1999 Minnesota Statutes

     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.  Any 
 payments or distributions made with respect to investment 
 property collateral are proceeds.  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 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 original collateral was investment property and the 
 proceeds are identifiable cash proceeds; or 

    (d) the security interest in the proceeds is perfected 
 before the expiration of the 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 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. 

    HIST: 1965 c 811 s 336.9-306; 1976 c 135 s 18; 1983 c 50 s 3; 
 1995 c 194 art 2 s 11