2000 Minnesota Statutes

     336.9-103 Purchase-money security interest; application 
  of payments; burden of establishing. 

    (a)    Definitions.  In this section: 

    (1) "purchase-money collateral" means goods or software 
 that secures a purchase-money obligation incurred with respect 
 to that collateral; and 

    (2) "purchase-money obligation" means an obligation of an 
 obligor incurred as all or part of the price of the collateral 
 or for value given to enable the debtor to acquire rights in or 
 the use of the collateral if the value is in fact so used. 

    (b)    Purchase-money security interest in goods.  A 
 security interest in goods is a purchase-money security interest:

    (1) to the extent that the goods are purchase-money 
 collateral with respect to that security interest; 

    (2) if the security interest is in inventory that is or was 
 purchase-money collateral, also to the extent that the security 
 interest secures a purchase-money obligation incurred with 
 respect to other inventory in which the secured party holds or 
 held a purchase-money security interest; and 

    (3) also to the extent that the security interest secures a 
 purchase-money obligation incurred with respect to software in 
 which the secured party holds or held a purchase-money security 
 interest. 

    (c)    Purchase-money security interest in software.  A 
 security interest in software is a purchase-money security 
 interest to the extent that the security interest also secures a 
 purchase-money obligation incurred with respect to goods in 
 which the secured party holds or held a purchase-money security 
 interest if: 

    (1) the debtor acquired its interest in the software in an 
 integrated transaction in which it acquired an interest in the 
 goods; and 

    (2) the debtor acquired its interest in the software for 
 the principal purpose of using the software in the goods. 

    (d)    Consignor's inventory purchase-money security 
 interest.  The security interest of a consignor in goods that 
 are the subject of a consignment is a purchase-money security 
 interest in inventory. 

    (e)    Application of payment in nonconsumer goods 
 transaction.  In a transaction other than a consumer goods 
 transaction, if the extent to which a security interest is a 
 purchase-money security interest depends on the application of a 
 payment to a particular obligation, the payment must be applied: 

    (1) in accordance with any reasonable method of application 
 to which the parties agree; 

    (2) in the absence of the parties' agreement to a 
 reasonable method, in accordance with any intention of the 
 obligor manifested at or before the time of payment; or 

    (3) in the absence of an agreement to a reasonable method 
 and a timely manifestation of the obligor's intention, in the 
 following order: 

    (A) to obligations that are not secured; and 

    (B) if more than one obligation is secured, to obligations 
 secured by purchase-money security interests in the order in 
 which those obligations were incurred. 

    (f)    No loss of status of purchase-money security 
 interest in nonconsumer goods transaction.  In a transaction 
 other than a consumer goods transaction, a purchase-money 
 security interest does not lose its status as such, even if: 

    (1) the purchase-money collateral also secures an 
 obligation that is not a purchase-money obligation; 

    (2) collateral that is not purchase-money collateral also 
 secures the purchase-money obligation; or 

    (3) the purchase-money obligation has been renewed, 
 refinanced, consolidated, or restructured. 

    (g)    Burden of proof in nonconsumer goods transaction. 
  In a transaction other than a consumer goods transaction, a 
 secured party claiming a purchase-money security interest has 
 the burden of establishing the extent to which the security 
 interest is a purchase-money security interest. 

    (h)    Nonconsumer goods transaction; no inference.  The 
 limitation of the rules in subsections (e), (f), and (g) to 
 transactions other than consumer goods transactions is intended 
 to leave to the court the determination of the proper rules in 
 consumer goods transactions.  The court may not infer from that 
 limitation the nature of the proper rule in consumer goods 
 transactions and may continue to apply established approaches. 

    HIST: 2000 c 399 art 1 s 3 

*   NOTE:  This section, as added by Laws 2000, chapter 399, 
*article 1, section 3, is effective July 1, 2001.  Laws 2000, 
*chapter 399, article 1, section 130. 

*   NOTE:  Minnesota Statutes 1998, section 336.9-103, which 
*reads as follows, is repealed July 1, 2001.  Laws 2000, chapter 
*399, article 1, section 130. 

*   "336.9-103 Perfection of security interests in multiple 
*state transactions. 

*   (1) Documents, instruments, letters of credit, and ordinary 
*goods. 

*   (a) This subsection applies to documents, instruments, 
*rights to proceeds of written letters of credit, and goods other 
*than those covered by a certificate of title described in 
*subsection (2), mobile goods described in subsection (3), and 
*minerals described in subsection (5). 

