOR'S TRADE NAME INSUFFICIENT.] A financing
88.13 statement that provides only the debtor's trade name does not
88.14 sufficiently provide the name of the debtor.
88.15 (d) [REPRESENTATIVE CAPACITY.] Failure to indicate the
88.16 representative capacity of a secured party or representative of
88.17 a secured party does not affect the sufficiency of a financing
88.18 statement.
88.19 (e) [MULTIPLE DEBTORS AND SECURED PARTIES.] A financing
88.20 statement may provide the name of more than one debtor and the
88.21 name of more than one secured party.
88.22 Sec. 75. [336.9-504] [INDICATION OF COLLATERAL.]
88.23 A financing statement sufficiently indicates the collateral
88.24 that it covers if the financing statement provides:
88.25 (1) a description of the collateral pursuant to section
88.26 336.9-108; or
88.27 (2) an indication that the financing statement covers all
88.28 assets or all personal property.
88.29 Sec. 76. [336.9-505] [FILING AND COMPLIANCE WITH OTHER
88.30 STATUTES AND TREATIES FOR CONSIGNMENTS, LEASES, OTHER BAILMENTS,
88.31 AND OTHER TRANSACTIONS.]
88.32 (a) [USE OF TERMS OTHER THAN DEBTOR AND SECURED PARTY.] A
88.33 consignor, lessor, or other bailor of goods, a licensor, or a
88.34 buyer of a payment intangible or promissory note may file a
88.35 financing statement, or may comply with a statute or treaty
88.36 described in section 336.9-311(a), using the terms "consignor,"
89.1 "consignee," "lessor," "lessee," "bailor," "bailee," "licensor,"
89.2 "licensee," "owner," "registered owner," "buyer," "seller," or
89.3 words of similar import, instead of the terms "secured party"
89.4 and "debtor."
89.5 (b) [EFFECT OF FINANCING STATEMENT UNDER SUBSECTION
89.6 (A).] This part applies to the filing of a financing statement
89.7 under subsection (a) and, as appropriate, to compliance that is
89.8 equivalent to filing a financing statement under section
89.9 336.9-311(b), but the filing or compliance is not of itself a
89.10 factor in determining whether the collateral secures an
89.11 obligation. If it is determined for another reason that the
89.12 collateral secures an obligation, a security interest held by
89.13 the consignor, lessor, bailor, licensor, owner, or buyer which
89.14 attaches to the collateral is perfected by the filing or
89.15 compliance.
89.16 Sec. 77. [336.9-506] [EFFECT OF ERRORS OR OMISSIONS.]
89.17 (a) [MINOR ERRORS AND OMISSIONS.] A financing statement
89.18 substantially satisfying the requirements of this part is
89.19 effective, even if it has minor errors or omissions, unless the
89.20 errors or omissions make the financing statement seriously
89.21 misleading.
89.22 (b) [FINANCING STATEMENT SERIOUSLY MISLEADING.] Except as
89.23 otherwise provided in subsection (c), a financing statement that
89.24 fails sufficiently to provide the name of the debtor in
89.25 accordance with section 336.9-503(a) is seriously misleading.
89.26 (c) [FINANCING STATEMENT NOT SERIOUSLY MISLEADING.] If a
89.27 search of the records of the filing office under the debtor's
89.28 correct name, using the filing office's standard search logic,
89.29 if any, would disclose a financing statement that fails
89.30 sufficiently to provide the name of the debtor in accordance
89.31 with section 336.9-503(a), the name provided does not make the
89.32 financing statement seriously misleading.
89.33 (d) [DEBTOR'S CORRECT NAME.] For purposes of section
89.34 336.9-508(b), the "debtor's correct name" in subsection (c)
89.35 means the correct name of the new debtor.
89.36 Sec. 78. [336.9-507] [EFFECT OF CERTAIN EVENTS ON
90.1 EFFECTIVENESS OF FINANCING STATEMENT.]
90.2 (a) [DISPOSITION.] A filed financing statement remains
90.3 effective with respect to collateral that is sold, exchanged,
90.4 leased, licensed, or otherwise disposed of and in which a
90.5 security interest or agricultural lien continues, even if the
90.6 secured party knows of or consents to the disposition.
90.7 (b) [INFORMATION BECOMING SERIOUSLY MISLEADING.] Except as
90.8 otherwise provided in subsection (c) and section 336.9-508, a
90.9 financing statement is not rendered ineffective if, after the
90.10 financing statement is filed, the information provided in the
90.11 financing statement becomes seriously misleading under section
90.12 336.9-506.
90.13 (c) [CHANGE IN DEBTOR'S NAME.] If a debtor so changes its
90.14 name that a filed financing statement becomes seriously
90.15 misleading under section 336.9-506:
90.16 (1) the financing statement is effective to perfect a
90.17 security interest in collateral acquired by the debtor before,
90.18 or within four months after, the change; and
90.19 (2) the financing statement is not effective to perfect a
90.20 security interest in collateral acquired by the debtor more than
90.21 four months after the change, unless an amendment to the
90.22 financing statement which renders the financing statement not
90.23 seriously misleading is filed within four months after the
90.24 change.
90.25 Sec. 79. [336.9-508] [EFFECTIVENESS OF FINANCING STATEMENT
90.26 IF NEW DEBTOR BECOMES BOUND BY SECURITY AGREEMENT.]
90.27 (a) [FINANCING STATEMENT NAMING ORIGINAL DEBTOR.] Except as
90.28 otherwise provided in this section, a filed financing statement
90.29 naming an original debtor is effective to perfect a security
90.30 interest in collateral in which a new debtor has or acquires
90.31 rights to the extent that the financing statement would have
90.32 been effective had the original debtor acquired rights in the
90.33 collateral.
90.34 (b) [FINANCING STATEMENT BECOMING SERIOUSLY MISLEADING.] If
90.35 the difference between the name of the original debtor and that
90.36 of the new debtor causes a filed financing statement that is
91.1 effective under subsection (a) to be seriously misleading under
91.2 section 336.9-506:
91.3 (1) the financing statement is effective to perfect a
91.4 security interest in collateral acquired by the new debtor
91.5 before, and within four months after, the new debtor becomes
91.6 bound under section 336.9-203(d); and
91.7 (2) the financing statement is not effective to perfect a
91.8 security interest in collateral acquired by the new debtor more
91.9 than four months after the new debtor becomes bound under
91.10 section 336.9-203(d) unless an initial financing statement
91.11 providing the name of the new debtor is filed before the
91.12 expiration of that time.
91.13 (c) [WHEN SECTION NOT APPLICABLE.] This section does not
91.14 apply to collateral as to which a filed financing statement
91.15 remains effective against the new debtor under section
91.16 336.9-507(a).
91.17 Sec. 80. [336.9-509] [PERSONS ENTITLED TO FILE A RECORD.]
91.18 (a) [PERSON ENTITLED TO FILE RECORD.] A person may file an
91.19 initial financing statement, amendment that adds collateral
91.20 covered by a financing statement, or amendment that adds a
91.21 debtor to a financing statement only if:
91.22 (1) the debtor authorizes the filing in an authenticated
91.23 record or pursuant to subsection (b) or (c); or
91.24 (2) the person holds an agricultural lien that has become
91.25 effective at the time of filing and the financing statement
91.26 covers only collateral in which the person holds an agricultural
91.27 lien.
91.28 (b) [SECURITY AGREEMENT AS AUTHORIZATION.] By
91.29 authenticating or becoming bound as debtor by a security
91.30 agreement, a debtor or new debtor authorizes the filing of an
91.31 initial financing statement, and an amendment, covering:
91.32 (1) the collateral described in the security agreement; and
91.33 (2) property that becomes collateral under section
91.34 336.9-315(a)(2), whether or not the security agreement expressly
91.35 covers proceeds.
91.36 (c) [PERSON ENTITLED TO FILE CERTAIN AMENDMENTS.] A person
92.1 may file an amendment other than an amendment that adds
92.2 collateral covered by a financing statement or an amendment that
92.3 adds a debtor to a financing statement only if:
92.4 (1) the secured party of record authorizes the filing; or
92.5 (2) the amendment is a termination statement for a
92.6 financing statement as to which the secured party of record has
92.7 failed to file or send a termination statement as required by
92.8 section 336.9-513(a) or (c), the debtor authorizes the filing,
92.9 and the termination statement indicates that the debtor
92.10 authorized it to be filed.
92.11 (d) [MULTIPLE SECURED PARTIES OF RECORD.] If there is more
92.12 than one secured party of record for a financing statement, each
92.13 secured party of record may authorize the filing of an amendment
92.14 under subsection (c).
92.15 Sec. 81. [336.9-510] [EFFECTIVENESS OF FILED RECORD.]
92.16 (a) [FILED RECORD EFFECTIVE IF AUTHORIZED.] A filed record
92.17 is effective only to the extent that it was filed by a person
92.18 that may file it under section 336.9-509.
92.19 (b) [AUTHORIZATION BY ONE SECURED PARTY OF RECORD.] A
92.20 record authorized by one secured party of record does not affect
92.21 the financing statement with respect to another secured party of
92.22 record.
92.23 (c) [CONTINUATION STATEMENT NOT TIMELY FILED.] A
92.24 continuation statement that is not filed within the six-month
92.25 period prescribed by section 336.9-515(d) is ineffective.
92.26 Sec. 82. [336.9-511] [SECURED PARTY OF RECORD.]
92.27 (a) [SECURED PARTY OF RECORD.] A secured party of record
92.28 with respect to a financing statement is a person whose name is
92.29 provided as the name of the secured party or a representative of
92.30 the secured party in an initial financing statement that has
92.31 been filed. If an initial financing statement is filed under
92.32 section 336.9-514(a), the assignee named in the initial
92.33 financing statement is the secured party of record with respect
92.34 to the financing statement.
92.35 (b) [AMENDMENT NAMING SECURED PARTY OF RECORD.] If an
92.36 amendment of a financing statement which provides the name of a
93.1 person as a secured party or a representative of a secured party
93.2 is filed, the person named in the amendment is a secured party
93.3 of record. If an amendment is filed under section 336.9-514(b),
93.4 the assignee named in the amendment is a secured party of record.
93.5 (c) [AMENDMENT DELETING SECURED PARTY OF RECORD.] A person
93.6 remains a secured party of record until the filing of an
93.7 amendment of the financing statement which deletes the person.
93.8 Sec. 83. [336.9-512] [AMENDMENT OF FINANCING STATEMENT.]
93.9 (a) [AMENDMENT OF INFORMATION IN FINANCING
93.10 STATEMENT.] Subject to section 336.9-509, a person may add or
93.11 delete collateral covered by, continue or terminate the
93.12 effectiveness of, or, subject to subsection (e), otherwise amend
93.13 the information provided in, a financing statement by filing an
93.14 amendment that:
93.15 (1) identifies, by its file number, the initial financing
93.16 statement to which the amendment relates; and
93.17 (2) if the amendment relates to an initial financing
93.18 statement filed or recorded in a filing office described in
93.19 section 336.9-501(a)(1), provides the information specified in
93.20 section 336.9-502(b).
93.21 (b) [PERIOD OF EFFECTIVENESS NOT AFFECTED.] Except as
93.22 otherwise provided in section 336.9-515, the filing of an
93.23 amendment does not extend the period of effectiveness of the
93.24 financing statement.
93.25 (c) [EFFECTIVENESS OF AMENDMENT ADDING COLLATERAL.] A
93.26 financing statement that is amended by an amendment that adds
93.27 collateral is effective as to the added collateral only from the
93.28 date of the filing of the amendment.
93.29 (d) [EFFECTIVENESS OF AMENDMENT ADDING DEBTOR.] A financing
93.30 statement that is amended by an amendment that adds a debtor is
93.31 effective as to the added debtor only from the date of the
93.32 filing of the amendment.
93.33 (e) [CERTAIN AMENDMENTS INEFFECTIVE.] An amendment is
93.34 ineffective to the extent it:
93.35 (1) purports to delete all debtors and fails to provide the
93.36 name of a debtor to be covered by the financing statement; or
94.1 (2) purports to delete all secured parties of record and
94.2 fails to provide the name of a new secured party of record.
94.3 Sec. 84. [336.9-513] [TERMINATION STATEMENT.]
94.4 (a) [CONSUMER GOODS.] A secured party shall cause the
94.5 secured party of record for a financing statement to file a
94.6 termination statement for the financing statement if the
94.7 financing statement covers consumer goods and:
94.8 (1) there is no obligation secured by the collateral
94.9 covered by the financing statement and no commitment to make an
94.10 advance, incur an obligation, or otherwise give value; or
94.11 (2) the debtor did not authorize the filing of the initial
94.12 financing statement.
94.13 (b) [TIME FOR COMPLIANCE WITH SUBSECTION (A).] To comply
94.14 with subsection (a), a secured party shall cause the secured
94.15 party of record to file the termination statement:
94.16 (1) within one month after there is no obligation secured
94.17 by the collateral covered by the financing statement and no
94.18 commitment to make an advance, incur an obligation, or otherwise
94.19 give value; or
94.20 (2) if earlier, within 20 days after the secured party
94.21 receives an authenticated demand from a debtor.
94.22 (c) [OTHER COLLATERAL.] In cases not governed by subsection
94.23 (a), within 20 days after a secured party receives an
94.24 authenticated demand from a debtor, the secured party shall
94.25 cause the secured party of record for a financing statement to
94.26 send to the debtor a termination statement for the financing
94.27 statement or file the termination statement in the filing office
94.28 if:
94.29 (1) except in the case of a financing statement covering
94.30 accounts or chattel paper that has been sold or goods that are
94.31 the subject of a consignment, there is no obligation secured by
94.32 the collateral covered by the financing statement and no
94.33 commitment to make an advance, incur an obligation, or otherwise
94.34 give value;
94.35 (2) the financing statement covers accounts or chattel
94.36 paper that has been sold but as to which the account debtor or
95.1 other person obligated has discharged its obligation;
95.2 (3) the financing statement covers goods that were the
95.3 subject of a consignment to the debtor but are not in the
95.4 debtor's possession; or
95.5 (4) the debtor did not authorize the filing of the initial
95.6 financing statement.
95.7 (d) [EFFECT OF FILING TERMINATION STATEMENT.] Except as
95.8 otherwise provided in section 336.9-510, upon the filing of a
95.9 termination statement with the filing office, the financing
95.10 statement to which the termination statement relates ceases to
95.11 be effective. Except as otherwise provided in section
95.12 336.9-510, for purposes of sections 336.9-519(g), 336.9-522(a),
95.13 and 336.9-523(c), the filing with the filing office of a
95.14 termination statement relating to a filing statement that
95.15 indicates that the debtor is a transmitting utility also causes
95.16 the effectiveness of the financing statement to lapse.
95.17 Sec. 85. [336.9-514] [ASSIGNMENT OF POWERS OF SECURED
95.18 PARTY OF RECORD.]
95.19 (a) [ASSIGNMENT REFLECTED ON INITIAL FINANCING
95.20 STATEMENT.] Except as otherwise provided in subsection (c), an
95.21 initial financing statement may reflect an assignment of all of
95.22 the secured party's power to authorize an amendment to the
95.23 financing statement by providing the name and mailing address of
95.24 the assignee as the name and address of the secured party.
95.25 (b) [ASSIGNMENT OF FILED FINANCING STATEMENT.] Except as
95.26 otherwise provided in subsection (c), a secured party of record
95.27 may assign of record all or part of its power to authorize an
95.28 amendment to a financing statement by filing in the filing
95.29 office an amendment of the financing statement which:
95.30 (1) identifies, by its file number, the initial financing
95.31 statement to which it relates;
95.32 (2) provides the name of the assignor; and
95.33 (3) provides the name and mailing address of the assignee.
95.34 (c) [ASSIGNMENT OF RECORD OF MORTGAGE.] An assignment of
95.35 record of a security interest in a fixture covered by a record
95.36 of a mortgage which is effective as a financing statement filed
96.1 as a fixture filing under section 336.9-502(c) may be made only
96.2 by an assignment of record of the mortgage in the manner
96.3 provided by law of this state other than the Uniform Commercial
96.4 Code.
96.5 Sec. 86. [336.9-515] [DURATION AND EFFECTIVENESS OF
96.6 FINANCING STATEMENT; EFFECT OF LAPSED FINANCING STATEMENT.]
96.7 (a) [FIVE-YEAR EFFECTIVENESS.] Except as otherwise provided
96.8 in subsections (b), (e), (f), and (g), a filed financing
96.9 statement is effective for a period of five years after the date
96.10 of filing.
96.11 (b) [PUBLIC FINANCE OR MANUFACTURED HOME
96.12 TRANSACTION.] Except as otherwise provided in subsections (e),
96.13 (f), and (g), an initial financing statement filed in connection
96.14 with a public finance transaction or manufactured home
96.15 transaction is effective for a period of 30 years after the date
96.16 of filing if it indicates that it is filed in connection with a
96.17 public finance transaction or manufactured home transaction.
96.18 (c) [LAPSE AND CONTINUATION OF FINANCING STATEMENT.] The
96.19 effectiveness of a filed financing statement lapses on the
96.20 expiration of the period of its effectiveness unless before the
96.21 lapse a continuation statement is filed pursuant to subsection
96.22 (d). Upon lapse, a financing statement ceases to be effective
96.23 and any security interest or agricultural lien that was
96.24 perfected by the financing statement becomes unperfected, unless
96.25 the security interest is perfected otherwise. If the security
96.26 interest or agricultural lien becomes unperfected upon lapse, it
96.27 is deemed never to have been perfected as against a purchaser of
96.28 the collateral for value.
96.29 (d) [WHEN CONTINUATION STATEMENT MAY BE FILED.] A
96.30 continuation statement may be filed only within six months
96.31 before the expiration of the five-year period specified in
96.32 subsection (a) or the 30-year period specified in subsection
96.33 (b), whichever is applicable.
96.34 (e) [EFFECT OF FILING CONTINUATION STATEMENT.] Except as
96.35 otherwise provided in section 336.9-510, upon timely filing of a
96.36 continuation statement, the effectiveness of the initial
97.1 financing statement continues for a period of five years
97.2 commencing on the day on which the financing statement would
97.3 have become ineffective in the absence of the filing. Upon the
97.4 expiration of the five-year period, the financing statement
97.5 lapses in the same manner as provided in subsection (c), unless,
97.6 before the lapse, another continuation statement is filed
97.7 pursuant to subsection (d). Succeeding continuation statements
97.8 may be filed in the same manner to continue the effectiveness of
97.9 the initial financing statement.
97.10 (f) [TRANSMITTING UTILITY FINANCING STATEMENT.] If a debtor
97.11 is a transmitting utility and a filed financing statement so
97.12 indicates, the financing statement is effective until a
97.13 termination statement is filed.
97.14 (g) [RECORD OF MORTGAGE AS FINANCING STATEMENT.] A record
97.15 of a mortgage that is effective as a financing statement filed
97.16 as a fixture filing under section 336.9-502(c) remains effective
97.17 as a financing statement filed as a fixture filing until the
97.18 mortgage is released or satisfied of record or its effectiveness
97.19 otherwise terminates as to the real property.
97.20 Sec. 87. [336.9-516] [WHAT CONSTITUTES FILING;
97.21 EFFECTIVENESS OF FILING.]
97.22 (a) [WHAT CONSTITUTES FILING.] Except as otherwise provided
97.23 in subsection (b), communication of a record to a filing office
97.24 and tender of the filing fee or acceptance of the record by the
97.25 filing office constitutes filing.
97.26 (b) [REFUSAL TO ACCEPT RECORD; FILING DOES NOT
97.27 OCCUR.] Filing does not occur with respect to a record that a
97.28 filing office refuses to accept because:
97.29 (1) the record is not communicated by a method or medium of
97.30 communication authorized by the filing office;
97.31 (2) an amount equal to or greater than the applicable
97.32 filing fee is not tendered;
97.33 (3) the filing office is unable to index the record because:
97.34 (A) in the case of an initial financing statement, the
97.35 record does not provide a name for the debtor;
97.36 (B) in the case of an amendment or correction statement,
98.1 the record:
98.2 (i) does not identify the initial financing statement as
98.3 required by section 336.9-512 or 336.9-518, as applicable; or
98.4 (ii) identifies an initial financing statement whose
98.5 effectiveness has lapsed under section 336.9-515;
98.6 (C) in the case of an initial financing statement that
98.7 provides the name of a debtor identified as an individual or an
98.8 amendment that provides a name of a debtor identified as an
98.9 individual which was not previously provided in the financing
98.10 statement to which the record relates, the record does not
98.11 identify the debtor's last name; or
98.12 (D) in the case of a record filed or recorded in the filing
98.13 office described in section 336.9-501(a)(1), the record does not
98.14 provide a sufficient description of the real property to which
98.15 it relates;
98.16 (4) in the case of an initial financing statement or an
98.17 amendment that adds a secured party of record, the record does
98.18 not provide a name and mailing address for the secured party of
98.19 record;
98.20 (5) in the case of an initial financing statement or an
98.21 amendment that provides a name of a debtor which was not
98.22 previously provided in the financing statement to which the
98.23 amendment relates, the record does not:
98.24 (A) provide a mailing address for the debtor;
98.25 (B) indicate whether the debtor is an individual or an
98.26 organization; or
98.27 (C) if the financing statement indicates that the debtor is
98.28 an organization, provide:
98.29 (i) a type of organization for the debtor;
98.30 (ii) a jurisdiction of organization for the debtor; or
98.31 (iii) an organizational identification number for the
98.32 debtor or indicate that the debtor has none;
98.33 (6) in the case of an assignment reflected in an initial
98.34 financing statement under section 336.9-514(a) or an amendment
98.35 filed under section 336.9-514(b), the record does not provide a
98.36 name and mailing address for the assignee; or
99.1 (7) in the case of a continuation statement, the record is
99.2 not filed within the six-month period prescribed by section
99.3 336.9-515(d).
99.4 (c) [RULES APPLICABLE TO SUBSECTION (B).] For purposes of
99.5 subsection (b):
99.6 (1) a record does not provide information if the filing
99.7 office is unable to read or decipher the information; and
99.8 (2) a record that does not indicate that it is an amendment
99.9 or identify an initial financing statement to which it relates,
99.10 as required by section 336.9-512, 336.9-514, or 336.9-518, is an
99.11 initial financing statement.
99.12 (d) [REFUSAL TO ACCEPT RECORD; RECORD EFFECTIVE AS FILED
99.13 RECORD.] A record that is communicated to the filing office with
99.14 tender of the filing fee, but which the filing office refuses to
99.15 accept for a reason other than one set forth in subsection (b),
99.16 is effective as a filed record except as against a purchaser of
99.17 the collateral which gives value in reasonable reliance upon the
99.18 absence of the record from the files.
