Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                         CHAPTER 50--H.F.No. 633
           An act relating to commerce; uniform commercial code; 
          extending the time period for the perfection of or 
          priority over certain security interests; amending 
          Minnesota Statutes 1982, sections 336.9-301; 
          336.9-302; 336.9-306; and 336.9-312. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 336.9-301, is 
amended to read: 
    336.9-301 [PERSONS WHO TAKE PRIORITY OVER UNPERFECTED 
SECURITY INTERESTS; RIGHT OF "LIEN CREDITOR".] 
    (1) Except as otherwise provided in subsection (2), an 
unperfected security interest is subordinate to the rights of 
    (a) persons entitled to priority under section 336.9-312; 
    (b) a person who becomes a lien creditor before the 
security interest is perfected; 
    (c) in the case of goods, instruments, documents, and 
chattel paper, a person who is not a secured party and who is a 
transferee in bulk or other buyer not in ordinary course of 
business, or is a buyer of farm products in the ordinary course 
of business, to the extent that he gives value and receives 
delivery of the collateral without knowledge of the security 
interest and before it is perfected; 
    (d) in the case of accounts and general intangibles, a 
person who is not a secured party and who is a transferee to the 
extent that he gives value without knowledge of the security 
interest and before it is perfected. 
    (2) If the secured party files with respect to a purchase 
money security interest before or within ten 20 days after the 
debtor receives possession of the collateral, he takes priority 
over the rights of a transferee in bulk or of a lien creditor 
which arise between the time the security interest attaches and 
the time of filing. 
    (3) A "lien creditor" means a creditor who has acquired a 
lien on the property involved by attachment, levy or the like 
and includes an assignee for benefit of creditors from the time 
of assignment, and a trustee in bankruptcy from the date of the 
filing of the petition or a receiver in equity from the time of 
appointment. 
    (4) A person who becomes a lien creditor while a security 
interest is perfected takes subject to the security interest 
only to the extent that it secures advances made before he 
becomes a lien creditor or within 45 days thereafter or made 
without knowledge of the lien or pursuant to a commitment 
entered into without knowledge of the lien. 
     Sec. 2.  Minnesota Statutes 1982, section 336.9-302, is 
amended to read: 
    336.9-302 [WHEN FILING IS REQUIRED TO PERFECT SECURITY 
INTEREST; SECURITY INTERESTS TO WHICH FILING PROVISIONS OF THIS 
ARTICLE DO NOT APPLY.] 
    (1) A financing statement must be filed to perfect all 
security interest except the following: 
    (a) A security interest in collateral in possession of the 
secured party under section 336.9-305; 
    (b) A security interest temporarily perfected in 
instruments or documents without delivery under section 
336.9-304 or in proceeds for a 10 20 day period under section 
336.9-306; 
    (c) A security interest created by an assignment of a 
beneficial interest in a trust or a decedent's estate; 
    (d) A purchase money security interest in consumer goods; 
but filing is required for a motor vehicle required to be 
registered; and fixture filing is required for priority over 
conflicting interests in fixtures to the extent provided in 
section 336.9-313; 
    (e) An assignment of accounts which does not alone or in 
conjunction with other assignments to the same assignee transfer 
a significant part of the outstanding accounts of the assignor; 
    (f) A security interest of a collecting bank (section 
336.4-208) or in securities (section 336.8-321) or arising under 
the article on sales (see section 336.9-113) or covered in 
subsection (3) of this section; 
    (g) An assignment for the benefit of all the creditors of 
the transferor, and subsequent transfers by the assignee 
thereunder. 
    (2) If a secured party assigns a perfected security 
interest, no filing under this article is required in order to 
continue the perfected status of the security interest against 
creditors of and transferees from the original debtor. 
    (3) The filing of a financing statement otherwise required 
by this article is not necessary or effective to perfect a 
security interest in property subject to the following statutes 
or treaties; except that to the extent such statutes or treaties 
are silent on a specific matter, the provisions of this article 
shall govern: 
    (a) a statute or treaty of the United States which provides 
for a national or international registration or a national or 
international certificate of title or which specifies a place of 
filing different from that specified in this article for filing 
of the security interest; or 
    (b) the following statutes of this state; 
    (i) Sections 168A.01 to 168A.31; but during any period in 
which collateral is inventory held for sale by a person who is 
in the business of selling goods of that kind, the filing 
provisions of this article (part 4) apply to a security interest 
in that collateral created by him as a debtor; or 
    (ii) Sections 300.11 to 300.115. 
