HB0111 - UCC-9 revisions.

2001

State of Wyoming

01LSO-0200

HOUSE BILL NO. HB0111

UCC-9 revisions.

Sponsored by: Joint Judiciary Interim Committee

A BILL

for

1 AN ACT relating to revisions of article 9 of the Uniform
2 Commercial Code; providing for a central filing system at
3 the office of the secretary of state; maintaining local
4 filing to perfect a security interest in a motor vehicle;
5 making an appropriation; authorizing additional positions;
6 requiring a local area network to be implemented by July 1,
7 2002; and providing for an effective date.

9 Be It Enacted by the Legislature of the State of Wyoming:

11 Section 1. W.S. 34.1-9-101 through 34.1-9-708 are
12 repealed and recreated to read:

14 ARTICLE 9

15 SECURED TRANSACTIONS

17 34.1-9-101. Short title.

19 This article may be cited as Uniform Commercial Code-
20 Secured Transactions.

22 34.1-9-102. Definitions and index of definitions.

Page 1

2 (a) In this article:

4 (i) "Accession" means goods that are physically
5 united with other goods in such a manner that the identity
6 of the original goods is not lost;

8 (ii) "Account", except as used in "account for",
9 means a right to payment of a monetary obligation, whether
10 or not earned by performance, (1) for property that has
11 been or is to be sold, leased, licensed, assigned or
12 otherwise disposed of, (2) for services rendered or to be
13 rendered, (3) for a policy of insurance issued or to be
14 issued, (4) for a secondary obligation incurred or to be
15 incurred, (5) for energy provided or to be provided, (6)
16 for the use or hire of a vessel under a charter or other
17 contract, (7) arising out of the use of a credit or charge
18 card or information contained on or for use with the card
19 or (8) as winnings in a lottery or other game of chance
20 operated or sponsored by a state, governmental unit of a
21 state, or person licensed or authorized to operate the game
22 by a state or governmental unit of a state. The term
23 includes health-care-insurance receivables. The term does
24 not include (1) rights to payment evidenced by chattel
25 paper or an instrument, (2) commercial tort claims, (3)
26 deposit accounts, (4) investment property, (5) letter-of-
27 credit rights or letters of credit, or (6) rights to
28 payment for money or funds advanced or sold, other than
29 rights arising out of the use of a credit or charge card or
30 information contained on or for use with the card;

32 (iii) "Account debtor" means a person obligated
33 on an account, chattel paper or general intangible. The
34 term does not include persons obligated to pay a negotiable
35 instrument, even if the instrument constitutes part of
36 chattel paper;

38 (iv) "Accounting", except as used in "accounting
39 for", means a record:

41 (A) Authenticated by a secured party;

43 (B) Indicating the aggregate unpaid secured
44 obligations as of a date not more than thirty-five (35)
45 days earlier or thirty-five (35) days later than the date
46 of the record; and

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1 (C) Identifying the components of the
2 obligations in reasonable detail.

4 (v) "Agricultural lien" means an interest, other
5 than a security interest, in farm products:

7 (A) Which secures payment or performance of
8 an obligation for:

10 (I) Goods or services furnished in
11 connection with a debtor's farming operation; or

13 (II) Rent on real property leased by a
14 debtor in connection with its farming operation;

16 (B) Which is created by statute in favor of
17 a person that:

19 (I) In the ordinary course of its
20 business furnished goods or services to a debtor in
21 connection with a debtor's farming operation; or

23 (II) Leased real property to a debtor
24 in connection with the debtor's farming operation; and

26 (C) Whose effectiveness does not depend on
27 the person's possession of the personal property.

29 (vi) "As-extracted collateral" means:

31 (A) Oil, gas or other minerals that are
32 subject to a security interest that:

34 (I) Is created by a debtor having an
35 interest in the minerals before extraction; and

37 (II) Attaches to the minerals as
38 extracted; or

40 (B) Accounts arising out of the sale at the
41 wellhead or minehead of oil, gas or other minerals in which
42 the debtor had an interest before extraction.

44 (vii) "Authenticate" means:

46 (A) To sign; or

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1 (B) To execute or otherwise adopt a symbol,
2 or encrypt or similarly process a record in whole or in
3 part, with the present intent of the authenticating person
4 to identify the person and adopt or accept a record.

6 (viii) "Bank" means an organization that is
7 engaged in the business of banking. The term includes
8 savings banks, savings and loan associations, credit unions
9 and trust companies;

11 (ix) "Cash proceeds" means proceeds that are
12 money, checks, deposit accounts or the like;

14 (x) "Certificate of title" means a certificate
15 of title with respect to which a statute provides for the
16 security interest in question to be indicated on the
17 certificate as a condition or result of the security
18 interest's obtaining priority over the rights of a lien
19 creditor with respect to the collateral;

21 (xi) "Chattel paper" means a record or records
22 that evidence both a monetary obligation and a security
23 interest in specific goods, a security interest in specific
24 goods and software used in the goods, a security interest
25 in specific goods and license of software used in the
26 goods, a lease of specific goods, or a lease of specific
27 goods and license of software used in the goods. In this
28 paragraph, "monetary obligation" means a monetary
29 obligation secured by the goods or owed under a lease of
30 the goods and includes a monetary obligation with respect
31 to software used in the goods. The term does not include
32 charters or other contracts involving the use or hire of a
33 vessel or records that evidence a right to payment arising
34 out of the use of a credit or charge card or information
35 contained on or for use with the card. If a transaction is
36 evidenced by records that include an instrument or series
37 of instruments, the group of records taken together
38 constitutes chattel paper;

40 (xii) "Collateral" means the property subject to
41 a security interest or agricultural lien. The term
42 includes:

44 (A) Proceeds to which a security interest
45 attaches;

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1 (B) Accounts, chattel paper, payment
2 intangibles and promissory notes that have been sold; and

4 (C) Goods that are the subject of a
5 consignment.

7 (xiii) "Commercial tort claim" means a claim
8 arising in tort with respect to which:

10 (A) The claimant is an organization; or

12 (B) The claimant is an individual and the
13 claim:

15 (I) Arose in the course of the
16 claimant's business or profession; and

18 (II) Does not include damages arising
19 out of personal injury to or the death of an individual.

21 (xiv) "Commodity account" means an account
22 maintained by a commodity intermediary in which a commodity
23 contract is carried for a commodity customer;

25 (xv) "Commodity contract" means a commodity
26 futures contract, an option on a commodity futures
27 contract, a commodity option or another contract if the
28 contract or option is:

30 (A) Traded on or subject to the rules of a
31 board of trade that has been designated as a contract
32 market for such a contract pursuant to federal commodities
33 laws; or

35 (B) Traded on a foreign commodity board of
36 trade, exchange or market, and is carried on the books of a
37 commodity intermediary for a commodity customer.

39 (xvi) "Commodity customer" means a person for
40 which a commodity intermediary carries a commodity contract
41 on its books;

43 (xvii) "Commodity intermediary" means a person
44 that:

46 (A) Is registered as a futures commission
47 merchant under federal commodities law; or

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2 (B) In the ordinary course of its business
3 provides clearance or settlement services for a board of
4 trade that has been designated as a contract market
5 pursuant to federal commodities law.

7 (xviii) "Communicate" means:

9 (A) To send a written or other tangible
10 record;

12 (B) To transmit a record by any means
13 agreed upon by the persons sending and receiving the
14 record; or

16 (C) In the case of transmission of a record
17 to or by a filing office, to transmit a record by any means
18 prescribed by filing-office rule.

20 (xix) "Consignee" means a merchant to which
21 goods are delivered in a consignment;

23 (xx) "Consignment" means a transaction,
24 regardless of its form, in which a person delivers goods to
25 a merchant for the purpose of sale and:

27 (A) The merchant:

29 (I) Deals in goods of that kind under
30 a name other than the name of the person making delivery;

32 (II) Is not an auctioneer; and

34 (III) Is not generally known by its
35 creditors to be substantially engaged in selling the goods
36 of others.

38 (B) With respect to each delivery, the
39 aggregate value of the goods is one thousand dollars
40 ($1,000.00) or more at the time of delivery;

42 (C) The goods are not consumer goods
43 immediately before delivery; and

45 (D) The transaction does not create a
46 security interest that secures an obligation.

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1 (xxi) "Consignor" means a person that delivers
2 goods to a consignee in a consignment;

4 (xxii) "Consumer debtor" means a debtor in a
5 consumer transaction;

7 (xxiii) "Consumer goods" means goods that are
8 used or bought for use primarily for personal, family or
9 household purposes;

11 (xxiv) "Consumer-goods transaction" means a
12 consumer transaction in which:

14 (A) An individual incurs an obligation
15 primarily for personal, family or household purposes; and

17 (B) A security interest in consumer goods
18 secures the obligation.

20 (xxv) "Consumer obligor" means an obligor who is
21 an individual and who incurred the obligation as part of a
22 transaction entered into primarily for personal, family or
23 household purposes;

25 (xxvi) "Consumer transaction" means a
26 transaction in which (1) an individual incurs an obligation
27 primarily for personal, family or household purposes, (2) a
28 security interest secures the obligation, and (3) the
29 collateral is held or acquired primarily for personal,
30 family or household purposes. The term includes
31 consumer-goods transactions;

33 (xxvii) "Continuation statement" means an
34 amendment of a financing statement which:

36 (A) Identifies, by its file number, the
37 initial financing statement to which it relates; and

39 (B) Indicates that it is a continuation
40 statement for, or that it is filed to continue the
41 effectiveness of, the identified financing statement.

43 (xxviii) "Debtor" means:

45 (A) A person having an interest, other than
46 a security interest or other lien, in the collateral,
47 whether or not the person is an obligor;

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2 (B) A seller of accounts, chattel paper,
3 payment intangibles or promissory notes; or

5 (C) A consignee.

7 (xxix) "Deposit account" means a demand, time,
8 savings, passbook or similar account maintained with a
9 bank. The term does not include investment property or
10 accounts evidenced by an instrument;

12 (xxx) "Document" means a document of title or a
13 receipt of the type described in section 34.1-7-201(b);

15 (xxxi) "Electronic chattel paper" means chattel
16 paper evidenced by a record or records consisting of
17 information stored in an electronic medium;

19 (xxxii) "Encumbrance" means a right, other than
20 an ownership interest, in real property. The term includes
21 mortgages and other liens on real property;

23 (xxxiii) "Equipment" means goods other than
24 inventory, farm products or consumer goods;

26 (xxxiv) "Farm products" means goods, other than
27 standing timber, with respect to which the debtor is
28 engaged in a farming operation and which are:

30 (A) Crops grown, growing or to be grown,
31 including:

33 (I) Crops produced on trees, vines and
34 bushes; and

36 (II) Aquatic goods produced in
37 aquacultural operations.

39 (B) Livestock, born or unborn, including
40 aquatic goods produced in aquacultural operations;

42 (C) Supplies used or produced in a farming
43 operation; or

45 (D) Products of crops or livestock in their
46 unmanufactured states.

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1 (xxxv) "Farming operation" means raising,
2 cultivating, propagating, fattening, grazing or any other
3 farming, livestock or aquacultural operation;

5 (xxxvi) "File number" means the number assigned
6 to an initial financing statement pursuant to section
7 34.1-9-519(a);

9 (xxxvii) "Filing office" means an office
10 designated in section 34.1-9-501 as the place to file a
11 financing statement;

13 (xxxviii) "Filing-office rule" means a rule
14 adopted pursuant to section 34.1-9-526;

16 (xxxix) "Financing statement" means a record or
17 records composed of an initial financing statement and any
18 filed record relating to the initial financing statement;

20 (xl) "Fixture filing" means the filing of a
21 financing statement covering goods that are or are to
22 become fixtures and satisfying section 34.1-9-502(a) and
23 (b). The term includes the filing of a financing statement
24 covering goods of a transmitting utility which are or are
25 to become fixtures;

27 (xli) "Fixtures" means goods that have become so
28 related to particular real property that an interest in
29 them arises under real property law;

31 (xlii) "General intangible" means any personal
32 property, including things in action, other than accounts,
33 chattel paper, commercial tort claims, deposit accounts,
34 documents, goods, instruments, investment property,
35 letter-of-credit rights, letters of credit, money and oil,
36 gas or other minerals before extraction. The term includes
37 payment intangibles and software;

39 (xliii) "Good faith" means honesty in fact and
40 the observance of reasonable commercial standards of fair
41 dealing;

43 (xliv) "Goods" means all things that are movable
44 when a security interest attaches. The term includes (1)
45 fixtures, (2) standing timber that is to be cut and removed
46 under a conveyance or contract for sale, (3) the unborn
47 young of animals, (4) crops grown, growing or to be grown,

Page 9

1 even if the crops are produced on trees, vines or bushes,
2 and (5) manufactured homes. The term also includes a
3 computer program embedded in goods and any supporting
4 information provided in connection with a transaction
5 relating to the program if (1) the program is associated
6 with the goods in such a manner that it customarily is
7 considered part of the goods, or (2) by becoming the owner
8 of the goods, a person acquires a right to use the program
9 in connection with the goods. The term does not include a
10 computer program embedded in goods that consist solely of
11 the medium in which the program is embedded. The term also
12 does not include accounts, chattel paper, commercial tort
13 claims, deposit accounts, documents, general intangibles,
14 instruments, investment property, letter-of-credit rights,
15 letters of credit, money or oil, gas or other minerals
16 before extraction;

18 (xlv) "Governmental unit" means a subdivision,
19 agency, department, county, parish, municipality or other
20 unit of the government of the United States, a state or a
21 foreign country. The term includes an organization having a
22 separate corporate existence if the organization is
23 eligible to issue debt on which interest is exempt from
24 income taxation under the laws of the United States;

26 (xlvi) "Health-care-insurance receivable" means
27 an interest in or claim under a policy of insurance which
28 is a right to payment of a monetary obligation for
29 health-care goods or services provided;

31 (xlvii) "Instrument" means a negotiable
32 instrument or any other writing that evidences a right to
33 the payment of a monetary obligation, is not itself a
34 security agreement or lease, and is of a type that in
35 ordinary course of business is transferred by delivery with
36 any necessary indorsement or assignment. The term does not
37 include (1) investment property, (2) letters of credit or
38 (3) writings that evidence a right to payment arising out
39 of the use of a credit or charge card or information
40 contained on or for use with the card;

42 (xlviii) "Inventory" means goods, other than
43 farm products, which:

45 (A) Are leased by a person as lessor;

Page 10

1 (B) Are held by a person for sale or lease
2 or to be furnished under a contract of service;

4 (C) Are furnished by a person under a
5 contract of service; or

7 (D) Consist of raw materials, work in
8 process or materials used or consumed in a business.

10 (xlix) "Investment property" means a security,
11 whether certificated or uncertificated, security
12 entitlement, securities account, commodity contract or
13 commodity account;

15 (l) "Jurisdiction of organization", with respect
16 to a registered organization, means the jurisdiction under
17 whose law the organization is organized;

19 (li) "Letter-of-credit right" means a right to
20 payment or performance under a letter of credit, whether or
21 not the beneficiary has demanded or is at the time entitled
22 to demand payment or performance. The term does not
23 include the right of a beneficiary to demand payment or
24 performance under a letter of credit;

26 (lii) "Lien creditor" means:

28 (A) A creditor that has acquired a lien on
29 the property involved by attachment, levy or the like;

31 (B) An assignee for benefit of creditors
32 from the time of assignment;

34 (C) A trustee in bankruptcy from the date
35 of the filing of the petition; or

37 (D) A receiver in equity from the time of
38 appointment.

40 (liii) "Manufactured home" means a structure,
41 transportable in one (1) or more sections, which, in the
42 traveling mode, is eight (8) body feet or more in width or
43 forty (40) body feet or more in length, or, when erected on
44 site, is three hundred twenty (320) or more square feet,
45 and which is built on a permanent chassis and designed to
46 be used as a dwelling with or without a permanent
47 foundation when connected to the required utilities, and

Page 11

1 includes the plumbing, heating, air-conditioning and
2 electrical systems contained therein. The term includes
3 any structure that meets all of the requirements of this
4 paragraph except the size requirements and with respect to
5 which the manufacturer voluntarily files a certification
6 required by the United States Secretary of Housing and
7 Urban Development and complies with the standards
8 established under title 42 of the United States Code;

10 (liv) "Manufactured-home transaction" means a
11 secured transaction:

13 (A) That creates a purchase-money security
14 interest in a manufactured home, other than a manufactured
15 home held as inventory; or

17 (B) In which a manufactured home, other
18 than a manufactured home held as inventory, is the primary
19 collateral.

21 (lv) "Mortgage" means a consensual interest in
22 real property, including fixtures, which secures payment or
23 performance of an obligation;

25 (lvi) "New debtor" means a person that becomes
26 bound as debtor under section 34.1-9-203(d) by a security
27 agreement previously entered into by another person;

29 (lvii) "New value" means (1) money, (2) money's
30 worth in property, services or new credit or (3) release by
31 a transferee of an interest in property previously
32 transferred to the transferee. The term does not include
33 an obligation substituted for another obligation;

35 (lviii) "Noncash proceeds" means proceeds other
36 than cash proceeds;

38 (lix) "Obligor" means a person that, with
39 respect to an obligation secured by a security interest in
40 or an agricultural lien on the collateral, (1) owes payment
41 or other performance of the obligation, (2) has provided
42 property other than the collateral to secure payment or
43 other performance of the obligation or (3) is otherwise
44 accountable in whole or in part for payment or other
45 performance of the obligation. The term does not include
46 issuers or nominated persons under a letter of credit;

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1 (lx) "Original debtor," except as used in W.S.
2 34.1-9-310(c), means a person that, as debtor, entered into
3 a security agreement to which a new debtor has become bound
4 under section 34.1-9-203(d);

6 (lxi) "Payment intangible" means a general
7 intangible under which the account debtor's principal
8 obligation is a monetary obligation;

10 (lxii) "Person related to", with respect to an
11 individual, means:

13 (A) The spouse of the individual;

15 (B) A brother, brother-in-law, sister or
16 sister-in-law of the individual;

18 (C) An ancestor or lineal descendant of the
19 individual or the individual's spouse; or

21 (D) Any other relative, by blood or
22 marriage, of the individual or the individual's spouse who
23 shares the same home with the individual.

25 (lxiii) "Person related to", with respect to an
26 organization, means:

28 (A) A person directly or indirectly
29 controlling, controlled by or under common control with the
30 organization;

32 (B) An officer or director of, or a person
33 performing similar functions with respect to, the
34 organization;

36 (C) An officer or director of, or a person
37 performing similar functions with respect to, a person
38 described in subparagraph (A);

40 (D) The spouse of an individual described
41 in subparagraph (A), (B) or (C); or

43 (E) An individual who is related by blood
44 or marriage to an individual described in subparagraph (A),
45 (B), (C) or (D) and shares the same home with the
46 individual.

Page 13

1 (lxiv) "Proceeds", except as used in section
2 34.1-9-609(b) means the following property:

4 (A) Whatever is acquired upon the sale,
5 lease, license, exchange or other disposition of
6 collateral;

8 (B) Whatever is collected on, or
9 distributed on account of, collateral;

11 (C) Rights arising out of collateral;

13 (D) To the extent of the value of
14 collateral, claims arising out of the loss, nonconformity,
15 or interference with the use of, defects or infringement of
16 rights in or damage to, the collateral; or

18 (E) To the extent of the value of
19 collateral and to the extent payable to the debtor or the
20 secured party, insurance payable by reason of the loss or
21 nonconformity of, defects or infringement of rights in, or
22 damage to, the collateral.

24 (lxv) "Production-money crops" means crops that
25 secure a production-money obligation incurred with respect
26 to the production of those crops;

28 (lxvi) "Production-money obligation" means an
29 obligation of an obligor incurred for new value given to
30 enable the debtor to produce crops if the value is in fact
31 used for the production of the crops;

33 (lxvii) "Production of crops" includes tilling
34 and otherwise preparing land for growing, planting,
35 cultivating, fertilizing, irrigating, harvesting and
36 gathering crops and protecting them from damage or disease;

38 (lxviii) "Promissory note" means an instrument
39 that evidences a promise to pay a monetary obligation, does
40 not evidence an order to pay and does not contain an
41 acknowledgment by a bank that the bank has received for
42 deposit a sum of money or funds;

44 (lxix) "Proposal" means a record authenticated
45 by a secured party which includes the terms on which the
46 secured party is willing to accept collateral in full or

Page 14

1 partial satisfaction of the obligation it secures pursuant
2 to sections 34.1-9-620, 34.1-9-621 and 34.1-9-622;

4 (lxx) "Public-finance transaction" means a
5 secured transaction in connection with which:

7 (A) Debt securities are issued;

9 (B) All or a portion of the securities
10 issued have an initial stated maturity of at least twenty
11 (20) years; and

13 (C) The debtor, obligor, secured party,
14 account debtor or other person obligated on collateral,
15 assignor or assignee of a secured obligation, or assignor
16 or assignee of a security interest is a state or a
17 governmental unit of a state.

19 (lxxi) "Pursuant to commitment", with respect to
20 an advance made or other value given by a secured party,
21 means pursuant to the secured party's obligation, whether
22 or not a subsequent event of default or other event not
23 within the secured party's control has relieved or may
24 relieve the secured party from its obligation;

26 (lxxii) "Record", except as used in "for
27 record", "of record", "record or legal title" and "record
28 owner", means information that is inscribed on a tangible
29 medium or which is stored in an electronic or other medium
30 and is retrievable in perceivable form;

32 (lxxiii) "Registered organization" means an
33 organization organized solely under the law of a single
34 state or the United States and as to which the state or the
35 United States must maintain a public record showing the
36 organization to have been organized;

38 (lxxiv) "Secondary obligor" means an obligor to
39 the extent that:

41 (A) The obligor's obligation is secondary;
42 or

44 (B) The obligor has a right of recourse
45 with respect to an obligation secured by collateral against
46 the debtor, another obligor or property of either.