99.19 Sec. 88. [336.9-517] [EFFECT OF INDEXING ERRORS.]
99.20 The failure of the filing office to index a record
99.21 correctly does not affect the effectiveness of the filed record.
99.22 Sec. 89. [336.9-518] [CLAIM CONCERNING INACCURATE OR
99.23 WRONGFULLY FILED RECORD.]
99.24 (a) [CORRECTION STATEMENT.] A person may file in the filing
99.25 office a correction statement with respect to a record indexed
99.26 there under the person's name if the person believes that the
99.27 record is inaccurate or was wrongfully filed.
99.28 (b) [SUFFICIENCY OF CORRECTION STATEMENT.] A correction
99.29 statement must:
99.30 (1) identify the record to which it relates by the file
99.31 number assigned to the initial financing statement to which the
99.32 record relates;
99.33 (2) indicate that it is a correction statement; and
99.34 (3) provide the basis for the person's belief that the
99.35 record is inaccurate and indicate the manner in which the person
99.36 believes the record should be amended to cure any inaccuracy or
100.1 provide the basis for the person's belief that the record was
100.2 wrongfully filed.
100.3 (c) [RECORD NOT AFFECTED BY CORRECTION STATEMENT.] The
100.4 filing of a correction statement does not affect the
100.5 effectiveness of an initial financing statement or other filed
100.6 record.
100.7 SUBPART 2. DUTIES AND OPERATION OF FILING OFFICE
100.8 Sec. 90. [336.9-519] [NUMBERING, MAINTAINING, AND INDEXING
100.9 RECORDS; COMMUNICATING INFORMATION PROVIDED IN RECORDS.]
100.10 (a) [FILING OFFICE DUTIES.] For each record filed in a
100.11 filing office, the filing office shall:
100.12 (1) assign a unique number to the filed record;
100.13 (2) create a record that bears the number assigned to the
100.14 filed record and the date and time of filing;
100.15 (3) maintain the filed record for public inspection; and
100.16 (4) index the filed record in accordance with subsections
100.17 (c), (d), and (e).
100.18 (b) [FILE NUMBER.] A file number assigned after July 1,
100.19 2001, must include a digit that:
100.20 (1) is mathematically derived from or related to the other
100.21 digits of the file number; and
100.22 (2) enables the filing office to detect whether a number
100.23 communicated as the file number includes a single-digit or
100.24 transpositional error.
100.25 (c) [INDEXING: GENERAL.] Except as otherwise provided in
100.26 subsections (d) and (e), the filing office shall:
100.27 (1) index an initial financing statement according to the
100.28 name of the debtor and index all filed records relating to the
100.29 initial financing statement in a manner that associates with one
100.30 another an initial financing statement and all filed records
100.31 relating to the initial financing statement; and
100.32 (2) index a record that provides a name of a debtor which
100.33 was not previously provided in the financing statement to which
100.34 the record relates also according to the name that was not
100.35 previously provided.
100.36 (d) [INDEXING: REAL PROPERTY-RELATED FINANCING STATEMENT.]
101.1 If a financing statement is filed as a fixture filing or covers
101.2 as-extracted collateral or timber to be cut, it must be filed
101.3 for record and the filing office shall index it:
101.4 (1) under the names of the debtor and of each owner of
101.5 record shown on the financing statement as if they were the
101.6 mortgagors under a mortgage of the real property described; and
101.7 (2) to the extent that the law of this state provides for
101.8 indexing of records of mortgages under the name of the
101.9 mortgagee, under the name of the secured party as if the secured
101.10 party were the mortgagee thereunder, or, if indexing is by
101.11 description, as if the financing statement were a record of a
101.12 mortgage of the real property described.
101.13 (e) [INDEXING: REAL PROPERTY-RELATED ASSIGNMENT.] If a
101.14 financing statement is filed as a fixture filing or covers
101.15 as-extracted collateral or timber to be cut, the filing office
101.16 shall index an assignment filed under section 336.9-514(a) or an
101.17 amendment filed under section 336.9-514(b):
101.18 (1) under the name of the assignor as grantor; and
101.19 (2) to the extent that the law of this state provides for
101.20 indexing a record of the assignment of a mortgage under the name
101.21 of the assignee, under the name of the assignee.
101.22 (f) [RETRIEVAL AND ASSOCIATION CAPABILITY.] The filing
101.23 office shall maintain a capability:
101.24 (1) to retrieve a record by the name of the debtor and by
101.25 the file number assigned to the initial financing statement to
101.26 which the record relates; and
101.27 (2) to associate and retrieve with one another an initial
101.28 financing statement and each filed record relating to the
101.29 initial financing statement.
101.30 (g) [REMOVAL OF DEBTOR'S NAME.] The filing office may not
101.31 remove a debtor's name from the index until one year after the
101.32 effectiveness of a financing statement naming the debtor lapses
101.33 under section 336.9-515 with respect to all secured parties of
101.34 record.
101.35 (h) [TIMELINESS OF FILING OFFICE PERFORMANCE.] The filing
101.36 office shall perform the acts required by subsections (a)
102.1 through (e) at the time and in the manner prescribed by filing
102.2 office rule, but not later than two business days after the
102.3 filing office receives the record in question.
102.4 (i) [INAPPLICABILITY TO REAL PROPERTY-RELATED FILING
102.5 OFFICE.] Subsections (b) and (h) do not apply to a filing office
102.6 described in section 336.9-501(a)(1).
102.7 Sec. 91. [336.9-520] [ACCEPTANCE AND REFUSAL TO ACCEPT
102.8 RECORD.]
102.9 (a) [MANDATORY REFUSAL TO ACCEPT RECORD.] A filing office
102.10 shall refuse to accept a record for filing for a reason set
102.11 forth in section 336.9-516(b) and may refuse to accept a record
102.12 for filing only for a reason set forth in section 336.9-516(b).
102.13 (b) [COMMUNICATION CONCERNING REFUSAL.] If a filing office
102.14 refuses to accept a record for filing, it shall communicate to
102.15 the person that presented the record the fact of and reason for
102.16 the refusal and the date and time the record would have been
102.17 filed had the filing office accepted it. The communication must
102.18 be made at the time and in the manner prescribed by filing
102.19 office rule, but in no event more than two business days after
102.20 the filing office receives the record.
102.21 (c) [WHEN FILED FINANCING STATEMENT EFFECTIVE.] A filed
102.22 financing statement satisfying section 336.9-502(a) and (b) is
102.23 effective, even if the filing office is required to refuse to
102.24 accept it for filing under subsection (a). However, section
102.25 336.9-338 applies to a filed financing statement providing
102.26 information described in section 336.9-516(b)(5) which is
102.27 incorrect at the time the financing statement is filed.
102.28 (d) [SEPARATE APPLICATION TO MULTIPLE DEBTORS.] If a record
102.29 communicated to a filing office provides information that
102.30 relates to more than one debtor, this part applies as to each
102.31 debtor separately.
102.32 Sec. 92. [336.9-521] [UNIFORM FORM OF WRITTEN FINANCING
102.33 STATEMENT AND AMENDMENT.]
102.34 (a) [INITIAL FINANCING STATEMENT FORM.] A filing office
102.35 that accepts written records may not refuse to accept a written
102.36 initial financing statement in the form and format adopted by
103.1 the National Conference of Commissioners on Uniform State Laws,
103.2 except for a reason set forth in section 336.9-516(b).
103.3 (b) [AMENDMENT FORM.] A filing office that accepts written
103.4 records may not refuse to accept a written record in the form
103.5 and format adopted by the National Conference of Commissioners
103.6 on Uniform State Laws, except for a reason set forth in section
103.7 336.9-516(b).
103.8 Sec. 93. [336.9-522] [MAINTENANCE AND DESTRUCTION OF
103.9 RECORDS.]
103.10 (a) [POST-LAPSE MAINTENANCE AND RETRIEVAL OF
103.11 INFORMATION.] The filing office shall maintain a record of the
103.12 information provided in a filed financing statement for at least
103.13 one year after the effectiveness of the financing statement has
103.14 lapsed under section 336.9-515 with respect to all secured
103.15 parties of record. The record must be retrievable by using the
103.16 name of the debtor and by using the file number assigned to the
103.17 initial financing statement to which the record relates.
103.18 (b) [DESTRUCTION OF WRITTEN RECORDS.] Except to the extent
103.19 that a statute governing disposition of public records provides
103.20 otherwise, the filing office immediately may destroy any written
103.21 record evidencing a financing statement. However, if the filing
103.22 office destroys a written record, it shall maintain another
103.23 record of the financing statement which complies with subsection
103.24 (a).
103.25 Sec. 94. [336.9-523] [INFORMATION FROM FILING OFFICE; SALE
103.26 OR LICENSE OF RECORDS.]
103.27 (a) [ACKNOWLEDGMENT OF FILING WRITTEN RECORD.] If a person
103.28 that files a written record requests an acknowledgment of the
103.29 filing, the filing office shall send to the person an image of
103.30 the record showing the number assigned to the record pursuant to
103.31 section 336.9-519(a)(1) and the date and time of the filing of
103.32 the record. However, if the person furnishes a copy of the
103.33 record to the filing office, the filing office may instead:
103.34 (1) note upon the copy the number assigned to the record
103.35 pursuant to section 336.9-519(a)(1) and the date and time of the
103.36 filing of the record; and
104.1 (2) send the copy to the person.
104.2 (b) [ACKNOWLEDGMENT OF FILING OTHER RECORD.] If a person
104.3 files a record other than a written record, the filing office
104.4 shall communicate to the person an acknowledgment that provides:
104.5 (1) the information in the record;
104.6 (2) the number assigned to the record pursuant to section
104.7 336.9-519(a)(1); and
104.8 (3) the date and time of the filing of the record.
104.9 (c) [COMMUNICATION OF REQUESTED INFORMATION.] The filing
104.10 office shall communicate or otherwise make available in a record
104.11 the following information to any person that requests it:
104.12 (1) whether there is on file on a date and time specified
104.13 by the filing office, but not a date earlier than three business
104.14 days before the filing office receives the request, any
104.15 financing statement that:
104.16 (A) designates a particular debtor (or, if the request so
104.17 states, designates a particular debtor at the address specified
104.18 in the request);
104.19 (B) has not lapsed under section 336.9-515 with respect to
104.20 all secured parties of record; and
104.21 (C) if the request so states, has lapsed under section
104.22 336.9-515 and a record of which is maintained by the filing
104.23 office under section 336.9-522(a);
104.24 (2) the date and time of filing of each financing
104.25 statement; and
104.26 (3) the information provided in each financing statement.
104.27 (d) [MEDIUM FOR COMMUNICATING INFORMATION.] In complying
104.28 with its duty under subsection (c), the filing office may
104.29 communicate information in any medium. However, if requested,
104.30 the filing office shall communicate information by issuing its
104.31 written certificate.
104.32 (e) [TIMELINESS OF FILING OFFICE PERFORMANCE.] The filing
104.33 office shall perform the acts required by subsections (a)
104.34 through (d) at the time and in the manner prescribed by filing
104.35 office rule, but not later than two business days after the
104.36 filing office receives the request.
105.1 (f) [PUBLIC AVAILABILITY OF RECORDS.] At least weekly, the
105.2 secretary of state shall offer to sell or license to the public
105.3 on a nonexclusive basis, in bulk, copies of all records filed in
105.4 it under this part, in every medium from time to time available
105.5 to the filing office.
105.6 Sec. 95. [336.9-524] [DELAY BY FILING OFFICE.]
105.7 Delay by the filing office beyond a time limit prescribed
105.8 by this part is excused if:
105.9 (1) the delay is caused by interruption of communication or
105.10 computer facilities, war, emergency conditions, failure of
105.11 equipment, or other circumstances beyond control of the filing
105.12 office; and
105.13 (2) the filing office exercises reasonable diligence under
105.14 the circumstances.
105.15 Sec. 96. [336.9-525] [FEES.]
105.16 (a) [INITIAL FINANCING STATEMENT OR OTHER RECORD: GENERAL
105.17 RULE.] Except as otherwise provided in subsection (d), the fee
105.18 for filing and indexing a record under this part is $20.
105.19 (b) [NUMBER OF NAMES.] The number of names required to be
105.20 indexed does not affect the amount of the fee in subsection (a).
105.21 (c) [RESPONSE TO INFORMATION REQUEST.] The fee for
105.22 responding to a request for information from the filing office,
105.23 including for issuing a certificate showing whether there is on
105.24 file any financing statement naming a particular debtor, is $20.
105.25 (d) [RECORD OF MORTGAGE.] This section does not require a
105.26 fee with respect to a record of a mortgage which is effective as
105.27 a financing statement filed as a fixture filing or as a
105.28 financing statement covering as-extracted collateral or timber
105.29 to be cut under section 336.9-502(c). However, the recording
105.30 and satisfaction fees that otherwise would be applicable to the
105.31 record of the mortgage apply.
105.32 Sec. 97. [336.9-526] [DUTY TO REPORT.]
105.33 The secretary of state shall report annually on or before
105.34 January 1 to the legislature on the operation of the filing
105.35 office.
105.36 Sec. 98. [336.9-527] [SATELLITE OFFICES AUTHORIZED.]
106.1 The secretary of state may establish satellite offices by
106.2 written agreements with public officials within the state for
106.3 the purpose of meeting the filing officer responsibilities
106.4 described in sections 336.9-528 to 336.9-530. The term of the
106.5 agreement must be set by, and may be renewed by, mutual
106.6 agreement. The agreement may be terminated upon 60 days'
106.7 notice. The secretary must maintain a list of those public
106.8 officials authorized to act as satellite offices. The secretary
106.9 of state must make this list available in an electronic format
106.10 and the list must be updated at least monthly.
106.11 Sec. 99. [336.9-528] [FILING; ASSIGNMENT OF FILING
106.12 INFORMATION AT SATELLITE OFFICES.]
106.13 Satellite offices shall accept Uniform Commercial Code
106.14 documents and respond to requests for information pursuant to
106.15 the provisions of sections 336.9-101 to 336.9-708. A filing
106.16 made at a satellite office is filed and effective at the same
106.17 time and under the same rules provided for filing in any other
106.18 manner in the Uniform Commercial Code information system. The
106.19 filing date, time, and file number for any Uniform Commercial
106.20 Code document accepted at a satellite office must be
106.21 automatically assigned by the Uniform Commercial Code
106.22 information management system operated by the secretary of
106.23 state, and the file number must be the next available file
106.24 number in the Uniform Commercial Code information management
106.25 system.
106.26 Sec. 100. [336.9-529] [MAINTENANCE AND RETRIEVAL OF
106.27 DOCUMENTS AND DATA.]
106.28 The secretary of state shall maintain all Uniform
106.29 Commercial Code documents and the database used to index them
106.30 regardless of where or how the Uniform Commercial Code document
106.31 was filed. The Uniform Commercial Code documents and database
106.32 must be housed in the Uniform Commercial Code information
106.33 management system. Uniform Commercial Code documents and data
106.34 shall be available from the secretary of state or any satellite
106.35 office. The secretary of state shall arrange by mutual
106.36 agreement with county recorders for the storage and retrieval of
107.1 existing Uniform Commercial Code documents.
107.2 Any filing office within the Uniform Commercial Code
107.3 information management system may respond to requests for
107.4 information, and the secretary of state shall establish and
107.5 administer a system to facilitate those responses.
107.6 Sec. 101. [336.9-530] [SATELLITE OFFICES; UNIFORMITY OF
107.7 SERVICES ASSURED.]
107.8 Subdivision 1. [PERFORMANCE STANDARDS.] All filing
107.9 officers must perform the responsibilities in sections 336.9-501
107.10 to 336.9-530 and rules adopted under section 139 in a uniform
107.11 manner, whether services are provided by the secretary of state
107.12 or at a satellite office location. Reports by citizens
107.13 describing concerns with performance of filing officer
107.14 responsibilities must be made to the secretary of state. The
107.15 secretary of state is responsible for responding to reports
107.16 about performance in a manner the secretary of state determines
107.17 is appropriate.
107.18 Subd. 2. [FAILURE TO MEET PERFORMANCE STANDARDS.] If, upon
107.19 investigation of citizen reports described in subdivision 1, the
107.20 secretary of state determines that performance by a satellite
107.21 office of the filing officer responsibilities has been so
107.22 unsatisfactory that customer service has been severely impaired,
107.23 the secretary of state must terminate the satellite office's
107.24 status and ability to perform filing office responsibilities.
107.25 If a satellite office's ability to perform filing office
107.26 responsibilities is terminated by the secretary of state, the
107.27 change in status must be posted in the former satellite office
107.28 and must also be publicly posted in the county courthouse in the
107.29 county in which the former satellite office is located and must
107.30 be made available in an electronic format.
107.31 Part 6
107.32 DEFAULT
107.33 SUBPART 1. DEFAULT AND ENFORCEMENT OF
107.34 SECURITY INTEREST
107.35 Sec. 102. [336.9-601] [RIGHTS AFTER DEFAULT; JUDICIAL
107.36 ENFORCEMENT; CONSIGNOR OR BUYER OF ACCOUNTS, CHATTEL PAPER,
108.1 PAYMENT INTANGIBLES, OR PROMISSORY NOTES.]
108.2 (a) [RIGHTS OF SECURED PARTY AFTER DEFAULT.] After default,
108.3 a secured party has the rights provided in this part and, except
108.4 as otherwise provided in section 336.9-602, those provided by
108.5 agreement of the parties. A secured party:
108.6 (1) may reduce a claim to judgment, foreclose, or otherwise
108.7 enforce the claim, security interest, or agricultural lien by
108.8 any available judicial procedure; and
108.9 (2) if the collateral is documents, may proceed either as
108.10 to the documents or as to the goods they cover.
108.11 (b) [RIGHTS AND DUTIES OF SECURED PARTY IN POSSESSION OR
108.12 CONTROL.] A secured party in possession of collateral or control
108.13 of collateral under section 336.9-104, 336.9-105, 336.9-106, or
108.14 336.9-107 has the rights and duties provided in section
108.15 336.9-207.
108.16 (c) [RIGHTS CUMULATIVE; SIMULTANEOUS EXERCISE.] The rights
108.17 under subsections (a) and (b) are cumulative and may be
108.18 exercised simultaneously.
108.19 (d) [RIGHTS OF DEBTOR AND OBLIGOR.] Except as otherwise
108.20 provided in subsection (g) and section 336.9-605, after default,
108.21 a debtor and an obligor have the rights provided in this part
108.22 and by agreement of the parties.
108.23 (e) [LIEN OF LEVY AFTER JUDGMENT.] If a secured party has
108.24 reduced its claim to judgment, the lien of any levy that may be
108.25 made upon the collateral by virtue of an execution based upon
108.26 the judgment relates back to the earliest of:
108.27 (1) the date of perfection of the security interest or
108.28 agricultural lien in the collateral;
108.29 (2) the date of filing a financing statement covering the
108.30 collateral; or
108.31 (3) any date specified in a statute under which the
108.32 agricultural lien was created.
108.33 (f) [EXECUTION SALE.] A sale pursuant to an execution is a
108.34 foreclosure of the security interest or agricultural lien by
108.35 judicial procedure within the meaning of this section. A
108.36 secured party may purchase at the sale and thereafter hold the
109.1 collateral free of any other requirements of this article.
109.2 (g) [CONSIGNOR OR BUYER OF CERTAIN RIGHTS TO
109.3 PAYMENT.] Except as otherwise provided in section 336.9-607(c),
109.4 this part imposes no duties upon a secured party that is a
109.5 consignor or is a buyer of accounts, chattel paper, payment
109.6 intangibles, or promissory notes.
109.7 Sec. 103. [336.9-602] [WAIVER AND VARIANCE OF RIGHTS AND
109.8 DUTIES.]
109.9 Except as otherwise provided in section 336.9-624, to the
109.10 extent that they give rights to a debtor or obligor and impose
109.11 duties on a secured party, the debtor or obligor may not waive
109.12 or vary the rules stated in the following listed sections:
109.13 (1) section 336.9-207(b)(4)(C), which deals with use and
109.14 operation of the collateral by the secured party;
109.15 (2) section 336.9-210, which deals with requests for an
109.16 accounting and requests concerning a list of collateral and
109.17 statement of account;
109.18 (3) section 336.9-607(c), which deals with collection and
109.19 enforcement of collateral;
109.20 (4) sections 336.9-608(a) and 336.9-615(c) to the extent
109.21 that they deal with application or payment of noncash proceeds
109.22 of collection, enforcement, or disposition;
109.23 (5) sections 336.9-608(a) and 336.9-615(d) to the extent
109.24 that they require accounting for or payment of surplus proceeds
109.25 of collateral;
109.26 (6) section 336.9-609 to the extent that it imposes upon a
109.27 secured party that takes possession of collateral without
109.28 judicial process the duty to do so without breach of the peace;
109.29 (7) sections 336.9-610(b), 336.9-611, 336.9-613, and
109.30 336.9-614, which deal with disposition of collateral;
109.31 (8) section 336.9-615(f), which deals with calculation of a
109.32 deficiency or surplus when a disposition is made to the secured
109.33 party, a person related to the secured party, or a secondary
109.34 obligor;
109.35 (9) section 336.9-616, which deals with explanation of the
109.36 calculation of a surplus or deficiency;
110.1 (10) sections 336.9-620, 336.9-621, and 336.9-622, which
110.2 deal with acceptance of collateral in satisfaction of
110.3 obligation;
110.4 (11) section 336.9-623, which deals with redemption of
110.5 collateral;
110.6 (12) section 336.9-624, which deals with permissible
110.7 waivers; and
110.8 (13) sections 336.9-625 and 336.9-626, which deal with the
110.9 secured party's liability for failure to comply with this
110.10 article.
110.11 Sec. 104. [336.9-603] [AGREEMENT ON STANDARDS CONCERNING
110.12 RIGHTS AND DUTIES.]
110.13 (a) [AGREED STANDARDS.] The parties may determine by
110.14 agreement the standards measuring the fulfillment of the rights
110.15 of a debtor or obligor and the duties of a secured party under a
110.16 rule stated in section 336.9-602 if the standards are not
110.17 manifestly unreasonable.
110.18 (b) [AGREED STANDARDS INAPPLICABLE TO BREACH OF
110.19 PEACE.] Subsection (a) does not apply to the duty under section
110.20 336.9-609 to refrain from breaching the peace.