*   (b) Except as otherwise provided in this subsection, 
*perfection and the effect of perfection or nonperfection of a 
*security interest in collateral are governed by the law of the 
*jurisdiction where the collateral is when the last event occurs 
*on which is based the assertion that the security interest is 
*perfected or unperfected. 

*   (c) If the parties to a transaction creating a purchase 
*money security interest in goods in one jurisdiction understand 
*at the time that the security interest attaches that the goods 
*will be kept in another jurisdiction, then the law of the other 
*jurisdiction governs the perfection and the effect of perfection 
*or nonperfection of the security interest from the time it 
*attaches until 30 days after the debtor receives possession of 
*the goods and thereafter if the goods are taken to the other 
*jurisdiction before the end of the 30-day period. 

*   (d) When collateral is brought into and kept in this state 
*while subject to a security interest perfected under the law of 
*the jurisdiction from which the collateral was removed, the 
*security interest remains perfected, but if action is required 
*by part 3 of this article to perfect the security interest, 

*   (i) if the action is not taken before the expiration of the 
*period of perfection in the other jurisdiction or the end of 
*four months after the collateral is brought into this state, 
*whichever period first expires, the security interest becomes 
*unperfected at the end of that period and is thereafter deemed 
*to have been unperfected as against a person who became a 
*purchaser after removal; 

*   (ii) if the action is taken before the expiration of the 
*period specified in subparagraph (i), the security interest 
*continues perfected thereafter; 

*   (iii) for the purpose of priority over a buyer of consumer 
*goods (subsection (2) of section 336.9-307), the period of the 
*effectiveness of a filing in the jurisdiction from which the 
*collateral is removed is governed by the rules with respect to 
*perfection in subparagraphs (i) and (ii). 

*   (2) Certificate of title. 

*   (a) This subsection applies to goods covered by a 
*certificate of title issued under a statute of this state or of 
*another jurisdiction under the law of which indication of a 
*security interest on the certificate is required as a condition 
*of perfection. 

*   (b) Except as otherwise provided in this subsection, 
*perfection and the effect of perfection or nonperfection of the 
*security interest are governed by the law (including the 
*conflict of laws rules) of the jurisdiction issuing the 
*certificate until four months after the goods are removed from 
*that jurisdiction and thereafter until the goods are registered 
*in another jurisdiction, but in any event not beyond surrender 
*of the certificate.  After the expiration of that period, the 
*goods are not covered by the certificate of title within the 
*meaning of this section. 

*   (c) Except with respect to the rights of a buyer described 
*in the next paragraph, a security interest, perfected in another 
*jurisdiction otherwise than by notation on a certificate of 
*title, in goods brought into this state and thereafter covered 
*by a certificate of title issued by this state is subject to the 
*rules stated in paragraph (d) of subsection (1). 

*   (d) If goods are brought into this state while a security 
*interest therein is perfected in any manner under the law of the 
*jurisdiction from which the goods are removed and a certificate 
*of title is issued by this state and the certificate does not 
*show that the goods are subject to the security interest or that 
*they may be subject to security interests not shown on the 
*certificate, the security interest is subordinate to the rights 
*of a buyer of the goods who is not in the business of selling 
*goods of that kind to the extent that the buyer gives value and 
*receives delivery of the goods after issuance of the certificate 
*and without knowledge of the security interest. 

*   (3) Accounts, general intangibles and mobile goods. 

*   (a) This subsection applies to accounts (other than an 
*account described in subsection (5) on minerals) and general 
*intangibles (other than uncertificated securities) and to goods 
*which are mobile and which are of a type normally used in more 
*than one jurisdiction, such as motor vehicles, trailers, rolling 
*stock, airplanes, shipping containers, road building and 
*construction machinery and commercial harvesting machinery and 
*the like, if the goods are equipment or are inventory leased or 
*held for lease by the debtor to others, and are not covered by a 
*certificate of title described in subsection (2). 

*   (b) The law (including the conflict of laws rules) of the 
*jurisdiction in which the debtor is located governs the 
*perfection and the effect of perfection or nonperfection of the 
*security interest. 

*   (c) If, however, the debtor is located in a jurisdiction 
*which is not a part of the United States, and which does not 
*provide for perfection of the security interest by filing or 
*recording in that jurisdiction, the law of the jurisdiction in 
*the United States in which the debtor has its major executive 
*office in the United States governs the perfection and the 
*effect of perfection or nonperfection of the security interest 
*through filing.  In the alternative, if the debtor is located in 
*a jurisdiction which is not a part of the United States or 
*Canada and the collateral is accounts or general intangibles for 
*money due or to become due, the security interest may be 
*perfected by notification to the account debtor.  As used in 
*this paragraph, "United States" includes its territories and 
*possessions and the Commonwealth of Puerto Rico. 

*   (d) A debtor shall be deemed located at the debtor's place 
*of business if the debtor has one, at the chief executive office 
*if there is more than one place of business, otherwise at the 
*debtor's residence.  If, however, the debtor is a foreign air 
*carrier under the Federal Aviation Act of 1958, as amended, it 
*shall be deemed located at the designated office of the agent 
*upon whom service of process may be made on behalf of the 
*foreign air carrier. 

*   (e) A security interest perfected under the law of the 
*jurisdiction of the location of the debtor is perfected until 
*the expiration of four months after a change of the debtor's 
*location to another jurisdiction, or until perfection would have 
*ceased by the law of the first jurisdiction, whichever period 
*first expires.  Unless perfected in the new jurisdiction before 
*the end of that period, it becomes unperfected thereafter and is 
*deemed to have been unperfected as against a person who became a 
*purchaser after the change. 

*   (4) Chattel paper. 

*   The rules stated for goods in subsection (1) apply to a 
*possessory security interest in chattel paper.  The rules stated 
*for accounts in subsection (3) apply to a nonpossessory security 
*interest in chattel paper, but the security interest may not be 
*perfected by notification to the account debtor. 

*   (5) Minerals. 

*   Perfection and the effect of perfection or nonperfection of 
*a security interest which is created by a debtor who has an 
*interest in minerals or the like (including oil and gas) before 
*extraction and which attaches thereto as extracted, or which 
*attaches to an account resulting from the sale thereof at the 
*wellhead or minehead are governed by the law (including the 
*conflict of laws rules) of the jurisdiction wherein the wellhead 
*or minehead is located. 

*   (6) Investment property. 

*   (a) This subsection applies to investment property.  

*   (b) Except as otherwise provided in paragraph (f), during 
*the time that a security certificate is located in a 
*jurisdiction, perfection of a security interest, the effect of 
*perfection or nonperfection, and the priority of a security 
*interest in the certificated security represented thereby are 
*governed by the local law of that jurisdiction.  

*   (c) Except as otherwise provided in paragraph (f), 
*perfection of a security interest, the effect of perfection or 
*nonperfection, and the priority of a security interest in an 
*uncertificated security are governed by the local law of the 
*issuer's jurisdiction as specified in section 336.8-110(d).  

*   (d) Except as otherwise provided in paragraph (f), 
*perfection of a security interest, the effect of perfection or 
*nonperfection, and the priority of a security interest in a 
*security entitlement or securities account are governed by the 
*local law of the securities intermediary's jurisdiction as 
*specified in section 336.8-110(e).  

*   (e) Except as otherwise provided in paragraph (f), 
*perfection of a security interest, the effect of perfection or 
*nonperfection, and the priority of a security interest in a 
*commodity contract or commodity account are governed by the 
*local law of the commodity intermediary's jurisdiction.  The 
*following rules determine a "commodity intermediary's 
*jurisdiction" for purposes of this paragraph:  

*   (i) If an agreement between the commodity intermediary and 
*commodity customer specifies that it is governed by the law of a 
*particular jurisdiction, that jurisdiction is the commodity 
*intermediary's jurisdiction.  

*   (ii) If an agreement between the commodity intermediary and 
*commodity customer does not specify the governing law as 
*provided in subparagraph (i), but expressly specifies that the 
*commodity account is maintained at an office in a particular 
*jurisdiction, that jurisdiction is the commodity intermediary's 
*jurisdiction.  

*   (iii) If an agreement between the commodity intermediary 
*and commodity customer does not specify a jurisdiction as 
*provided in subparagraph (i) or (ii), the commodity 
*intermediary's jurisdiction is the jurisdiction in which is 
*located the office identified in an account statement as the 
*office serving the commodity customer's account.  

*   (iv) If an agreement between the commodity intermediary and 
*commodity customer does not specify a jurisdiction as provided 
*in subparagraph (i) or (ii) and an account statement does not 
*identify an office serving the commodity customer's account as 
*provided in subparagraph (iii), the commodity intermediary's 
*jurisdiction is the jurisdiction in which is located the chief 
*executive office of the commodity intermediary.  

*   (f) Perfection of a security interest by filing, automatic 
*perfection of a security interest in investment property granted 
*by a broker or securities intermediary, and automatic perfection 
*of a security interest in a commodity contract or commodity 
*account granted by a commodity intermediary are governed by the 
*local law of the jurisdiction in which the debtor is located."