    (c) a certificate of title statute of another jurisdiction 
under the law of which indication of a security interest on the 
certificate is required as a condition of perfection (subsection 
(2) of section 336.9-103). 
    (4) Compliance with a statute or treaty described in 
subsection (3) is equivalent to the filing of a financing 
statement under this article, and a security interest in 
property subject to the statute or treaty can be perfected only 
by compliance therewith except as provided in section 336.9-103 
on multiple state transactions.  A security interest perfected 
by compliance with such a statute or treaty is governed by this 
article in all respects not inconsistent with the provisions of 
the statute or treaty under which it was perfected, provided 
that this article shall not be deemed inconsistent if it 
provides for a more extensive duration of effectiveness. 
     Sec. 3.  Minnesota Statutes 1982, section 336.9-306, is 
amended to read: 
     336.9-306 ["PROCEEDS"; SECURED PARTY'S RIGHTS ON 
DISPOSITION OF COLLATERAL.] 
    (1) "Proceeds" includes whatever is received upon the sale, 
exchange, collection or other disposition of collateral or 
proceeds.  Insurance payable by reason of loss or damage to the 
collateral is proceeds, except to the extent that it is payable 
to a person other than a party to the security agreement.  
Money, checks, deposit accounts, and the like are "cash 
proceeds".  All other proceeds are "noncash proceeds." 
    (2) Except where this article otherwise provides, a 
security interest continues in collateral notwithstanding sale, 
exchange or other disposition thereof unless the disposition was 
authorized by the secured party in the security agreement or 
otherwise, and also continues in any identifiable proceeds 
including collections received by the debtor. 
    (3) The security interest in proceeds is a continuously 
perfected security interest if the interest in the original 
collateral was perfected but it ceases to be a perfected 
security interest and becomes unperfected ten 20 days after 
receipt of the proceeds by the debtor unless 
    (a) a filed financing statement covers the original 
collateral and the proceeds are collateral in which a security 
interest may be perfected by filing in the office or offices 
where the financing statement has been filed and, if the 
proceeds are acquired with cash proceeds, the description of 
collateral in the financing statement indicates the types of 
property constituting the proceeds; or 
    (b) a filed financing statement covers the original 
collateral and the proceeds are identifiable cash proceeds; or 
    (c) the security interest in the proceeds is perfected 
before the expiration of the ten 20 day period. 
    Except as provided in this section, a security interest in 
proceeds can be perfected only by the methods or under the 
circumstances permitted in this article for original collateral 
of the same type. 
    (4) In the event of insolvency proceedings instituted by or 
against a debtor, a secured party with a perfected security 
interest in proceeds has a perfected security interest only in 
the following proceeds: 
    (a) in identifiable noncash proceeds and in separate 
deposit accounts containing only proceeds; 
    (b) in identifiable cash proceeds in the form of money 
which is neither commingled with other money nor deposited in a 
deposit account prior to the insolvency proceedings; 
    (c) in identifiable cash proceeds in the form of checks and 
the like which are not deposited in a deposit account prior to 
the insolvency proceedings; and 
    (d) in all cash and deposit accounts of the debtor, in 
which proceeds have been commingled with other funds, but the 
perfected security interest under this paragraph (d) is 
    (i) subject to any right of setoff; and 
    (ii) limited to an amount not greater than the amount of 
any cash proceeds received by the debtor within ten 20 days 
before the institution of the insolvency proceedings less the 
sum of (I) the payments to the secured party on account of cash 
proceeds received by the debtor during such period and (II) the 
cash proceeds received by the debtor during such period to which 
the secured party is entitled under paragraphs (a) to (c) of 
this subsection (4). 
    (5) If a sale of goods results in an account or chattel 
paper which is transferred by the seller to a secured party, and 
if the goods are returned to or are repossessed by the seller or 
the secured party, the following rules determine priorities: 
    (a) If the goods were collateral at the time of sale for an 
indebtedness of the seller which is still unpaid, the original 
security interest attaches again to the goods and continues as a 
perfected security interest if it was perfected at the time when 
the goods were sold.  If the security interest was originally 
perfected by a filing which is still effective, nothing further 
is required to continue the perfected status; in any other case, 
the secured party must take possession of the returned or 
repossessed goods or must file. 