110.21 Sec. 105. [336.9-604] [PROCEDURE IF SECURITY AGREEMENT
110.22 COVERS REAL PROPERTY OR FIXTURES.]
110.23 (a) [ENFORCEMENT: PERSONAL AND REAL PROPERTY.] If a
110.24 security agreement covers both personal and real property, a
110.25 secured party may proceed:
110.26 (1) under this part as to the personal property without
110.27 prejudicing any rights with respect to the real property; or
110.28 (2) as to both the personal property and the real property
110.29 in accordance with the rights with respect to the real property,
110.30 in which case the other provisions of this part do not apply.
110.31 (b) [ENFORCEMENT: FIXTURES.] Subject to subsection (c), if
110.32 a security agreement covers goods that are or become fixtures, a
110.33 secured party may proceed:
110.34 (1) under this part; or
110.35 (2) in accordance with the rights with respect to real
110.36 property, in which case the other provisions of this part do not
111.1 apply.
111.2 (c) [REMOVAL OF FIXTURES.] Subject to the other provisions
111.3 of this part, if a secured party holding a security interest in
111.4 fixtures has priority over all owners and encumbrancers of the
111.5 real property, the secured party, after default, may remove the
111.6 collateral from the real property.
111.7 (d) [INJURY CAUSED BY REMOVAL.] A secured party that
111.8 removes collateral shall promptly reimburse any encumbrancer or
111.9 owner of the real property, other than the debtor, for the cost
111.10 of repair of any physical injury caused by the removal. The
111.11 secured party need not reimburse the encumbrancer or owner for
111.12 any diminution in value of the real property caused by the
111.13 absence of the goods removed or by any necessity of replacing
111.14 them. A person entitled to reimbursement may refuse permission
111.15 to remove until the secured party gives adequate assurance for
111.16 the performance of the obligation to reimburse.
111.17 Sec. 106. [336.9-605] [UNKNOWN DEBTOR OR SECONDARY
111.18 OBLIGOR.]
111.19 A secured party does not owe a duty based on its status as
111.20 secured party:
111.21 (1) to a person that is a debtor or obligor, unless the
111.22 secured party knows:
111.23 (A) that the person is a debtor or obligor;
111.24 (B) the identity of the person; and
111.25 (C) how to communicate with the person; or
111.26 (2) to a secured party or lienholder that has filed a
111.27 financing statement against a person, unless the secured party
111.28 knows:
111.29 (A) that the person is a debtor; and
111.30 (B) the identity of the person.
111.31 Sec. 107. [336.9-606] [TIME OF DEFAULT FOR AGRICULTURAL
111.32 LIEN.]
111.33 For purposes of this part, a default occurs in connection
111.34 with an agricultural lien at the time the secured party becomes
111.35 entitled to enforce the lien in accordance with the statute
111.36 under which it was created.
112.1 Sec. 108. [336.9-607] [COLLECTION AND ENFORCEMENT BY
112.2 SECURED PARTY.]
112.3 (a) [COLLECTION AND ENFORCEMENT GENERALLY.] If so agreed,
112.4 and in any event after default, a secured party:
112.5 (1) may notify an account debtor or other person obligated
112.6 on collateral to make payment or otherwise render performance to
112.7 or for the benefit of the secured party;
112.8 (2) may take any proceeds to which the secured party is
112.9 entitled under section 336.9-315;
112.10 (3) may enforce the obligations of an account debtor or
112.11 other person obligated on collateral and exercise the rights of
112.12 the debtor with respect to the obligation of the account debtor
112.13 or other person obligated on collateral to make payment or
112.14 otherwise render performance to the debtor, and with respect to
112.15 any property that secures the obligations of the account debtor
112.16 or other person obligated on the collateral;
112.17 (4) if it holds a security interest in a deposit account
112.18 perfected by control under section 336.9-104(a)(1), may apply
112.19 the balance of the deposit account to the obligation secured by
112.20 the deposit account;
112.21 (5) if it holds a security interest in a deposit account
112.22 perfected by control under section 336.9-104(a)(2) or (3), may
112.23 instruct the bank to pay the balance of the deposit account to
112.24 or for the benefit of the secured party; and
112.25 (6) if the obligation of the account debtor or other person
112.26 obligated on collateral is secured by an interest in real
112.27 property and the account debtor or other person obligated on
112.28 collateral satisfies its obligation, must furnish the account
112.29 debtor or the other person obligated on collateral with a
112.30 release or satisfaction of the interest in real property
112.31 sufficient for recording in the real property records applicable
112.32 to that real property.
112.33 (b) [NONJUDICIAL ENFORCEMENT OF MORTGAGE.] (1) To exercise
112.34 under subsection (a)(3) the right of a debtor to enforce a
112.35 mortgage nonjudicially, the secured party must record in the
112.36 office in which a record of the mortgage is recorded:
113.1 (A) an assignment of the mortgage to the secured party; or
113.2 (B) the secured party's sworn affidavit of assignment in
113.3 recordable form stating:
113.4 (i) a default has occurred under a security agreement that
113.5 creates or provides for a security interest in the obligation
113.6 secured by the mortgage;
113.7 (ii) a true and correct copy of the security agreement is
113.8 attached to the affidavit;
113.9 (iii) the secured party is entitled to enforce the mortgage
113.10 nonjudicially;
113.11 (iv) the legal description of the real property encumbered
113.12 by the mortgage;
113.13 (v) the parties to the mortgage, the date of the mortgage,
113.14 the date of recording of the mortgage, the place of recording of
113.15 the mortgage, and the identifying number or other indexing
113.16 information that identifies the mortgage in the office of the
113.17 county recorder or registrar of titles where the mortgage is
113.18 recorded;
113.19 (vi) the secured party has succeeded to the interest of the
113.20 debtor under the mortgage; and
113.21 (vii) the affidavit of assignment shall be an assignment to
113.22 the secured party of the interest of the debtor under the
113.23 mortgage.
113.24 (2) The affidavit of assignment is entitled to be recorded
113.25 with the county recorder or the registrar of titles and upon
113.26 recording, the affidavit of assignment shall be deemed an
113.27 assignment to the secured party of the interest of the debtor
113.28 under the mortgage.
113.29 (c) [COMMERCIALLY REASONABLE COLLECTION AND ENFORCEMENT.] A
113.30 secured party shall proceed in a commercially reasonable manner
113.31 if the secured party:
113.32 (1) undertakes to collect from or enforce an obligation of
113.33 an account debtor or other person obligated on collateral; and
113.34 (2) is entitled to charge back uncollected collateral or
113.35 otherwise to full or limited recourse against the debtor or a
113.36 secondary obligor.
114.1 (d) [EXPENSES OF COLLECTION AND ENFORCEMENT.] A secured
114.2 party may deduct from the collections made pursuant to
114.3 subsection (c) reasonable expenses of collection and
114.4 enforcement, including reasonable attorneys fees and legal
114.5 expenses incurred by the secured party.
114.6 (e) [DUTIES TO SECURED PARTY NOT AFFECTED.] This section
114.7 does not determine whether an account debtor, bank, or other
114.8 person obligated on collateral owes a duty to a secured party.
114.9 (f) [SECURED PARTY TO OBTAIN ASSIGNMENT OF DEBTOR'S
114.10 INTEREST UNDER THE MORTGAGE.] If the obligation of an account
114.11 debtor or other person obligated on collateral is secured by an
114.12 interest in real property, the secured party promptly after
114.13 commencing exercise of any of its rights under this section
114.14 shall:
114.15 (1) file an assignment of the mortgage to the secured
114.16 party;
114.17 (2) proceed under section 336.9-619 and record a transfer
114.18 statement in the office of the county recorder or registrar of
114.19 titles where the mortgage is recorded; or
114.20 (3) file an affidavit of assignment as provided under
114.21 subsection (b).
114.22 Sec. 109. [336.9-608] [APPLICATION OF PROCEEDS OF
114.23 COLLECTION OR ENFORCEMENT; LIABILITY FOR DEFICIENCY AND RIGHT TO
114.24 SURPLUS.]
114.25 (a) [APPLICATION OF PROCEEDS, SURPLUS, AND DEFICIENCY IF
114.26 OBLIGATION SECURED.] If a security interest or agricultural lien
114.27 secures payment or performance of an obligation, the following
114.28 rules apply:
114.29 (1) A secured party shall apply or pay over for application
114.30 the cash proceeds of collection or enforcement under section
114.31 336.9-607 in the following order to:
114.32 (A) the reasonable expenses of collection and enforcement
114.33 and, to the extent provided for by agreement and not prohibited
114.34 by law, reasonable attorneys fees and legal expenses incurred by
114.35 the secured party;
114.36 (B) the satisfaction of obligations secured by the security
115.1 interest or agricultural lien under which the collection or
115.2 enforcement is made; and
115.3 (C) the satisfaction of obligations secured by any
115.4 subordinate security interest in or other lien on the collateral
115.5 subject to the security interest or agricultural lien under
115.6 which the collection or enforcement is made if the secured party
115.7 receives an authenticated demand for proceeds before
115.8 distribution of the proceeds is completed.
115.9 (2) If requested by a secured party, a holder of a
115.10 subordinate security interest or other lien shall furnish
115.11 reasonable proof of the interest or lien within a reasonable
115.12 time. Unless the holder complies, the secured party need not
115.13 comply with the holder's demand under paragraph (1)(C).
115.14 (3) A secured party need not apply or pay over for
115.15 application noncash proceeds of collection and enforcement under
115.16 section 336.9-607 unless the failure to do so would be
115.17 commercially unreasonable. A secured party that applies or pays
115.18 over for application noncash proceeds shall do so in a
115.19 commercially reasonable manner.
115.20 (4) A secured party shall account to and pay a debtor for
115.21 any surplus, and the obligor is liable for any deficiency.
115.22 (b) [NO SURPLUS OR DEFICIENCY IN SALES OF CERTAIN RIGHTS TO
115.23 PAYMENT.] If the underlying transaction is a sale of accounts,
115.24 chattel paper, payment intangibles, or promissory notes, the
115.25 debtor is not entitled to any surplus, and the obligor is not
115.26 liable for any deficiency.
115.27 Sec. 110. [336.9-609] [SECURED PARTY'S RIGHT TO TAKE
115.28 POSSESSION AFTER DEFAULT.]
115.29 (a) [POSSESSION; RENDERING EQUIPMENT UNUSABLE; DISPOSITION
115.30 ON DEBTOR'S PREMISES.] After default, a secured party:
115.31 (1) may take possession of the collateral; and
115.32 (2) without removal, may render equipment unusable and
115.33 dispose of collateral on a debtor's premises under section
115.34 336.9-610.
115.35 (b) [JUDICIAL AND NONJUDICIAL PROCESS.] A secured party may
115.36 proceed under subsection (a):
116.1 (1) pursuant to judicial process; or
116.2 (2) without judicial process, if it proceeds without breach
116.3 of the peace.
116.4 (c) [ASSEMBLY OF COLLATERAL.] If so agreed, and in any
116.5 event after default, a secured party may require the debtor to
116.6 assemble the collateral and make it available to the secured
116.7 party at a place to be designated by the secured party which is
116.8 reasonably convenient to both parties.
116.9 Sec. 111. [336.9-610] [DISPOSITION OF COLLATERAL AFTER
116.10 DEFAULT.]
116.11 (a) [DISPOSITION AFTER DEFAULT.] After default, a secured
116.12 party may sell, lease, license, or otherwise dispose of any or
116.13 all of the collateral in its present condition or following any
116.14 commercially reasonable preparation or processing.
116.15 (b) [COMMERCIALLY REASONABLE DISPOSITION.] Every aspect of
116.16 a disposition of collateral, including the method, manner, time,
116.17 place, and other terms, must be commercially reasonable. If
116.18 commercially reasonable, a secured party may dispose of
116.19 collateral by public or private proceedings, by one or more
116.20 contracts, as a unit or in parcels, and at any time and place
116.21 and on any terms.
116.22 (c) [PURCHASE BY SECURED PARTY.] A secured party may
116.23 purchase collateral:
116.24 (1) at a public disposition; or
116.25 (2) at a private disposition only if the collateral is of a
116.26 kind that is customarily sold on a recognized market or the
116.27 subject of widely distributed standard price quotations.
116.28 (d) [WARRANTIES ON DISPOSITION.] A contract for sale,
116.29 lease, license, or other disposition includes the warranties
116.30 relating to title, possession, quiet enjoyment, and the like
116.31 which by operation of law accompany a voluntary disposition of
116.32 property of the kind subject to the contract.
116.33 (e) [DISCLAIMER OF WARRANTIES.] A secured party may
116.34 disclaim or modify warranties under subsection (d):
116.35 (1) in a manner that would be effective to disclaim or
116.36 modify the warranties in a voluntary disposition of property of
117.1 the kind subject to the contract of disposition; or
117.2 (2) by communicating to the purchaser a record evidencing
117.3 the contract for disposition and including an express disclaimer
117.4 or modification of the warranties.
117.5 (f) [RECORD SUFFICIENT TO DISCLAIM WARRANTIES.] A record is
117.6 sufficient to disclaim warranties under subsection (e) if it
117.7 indicates "there is no warranty relating to title, possession,
117.8 quiet enjoyment, or the like in this disposition" or uses words
117.9 of similar import.
117.10 Sec. 112. [336.9-611] [NOTIFICATION BEFORE DISPOSITION OF
117.11 COLLATERAL.]
117.12 (a) [NOTIFICATION DATE.] In this section, "notification
117.13 date" means the earlier of the date on which:
117.14 (1) a secured party sends to the debtor and any secondary
117.15 obligor an authenticated notification of disposition; or
117.16 (2) the debtor and any secondary obligor waive the right to
117.17 notification.
117.18 (b) [NOTIFICATION OF DISPOSITION REQUIRED.] Except as
117.19 otherwise provided in subsection (d), a secured party that
117.20 disposes of collateral under section 336.9-610 shall send to the
117.21 persons specified in subsection (c) a reasonable authenticated
117.22 notification of disposition.
117.23 (c) [PERSONS TO BE NOTIFIED.] To comply with subsection
117.24 (b), the secured party shall send an authenticated notification
117.25 of disposition to:
117.26 (1) the debtor;
117.27 (2) any secondary obligor; and
117.28 (3) if the collateral is other than consumer goods:
117.29 (A) any other person from which the secured party has
117.30 received, before the notification date, an authenticated
117.31 notification of a claim of an interest in the collateral;
117.32 (B) any other secured party or lienholder that, ten days
117.33 before the notification date, held a security interest in or
117.34 other lien on the collateral perfected by the filing of a
117.35 financing statement that:
117.36 (i) identified the collateral;
118.1 (ii) was indexed under the debtor's name as of that date;
118.2 and
118.3 (iii) was filed in the office in which to file a financing
118.4 statement against the debtor covering the collateral as of that
118.5 date; and
118.6 (C) any other secured party that, ten days before the
118.7 notification date, held a security interest in the collateral
118.8 perfected by compliance with a statute, regulation, or treaty
118.9 described in section 336.9-311(a).
118.10 (d) [SUBSECTION (B) INAPPLICABLE: PERISHABLE COLLATERAL;
118.11 RECOGNIZED MARKET.] Subsection (b) does not apply if the
118.12 collateral is perishable or threatens to decline speedily in
118.13 value or is of a type customarily sold on a recognized market.
118.14 (e) [COMPLIANCE WITH SUBSECTION (C)(3)(B).] A secured party
118.15 complies with the requirement for notification prescribed by
118.16 subsection (c)(3)(B) if:
118.17 (1) not later than 20 days or earlier than 30 days before
118.18 the notification date, the secured party requests, in a
118.19 commercially reasonable manner, information concerning financing
118.20 statements indexed under the debtor's name in the office
118.21 indicated in subsection (c)(3)(B); and
118.22 (2) before the notification date, the secured party:
118.23 (A) did not receive a response to the request for
118.24 information; or
118.25 (B) received a response to the request for information and
118.26 sent an authenticated notification of disposition to each
118.27 secured party named in that response whose financing statement
118.28 covered the collateral.
118.29 Sec. 113. [336.9-612] [TIMELINESS OF NOTIFICATION BEFORE
118.30 DISPOSITION OF COLLATERAL.]
118.31 (a) [REASONABLE TIME IS QUESTION OF FACT.] Except as
118.32 otherwise provided in subsection (b), whether a notification is
118.33 sent within a reasonable time is a question of fact.
118.34 (b) [TEN-DAY PERIOD SUFFICIENT IN NONCONSUMER TRANSACTION.]
118.35 In a transaction other than a consumer transaction, a
118.36 notification of disposition sent after default and ten days or
119.1 more before the earliest time of disposition set forth in the
119.2 notification is sent within a reasonable time before the
119.3 disposition.
119.4 Sec. 114. [336.9-613] [CONTENTS AND FORM OF NOTIFICATION
119.5 BEFORE DISPOSITION OF COLLATERAL: GENERAL.]
119.6 Except in a consumer goods transaction, the following rules
119.7 apply:
119.8 (1) The contents of a notification of disposition are
119.9 sufficient if the notification:
119.10 (A) describes the debtor and the secured party;
119.11 (B) describes the collateral that is the subject of the
119.12 intended disposition;
119.13 (C) states the method of intended disposition;
119.14 (D) states that the debtor is entitled to an accounting of
119.15 the unpaid indebtedness and states the charge, if any, for an
119.16 accounting; and
119.17 (E) states the time and place of a public disposition or
119.18 the time after which any other disposition is to be made.
119.19 (2) Whether the contents of a notification that lacks any
119.20 of the information specified in paragraph (1) are nevertheless
119.21 sufficient is a question of fact.
119.22 (3) The contents of a notification providing substantially
119.23 the information specified in paragraph (1) are sufficient, even
119.24 if the notification includes:
119.25 (A) information not specified by that paragraph; or
119.26 (B) minor errors that are not seriously misleading.
119.27 (4) A particular phrasing of the notification is not
119.28 required.
119.29 (5) The following form of notification and the form
119.30 appearing in section 336.9-614(3), when completed, each provides
119.31 sufficient information:
119.32 NOTIFICATION OF DISPOSITION OF COLLATERAL
119.33 To: (Name of debtor, obligor, or other person
119.34 to which the notification is sent)
119.35 From: (Name, address, and telephone number of
119.36 secured party)
120.1 Name of Debtor(s): (Include only if debtor(s) are not an
120.2 addressee)
120.3 (For a public disposition:)
120.4 We will sell (or lease or license, as applicable) the
120.5 .....(describe collateral)..... (to the highest qualified
120.6 bidder) in public as follows:
120.7 Day and Date: ........................
120.8 Time: ........................
120.9 Place: ........................
120.10 (For a private disposition:)
120.11 We will sell (or lease or license, as applicable) the
120.12 .....(describe collateral)..... privately sometime after ...(day
120.13 and date)....
120.14 You are entitled to an accounting of the unpaid
120.15 indebtedness secured by the property that we intend to sell (or
120.16 lease or license, as applicable) (for a charge of $.......).
120.17 You may request an accounting by calling us at ...(telephone
120.18 number)....
120.19 Sec. 115. [336.9-614] [CONTENTS AND FORM OF NOTIFICATION
120.20 BEFORE DISPOSITION OF COLLATERAL: CONSUMER GOODS TRANSACTION.]
120.21 In a consumer goods transaction, the following rules apply:
120.22 (1) A notification of disposition must provide the
120.23 following information:
120.24 (A) the information specified in section 336.9-613(1);
120.25 (B) a description of any liability for a deficiency of the
120.26 person to which the notification is sent;
120.27 (C) a telephone number from which the amount that must be
120.28 paid to the secured party to redeem the collateral under section
120.29 336.9-623 is available; and
120.30 (D) a telephone number or mailing address from which
120.31 additional information concerning the disposition and the
120.32 obligation secured is available.
120.33 (2) A particular phrasing of the notification is not
120.34 required.
120.35 (3) The following form of notification, when completed,
120.36 provides sufficient information:
121.1 (Name and address of secured party)
121.2 (Date)
121.3 NOTICE OF OUR PLAN TO SELL PROPERTY
121.4 (Name and address of any obligor who is also a debtor)
121.5 Subject: ....(Identification of Transaction)....
121.6 We have your ...(describe collateral)..., because you broke
121.7 promises in our agreement.
121.8 (For a public disposition:)
121.9 We will sell ...(describe collateral)... at public sale. A
121.10 sale could include a lease or license. The sale will be held as
121.11 follows:
121.12 Date: .............
121.13 Time: .............
121.14 Place: .............
121.15 You may attend the sale and bring bidders if you want.
121.16 (For a private disposition:)
121.17 We will sell ...(describe collateral)... at private sale
121.18 sometime after ..(date)... A sale could include a lease or
121.19 license.
121.20 The money that we get from the sale (after paying our costs)
121.21 will reduce the amount you owe. If we get less money than you
121.22 owe, you ..(will or will not, as applicable).. still owe us the
121.23 difference. If we get more money than you owe, you will get the
121.24 extra money, unless we must pay it to someone else.
121.25 You can get the property back at any time before we sell it
121.26 by paying us the full amount you owe (not just the past due
121.27 payments), including our expenses. To learn the exact amount
121.28 you must pay, call us at ..(telephone number)...
121.29 If you want us to explain to you in writing how we have
121.30 figured the amount that you owe us, you may call us at
121.31 ..(telephone number).. (or write us at ..(secured party's
121.32 address)..) and request a written explanation. (We will charge
121.33 you $....... for the explanation if we sent you another written
121.34 explanation of the amount you owe us within the last six months.)
121.35 If you need more information about the sale call us at
121.36 ..(telephone number).. (or write us at ..(secured party's
122.1 address)..).
122.2 We are sending this notice to the following other people
122.3 who have an interest in ...(describe collateral)... or who owe
122.4 money under your agreement:
122.5 ..(Names of all other debtors and obligors, if any)..
122.6 (4) A notification in the form of paragraph (3) is
122.7 sufficient, even if additional information appears at the end of
122.8 the form.
122.9 (5) A notification in the form of paragraph (3) is
122.10 sufficient, even if it includes errors in information not
122.11 required by paragraph (1), unless the error is misleading with
122.12 respect to rights arising under this article.
122.13 (6) If a notification under this section is not in the form
122.14 of paragraph (3), law other than this article determines the
122.15 effect of including information not required by paragraph (1).