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1 (lxxv) "Secured party" means:

3 (A) A person in whose favor a security
4 interest is created or provided for under a security
5 agreement, whether or not any obligation to be secured is
6 outstanding;

8 (B) A person that holds an agricultural
9 lien;

11 (C) A consignor;

13 (D) A person to which accounts, chattel
14 paper, payment intangibles or promissory notes have been
15 sold;

17 (E) A trustee, indenture trustee, agent,
18 collateral agent or other representative in whose favor a
19 security interest or agricultural lien is created or
20 provided for; or

22 (F) A person that holds a security interest
23 arising under section 34.1-2-401, 34.1-2-505,
24 34.1-2-711(c), 34.1-2A-508(e), 34.1-4-210 or 34.1-5-118.

26 (lxxvi) "Security agreement" means an agreement
27 that creates or provides for a security interest;

29 (lxxvii) "Send", in connection with a record or
30 notification, means:

32 (A) To deposit in the mail, deliver for
33 transmission or transmit by any other usual means of
34 communication, with postage or cost of transmission
35 provided for, addressed to any address reasonable under the
36 circumstances; or

38 (B) To cause the record or notification to
39 be received within the time that it would have been
40 received if properly sent under subparagraph (A).

42 (lxxviii) "Software" means a computer program
43 and any supporting information provided in connection with
44 a transaction relating to the program. The term does not
45 include a computer program that is included in the
46 definition of goods;

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1 (lxxix) "State" means a state of the United
2 States, the District of Columbia, Puerto Rico, the United
3 States Virgin Islands or any territory or insular
4 possession subject to the jurisdiction of the United
5 States;

7 (lxxx) "Supporting obligation" means a
8 letter-of-credit right or secondary obligation that
9 supports the payment or performance of an account, chattel
10 paper, a document, a general intangible, an instrument or
11 investment property;

13 (lxxxi) "Tangible chattel paper" means chattel
14 paper evidenced by a record or records consisting of
15 information that is inscribed on a tangible medium;

17 (lxxxii) "Termination statement" means an
18 amendment of a financing statement which:

20 (A) Identifies, by its file number, the
21 initial financing statement to which it relates; and

23 (B) Indicates either that it is a
24 termination statement or that the identified financing
25 statement is no longer effective.

27 (lxxxiii) "Transmitting utility" means a person
28 primarily engaged in the business of:

30 (A) Operating a railroad, subway, street
31 railway or trolley bus;

33 (B) Transmitting communications
34 electrically, electromagnetically or by light;

36 (C) Transmitting goods by pipeline or
37 sewer; or

39 (D) Transmitting or producing and
40 transmitting electricity, steam, gas or water.

42 (b) The following definitions in other articles apply
43 to this article:

44 "Applicant" Section 34.1-5-102.

45 "Beneficiary" Section 34.1-5-102.

46 "Broker" Section 34.1-8-102.

47 "Certificated security" Section 34.1-8-102.

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1 "Check" Section 34.1-3-104.

2 "Clearing corporation" Section 34.1-8-102.

3 "Contract for sale" Section 34.1-2-106.

4 "Customer" Section 34.1-4-104.

5 "Entitlement holder" Section 34.1-8-102.

6 "Financial asset" Section 34.1-8-102.

7 "Holder in due course" Section 34.1-3-302.

8 "Issuer" (with respect to a

9 letter of credit or

10 letter-of-credit right) Section 34.1-5-102.

11 "Issuer" (with respect to a

12 security) Section 34.1-8-201.

13 "Lease" Section 34.1-2A-103.

14 "Lease agreement" Section 34.1-2A-103.

15 "Lease contract" Section 34.1-2A-103.

16 "Leasehold interest" Section 34.1-2A-103.

17 "Lessee" Section 34.1-2A-103.

18 "Lessee in ordinary course of

19 business" Section 34.1-2A-103.

20 "Lessor" Section 34.1-2A-103.

21 "Lessor's residual interest" Section 34.1-2A-103.

22 "Letter of credit" Section 34.1-5-102.

23 "Merchant" Section 34.1-2-104.

24 "Negotiable instrument" Section 34.1-3-104.

25 "Nominated person" Section 34.1-5-102.

26 "Note" Section 34.1-3-104.

27 "Proceeds of a letter of

28 credit" Section 34.1-5-114.

29 "Prove" Section 34.1-3-103.

30 "Sale" Section 34.1-2-106.

31 "Securities account" Section 34.1-8-501.

32 "Securities intermediary" Section 34.1-8-102.

33 "Security" Section 34.1-8-102.

34 "Security certificate" Section 34.1-8-102.

35 "Security entitlement" Section 34.1-8-102.

36 "Uncertificated security" Section 34.1-8-102.

38 (c) Article 1 contains general definitions and
39 principles of construction and interpretation applicable
40 throughout this article.

42 34.1-9-103. Purchase-money security interest;
43 application of payments; burden of establishing.

45 (a) In this section:

Page 18

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

5 (ii) "Purchase-money obligation" means an
6 obligation of an obligor incurred as all or part of the
7 price of the collateral or for value given to enable the
8 debtor to acquire rights in or the use of the collateral if
9 the value is in fact so used.

11 (b) A security interest in goods is a purchase-money
12 security interest:

14 (i) To the extent that the goods are
15 purchase-money collateral with respect to that security
16 interest;

18 (ii) If the security interest is in inventory
19 that is or was purchase-money collateral, also to the
20 extent that the security interest secures a purchase-money
21 obligation incurred with respect to other inventory in
22 which the secured party holds or held a purchase-money
23 security interest; and

25 (iii) Also to the extent that the security
26 interest secures a purchase-money obligation incurred with
27 respect to software in which the secured party holds or
28 held a purchase-money security interest.

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

36 (i) The debtor acquired its interest in the
37 software in an integrated transaction in which it acquired
38 an interest in the goods; and

40 (ii) The debtor acquired its interest in the
41 software for the principal purpose of using the software in
42 the goods.

44 (d) The security interest of a consignor in goods
45 that are the subject of a consignment is a purchase-money
46 security interest in inventory.

Page 19

1 (e) In a transaction other than a consumer-goods
2 transaction, if the extent to which a security interest is
3 a purchase-money security interest depends on the
4 application of a payment to a particular obligation, the
5 payment must be applied:

7 (i) In accordance with any reasonable method of
8 application to which the parties agree;

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

14 (iii) In the absence of an agreement to a
15 reasonable method and a timely manifestation of the
16 obligor's intention, in the following order:

18 (A) To obligations that are not secured;
19 and

21 (B) If more than one (1) obligation is
22 secured, to obligations secured by purchase-money security
23 interests in the order in which those obligations were
24 incurred.

26 (f) In a transaction other than a consumer-goods
27 transaction, a purchase-money security interest does not
28 lose its status as such, even if:

30 The purchase-money collateral also secures
31 an obligation that is not a purchase-money obligation;

33 (ii) Collateral that is not purchase-money
34 collateral also secures the purchase-money obligation; or

36 (iii) The purchase-money obligation has been
37 renewed, refinanced, consolidated or restructured.

39 (g) In a transaction other than a consumer-goods
40 transaction, a secured party claiming a purchase-money
41 security interest has the burden of establishing the extent
42 to which the security interest is a purchase-money security
43 interest.

45 (h) The limitation of the rules in subsections (e),
46 (f) and (g) to transactions other than consumer-goods
47 transactions is intended to leave to the court the

Page 20

1 determination of the proper rules in consumer-goods
2 transactions. The court may not infer from that limitation
3 the nature of the proper rule in consumer-goods
4 transactions and may continue to apply established
5 approaches.

7 34.1-9-103A. "Production-money crops"; "production-
8 money obligation"; production-money security interest;
9 burden of establishing.

11 (a) A security interest in crops is a
12 production-money security interest to the extent that the
13 crops are production-money crops.

15 (b) If the extent to which a security interest is a
16 production-money security interest depends on the
17 application of a payment to a particular obligation, the
18 payment must be applied:

20 (i) In accordance with any reasonable method of
21 application to which the parties agree;

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

27 (iii) In the absence of an agreement to a
28 reasonable method and a timely manifestation of the
29 obligor's intention, in the following order:

31 (A) To obligations that are not secured;
32 and

34 (B) If more than one (1) obligation is
35 secured, to obligations secured by production-money
36 security interests in the order in which those obligations
37 were incurred.

39 (c) A production-money security interest does not
40 lose its status as such, even if:

42 (i) The production-money crops also secure an
43 obligation that is not a production-money obligation;

45 (ii) Collateral that is not production-money
46 crops also secures the production-money obligation; or

Page 21

1 (iii) The production-money obligation has been
2 renewed, refinanced or restructured.

4 (d) A secured party claiming a production-money
5 security interest has the burden of establishing the extent
6 to which the security interest is a production-money
7 security interest.

9 34.1-9-104. Control of deposit account.

11 (a) A secured party has control of a deposit account
12 if:

14 (i) The secured party is the bank with which the
15 deposit account is maintained;

17 (ii) The debtor, secured party and bank have
18 agreed in an authenticated record that the bank will comply
19 with instructions originated by the secured party directing
20 disposition of the funds in the deposit account without
21 further consent by the debtor; or

23 (iii) The secured party becomes the bank's
24 customer with respect to the deposit account.

26 (b) A secured party that has satisfied subsection (a)
27 has control, even if the debtor retains the right to direct
28 the disposition of funds from the deposit account.

30 34.1-9-105. Control of electronic chattel paper.

32 (a) A secured party has control of electronic chattel
33 paper if the record or records comprising the chattel paper
34 are created, stored and assigned in such a manner that:

36 (i) A single authoritative copy of the record or
37 records exists which is unique, identifiable and, except as
38 otherwise provided in paragraphs (iv), (v) and (vi),
39 unalterable;

41 (ii) The authoritative copy identifies the
42 secured party as the assignee of the record or records;

44 (iii) The authoritative copy is communicated to
45 and maintained by the secured party or its designated
46 custodian;

Page 22

1 (iv) Copies or revisions that add or change an
2 identified assignee of the authoritative copy can be made
3 only with the participation of the secured party;

5 (v) Each copy of the authoritative copy and any
6 copy of a copy is readily identifiable as a copy that is
7 not the authoritative copy; and

9 (vi) Any revision of the authoritative copy is
10 readily identifiable as an authorized or unauthorized
11 revision.

13 34.1-9-106. Control of investment property.

15 (a) A person has control of a certificated security,
16 uncertificated security or security entitlement as provided
17 in section 34.1-8-106.

19 (b) A secured party has control of a commodity
20 contract if:

22 (i) The secured party is the commodity
23 intermediary with which the commodity contract is carried;
24 or

26 (ii) The commodity customer, secured party and
27 commodity intermediary have agreed that the commodity
28 intermediary will apply any value distributed on account of
29 the commodity contract as directed by the secured party
30 without further consent by the commodity customer.

32 (c) A secured party having control of all security
33 entitlements or commodity contracts carried in a securities
34 account or commodity account has control over the
35 securities account or commodity account.

37 34.1-9-107. Control of letter-of-credit right.

39 A secured party has control of a letter-of-credit right to
40 the extent of any right to payment or performance by the
41 issuer or any nominated person if the issuer or nominated
42 person has consented to an assignment of proceeds of the
43 letter of credit under section 34.1-5-114(c) or otherwise
44 applicable law or practice.

46 34.1-9-108. Sufficiency of description.

Page 23

1 (a) Except as otherwise provided in subsections (c),
2 (d) and (e), a description of personal or real property is
3 sufficient, whether or not it is specific, if it reasonably
4 identifies what is described.

6 (b) Except as otherwise provided in subsection (d), a
7 description of collateral reasonably identifies the
8 collateral if it identifies the collateral by:

10 (i) Specific listing;

12 (ii) Category;

14 (iii) Except as otherwise provided in subsection
15 (e), a type of collateral defined in this title;

17 (iv) Quantity;

19 (v) Computational or allocational formula or
20 procedure; or

22 (vi) Except as otherwise provided in subsection
23 (c), any other method, if the identity of the collateral is
24 objectively determinable.

26 (c) A description of collateral as "all the debtor's
27 assets" or "all the debtor's personal property" or using
28 words of similar import does not reasonably identify the
29 collateral.

31 (d) Except as otherwise provided in subsection (e), a
32 description of a security entitlement, securities account
33 or commodity account is sufficient if it describes:

35 (i) The collateral by those terms or as
36 investment property; or

38 (ii) The underlying financial asset or commodity
39 contract.

41 (e) A description only by type of collateral defined
42 in this title is an insufficient description of:

44 (i) A commercial tort claim; or

Page 24

1 (ii) In a consumer transaction, consumer goods,
2 a security entitlement, a securities account or a commodity
3 account.

5 SUBPART 2

6 APPLICABILITY OF ARTICLE

8 34.1-9-109. Scope.

10 (a) Except as otherwise provided in subsections (c)
11 and (d), this article applies to:

13 (i) A transaction, regardless of its form, that
14 creates a security interest in personal property or
15 fixtures by contract;

17 (ii) An agricultural lien;

19 (iii) A sale of accounts, chattel paper, payment
20 intangibles or promissory notes;

22 (iv) A consignment;

24 (v) A security interest arising under section
25 34.1-2-401, 34.1-2-505, 34.1-2-711(c) or 34.1-2A-508(e), as
26 provided in section 34.1-9-110; and

28 (vi) A security interest arising under section
29 34.1-4-210 or 34.1-5-118.

31 (b) The application of this article to a security
32 interest in a secured obligation is not affected by the
33 fact that the obligation is itself secured by a transaction
34 or interest to which this article does not apply.

36 (c) This article does not apply to the extent that:

38 (i) A statute, regulation or treaty of the
39 United States preempts this article;

41 (ii) Another statute of this state expressly
42 governs the creation, perfection, priority or enforcement
43 of a security interest created by this state or a
44 governmental unit of this state;

46 (iii) A statute of another state, a foreign
47 country or a governmental unit of another state or a

Page 25

1 foreign country, other than a statute generally applicable
2 to security interests, expressly governs creation,
3 perfection, priority or enforcement of a security interest
4 created by the state, country or governmental unit; or

6 (iv) The rights of a transferee beneficiary or
7 nominated person under a letter of credit are independent
8 and superior under section 34.1-5-114.

10 (d) This article does not apply to:

12 (i) A landlord's lien, other than an
13 agricultural lien;

15 (ii) A lien, other than an agricultural lien,
16 given by statute or other rule of law for services or
17 materials, but section 34.1-9-333 applies with respect to
18 priority of the lien;

20 (iii) An assignment of a claim for wages, salary
21 or other compensation of an employee;

23 (iv) A sale of accounts, chattel paper, payment
24 intangibles or promissory notes as part of a sale of the
25 business out of which they arose;

27 (v) An assignment of accounts, chattel paper,
28 payment intangibles or promissory notes which is for the
29 purpose of collection only;

31 (vi) An assignment of a right to payment under a
32 contract to an assignee that is also obligated to perform
33 under the contract;

35 (vii) An assignment of a single account, payment
36 intangible or promissory note to an assignee in full or
37 partial satisfaction of a preexisting indebtedness;

39 (viii) A transfer of an interest in or an
40 assignment of a claim under a policy of insurance, other
41 than an assignment by or to a health-care provider of a
42 health-care-insurance receivable and any subsequent
43 assignment of the right to payment, but sections 34.1-9-315
44 and 34.1-9-322 apply with respect to proceeds and
45 priorities in proceeds;

Page 26

1 (ix) An assignment of a right represented by a
2 judgment, other than a judgment taken on a right to payment
3 that was collateral;

5 (x) A right of recoupment or set-off, but:

7 (A) Section 34.1-9-340 applies with respect
8 to the effectiveness of rights of recoupment or set-off
9 against deposit accounts; and

11 (B) Section 34.1-9-404 applies with respect
12 to defenses or claims of an account debtor;

14 (xi) The creation or transfer of an interest in
15 or lien on real property, including a lease or rents
16 thereunder, except to the extent that provision is made
17 for:

19 (A) Liens on real property in sections
20 34.1-9-203 and 34.1-9-308;

22 (B) Fixtures in section 34.1-9-334;

24 (C) Fixture filings in sections 34.1-9-501,
25 34.1-9-502, 34.1-9-512, 34.1-9-516 and 34.1-9-519; and

27 (D) Security agreements covering personal
28 and real property in section 34.1-9-604;

30 (xii) An assignment of a claim arising in tort,
31 other than a commercial tort claim, but sections 34.1-9-315
32 and 34.1-9-322 apply with respect to proceeds and
33 priorities in proceeds;

35 (xiii) An assignment of a deposit account in a
36 consumer transaction, but sections 34.1-9-315 and
37 34.1-9-322 apply with respect to proceeds and priorities in
38 proceeds; or

40 (xiv) Notwithstanding paragraph (c)(ii) of this
41 section, a transfer by this state or governmental unit of
42 this state.

44 34.1-9-110. Security interests arising under article
45 2 or 2A.

Page 27

1 (a) A security interest arising under section
2 34.1-2-401, 34.1-2-505, 34.1-2-711(c) or 34.1-2A-508(e) is
3 subject to this article. However, until the debtor obtains
4 possession of the goods:

6 (i) The security interest is enforceable, even
7 if section 34.1-9-203(b)(iii) has not been satisfied;

9 (ii) Filing is not required to perfect the
10 security interest;

12 (iii) The rights of the secured party after
13 default by the debtor are governed by article 2 or 2A; and

15 (iv) The security interest has priority over a
16 conflicting security interest created by the debtor.

18 PART 2

19 EFFECTIVENESS OF SECURITY AGREEMENT;

20 ATTACHMENT OF SECURITY INTEREST;

21 RIGHTS OF PARTIES TO SECURITY AGREEMENT

23 SUBPART 1

24 EFFECTIVENESS AND ATTACHMENT

26 34.1-9-201. General effectiveness of security
27 agreement.

29 (a) Except as otherwise provided in this title, a
30 security agreement is effective according to its terms
31 between the parties, against purchasers of the collateral,
32 and against creditors.

34 (b) A transaction subject to this article is subject
35 to any applicable rule of law which establishes a different
36 rule for consumers, to any other statute or regulation of
37 this state that regulates the rates, charges, agreements
38 and practices for loans, credit sales or other extensions
39 of credit and to any consumer-protection statute or
40 regulation of this state.

42 (c) In case of conflict between this article and a
43 rule of law, statute or regulation described in subsection
44 (b), the rule of law, statute or regulation controls.
45 Failure to comply with a statute or regulation described in
46 subsection (b) has only the effect the statute or
47 regulation specifies.

Page 28

2 (d) This article does not:

4 (i) Validate any rate, charge, agreement or
5 practice that violates a rule of law, statute or regulation
6 described in subsection (b); or

8 (ii) Extend the application of the rule of law,
9 statute or regulation to a transaction not otherwise
10 subject to it.

12 34.1-9-202. Title to collateral immaterial.

14 Except as otherwise provided with respect to consignments
15 or sales of accounts, chattel paper, payment intangibles or
16 promissory notes, the provisions of this article with
17 regard to rights and obligations apply whether title to
18 collateral is in the secured party or the debtor.

20 34.1-9-203. Attachment and enforceability of security
21 interest; proceeds; supporting obligations; formal
22 requisites.

24 (a) A security interest attaches to collateral when
25 it becomes enforceable against the debtor with respect to
26 the collateral, unless an agreement expressly postpones the
27 time of attachment.

29 (b) Except as otherwise provided in subsections (c)
30 through (j), a security interest is enforceable against the
31 debtor and third parties with respect to the collateral
32 only if:

34 (i) Value has been given;

36 (ii) The debtor has rights in the collateral or
37 the power to transfer rights in the collateral to a secured
38 party; and

40 (iii) One (1) of the following conditions is
41 met:

43 (A) The debtor has authenticated a security
44 agreement that provides a description of the collateral
45 and, if the security interest covers timber to be cut, a
46 description of the land concerned;

Page 29

1 (B) The collateral is not a certificated
2 security and is in the possession of the secured party
3 under section 34.1-9-313 pursuant to the debtor's security
4 agreement;

6 (C) The collateral is a certificated
7 security in registered form and the security certificate
8 has been delivered to the secured party under section
9 34.1-8-301 pursuant to the debtor's security agreement; or

11 (D) The collateral is deposit accounts,
12 electronic chattel paper, investment property or
13 letter-of-credit rights, and the secured party has control
14 under section 34.1-9-104, 34.1-9-105, 34.1-9-106 or
15 34.1-9-107 pursuant to the debtor's security agreement.

17 (c) Subsection (b) is subject to section 34.1-4-210
18 on the security interest of a collecting bank, section
19 34.1-5-118 on the security interest of a letter-of-credit
20 issuer or nominated person, section 34.1-9-110 on a
21 security interest arising under article 2 or 2A, and
22 section 34.1-9-206 on security interests in investment
23 property.

25 (d) A person becomes bound as debtor by a security
26 agreement entered into by another person if, by operation
27 of law other than this article or by contract:

29 (i) The security agreement becomes effective to
30 create a security interest in the person's property; or

32 (ii) The person becomes generally obligated for
33 the obligations of the other person, including the
34 obligation secured under the security agreement, and
35 acquires or succeeds to all or substantially all of the
36 assets of the other person.

38 (e) If a new debtor becomes bound as debtor by a
39 security agreement entered into by another person:

41 (i) The agreement satisfies paragraph (b)(iii)
42 with respect to existing or after-acquired property of the
43 new debtor to the extent the property is described in the
44 agreement; and

46 (ii) Another agreement is not necessary to make
47 a security interest in the property enforceable.