    (b) An unpaid transferee of the chattel paper has a 
security interest in the goods against the transferor.  Such 
security interest is prior to a security interest asserted under 
paragraph (a) to the extent that the transferee of the chattel 
paper was entitled to priority under section 336.9-308. 
    (c) An unpaid transferee of the account has a security 
interest in the goods against the transferor.  Such security 
interest is subordinate to a security interest asserted under 
paragraph (a). 
    (d) A security interest of an unpaid transferee asserted 
under paragraph (b) or (c) must be perfected for protection 
against creditors of the transferor and purchasers of the 
returned or repossessed goods. 
    Sec. 4.  Minnesota Statutes 1982, section 336.9-312, is 
amended to read: 
     336.9-312 [PRIORITIES AMONG CONFLICTING SECURITY INTERESTS 
IN THE SAME COLLATERAL.] 
    (1) The rules of priority stated in other sections of this 
part and in the following sections shall govern when 
applicable:  section 336.4-208 with respect to the security 
interests of collecting banks in items being collected, 
accompanying documents and proceeds; section 336.9-103 on 
security interests related to other jurisdictions; section 
336.9-114 on consignments. 
    (2) A perfected security interest in crops for new value 
given to enable the debtor to produce the crops during the 
production season and given not more than three months before 
the crops become growing crops by planting or otherwise takes 
priority over an earlier perfected security interest to the 
extent that such earlier interest secures obligations due more 
than six months before the crops become growing crops by 
planting or otherwise, even though the person giving new value 
had knowledge of the earlier security interest. 
    (3) A perfected purchase money security interest in 
inventory has priority over a conflicting security interest in 
the same inventory and also has priority in identifiable cash 
proceeds received on or before the delivery of the inventory to 
a buyer if 
    (a) the purchase money security interest is perfected at 
the time the debtor receives possession of the inventory; and 
    (b) the purchase money secured party gives notification in 
writing to the holder of the conflicting security interest if 
the holder had filed a financing statement covering the same 
types of inventory (i) before the date of the filing made by the 
purchase money secured party, or (ii) before the beginning of 
the 21 day period where the purchase money security interest is 
temporarily perfected without filing or possession (subsection 
(5) of section 336.9-304); and 
    (c) the holder of the conflicting security interest 
receives the notification within five years before the debtor 
receives possession of the inventory; and 
    (d) the notification states that the person giving the 
notice has or expects to acquire a purchase money security 
interest in inventory of the debtor, describing such inventory 
by item or type. 
    (4) A purchase money security interest in collateral other 
than inventory has priority over a conflicting security interest 
in the same collateral or its proceeds if the purchase money 
security interest is perfected at the time the debtor receives 
possession of the collateral or within ten 20 days thereafter. 
    (5) In all cases not governed by other rules stated in this 
section (including cases of purchase money security interests 
which do not qualify for the special priorities set forth in 
subsections (3) and (4) of this section), priority between 
conflicting security interests in the same collateral shall be 
determined according to the following rules: 
    (a) Conflicting security interests rank according to 
priority in time of filing or perfection.  Priority dates from 
the time a filing is first made covering the collateral or the 
time the security interest is first perfected, whichever is 
earlier, provided that there is no period thereafter when there 
is neither filing nor perfection. 
    (b) so long as conflicting security interests are 
unperfected, the first to attach has priority. 
    (6) For the purposes of subsection (5) a date of filing or 
perfection as to collateral is also a date of filing or 
perfection as to proceeds. 
    (7) If future advances are made while a security interest 
is perfected by filing, the taking of possession, or under 
section 336.8-321 on securities, the security interest has the 
same priority for the purposes of subsection (5) with respect to 
the future advances as it does with respect to the first 
advance.  If a commitment is made before or while the security 
interest is so perfected, the security interest has the same 
priority with respect to advances made pursuant thereto.  In 
other cases a perfected security interest has priority from the 
date the advance is made. 
     Sec. 5.  [EFFECTIVE DATE.] 
     Sections 1 to 4 are effective the day following final 
enactment. 
    Approved April 21, 1983