122.16 Sec. 116. [336.9-615] [APPLICATION OF PROCEEDS OF
122.17 DISPOSITION; LIABILITY FOR DEFICIENCY AND RIGHT TO SURPLUS.]
122.18 (a) [APPLICATION OF PROCEEDS.] A secured party shall apply
122.19 or pay over for application the cash proceeds of disposition
122.20 under section 336.9-610 in the following order to:
122.21 (1) the reasonable expenses of retaking, holding, preparing
122.22 for disposition, processing, and disposing, and, to the extent
122.23 provided for by agreement and not prohibited by law, reasonable
122.24 attorneys fees and legal expenses incurred by the secured party;
122.25 (2) the satisfaction of obligations secured by the security
122.26 interest or agricultural lien under which the disposition is
122.27 made;
122.28 (3) the satisfaction of obligations secured by any
122.29 subordinate security interest in or other subordinate lien on
122.30 the collateral if:
122.31 (A) the secured party receives from the holder of the
122.32 subordinate security interest or other lien an authenticated
122.33 demand for proceeds before distribution of the proceeds is
122.34 completed; and
122.35 (B) in a case in which a consignor has an interest in the
122.36 collateral, the subordinate security interest or other lien is
123.1 senior to the interest of the consignor; and
123.2 (4) a secured party that is a consignor of the collateral
123.3 if the secured party receives from the consignor an
123.4 authenticated demand for proceeds before distribution of the
123.5 proceeds is completed.
123.6 (b) [PROOF OF SUBORDINATE INTEREST.] If requested by a
123.7 secured party, a holder of a subordinate security interest or
123.8 other lien shall furnish reasonable proof of the interest or
123.9 lien within a reasonable time. Unless the holder does so, the
123.10 secured party need not comply with the holder's demand under
123.11 subsection (a)(3).
123.12 (c) [APPLICATION OF NONCASH PROCEEDS.] A secured party need
123.13 not apply or pay over for application noncash proceeds of
123.14 disposition under section 336.9-610 unless the failure to do so
123.15 would be commercially unreasonable. A secured party that
123.16 applies or pays over for application noncash proceeds shall do
123.17 so in a commercially reasonable manner.
123.18 (d) [SURPLUS OR DEFICIENCY IF OBLIGATION SECURED.] If the
123.19 security interest under which a disposition is made secures
123.20 payment or performance of an obligation, after making the
123.21 payments and applications required by subsection (a) and
123.22 permitted by subsection (c):
123.23 (1) unless subsection (a)(4) requires the secured party to
123.24 apply or pay over cash proceeds to a consignor, the secured
123.25 party shall account to and pay a debtor for any surplus; and
123.26 (2) the obligor is liable for any deficiency.
123.27 (e) [NO SURPLUS OR DEFICIENCY IN SALES OF CERTAIN RIGHTS TO
123.28 PAYMENT.] If the underlying transaction is a sale of accounts,
123.29 chattel paper, payment intangibles, or promissory notes:
123.30 (1) the debtor is not entitled to any surplus; and
123.31 (2) the obligor is not liable for any deficiency.
123.32 (f) [CALCULATION OF SURPLUS OR DEFICIENCY IN DISPOSITION TO
123.33 PERSON RELATED TO SECURED PARTY.] The surplus or deficiency
123.34 following a disposition is calculated based on the amount of
123.35 proceeds that would have been realized in a disposition
123.36 complying with this part to a transferee other than the secured
124.1 party, a person related to the secured party, or a secondary
124.2 obligor if:
124.3 (1) the transferee in the disposition is the secured party,
124.4 a person related to the secured party, or a secondary obligor;
124.5 and
124.6 (2) the amount of proceeds of the disposition is
124.7 significantly below the range of proceeds that a complying
124.8 disposition to a person other than the secured party, a person
124.9 related to the secured party, or a secondary obligor would have
124.10 brought.
124.11 (g) [CASH PROCEEDS RECEIVED BY JUNIOR SECURED PARTY.] A
124.12 secured party that receives cash proceeds of a disposition in
124.13 good faith and without knowledge that the receipt violates the
124.14 rights of the holder of a security interest or other lien that
124.15 is not subordinate to the security interest or agricultural lien
124.16 under which the disposition is made:
124.17 (1) takes the cash proceeds free of the security interest
124.18 or other lien;
124.19 (2) is not obligated to apply the proceeds of the
124.20 disposition to the satisfaction of obligations secured by the
124.21 security interest or other lien; and
124.22 (3) is not obligated to account to or pay the holder of the
124.23 security interest or other lien for any surplus.
124.24 Sec. 117. [336.9-616] [EXPLANATION OF CALCULATION OF
124.25 SURPLUS OR DEFICIENCY.]
124.26 (a) [DEFINITIONS.] In this section:
124.27 (1) "Explanation" means a writing that:
124.28 (A) states the amount of the surplus or deficiency;
124.29 (B) provides an explanation in accordance with subsection
124.30 (c) of how the secured party calculated the surplus or
124.31 deficiency;
124.32 (C) states, if applicable, that future debits, credits,
124.33 charges, including additional credit service charges or
124.34 interest, rebates, and expenses may affect the amount of the
124.35 surplus or deficiency; and
124.36 (D) provides a telephone number or mailing address from
125.1 which additional information concerning the transaction is
125.2 available.
125.3 (2) "Request" means a record:
125.4 (A) authenticated by a debtor or consumer obligor;
125.5 (B) requesting that the recipient provide an explanation;
125.6 and
125.7 (C) sent after disposition of the collateral under section
125.8 336.9-610.
125.9 (b) [EXPLANATION OF CALCULATION.] In a consumer goods
125.10 transaction in which the debtor is entitled to a surplus or a
125.11 consumer obligor is liable for a deficiency under section
125.12 336.9-615, the secured party shall:
125.13 (1) send an explanation to the debtor or consumer obligor,
125.14 as applicable, after the disposition and:
125.15 (A) before or when the secured party accounts to the debtor
125.16 and pays any surplus or first makes written demand on the
125.17 consumer obligor after the disposition for payment of the
125.18 deficiency; and
125.19 (B) within 14 days after receipt of a request; or
125.20 (2) in the case of a consumer obligor who is liable for a
125.21 deficiency, within 14 days after receipt of a request, send to
125.22 the consumer obligor a record waiving the secured party's right
125.23 to a deficiency.
125.24 (c) [REQUIRED INFORMATION.] To comply with subsection
125.25 (a)(1)(B), a writing must provide the following information in
125.26 the following order:
125.27 (1) the aggregate amount of obligations secured by the
125.28 security interest under which the disposition was made, and, if
125.29 the amount reflects a rebate of unearned interest or credit
125.30 service charge, an indication of that fact, calculated as of a
125.31 specified date:
125.32 (A) if the secured party takes or receives possession of
125.33 the collateral after default, not more than 35 days before the
125.34 secured party takes or receives possession; or
125.35 (B) if the secured party takes or receives possession of
125.36 the collateral before default or does not take possession of the
126.1 collateral, not more than 35 days before the disposition;
126.2 (2) the amount of proceeds of the disposition;
126.3 (3) the aggregate amount of the obligations after deducting
126.4 the amount of proceeds;
126.5 (4) the amount, in the aggregate or by type, and types of
126.6 expenses, including expenses of retaking, holding, preparing for
126.7 disposition, processing, and disposing of the collateral, and
126.8 attorneys fees secured by the collateral which are known to the
126.9 secured party and relate to the current disposition;
126.10 (5) the amount, in the aggregate or by type, and types of
126.11 credits, including rebates of interest or credit service
126.12 charges, to which the obligor is known to be entitled and which
126.13 are not reflected in the amount in paragraph (1); and
126.14 (6) the amount of the surplus or deficiency.
126.15 (d) [SUBSTANTIAL COMPLIANCE.] A particular phrasing of the
126.16 explanation is not required. An explanation complying
126.17 substantially with the requirements of subsection (a) is
126.18 sufficient, even if it includes minor errors that are not
126.19 seriously misleading.
126.20 (e) [CHARGES FOR RESPONSES.] A debtor or consumer obligor
126.21 is entitled without charge to one response to a request under
126.22 this section during any six-month period in which the secured
126.23 party did not send to the debtor or consumer obligor an
126.24 explanation pursuant to subsection (b)(1). The secured party
126.25 may require payment of a charge not exceeding $25 for each
126.26 additional response.
126.27 Sec. 118. [336.9-617] [RIGHTS OF TRANSFEREE OF
126.28 COLLATERAL.]
126.29 (a) [EFFECTS OF DISPOSITION.] A secured party's disposition
126.30 of collateral after default:
126.31 (1) transfers to a transferee for value all of the debtor's
126.32 rights in the collateral;
126.33 (2) discharges the security interest under which the
126.34 disposition is made; and
126.35 (3) discharges any subordinate security interest or other
126.36 subordinate lien other than liens created under (cite acts or
127.1 statutes providing for liens, if any, that are not to be
127.2 discharged).
127.3 (b) [RIGHTS OF GOOD FAITH TRANSFEREE.] A transferee that
127.4 acts in good faith takes free of the rights and interests
127.5 described in subsection (a), even if the secured party fails to
127.6 comply with this article or the requirements of any judicial
127.7 proceeding.
127.8 (c) [RIGHTS OF OTHER TRANSFEREE.] If a transferee does not
127.9 take free of the rights and interests described in subsection
127.10 (a), the transferee takes the collateral subject to:
127.11 (1) the debtor's rights in the collateral;
127.12 (2) the security interest or agricultural lien under which
127.13 the disposition is made; and
127.14 (3) any other security interest or other lien.
127.15 Sec. 119. [336.9-618] [RIGHTS AND DUTIES OF CERTAIN
127.16 SECONDARY OBLIGORS.]
127.17 (a) [RIGHTS AND DUTIES OF SECONDARY OBLIGOR.] A secondary
127.18 obligor acquires the rights and becomes obligated to perform the
127.19 duties of the secured party after the secondary obligor:
127.20 (1) receives an assignment of a secured obligation from the
127.21 secured party;
127.22 (2) receives a transfer of collateral from the secured
127.23 party and agrees to accept the rights and assume the duties of
127.24 the secured party; or
127.25 (3) is subrogated to the rights of a secured party with
127.26 respect to collateral.
127.27 (b) [EFFECT OF ASSIGNMENT, TRANSFER, OR SUBROGATION.] An
127.28 assignment, transfer, or subrogation described in subsection (a):
127.29 (1) is not a disposition of collateral under section
127.30 336.9-610; and
127.31 (2) relieves the secured party of further duties under this
127.32 article.
127.33 Sec. 120. [336.9-619] [TRANSFER OF RECORD OR LEGAL TITLE.]
127.34 (a) [TRANSFER STATEMENT.] (1) In this section, "transfer
127.35 statement" means a record authenticated by a secured party
127.36 stating:
128.1 (A) that the debtor has defaulted in connection with an
128.2 obligation secured by specified collateral;
128.3 (B) that the secured party has exercised its postdefault
128.4 remedies with respect to the collateral;
128.5 (C) that, by reason of the exercise, a transferee has
128.6 acquired the rights of the debtor in the collateral;
128.7 (D) the name and mailing address of the secured party,
128.8 debtor, and transferee; and
128.9 (E) in addition, if the statement is to be filed in the
128.10 real property records concerning a mortgage or other record
128.11 evidencing an interest in real property, the statement must
128.12 state the following information concerning the mortgage or other
128.13 record evidencing an interest in real property:
128.14 (i) the name and title on the record;
128.15 (ii) the date on the record;
128.16 (iii) the names of the parties on the record;
128.17 (iv) the identity of the office of the county recorder or
128.18 registrar of titles where the record is filed;
128.19 (v) the date the record was filed; and
128.20 (vi) the identifying number of the record in the office of
128.21 the county recorder or registrar of titles.
128.22 (2) A transfer statement that is to be filed in the real
128.23 property records must contain an acknowledgment by the secured
128.24 party in a form sufficient to satisfy the requirements of
128.25 chapter 358.
128.26 (b) [EFFECT OF TRANSFER STATEMENT.] A transfer statement
128.27 entitles the transferee to the transfer of record of all rights
128.28 of the debtor in the collateral specified in the statement in
128.29 any official filing, recording, registration, or certificate of
128.30 title system covering the collateral. If a transfer statement
128.31 is presented with the applicable fee and request form to the
128.32 official or office responsible for maintaining the system, the
128.33 official or office shall:
128.34 (1) accept the transfer statement;
128.35 (2) promptly amend its records to reflect the transfer; and
128.36 (3) if applicable, issue a new appropriate certificate of
129.1 title in the name of transferee.
129.2 (c) [TRANSFER NOT A DISPOSITION; NO RELIEF OF SECURED
129.3 PARTY'S DUTIES.] A transfer of the record or legal title to
129.4 collateral to a secured party under subsection (b) or otherwise
129.5 is not of itself a disposition of collateral under this article
129.6 and does not of itself relieve the secured party of its duties
129.7 under this article.
129.8 Sec. 121. [336.9-620] [ACCEPTANCE OF COLLATERAL IN FULL OR
129.9 PARTIAL SATISFACTION OF OBLIGATION; COMPULSORY DISPOSITION OF
129.10 COLLATERAL.]
129.11 (a) [CONDITIONS TO ACCEPTANCE IN SATISFACTION.] Except as
129.12 otherwise provided in subsection (g), a secured party may accept
129.13 collateral in full or partial satisfaction of the obligation it
129.14 secures only if:
129.15 (1) the debtor consents to the acceptance under subsection
129.16 (c);
129.17 (2) the secured party does not receive, within the time set
129.18 forth in subsection (d), a notification of objection to the
129.19 proposal authenticated by:
129.20 (A) a person to which the secured party was required to
129.21 send a proposal under section 336.9-621; or
129.22 (B) any other person, other than the debtor, holding an
129.23 interest in the collateral subordinate to the security interest
129.24 that is the subject of the proposal;
129.25 (3) if the collateral is consumer goods, the collateral is
129.26 not in the possession of the debtor when the debtor consents to
129.27 the acceptance; and
129.28 (4) subsection (e) does not require the secured party to
129.29 dispose of the collateral or the debtor waives the requirement
129.30 pursuant to section 336.9-624.
129.31 (b) [PURPORTED ACCEPTANCE INEFFECTIVE.] A purported or
129.32 apparent acceptance of collateral under this section is
129.33 ineffective unless:
129.34 (1) the secured party consents to the acceptance in an
129.35 authenticated record or sends a proposal to the debtor; and
129.36 (2) the conditions of subsection (a) are met.
130.1 (c) [DEBTOR'S CONSENT.] For purposes of this section:
130.2 (1) a debtor consents to an acceptance of collateral in
130.3 partial satisfaction of the obligation it secures only if the
130.4 debtor agrees to the terms of the acceptance in a record
130.5 authenticated after default; and
130.6 (2) a debtor consents to an acceptance of collateral in
130.7 full satisfaction of the obligation it secures only if the
130.8 debtor agrees to the terms of the acceptance in a record
130.9 authenticated after default or the secured party:
130.10 (A) sends to the debtor after default a proposal that is
130.11 unconditional or subject only to a condition that collateral not
130.12 in the possession of the secured party be preserved or
130.13 maintained;
130.14 (B) in the proposal, proposes to accept collateral in full
130.15 satisfaction of the obligation it secures; and
130.16 (C) does not receive a notification of objection
130.17 authenticated by the debtor within 20 days after the proposal is
130.18 sent.
130.19 (d) [EFFECTIVENESS OF NOTIFICATION.] To be effective under
130.20 subsection (a)(2), a notification of objection must be received
130.21 by the secured party:
130.22 (1) in the case of a person to which the proposal was sent
130.23 pursuant to section 336.9-621, within 20 days after notification
130.24 was sent to that person; and
130.25 (2) in other cases:
130.26 (A) within 20 days after the last notification was sent
130.27 pursuant to section 336.9-621; or
130.28 (B) if a notification was not sent, before the debtor
130.29 consents to the acceptance under subsection (c).
130.30 (e) [MANDATORY DISPOSITION OF CONSUMER GOODS.] A secured
130.31 party that has taken possession of collateral shall dispose of
130.32 the collateral pursuant to section 336.9-610 within the time
130.33 specified in subsection (f) if:
130.34 (1) 60 percent of the cash price has been paid in the case
130.35 of a purchase-money security interest in consumer goods; or
130.36 (2) 60 percent of the principal amount of the obligation
131.1 secured has been paid in the case of a non-purchase-money
131.2 security interest in consumer goods.
131.3 (f) [COMPLIANCE WITH MANDATORY DISPOSITION REQUIREMENT.] To
131.4 comply with subsection (e), the secured party shall dispose of
131.5 the collateral:
131.6 (1) within 90 days after taking possession; or
131.7 (2) within any longer period to which the debtor and all
131.8 secondary obligors have agreed in an agreement to that effect
131.9 entered into and authenticated after default.
131.10 (g) [NO PARTIAL SATISFACTION IN CONSUMER TRANSACTION.] In a
131.11 consumer transaction, a secured party may not accept collateral
131.12 in partial satisfaction of the obligation it secures.
131.13 Sec. 122. [336.9-621] [NOTIFICATION OF PROPOSAL TO ACCEPT
131.14 COLLATERAL.]
131.15 (a) [PERSONS TO WHICH PROPOSAL TO BE SENT.] A secured party
131.16 that desires to accept collateral in full or partial
131.17 satisfaction of the obligation it secures shall send its
131.18 proposal to:
131.19 (1) any person from which the secured party has received,
131.20 before the debtor consented to the acceptance, an authenticated
131.21 notification of a claim of an interest in the collateral;
131.22 (2) any other secured party or lienholder that, ten days
131.23 before the debtor consented to the acceptance, held a security
131.24 interest in or other lien on the collateral perfected by the
131.25 filing of a financing statement that:
131.26 (A) identified the collateral;
131.27 (B) was indexed under the debtor's name as of that date;
131.28 and
131.29 (C) was filed in the office or offices in which to file a
131.30 financing statement against the debtor covering the collateral
131.31 as of that date; and
131.32 (3) any other secured party that, ten days before the
131.33 debtor consented to the acceptance, held a security interest in
131.34 the collateral perfected by compliance with a statute,
131.35 regulation, or treaty described in section 336.9-311(a).
131.36 (b) [PROPOSAL TO BE SENT TO SECONDARY OBLIGOR IN PARTIAL
132.1 SATISFACTION.] A secured party that desires to accept collateral
132.2 in partial satisfaction of the obligation it secures shall send
132.3 its proposal to any secondary obligor in addition to the persons
132.4 described in subsection (a).
132.5 Sec. 123. [336.9-622] [EFFECT OF ACCEPTANCE OF
132.6 COLLATERAL.]
132.7 (a) [EFFECT OF ACCEPTANCE.] A secured party's acceptance of
132.8 collateral in full or partial satisfaction of the obligation it
132.9 secures:
132.10 (1) discharges the obligation to the extent consented to by
132.11 the debtor;
132.12 (2) transfers to the secured party all of a debtor's rights
132.13 in the collateral;
132.14 (3) discharges the security interest or agricultural lien
132.15 that is the subject of the debtor's consent and any subordinate
132.16 security interest or other subordinate lien; and
132.17 (4) terminates any other subordinate interest.
132.18 (b) [DISCHARGE OF SUBORDINATE INTEREST NOTWITHSTANDING
132.19 NONCOMPLIANCE.] A subordinate interest is discharged or
132.20 terminated under subsection (a), even if the secured party fails
132.21 to comply with this article.
132.22 Sec. 124. [336.9-623] [RIGHT TO REDEEM COLLATERAL.]
132.23 (a) [PERSONS THAT MAY REDEEM.] A debtor, any secondary
132.24 obligor, or any other secured party or lienholder may redeem
132.25 collateral.
132.26 (b) [REQUIREMENTS FOR REDEMPTION.] To redeem collateral, a
132.27 person shall tender:
132.28 (1) fulfillment of all obligations secured by the
132.29 collateral; and
132.30 (2) the reasonable expenses and attorneys fees described in
132.31 section 336.9-615(a)(1).
132.32 (c) [WHEN REDEMPTION MAY OCCUR.] A redemption may occur at
132.33 any time before a secured party:
132.34 (1) has collected collateral under section 336.9-607;
132.35 (2) has disposed of collateral or entered into a contract
132.36 for its disposition under section 336.9-610; or
133.1 (3) has accepted collateral in full or partial satisfaction
133.2 of the obligation it secures under section 336.9-622.
133.3 Sec. 125. [336.9-624] [WAIVER.]
133.4 (a) [WAIVER OF DISPOSITION NOTIFICATION.] A debtor or
133.5 secondary obligor may waive the right to notification of
133.6 disposition of collateral under section 336.9-611 only by an
133.7 agreement to that effect entered into and authenticated after
133.8 default.
133.9 (b) [WAIVER OF MANDATORY DISPOSITION.] A debtor may waive
133.10 the right to require disposition of collateral under section
133.11 336.9-620(e) only by an agreement to that effect entered into
133.12 and authenticated after default.
133.13 (c) [WAIVER OF REDEMPTION RIGHT.] Except in a consumer
133.14 goods transaction, a debtor or secondary obligor may waive the
133.15 right to redeem collateral under section 336.9-623 only by an
133.16 agreement to that effect entered into and authenticated after
133.17 default.
133.18 SUBPART 2. NONCOMPLIANCE WITH ARTICLE
133.19 Sec. 126. [336.9-625] [REMEDIES FOR SECURED PARTY'S
133.20 FAILURE TO COMPLY WITH ARTICLE.]
133.21 (a) [JUDICIAL ORDERS CONCERNING NONCOMPLIANCE.] If it is
133.22 established that a secured party is not proceeding in accordance
133.23 with this article, a court may order or restrain collection,
133.24 enforcement, or disposition of collateral on appropriate terms
133.25 and conditions.
133.26 (b) [DAMAGES FOR NONCOMPLIANCE LOSSES.] Subject to
133.27 subsections (c), (d), and (f), a person is liable for damages in
133.28 the amount of any loss caused by a failure to comply with this
133.29 article. Loss caused by a failure to comply may include loss
133.30 resulting from the debtor's inability to obtain, or increased
133.31 costs of, alternative financing.
133.32 (c) [PERSONS ENTITLED TO RECOVER DAMAGES; STATUTORY DAMAGES
133.33 IN CONSUMER GOODS TRANSACTION.] Except as otherwise provided in
133.34 section 336.9-628:
133.35 (1) a person that, at the time of the failure, was a
133.36 debtor, was an obligor, or held a security interest in or other
134.1 lien on the collateral may recover damages under subsection (b)
134.2 for its loss; and
134.3 (2) if the collateral is consumer goods, a person that was
134.4 a debtor or a secondary obligor at the time a secured party
134.5 failed to comply with this part may recover for that failure in
134.6 any event an amount not less than the credit service charge plus
134.7 ten percent of the principal amount of the obligation or the
134.8 time-price differential plus ten percent of the cash price.
134.9 (d) [RECOVERY WHEN DEFICIENCY ELIMINATED OR REDUCED.] A
134.10 debtor whose deficiency is eliminated under section 336.9-626
134.11 may recover damages for the loss of any surplus. However, a
134.12 debtor or secondary obligor whose deficiency is eliminated or
134.13 reduced under section 336.9-626 may not otherwise recover under
134.14 subsection (b) for noncompliance with the provisions of this
134.15 part relating to collection, enforcement, disposition, or
134.16 acceptance.
134.17 (e) [STATUTORY DAMAGES: NONCOMPLIANCE WITH SPECIFIED
134.18 PROVISIONS.] In addition to any damages recoverable under
134.19 subsection (b), the debtor, consumer obligor, or person named as
134.20 a debtor in a filed record, as applicable, may recover $500 in
134.21 each case from a person who:
134.22 (1) fails to comply with section 336.9-208;
134.23 (2) fails to comply with section 336.9-209;
134.24 (3) files a record that the person is not entitled to file
134.25 under section 336.9-509(a);
134.26 (4) fails to cause the secured party of record to file or
134.27 send a termination statement as required by section 336.9-513(a)
134.28 or (c);
134.29 (5) fails to comply with section 336.9-616(b)(1) and whose
134.30 failure is part of a pattern, or consistent with a practice, of
134.31 noncompliance; or
134.32 (6) fails to comply with section 336.9-616(b)(2).
134.33 (f) [STATUTORY DAMAGES: NONCOMPLIANCE WITH SECTION
134.34 336.9-210.] A debtor or consumer obligor may recover damages
134.35 under subsection (b) and, in addition, $500 in each case from a
134.36 person that, without reasonable cause, fails to comply with a
135.1 request under section 336.9-210. A recipient of a request under
135.2 section 336.9-210 which never claimed an interest in the
135.3 collateral or obligations that are the subject of a request
135.4 under that section has a reasonable excuse for failure to comply
135.5 with the request within the meaning of this subsection.
135.6 (g) [LIMITATION OF SECURITY INTEREST: NONCOMPLIANCE WITH
135.7 SECTION 336.9-210.] If a secured party fails to comply with a
135.8 request regarding a list of collateral or a statement of account
135.9 under section 336.9-210, the secured party may claim a security
135.10 interest only as shown in the list or statement included in the
135.11 request as against a person that is reasonably misled by the
135.12 failure.
135.13 Sec. 127. [336.9-626] [ACTION IN WHICH DEFICIENCY OR
135.14 SURPLUS IS IN ISSUE.]
135.15 (a) [APPLICABLE RULES IF AMOUNT OF DEFICIENCY OR SURPLUS IS
135.16 IN ISSUE.] In an action arising from a transaction, other than a
135.17 consumer transaction, in which the amount of a deficiency or
135.18 surplus is in issue, the following rules apply:
135.19 (1) A secured party need not prove compliance with the
135.20 provisions of this part relating to collection, enforcement,
135.21 disposition, or acceptance unless the debtor or a secondary
135.22 obligor places the secured party's compliance in issue.
135.23 (2) If the secured party's compliance is placed in issue,
135.24 the secured party has the burden of establishing that the
135.25 collection, enforcement, disposition, or acceptance was
135.26 conducted in accordance with this part.
135.27 (3) Except as otherwise provided in section 336.9-628, if a
135.28 secured party fails to prove that the collection, enforcement,
135.29 disposition, or acceptance was conducted in accordance with the
135.30 provisions of this part relating to collection, enforcement,
135.31 disposition, or acceptance, the liability of a debtor or a
135.32 secondary obligor for a deficiency is limited to an amount by
135.33 which the sum of the secured obligation, expenses, and attorneys
135.34 fees exceeds the greater of:
135.35 (A) the proceeds of the collection, enforcement,
135.36 disposition, or acceptance; or
136.1 (B) the amount of proceeds that would have been realized
136.2 had the noncomplying secured party proceeded in accordance with
136.3 the provisions of this part relating to collection, enforcement,
136.4 disposition, or acceptance.
136.5 (4) For purposes of paragraph (3)(B), the amount of
136.6 proceeds that would have been realized is equal to the sum of
136.7 the secured obligation, expenses, and attorneys fees unless the
136.8 secured party proves that the amount is less than that sum.
136.9 (5) If a deficiency or surplus is calculated under section
136.10 336.9-615(f), the debtor or obligor has the burden of
136.11 establishing that the amount of proceeds of the disposition is
136.12 significantly below the range of prices that a complying
136.13 disposition to a person other than the secured party, a person
136.14 related to the secured party, or a secondary obligor would have
136.15 brought.
136.16 (b) [NONCONSUMER TRANSACTIONS; NO INFERENCE.] The
136.17 limitation of the rules in subsection (a) to transactions other
136.18 than consumer transactions is intended to leave to the court the
136.19 determination of the proper rules in consumer transactions. The
136.20 court may not infer from that limitation the nature of the
136.21 proper rule in consumer transactions and may continue to apply
136.22 established approaches.
136.23 Sec. 128. [336.9-627] [DETERMINATION OF WHETHER CONDUCT
136.24 WAS COMMERCIALLY REASONABLE.]
136.25 (a) [GREATER AMOUNT OBTAINABLE UNDER OTHER CIRCUMSTANCES;
136.26 NO PRECLUSION OF COMMERCIAL REASONABLENESS.] The fact that a
136.27 greater amount could have been obtained by a collection,
136.28 enforcement, disposition, or acceptance at a different time or
136.29 in a different method from that selected by the secured party is
136.30 not of itself sufficient to preclude the secured party from
136.31 establishing that the collection, enforcement, disposition, or
136.32 acceptance was made in a commercially reasonable manner.
136.33 (b) [DISPOSITIONS THAT ARE COMMERCIALLY REASONABLE.] A
136.34 disposition of collateral is made in a commercially reasonable
136.35 manner if the disposition is made:
136.36 (1) in the usual manner on any recognized market;
137.1 (2) at the price current in any recognized market at the
137.2 time of the disposition; or
137.3 (3) otherwise in conformity with reasonable commercial
137.4 practices among dealers in the type of property that was the
137.5 subject of the disposition.
137.6 (c) [APPROVAL BY COURT OR ON BEHALF OF CREDITORS.] A
137.7 collection, enforcement, disposition, or acceptance is
137.8 commercially reasonable if it has been approved:
137.9 (1) in a judicial proceeding;
137.10 (2) by a bona fide creditors' committee;
137.11 (3) by a representative of creditors; or
137.12 (4) by an assignee for the benefit of creditors.
137.13 (d) [APPROVAL UNDER SUBSECTION (C) NOT NECESSARY; ABSENCE
137.14 OF APPROVAL HAS NO EFFECT.] Approval under subsection (c) need
137.15 not be obtained, and lack of approval does not mean that the
137.16 collection, enforcement, disposition, or acceptance is not
137.17 commercially reasonable.
137.18 Sec. 129. [336.9-628] [NONLIABILITY AND LIMITATION ON
137.19 LIABILITY OF SECURED PARTY; LIABILITY OF SECONDARY OBLIGOR.]
137.20 (a) [LIMITATION OF LIABILITY OF SECURED PARTY FOR
137.21 NONCOMPLIANCE WITH ARTICLE.] Unless a secured party knows that a
137.22 person is a debtor or obligor, knows the identity of the person,
137.23 and knows how to communicate with the person:
137.24 (1) the secured party is not liable to the person, or to a
137.25 secured party or lienholder that has filed a financing statement
137.26 against the person, for failure to comply with this article; and
137.27 (2) the secured party's failure to comply with this article
137.28 does not affect the liability of the person for a deficiency.
137.29 (b) [LIMITATION OF LIABILITY BASED ON STATUS AS SECURED
137.30 PARTY.] A secured party is not liable because of its status as
137.31 secured party:
137.32 (1) to a person that is a debtor or obligor, unless the
137.33 secured party knows:
137.34 (A) that the person is a debtor or obligor;
137.35 (B) the identity of the person; and
137.36 (C) how to communicate with the person; or
138.1 (2) to a secured party or lienholder that has filed a
138.2 financing statement against a person, unless the secured party
138.3 knows:
138.4 (A) that the person is a debtor; and
138.5 (B) the identity of the person.
138.6 (c) [LIMITATION OF LIABILITY IF GOOD FAITH BELIEF THAT
138.7 TRANSACTION IS NOT A CONSUMER GOODS TRANSACTION OR CONSUMER
138.8 TRANSACTION.] A secured party is not liable to any person, and a
138.9 persons liability for a deficiency is not affected, because of
138.10 any act or omission arising out of the secured party's
138.11 reasonable belief that a transaction is not a consumer goods
138.12 transaction or a consumer transaction or that goods are not
138.13 consumer goods, if the secured party's belief is based on its
138.14 reasonable reliance on:
138.15 (1) a debtor's representation concerning the purpose for
138.16 which collateral was to be used, acquired, or held; or
138.17 (2) an obligor's representation concerning the purpose for
138.18 which a secured obligation was incurred.
138.19 (d) [LIMITATION OF LIABILITY FOR STATUTORY DAMAGES.] A
138.20 secured party is not liable to any person under section
138.21 336.9-625(c)(2) for its failure to comply with section 336.9-616.
138.22 (e) [LIMITATION OF MULTIPLE LIABILITY FOR STATUTORY
138.23 DAMAGES.] A secured party is not liable under section
138.24 336.9-625(c)(2) more than once with respect to any one secured
138.25 obligation.
138.26 Part 7
138.27 TRANSITION
138.28 Sec. 130. [336.9-701] [EFFECTIVE DATE.]
138.29 This act takes effect July 1, 2001.
138.30 Sec. 131. [336.9-702] [SAVINGS CLAUSE.]
138.31 (a) [PREEFFECTIVE DATE TRANSACTIONS OR LIENS.] Except as
138.32 otherwise provided in this part, this act applies to a
138.33 transaction or lien within its scope, even if the transaction or
138.34 lien was entered into or created before this act takes effect.
138.35 (b) [CONTINUING VALIDITY.] Except as otherwise provided in
138.36 subsection (c) and sections 336.9-703 through 336.9-709:
139.1 (1) transactions and liens that were not governed by former
139.2 article 9, were validly entered into or created before this act
139.3 takes effect, and would be subject to this act if they had been
139.4 entered into or created after this act takes effect, and the
139.5 rights, duties, and interests flowing from those transactions
139.6 and liens remain valid after this act takes effect; and
139.7 (2) the transactions and liens may be terminated,
139.8 completed, consummated, and enforced as required or permitted by
139.9 this act or by the law that otherwise would apply if this act
139.10 had not taken effect.
139.11 (c) [PREEFFECTIVE DATE PROCEEDINGS.] This act does not
139.12 affect an action, case, or proceeding commenced before this act
139.13 takes effect.
139.14 Sec. 132. [336.9-703] [SECURITY INTEREST PERFECTED BEFORE
139.15 EFFECTIVE DATE.]
139.16 (a) [CONTINUING PRIORITY OVER LIEN CREDITOR: PERFECTION
139.17 REQUIREMENTS SATISFIED.] A security interest that is enforceable
139.18 immediately before this act takes effect and would have priority
139.19 over the rights of a person that becomes a lien creditor at that
139.20 time is a perfected security interest under this act if, when
139.21 this act takes effect, the applicable requirements for
139.22 enforceability and perfection under this act are satisfied
139.23 without further action.
139.24 (b) [CONTINUING PRIORITY OVER LIEN CREDITOR: PERFECTION
139.25 REQUIREMENTS NOT SATISFIED.] Except as otherwise provided in
139.26 section 336.9-705, if, immediately before this act takes effect,
139.27 a security interest is enforceable and would have priority over
139.28 the rights of a person that becomes a lien creditor at that
139.29 time, but the applicable requirements for enforceability or
139.30 perfection under this act are not satisfied when this act takes
139.31 effect, the security interest:
139.32 (1) is a perfected security interest for one year after
139.33 this act takes effect;
139.34 (2) remains enforceable thereafter only if the security
139.35 interest becomes enforceable under section 336.9-203 before the
139.36 year expires; and
140.1 (3) remains perfected thereafter only if the applicable
140.2 requirements for perfection under this act are satisfied before
140.3 the year expires.
140.4 Sec. 133. [336.9-704] [SECURITY INTEREST UNPERFECTED
140.5 BEFORE EFFECTIVE DATE.]
140.6 A security interest that is enforceable immediately before
140.7 this act takes effect but which would be subordinate to the
140.8 rights of a person that becomes a lien creditor at that time:
140.9 (1) remains an enforceable security interest for one year
140.10 after this act takes effect;
140.11 (2) remains enforceable thereafter if the security interest
140.12 becomes enforceable under section 336.9-203 when this act takes
140.13 effect or within one year thereafter; and
140.14 (3) becomes perfected:
140.15 (A) without further action, when this act takes effect if
140.16 the applicable requirements for perfection under this act are
140.17 satisfied before or at that time; or
140.18 (B) when the applicable requirements for perfection are
140.19 satisfied if the requirements are satisfied after that time.
140.20 Sec. 134. [336.9-705] [EFFECTIVENESS OF ACTION TAKEN
140.21 BEFORE EFFECTIVE DATE.]
140.22 (a) [PREEFFECTIVE DATE ACTION; ONE-YEAR PERFECTION PERIOD
140.23 UNLESS REPERFECTED.] If action, other than the filing of a
140.24 financing statement, is taken before this act takes effect and
140.25 the action would have resulted in priority of a security
140.26 interest over the rights of a person that becomes a lien
140.27 creditor had the security interest become enforceable before
140.28 this act takes effect, the action is effective to perfect a
140.29 security interest that attaches under this act within one year
140.30 after this act takes effect. An attached security interest
140.31 becomes unperfected one year after this act takes effect unless
140.32 the security interest becomes a perfected security interest
140.33 under this act before the expiration of that period.
140.34 (b) [PREEFFECTIVE DATE FILING.] The filing of a financing
140.35 statement before this act takes effect is effective to perfect a
140.36 security interest to the extent the filing would satisfy the
141.1 applicable requirements for perfection under this act.
141.2 (c) [PREEFFECTIVE DATE FILING IN JURISDICTION FORMERLY
141.3 GOVERNING PERFECTION.] This act does not render ineffective an
141.4 effective financing statement that, before this act takes
141.5 effect, is filed and satisfies the applicable requirements for
141.6 perfection under the law of the jurisdiction governing
141.7 perfection as provided in Minnesota Statutes 1998, section
141.8 336.9-103. However, except as otherwise provided in subsections
141.9 (d) and (e) and section 336.9-706, the financing statement
141.10 ceases to be effective at the earlier of:
141.11 (1) the time the financing statement would have ceased to
141.12 be effective under the law of the jurisdiction in which it is
141.13 filed; or
141.14 (2) June 30, 2006.
141.15 (d) [CONTINUATION STATEMENT.] The filing of a continuation
141.16 statement after this act takes effect does not continue the
141.17 effectiveness of the financing statement filed before this act
141.18 takes effect. However, upon the timely filing of a continuation
141.19 statement after this act takes effect and in accordance with the
141.20 law of the jurisdiction governing perfection as provided in Part
141.21 3, the effectiveness of a financing statement filed in the same
141.22 office in that jurisdiction before this act takes effect
141.23 continues for the period provided by the law of that
141.24 jurisdiction.
141.25 (e) [APPLICATION OF SUBSECTION (C)(2) TO TRANSMITTING
141.26 UTILITY FINANCING STATEMENT.] Subsection (c)(2) applies to a
141.27 financing statement that, before this act takes effect, is filed
141.28 against a transmitting utility and satisfies the applicable
141.29 requirements for perfection under the law of the jurisdiction
141.30 governing perfection as provided in Minnesota Statutes 1998,
141.31 section 336.9-103, only to the extent that Part 3 provides that
141.32 the law of a jurisdiction other than the jurisdiction in which
141.33 the financing statement is filed governs perfection of a
141.34 security interest in collateral covered by the financing
141.35 statement.
141.36 (f) [APPLICATION OF PART 5.] A financing statement that
142.1 includes a financing statement filed before this act takes
142.2 effect and a continuation statement filed after this act takes
142.3 effect is effective only to the extent that it satisfies the
142.4 requirements of Part 5 for an initial financing statement.
142.5 Sec. 135. [336.9-706] [WHEN INITIAL FINANCING STATEMENT
142.6 SUFFICES TO CONTINUE EFFECTIVENESS OF FINANCING STATEMENT.]
142.7 (a) [INITIAL FINANCING STATEMENT IN LIEU OF CONTINUATION
142.8 STATEMENT.] The filing of an initial financing statement in the
142.9 office specified in section 336.9-501 continues the
142.10 effectiveness of a financing statement filed before this act
142.11 takes effect if:
142.12 (1) the filing of an initial financing statement in that
142.13 office would be effective to perfect a security interest under
142.14 this act;
142.15 (2) the preeffective date financing statement was filed in
142.16 an office in another state or another office in this state; and
142.17 (3) the initial financing statement satisfies subsection
142.18 (c).
142.19 (b) [PERIOD OF CONTINUED EFFECTIVENESS.] The filing of an
142.20 initial financing statement under subsection (a) continues the
142.21 effectiveness of the preeffective date financing statement:
142.22 (1) if the initial financing statement is filed before this
142.23 act takes effect, for the period provided in Minnesota Statutes
142.24 1998, section 336.9-403, with respect to a financing statement;
142.25 and
142.26 (2) if the initial financing statement is filed after this
142.27 act takes effect, for the period provided in section 336.9-515
142.28 with respect to an initial financing statement.
142.29 (c) [REQUIREMENTS FOR INITIAL FINANCING STATEMENT UNDER
142.30 SUBSECTION (A).] To be effective for purposes of subsection (a),
142.31 an initial financing statement must:
142.32 (1) satisfy the requirements of Part 5 for an initial
142.33 financing statement;
142.34 (2) identify the preeffective date financing statement by
142.35 indicating the office in which the financing statement was filed
142.36 and providing the dates of filing and file numbers, if any, of
143.1 the financing statement and of the most recent continuation
143.2 statement filed with respect to the financing statement; and
143.3 (3) indicate that the preeffective date financing statement
143.4 remains effective.
143.5 Sec. 136. [336.9-707] [AMENDMENT OF PRE-EFFECTIVE DATE
143.6 FINANCING STATEMENT.]
143.7 (a) [PRE-EFFECTIVE DATE FINANCING STATEMENT.] In this
143.8 section, "pre-effective date financing statement" means a
143.9 financing statement filed before this act takes effect.
143.10 (b) [APPLICABLE LAW.] After this act takes effect, a person
143.11 may add or delete collateral covered by, continue or terminate
143.12 the effectiveness of, or otherwise amend the information
143.13 provided in, a pre-effective date financing statement only in
143.14 accordance with the law of the jurisdiction governing perfection
143.15 as provided in Part 3. However, the effectiveness of a
143.16 pre-effective date financing statement also may be terminated in
143.17 accordance with the law of the jurisdiction in which the
143.18 financing statement is filed.
143.19 (c) [METHOD OF AMENDING: GENERAL RULE.] Except as
143.20 otherwise provided in subsection (d), if the law of this state
143.21 governs perfection of a security interest, the information in a
143.22 pre-effective date financing statement may be amended after this
143.23 act takes effect only if:
143.24 (1) the pre-effective date financing statement and an
143.25 amendment are filed in the office specified in section
143.26 336.9-501;
143.27 (2) an amendment is filed in the office specified in
143.28 section 336.9-501 concurrently with, or after the filing in that
143.29 office of, an initial financing statement that satisfies section
143.30 336.9-706(c); or
143.31 (3) an initial financing statement that provides the
143.32 information as amended and satisfies section 336.9-706(c) is
143.33 filed in the office specified in section 336.9-501.
143.34 (d) [METHOD OF AMENDING: CONTINUATION.] If the law of this
143.35 state governs perfection of a security interest, the
143.36 effectiveness of a pre-effective date financing statement may be
144.1 continued only under section 336.9-705(d) and (f) or 336.9-706.
144.2 (e) [METHOD OF AMENDING: ADDITIONAL TERMINATION
144.3 RULE.] Whether or not the law of this state governs perfection
144.4 of a security interest, the effectiveness of a pre-effective
144.5 date financing statement filed in this state may be terminated
144.6 after this act takes effect by filing a termination statement in
144.7 the office in which the pre-effective date financing statement
144.8 is filed, unless an initial financing statement that satisfies
144.9 section 336.9-706(c) has been filed in the office specified by
144.10 the law of the jurisdiction governing perfection as provided in
144.11 Part 3 as the office in which to file a financing statement.
144.12 Sec. 137. [336.9-708] [PERSONS ENTITLED TO FILE INITIAL
144.13 FINANCING STATEMENT OR CONTINUATION STATEMENT.]
144.14 A person may file an initial financing statement or a
144.15 continuation statement under this part if:
144.16 (1) the secured party of record authorizes the filing; and
144.17 (2) the filing is necessary under this part:
144.18 (A) to continue the effectiveness of a financing statement
144.19 filed before this act takes effect; or
144.20 (B) to perfect or continue the perfection of a security
144.21 interest.
144.22 Sec. 138. [336.9-709] [PRIORITY.]
144.23 (a) [LAW GOVERNING PRIORITY.] This act determines the
144.24 priority of conflicting claims to collateral. However, if the
144.25 relative priorities of the claims were established before this
144.26 act takes effect, former article 9 determines priority.
144.27 (b) [PRIORITY IF SECURITY INTERESTS BECOME ENFORCEABLE
144.28 UNDER SECTION 336.9-203.] For purposes of section 336.9-322(a),
144.29 the priority of a security interest that becomes enforceable
144.30 under section 336.9-203 dates from the time this act takes
144.31 effect if the security interest is perfected under this act by
144.32 the filing of a financing statement before this act takes effect
144.33 which would not have been effective to perfect the security
144.34 interest under former article 9. This subsection does not apply
144.35 to conflicting security interests each of which is perfected by
144.36 the filing of such a financing statement.
145.1 Sec. 139. [SATELLITE OFFICES; RULEMAKING.]
145.2 The secretary of state shall adopt rules governing the
145.3 establishment and operation of satellite offices under Minnesota
145.4 Statutes, sections 336.9-527 to 336.9-530, by July 1, 2000. The
145.5 rules are exempt from the rulemaking provisions of Minnesota
145.6 Statutes, chapter 14, but must be adopted under Minnesota
145.7 Statutes, section 14.386. Notwithstanding Minnesota Statutes,
145.8 section 14.386, paragraph (b), the rules remain in effect until
145.9 July 1, 2003.
145.10 The secretary of state may also adopt expedited rules
145.11 governing the establishment and operation of the central filing
145.12 system under Minnesota Statutes, sections 336.9-501 to 336.9-530
145.13 and 336.9-701 to 336.9-709, pursuant to section 14.389.
145.14 The authority to adopt rules under this section expires on
145.15 July 1, 2003. The expiration of this authority does not affect
145.16 the validity of the rules adopted under it.
145.17 This section is effective the day following final enactment.
145.18 Sec. 140. [REPEALER.]
145.19 Minnesota Statutes 1998, sections 336.9-101; 336.9-102;
145.20 336.9-103; 336.9-104; 336.9-105; 336.9-106; 336.9-107;
145.21 336.9-108; 336.9-109; 336.9-110; 336.9-112; 336.9-113;
145.22 336.9-114; 336.9-115; 336.9-116; 336.9-201; 336.9-202;
145.23 336.9-204; 336.9-205; 336.9-206; 336.9-207; 336.9-208;
145.24 336.9-301; 336.9-302; 336.9-303; 336.9-304; 336.9-305;
145.25 336.9-306; 336.9-307; 336.9-308; 336.9-309; 336.9-310;
145.26 336.9-311; 336.9-312; 336.9-313; 336.9-314; 335.9-315;
145.27 336.9-316; 336.9-317; 336.9-318; 336.9-403; 336.9-404;
145.28 336.9-405; 336.9-406; 336.9-407; 336.9-408; 336.9-410;
145.29 336.9-412; 336.9-413; 336.9-501; 336.9-502; 336.9-503;
145.30 336.9-504; 336.9-505; 336.9-506; 336.9-507; and 336.9-508; and
145.31 Minnesota Statutes 1999 Supplement, sections 336.9-203;
145.32 336.9-401; 336.9-402; and 336.9-411, are repealed.
145.33 ARTICLE 2
145.34 CONFORMING AMENDMENTS TO OTHER ARTICLES
145.35 Section 1. Minnesota Statutes 1998, section 336.1-105, is
145.36 amended to read:
146.1 336.1-105 [TERRITORIAL APPLICATION OF THE CHAPTER; PARTIES'
146.2 POWER TO CHOOSE APPLICABLE LAW.]
146.3 (1) Except as provided hereafter in this section, when a
146.4 transaction bears a reasonable relation to this state and also
146.5 to another state or nation the parties may agree that the law
146.6 either of this state or of such other state or nation shall
146.7 govern their rights and duties. Failing such agreement this
146.8 chapter applies to transactions bearing an appropriate relation
146.9 to this state.
146.10 (2) Where one of the following provisions of this chapter
146.11 specifies the applicable law, that provision governs and a
146.12 contrary agreement is effective only to the extent permitted by
146.13 the law (including the conflict of laws rules) so specified:
146.14 Rights of creditors against sold goods. Section 336.2-402.
146.15 Applicability of the article on leases. Sections
146.16 336.2A-105 and 336.2A-106.
146.17 Applicability of the article on bank deposits and
146.18 collections. Section 336.4-102.
146.19 Governing law in the article on funds transfers. Section
146.20 336.4A-507.
146.21 Letters of Credit. Section 336.5-116.
146.22 Applicability of the article on investment securities.
146.23 Section 336.8-110.
146.24 Perfection provisions of the article on secured
146.25 transactions. Section 336.9-103.
146.26 Law governing perfection, the effect of perfection or
146.27 nonperfection, and the priority of security interests and
146.28 agricultural liens. Sections 336.9-301 to 336.9-307.
146.29 Sec. 2. Minnesota Statutes 1998, section 336.1-201, is
146.30 amended to read:
146.31 336.1-201 [GENERAL DEFINITIONS.]
146.32 Subject to additional definitions contained in the
146.33 subsequent articles of this chapter which are applicable to
146.34 specific articles or parts thereof, and unless the context
146.35 otherwise requires, in this chapter:
146.36 (1) "Action" in the sense of a judicial proceeding includes
147.1 recoupment, counterclaim, setoff, suit in equity and any other
147.2 proceedings in which rights are determined.
147.3 (2) "Aggrieved party" means a party entitled to resort to a
147.4 remedy.
147.5 (3) "Agreement" means the bargain of the parties in fact as
147.6 found in their language or by implication from other
147.7 circumstances including course of dealing or usage of trade or
147.8 course of performance as provided in this chapter (sections
147.9 336.1-205 and 336.2-208). Whether an agreement has legal
147.10 consequences is determined by the provisions of this chapter, if
147.11 applicable; otherwise by the law of contracts (section
147.12 336.1-103). (Compare "Contract.")
147.13 (4) "Bank" means any person engaged in the business of
147.14 banking.
147.15 (5) "Bearer" means the person in possession of an
147.16 instrument, document of title, or certificated security payable
147.17 to bearer or endorsed in blank.
147.18 (6) "Bill of lading" means a document evidencing the
147.19 receipt of goods for shipment issued by a person engaged in the
147.20 business of transporting or forwarding goods, and includes an
147.21 airbill. "Airbill" means a document serving for air
147.22 transportation as a bill of lading does for marine or rail
147.23 transportation, and includes an air consignment note or air
147.24 waybill.
147.25 (7) "Branch" includes a separately incorporated foreign
147.26 branch of a bank.
147.27 (8) "Burden of establishing" a fact means the burden of
147.28 persuading the triers of fact that the existence of the fact is
147.29 more probable than its nonexistence.
147.30 (9) "Buyer in ordinary course of business" means a person
147.31 who that buys goods in good faith and, without knowledge that
147.32 the sale to that person is in violation of violates the
147.33 ownership rights or security interest of a third party another
147.34 person in the goods buys, and in the ordinary course from a
147.35 person, other than a pawnbroker, in the business of selling
147.36 goods of that kind but does not include a pawnbroker. All
148.1 persons who sell minerals or the like (including oil and gas) at
148.2 wellhead or minehead shall be deemed to be persons A person buys
148.3 goods in the ordinary course if the sale to the person comports
148.4 with the usual or customary practices in the kind of business in
148.5 which the seller is engaged or with the seller's own usual or
148.6 customary practices. A person that sells oil, gas, or other
148.7 minerals at the wellhead or minehead is a person in the business
148.8 of selling goods of that kind. "Buying" A buyer in ordinary
148.9 course of business may be buy for cash or, by exchange of
148.10 other property, or on secured or unsecured credit, and includes
148.11 receiving may acquire goods or documents of title under a
148.12 preexisting contract for sale but does not include a transfer in
148.13 bulk or as security for or in total or partial satisfaction of a
148.14 money debt. Only a buyer that takes possession of the goods or
148.15 has a right to recover the goods from the seller under article 2
148.16 may be a buyer in ordinary course of business. A person that
148.17 acquires goods in a transfer in bulk or as security for or in
148.18 total or partial satisfaction of a money debt is not a buyer in
148.19 ordinary course of business.
148.20 (10) "Conspicuous": A term or clause is conspicuous when
148.21 it is so written that a reasonable person against whom it is to
148.22 operate ought to have noticed it. A printing heading in
148.23 capitals (as: NONNEGOTIABLE BILL OF LADING) is conspicuous.
148.24 Language in the body of a form is "conspicuous" if it is in
148.25 larger or other contrasting type or color. But in a telegram
148.26 any stated term is "conspicuous". Whether a term or clause is
148.27 "conspicuous" or not is for decision by the court.
148.28 (11) "Contract" means the total legal obligation which
148.29 results from the parties' agreement as affected by this chapter
148.30 and any other applicable rules of law. (Compare "Agreement.")
148.31 (12) "Creditor" includes a general creditor, a secured
148.32 creditor, a lien creditor and any representative of creditors,
148.33 including an assignee for the benefit of creditors, a trustee in
148.34 bankruptcy, a receiver in equity and an executor or
148.35 administrator of an insolvent debtor's or assignor's estate.
148.36 (13) "Defendant" includes a person in the position of
149.1 defendant in a cross-action or counterclaim.
149.2 (14) "Delivery" with respect to instruments, documents of
149.3 title, chattel paper, or certificated securities means voluntary
149.4 transfer of possession.
149.5 (15) "Document of title" includes bill of lading, dock
149.6 warrant, dock receipt, warehouse receipt or order for the
149.7 delivery of goods, and also any other document which in the
149.8 regular course of business or financing is treated as adequately
149.9 evidencing that the person in possession of it is entitled to
149.10 receive, hold and dispose of the document and the goods it
149.11 covers. To be a document of title a document must purport to be
149.12 issued by or addressed to a bailee and purport to cover goods in
149.13 the bailee's possession which are either identified or are
149.14 fungible portions of an identified mass.
149.15 (16) "Fault" means wrongful act, omission or breach.
149.16 (17) "Fungible" with respect to goods or securities means
149.17 goods or securities of which any unit is, by nature or usage of
149.18 trade, the equivalent of any other like unit. Goods which are
149.19 not fungible shall be deemed fungible for the purposes of this
149.20 chapter to the extent that under a particular agreement or
149.21 document unlike units are treated as equivalents.
149.22 (18) "Genuine" means free of forgery or counterfeiting.
149.23 (19) "Good faith" means honesty in fact in the conduct or
149.24 transaction concerned.
149.25 (20) "Holder," with respect to a negotiable instrument,
149.26 means the person in possession if the instrument is payable to
149.27 bearer or, in the case of an instrument payable to an identified
149.28 person, if the identified person is in possession. "Holder,"
149.29 with respect to a document of title, means the person in
149.30 possession if the goods are deliverable to bearer or to the
149.31 order of the person in possession.
149.32 (21) To "honor" is to pay or to accept and pay, or where a
149.33 credit so engages to purchase or discount a draft complying with
149.34 the terms of the credit.
149.35 (22) "Insolvency proceedings" includes any assignment for
149.36 the benefit of creditors or other proceedings intended to
150.1 liquidate or rehabilitate the estate of the person involved.
150.2 (23) A person is "insolvent" who either has ceased to pay
150.3 debts in the ordinary course of business or cannot pay the debts
150.4 as they become due or is insolvent within the meaning of the
150.5 federal bankruptcy law.
150.6 (24) "Money" means a medium of exchange authorized or
150.7 adopted by a domestic or foreign government and includes a
150.8 monetary unit of account established by an intergovernmental
150.9 organization or by agreement between two or more nations.
150.10 (25) A person has "notice" of a fact when that person
150.11 (a) has actual knowledge of it; or
150.12 (b) has received a notice or notification of it; or
150.13 (c) from all the facts and circumstances known to that
150.14 person at the time in question, has reason to know that it
150.15 exists.
150.16 A person "knows" or has "knowledge" of a fact when that
150.17 person has actual knowledge of it. "Discover" or "learn" or a
150.18 word or phrase of similar import refers to knowledge rather than
150.19 to reason to know. The time and circumstances under which a
150.20 notice or notification may cease to be effective are not
150.21 determined by this chapter.
150.22 (26) A person "notifies" or "gives" a notice or
150.23 notification to another by taking such steps as may be
150.24 reasonably required to inform the other in ordinary course
150.25 whether or not such other actually comes to know of it. A
150.26 person "receives" a notice or notification when
150.27 (a) it comes to that person's attention; or
150.28 (b) it is duly delivered at the place of business through
150.29 which the contract was made or at any other place held out by
150.30 that person as the place for receipt of such communications.
150.31 (27) Notice, knowledge or a notice or notification received
150.32 by an organization is effective for a particular transaction
150.33 from the time when it is brought to the attention of the
150.34 individual conducting that transaction, and in any event from
150.35 the time when it would have been brought to the individual's
150.36 attention if the organization had exercised due diligence. An
151.1 organization exercises due diligence if it maintains reasonable
151.2 routines for communicating significant information to the person
151.3 conducting the transaction and there is reasonable compliance
151.4 with the routines. Due diligence does not require an individual
151.5 acting for the organization to communicate information unless
151.6 such communication is part of regular duties or unless the
151.7 individual has reason to know of the transaction and that the
151.8 transaction would be materially affected by the information.
151.9 (28) "Organization" includes a corporation, government or
151.10 governmental subdivision or agency, business trust, estate,
151.11 trust, partnership or association, two or more persons having a
151.12 joint or common interest, or any other legal or commercial
151.13 entity.
151.14 (29) "Party," as distinct from "third party," means a
151.15 person who has engaged in a transaction or made an agreement
151.16 within this chapter.
151.17 (30) "Person" includes an individual or an organization
151.18 (see section 336.1-102).
151.19 (31) "Presumption" or "presumed" means that the trier of
151.20 fact must find the existence of the fact presumed unless and
151.21 until evidence is introduced which would support a finding of
151.22 its nonexistence.
151.23 (32) "Purchase" includes taking by sale, discount,
151.24 negotiation, mortgage, pledge, lien, security interest, issue or
151.25 reissue, gift or any other voluntary transaction creating an
151.26 interest in property.
151.27 (33) "Purchaser" means a person who takes by purchase.
151.28 (34) "Remedy" means any remedial right to which an
151.29 aggrieved party is entitled with or without resort to a tribunal.
151.30 (35) "Representative" includes an agent, an officer of a
151.31 corporation or association, and a trustee, executor or
151.32 administrator of an estate, or any other person empowered to act
151.33 for another.
151.34 (36) "Rights" includes remedies.
151.35 (37) "Security interest" means an interest in personal
151.36 property or fixtures which secures payment or performance of an
152.1 obligation. The retention or reservation of title by a seller
152.2 of goods notwithstanding shipment or delivery to the buyer
152.3 (section 336.2-401) is limited in effect to a reservation of a
152.4 "security interest". The term also includes any interest of a
152.5 consignor and a buyer of accounts or, chattel paper which, a
152.6 payment intangible, or a promissory note in a transaction that
152.7 is subject to article 9. The special property interest of a
152.8 buyer of goods on identification of those goods to a contract
152.9 for sale under section 336.2-401 is not a "security interest,"
152.10 but a buyer may also acquire a "security interest" by complying
152.11 with article 9. Unless a consignment is intended as security,
152.12 reservation of title thereunder is not a "security interest,"
152.13 but a consignment in any event is subject to the provisions on
152.14 consignment sales (section 336.2-326). Except as otherwise
152.15 provided in section 336.2-505, the right of a seller or lessor
152.16 of goods under article 2 or 2a to retain or acquire possession
152.17 of the goods is not a "security interest," but a seller or
152.18 lessor may also acquire a security interest by complying with
152.19 article 9. The retention or reservation of title by a seller of
152.20 goods notwithstanding shipment or delivery to the buyer (section
152.21 336.2-401) is limited in effect to a reservation of a security
152.22 interest.
152.23 Whether a transaction creates a lease or security interest
152.24 is determined by the facts of each case; however, a transaction
152.25 creates a security interest if the consideration the lessee is
152.26 to pay the lessor for the right to possession and use of the
152.27 goods is an obligation for the term of the lease not subject to
152.28 termination by the lessee, and
152.29 (a) the original term of the lease is equal to or greater
152.30 than the remaining economic life of the goods,
152.31 (b) the lessee is bound to renew the lease for the
152.32 remaining economic life of the goods or is bound to become the
152.33 owner of the goods,
152.34 (c) the lessee has an option to renew the lease for the
152.35 remaining economic life of the goods for no additional
152.36 consideration or nominal additional consideration upon
153.1 compliance with the lease agreement, or
153.2 (d) the lessee has an option to become the owner of the
153.3 goods for no additional consideration or nominal additional
153.4 consideration upon compliance with the lease agreement.
153.5 A transaction does not create a security interest merely
153.6 because it provides that
153.7 (a) the present value of the consideration the lessee is
153.8 obligated to pay the lessor for the right to possession and use
153.9 of the goods is substantially equal to or is greater than the
153.10 fair market value of the goods at the time the lease is entered
153.11 into,
153.12 (b) the lessee assumes risk of loss of the goods, or agrees
153.13 to pay taxes, insurance, filing, recording, or registration
153.14 fees, or service or maintenance costs with respect to the goods,
153.15 (c) the lessee has an option to renew the lease or to
153.16 become the owner of the goods,
153.17 (d) the lessee has an option to renew the lease for a fixed
153.18 rent that is equal to or greater than the reasonably predictable
153.19 fair market rent for the use of the goods for the term of the
153.20 renewal at the time the option is to be performed, or
153.21 (e) the lessee has an option to become the owner of the
153.22 goods for a fixed price that is equal to or greater than the
153.23 reasonably predictable fair market value of the goods at the
153.24 time the option is to be performed.
153.25 For purposes of this subsection (37):
153.26 (x) Additional consideration is not nominal if (i) when the
153.27 option to renew the lease is granted to the lessee the rent is
153.28 stated to be the fair market rent for the use of the goods for
153.29 the term of the renewal determined at the time the option is to
153.30 be performed, or (ii) when the option to become the owner of the
153.31 goods is granted to the lessee the price is stated to be the
153.32 fair market value of the goods determined at the time the option
153.33 is to be performed. Additional consideration is nominal if it
153.34 is less than the lessee's reasonably predictable cost of
153.35 performing under the lease agreement if the option is not
153.36 exercised;
154.1 (y) "Reasonably predictable" and "remaining economic life
154.2 of the goods" are to be determined with reference to the facts
154.3 and circumstances at the time the transaction is entered into;
154.4 and
154.5 (z) "Present value" means the amount as of a date certain
154.6 of one or more sums payable in the future, discounted to the
154.7 date certain. The discount is determined by the interest rate
154.8 specified by the parties if the rate is not manifestly
154.9 unreasonable at the time the transaction is entered into;
154.10 otherwise, the discount is determined by a commercially
154.11 reasonable rate that takes into account the facts and
154.12 circumstances of each case at the time the transaction was
154.13 entered into.
154.14 (38) "Send" in connection with any writing or notice means
154.15 to deposit in the mail or deliver for transmission by any other
154.16 usual means of communication with postage or cost of
154.17 transmission provided for and properly addressed and in the case
154.18 of an instrument to an address specified thereon or otherwise
154.19 agreed, or if there be none to any address reasonable under the
154.20 circumstances. The receipt of any writing or notice within the
154.21 time at which it would have arrived if properly sent has the
154.22 effect of a proper sending.
154.23 (39) "Signed" includes any symbol executed or adopted by a
154.24 party with present intention to authenticate a writing.
154.25 (40) "Surety" includes guarantor.
154.26 (41) "Telegram" includes a message transmitted by radio,
154.27 teletype, cable, any mechanical method of transmission, or the
154.28 like.
154.29 (42) "Term" means that portion of an agreement which
154.30 relates to a particular matter.
154.31 (43) "Unauthorized" signature means one made without
154.32 actual, implied, or apparent authority and includes a forgery.
154.33 (44) "Value": Except as otherwise provided with respect to
154.34 negotiable instruments and bank collections (sections 336.3-303,
154.35 336.4-210 and 336-4.211) a person gives "value" for rights by
154.36 acquiring them
155.1 (a) in return for a binding commitment to extend credit or
155.2 for the extension of immediately available credit whether or not
155.3 drawn upon and whether or not a chargeback is provided for in
155.4 the event of difficulties in collection; or
155.5 (b) as security for or in total or partial satisfaction of
155.6 a preexisting claim; or
155.7 (c) by accepting delivery pursuant to a preexisting
155.8 contract for purchase; or
155.9 (d) generally, in return for any consideration sufficient
155.10 to support a simple contract.
155.11 (45) "Warehouse receipt" means a receipt issued by a person
155.12 engaged in the business of storing goods for hire.
155.13 (46) "Written" or "writing" includes printing, typewriting
155.14 or any other intentional reduction to tangible form.
155.15 Sec. 3. Minnesota Statutes 1998, section 336.2-103, is
155.16 amended to read:
155.17 336.2-103 [DEFINITIONS AND INDEX OF DEFINITIONS.]
155.18 (1) In this article unless the context otherwise requires:
155.19 (a) "Buyer" means a person who buys or contracts to buy
155.20 goods.
155.21 (b) "Good faith" in the case of a merchant means honesty in
155.22 fact and the observance of reasonable commercial standards of
155.23 fair dealing in the trade.
155.24 (c) "Receipt" of goods means taking physical possession of
155.25 them.
155.26 (d) "Seller" means a person who sells or contracts to sell
155.27 goods.
155.28 (2) Other definitions applying to this article or to
155.29 specified parts thereof, and the sections in which they appear
155.30 are:
155.31 "Acceptance," section 336.2-606.
155.32 "Banker's credit," section 336.2-325.
155.33 "Between merchants," section 336.2-104.
155.34 "Cancellation," section 336.2-106(4).
155.35 "Commercial unit," section 336.2-105.
155.36 "Confirmed credit," section 336.2-325.
156.1 "Conforming to contract," section 336.2-106.
156.2 "Contract for sale," section 336.2-106.
156.3 "Cover," section 336.2-712.
156.4 "Entrusting," section 336.2-403.
156.5 "Financing agency," section 336.2-104.
156.6 "Future goods," section 336.2-105.
156.7 "Goods," section 336.2-105.
156.8 "Identification," section 336.2-501.
156.9 "Installment contract," section 336.2-612.
156.10 "Letter of credit," section 336.2-325.
156.11 "Lot," section 336.2-105.
156.12 "Merchant," section 336.2-104.
156.13 "Overseas," section 336.2-323.
156.14 "Person in position of seller," section 336.2-707.
156.15 "Present sale," section 336.2-106.
156.16 "Sale," section 336.2-106.
156.17 "Sale on approval," section 336.2-326.
156.18 "Sale or return," section 336.2-326.
156.19 "Termination," section 336.2-106.
156.20 (3) The following definitions in other articles apply to
156.21 this article:
156.22 "Check," section 336.3-104.
156.23 "Consignee," section 336.7-102.
156.24 "Consignor," section 336.7-102.
156.25 "Consumer goods," section 336.9-109 336.9-102.
156.26 "Dishonor," section 336.3-502.
156.27 "Draft," section 336.3-104.
156.28 (4) In addition article 1 contains general definitions and
156.29 principles of construction and interpretation applicable
156.30 throughout this article.
156.31 Sec. 4. Minnesota Statutes 1998, section 336.2-210, is
156.32 amended to read:
156.33 336.2-210 [DELEGATION OF PERFORMANCE; ASSIGNMENT OF
156.34 RIGHTS.]
156.35 (1) A party may perform a duty through a delegate unless
156.36 otherwise agreed or unless the other party has a substantial
157.1 interest in having the original promisor perform or control the
157.2 acts required by the contract. No delegation of performance
157.3 relieves the party delegating of any duty to perform or any
157.4 liability for breach.
157.5 (2) Unless otherwise agreed all rights of either seller or
157.6 buyer can be assigned except where the assignment would
157.7 materially change the duty of the other party, or increase
157.8 materially the burden or risk imposed on the other party by the
157.9 contract, or impair materially the other party's chance of
157.10 obtaining return performance. A right to damages for breach of
157.11 the whole contract or a right arising out of the assignor's due
157.12 performance of the assignor's entire obligation can be assigned
157.13 despite agreement otherwise.
157.14 (3) The creation, attachment, perfection, or enforcement of
157.15 a security interest in the seller's interest under a contract is
157.16 not a transfer that materially changes the duty of or increases
157.17 materially the burden or risk imposed on the buyer or impairs
157.18 materially the buyer's chance of obtaining return performance
157.19 within the purview of subsection (2) unless, and then only to
157.20 the extent that, enforcement actually results in a delegation of
157.21 material performance of the seller. Even in that event, the
157.22 creation, attachment, perfection, and enforcement of the
157.23 security interest remain effective, but (i) the seller is liable
157.24 to the buyer for damages caused by the delegation to the extent
157.25 that the damages could not reasonably be prevented by the buyer,
157.26 and (ii) a court having jurisdiction may grant other appropriate
157.27 relief, including cancellation of the contract for sale or an
157.28 injunction against enforcement of the security interest or
157.29 consummation of the enforcement.
157.30 (4) Unless the circumstances indicate the contrary a
157.31 prohibition of assignment of "the contract" is to be construed
157.32 as barring only the delegation to the assignee of the assignor's
157.33 performance.
157.34 (4) (5) An assignment of "the contract" or of "all my
157.35 rights under the contract" or an assignment in similar general
157.36 terms is an assignment of rights and unless the language or the
158.1 circumstances (as in an assignment for security) indicate the
158.2 contrary, it is a delegation of performance of the duties of the
158.3 assignor and its acceptance by the assignee constitutes a
158.4 promise by the assignee to perform those duties. This promise
158.5 is enforceable by either the assignor or the other party to the
158.6 original contract.
158.7 (5) (6) The other party may treat any assignment which
158.8 delegates performance as creating reasonable grounds for
158.9 insecurity and may without prejudice to the rights of the other
158.10 party against the assignor demand assurances from the assignee
158.11 (section 336.2-609).
158.12 Sec. 5. Minnesota Statutes 1998, section 336.2-326, is
158.13 amended to read:
158.14 336.2-326 [SALE ON APPROVAL AND SALE OR RETURN; CONSIGNMENT
158.15 SALES AND RIGHTS OF CREDITORS.]
158.16 (1) Unless otherwise agreed, if delivered goods may be
158.17 returned by the buyer even though they conform to the contract,
158.18 the transaction is
158.19 (a) a "sale on approval" if the goods are delivered
158.20 primarily for use, and
158.21 (b) a "sale or return" if the goods are delivered primarily
158.22 for resale.
158.23 (2) Except as provided in subsection (3), Goods held on
158.24 approval are not subject to the claims of the buyer's creditors
158.25 until acceptance; goods held on sale or return are subject to
158.26 such claims while in the buyer's possession.
158.27 (3) Where goods are delivered to a person for sale and such
158.28 person maintains a place of business dealing in goods of the
158.29 kind involved, under a name other than the name of the person
158.30 making delivery, then with respect to claims of creditors of the
158.31 person conducting the business the goods are deemed to be on
158.32 sale or return. The provisions of this subsection are
158.33 applicable even though an agreement purports to reserve title to
158.34 the person making delivery until payment or resale or uses such
158.35 words as "on consignment" or "on memorandum." However, this
158.36 subsection is not applicable if the person making delivery
159.1 (a) complies with an applicable law providing for a
159.2 consignor's interest or the like to be evidenced by a sign, or
159.3 (b) establishes that the person conducting the business is
159.4 generally known by the person's creditors to be substantially
159.5 engaged in selling the goods of others, or
159.6 (c) complies with the filing provisions of the article on
159.7 secured transactions (article 9).
159.8 (4) Any "or return" term of a contract for sale is to be
159.9 treated as a separate contract for sale within the statute of
159.10 frauds section of this article (section 336.2-201) and as
159.11 contradicting the sale aspect of the contract within the
159.12 provisions of this article on parol or extrinsic evidence
159.13 (section 336.2-202).
159.14 Sec. 6. Minnesota Statutes 1998, section 336.2-502, is
159.15 amended to read:
159.16 336.2-502 [BUYER'S RIGHT TO GOODS ON SELLER'S REPUDIATION,
159.17 FAILURE TO DELIVER, OR INSOLVENCY.]
159.18 (1) Subject to subsection subsections (2) and (3) and even
159.19 though the goods have not been shipped a buyer who has paid a
159.20 part or all of the price of goods in which the buyer has a
159.21 special property under the provisions of the immediately
159.22 preceding section may on making and keeping good a tender of any
159.23 unpaid portion of their price recover them from the seller if:
159.24 (a) in the case of goods bought for personal, family, or
159.25 household purposes, the seller repudiates or fails to deliver as
159.26 required by the contract; or
159.27 (b) in all cases, the seller becomes insolvent within ten
159.28 days after receipt of the first installment on their price.
159.29 (2) The buyer's right to recover the goods under subsection
159.30 (1)(a) vests upon acquisition of a special property, even if the
159.31 seller had not then repudiated or failed to deliver.
159.32 (3) If the identification creating the special property has
159.33 been made by the buyer, the buyer acquires the right to recover
159.34 the goods only if they conform to the contract for sale.
159.35 Sec. 7. Minnesota Statutes 1998, section 336.2-716, is
159.36 amended to read:
160.1 336.2-716 [BUYER'S RIGHT TO SPECIFIC PERFORMANCE OR
160.2 REPLEVIN.]
160.3 (1) Specific performance may be decreed where the goods are
160.4 unique or in other proper circumstances.
160.5 (2) The decree for specific performance may include such
160.6 terms and conditions as to payment of the price, damages, or
160.7 other relief as the court may deem just.
160.8 (3) The buyer has a right of replevin for goods identified
160.9 to the contract if after reasonable effort the buyer is unable
160.10 to effect cover for such goods or the circumstances reasonably
160.11 indicate that such effort will be unavailing or if the goods
160.12 have been shipped under reservation and satisfaction of the
160.13 security interest in them has been made or tendered. In the
160.14 case of goods bought for personal, family, or household
160.15 purposes, the buyer's right of replevin vests upon acquisition
160.16 of a special property, even if the seller had not then
160.17 repudiated or failed to deliver.
160.18 Sec. 8. Minnesota Statutes 1998, section 336.2A-103, is
160.19 amended to read:
160.20 336.2A-103 [DEFINITIONS AND INDEX OF DEFINITIONS.]
160.21 (1) In this article unless the context otherwise requires:
160.22 (a) "Buyer in ordinary course of business" means a person
160.23 who in good faith and without knowledge that the sale is in
160.24 violation of the ownership rights or security interest or
160.25 leasehold interest of a third party in the goods, buys in
160.26 ordinary course from a person in the business of selling goods
160.27 of that kind but does not include a pawnbroker. "Buying" may be
160.28 for cash or by exchange of other property or on secured or
160.29 unsecured credit and includes receiving goods or documents of
160.30 title under a preexisting contract for sale but does not include
160.31 a transfer in bulk or as security for or in total or partial
160.32 satisfaction of a money debt.
160.33 (b) "Cancellation" occurs when either party puts an end to
160.34 the lease contract for default by the other party.
160.35 (c) "Commercial unit" means a unit of goods that by
160.36 commercial usage is a single whole for purposes of lease and
161.1 division of which materially impairs its character or value on
161.2 the market or in use. A commercial unit may be a single
161.3 article, as a machine, or a set of articles, as a suite of
161.4 furniture or a line of machinery, or a quantity, as a gross or
161.5 carload, or any other unit treated in use or in the relevant
161.6 market as a single whole.
161.7 (d) "Conforming" goods or performance under a lease
161.8 contract means goods or performance that are in accordance with
161.9 the obligations under the lease contract.
161.10 (e) "Consumer lease" means a lease that a lessor regularly
161.11 engaged in the business of leasing or selling makes to a lessee
161.12 who is an individual and who takes under the lease primarily for
161.13 a personal, family, or household purpose, if the total payments
161.14 to be made under the lease contract, excluding payments for
161.15 options to renew or buy, do not exceed $25,000.
161.16 (f) "Fault" means wrongful act, omission, breach, or
161.17 default.
161.18 (g) "Finance lease" means a lease in which
161.19 (1) the lessor does not select, manufacture, or supply the
161.20 goods,
161.21 (2) the lessor acquires the goods or the right to
161.22 possession and use of the goods in connection with the lease,
161.23 and
161.24 (3) either
161.25 (i) the lessee receives a copy of the contract evidencing
161.26 the lessor's purchase of the goods or a disclaimer statement on
161.27 or before signing the lease contract, or
161.28 (ii) the lessee's approval of the contract evidencing the
161.29 lessor's purchase of the goods or a disclaimer statement is a
161.30 condition to effectiveness of the lease contract.
161.31 "Disclaimer statement" means a written statement that is
161.32 part of or separate from the lease contract that discloses all
161.33 warranties and other rights provided to the lessee by the lessor
161.34 and supplier in connection with the lease contract and informs
161.35 the lessee in a conspicuous manner that there are no warranties
161.36 or other rights provided to the lessee by the lessor and
162.1 supplier other than those disclosed in the statement.
162.2 (h) "Goods" means all things that are movable at the time
162.3 of identification to the lease contract, or are fixtures
162.4 (section 336.2A-309), but the term does not include money,
162.5 documents, instruments, accounts, chattel paper, general
162.6 intangibles, or minerals or the like, including oil and gas,
162.7 before extraction. The term also includes the unborn young of
162.8 animals.
162.9 (i) "Installment lease contract" means a lease contract
162.10 that authorizes or requires the delivery of goods in separate
162.11 lots to be separately accepted, even though the lease contract
162.12 contains a clause "each delivery is a separate lease" or its
162.13 equivalent.
162.14 (j) "Lease" means a transfer of the right to possession and
162.15 use of goods for a term in return for consideration, but a sale,
162.16 including a sale on approval or a sale or return, or retention
162.17 or creation of a security interest is not a lease. Unless the
162.18 context clearly indicates otherwise, the term includes a
162.19 sublease.
162.20 (k) "Lease agreement" means the bargain, with respect to
162.21 the lease, of the lessor and the lessee in fact as found in
162.22 their language or by implication from other circumstances
162.23 including course of dealing or usage of trade or course of
162.24 performance as provided in this article. Unless the context
162.25 clearly indicates otherwise, the term includes a sublease
162.26 agreement.
162.27 (l) "Lease contract" means the total legal obligation that
162.28 results from the lease agreement as affected by this article and
162.29 any other applicable rules of law. Unless the context clearly
162.30 indicates otherwise, the term includes a sublease contract.
162.31 (m) "Leasehold interest" means the interest of the lessor
162.32 or the lessee under a lease contract.
162.33 (n) "Lessee" means a person who acquires the right to
162.34 possession and use of goods under a lease. Unless the context
162.35 clearly indicates otherwise, the term includes a sublessee.
162.36 (o) "Lessee in ordinary course of business" means a person
163.1 who in good faith and without knowledge that the lease is in
163.2 violation of the ownership rights or security interest or
163.3 leasehold interest of a third party in the goods leases in
163.4 ordinary course from a person in the business of selling or
163.5 leasing goods of that kind but does not include a pawnbroker.
163.6 "Leasing" may be for cash or by exchange of other property or on
163.7 secured or unsecured credit and includes receiving goods or
163.8 documents of title under a preexisting lease contract but does
163.9 not include a transfer in bulk or as security for or in total or
163.10 partial satisfaction of a money debt.
163.11 (p) "Lessor" means a person who transfers the right to
163.12 possession and use of goods under a lease. Unless the context
163.13 clearly indicates otherwise, the term includes a sublessor.
163.14 (q) "Lessor's residual interest" means the lessor's
163.15 interest in the goods after expiration, termination, or
163.16 cancellation of the lease contract.
163.17 (r) "Lien" means a charge against or interest in goods to
163.18 secure payment of a debt or performance of an obligation, but
163.19 the term does not include a security interest.
163.20 (s) "Lot" means a parcel or a single article that is the
163.21 subject matter of a separate lease or delivery, whether or not
163.22 it is sufficient to perform the lease contract.
163.23 (t) "Merchant lessee" means a lessee that is a merchant
163.24 with respect to goods of the kind subject to the lease.
163.25 (u) "Present value" means the amount as of a date certain
163.26 of one or more sums payable in the future, discounted to the
163.27 date certain. The discount is determined by the interest rate
163.28 specified by the parties if the rate was not manifestly
163.29 unreasonable at the time the transaction was entered into;
163.30 otherwise, the discount is determined by a commercially
163.31 reasonable rate that takes into account the facts and
163.32 circumstances of each case at the time the transaction was
163.33 entered into.
163.34 (v) "Purchase" includes taking by sale, lease, mortgage,
163.35 security interest, pledge, gift, or any other voluntary
163.36 transaction creating an interest in goods.
164.1 (w) "Sublease" means a lease of goods the right to
164.2 possession and use of which was acquired by the lessor as a
164.3 lessee under an existing lease.
164.4 (x) "Supplier" means a person from whom a lessor buys or
164.5 leases goods to be leased under a finance lease.
164.6 (y) "Supply contract" means a contract under which a lessor
164.7 buys or leases goods to be leased.
164.8 (z) "Termination" occurs when either party pursuant to a
164.9 power created by agreement or law puts an end to the lease
164.10 contract otherwise than for default.
164.11 (2) Other definitions applying to this article and the
164.12 sections in which they appear are:
164.13 "Accessions." Section 336.2A-310(1).
164.14 "Construction mortgage." Section 336.2A-309(1)(d).
164.15 "Encumbrance." Section 336.2A-309(1)(e).
164.16 "Fixtures." Section 336.2A-309(1)(a).
164.17 "Fixture filing." Section 336.2A-309(1)(b).
164.18 "Purchase money lease." Section 336.2A-309(1)(c).
164.19 (3) The following definitions in other articles apply to
164.20 this article:
164.21 "Account." Section 336.9-106 336.9-102(a)(2).
164.22 "Between merchants." Section 336.2-104(3).
164.23 "Buyer." Section 336.2-103(1)(a).
164.24 "Chattel paper." Section 336.9-105(1)(b) 336.9-102(a)(11).
164.25 "Consumer goods." Section 336.9-109(1) 336.9-102(a)(23).
164.26 "Document." Section 336.9-105(1)(f) 336.9-102(a)(30).
164.27 "Entrusting." Section 336.2-403(3).
164.28 "General intangibles intangible." Section 336.9-106
164.29 336.9-102(a)(42).
164.30 "Good faith." Section 336.2-103(1)(b).
164.31 "Instrument." Section 336.9-105(1)(i) 336.9-102(a)(47).
164.32 "Merchant." Section 336.2-104(1).
164.33 "Mortgage." Section 336.9-105(1)(j) 336.9-102(a)(55).
164.34 "Pursuant to commitment."
164.35 Section 336.9-105(1)(k) 336.9-102(a)(68).
164.36 "Receipt." Section 336.2-103(1)(c).
165.1 "Sale." Section 336.2-106(1).
165.2 "Sale on approval." Section 336.2-326.
165.3 "Sale or return." Section 336.2-326.
165.4 "Seller." Section 336.2-103(1)(d).
165.5 (4) In addition, sections 336.1-101 to 336.1-109 contain
165.6 general definitions and principles of construction and
165.7 interpretation applicable throughout this article.
165.8 Sec. 9. Minnesota Statutes 1998, section 336.2A-303, is
165.9 amended to read:
165.10 336.2A-303 [ALIENABILITY OF PARTY'S INTEREST UNDER LEASE
165.11 CONTRACT OR OF LESSOR'S RESIDUAL INTEREST IN GOODS; DELEGATION
165.12 OF PERFORMANCE; TRANSFER OF RIGHTS.]
165.13 (1) As used in this section, "creation of a security
165.14 interest" includes the sale of a lease contract that is subject
165.15 to article 9, secured transactions, by reason of section
165.16 336.9-102(1)(b) 336.9-109(a)(3).
165.17 (2) Except as provided in subsections subsection (3)
165.18 and (4) section 336.9-407, a provision in a lease agreement that
165.19 (i) prohibits the voluntary or involuntary transfer, including a
165.20 transfer by sale, sublease, creation or enforcement of a
165.21 security interest, or attachment, levy, or other judicial
165.22 process, of an interest of a party under the lease contract or
165.23 of the lessor's residual interest in the goods, or (ii) makes
165.24 the transfer an event of default, gives rise to the rights and
165.25 remedies provided in subsection (5) (4), but a transfer that is
165.26 prohibited or is an event of default under the lease agreement
165.27 is otherwise effective.
165.28 (3) A provision in a lease agreement that (i) prohibits the
165.29 creation or enforcement of a security interest in an interest of
165.30 a party under the lease contract or in the lessor's residual
165.31 interest in the goods, or (ii) makes the transfer an event of
165.32 default, is not enforceable unless, and then only to the extent
165.33 that, there is an actual transfer by the lessee of the lessee's
165.34 right of possession or use of the goods in violation of the
165.35 provision or an actual delegation of a material performance of
165.36 either party to the lease contract in violation of the
166.1 provision. Neither the granting nor the enforcement of a
166.2 security interest in (i) the lessor's interest under the lease
166.3 contract or (ii) the lessor's residual interest in the goods is
166.4 a transfer that materially impairs the prospect of obtaining
166.5 return performance by, materially changes the duty of, or
166.6 materially increases the burden or risk imposed on, the lessee
166.7 within the purview of subsection (5) unless, and then only to
166.8 the extent that, there is an actual delegation of a material
166.9 performance of the lessor.
166.10 (4) A provision in a lease agreement that (i) prohibits a
166.11 transfer of a right to damages for default with respect to the
166.12 whole lease contract or of a right to payment arising out of the
166.13 transferor's due performance of the transferor's entire
166.14 obligation, or (ii) makes the transfer an event of default, is
166.15 not enforceable, and the transfer is not a transfer that
166.16 materially impairs the prospect of obtaining return performance
166.17 by, materially changes the duty of, or materially increases the
166.18 burden or risk imposed on, the other party to the lease contract
166.19 within the purview of subsection (5) (4).
166.20 (5) (4) Subject to subsections subsection (3)
166.21 and (4) section 336.9-407:
166.22 (a) if a transfer is made that is made an event of default
166.23 under a lease agreement, the party to the lease contract not
166.24 making the transfer, unless that party waives the default or
166.25 otherwise agrees, has the rights and remedies described in
166.26 section 336.2A-501(2);
166.27 (b) if paragraph (a) is not applicable and if a transfer is
166.28 made that (i) is prohibited under a lease agreement or (ii)
166.29 materially impairs the prospect of obtaining return performance
166.30 by, materially changes the duty of, or materially increases the
166.31 burden or risk imposed on, the other party to the lease
166.32 contract, unless the party not making the transfer agrees at any
166.33 time to the transfer in the lease contract or otherwise, then,
166.34 except as limited by contract, (i) the transferor is liable to
166.35 the party not making the transfer for damages caused by the
166.36 transfer to the extent that the damages could not reasonably be
167.1 prevented by the party not making the transfer and (ii) a court
167.2 having jurisdiction may grant other appropriate relief,
167.3 including cancellation of the lease contract or an injunction
167.4 against the transfer.
167.5 (6) (5) A transfer of "the lease" or of "all my rights
167.6 under the lease," or a transfer in similar general terms, is a
167.7 transfer of rights and, unless the language or the
167.8 circumstances, as in a transfer for security, indicate the
167.9 contrary, the transfer is a delegation of duties by the
167.10 transferor to the transferee. Acceptance by the transferee
167.11 constitutes a promise by the transferee to perform those
167.12 duties. The promise is enforceable by either the transferor or
167.13 the other party to the lease contract.
167.14 (7) (6) Unless otherwise agreed by the lessor and the
167.15 lessee, a delegation of performance does not relieve the
167.16 transferor as against the other party of any duty to perform or
167.17 of any liability for default.
167.18 (8) (7) In a consumer lease, to prohibit the transfer of an
167.19 interest of a party under the lease contract or to make a
167.20 transfer an event of default, the language must be specific, by
167.21 a writing, and conspicuous.
167.22 Sec. 10. Minnesota Statutes 1998, section 336.2A-307, is
167.23 amended to read:
167.24 336.2A-307 [PRIORITY OF LIENS ARISING BY ATTACHMENT OR LEVY
167.25 ON, SECURITY INTERESTS IN, AND OTHER CLAIMS TO GOODS.]
167.26 (1) Except as otherwise provided in section 336.2A-306, a
167.27 creditor of a lessee takes subject to the lease contract.
167.28 (2) Except as otherwise provided in subsections
167.29 subsection (3) and (4) and in sections 336.2A-306 and
167.30 336.2A-308, a creditor of a lessor takes subject to the lease
167.31 contract unless:
167.32 (a) the creditor holds a lien that attached to the goods
167.33 before the lease contract became enforceable;.
167.34 (b) the creditor holds a security interest in the goods and
167.35 the lessee did not give value and receive delivery of the goods
167.36 without knowledge of the security interest; or
168.1 (c) the creditor holds a security interest in the goods
168.2 which was perfected (section 336.9-303) before the lease
168.3 contract became enforceable.
168.4 (3) Except as otherwise provided in sections 336.9-317,
168.5 336.9-321, and 336.9-323, a lessee in the ordinary course of
168.6 business takes the a leasehold interest free of subject to a
168.7 security interest in the goods created by the lessor even though
168.8 the security interest is perfected (section 336.9-303) and the
168.9 lessee knows of its existence held by a creditor of the lessor.
168.10 (4) A lessee other than a lessee in the ordinary course of
168.11 business takes the leasehold interest free of a security
168.12 interest to the extent that it secures future advances made
168.13 after the secured party acquires knowledge of the lease or more
168.14 than 45 days after the lease contract becomes enforceable,
168.15 whichever first occurs, unless the future advances are made
168.16 pursuant to a commitment entered into without knowledge of the
168.17 lease and before the expiration of the 45-day period.
168.18 Sec. 11. Minnesota Statutes 1998, section 336.2A-309, is
168.19 amended to read:
168.20 336.2A-309 [LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS BECOME
168.21 FIXTURES.]
168.22 (1) In this section:
168.23 (a) goods are "fixtures" when they become so related to
168.24 particular real estate that an interest in them arises under
168.25 real estate law;
168.26 (b) a "fixture filing" is the filing, in the office where a
168.27 record of a mortgage on the real estate would be filed or
168.28 recorded, of a financing statement covering goods that are or
168.29 are to become fixtures and conforming to the requirements of
168.30 section 336.9-402(5) 336.9-502(a) and (b);
168.31 (c) a lease is a "purchase money lease" unless the lessee
168.32 has possession or use of the goods or the right to possession or
168.33 use of the goods before the lease agreement is enforceable;
168.34 (d) a mortgage is a "construction mortgage" to the extent
168.35 it secures an obligation incurred for the construction of an
168.36 improvement on land including the acquisition cost of the land,
169.1 if the recorded writing so indicates; and
169.2 (e) "encumbrance" includes real estate mortgages and other
169.3 liens on real estate and all other rights in real estate that
169.4 are not ownership interests.
169.5 (2) Under this article a lease may be of goods that are
169.6 fixtures or may continue in goods that become fixtures, but no
169.7 lease exists under this article of ordinary building materials
169.8 incorporated into an improvement on land.
169.9 (3) This article does not prevent creation of a lease of
169.10 fixtures pursuant to real estate law.
169.11 (4) The perfected interest of a lessor of fixtures has
169.12 priority over a conflicting interest of an encumbrancer or owner
169.13 of the real estate if:
169.14 (a) the lease is a purchase money lease, the conflicting
169.15 interest of the encumbrancer or owner arises before the goods
169.16 become fixtures, the interest of the lessor is perfected by a
169.17 fixture filing before the goods become fixtures or within ten
169.18 days after that, and the lessee has an interest of record in the
169.19 real estate or is in possession of the real estate; or
169.20 (b) the interest of the lessor is perfected by a fixture
169.21 filing before the interest of the encumbrancer or owner is of
169.22 record, the lessor's interest has priority over any conflicting
169.23 interest of a predecessor in title of the encumbrancer or owner,
169.24 and the lessee has an interest of record in the real estate or
169.25 is in possession of the real estate.
169.26 (5) The interest of a lessor of fixtures, whether or not
169.27 perfected, has priority over the conflicting interest of an
169.28 encumbrancer or owner of the real estate if:
169.29 (a) the fixtures are readily removable factory or office
169.30 machines, readily removable equipment that is not primarily used
169.31 or leased for use in the operation of the real estate, or
169.32 readily removable replacements of domestic appliances that are
169.33 goods subject to a consumer lease, and before the goods become
169.34 fixtures the lease contract is enforceable; or
169.35 (b) the conflicting interest is a lien on the real estate
169.36 obtained by legal or equitable proceedings after the lease
170.1 contract is enforceable; or
170.2 (c) the encumbrancer or owner has consented in writing to
170.3 the lease or has disclaimed an interest in the goods as
170.4 fixtures; or
170.5 (d) the lessee has a right to remove the goods as against
170.6 the encumbrancer or owner. If the lessee's right to remove
170.7 terminates, the priority of the interest of the lessor continues
170.8 for a reasonable time.
170.9 (6) Notwithstanding subsection (4)(a) but otherwise subject
170.10 to subsections (4) and (5), the interest of a lessor of
170.11 fixtures, including the lessor's residual interest, is
170.12 subordinate to the conflicting interest of an encumbrancer of
170.13 the real estate under a construction mortgage recorded before
170.14 the goods become fixtures if the goods become fixtures before
170.15 the completion of the construction. To the extent given to
170.16 refinance a construction mortgage, the conflicting interest of
170.17 an encumbrancer of the real estate under a mortgage has this
170.18 priority to the same extent as the encumbrancer of the real
170.19 estate under the construction mortgage.
170.20 (7) In cases not within the preceding subsections, priority
170.21 between the interest of a lessor of fixtures, including the
170.22 lessor's residual interest, and the conflicting interest of an
170.23 encumbrancer or owner of the real estate who is not the lessee
170.24 is determined by the priority rules governing conflicting
170.25 interests in real estate.
170.26 (8) If the interest of a lessor of fixtures, including the
170.27 lessor's residual interest, has priority over all conflicting
170.28 interests of all owners and encumbrancers of the real estate,
170.29 the lessor or the lessee may (i) on default, expiration,
170.30 termination, or cancellation of the lease agreement but subject
170.31 to the lease agreement and this article, or (ii) if necessary to
170.32 enforce the lessor's or lessee's other rights and remedies under
170.33 this article; remove the goods from the real estate, free and
170.34 clear of all conflicting interests of all owners and
170.35 encumbrancers of the real estate, but the lessor or lessee must
170.36 reimburse any encumbrancer or owner of the real estate who is
171.1 not the lessee and who has not otherwise agreed for the cost of
171.2 repair of any physical injury, but not for any diminution in
171.3 value of the real estate caused by the absence of the goods
171.4 removed or by any necessity of replacing them. A person
171.5 entitled to reimbursement may refuse permission to remove until
171.6 the party seeking removal gives adequate security for the
171.7 performance of this obligation.
171.8 (9) Even though the lease agreement does not create a
171.9 security interest, the interest of a lessor of fixtures,
171.10 including the lessor's residual interest, is perfected by filing
171.11 a financing statement as a fixture filing for leased goods that
171.12 are or are to become fixtures in accordance with the relevant
171.13 provisions of the Article on Secured Transactions (article 9).
171.14 Sec. 12. Minnesota Statutes 1998, section 336.4-210, is
171.15 amended to read:
171.16 336.4-210 [SECURITY INTEREST OF COLLECTING BANK IN ITEMS,
171.17 ACCOMPANYING DOCUMENTS, AND PROCEEDS.]
171.18 (a) A collecting bank has a security interest in an item
171.19 and any accompanying documents or the proceeds of either:
171.20 (1) in case of an item deposited in an account, to the
171.21 extent to which credit given for the item has been withdrawn or
171.22 applied;
171.23 (2) in case of an item for which it has given credit
171.24 available for withdrawal as of right, to the extent of the
171.25 credit given, whether or not the credit is drawn upon or there
171.26 is a right of chargeback; or
171.27 (3) if it makes an advance on or against the item.
171.28 (b) If credit given for several items received at one time
171.29 or pursuant to a single agreement is withdrawn or applied in
171.30 part, the security interest remains upon all the items, any
171.31 accompanying documents or the proceeds of either. For the
171.32 purpose of this section, credits first given are first withdrawn.
171.33 (c) Receipt by a collecting bank of a final settlement for
171.34 an item is a realization on its security interest in the item,
171.35 accompanying documents, and proceeds. So long as the bank does
171.36 not receive final settlement for the item or give up possession
172.1 of the item or accompanying documents for purposes other than
172.2 collection, the security interest continues to that extent and
172.3 is subject to article 9, but:
172.4 (1) no security agreement is necessary to make the security
172.5 interest enforceable (section 336.9-203(1)(a)(b)(3)(A));
172.6 (2) no filing is required to perfect the security interest;
172.7 and
172.8 (3) the security interest has priority over conflicting
172.9 perfected security interests in the item, accompanying
172.10 documents, or proceeds.
172.11 Sec. 13. [336.5-118] [SECURITY INTEREST OF ISSUER OR
172.12 NOMINATED PERSON.]
172.13 (a) An issuer or nominated person has a security interest
172.14 in a document presented under a letter of credit to the extent
172.15 that the issuer or nominated person honors or gives value for
172.16 the presentation.
172.17 (b) So long as and to the extent that an issuer or
172.18 nominated person has not been reimbursed or has not otherwise
172.19 recovered the value given with respect to a security interest in
172.20 a document under subsection (a), the security interest continues
172.21 and is subject to article 9, but:
172.22 (1) a security agreement is not necessary to make the
172.23 security interest enforceable under section 336.9-203(b)(3);
172.24 (2) if the document is presented in a medium other than a
172.25 written or other tangible medium, the security interest is
172.26 perfected; and
172.27 (3) if the document is presented in a written or other
172.28 tangible medium and is not a certificated security, chattel
172.29 paper, a document of title, an instrument, or a letter of
172.30 credit, the security interest is perfected and has priority over
172.31 a conflicting security interest in the document so long as the
172.32 debtor does not have possession of the document.
172.33 Sec. 14. Minnesota Statutes 1998, section 336.7-503, is
172.34 amended to read:
172.35 336.7-503 [DOCUMENT OF TITLE TO GOODS DEFEATED IN CERTAIN
172.36 CASES.]
173.1 (1) A document of title confers no right in goods against a
173.2 person who before issuance of the document had a legal interest
173.3 or a perfected security interest in them and who neither
173.4 (a) delivered or entrusted them or any document of title
173.5 covering them to the bailor or the bailor's nominee with actual
173.6 or apparent authority to ship, store or sell or with power to
173.7 obtain delivery under this article (section 336.7-403) or with
173.8 power of disposition under this chapter (sections 336.2-403 and
173.9 336.9-307 336.9-320) or other statute or rule of law; nor
173.10 (b) acquiesced in the procurement by the bailor or the
173.11 bailor's nominee of any document of title.
173.12 (2) Title to goods based upon an unaccepted delivery order
173.13 is subject to the rights of anyone to whom a negotiable
173.14 warehouse receipt or bill of lading covering the goods has been
173.15 duly negotiated. Such a title may be defeated under the next
173.16 section to the same extent as the rights of the issuer or a
173.17 transferee from the issuer.
173.18 (3) Title to goods based upon a bill of lading issued to a
173.19 freight forwarder is subject to the rights of anyone to whom a
173.20 bill issued by the freight forwarder is duly negotiated; but
173.21 delivery by the carrier in accordance with part 4 of this
173.22 article pursuant to its own bill of lading discharges the
173.23 carrier's obligation to deliver.
173.24 Sec. 15. Minnesota Statutes 1998, section 336.8-103, is
173.25 amended to read:
173.26 336.8-103 [RULES FOR DETERMINING WHETHER CERTAIN
173.27 OBLIGATIONS AND INTERESTS ARE SECURITIES OR FINANCIAL ASSETS.]
173.28 (a) A share or similar equity interest issued by a
173.29 corporation, business trust, joint stock company, or similar
173.30 entity is a security.
173.31 (b) An "investment company security" is a security.
173.32 "Investment company security" means a share or similar equity
173.33 interest issued by an entity that is registered as an investment
173.34 company under the federal investment company laws, an interest
173.35 in a unit investment trust that is so registered, or a
173.36 face-amount certificate issued by a face-amount certificate
174.1 company that is so registered. Investment company security does
174.2 not include an insurance policy or endowment policy or annuity
174.3 contract issued by an insurance company.
174.4 (c) An interest in a partnership or limited liability
174.5 company is a general intangible and is not a security or a
174.6 financial asset, except as follows:
174.7 (1) An interest in a partnership or limited liability
174.8 company is a security and is not a general intangible if it is
174.9 dealt in or traded on a securities exchange or in a securities
174.10 market, its terms expressly provide that it is a security
174.11 governed by this article, or it is an investment company
174.12 security.
174.13 (2) An interest in a partnership or limited liability
174.14 company is a financial asset and is not a general intangible if
174.15 it is held in a securities account.
174.16 (d) A writing that is a security certificate is governed by
174.17 this article and not by article 3, even though it also meets the
174.18 requirements of that article. However, a negotiable instrument
174.19 governed by article 3 is a financial asset if it is held in a
174.20 securities account.
174.21 (e) An option or similar obligation issued by a clearing
174.22 corporation to its participants is not a security, but is a
174.23 financial asset.
174.24 (f) A commodity contract, as defined in section 336.9-115
174.25 336.9-102(a)(15), is not a security or a financial asset.
174.26 Sec. 16. Minnesota Statutes 1998, section 336.8-106, is
174.27 amended to read:
174.28 336.8-106 [CONTROL.]
174.29 (a) A purchaser has "control" of a certificated security in
174.30 bearer form if the certificated security is delivered to the
174.31 purchaser.
174.32 (b) A purchaser has "control" of a certificated security in
174.33 registered form if the certificated security is delivered to the
174.34 purchaser, and:
174.35 (1) the certificate is endorsed to the purchaser or in
174.36 blank by an effective endorsement; or
175.1 (2) the certificate is registered in the name of the
175.2 purchaser, upon original issue or registration of transfer by
175.3 the issuer.
175.4 (c) A purchaser has "control" of an uncertificated security
175.5 if:
175.6 (1) the uncertificated security is delivered to the
175.7 purchaser; or
175.8 (2) the issuer has agreed that it will comply with
175.9 instructions originated by the purchaser without further consent
175.10 by the registered owner.
175.11 (d) A purchaser has "control" of a security entitlement if:
175.12 (1) the purchaser becomes the entitlement holder; or
175.13 (2) the securities intermediary has agreed that it will
175.14 comply with entitlement orders originated by the purchaser
175.15 without further consent by the entitlement holder; or
175.16 (3) another person has control of the security entitlement
175.17 on behalf of the purchaser or, having previously acquired
175.18 control of the security entitlement, acknowledges that it has
175.19 control on behalf of the purchaser.
175.20 (e) If an interest in a security entitlement is granted by
175.21 the entitlement holder to the entitlement holder's own
175.22 securities intermediary, the securities intermediary has control.
175.23 (f) A purchaser who has satisfied the requirements of
175.24 subsection (c)(2) (c) or (d)(2) (d) has control, even if the
175.25 registered owner in the case of subsection (c)(2) (c) or the
175.26 entitlement holder in the case of subsection (d)(2) (d) retains
175.27 the right to make substitutions for the uncertificated security
175.28 or security entitlement, to originate instructions or
175.29 entitlement orders to the issuer or securities intermediary, or
175.30 otherwise to deal with the uncertificated security or security
175.31 entitlement.
175.32 (g) An issuer or a securities intermediary may not enter
175.33 into an agreement of the kind described in subsection (c)(2) or
175.34 (d)(2) without the consent of the registered owner or
175.35 entitlement holder, but an issuer or a securities intermediary
175.36 is not required to enter into such an agreement even though the
176.1 registered owner or entitlement holder so directs. An issuer or
176.2 securities intermediary that has entered into such an agreement
176.3 is not required to confirm the existence of the agreement to
176.4 another party unless requested to do so by the registered owner
176.5 or entitlement holder.
176.6 Sec. 17. Minnesota Statutes 1998, section 336.8-110, is
176.7 amended to read:
176.8 336.8-110 [APPLICABILITY; CHOICE OF LAW.]
176.9 (a) The local law of the issuer's jurisdiction, as
176.10 specified in subsection (d), governs:
176.11 (1) the validity of a security;
176.12 (2) the rights and duties of the issuer with respect to
176.13 registration of transfer;
176.14 (3) the effectiveness of registration of transfer by the
176.15 issuer;
176.16 (4) whether the issuer owes any duties to an adverse
176.17 claimant to a security; and
176.18 (5) whether an adverse claim can be asserted against a
176.19 person to whom transfer of a certificated or uncertificated
176.20 security is registered or a person who obtains control of an
176.21 uncertificated security.
176.22 (b) The local law of the securities intermediary's
176.23 jurisdiction, as specified in subsection (e), governs:
176.24 (1) acquisition of a security entitlement from the
176.25 securities intermediary;
176.26 (2) the rights and duties of the securities intermediary
176.27 and entitlement holder arising out of a security entitlement;
176.28 (3) whether the securities intermediary owes any duties to
176.29 an adverse claimant to a security entitlement; and
176.30 (4) whether an adverse claim can be asserted against a
176.31 person who acquires a security entitlement from the securities
176.32 intermediary or a person who purchases a security entitlement or
176.33 interest therein from an entitlement holder.
176.34 (c) The local law of the jurisdiction in which a security
176.35 certificate is located at the time of delivery governs whether
176.36 an adverse claim can be asserted against a person to whom the
177.1 security certificate is delivered.
177.2 (d) "Issuer's jurisdiction" means the jurisdiction under
177.3 which the issuer of the security is organized or, if permitted
177.4 by the law of that jurisdiction, the law of another jurisdiction
177.5 specified by the issuer. An issuer organized under the law of
177.6 this state may specify the law of another jurisdiction as the
177.7 law governing the matters specified in subsection (a)(2) through
177.8 (5).
177.9 (e) The following rules determine a "securities
177.10 intermediary's jurisdiction" for purposes of this section:
177.11 (1) If an agreement between the securities intermediary and
177.12 its entitlement holder specifies that it is governed by the law
177.13 of governing the securities account expressly provides that a
177.14 particular jurisdiction is the securities intermediary's
177.15 jurisdiction for purposes of this part, this article, or this
177.16 act, that jurisdiction is the securities intermediary's
177.17 jurisdiction.
177.18 (2) If paragraph (1) does not apply and an agreement
177.19 between the securities intermediary and its entitlement holder
177.20 governing the securities account expressly provides that the
177.21 agreement is governed by the law of a particular jurisdiction,
177.22 that jurisdiction is the securities intermediary's jurisdiction.
177.23 (3) If neither paragraph (1) nor (2) applies and an
177.24 agreement between the securities intermediary and its
177.25 entitlement holder does not specify the governing law as
177.26 provided in paragraph (1), but the securities account expressly
177.27 specifies provides that the securities account is maintained at
177.28 an office in a particular jurisdiction, that jurisdiction is the
177.29 securities intermediary's jurisdiction.
177.30 (3) (4) If an agreement between the securities intermediary
177.31 and its entitlement holder does not specify a jurisdiction as
177.32 provided in paragraph (1) or (2) none of the preceding
177.33 paragraphs apply, the securities intermediary's jurisdiction is
177.34 the jurisdiction in which is located the office identified in an
177.35 account statement as the office serving the entitlement holder's
177.36 account is located.
178.1 (4) (5) If an agreement between the securities intermediary
178.2 and its entitlement holder does not specify a jurisdiction as
178.3 provided in paragraph (1) or (2) and an account statement does
178.4 not identify an office serving the entitlement holder's account
178.5 as provided in paragraph (3) none of the preceding paragraphs
178.6 apply, the securities intermediary's jurisdiction is the
178.7 jurisdiction in which is located the chief executive office of
178.8 the securities intermediary is located.
178.9 (f) A securities intermediary's jurisdiction is not
178.10 determined by the physical location of certificates representing
178.11 financial assets, or by the jurisdiction in which is organized
178.12 the issuer of the financial asset with respect to which an
178.13 entitlement holder has a security entitlement, or by the
178.14 location of facilities for data processing or other
178.15 recordkeeping concerning the account.
178.16 Sec. 18. Minnesota Statutes 1998, section 336.8-301, is
178.17 amended to read:
178.18 336.8-301 [DELIVERY.]
178.19 (a) Delivery of a certificated security to a purchaser
178.20 occurs when:
178.21 (1) the purchaser acquires possession of the security
178.22 certificate;
178.23 (2) another person, other than a securities intermediary,
178.24 either acquires possession of the security certificate on behalf
178.25 of the purchaser or, having previously acquired possession of
178.26 the certificate, acknowledges that it holds for the purchaser;
178.27 or
178.28 (3) a securities intermediary acting on behalf of the
178.29 purchaser acquires possession of the security certificate, only
178.30 if the certificate is in registered form and has been is (i)
178.31 registered in the name of the purchaser, (ii) payable to the
178.32 order of the purchaser, or (iii) specially endorsed to the
178.33 purchaser by an effective endorsement and has not been endorsed
178.34 to the securities intermediary or in blank.
178.35 (b) Delivery of an uncertificated security to a purchaser
178.36 occurs when:
179.1 (1) the issuer registers the purchaser as the registered
179.2 owner, upon original issue or registration of transfer; or
179.3 (2) another person, other than a securities intermediary,
179.4 either becomes the registered owner of the uncertificated
179.5 security on behalf of the purchaser or, having previously become
179.6 the registered owner, acknowledges that it holds for the
179.7 purchaser.
179.8 Sec. 19. Minnesota Statutes 1998, section 336.8-302, is
179.9 amended to read:
179.10 336.8-302 [RIGHTS OF PURCHASER.]
179.11 (a) Except as otherwise provided in subsections (b) and
179.12 (c), upon delivery a purchaser of a certificated or
179.13 uncertificated security to a purchaser, the purchaser acquires
179.14 all rights in the security that the transferor had or had power
179.15 to transfer.
179.16 (b) A purchaser of a limited interest acquires rights only
179.17 to the extent of the interest purchased.
179.18 (c) A purchaser of a certificated security who as a
179.19 previous holder had notice of an adverse claim does not improve
179.20 its position by taking from a protected purchaser.
179.21 Sec. 20. Minnesota Statutes 1998, section 336.8-510, is
179.22 amended to read:
179.23 336.8-510 [RIGHTS OF PURCHASER OF SECURITY ENTITLEMENT FROM
179.24 ENTITLEMENT HOLDER.]
179.25 (a) In a case not covered by the priority rules in article
179.26 9 or the rules stated in subsection (c), an action based on an
179.27 adverse claim to a financial asset or security entitlement,
179.28 whether framed in conversion, replevin, constructive trust,
179.29 equitable lien, or other theory, may not be asserted against a
179.30 person who purchases a security entitlement, or an interest
179.31 therein, from an entitlement holder if the purchaser gives
179.32 value, does not have notice of the adverse claim, and obtains
179.33 control.
179.34 (b) If an adverse claim could not have been asserted
179.35 against an entitlement holder under section 336.8-502, the
179.36 adverse claim cannot be asserted against a person who purchases
180.1 a security entitlement, or an interest therein, from the
180.2 entitlement holder.
180.3 (c) In a case not covered by the priority rules in article
180.4 9, a purchaser for value of a security entitlement, or an
180.5 interest therein, who obtains control has priority over a
180.6 purchaser of a security entitlement, or an interest therein, who
180.7 does not obtain control. Except as otherwise provided in
180.8 subsection (d), purchasers who have control rank equally, except
180.9 that a according to priority in time of:
180.10 (1) the purchaser's becoming the person for whom the
180.11 securities account, in which the security entitlement is
180.12 carried, is maintained, if the purchaser obtained control under
180.13 section 336.8-106(d)(1);
180.14 (2) the securities intermediary's agreement to comply with
180.15 the purchaser's entitlement orders with respect to security
180.16 entitlements carried or to be carried in the securities account
180.17 in which the security entitlement is carried, if the purchaser
180.18 obtained control under section 336.8-106(d)(2); or
180.19 (3) if the purchaser obtained control through another
180.20 person under section 336.8-106(d)(3), the time on which priority
180.21 would be based under this subsection if the other person were
180.22 the secured party.
180.23 (d) A securities intermediary as purchaser has priority
180.24 over a conflicting purchaser who has control, unless otherwise
180.25 agreed by the securities intermediary.