Page 30

2 (f) The attachment of a security interest in
3 collateral gives the secured party the rights to proceeds
4 provided by section 34.1-9-315 and is also attachment of a
5 security interest in a supporting obligation for the
6 collateral.

8 (g) The attachment of a security interest in a right
9 to payment or performance secured by a security interest or
10 other lien on personal or real property is also attachment
11 of a security interest in the security interest, mortgage
12 or other lien.

14 (h) The attachment of a security interest in a
15 securities account is also attachment of a security
16 interest in the security entitlements carried in the
17 securities account.

19 (j) The attachment of a security interest in a
20 commodity account is also attachment of a security interest
21 in the commodity contracts carried in the commodity
22 account.

24 34.1-9-204. After-acquired property; future advances.

26 (a) Except as otherwise provided in subsection (b), a
27 security agreement may create or provide for a security
28 interest in after-acquired collateral.

30 (b) A security interest does not attach under a term
31 constituting an after-acquired property clause to:

33 (i) Consumer goods, other than an accession when
34 given as additional security, unless the debtor acquires
35 rights in them within ten (10) days after the secured party
36 gives value; or

38 (ii) A commercial tort claim.

40 (c) A security agreement may provide that collateral
41 secures, or that accounts, chattel paper, payment
42 intangibles or promissory notes are sold in connection
43 with, future advances or other value, whether or not the
44 advances or value are given pursuant to commitment.

46 34.1-9-205. Use or disposition of collateral
47 permissible.

Page 31

2 (a) A security interest is not invalid or fraudulent
3 against creditors solely because:

5 (i) The debtor has the right or ability to:

7 (A) Use, commingle or dispose of all or
8 part of the collateral, including returned or repossessed
9 goods;

11 (B) Collect, compromise, enforce or
12 otherwise deal with collateral;

14 (C) Accept the return of collateral or make
15 repossessions; or

17 (D) Use, commingle or dispose of proceeds;
18 or

20 (ii) The secured party fails to require the
21 debtor to account for proceeds or replace collateral.

23 (b) This section does not relax the requirements of
24 possession if attachment, perfection or enforcement of a
25 security interest depends upon possession of the collateral
26 by the secured party.

28 34.1-9-206. Security interest arising in purchase or
29 delivery of financial asset.

31 (a) A security interest in favor of a securities
32 intermediary attaches to a person's security entitlement
33 if:

35 (i) The person buys a financial asset through
36 the securities intermediary in a transaction in which the
37 person is obligated to pay the purchase price to the
38 securities intermediary at the time of the purchase; and

40 (ii) The securities intermediary credits the
41 financial asset to the buyer's securities account before
42 the buyer pays the securities intermediary.

44 (b) The security interest described in subsection (a)
45 secures the person's obligation to pay for the financial
46 asset.

Page 32

1 (c) A security interest in favor of a person that
2 delivers a certificated security or other financial asset
3 represented by a writing attaches to the security or other
4 financial asset if:

6 (i) The security or other financial asset:

8 (A) In the ordinary course of business is
9 transferred by delivery with any necessary indorsement or
10 assignment; and

12 (B) Is delivered under an agreement between
13 persons in the business of dealing with such securities or
14 financial assets; and

16 (ii) The agreement calls for delivery against
17 payment.

19 (d) The security interest described in subsection (c)
20 secures the obligation to make payment for the delivery.

22 SUBPART 2

23 RIGHTS AND DUTIES

25 34.1-9-207. Rights and duties of secured party having
26 possession or control of collateral.

28 (a) Except as otherwise provided in subsection (d), a
29 secured party shall use reasonable care in the custody and
30 preservation of collateral in the secured party's
31 possession. In the case of chattel paper or an instrument,
32 reasonable care includes taking necessary steps to preserve
33 rights against prior parties unless otherwise agreed.

35 (b) Except as otherwise provided in subsection (d),
36 if a secured party has possession of collateral:

38 (i) Reasonable expenses, including the cost of
39 insurance and payment of taxes or other charges, incurred
40 in the custody, preservation, use or operation of the
41 collateral are chargeable to the debtor and are secured by
42 the collateral;

44 (ii) The risk of accidental loss or damage is on
45 the debtor to the extent of a deficiency in any effective
46 insurance coverage;

Page 33

1 (iii) The secured party shall keep the
2 collateral identifiable, but fungible collateral may be
3 commingled; and

5 (iv) The secured party may use or operate the
6 collateral:

8 (A) For the purpose of preserving the
9 collateral or its value;

11 (B) As permitted by an order of a court
12 having competent jurisdiction; or

14 (C) Except in the case of consumer goods,
15 in the manner and to the extent agreed by the debtor.

17 (c) Except as otherwise provided in subsection (d), a
18 secured party having possession of collateral or control of
19 collateral under section 34.1-9-104, 34.1-9-105, 34.1-9-106
20 or 34.1-9-107:

22 (i) May hold as additional security any
23 proceeds, except money or funds, received from the
24 collateral;

26 (ii) Shall apply money or funds received from
27 the collateral to reduce the secured obligation, unless
28 remitted to the debtor; and

30 (iii) May create a security interest in the
31 collateral.

33 (d) If the secured party is a buyer of accounts,
34 chattel paper, payment intangibles or promissory notes or a
35 consignor:

37 (i) Subsection (a) does not apply unless the
38 secured party is entitled under an agreement:

40 (A) To charge back uncollected collateral;
41 or

43 (B) Otherwise to full or limited recourse
44 against the debtor or a secondary obligor based on the
45 nonpayment or other default of an account debtor or other
46 obligor on the collateral; and

Page 34

1 (ii) Subsections (b) and (c) do not apply.

3 34.1-9-208. Additional duties of secured party having
4 control of collateral.

6 (a) This section applies to cases in which there is
7 no outstanding secured obligation and the secured party is
8 not committed to make advances, incur obligations or
9 otherwise give value.

11 (b) Within ten (10) days after receiving an
12 authenticated demand by the debtor:

14 (i) A secured party having control of a deposit
15 account under section 34.1-9-104(a)(ii) shall send to the
16 bank with which the deposit account is maintained an
17 authenticated statement that releases the bank from any
18 further obligation to comply with instructions originated
19 by the secured party;

21 (ii) A secured party having control of a deposit
22 account under section 34.1-9-104(a)(iii) shall:

24 (A) Pay the debtor the balance on deposit
25 in the deposit account; or

27 (B) Transfer the balance on deposit into a
28 deposit account in the debtor's name;

30 (iii) A secured party, other than a buyer,
31 having control of electronic chattel paper under section
32 34.1-9-105 shall:

34 (A) Communicate the authoritative copy of
35 the electronic chattel paper to the debtor or its
36 designated custodian;

38 (B) If the debtor designates a custodian
39 that is the designated custodian with which the
40 authoritative copy of the electronic chattel paper is
41 maintained for the secured party, communicate to the
42 custodian an authenticated record releasing the designated
43 custodian from any further obligation to comply with
44 instructions originated by the secured party and
45 instructing the custodian to comply with instructions
46 originated by the debtor; and

Page 35

1 (C) Take appropriate action to enable the
2 debtor or its designated custodian to make copies of or
3 revisions to the authoritative copy which add or change an
4 identified assignee of the authoritative copy without the
5 consent of the secured party.

7 (iv) A secured party having control of
8 investment property under section 34.1-8-106(d)(ii) or
9 34.1-9-106(b) shall send to the securities intermediary or
10 commodity intermediary with which the security entitlement
11 or commodity contract is maintained an authenticated record
12 that releases the securities intermediary or commodity
13 intermediary from any further obligation to comply with
14 entitlement orders or directions originated by the secured
15 party; and

17 (v) A secured party having control of a
18 letter-of-credit right under section 34.1-9-107 shall send
19 to each person having an unfulfilled obligation to pay or
20 deliver proceeds of the letter of credit to the secured
21 party an authenticated release from any further obligation
22 to pay or deliver proceeds of the letter of credit to the
23 secured party.

25 34.1-9-209. Duties of secured party if account debtor
26 has been notified of assignment.

28 (a) Except as otherwise provided in subsection (c),
29 this section applies if:

31 (i) There is no outstanding secured obligation;
32 and

34 (ii) The secured party is not committed to make
35 advances, incur obligations or otherwise give value.

37 (b) Within ten (10) days after receiving an
38 authenticated demand by the debtor, a secured party shall
39 send to an account debtor that has received notification of
40 an assignment to the secured party as assignee under
41 section 34.1-9-406(a) an authenticated record that releases
42 the account debtor from any further obligation to the
43 secured party.

45 (c) This section does not apply to an assignment
46 constituting the sale of an account, chattel paper or
47 payment intangible.

Page 36

2 34.1-9-210. Request for accounting; request regarding
3 list of collateral or statement of account.

5 (a) In this section:

7 (i) "Request" means a record of a type described
8 in paragraph (ii), (iii) or (iv);

10 (ii) "Request for an accounting" means a record
11 authenticated by a debtor requesting that the recipient
12 provide an accounting of the unpaid obligations secured by
13 collateral and reasonably identifying the transaction or
14 relationship that is the subject of the request;

16 (iii) "Request regarding a list of collateral"
17 means a record authenticated by a debtor requesting that
18 the recipient approve or correct a list of what the debtor
19 believes to be the collateral securing an obligation and
20 reasonably identifying the transaction or relationship that
21 is the subject of the request;

23 (iv) "Request regarding a statement of account"
24 means a record authenticated by a debtor requesting that
25 the recipient approve or correct a statement indicating
26 what the debtor believes to be the aggregate amount of
27 unpaid obligations secured by collateral as of a specified
28 date and reasonably identifying the transaction or
29 relationship that is the subject of the request.

31 (b) Subject to subsections (c), (d), (e) and (f), a
32 secured party, other than a buyer of accounts, chattel
33 paper, payment intangibles or promissory notes or a
34 consignor, shall comply with a request within fourteen (14)
35 days after receipt:

37 (i) In the case of a request for an accounting,
38 by authenticating and sending to the debtor an accounting;
39 and

41 (ii) In the case of a request regarding a list
42 of collateral or a request regarding a statement of
43 account, by authenticating and sending to the debtor an
44 approval or correction.

46 (c) A secured party that claims a security interest
47 in all of a particular type of collateral owned by the

Page 37

1 debtor may comply with a request regarding a list of
2 collateral by sending to the debtor an authenticated record
3 including a statement to that effect within fourteen (14)
4 days after receipt.

6 (d) A person that receives a request regarding a list
7 of collateral, claims no interest in the collateral when it
8 receives the request, and claimed an interest in the
9 collateral at an earlier time shall comply with the request
10 within fourteen (14) days after receipt by sending to the
11 debtor an authenticated record:

13 (i) Disclaiming any interest in the collateral;
14 and

16 (ii) If known to the recipient, providing the
17 name and mailing address of any assignee of or successor to
18 the recipient's interest in the collateral.

20 (e) A person that receives a request for an
21 accounting or a request regarding a statement of account,
22 claims no interest in the obligations when it receives the
23 request, and claimed an interest in the obligations at an
24 earlier time shall comply with the request within fourteen
25 (14) days after receipt by sending to the debtor an
26 authenticated record:

28 (i) Disclaiming any interest in the obligations;
29 and

31 (ii) If known to the recipient, providing the
32 name and mailing address of any assignee of or successor to
33 the recipient's interest in the obligations.

35 (f) A debtor is entitled without charge to one (1)
36 response to a request under this section during any six (6)
37 month period. The secured party may require payment of a
38 charge not exceeding twenty-five dollars ($25.00) for each
39 additional response.

41 PART 3

42 PERFECTION AND PRIORITY

44 SUBPART 1

45 LAW GOVERNING PERFECTION AND PRIORITY

Page 38

1 34.1-9-301. Law governing perfection and priority of
2 security interests.

4 (a) Except as otherwise provided in sections
5 34.1-9-303 through 34.1-9-306, the following rules
6 determine the law governing perfection, the effect of
7 perfection or nonperfection, and the priority of a security
8 interest in collateral:

10 (i) Except as otherwise provided in this
11 section, while a debtor is located in a jurisdiction, the
12 local law of that jurisdiction governs perfection, the
13 effect of perfection or nonperfection, and the priority of
14 a security interest in collateral;

16 (ii) While collateral is located in a
17 jurisdiction, the local law of that jurisdiction governs
18 perfection, the effect of perfection or nonperfection, and
19 the priority of a possessory security interest in that
20 collateral;

22 (iii) Except as otherwise provided in paragraph
23 (iv), while negotiable documents, goods, instruments, money
24 or tangible chattel paper is located in a jurisdiction, the
25 local law of that jurisdiction governs:

27 (A) Perfection of a security interest in
28 the goods by filing a fixture filing;

30 (B) Perfection of a security interest in
31 timber to be cut; and

33 (C) The effect of perfection or
34 nonperfection and the priority of a nonpossessory security
35 interest in the collateral.

37 (iv) The local law of the jurisdiction in which
38 the wellhead or minehead is located governs perfection, the
39 effect of perfection or nonperfection and the priority of a
40 security interest in as-extracted collateral.

42 34.1-9-302. Law governing perfection and priority of
43 agricultural liens.

45 While farm products are located in a jurisdiction, the
46 local law of that jurisdiction governs perfection, the

Page 39

1 effect of perfection or nonperfection and the priority of
2 an agricultural lien on the farm products.

4 34.1-9-303. Law governing perfection and priority of
5 security interests in goods covered by a certificate of
6 title.

8 (a) This section applies to goods covered by a
9 certificate of title, even if there is no other
10 relationship between the jurisdiction under whose
11 certificate of title the goods are covered and the goods or
12 the debtor.

14 (b) Goods become covered by a certificate of title
15 when a valid application for the certificate of title and
16 the applicable fee are delivered to the appropriate
17 authority. Goods cease to be covered by a certificate of
18 title at the earlier of the time the certificate of title
19 ceases to be effective under the law of the issuing
20 jurisdiction or the time the goods become covered
21 subsequently by a certificate of title issued by another
22 jurisdiction.

24 (c) The local law of the jurisdiction under whose
25 certificate of title the goods are covered governs
26 perfection, the effect of perfection or nonperfection, and
27 the priority of a security interest in goods covered by a
28 certificate of title from the time the goods become covered
29 by the certificate of title until the goods cease to be
30 covered by the certificate of title.

32 34.1-9-304. Law governing perfection and priority of
33 security interests in deposit accounts.

35 (a) The local law of a bank's jurisdiction governs
36 perfection, the effect of perfection or nonperfection, and
37 the priority of a security interest in a deposit account
38 maintained with that bank.

40 (b) The following rules determine a bank's
41 jurisdiction for purposes of this part:

43 (i) If an agreement between the bank and the
44 debtor governing the deposit account expressly provides
45 that a particular jurisdiction is the bank's jurisdiction
46 for purposes of this part, this article or this title, that
47 jurisdiction is the bank's jurisdiction;

Page 40

2 (ii) If paragraph (i) does not apply and an
3 agreement between the bank and its customer governing the
4 deposit account expressly provides that the agreement is
5 governed by the law of a particular jurisdiction, that
6 jurisdiction is the bank's jurisdiction;

8 (iii) If neither paragraph (i) nor (ii) applies
9 and an agreement between the bank and its customer
10 governing the deposit account expressly provides that the
11 deposit account is maintained at an office in a particular
12 jurisdiction, that jurisdiction is the bank's jurisdiction;

14 (iv) If none of the preceding paragraphs
15 applies, the bank's jurisdiction is the jurisdiction in
16 which the office identified in an account statement as the
17 office serving the customer's account is located;

19 (v) If none of the preceding paragraphs applies,
20 the bank's jurisdiction is the jurisdiction in which the
21 chief executive office of the bank is located.

23 34.1-9-305. Law governing perfection and priority of
24 security interests in investment property.

26 (a) Except as otherwise provided in subsection (c),
27 the following rules apply:

29 (i) While a security certificate is located in a
30 jurisdiction, the local law of that jurisdiction governs
31 perfection, the effect of perfection or nonperfection and
32 the priority of a security interest in the certificated
33 security represented thereby;

35 (ii) The local law of the issuer's jurisdiction
36 as specified in section 34.1-8-110(d) governs perfection,
37 the effect of perfection or nonperfection and the priority
38 of a security interest in an uncertificated security;

40 (iii) The local law of the securities
41 intermediary's jurisdiction as specified in section
42 34.1-8-110(e) governs perfection, the effect of perfection
43 or nonperfection and the priority of a security interest in
44 a security entitlement or securities account;

46 (iv) The local law of the commodity
47 intermediary's jurisdiction governs perfection, the effect

Page 41

1 of perfection or nonperfection and the priority of a
2 security interest in a commodity contract or commodity
3 account.

5 (b) The following rules determine a commodity
6 intermediary's jurisdiction for purposes of this part:

8 (i) If an agreement between the commodity
9 intermediary and commodity customer governing the commodity
10 account expressly provides that a particular jurisdiction
11 is the commodity intermediary's jurisdiction for purposes
12 of this part, this article or this title, that jurisdiction
13 is the commodity intermediary's jurisdiction;

15 (ii) If paragraph (i) does not apply and an
16 agreement between the commodity intermediary and commodity
17 customer governing the commodity account expressly provides
18 that the agreement is governed by the law of a particular
19 jurisdiction, that jurisdiction is the commodity
20 intermediary's jurisdiction;

22 (iii) If neither paragraph (i) nor (ii) applies
23 and an agreement between the commodity intermediary and
24 commodity customer governing the commodity account
25 expressly provides that the commodity account is maintained
26 at an office in a particular jurisdiction, that
27 jurisdiction is the commodity intermediary's jurisdiction;

29 (iv) If none of the preceding paragraphs
30 applies, the commodity intermediary's jurisdiction is the
31 jurisdiction in which the office identified in an account
32 statement as the office serving the commodity customer's
33 account is located;

35 (v) If none of the preceding paragraphs applies,
36 the commodity intermediary's jurisdiction is the
37 jurisdiction in which the chief executive office of the
38 commodity intermediary is located.

40 (c) The local law of the jurisdiction in which the
41 debtor is located governs:

43 (i) Perfection of a security interest in
44 investment property by filing;

Page 42

1 (ii) Automatic perfection of a security interest
2 in investment property created by a broker or securities
3 intermediary; and

5 (iii) Automatic perfection of a security
6 interest in a commodity contract or commodity account
7 created by a commodity intermediary.

9 34.1-9-306. Law governing perfection and priority of
10 security interests in letter-of-credit rights.

12 (a) Subject to subsection (c), the local law of the
13 issuer's jurisdiction or a nominated person's jurisdiction
14 governs perfection, the effect of perfection or
15 nonperfection and the priority of a security interest in a
16 letter-of-credit right if the issuer's jurisdiction or
17 nominated person's jurisdiction is a state.

19 (b) For purposes of this part, an issuer's
20 jurisdiction or nominated person's jurisdiction is the
21 jurisdiction whose law governs the liability of the issuer
22 or nominated person with respect to the letter-of-credit
23 right as provided in section 34.1-5-116.

25 (c) This section does not apply to a security
26 interest that is perfected only under section
27 34.1-9-308(d).

29 34.1-9-307. Location of debtor.

31 (a) In this section, "place of business" means a
32 place where a debtor conducts its affairs.

34 (b) Except as otherwise provided in this section, the
35 following rules determine a debtor's location:

37 (i) A debtor who is an individual is located at
38 the individual's principal residence;

40 (ii) A debtor that is an organization and has
41 only one (1) place of business is located at its place of
42 business;

44 (iii) A debtor that is an organization and has
45 more than one (1) place of business is located at its chief
46 executive office.

Page 43

1 (c) Subsection (b) applies only if a debtor's
2 residence, place of business or chief executive office, as
3 applicable, is located in a jurisdiction whose law
4 generally requires information concerning the existence of
5 a nonpossessory security interest to be made generally
6 available in a filing, recording or registration system as
7 a condition or result of the security interest's obtaining
8 priority over the rights of a lien creditor with respect to
9 the collateral. If subsection (b) does not apply, the
10 debtor is located in the District of Columbia.

12 (d) A person that ceases to exist, have a residence
13 or have a place of business continues to be located in the
14 jurisdiction specified by subsections (b) and (c).

16 (e) A registered organization that is organized under
17 the law of a state is located in that state.

19 (f) Except as otherwise provided in subsection (j), a
20 registered organization that is organized under the law of
21 the United States and a branch or agency of a bank that is
22 not organized under the law of the United States or a state
23 are located:

25 (i) In the state that the law of the United
26 States designates, if the law designates a state of
27 location;

29 (ii) In the state that the registered
30 organization, branch or agency designates, if the law of
31 the United States authorizes the registered organization,
32 branch or agency to designate its state of location; or

34 (iii) In the District of Columbia, if neither
35 paragraph (i) nor (ii) applies.

37 (g) A registered organization continues to be located
38 in the jurisdiction specified by subsection (e) or (f)
39 notwithstanding:

41 (i) The suspension, revocation, forfeiture or
42 lapse of the registered organization's status as such in
43 its jurisdiction of organization; or

45 (ii) The dissolution, winding up or cancellation
46 of the existence of the registered organization.

Page 44

1 (h) The United States is located in the District of
2 Columbia.

4 (j) A branch or agency of a bank that is not
5 organized under the law of the United States or a state is
6 located in the state in which the branch or agency is
7 licensed, if all branches and agencies of the bank are
8 licensed in only one (1) state.

10 (k) A foreign air carrier under the Federal Aviation
11 Act of 1958, as amended, is located at the designated
12 office of the agent upon which service of process may be
13 made on behalf of the carrier.

15 (m) This section applies only for purposes of this
16 part.

18 SUBPART 2

19 PERFECTION

21 34.1-9-308. When security interest or agricultural
22 lien is perfected; continuity of perfection.

24 (a) Except as otherwise provided in this section and
25 section 34.1-9-309, a security interest is perfected if it
26 has attached and all of the applicable requirements for
27 perfection in sections 34.1-9-310 through 34.1-9-316 have
28 been satisfied. A security interest is perfected when it
29 attaches if the applicable requirements are satisfied
30 before the security interest attaches.

32 (b) An agricultural lien is perfected if it has
33 become effective and all of the applicable requirements for
34 perfection in section 34.1-9-310 have been satisfied. An
35 agricultural lien is perfected when it becomes effective if
36 the applicable requirements are satisfied before the
37 agricultural lien becomes effective.

39 (c) A security interest or agricultural lien is
40 perfected continuously if it is originally perfected by one
41 (1) method under this article and is later perfected by
42 another method under this article, without an intermediate
43 period when it was unperfected.

45 (d) Perfection of a security interest in collateral
46 also perfects a security interest in a supporting
47 obligation for the collateral.

Page 45

2 (e) Perfection of a security interest in a right to
3 payment or performance also perfects a security interest in
4 a security interest, mortgage or other lien on personal or
5 real property securing the right.

7 (f) Perfection of a security interest in a securities
8 account also perfects a security interest in the security
9 entitlements carried in the securities account.

11 (g) Perfection of a security interest in a commodity
12 account also perfects a security interest in the commodity
13 contracts carried in the commodity account.

15 34.1-9-309. Security interest perfected upon
16 attachment.

18 (a) The following security interests are perfected
19 when they attach:

21 (i) A purchase-money security interest in
22 consumer goods, except as otherwise provided in section
23 34.1-9-311(b) with respect to consumer goods that are
24 subject to a statute or treaty described in section
25 34.1-9-311(a);

27 (ii) An assignment of accounts or payment
28 intangibles which does not by itself or in conjunction with
29 other assignments to the same assignee transfer a
30 significant part of the assignor's outstanding accounts or
31 payment intangibles;

33 (iii) A sale of a payment intangible;

35 (iv) A sale of a promissory note;

37 (v) A security interest created by the
38 assignment of a health-care-insurance receivable to the
39 provider of the health-care goods or services;

41 (vi) A security interest arising under section
42 34.1-2-401, 34.1-2-505, 34.1-2-711(c) or 34.1-2A-508(e),
43 until the debtor obtains possession of the collateral;

45 (vii) A security interest of a collecting bank
46 arising under section 34.1-4-210;

Page 46

1 (viii) A security interest of an issuer or
2 nominated person arising under section 34.1-5-118;

4 (ix) A security interest arising in the delivery
5 of a financial asset under section 34.1-9-206(c);

7 (x) A security interest in investment property
8 created by a broker or securities intermediary;

10 (xi) A security interest in a commodity contract
11 or a commodity account created by a commodity intermediary;

13 (xii) An assignment for the benefit of all
14 creditors of the transferor and subsequent transfers by the
15 assignee thereunder; and

17 (xiii) A security interest created by an
18 assignment of a beneficial interest in a decedent's estate.

20 34.1-9-310. When filing required to perfect security
21 interest or agricultural lien; security interests and
22 agricultural liens to which filing provisions do not apply.

24 (a) Except as otherwise provided in subsection (b)
25 and section 34.1-9-312(b), a financing statement must be
26 filed to perfect all security interests and agricultural
27 liens.

29 (b) The filing of a financing statement is not
30 necessary to perfect a security interest:

32 (i) That is perfected under section
33 34.1-9-308(d), (e), (f) or (g);

35 (ii) That is perfected under section 34.1-9-309
36 when it attaches;

38 (iii) In property subject to a statute,
39 regulation, or treaty described in section 34.1-9-311(a);

41 (iv) In goods in possession of a bailee which is
42 perfected under section 34.1-9-312(d)(i) or (ii);

44 (v) In certificated securities, documents, goods
45 or instruments which is perfected without filing or
46 possession under section 34.1-9-312(e), (f) or (g);

Page 47

1 (vi) In collateral in the secured party's
2 possession under section 34.1-9-313;

4 (vii) In a certificated security which is
5 perfected by delivery of the security certificate to the
6 secured party under section 34.1-9-313;

8 (viii) In deposit accounts, electronic chattel
9 paper, investment property or letter-of-credit rights which
10 is perfected by control under section 34.1-9-314;

12 (ix) In proceeds which is perfected under
13 section 34.1-9-315; or

15 (x) That is perfected under section 34.1-9-316.

17 (c) If a secured party assigns a perfected security
18 interest or agricultural lien, a filing under this article
19 is not required to continue the perfected status of the
20 security interest against creditors of and transferees from
21 the original debtor.

23 34.1-9-311. Perfection of security interests in
24 property subject to certain statutes, regulations and
25 treaties.

27 (a) Except as otherwise provided in subsection (d),
28 the filing of a financing statement is not necessary or
29 effective to perfect a security interest in property
30 subject to:

32 (i) A statute, regulation or treaty of the
33 United States whose requirements for a security interest's
34 obtaining priority over the rights of a lien creditor with
35 respect to the property preempt section 34.1-9-310(a);

37 (ii) The following statutes of this state: the
38 certificate of ownership provisions of title 31 relating to
39 perfection of security interests in motor vehicles;

41 (iii) A certificate-of-title statute of another
42 jurisdiction which provides for a security interest to be
43 indicated on the certificate as a condition or result of
44 the security interest's obtaining priority over the rights
45 of a lien creditor with respect to the property.

Page 48

1 (b) Compliance with the requirements of a statute,
2 regulation or treaty described in subsection (a) for
3 obtaining priority over the rights of a lien creditor is
4 equivalent to the filing of a financing statement under
5 this article. Except as otherwise provided in subsection
6 (d) and sections 34.1-9-313 and 34.1-9-316(d) and (e) for
7 goods covered by a certificate of title, a security
8 interest in property subject to a statute, regulation or
9 treaty described in subsection (a) may be perfected only by
10 compliance with those requirements, and a security interest
11 so perfected remains perfected notwithstanding a change in
12 the use or transfer of possession of the collateral.

14 (c) Except as otherwise provided in subsection (d)
15 and section 34.1-9-316(d) and (e), duration and renewal of
16 perfection of a security interest perfected by compliance
17 with the requirements prescribed by a statute, regulation,
18 or treaty described in subsection (a) are governed by the
19 statute, regulation or treaty. In other respects, the
20 security interest is subject to this article.

22 (d) During any period in which collateral subject to
23 a statute specified in subsection (a)(ii) of this section
24 is inventory held for sale or lease by a person or leased
25 by that person as lessor and that person is in the business
26 of selling goods of that kind, this section does not apply
27 to a security interest in that collateral created by that
28 person.

30 34.1-9-312. Perfection of security interests in
31 chattel paper, deposit accounts, documents, goods covered
32 by documents, instruments, investment property,
33 letter-of-credit rights and money; perfection by permissive
34 filing; temporary perfection without filing or transfer of
35 possession.

37 (a) A security interest in chattel paper, negotiable
38 documents, instruments or investment property may be
39 perfected by filing.

41 (b) Except as otherwise provided in section
42 34.1-9-315(c) and (d) for proceeds:

44 (i) A security interest in a deposit account may
45 be perfected only by control under section 34.1-9-314;

Page 49

1 (ii) And except as otherwise provided in section
2 34.1-9-308(d), a security interest in a letter-of-credit
3 right may be perfected only by control under section
4 34.1-9-314; and

6 (iii) A security interest in money may be
7 perfected only by the secured party's taking possession
8 under section 34.1-9-313.

10 (c) While goods are in the possession of a bailee
11 that has issued a negotiable document covering the goods:

13 (i) A security interest in the goods may be
14 perfected by perfecting a security interest in the
15 document; and

17 (ii) A security interest perfected in the
18 document has priority over any security interest that
19 becomes perfected in the goods by another method during
20 that time.

22 (d) While goods are in the possession of a bailee
23 that has issued a nonnegotiable document covering the
24 goods, a security interest in the goods may be perfected
25 by:

27 (i) Issuance of a document in the name of the
28 secured party;

30 (ii) The bailee's receipt of notification of the
31 secured party's interest; or

33 (iii) Filing as to the goods.

35 (e) A security interest in certificated securities,
36 negotiable documents or instruments is perfected without
37 filing or the taking of possession for a period of twenty
38 (20) days from the time it attaches to the extent that it
39 arises for new value given under an authenticated security
40 agreement.

42 (f) A perfected security interest in a negotiable
43 document or goods in possession of a bailee, other than one
44 that has issued a negotiable document for the goods,
45 remains perfected for twenty (20) days without filing if
46 the secured party makes available to the debtor the goods
47 or documents representing the goods for the purpose of:

Page 50

2 (i) Ultimate sale or exchange; or

4 (ii) Loading, unloading, storing, shipping,
5 transshipping, manufacturing, processing or otherwise
6 dealing with them in a manner preliminary to their sale or
7 exchange.

9 (g) A perfected security interest in a certificated
10 security or instrument remains perfected for twenty (20)
11 days without filing if the secured party delivers the
12 security certificate or instrument to the debtor for the
13 purpose of:

15 (i) Ultimate sale or exchange; or

17 (ii) Presentation, collection, enforcement,
18 renewal or registration of transfer.

20 (h) After the twenty (20) day period specified in
21 subsection (e), (f) or (g) expires, perfection depends upon
22 compliance with this article.

24 34.1-9-313. When possession by or delivery to secured
25 party perfects security interest without filing.

27 (a) Except as otherwise provided in subsection (b), a
28 secured party may perfect a security interest in negotiable
29 documents, goods, instruments, money or tangible chattel
30 paper by taking possession of the collateral. A secured
31 party may perfect a security interest in certificated
32 securities by taking delivery of the certificated
33 securities under section 34.1-8-301.

35 (b) With respect to goods covered by a certificate of
36 title issued by this state, a secured party may perfect a
37 security interest in the goods by taking possession of the
38 goods only in the circumstances described in section
39 34.1-9-316(d).

41 (c) With respect to collateral other than
42 certificated securities and goods covered by a document, a
43 secured party takes possession of collateral in the
44 possession of a person other than the debtor, the secured
45 party or a lessee of the collateral from the debtor in the
46 ordinary course of the debtor's business, when:

Page 51

1 (i) The person in possession authenticates a
2 record acknowledging that it holds possession of the
3 collateral for the secured party's benefit; or

5 (ii) The person takes possession of the
6 collateral after having authenticated a record
7 acknowledging that it will hold possession of collateral
8 for the secured party's benefit.

10 (d) If perfection of a security interest depends upon
11 possession of the collateral by a secured party, perfection
12 occurs no earlier than the time the secured party takes
13 possession and continues only while the secured party
14 retains possession.

16 (e) A security interest in a certificated security in
17 registered form is perfected by delivery when delivery of
18 the certificated security occurs under section 34.1-8-301
19 and remains perfected by delivery until the debtor obtains
20 possession of the security certificate.

22 (f) A person in possession of collateral is not
23 required to acknowledge that it holds possession for a
24 secured party's benefit.

26 (g) If a person acknowledges that it holds possession
27 for the secured party's benefit:

29 (i) The acknowledgment is effective under
30 subsection (c) or section 34.1-8-301(a), even if the
31 acknowledgment violates the rights of a debtor; and

33 (ii) Unless the person otherwise agrees or law
34 other than this article otherwise provides, the person does
35 not owe any duty to the secured party and is not required
36 to confirm the acknowledgment to another person.

38 (h) A secured party having possession of collateral
39 does not relinquish possession by delivering the collateral
40 to a person other than the debtor or a lessee of the
41 collateral from the debtor in the ordinary course of the
42 debtor's business if the person was instructed before the
43 delivery or is instructed contemporaneously with the
44 delivery:

46 (i) To hold possession of the collateral for the
47 secured party's benefit; or

Page 52

2 (ii) To redeliver the collateral to the secured
3 party.

5 (j) A secured party does not relinquish possession,
6 even if a delivery under subsection (h) violates the rights
7 of a debtor. A person to which collateral is delivered
8 under subsection (h) does not owe any duty to the secured
9 party and is not required to confirm the delivery to
10 another person unless the person otherwise agrees or law
11 other than this article otherwise provides.

13 34.1-9-314. Perfection by control.

15 (a) A security interest in investment property,
16 deposit accounts, letter-of-credit rights or electronic
17 chattel paper may be perfected by control of the collateral
18 under section 34.1-9-104, 34.1-9-105, 34.1-9-106 or
19 34.1-9-107.

21 (b) A security interest in deposit accounts,
22 electronic chattel paper, or letter-of-credit rights is
23 perfected by control under section 34.1-9-104, 34.1-9-105
24 or 34.1-9-107 when the secured party obtains control and
25 remains perfected by control only while the secured party
26 retains control.

28 (c) A security interest in investment property is
29 perfected by control under section 34.1-9-106 from the time
30 the secured party obtains control and remains perfected by
31 control until:

33 (i) The secured party does not have control; and

35 (ii) One (1) of the following occurs:

37 (A) If the collateral is a certificated
38 security, the debtor has or acquires possession of the
39 security certificate;

41 (B) If the collateral is an uncertificated
42 security, the issuer has registered or registers the debtor
43 as the registered owner; or

45 (C) If the collateral is a security
46 entitlement, the debtor is or becomes the entitlement
47 holder.

Page 53

2 34.1-9-315. Secured party's rights on disposition of
3 collateral and in proceeds.

5 (a) Except as otherwise provided in this article and
6 in section 34.1-2-403(b):

8 (i) A security interest or agricultural lien
9 continues in collateral notwithstanding sale, lease,
10 license, exchange or other disposition thereof unless the
11 secured party authorized the disposition free of the
12 security interest or agricultural lien; and

14 (ii) A security interest attaches to any
15 identifiable proceeds of collateral.

17 (b) Proceeds that are commingled with other property
18 are identifiable proceeds:

20 (i) If the proceeds are goods, to the extent
21 provided by section 34.1-9-336; and

23 (ii) If the proceeds are not goods, to the
24 extent that the secured party identifies the proceeds by a
25 method of tracing, including application of equitable
26 principles, that is permitted under law other than this
27 article with respect to commingled property of the type
28 involved.

30 (c) A security interest in proceeds is a perfected
31 security interest if the security interest in the original
32 collateral was perfected.

34 (d) A perfected security interest in proceeds becomes
35 unperfected on the twenty-first day after the security
36 interest attaches to the proceeds unless:

38 (i) The following conditions are satisfied:

40 (A) A filed financing statement covers the
41 original collateral;

43 (B) The proceeds are collateral in which a
44 security interest may be perfected by filing in the office
45 in which the financing statement has been filed; and

Page 54

1 (C) The proceeds are not acquired with cash
2 proceeds;

4 (ii) The proceeds are identifiable cash
5 proceeds; or

7 (iii) The security interest in the proceeds is
8 perfected other than under subsection (c) when the security
9 interest attaches to the proceeds or within twenty (20)
10 days thereafter.

12 (e) If a filed financing statement covers the
13 original collateral, a security interest in proceeds which
14 remains perfected under paragraph (d)(i) becomes
15 unperfected at the later of:

17 (i) When the effectiveness of the filed
18 financing statement lapses under section 34.1-9-515 or is
19 terminated under section 34.1-9-513; or

21 (ii) The twenty-first day after the security
22 interest attaches to the proceeds.

24 34.1-9-316. Continued perfection of security interest
25 following change in governing law.

27 (a) A security interest perfected pursuant to the law
28 of the jurisdiction designated in section 34.1-9-301(a)(i)
29 or 34.1-9-305(c) remains perfected until the earliest of:

31 (i) The time perfection would have ceased under
32 the law of that jurisdiction;

34 (ii) The expiration of four (4) months after a
35 change of the debtor's location to another jurisdiction; or

37 (iii) The expiration of one (1) year after a
38 transfer of collateral to a person that thereby becomes a
39 debtor and is located in another jurisdiction.

41 (b) If a security interest described in subsection
42 (a) becomes perfected under the law of the other
43 jurisdiction before the earliest time or event described in
44 that subsection, it remains perfected thereafter. If the
45 security interest does not become perfected under the law
46 of the other jurisdiction before the earliest time or
47 event, it becomes unperfected and is deemed never to have

Page 55

1 been perfected as against a purchaser of the collateral for
2 value.

4 (c) A possessory security interest in collateral,
5 other than goods covered by a certificate of title and
6 as-extracted collateral consisting of goods, remains
7 continuously perfected if:

9 (i) The collateral is located in one (1)
10 jurisdiction and subject to a security interest perfected
11 under the law of that jurisdiction;

13 (ii) Thereafter the collateral is brought into
14 another jurisdiction; and

16 (iii) Upon entry into the other jurisdiction,
17 the security interest is perfected under the law of the
18 other jurisdiction.

20 (d) Except as otherwise provided in subsection (e), a
21 security interest in goods covered by a certificate of
22 title which is perfected by any method under the law of
23 another jurisdiction when the goods become covered by a
24 certificate of title from this state remains perfected
25 until the security interest would have become unperfected
26 under the law of the other jurisdiction had the goods not
27 become so covered.

29 (e) A security interest described in subsection (d)
30 becomes unperfected as against a purchaser of the goods for
31 value and is deemed never to have been perfected as against
32 a purchaser of the goods for value if the applicable
33 requirements for perfection under section 34.1-9-311(b) or
34 34.1-9-313 are not satisfied before the earlier of:

36 (i) The time the security interest would have
37 become unperfected under the law of the other jurisdiction
38 had the goods not become covered by a certificate of title
39 from this state; or

41 (ii) The expiration of four (4) months after the
42 goods had become so covered.

44 (f) A security interest in deposit accounts,
45 letter-of-credit rights or investment property which is
46 perfected under the law of the bank's jurisdiction, the
47 issuer's jurisdiction, a nominated person's jurisdiction,

Page 56

1 the securities intermediary's jurisdiction or the commodity
2 intermediary's jurisdiction, as applicable, remains
3 perfected until the earlier of:

5 (i) The time the security interest would have
6 become unperfected under the law of that jurisdiction; or

8 (ii) The expiration of four (4) months after a
9 change of the applicable jurisdiction to another
10 jurisdiction.

12 (g) If a security interest described in subsection
13 (f) becomes perfected under the law of the other
14 jurisdiction before the earlier of the time or the end of
15 the period described in that subsection, it remains
16 perfected thereafter. If the security interest does not
17 become perfected under the law of the other jurisdiction
18 before the earlier of that time or the end of that period,
19 it becomes unperfected and is deemed never to have been
20 perfected as against a purchaser of the collateral for
21 value.

23 SUBPART 3

24 PRIORITY

26 34.1-9-317. Interests that take priority over or take
27 free of security interest or agricultural lien.

29 (a) A security interest or agricultural lien is
30 subordinate to the rights of:

32 (i) A person entitled to priority under section
33 34.1-9-322; and

35 (ii) Except as otherwise provided in subsection
36 (e), a person that becomes a lien creditor before the
37 earlier of the time:

39 (A) The security interest or agricultural
40 lien is perfected; or

42 (B) One (1) of the conditions specified in
43 W.S. 34.1-9-203(b)(iii) is met and a financing
44 statement covering the collateral is filed.

46 (b) Except as otherwise provided in subsection (e), a
47 buyer, other than a secured party, of tangible chattel

Page 57

1 paper, documents, goods, instruments or a security
2 certificate takes free of a security interest or
3 agricultural lien if the buyer gives value and receives
4 delivery of the collateral without knowledge of the
5 security interest or agricultural lien and before it is
6 perfected.

8 (c) Except as otherwise provided in subsection (e), a
9 lessee of goods takes free of a security interest or
10 agricultural lien if the lessee gives value and receives
11 delivery of the collateral without knowledge of the
12 security interest or agricultural lien and before it is
13 perfected.

15 (d) A licensee of a general intangible or a buyer,
16 other than a secured party, of accounts, electronic chattel
17 paper, general intangibles or investment property other
18 than a certificated security takes free of a security
19 interest if the licensee or buyer gives value without
20 knowledge of the security interest and before it is
21 perfected.

23 (e) Except as otherwise provided in sections
24 34.1-9-320 and 34.1-9-321, if a person files a financing
25 statement with respect to a purchase-money security
26 interest before or within twenty (20) days after the debtor
27 receives delivery of the collateral, the security interest
28 takes priority over the rights of a buyer, lessee or lien
29 creditor which arise between the time the security interest
30 attaches and the time of filing.

32 34.1-9-318. No interest retained in right to payment
33 that is sold; rights and title of seller of account or
34 chattel paper with respect to creditors and purchasers.

36 (a) A debtor that has sold an account, chattel paper,
37 payment intangible or promissory note does not retain a
38 legal or equitable interest in the collateral sold.

40 (b) For purposes of determining the rights of
41 creditors of, and purchasers for value of an account or
42 chattel paper from, a debtor that has sold an account or
43 chattel paper, while the buyer's security interest is
44 unperfected, the debtor is deemed to have rights and title
45 to the account or chattel paper identical to those the
46 debtor sold.

Page 58

1 34.1-9-319. Rights and title of consignee with
2 respect to creditors and purchasers.

4 (a) Except as otherwise provided in subsection (b),
5 for purposes of determining the rights of creditors of, and
6 purchasers for value of goods from, a consignee, while the
7 goods are in the possession of the consignee, the consignee
8 is deemed to have rights and title to the goods identical
9 to those the consignor had or had power to transfer.

11 (b) For purposes of determining the rights of a
12 creditor of a consignee, law other than this article
13 determines the rights and title of a consignee while goods
14 are in the consignee's possession if, under this part, a
15 perfected security interest held by the consignor would
16 have priority over the rights of the creditor.

18 34.1-9-320. Buyer of goods.

20 (a) Except as otherwise provided in subsection (e), a
21 buyer in ordinary course of business, other than a person
22 buying farm products from a person engaged in farming
23 operations, takes free of a security interest created by
24 the buyer's seller, even if the security interest is
25 perfected and the buyer knows of its existence.

27 (b) Except as otherwise provided in subsection (e), a
28 buyer of goods from a person who used or bought the goods
29 for use primarily for personal, family or household
30 purposes takes free of a security interest, even if
31 perfected, if the buyer buys:

33 (i) Without knowledge of the security interest;

35 (ii) For value;

37 (iii) Primarily for the buyer's personal, family
38 or household purposes; and

40 (iv) Before the filing of a financing statement
41 covering the goods.

43 (c) To the extent that it affects the priority of a
44 security interest over a buyer of goods under subsection
45 (b), the period of effectiveness of a filing made in the
46 jurisdiction in which the seller is located is governed by
47 section 34.1-9-316(a) and (b).

Page 59

2 (d) A buyer in ordinary course of business buying
3 oil, gas or other minerals at the wellhead or minehead or
4 after extraction takes free of an interest arising out of
5 an encumbrance.

7 (e) Subsections (a) and (b) do not affect a security
8 interest in goods in the possession of the secured party
9 under section 34.1-9-313.

11 34.1-9-321. Licensee of general intangible and lessee
12 of goods in ordinary course of business.

14 (a) In this section, "licensee in ordinary course of
15 business" means a person that becomes a licensee of a
16 general intangible in good faith, without knowledge that
17 the license violates the rights of another person in the
18 general intangible and in the ordinary course from a person
19 in the business of licensing general intangibles of that
20 kind. A person becomes a licensee in the ordinary course if
21 the license to the person comports with the usual or
22 customary practices in the kind of business in which the
23 licensor is engaged or with the licensor's own usual or
24 customary practices.

26 (b) A licensee in ordinary course of business takes
27 its rights under a nonexclusive license free of a security
28 interest in the general intangible created by the licensor,
29 even if the security interest is perfected and the licensee
30 knows of its existence.

32 (c) A lessee in ordinary course of business takes its
33 leasehold interest free of a security interest in the goods
34 created by the lessor, even if the security interest is
35 perfected and the lessee knows of its existence.

37 34.1-9-322. Priorities among conflicting security
38 interests in and agricultural liens on same collateral.

40 (a) Except as otherwise provided in this section,
41 priority among conflicting security interests and
42 agricultural liens in the same collateral is determined
43 according to the following rules:

45 (i) Conflicting perfected security interests and
46 agricultural liens rank according to priority in time of
47 filing or perfection. Priority dates from the earlier of

Page 60

1 the time a filing covering the collateral is first made or
2 the security interest or agricultural lien is first
3 perfected, if there is no period thereafter when there is
4 neither filing nor perfection;

6 (ii) A perfected security interest or
7 agricultural lien has priority over a conflicting
8 unperfected security interest or agricultural lien;

10 (iii) The first security interest or
11 agricultural lien to attach or become effective has
12 priority if conflicting security interests and agricultural
13 liens are unperfected.

15 (b) For the purposes of paragraph (a)(i):

17 (i) The time of filing or perfection as to a
18 security interest in collateral is also the time of filing
19 or perfection as to a security interest in proceeds; and

21 (ii) The time of filing or perfection as to a
22 security interest in collateral supported by a supporting
23 obligation is also the time of filing or perfection as to a
24 security interest in the supporting obligation.

26 (c) Except as otherwise provided in subsection (f), a
27 security interest in collateral which qualifies for
28 priority over a conflicting security interest under section
29 34.1-9-327, 34.1-9-328, 34.1-9-329, 34.1-9-330 or
30 34.1-9-331 also has priority over a conflicting security
31 interest in:

33 (i) Any supporting obligation for the
34 collateral; and

36 (ii) Proceeds of the collateral if:

38 (A) The security interest in proceeds is
39 perfected;

41 (B) The proceeds are cash proceeds or of
42 the same type as the collateral; and

44 (C) In the case of proceeds that are
45 proceeds of proceeds, all intervening proceeds are cash
46 proceeds, proceeds of the same type as the collateral or an
47 account relating to the collateral.

Page 61

2 (d) Subject to subsection (e) and except as otherwise
3 provided in subsection (f), if a security interest in
4 chattel paper, deposit accounts, negotiable documents,
5 instruments, investment property or letter-of-credit rights
6 is perfected by a method other than filing, conflicting
7 perfected security interests in proceeds of the collateral
8 rank according to priority in time of filing.

10 (e) Subsection (d) applies only if the proceeds of
11 the collateral are not cash proceeds, chattel paper,
12 negotiable documents, instruments, investment property or
13 letter-of-credit rights.

15 (f) Subsections (a) through (e) are subject to:

17 (i) Subsection (g) and the other provisions of
18 this part;

20 (ii) Section 34.1-4-210 with respect to a
21 security interest of a collecting bank;

23 (iii) Section 34.1-5-118 with respect to a
24 security interest of an issuer or nominated person; and

26 (iv) Section 34.1-9-110 with respect to a
27 security interest arising under article 2 or 2A.

29 (g) A perfected agricultural lien on collateral has
30 priority over a conflicting security interest in or
31 agricultural lien on the same collateral if the statute
32 creating the agricultural lien so provides.

34 34.1-9-323. Future advances.

36 (a) Except as otherwise provided in subsection (c),
37 for purposes of determining the priority of a perfected
38 security interest under section 34.1-9-322(a)(i),
39 perfection of the security interest dates from the time an
40 advance is made to the extent that the security interest
41 secures an advance that:

43 (i) Is made while the security interest is
44 perfected only:

46 (A) Under section 34.1-9-309 when it
47 attaches; or

Page 62

2 (B) Temporarily under section
3 34.1-9-312(e), (f) or (g); and

5 (ii) Is not made pursuant to a commitment
6 entered into before or while the security interest is
7 perfected by a method other than under section 34.1-9-309
8 or 34.1-9-312(e), (f) or (g).

10 (b) Except as otherwise provided in subsection (c), a
11 security interest is subordinate to the rights of a person
12 that becomes a lien creditor to the extent that the
13 security interest secures an advance made more than
14 forty-five (45) days after the person becomes a lien
15 creditor unless the advance is made:

17 (i) Without knowledge of the lien; or

19 (ii) Pursuant to a commitment entered into
20 without knowledge of the lien.

22 (c) Subsections (a) and (b) do not apply to a
23 security interest held by a secured party that is a buyer
24 of accounts, chattel paper, payment intangibles or
25 promissory notes or a consignor.

27 (d) Except as otherwise provided in subsection (e), a
28 buyer of goods other than a buyer in ordinary course of
29 business takes free of a security interest to the extent
30 that it secures advances made after the earlier of:

32 (i) The time the secured party acquires
33 knowledge of the buyer's purchase; or

35 (ii) Forty-five (45) days after the purchase.

37 (e) Subsection (d) does not apply if the advance is
38 made pursuant to a commitment entered into without
39 knowledge of the buyer's purchase and before the expiration
40 of the forty-five (45) day period.

42 (f) Except as otherwise provided in subsection (g), a
43 lessee of goods, other than a lessee in ordinary course of
44 business, takes the leasehold interest free of a security
45 interest to the extent that it secures advances made after
46 the earlier of:

Page 63

1 (i) The time the secured party acquires
2 knowledge of the lease; or

4 (ii) Forty-five (45) days after the lease
5 contract becomes enforceable.

7 (g) Subsection (f) does not apply if the advance is
8 made pursuant to a commitment entered into without
9 knowledge of the lease and before the expiration of the
10 forty-five (45) day period.

12 34.1-9-324. Priority of purchase-money security
13 interests.

15 (a) Except as otherwise provided in subsection (g), a
16 perfected purchase-money security interest in goods other
17 than inventory or livestock has priority over a conflicting
18 security interest in the same goods, and, except as
19 otherwise provided in section 34.1-9-327, a perfected
20 security interest in its identifiable proceeds also has
21 priority, if the purchase-money security interest is
22 perfected when the debtor receives possession of the
23 collateral or within twenty (20) days thereafter.

25 (b) Subject to subsection (c) and except as otherwise
26 provided in subsection (g), a perfected purchase-money
27 security interest in inventory has priority over a
28 conflicting security interest in the same inventory, has
29 priority over a conflicting security interest in chattel
30 paper or an instrument constituting proceeds of the
31 inventory and in proceeds of the chattel paper, if so
32 provided in section 34.1-9-330, and, except as otherwise
33 provided in section 34.1-9-327, also has priority in
34 identifiable cash proceeds of the inventory to the extent
35 the identifiable cash proceeds are received on or before
36 the delivery of the inventory to a buyer, if:

38 (i) The purchase-money security interest is
39 perfected when the debtor receives possession of the
40 inventory;

42 (ii) The purchase-money secured party sends an
43 authenticated notification to the holder of the conflicting
44 security interest;

Page 64

1 (iii) The holder of the conflicting security
2 interest receives the notification within five (5) years
3 before the debtor receives possession of the inventory; and

5 (iv) The notification states that the person
6 sending the notification has or expects to acquire a
7 purchase-money security interest in inventory of the debtor
8 and describes the inventory.

10 (c) Paragraphs (b)(ii) through (iv) apply only if the
11 holder of the conflicting security interest had filed a
12 financing statement covering the same types of inventory:

14 (i) If the purchase-money security interest is
15 perfected by filing, before the date of the filing; or

17 (ii) If the purchase-money security interest is
18 temporarily perfected without filing or possession under
19 section 34.1-9-312(f), before the beginning of the twenty
20 (20) day period thereunder.

22 (d) Subject to subsection (e) and except as otherwise
23 provided in subsection (g), a perfected purchase-money
24 security interest in livestock that are farm products has
25 priority over a conflicting security interest in the same
26 livestock, and, except as otherwise provided in section
27 34.1-9-327, a perfected security interest in their
28 identifiable proceeds and identifiable products in their
29 unmanufactured states also has priority, if:

31 (i) The purchase-money security interest is
32 perfected when the debtor receives possession of the
33 livestock;

35 (ii) The purchase-money secured party sends an
36 authenticated notification to the holder of the conflicting
37 security interest;

39 (iii) The holder of the conflicting security
40 interest receives the notification within six (6) months
41 before the debtor receives possession of the livestock; and

43 (iv) The notification states that the person
44 sending the notification has or expects to acquire a
45 purchase-money security interest in livestock of the debtor
46 and describes the livestock.

Page 65

1 (e) Paragraphs (d)(ii) through (iv) apply only if the
2 holder of the conflicting security interest had filed a
3 financing statement covering the same types of livestock:

5 (i) If the purchase-money security interest is
6 perfected by filing, before the date of the filing; or

8 (ii) If the purchase-money security interest is
9 temporarily perfected without filing or possession under
10 section 34.1-9-312(f), before the beginning of the twenty
11 (20) day period thereunder.

13 (f) Except as otherwise provided in subsection (g), a
14 perfected purchase-money security interest in software has
15 priority over a conflicting security interest in the same
16 collateral, and, except as otherwise provided in section
17 34.1-9-327, a perfected security interest in its
18 identifiable proceeds also has priority, to the extent that
19 the purchase-money security interest in the goods in which
20 the software was acquired for use has priority in the goods
21 and proceeds of the goods under this section.

23 (g) If more than one (1) security interest qualifies
24 for priority in the same collateral under subsection (a),
25 (b), (d) or (f):

27 (i) A security interest securing an obligation
28 incurred as all or part of the price of the collateral has
29 priority over a security interest securing an obligation
30 incurred for value given to enable the debtor to acquire
31 rights in or the use of collateral; and

33 (ii) In all other cases, section 34.1-9-322(a)
34 applies to the qualifying security interests.

36 34.1-9-324A. Priority of production-money security
37 interests and agricultural liens.

39 (a) Except as otherwise provided in subsections (c),
40 (d) and (e), if the requirements of subsection (b) are
41 satisfied, a perfected production-money security interest
42 in production-money crops has priority over a conflicting
43 security interest in the same crops and, except as
44 otherwise provided in section 34.1-9-327, also has priority
45 in their identifiable proceeds.

Page 66

1 (b) A production-money security interest has priority
2 under subsection (a) if:

4 (i) The production-money security interest is
5 perfected by filing when the production-money secured party
6 first gives new value to enable the debtor to produce the
7 crops;

9 (ii) The production-money secured party sends an
10 authenticated notification to the holder of the conflicting
11 security interest not less than ten (10) or more than
12 thirty (30) days before the production-money secured party
13 first gives new value to enable the debtor to produce the
14 crops if the holder had filed a financing statement
15 covering the crops before the date of the filing made by
16 the production-money secured party; and

18 (iii) The notification states that the
19 production-money secured party has or expects to acquire a
20 production-money security interest in the debtor's crops
21 and provides a description of the crops.

23 (c) Except as otherwise provided in subsection (d) or
24 (e), if more than one (1) security interest qualifies for
25 priority in the same collateral under subsection (a), the
26 security interests rank according to priority in time of
27 filing under section 34.1-9-322(a).

29 (d) To the extent that a person holding a perfected
30 security interest in production-money crops that are the
31 subject of a production-money security interest gives new
32 value to enable the debtor to produce the production-money
33 crops and the value is in fact used for the production of
34 the production-money crops, the security interests rank
35 according to priority in time of filing under section
36 34.1-9-322(a).

38 (e) To the extent that a person holds both an
39 agricultural lien and a production-money security interest
40 in the same collateral securing the same obligations, the
41 rules of priority applicable to agricultural liens govern
42 priority.

44 34.1-9-325. Priority of security interests in
45 transferred collateral.

Page 67

1 (a) Except as otherwise provided in subsection (b), a
2 security interest created by a debtor is subordinate to a
3 security interest in the same collateral created by another
4 person if:

6 (i) The debtor acquired the collateral subject
7 to the security interest created by the other person;

9 (ii) The security interest created by the other
10 person was perfected when the debtor acquired the
11 collateral; and

13 (iii) There is no period thereafter when the
14 security interest is unperfected.

16 (b) Subsection (a) subordinates a security interest
17 only if the security interest:

19 (i) Otherwise would have priority solely under
20 section 34.1-9-322(a) or 34.1-9-324; or

22 (ii) Arose solely under section 34.1-2-711(c) or
23 34.1-2A-508(e).

25 34.1-9-326. Priority of security interests created by
26 new debtor.

28 (a) Subject to subsection (b), a security interest
29 created by a new debtor which is perfected by a filed
30 financing statement that is effective solely under section
31 34.1-9-508 in collateral in which a new debtor has or
32 acquires rights is subordinate to a security interest in
33 the same collateral which is perfected other than by a
34 filed financing statement that is effective solely under
35 section 34.1-9-508.

37 (b) The other provisions of this part determine the
38 priority among conflicting security interests in the same
39 collateral perfected by filed financing statements that are
40 effective solely under section 34.1-9-508. However, if the
41 security agreements to which a new debtor became bound as
42 debtor were not entered into by the same original debtor,
43 the conflicting security interests rank according to
44 priority in time of the new debtor's having become bound.

46 34.1-9-327. Priority of security interests in deposit
47 account.

Page 68

2 (a) The following rules govern priority among
3 conflicting security interests in the same deposit account:

5 (i) A security interest held by a secured party
6 having control of the deposit account under section
7 34.1-9-104 has priority over a conflicting security
8 interest held by a secured party that does not have
9 control;

11 (ii) Except as otherwise provided in paragraphs
12 (iii) and (iv), security interests perfected by control
13 under section 34.1-9-314 rank according to priority in time
14 of obtaining control;

16 (iii) Except as otherwise provided in paragraph
17 (iv), a security interest held by the bank with which the
18 deposit account is maintained has priority over a
19 conflicting security interest held by another secured
20 party;

22 (iv) A security interest perfected by control
23 under section 34.1-9-104(a)(iii) has priority over a
24 security interest held by the bank with which the deposit
25 account is maintained.

27 34.1-9-328. Priority of security interests in
28 investment property.

30 (a) The following rules govern priority among
31 conflicting security interests in the same investment
32 property:

34 (i) A security interest held by a secured party
35 having control of investment property under section
36 34.1-9-106 has priority over a security interest held by a
37 secured party that does not have control of the investment
38 property.

40 (ii) Except as otherwise provided in paragraphs
41 (iii) and (iv), conflicting security interests held by
42 secured parties each of which has control under section
43 34.1-9-106 rank according to priority in time of:

45 (A) If the collateral is a security,
46 obtaining control;

Page 69

1 (B) If the collateral is a security
2 entitlement carried in a securities account and:

4 (I) If the secured party obtained
5 control under section 34.1-8-106(d)(i), the secured party's
6 becoming the person for which the securities account is
7 maintained;

9 (II) If the secured party obtained
10 control under section 34.1-8-106(d)(ii), the securities
11 intermediary's agreement to comply with the secured party's
12 entitlement orders with respect to security entitlements
13 carried or to be carried in the securities account; or

15 (III) If the secured party obtained
16 control through another person under section
17 34.1-8-106(d)(iii), the time on which priority would be
18 based under this paragraph if the other person were the
19 secured party; or

21 (C) If the collateral is a commodity
22 contract carried with a commodity intermediary, the
23 satisfaction of the requirement for control specified in
24 section 34.1-9-106(b)(ii) with respect to commodity
25 contracts carried or to be carried with the commodity
26 intermediary.

28 (iii) A security interest held by a securities
29 intermediary in a security entitlement or a securities
30 account maintained with the securities intermediary has
31 priority over a conflicting security interest held by
32 another secured party;

34 (iv) A security interest held by a commodity
35 intermediary in a commodity contract or a commodity account
36 maintained with the commodity intermediary has priority
37 over a conflicting security interest held by another
38 secured party;

40 (v) A security interest in a certificated
41 security in registered form which is perfected by taking
42 delivery under section 34.1-9-313(a) and not by control
43 under section 34.1-9-314 has priority over a conflicting
44 security interest perfected by a method other than control;

46 (vi) Conflicting security interests created by a
47 broker, securities intermediary or commodity intermediary

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1 which are perfected without control under section
2 34.1-9-106 rank equally;

4 (vii) In all other cases, priority among
5 conflicting security interests in investment property is
6 governed by sections 34.1-9-322 and 34.1-9-323.

8 34.1-9-329. Priority of security interests in
9 letter-of-credit right.

11 (a) The following rules govern priority among
12 conflicting security interests in the same letter-of-credit
13 right:

15 (i) A security interest held by a secured party
16 having control of the letter-of-credit right under section
17 34.1-9-107 has priority to the extent of its control over a
18 conflicting security interest held by a secured party that
19 does not have control.

21 (ii) Security interests perfected by control
22 under section 34.1-9-314 rank according to priority in time
23 of obtaining control.

25 34.1-9-330. Priority of purchaser of chattel paper or
26 instrument.

28 (a) A purchaser of chattel paper has priority over a
29 security interest in the chattel paper which is claimed
30 merely as proceeds of inventory subject to a security
31 interest if:

33 (i) In good faith and in the ordinary course of
34 the purchaser's business, the purchaser gives new value and
35 takes possession of the chattel paper or obtains control of
36 the chattel paper under section 34.1-9-105; and

38 (ii) The chattel paper does not indicate that it
39 has been assigned to an identified assignee other than the
40 purchaser.

42 (b) A purchaser of chattel paper has priority over a
43 security interest in the chattel paper which is claimed
44 other than merely as proceeds of inventory subject to a
45 security interest if the purchaser gives new value and
46 takes possession of the chattel paper or obtains control of
47 the chattel paper under section 34.1-9-105 in good faith,

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1 in the ordinary course of the purchaser's business and
2 without knowledge that the purchase violates the rights of
3 the secured party.

5 (c) Except as otherwise provided in section
6 34.1-9-327, a purchaser having priority in chattel paper
7 under subsection (a) or (b) also has priority in proceeds
8 of the chattel paper to the extent that:

10 (i) Section 34.1-9-322 provides for priority in
11 the proceeds; or

13 (ii) The proceeds consist of the specific goods
14 covered by the chattel paper or cash proceeds of the
15 specific goods, even if the purchaser's security interest
16 in the proceeds is unperfected.

18 (d) Except as otherwise provided in section
19 34.1-9-331(a), a purchaser of an instrument has priority
20 over a security interest in the instrument perfected by a
21 method other than possession if the purchaser gives value
22 and takes possession of the instrument in good faith and
23 without knowledge that the purchase violates the rights of
24 the secured party.

26 (e) For purposes of subsections (a) and (b), the
27 holder of a purchase-money security interest in inventory
28 gives new value for chattel paper constituting proceeds of
29 the inventory.

31 (f) For purposes of subsections (b) and (d), if
32 chattel paper or an instrument indicates that it has been
33 assigned to an identified secured party other than the
34 purchaser, a purchaser of the chattel paper or instrument
35 has knowledge that the purchase violates the rights of the
36 secured party.

38 34.1-9-331. Priority of rights of purchasers of
39 instruments, documents, and securities under other
40 articles; priority of interests in financial assets and
41 security entitlements under article 8.

43 (a) This article does not limit the rights of a
44 holder in due course of a negotiable instrument, a holder
45 to which a negotiable document of title has been duly
46 negotiated, or a protected purchaser of a security. These
47 holders or purchasers take priority over an earlier

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1 security interest, even if perfected, to the extent
2 provided in articles 3, 7 and 8.

4 (b) This article does not limit the rights of or
5 impose liability on a person to the extent that the person
6 is protected against the assertion of an adverse claim
7 under article 8.

9 (c) Filing under this article does not constitute
10 notice of a claim or defense to the holders, or purchasers,
11 or persons described in subsections (a) and (b).

13 34.1-9-332. Transfer of money; transfer of funds from
14 deposit account.

16 (a) A transferee of money takes the money free of a
17 security interest unless the transferee acts in collusion
18 with the debtor in violating the rights of the secured
19 party.

21 (b) A transferee of funds from a deposit account
22 takes the funds free of a security interest in the deposit
23 account unless the transferee acts in collusion with the
24 debtor in violating the rights of the secured party.

26 34.1-9-333. Priority of certain liens arising by
27 operation of law.

29 (a) In this section, "possessory lien" means an
30 interest, other than a security interest or an agricultural
31 lien:

33 (i) Which secures payment or performance of an
34 obligation for services or materials furnished with respect
35 to goods by a person in the ordinary course of the person's
36 business;

38 (ii) Which is created by statute or rule of law
39 in favor of the person; and

41 (iii) Whose effectiveness depends on the
42 person's possession of the goods.

44 (b) A possessory lien on goods has priority over a
45 security interest in the goods unless the lien is created
46 by a statute that expressly provides otherwise.

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1 34.1-9-334. Priority of security interests in
2 fixtures and crops.

4 (a) A security interest under this article may be
5 created in goods that are fixtures or may continue in goods
6 that become fixtures. A security interest does not exist
7 under this article in ordinary building materials
8 incorporated into an improvement on land.

10 (b) This article does not prevent creation of an
11 encumbrance upon fixtures under real property law.

13 (c) In cases not governed by subsections (d) through
14 (h), a security interest in fixtures is subordinate to a
15 conflicting interest of an encumbrancer or owner of the
16 related real property other than the debtor.

18 (d) Except as otherwise provided in subsection (h), a
19 perfected security interest in fixtures has priority over a
20 conflicting interest of an encumbrancer or owner of the
21 real property if the debtor has an interest of record in or
22 is in possession of the real property and:

24 (i) The security interest is a purchase-money
25 security interest;

27 (ii) The interest of the encumbrancer or owner
28 arises before the goods become fixtures; and

30 (iii) The security interest is perfected by a
31 fixture filing before the goods become fixtures or within
32 twenty (20) days thereafter.

34 (e) A perfected security interest in fixtures has
35 priority over a conflicting interest of an encumbrancer or
36 owner of the real property if:

38 (i) The debtor has an interest of record in the
39 real property or is in possession of the real property and
40 the security interest:

42 (A) Is perfected by a fixture filing before
43 the interest of the encumbrancer or owner is of record; and

45 (B) Has priority over any conflicting
46 interest of a predecessor in title of the encumbrancer or
47 owner.

Page 74

2 (ii) Before the goods become fixtures, the
3 security interest is perfected by any method permitted by
4 this article and the fixtures are readily removable:

6 (A) Factory or office machines;

8 (B) Equipment that is not primarily used or
9 leased for use in the operation of the real property; or

11 (C) Replacements of domestic appliances
12 that are consumer goods.

14 (iii) The conflicting interest is a lien on the
15 real property obtained by legal or equitable proceedings
16 after the security interest was perfected by any method
17 permitted by this article; or

19 (iv) The security interest is:

21 (A) Created in a manufactured home in a
22 manufactured-home transaction; and

24 (B) Perfected pursuant to a statute
25 described in section 34.1-9-311(a)(ii).

27 (f) A security interest in fixtures, whether or not
28 perfected, has priority over a conflicting interest of an
29 encumbrancer or owner of the real property if:

31 (i) The encumbrancer or owner has, in an
32 authenticated record, consented to the security interest or
33 disclaimed an interest in the goods as fixtures; or

35 (ii) The debtor has a right to remove the goods
36 as against the encumbrancer or owner.

38 (g) The priority of the security interest under
39 paragraph (f)(ii) continues for a reasonable time if the
40 debtor's right to remove the goods as against the
41 encumbrancer or owner terminates.

43 (h) A mortgage is a construction mortgage to the
44 extent that it secures an obligation incurred for the
45 construction of an improvement on land, including the
46 acquisition cost of the land, if a recorded record of the
47 mortgage so indicates. Except as otherwise provided in

Page 75

1 subsections (e) and (f), a security interest in fixtures is
2 subordinate to a construction mortgage if a record of the
3 mortgage is recorded before the goods become fixtures and
4 the goods become fixtures before the completion of the
5 construction. A mortgage has this priority to the same
6 extent as a construction mortgage to the extent that it is
7 given to refinance a construction mortgage.

9 (j) A perfected security interest in crops growing on
10 real property has priority over a conflicting interest of
11 an encumbrancer or owner of the real property if the debtor
12 has an interest of record in or is in possession of the
13 real property.

15 (k) Subsection (j) prevails over any inconsistent
16 provisions of title 1, chapter 15, articles 1 and 2 and
17 title 29, chapter 5.

19 34.1-9-335. Accessions.

21 (a) A security interest may be created in an
22 accession and continues in collateral that becomes an
23 accession.

25 (b) If a security interest is perfected when the
26 collateral becomes an accession, the security interest
27 remains perfected in the collateral.

29 (c) Except as otherwise provided in subsection (d),
30 the other provisions of this part determine the priority of
31 a security interest in an accession.

33 (d) A security interest in an accession is
34 subordinate to a security interest in the whole which is
35 perfected by compliance with the requirements of a
36 certificate-of-title statute under section 34.1-9-311(b).

38 (e) After default, subject to Part 6, a secured party
39 may remove an accession from other goods if the security
40 interest in the accession has priority over the claims of
41 every person having an interest in the whole.

43 (f) A secured party that removes an accession from
44 other goods under subsection (e) shall promptly reimburse
45 any holder of a security interest or other lien on, or
46 owner of, the whole or of the other goods, other than the
47 debtor, for the cost of repair of any physical injury to

Page 76

1 the whole or the other goods. The secured party need not
2 reimburse the holder or owner for any diminution in value
3 of the whole or the other goods caused by the absence of
4 the accession removed or by any necessity for replacing it.
5 A person entitled to reimbursement may refuse permission to
6 remove until the secured party gives adequate assurance for
7 the performance of the obligation to reimburse.

9 34.1-9-336. Commingled goods.

11 (a) In this section, "commingled goods" means goods
12 that are physically united with other goods in such a
13 manner that their identity is lost in a product or mass.

15 (b) A security interest does not exist in commingled
16 goods as such. However, a security interest may attach to
17 a product or mass that results when goods become commingled
18 goods.

20 (c) If collateral becomes commingled goods, a
21 security interest attaches to the product or mass.

23 (d) If a security interest in collateral is perfected
24 before the collateral becomes commingled goods, the
25 security interest that attaches to the product or mass
26 under subsection (c) is perfected.

28 (e) Except as otherwise provided in subsection (f),
29 the other provisions of this part determine the priority of
30 a security interest that attaches to the product or mass
31 under subsection (c).

33 (f) If more than one (1) security interest attaches
34 to the product or mass under subsection (c), the following
35 rules determine priority:

37 (i) A security interest that is perfected under
38 subsection (d) has priority over a security interest that
39 is unperfected at the time the collateral becomes
40 commingled goods.

42 (ii) If more than one (1) security interest is
43 perfected under subsection (d), the security interests rank
44 equally in proportion to value of the collateral at the
45 time it became commingled goods.

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1 34.1-9-337. Priority of security interests in goods
2 covered by certificate of title.

4 (a) If, while a security interest in goods is
5 perfected by any method under the law of another
6 jurisdiction, this state issues a certificate of title that
7 does not show that the goods are subject to the security
8 interest or contain a statement that they may be subject to
9 security interests not shown on the certificate:

11 (i) A buyer of the goods, other than a person in
12 the business of selling goods of that kind, takes free of
13 the security interest if the buyer gives value and receives
14 delivery of the goods after issuance of the certificate and
15 without knowledge of the security interest; and

17 (ii) The security interest is subordinate to a
18 conflicting security interest in the goods that attaches,
19 and is perfected under section 34.1-9-311(b), after
20 issuance of the certificate and without the conflicting
21 secured party's knowledge of the security interest.

23 34.1-9-338. Priority of security interest or
24 agricultural lien perfected by filed financing statement
25 providing certain incorrect information.

27 (a) If a security interest or agricultural lien is
28 perfected by a filed financing statement providing
29 information described in section 34.1-9-516(b)(v) which is
30 incorrect at the time the financing statement is filed:

32 (i) The security interest or agricultural lien
33 is subordinate to a conflicting perfected security interest
34 in the collateral to the extent that the holder of the
35 conflicting security interest gives value in reasonable
36 reliance upon the incorrect information; and

38 (ii) A purchaser, other than a secured party, of
39 the collateral takes free of the security interest or
40 agricultural lien to the extent that, in reasonable
41 reliance upon the incorrect information, the purchaser
42 gives value and, in the case of chattel paper, documents,
43 goods, instruments or a security certificate, receives
44 delivery of the collateral.

46 34.1-9-339. Priority subject to subordination.

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1 This article does not preclude subordination by agreement
2 by a person entitled to priority.

4 SUBPART 4

5 RIGHTS OF BANK

7 34.1-9-340. Effectiveness of right of recoupment or
8 set-off against deposit account.

10 (a) Except as otherwise provided in subsection (c), a
11 bank with which a deposit account is maintained may
12 exercise any right of recoupment or set-off against a
13 secured party that holds a security interest in the deposit
14 account.

16 (b) Except as otherwise provided in subsection (c),
17 the application of this article to a security interest in a
18 deposit account does not affect a right of recoupment or
19 set-off of the secured party as to a deposit account
20 maintained with the secured party.

22 (c) The exercise by a bank of a set-off against a
23 deposit account is ineffective against a secured party that
24 holds a security interest in the deposit account which is
25 perfected by control under section 34.1-9-104(a)(iii), if
26 the set-off is based on a claim against the debtor.

28 34.1-9-341. Bank's rights and duties with respect to
29 deposit account.

31 (a) Except as otherwise provided in section
32 34.1-9-340(c), and unless the bank otherwise agrees in an
33 authenticated record, a bank's rights and duties with
34 respect to a deposit account maintained with the bank are
35 not terminated, suspended or modified by:

37 (i) The creation, attachment or perfection of a
38 security interest in the deposit account;

40 (ii) The bank's knowledge of the security
41 interest; or

43 (iii) The bank's receipt of instructions from
44 the secured party.

46 34.1-9-342. Bank's right to refuse to enter into or
47 disclose existence of control agreement.

Page 79

2 This article does not require a bank to enter into an
3 agreement of the kind described in section
4 34.1-9-104(a)(ii), even if its customer so requests or
5 directs. A bank that has entered into such an agreement is
6 not required to confirm the existence of the agreement to
7 another person unless requested to do so by its customer.

9 PART 4

10 RIGHTS OF THIRD PARTIES

12 34.1-9-401. Alienability of debtor's rights.

14 (a) Except as otherwise provided in subsection (b)
15 and sections 34.1-9-406, 34.1-9-407, 34.1-9-408 and
16 34.1-9-409, whether a debtor's rights in collateral may be
17 voluntarily or involuntarily transferred is governed by law
18 other than this article.

20 (b) An agreement between the debtor and secured party
21 which prohibits a transfer of the debtor's rights in
22 collateral or makes the transfer a default does not prevent
23 the transfer from taking effect.

25 34.1-9-402. Secured party not obligated on contract
26 of debtor or in tort.

28 The existence of a security interest, agricultural lien or
29 authority given to a debtor to dispose of or use
30 collateral, without more, does not subject a secured party
31 to liability in contract or tort for the debtor's acts or
32 omissions.

34 34.1-9-403. Agreement not to assert defenses against
35 assignee.

37 (a) In this section, "value" has the meaning provided
38 in section 34.1-3-303(a).

40 (b) Except as otherwise provided in this section, an
41 agreement between an account debtor and an assignor not to
42 assert against an assignee any claim or defense that the
43 account debtor may have against the assignor is enforceable
44 by an assignee that takes an assignment:

46 (i) For value;

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1 (ii) In good faith;

3 (iii) Without notice of a claim of a property or
4 possessory right to the property assigned; and

6 (iv) Without notice of a defense or claim in
7 recoupment of the type that may be asserted against a
8 person entitled to enforce a negotiable instrument under
9 section 34.1-3-305(a).

11 (c) Subsection (b) does not apply to defenses of a
12 type that may be asserted against a holder in due course of
13 a negotiable instrument under section 34.1-3-305(b).

15 (d) In a consumer transaction, if a record evidences
16 the account debtor's obligation, law other than this
17 article requires that the record include a statement to the
18 effect that the rights of an assignee are subject to claims
19 or defenses that the account debtor could assert against
20 the original obligee, and the record does not include such
21 a statement:

23 (i) The record has the same effect as if the
24 record included such a statement; and

26 (ii) The account debtor may assert against an
27 assignee those claims and defenses that would have been
28 available if the record included such a statement.

30 (e) This section is subject to law other than this
31 article which establishes a different rule for an account
32 debtor who is an individual and who incurred the obligation
33 primarily for personal, family or household purposes.

35 (f) Except as otherwise provided in subsection (d),
36 this section does not displace law other than this article
37 which gives effect to an agreement by an account debtor not
38 to assert a claim or defense against an assignee.

40 34.1-9-404. Rights acquired by assignee; claims and
41 defenses against assignee.

43 (a) Unless an account debtor has made an enforceable
44 agreement not to assert defenses or claims, and subject to
45 subsections (b) through (e), the rights of an assignee are
46 subject to:

Page 81

1 (i) All terms of the agreement between the
2 account debtor and assignor and any defense or claim in
3 recoupment arising from the transaction that gave rise to
4 the contract; and

6 (ii) Any other defense or claim of the account
7 debtor against the assignor which accrues before the
8 account debtor receives a notification of the assignment
9 authenticated by the assignor or the assignee.

11 (b) Subject to subsection (c) and except as otherwise
12 provided in subsection (d), the claim of an account debtor
13 against an assignor may be asserted against an assignee
14 under subsection (a) only to reduce the amount the account
15 debtor owes.

17 (c) This section is subject to law other than this
18 article which establishes a different rule for an account
19 debtor who is an individual and who incurred the obligation
20 primarily for personal, family or household purposes.

22 (d) In a consumer transaction, if a record evidences
23 the account debtor's obligation, law other than this
24 article requires that the record include a statement to the
25 effect that the account debtor's recovery against an
26 assignee with respect to claims and defenses against the
27 assignor may not exceed amounts paid by the account debtor
28 under the record, and the record does not include such a
29 statement, the extent to which a claim of an account debtor
30 against the assignor may be asserted against an assignee is
31 determined as if the record included such a statement.

33 (e) This section does not apply to an assignment of a
34 health-care-insurance receivable.

36 34.1-9-405. Modification of assigned contract.

38 (a) A modification of or substitution for an assigned
39 contract is effective against an assignee if made in good
40 faith. The assignee acquires corresponding rights under
41 the modified or substituted contract. The assignment may
42 provide that the modification or substitution is a breach
43 of contract by the assignor. This subsection is subject to
44 subsections (b) through (d).

46 (b) Subsection (a) applies to the extent that:

Page 82

1 (i) The right to payment or a part thereof under
2 an assigned contract has not been fully earned by
3 performance; or

5 (ii) The right to payment or a part thereof has
6 been fully earned by performance and the account debtor has
7 not received notification of the assignment under section
8 34.1-9-406(a).

10 (c) This section is subject to law other than this
11 article which establishes a different rule for an account
12 debtor who is an individual and who incurred the obligation
13 primarily for personal, family or household purposes.

15 (d) This section does not apply to an assignment of a
16 health-care-insurance receivable.

18 34.1-9-406. Discharge of account debtor; notification
19 of assignment; identification and proof of assignment;
20 restrictions on assignment of accounts, chattel paper,
21 payment intangibles and promissory notes ineffective.

23 (a) Subject to subsections (b) through (j), an
24 account debtor on an account, chattel paper or a payment
25 intangible may discharge its obligation by paying the
26 assignor until, but not after, the account debtor receives
27 a notification, authenticated by the assignor or the
28 assignee, that the amount due or to become due has been
29 assigned and that payment is to be made to the assignee.
30 After receipt of the notification, the account debtor may
31 discharge its obligation by paying the assignee and may not
32 discharge the obligation by paying the assignor.

34 (b) Subject to subsection (h), notification is
35 ineffective under subsection (a):

37 (i) If it does not reasonably identify the
38 rights assigned;

40 (ii) To the extent that an agreement between an
41 account debtor and a seller of a payment intangible limits
42 the account debtor's duty to pay a person other than the
43 seller and the limitation is effective under law other than
44 this article; or

46 (iii) At the option of an account debtor, if the
47 notification notifies the account debtor to make less than

Page 83

1 the full amount of any installment or other periodic
2 payment to the assignee, even if:

4 (A) Only a portion of the account, chattel
5 paper or payment intangible has been assigned to that
6 assignee;

8 (B) A portion has been assigned to another
9 assignee; or

11 (C) The account debtor knows that the
12 assignment to that assignee is limited.

14 (c) Subject to subsection (h), if requested by the
15 account debtor, an assignee shall seasonably furnish
16 reasonable proof that the assignment has been made. Unless
17 the assignee complies, the account debtor may discharge its
18 obligation by paying the assignor, even if the account
19 debtor has received a notification under subsection (a).

21 (d) Except as otherwise provided in subsection (e)
22 and sections 34.1-2A-303 and 34.1-9-407, and subject to
23 subsection (h), a term in an agreement between an account
24 debtor and an assignor or in a promissory note is
25 ineffective to the extent that it:

27 (i) Prohibits, restricts or requires the consent
28 of the account debtor or person obligated on the promissory
29 note to the assignment or transfer of, or the creation,
30 attachment, perfection or enforcement of a security
31 interest in, the account, chattel paper, payment intangible
32 or promissory note; or

34 (ii) Provides that the assignment or transfer or
35 the creation, attachment, perfection or enforcement of the
36 security interest may give rise to a default, breach, right
37 of recoupment, claim, defense, termination right of
38 termination, or remedy under the account, chattel paper,
39 payment intangible or promissory note.

41 (e) Subsection (d) does not apply to the sale of a
42 payment intangible or promissory note.

44 (f) Except as otherwise provided in sections
45 34.1-2A-303 and 34.1-9-407 and subject to subsections (h)
46 and (j), a rule of law, statute or regulation that
47 prohibits, restricts or requires the consent of a

Page 84

1 government, governmental body or official or account debtor
2 to the assignment or transfer of, or creation of a security
3 interest in, an account or chattel paper is ineffective to
4 the extent that the rule of law, statute or regulation:

6 (i) Prohibits, restricts or requires the consent
7 of the government, governmental body or official, or
8 account debtor to the assignment or transfer of, or the
9 creation, attachment, perfection or enforcement of a
10 security interest in the account or chattel paper; or

12 (ii) Provides that the assignment or transfer or
13 the creation, attachment, perfection or enforcement of the
14 security interest may give rise to a default, breach, right
15 of recoupment, claim, defense, termination, right of
16 termination or remedy under the account or chattel paper.

18 (g) Subject to subsection (h), an account debtor may
19 not waive or vary its option under paragraph (b)(iii).

21 (h) This section is subject to law other than this
22 article which establishes a different rule for an account
23 debtor who is an individual and who incurred the obligation
24 primarily for personal, family or household purposes.

26 (j) This section prevails over any inconsistent
27 provision of an existing or future statute, rule or
28 regulation of this state unless the provision is contained
29 in a statute of this state, refers expressly to this
30 section and states that the provision prevails over this
31 section. Subsection (f) of this section does not apply to
32 an assignment or transfer of, or the creation, attachment,
33 perfection or enforcement of a security interest in, a
34 right the transfer of which is prohibited or restricted by
35 any of the following statutes to the extent that the
36 statute is inconsistent with subsection (f) of this
37 section: W.S. 1-40-113, 26-15-132 and 27-14-702.

39 (k) Except to the extent otherwise provided in
40 subsection (j), this section prevails over any inconsistent
41 provision of an existing or future statute, rule or
42 regulation of this state unless the provision is contained
43 in a statute of this state, refers expressly to this
44 section and states that the provision prevails over this
45 section.

Page 85

1 34.1-9-407. Restrictions on creation or enforcement
2 of security interest in leasehold interest or in lessor's
3 residual interest.

5 (a) Except as otherwise provided in subsection (b), a
6 term in a lease agreement is ineffective to the extent that
7 it:

9 (i) Prohibits, restricts or requires the consent
10 of a party to the lease to the assignment or transfer of,
11 or the creation, attachment, perfection or enforcement of a
12 security interest in, an interest of a party under the
13 lease contract or in the lessor's residual interest in the
14 goods; or

16 (ii) Provides that the assignment or transfer or
17 the creation, attachment, perfection or enforcement of the
18 security interest may give rise to a default, breach, right
19 of recoupment, claim, defense, termination, right of
20 termination or remedy under the lease.

22 (b) Except as otherwise provided in section
23 34.1-2A-303(g), a term described in paragraph (a)(ii) is
24 effective to the extent that there is:

26 (i) A transfer by the lessee of the lessee's
27 right of possession or use of the goods in violation of the
28 term; or

30 (ii) A delegation of a material performance of
31 either party to the lease contract in violation of the
32 term.

34 (c) The creation, attachment, perfection or
35 enforcement of a security interest in the lessor's interest
36 under the lease contract or the lessor's residual interest
37 in the goods is not a transfer that materially impairs the
38 lessee's prospect of obtaining return performance or
39 materially changes the duty of or materially increases the
40 burden or risk imposed on the lessee within the purview of
41 section 34.1-2A-303(d) unless, and then only to the extent
42 that, enforcement actually results in a delegation of
43 material performance of the lessor.

45 34.1-9-408. Restrictions on assignment of promissory
46 notes, health-care-insurance receivables and certain
47 general intangibles ineffective.

Page 86

2 (a) Except as otherwise provided in subsection (b), a
3 term in a promissory note or in an agreement between an
4 account debtor and a debtor which relates to a
5 health-care-insurance receivable or a general intangible,
6 including a contract, permit, license or franchise, and
7 which term prohibits, restricts or requires the consent of
8 the person obligated on the promissory note or the account
9 debtor to, the assignment or transfer of, or creation,
10 attachment or perfection of a security interest in, the
11 promissory note, health-care-insurance receivable or
12 general intangible, is ineffective to the extent that the
13 term:

15 (i) Would impair the creation, attachment or
16 perfection of a security interest; or

18 (ii) Provides that the assignment or transfer or
19 the creation, attachment or perfection of the security
20 interest may give rise to a default, breach, right of
21 recoupment, claim, defense, termination, right of
22 termination or remedy under the promissory note,
23 health-care-insurance receivable or general intangible.

25 (b) Subsection (a) applies to a security interest in
26 a payment intangible or promissory note only if the
27 security interest arises out of a sale of the payment
28 intangible or promissory note.

30 (c) A rule of law, statute or regulation that
31 prohibits, restricts or requires the consent of a
32 government, governmental body or official, person obligated
33 on a promissory note, or account debtor to the assignment
34 or transfer of, or creation of a security interest in, a
35 promissory note, health-care-insurance receivable or
36 general intangible including a contract, permit, license or
37 franchise between an account debtor and a debtor, is
38 ineffective to the extent that the rule of law, statute or
39 regulation:

41 (i) Would impair the creation, attachment or
42 perfection of a security interest; or

44 (ii) Provides that the assignment or transfer or
45 the creation, attachment or perfection of the security
46 interest may give rise to a default, breach, right of
47 recoupment, claim, defense, termination, right of

Page 87

1 termination or remedy under the promissory note,
2 health-care-insurance receivable or general intangible.

4 (d) To the extent that a term in a promissory note or
5 in an agreement between an account debtor and a debtor
6 which relates to a health-care-insurance receivable or
7 general intangible or a rule of law, statute or regulation
8 described in subsection (c) would be effective under law
9 other than this article but is ineffective under subsection
10 (a) or (c), the creation, attachment or perfection of a
11 security interest in the promissory note,
12 health-care-insurance receivable or general intangible:

14 (i) Is not enforceable against the person
15 obligated on the promissory note or the account debtor;

17 (ii) Does not impose a duty or obligation on the
18 person obligated on the promissory note or the account
19 debtor;

21 (iii) Does not require the person obligated on
22 the promissory note or the account debtor to recognize the
23 security interest, pay or render performance to the secured
24 party, or accept payment or performance from the secured
25 party;

27 (iv) Does not entitle the secured party to use
28 or assign the debtor's rights under the promissory note,
29 health-care-insurance receivable or general intangible,
30 including any related information or materials furnished to
31 the debtor in the transaction giving rise to the promissory
32 note, health-care-insurance receivable or general
33 intangible;

35 (v) Does not entitle the secured party to use,
36 assign, possess or have access to any trade secrets or
37 confidential information of the person obligated on the
38 promissory note or the account debtor; and

40 (vi) Does not entitle the secured party to
41 enforce the security interest in the promissory note,
42 health-care-insurance receivable or general intangible.

44 (e) Except to the extent otherwise provided in
45 subsection (f), this section prevails over any inconsistent
46 provision of an existing or future statute, rule or
47 regulation of this state unless the provision is contained

Page 88

1 in a statute of this state, refers expressly to this
2 section and states that the provision prevails over this
3 section.

5 (f) Subsection (c) of this section does not apply to
6 an assignment or transfer of, or the creation, attachment,
7 perfection, or enforcement of a security interest in, a
8 right the transfer of which is prohibited or restricted by
9 any of the following statutes, to the extent that the
10 statute is inconsistent with subsection (c) of this
11 section: W.S. 1-40-113, 26-15-132 and 27-14-702.

14 34.1-9-409. Restrictions on assignment of
15 letter-of-credit rights ineffective.

17 (a) A term in a letter of credit or a rule of law,
18 statute, regulation, custom or practice applicable to the
19 letter of credit which prohibits, restricts or requires the
20 consent of an applicant, issuer or nominated person to a
21 beneficiary's assignment of or creation of a security
22 interest in a letter-of-credit right is ineffective to the
23 extent that the term or rule of law, statute, regulation,
24 custom or practice:

26 (i) Would impair the creation, attachment or
27 perfection of a security interest in the letter-of-credit
28 right; or

30 (ii) Provides that the assignment or the
31 creation, attachment or perfection of the security interest
32 may give rise to a default, breach, right of recoupment,
33 claim, defense, termination, right of termination or remedy
34 under the letter-of-credit right.

36 (b) To the extent that a term in a letter of credit
37 is ineffective under subsection (a) but would be effective
38 under law other than this article or a custom or practice
39 applicable to the letter of credit, to the transfer of a
40 right to draw or otherwise demand performance under the
41 letter of credit or to the assignment of a right to
42 proceeds of the letter of credit, the creation, attachment
43 or perfection of a security interest in the
44 letter-of-credit right:

46 (i) Is not enforceable against the applicant,
47 issuer, nominated person or transferee beneficiary;

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2 (ii) Imposes no duties or obligations on the
3 applicant, issuer, nominated person or transferee
4 beneficiary; and

6 (iii) Does not require the applicant, issuer,
7 nominated person or transferee beneficiary to recognize the
8 security interest, pay or render performance to the secured
9 party or accept payment or other performance from the
10 secured party.

12 PART 5

13 FILING

15 SUBPART 1

16 FILING OFFICE; CONTENTS AND

17 EFFECTIVENESS OF FINANCING STATEMENT

19 34.1-9-501. Filing office.

21 (a) Except as otherwise provided in subsection (b),
22 if the local law of this state governs perfection of a
23 security interest or agricultural lien, the office in which
24 to file a financing statement to perfect the security
25 interest or agricultural lien is:

27 (i) The office designated for the filing or
28 recording of a record of a mortgage on the related real
29 property, if:

31 (A) The collateral is as-extracted
32 collateral or timber to be cut; or

34 (B) The financing statement is filed as a
35 fixture filing and the collateral is goods that are or are
36 to become fixtures; or

38 (ii) The office of the secretary of state in all
39 other cases, including a case in which the collateral is
40 goods that are or are to become fixtures and the financing
41 statement is not filed as a fixture filing; or

43 (iii) The office of the county clerk for
44 perfection of a security interest in vehicles or motor
45 vehicles.

Page 90

1 (b) The office in which to file a financing statement
2 to perfect a security interest in collateral, including
3 fixtures, of a transmitting utility is the office of the
4 secretary of state. The financing statement also
5 constitutes a fixture filing as to the collateral indicated
6 in the financing statement which is or is to become
7 fixtures.

9 34.1-9-502. Contents of financing statement; record
10 of mortgage as financing statement; time of filing
11 financing statement.

13 (a) Subject to subsection (b), a financing statement
14 is sufficient only if it:

16 (i) Provides the name of the debtor;

18 (ii) Provides the name of the secured party or a
19 representative of the secured party; and

21 (iii) Indicates the collateral covered by the
22 financing statement.

24 (b) Except as otherwise provided in section
25 34.1-9-501(b), to be sufficient, a financing statement that
26 covers as-extracted collateral or timber to be cut, or
27 which is filed as a fixture filing and covers goods that
28 are or are to become fixtures, must satisfy subsection (a)
29 and also:

31 (i) Indicate that it covers this type of
32 collateral;

34 (ii) Indicate that it is to be filed for record
35 in the real property records;

37 (iii) Provide a description of the real property
38 to which the collateral is related sufficient to give
39 constructive notice of a mortgage under the law of this
40 state if the description were contained in a record of the
41 mortgage of the real property; and

43 (iv) If the debtor does not have an interest of
44 record in the real property, provide the name of a record
45 owner.

Page 91

1 (c) A record of a mortgage is effective, from the
2 date of recording, as a financing statement filed as a
3 fixture filing or as a financing statement covering
4 as-extracted collateral or timber to be cut only if:

6 (i) The record indicates the goods or accounts
7 that it covers;

9 (ii) The goods are or are to become fixtures
10 related to the real property described in the record or the
11 collateral is related to the real property described in the
12 record and is as-extracted collateral or timber to be cut;

14 (iii) The record satisfies the requirements for
15 a financing statement in this section other than an
16 indication that it is to be filed in the real property
17 records; and

19 (iv) The record is duly recorded.

21 (d) A financing statement may be filed before a
22 security agreement is made or a security interest otherwise
23 attaches.

25 34.1-9-503. Name of debtor and secured party.

27 (a) A financing statement sufficiently provides the
28 name of the debtor:

30 (i) If the debtor is a registered organization,
31 only if the financing statement provides the name of the
32 debtor indicated on the public record of the debtor's
33 jurisdiction of organization which shows the debtor to have
34 been organized;

36 (ii) If the debtor is a decedent's estate, only
37 if the financing statement provides the name of the
38 decedent and indicates that the debtor is an estate;

40 (iii) If the debtor is a trust or a trustee
41 acting with respect to property held in trust, only if the
42 financing statement:

44 (A) Provides the name specified for the
45 trust in its organic documents or, if no name is specified,
46 provides the name of the settlor and additional information

Page 92

1 sufficient to distinguish the debtor from other trusts
2 having one (1) or more of the same settlors; and

4 (B) Indicates, in the debtor's name or
5 otherwise, that the debtor is a trust or is a trustee
6 acting with respect to property held in trust; and

8 (iv) In other cases:

10 (A) If the debtor has a name, only if it
11 provides the individual or organizational name of the
12 debtor; and

14 (B) If the debtor does not have a name,
15 only if it provides the names of the partners, members,
16 associates or other persons comprising the debtor.

18 (b) A financing statement that provides the name of
19 the debtor in accordance with subsection (a) is not
20 rendered ineffective by the absence of:

22 (i) A trade name or other name of the debtor; or

24 (ii) Unless required under subparagraph
25 (a)(iv)(B), names of partners, members, associates or other
26 persons comprising the debtor.

28 (c) A financing statement that provides only the
29 debtor's trade name does not sufficiently provide the name
30 of the debtor.

32 (d) Failure to indicate the representative capacity
33 of a secured party or representative of a secured party
34 does not affect the sufficiency of a financing statement.

36 (e) A financing statement may provide the name of
37 more than one (1) debtor and the name of more than one (1)
38 secured party.

40 34.1-9-504. Indication of collateral.

42 (a) A financing statement sufficiently indicates the
43 collateral that it covers if the financing statement
44 provides:

46 (i) A description of the collateral pursuant to
47 section 34.1-9-108; or

Page 93

2 (ii) An indication that the financing statement
3 covers all assets or all personal property.

5 34.1-9-505. Filing and compliance with other statutes
6 and treaties for consignments, leases, other bailments and
7 other transactions.

9 (a) A consignor, lessor or other bailor of goods, a
10 licensor, or a buyer of a payment intangible or promissory
11 note may file a financing statement, or may comply with a
12 statute or treaty described in section 34.1-9-311(a), using
13 the terms "consignor", "consignee", "lessor", "lessee",
14 "bailor", "bailee", "licensor", "licensee", "owner",
15 "registered owner", "buyer", "seller" or words of similar
16 import, instead of the terms "secured party" and "debtor".

18 (b) This part applies to the filing of a financing
19 statement under subsection (a) and, as appropriate, to
20 compliance that is equivalent to filing a financing
21 statement under section 34.1-9-311(b), but the filing or
22 compliance is not of itself a factor in determining whether
23 the collateral secures an obligation. If it is determined
24 for another reason that the collateral secures an
25 obligation, a security interest held by the consignor,
26 lessor, bailor, licensor, owner or buyer which attaches to
27 the collateral is perfected by the filing or compliance.

29 34.1-9-506. Effect of errors or omissions.

31 (a) A financing statement substantially satisfying
32 the requirements of this part is effective, even if it has
33 minor errors or omissions, unless the errors or omissions
34 make the financing statement seriously misleading.

36 (b) Except as otherwise provided in subsection (c), a
37 financing statement that fails sufficiently to provide the
38 name of the debtor in accordance with section 34.1-9-503(a)
39 is seriously misleading.

41 (c) If a search of the records of the filing office
42 under the debtor's correct name, using the filing office's
43 standard search logic, if any, would disclose a financing
44 statement that fails sufficiently to provide the name of
45 the debtor in accordance with section 34.1-9-503(a), the
46 name provided does not make the financing statement
47 seriously misleading.

Page 94

2 (d) For purposes of section 34.1-9-508(b), the
3 "debtor's correct name" in subsection (c) means the correct
4 name of the new debtor.

6 34.1-9-507. Effect of certain events on effectiveness
7 of financing statement.

9 (a) A filed financing statement remains effective
10 with respect to collateral that is sold, exchanged, leased,
11 licensed or otherwise disposed of and in which a security
12 interest or agricultural lien continues, even if the
13 secured party knows of or consents to the disposition.

15 (b) Except as otherwise provided in subsection (c)
16 and section 34.1-9-508, a financing statement is not
17 rendered ineffective if, after the financing statement is
18 filed, the information provided in the financing statement
19 becomes seriously misleading under section 34.1-9-506.

21 (c) If a debtor so changes its name that a filed
22 financing statement becomes seriously misleading under
23 section 34.1-9-506:

25 (i) The financing statement is effective to
26 perfect a security interest in collateral acquired by the
27 debtor before, or within four (4) months after, the change;
28 and

30 (ii) The financing statement is not effective to
31 perfect a security interest in collateral acquired by the
32 debtor more than four (4) months after the change, unless
33 an amendment to the financing statement which renders the
34 financing statement not seriously misleading is filed
35 within four (4) months after the change.

37 34.1-9-508. Effectiveness of financing statement if
38 new debtor becomes bound by security agreement.

40 (a) Except as otherwise provided in this section, a
41 filed financing statement naming an original debtor is
42 effective to perfect a security interest in collateral in
43 which a new debtor has or acquires rights to the extent
44 that the financing statement would have been effective had
45 the original debtor acquired rights in the collateral.

Page 95

1 (b) If the difference between the name of the
2 original debtor and that of the new debtor causes a filed
3 financing statement that is effective under subsection (a)
4 to be seriously misleading under section 34.1-9-506:

6 (i) The financing statement is effective to
7 perfect a security interest in collateral acquired by the
8 new debtor before, and within four (4) months after, the
9 new debtor becomes bound under section 34.1-9-203(d); and

11 (ii) The financing statement is not effective to
12 perfect a security interest in collateral acquired by the
13 new debtor more than four (4) months after the new debtor
14 becomes bound under section 34.1-9-203(d) unless an initial
15 financing statement providing the name of the new debtor is
16 filed before the expiration of that time.

18 (c) This section does not apply to collateral as to
19 which a filed financing statement remains effective against
20 the new debtor under section 34.1-9-507(a).

22 34.1-9-509. Persons entitled to file a record.

24 (a) A person may file an initial financing statement,
25 amendment that adds collateral covered by a financing
26 statement or amendment that adds a debtor to a financing
27 statement only if:

29 (i) The debtor authorizes the filing in an
30 authenticated record or pursuant to subsection (b) or (c)
31 of this section; or

33 (ii) The person holds an agricultural lien that
34 has become effective at the time of filing and the
35 financing statement covers only collateral in which the
36 person holds an agricultural lien.

38 (b) By authenticating or becoming bound as debtor by
39 a security agreement, a debtor or new debtor authorizes the
40 filing of an initial financing statement, and an amendment,
41 covering:

43 (i) The collateral described in the security
44 agreement; and

Page 96

1 (ii) Property that becomes collateral under
2 section 34.1-9-315(a)(ii), whether or not the security
3 agreement expressly covers proceeds.

5 (c) By acquiring collateral in which a security
6 interest or agricultural lien continues under section
7 34.1-9-315(a)(i), a debtor authorizes the filing of an
8 initial financing statement, and an amendment, covering the
9 collateral and property that becomes collateral under
10 section 34.1-9-315(a)(ii).

12 (d) A person may file an amendment other than an
13 amendment that adds collateral covered by a financing
14 statement or an amendment that adds a debtor to a financing
15 statement only if:

17 (i) The secured party of record authorizes the
18 filing; or

20 (ii) The amendment is a termination statement
21 for a financing statement as to which the secured party of
22 record has failed to file or send a termination statement
23 as required by section 34.1-9-513(a) or (c), the debtor
24 authorizes the filing, and the termination statement
25 indicates that the debtor authorized it to be filed.

27 (e) If there is more than one (1) secured party of
28 record for a financing statement, each secured party of
29 record may authorize the filing of an amendment under
30 subsection (d).

32 34.1-9-510. Effectiveness of filed record.

34 (a) A filed record is effective only to the extent
35 that it was filed by a person that may file it under
36 section 34.1-9-509.

38 (b) A record authorized by one (1) secured party of
39 record does not affect the financing statement with respect
40 to another secured party of record.

42 (c) A continuation statement that is not filed within
43 the six (6) month period prescribed by section
44 34.1-9-515(d) is ineffective.

46 34.1-9-511. Secured party of record.

Page 97

1 (a) A secured party of record with respect to a
2 financing statement is a person whose name is provided as
3 the name of the secured party or a representative of the
4 secured party in an initial financing statement that has
5 been filed. If an initial financing statement is filed
6 under section 34.1-9-514(a), the assignee named in the
7 initial financing statement is the secured party of record
8 with respect to the financing statement.

10 (b) If an amendment of a financing statement which
11 provides the name of a person as a secured party or a
12 representative of a secured party is filed, the person
13 named in the amendment is a secured party of record. If an
14 amendment is filed under section 34.1-9-514(b), the
15 assignee named in the amendment is a secured party of
16 record.

18 (c) A person remains a secured party of record until
19 the filing of an amendment of the financing statement which
20 deletes the person.

22 34.1-9-512. Amendment of financing statement.

24 (a) Subject to section 34.1-9-509, a person may add
25 or delete collateral covered by, continue or terminate the
26 effectiveness of, or, subject to subsection (e), otherwise
27 amend the information provided in, a financing statement by
28 filing an amendment that:

30 (i) Identifies, by its file number, the initial
31 financing statement to which the amendment relates; and

33 (ii) If the amendment relates to an initial
34 financing statement filed or recorded in a filing office
35 described in section 34.1-9-501(a)(i), provides the date
36 and time that the initial financing statement was filed or
37 recorded and the information specified in section
38 34.1-9-502(b).

40 (b) Except as otherwise provided in section
41 34.1-9-515, the filing of an amendment does not extend the
42 period of effectiveness of the financing statement.

44 (c) A financing statement that is amended by an
45 amendment that adds collateral is effective as to the added
46 collateral only from the date of the filing of the
47 amendment.

Page 98

2 (d) A financing statement that is amended by an
3 amendment that adds a debtor is effective as to the added
4 debtor only from the date of the filing of the amendment.

6 (e) An amendment is ineffective to the extent it:

8 (i) Purports to delete all debtors and fails to
9 provide the name of a debtor to be covered by the financing
10 statement; or

12 (ii) Purports to delete all secured parties of
13 record and fails to provide the name of a new secured party
14 of record.

16 34.1-9-513. Termination statement.

18 (a) A secured party shall cause the secured party of
19 record for a financing statement to file a termination
20 statement for the financing statement if the financing
21 statement covers consumer goods and:

23 (i) There is no obligation secured by the
24 collateral covered by the financing statement and no
25 commitment to make an advance, incur an obligation or
26 otherwise give value; or

28 (ii) The debtor did not authorize the filing of
29 the initial financing statement.

31 (b) To comply with subsection (a), a secured party
32 shall cause the secured party of record to file the
33 termination statement:

35 (i) Within one (1) month after there is no
36 obligation secured by the collateral covered by the
37 financing statement and no commitment to make an advance,
38 incur an obligation or otherwise give value; or

40 (ii) If earlier, within twenty (20) days after
41 the secured party receives an authenticated demand from a
42 debtor.

44 (c) In cases not governed by subsection (a), within
45 twenty (20) days after a secured party receives an
46 authenticated demand from a debtor, the secured party shall
47 cause the secured party of record for a financing statement

Page 99

1 to send to the debtor a termination statement for the
2 financing statement or file the termination statement in
3 the filing office if:

5 (i) Except in the case of a financing statement
6 covering accounts or chattel paper that has been sold or
7 goods that are the subject of a consignment, there is no
8 obligation secured by the collateral covered by the
9 financing statement and no commitment to make an advance,
10 incur an obligation or otherwise give value;

12 (ii) The financing statement covers accounts or
13 chattel paper that has been sold but as to which the
14 account debtor or other person obligated has discharged its
15 obligation;

17 (iii) The financing statement covers goods that
18 were the subject of a consignment to the debtor but are not
19 in the debtor's possession; or

21 (iv) The debtor did not authorize the filing of
22 the initial financing statement.

24 (d) Except as otherwise provided in section
25 34.1-9-510, upon the filing of a termination statement with
26 the filing office, the financing statement to which the
27 termination statement relates ceases to be effective.
28 Except as otherwise provided in W.S. 34.1-9-510, for
29 purposes of W.S. 34.1-9-519(g), 34.1-9-522(a), and
30 34.1-9-523(c), the filing with the filing office of a
31 termination statement relating to a financing statement
32 that indicates that the debtor is a transmitting utility
33 also causes the effectiveness of the financing statement to
34 lapse.

36 34.1-9-514. Assignment of powers of secured party of
37 record.

39 (a) Except as otherwise provided in subsection (c),
40 an initial financing statement may reflect an assignment of
41 all of the secured party's power to authorize an amendment
42 to the financing statement by providing the name and
43 mailing address of the assignee as the name and address of
44 the secured party.

46 (b) Except as otherwise provided in subsection (c), a
47 secured party of record may assign of record all or part of

Page 100

1 its power to authorize an amendment to a financing
2 statement by filing in the filing office an amendment of
3 the financing statement which:

5 (i) Identifies, by its file number, the initial
6 financing statement to which it relates;

8 (ii) Provides the name of the assignor; and

10 (iii) Provides the name and mailing address of
11 the assignee.

13 (c) An assignment of record of a security interest in
14 a fixture covered by a record of a mortgage which is
15 effective as a financing statement filed as a fixture
16 filing under section 34.1-9-502(c) may be made only by an
17 assignment of record of the mortgage in the manner provided
18 by law of this state other than this title.

20 34.1-9-515. Duration and effectiveness of financing
21 statement; effect of lapsed financing statement.

23 (a) Except as otherwise provided in subsections (b),
24 (e), (f) and (g), a filed financing statement is effective
25 for a period of five (5) years after the date of filing.

27 (b) Except as otherwise provided in subsections (e),
28 (f) and (g), an initial financing statement filed in
29 connection with a public-finance transaction or
30 manufactured-home transaction is effective for a period of
31 thirty (30) years after the date of filing if it indicates
32 that it is filed in connection with a public-finance
33 transaction or manufactured-home transaction.

35 (c) The effectiveness of a filed financing statement
36 lapses on the expiration of the period of its effectiveness
37 unless before the lapse a continuation statement is filed
38 pursuant to subsection (d). Upon lapse, a financing
39 statement ceases to be effective and any security interest
40 or agricultural lien that was perfected by the financing
41 statement becomes unperfected, unless the security interest
42 is perfected otherwise. If the security interest or
43 agricultural lien becomes unperfected upon lapse, it is
44 deemed never to have been perfected as against a purchaser
45 of the collateral for value.

Page 101

1 (d) A continuation statement may be filed only within
2 six (6) months before the expiration of the five (5) year
3 period specified in subsection (a) or the thirty (30) year
4 period specified in subsection (b), whichever is
5 applicable.

7 (e) Except as otherwise provided in section
8 34.1-9-510, upon timely filing of a continuation statement,
9 the effectiveness of the initial financing statement
10 continues for a period of five (5) years commencing on the
11 day on which the financing statement would have become
12 ineffective in the absence of the filing. Upon the
13 expiration of the five (5) year period, the financing
14 statement lapses in the same manner as provided in
15 subsection (c), unless, before the lapse, another
16 continuation statement is filed pursuant to subsection (d).
17 Succeeding continuation statements may be filed in the same
18 manner to continue the effectiveness of the initial
19 financing statement.

21 (f) If a debtor is a transmitting utility and a filed
22 financing statement so indicates, the financing statement
23 is effective until a termination statement is filed.

25 (g) A record of a mortgage that is effective as a
26 financing statement filed as a fixture filing under section
27 34.1-9-502(c) remains effective as a financing statement
28 filed as a fixture filing until the mortgage is released or
29 satisfied of record or its effectiveness otherwise
30 terminates as to the real property.

32 34.1-9-516. What constitutes filing; effectiveness of
33 filing.

35 (a) Except as otherwise provided in subsection (b),
36 communication of a record to a filing office and tender of
37 the filing fee or acceptance of the record by the filing
38 office constitutes filing.

40 (b) Filing does not occur with respect to a record
41 that a filing office refuses to accept because:

43 (i) The record is not communicated by a method
44 or medium of communication authorized by the filing office;

46 (ii) An amount equal to or greater than the
47 applicable filing fee is not tendered;

Page 102

2 (iii) The filing office is unable to index the
3 record because:

5 (A) In the case of an initial financing
6 statement, the record does not provide a name for the
7 debtor;

9 (B) In the case of an amendment or
10 correction statement, the record:

12 (I) Does not identify the initial
13 financing statement as required by section 34.1-9-512 or
14 34.1-9-518, as applicable; or

16 (II) Identifies an initial financing
17 statement whose effectiveness has lapsed under section
18 34.1-9-515.

20 (C) In the case of an initial financing
21 statement that provides the name of a debtor identified as
22 an individual or an amendment that provides a name of a
23 debtor identified as an individual which was not previously
24 provided in the financing statement to which the record
25 relates, the record does not identify the debtor's last
26 name; or

28 (D) In the case of a record filed or
29 recorded in the filing office described in section
30 34.1-9-501(a)(i), the record does not provide a sufficient
31 description of the real property to which it relates.

33 (iv) In the case of an initial financing
34 statement or an amendment that adds a secured party of
35 record, the record does not provide a name and mailing
36 address for the secured party of record;

38 (v) In the case of an initial financing
39 statement or an amendment that provides a name of a debtor
40 which was not previously provided in the financing
41 statement to which the amendment relates, the record does
42 not:

44 (A) Provide a mailing address for the
45 debtor;

Page 103

1 (B) Indicate whether the debtor is an
2 individual or an organization; or

4 (C) If the financing statement indicates
5 that the debtor is an organization, provide:

7 (I) A type of organization for the
8 debtor;

10 (II) A jurisdiction of organization
11 for the debtor; or

13 (III) An organizational identification
14 number for the debtor or indicate that the debtor has none.

16 (vi) In the case of an assignment reflected in
17 an initial financing statement under section 34.1-9-514(a)
18 or an amendment filed under section 34.1-9-514(b), the
19 record does not provide a name and mailing address for the
20 assignee; or

22 (vii) In the case of a continuation statement,
23 the record is not filed within the six (6) month period
24 prescribed by section 34.1-9-515(d).

26 (c) For purposes of subsection (b):

28 (i) A record does not provide information if the
29 filing office is unable to read or decipher the
30 information; and

32 (ii) A record that does not indicate that it is
33 an amendment or identify an initial financing statement to
34 which it relates, as required by section 34.1-9-512,
35 34.1-9-514 or 34.1-9-518, is an initial financing
36 statement.

38 (d) A record that is communicated to the filing
39 office with tender of the filing fee, but which the filing
40 office refuses to accept for a reason other than one set
41 forth in subsection (b), is effective as a filed record
42 except as against a purchaser of the collateral which gives
43 value in reasonable reliance upon the absence of the record
44 from the files.

46 34.1-9-517. Effect of indexing errors.

Page 104

1 The failure of the filing office to index a record
2 correctly does not affect the effectiveness of the filed
3 record.

5 34.1-9-518. Claim concerning inaccurate or wrongfully
6 filed record.

8 (a) A person may file in the filing office a
9 correction statement with respect to a record indexed there
10 under the person's name if the person believes that the
11 record is inaccurate or was wrongfully filed.

13 (b) A correction statement must:

15 (i) Identify the record to which it relates by:

17 (A) The file number assigned to the initial
18 financing statement to which the record relates; and

20 (B) If the correction statement relates to
21 a record filed or recorded in a filing office described in
22 section 34.1-9-501(a)(i), the date and time that the
23 initial financing statement was filed or recorded and the
24 information specified in section 34.1-9-502(b);

26 (ii) Indicate that it is a correction statement;
27 and

29 (iii) Provide the basis for the person's belief
30 that the record is inaccurate and indicate the manner in
31 which the person believes the record should be amended to
32 cure any inaccuracy or provide the basis for the person's
33 belief that the record was wrongfully filed.

35 (c) The filing of a correction statement does not
36 affect the effectiveness of an initial financing statement
37 or other filed record.

39 SUBPART 2

40 DUTIES AND OPERATION OF FILING OFFICE

42 34.1-9-519. Numbering, maintaining, and indexing
43 records; communicating information provided in records.

45 (a) For each record filed in a filing office, the
46 filing office shall:

Page 105

1 (i) Assign a unique number to the filed record;

3 (ii) Create a record that bears the number
4 assigned to the filed record and the date and time of
5 filing;

7 (iii) Maintain the filed record for public
8 inspection; and

10 (iv) Index the filed record in accordance with
11 subsections (c), (d) and (e).

13 (b) A file number assigned after January 1, 2005,
14 must include a digit that:

16 (i) Is mathematically derived from or related to
17 the other digits of the file number; and

19 (ii) Aids the filing office in determining
20 whether a number communicated as the file number includes a
21 single-digit or transpositional error.

23 (c) Except as otherwise provided in subsections (d)
24 and (e), the filing office shall:

26 (i) Index an initial financing statement
27 according to the name of the debtor and index all filed
28 records relating to the initial financing statement in a
29 manner that associates with one another an initial
30 financing statement and all filed records relating to the
31 initial financing statement; and

33 (ii) Index a record that provides a name of a
34 debtor which was not previously provided in the financing
35 statement to which the record relates also according to the
36 name that was not previously provided.

38 (d) If a financing statement is filed as a fixture
39 filing or covers as-extracted collateral or timber to be
40 cut, it must be filed for record and the filing office
41 shall index it:

43 (i) Under the names of the debtor and of each
44 owner of record shown on the financing statement as if they
45 were the mortgagors under a mortgage of the real property
46 described; and

Page 106

1 (ii) To the extent that the law of this state
2 provides for indexing of records of mortgages under the
3 name of the mortgagee, under the name of the secured party
4 as if the secured party were the mortgagee thereunder, or,
5 if indexing is by description, as if the financing
6 statement were a record of a mortgage of the real property
7 described.

9 (e) If a financing statement is filed as a fixture
10 filing or covers as-extracted collateral or timber to be
11 cut, the filing office shall index an assignment filed
12 under section 34.1-9-514(a) or an amendment filed under
13 section 34.1-9-514(b):

15 (i) Under the name of the assignor as grantor;
16 and

18 (ii) To the extent that the law of this state
19 provides for indexing a record of the assignment of a
20 mortgage under the name of the assignee, under the name of
21 the assignee.

23 (f) The filing office shall maintain a capability:

25 (i) To retrieve a record by the name of the
26 debtor and:

28 (A) If the filing office is described in
29 section 34.1-9-501(a)(i), by the file number assigned to
30 the initial financing statement to which the record relates
31 and the date and time that the record was filed or
32 recorded; or

34 (B) If the filing office is described in
35 section 34.1-9-501(a)(ii), by the file number assigned to
36 the initial financing statement to which the record
37 relates; and

39 (ii) To associate and retrieve with one another
40 an initial financing statement and each filed record
41 relating to the initial financing statement.

43 (g) The filing office may not remove a debtor's name
44 from the index until one (1) year after the effectiveness
45 of a financing statement naming the debtor lapses under
46 section 34.1-9-515 with respect to all secured parties of
47 record.

Page 107

2 (h) The filing office shall perform the acts required
3 by subsections (a) through (e) at the time and in the
4 manner prescribed by filing-office rule, but not later than
5 two (2) business days after the filing office receives the
6 record in question.

8 (j) Subsections (b) and (h) do not apply to a filing
9 office described in section 34.1-9-501(a)(i).

11 34.1-9-520. Acceptance and refusal to accept record.

13 (a) A filing office shall refuse to accept a record
14 for filing for a reason set forth in section 34.1-9-516(b)
15 and may refuse to accept a record for filing only for a
16 reason set forth in section 34.1-9-516(b).

18 (b) If a filing office refuses to accept a record for
19 filing, it shall communicate to the person that presented
20 the record the fact of and reason for the refusal and the
21 date and time the record would have been filed had the
22 filing office accepted it. The communication must be made
23 at the time and in the manner prescribed by filing-office
24 rule but, in the case of a filing office described in
25 section 34.1-9-501(a)(ii), in no event more than two (2)
26 business days after the filing office receives the record.

28 (c) A filed financing statement satisfying section
29 34.1-9-502(a) and (b) is effective, even if the filing
30 office is required to refuse to accept it for filing under
31 subsection (a). However, section 34.1-9-338 applies to a
32 filed financing statement providing information described
33 in section 34.1-9-516(b)(v) which is incorrect at the time
34 the financing statement is filed.

36 (d) If a record communicated to a filing office
37 provides information that relates to more than one (1)
38 debtor, this part applies as to each debtor separately.

40 34.1-9-521. Uniform form of written financing
41 statement and amendment.

43 (a) A filing office that accepts written records may
44 not refuse to accept a written initial financing statement
45 in the following form and format except for a reason set
46 forth in section 34.1-9-516(b):

Page 108

UCC FINANCING STATEMENT

Follow INSTRUCTIONS (front and back) CAREFULLY

A. NAME & PHONE OF CONTACT AT FILER (optional)

B. SEND ACKNOWLEDGMENT TO: (Name and Address)

THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

1. DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (1a or 1b) – do not abbreviate or combine names

	1a. ORGANIZATION'S NAME
or	1b. INDIVIDUAL'S LAST NAME			FIRST NAME	MIDDLE NAME		SUFFIX
1c. MAILING ADDRESS				CITY	STATE	POSTAL CODE	COUNTRY
1d. Tax ID #: SSN OR EIN		ADD'L INFO RE ORGANIZATION DEBTOR	1e. TYPE OF ORGANIZATION	1f. JURISDICTION OF ORGANIZATION	1g. ORGANIZATION ID #, if any NONE
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (2a or 2b) - do not abbreviate or combine names
	2a. ORGANIZATION'S NAME
or	2b. INDIVIDUAL'S LAST NAME			FIRST NAME	MIDDLE NAME		SUFFIX
2c. MAILING ADDRESS				CITY	STATE	POSTAL CODE	COUNTRY
2d. Tax ID #: SSN OR EIN		ADD'L INFO RE ORGANIZATION DEBTOR	2e. TYPE OF ORGANIZATION	2f. JURISDICTION OF ORGANIZATION	2g. ORGANIZATION ID #, if any NONE
3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) - insert only one secured party name (3a or 3b)
	3a. ORGANIZATION'S NAME
or	3b. INDIVIDUAL'S LAST NAME			FIRST NAME	MIDDLE NAME		SUFFIX
3c. MAILING ADDRESS				CITY	STATE	POSTAL CODE	COUNTRY
3d. Tax ID #: SSN OR EIN		ADD'L INFO RE ORGANIZATION DEBTOR	3e. TYPE OF ORGANIZATION	3f. JURISDICTION OF ORGANIZATION	3g. ORGANIZATION ID #, if any NONE

4. This FINANCING STATEMENT covers the following collateral:

5. ALTERNATIVE DESIGNATION [If applicable] :˜ LESSEE/LESSOR ˜ CONSIGNEE/CONSIGNOR ˜ BAILEE/BAILOR ˜ SELLER/BUYER ˜ AG. LIEN ˜ NON-UCC FILING

6. ˜ This FINANCING STATEMENT IS TO BE FILED (for record) (or recorded) in the REAL ESTATE RECORDS. Attach Addendum (if applicable)

7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)

(ADDITIONAL FEE) (optional) ˜ All Debtors ˜ Debtor 1 ˜ Debtor 2

8. OPTIONAL FILER REFERENCE DATA

Page 109

UCC FINANCING STATEMENT ADDENDUM

Follow INSTRUCTIONS (front and back) CAREFULLY

9. NAME OF FIRST DEBTOR (1a OR 1b) ON RELATED FINANCING STATEMENT
	9a. ORGANIZATION'S NAME
OR	9b. INDIVIDUAL'S LAST NAME	FIRST NAME	MIDDLE NAME, SUFFIX
10. MISCELLANEOUS:				THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

11. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME insert only one debtor name (11a or 11b) – do not abbreviate or combine names

	11a. ORGANIZATION'S NAME
or	11b. INDIVIDUAL'S LAST NAME			FIRST NAME	MIDDLE NAME		SUFFIX
11c. MAILING ADDRESS				CITY	STATE	POSTAL CODE	COUNTRY
11d. Tax ID #: SSN OR EIN		ADD'L INFO RE ORGANIZATION DEBTOR	11e. TYPE OF ORGANIZATION	11f. JURISDICTION OF ORGANIZATION	11g. ORGANIZATION ID #, if any NONE
12. ADDITIONAL SECURED PARTY'S or ˜ ASSIGNOR S/P'S NAME - insert only one name (12a or 12b)
	12a. ORGANIZATION'S NAME
or	12b. INDIVIDUAL'S LAST NAME			FIRST NAME	MIDDLE NAME		SUFFIX
12c. MAILING ADDRESS				CITY	STATE	POSTAL CODE	COUNTRY
13. This FINANCING STATEMENT covers ˜ timber to be cut or ˜ as-extracted collateral, or is filed as a ˜ fixture filing. 14. Description of real estate: 15. Name and address of a RECORD OWNER of above-described real estate (if Debtor does not have a record interest):				16. Additional collateral description:
				17. Check one if applicable and check only one box. Debtor is a ˜ Trust or ˜ Trustee acting with respect to property held in trust or ˜ Decedent's Estate
				18. Check only if applicable and check only one box. ˜ Debtor is a TRANSMITTING UTILITY ˜ Filed in connection with a Manufactured-Home transaction - effective 30 years ˜Filed in connection with a Public-Finance Transaction - effective 30 years

Page 110

1 (b) A filing office that accepts written records may
2 not refuse to accept a written record in the following form
3 and format except for a reason set forth in section
4 34.1-9-516(b):

UCC FINANCING STATEMENT AMENDMENT

Follow INSTRUCTIONS (front and back) CAREFULLY

A. NAME & PHONE OF CONTACT AT FILER (optional)
B. SEND ACKNOWLEDGMENT TO: (Name and Address)					THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
1a. INITIAL FINANCING STATEMENT FILE #							1b. This FINANCING STATEMENT AMENDMENT is to be filed (for record) (or recorded) in the REAL ESTATE RECORDS.
2. TERMINATION: Effectiveness of the Financing Statement identified above is terminated with respect to security interest(s) of the Secured Party authorizing this Termination Statement.
3. CONTINUATION: Effectiveness of the Financing Statement identified above with respect to security interest(s) of the Secured Party authorizing this Continuation Statement is continued for the additional period provided by applicable law.
4. ASSIGNMENT (full or partial): Give name of assignee in item 7a or 7b and address of assignee in item 7c; and also give name of assignor in item 9.
5. AMENDMENT (PARTY INFORMATION): This Amendment affects Debtor or Secured Party of record. Check only one of these two boxes. Also check one of the following three boxes and provide appropriate information in items 6 and/or 7. CHANGE name and/or address: Give current record name in item 6a or 6b; also give new DELETE name: Give record name ADD name: complete item 7a or 7b, and also name (if name change) in item 7a or 7b and/or new address (if address change) in item 7c. to be deleted in items 6a or 6b. item 7c; also complete items 7d-7g (if applicable).
6. CURRENT RECORD INFORMATION:
		6a. ORGANIZATION'S NAME
or		6b. INDIVIDUAL'S LAST NAME				FIRST NAME		MIDDLE NAME		SUFFIX
7. CHANGED (NEW) OR ADDED INFORMATION:
		7a. ORGANIZATION'S NAME
or		7b. INDIVIDUAL'S LAST NAME				FIRST NAME		MIDDLE NAME		SUFFIX
7c. MAILING ADDRESS						CITY		STATE	POSTAL CODE	COUNTRY
7d. Tax ID #: SSN OR EIN			ADD'L INFO RE ORGANIZATION DEBTOR	7e. TYPE OF ORGANIZATION		7f. JURISDICTION OF ORGANIZATION		7g. ORGANIZATION ID #, if any NONE
8. AMENDMENT (COLLATERAL CHANGE): check only one box. Describe collateral deleted or added, or give entire restated collateral description, or describe collateral assigned.
9. NAME OF SECURED PARTY OF RECORD AUTHORIZING THIS AMENDMENT (name of assignor, if this is an Assignment). If this is an Amendment authorized by a Debtor which adds collateral or adds the authorizing Debtor, or if this is a Termination authorized by a Debtor, check here and enter name of DEBTOR authorizing this Amendment.
		9a. ORGANIZATION'S NAME
or		9b. INDIVIDUAL'S LAST NAME				FIRST NAME		MIDDLE NAME		SUFFIX
	10. OPTIONAL FILER REFERENCE DATA

Page 111

UCC FINANCING STATEMENT ADDENDUM

Follow INSTRUCTIONS (front and back) CAREFULLY

11. INITIAL FINANCING STATEMENT FILE # (same as item 1a on Amendment form)
	12a. ORGANIZATION'S NAME
OR	12b. INDIVIDUAL'S LAST NAME	FIRST NAME	MIDDLE NAME, SUFFIX
13. Use this space for additional information				THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

1 34.1-9-522. Maintenance and destruction of records.

3 (a) The filing office shall maintain a record of the
4 information provided in a filed financing statement for at
5 least one (1) year after the effectiveness of the financing
6 statement has lapsed under section 34.1-9-515 with respect
7 to all secured parties of record. The record must be
8 retrievable by using the name of the debtor and:

10 (i) If the record was filed or recorded in the
11 filing office described in section 34.1-9-501(a)(i), by
12 using the file number assigned to the initial financing
13 statement to which the record relates and the date and time
14 that the record was filed or recorded; or

16 (ii) If the record was filed in the filing
17 office described in section 34.1-9-501(a)(ii), by using the
18 file number assigned to the initial financing statement to
19 which the record relates.

Page 112

2 (b) Except to the extent that a statute governing
3 disposition of public records provides otherwise, the
4 filing office immediately may destroy any written record
5 evidencing a financing statement. However, if the filing
6 office destroys a written record, it shall maintain another
7 record of the financing statement which complies with
8 subsection (a).

10 34.1-9-523. Information from filing office; sale or
11 license of records.

13 (a) If a person that files a written record requests
14 an acknowledgment of the filing, the filing office shall
15 send to the person an image of the record showing the
16 number assigned to the record pursuant to section
17 34.1-9-519(a)(i) and the date and time of the filing of the
18 record. However, if the person furnishes a copy of the
19 record to the filing office, the filing office may instead:

21 (i) Note upon the copy the number assigned to
22 the record pursuant to section 34.1-9-519(a)(i) and the
23 date and time of the filing of the record; and

25 (ii) