1999 Minnesota Statutes

     336.9-207 Rights and duties when collateral is in 
  secured party's possession.  

    (1) A secured party must use reasonable care in the custody 
 and preservation of collateral in the secured party's 
 possession.  In the case of an instrument or chattel paper 
 reasonable care includes taking necessary steps to preserve 
 rights against prior parties unless otherwise agreed.  

    (2) Unless otherwise agreed, when collateral is in the 
 secured party's possession 

    (a) reasonable expenses (including the cost of any 
 insurance and payment of taxes or other charges) incurred in the 
 custody, preservation, use or operation of the collateral are 
 chargeable to the debtor and are secured by the collateral; 

    (b) the risk of accidental loss or damage is on the debtor 
 to the extent of any deficiency in any effective insurance 
 coverage; 

    (c) the secured party may hold as additional security any 
 increase or profits (except money) received from the collateral, 
 but money so received, unless remitted to the debtor, shall be 
 applied in reduction of the secured obligation; 

    (d) the secured party must keep the collateral identifiable 
 but fungible collateral may be commingled; 

    (e) the secured party may repledge the collateral upon 
 terms which do not impair the debtor's right to redeem it.  

    (3) A secured party is liable for any loss caused by the 
 secured party's failure to meet any obligation imposed by the 
 preceding subsections but does not lose the security interest.  

    (4) A secured party may use or operate the collateral for 
 the purpose of preserving the collateral or its value or 
 pursuant to the order of a court of appropriate jurisdiction or, 
 except in the case of consumer goods, in the manner and to the 
 extent provided in the security agreement.  

    HIST: 1965 c 811 s 336.9-207; 1986 c 444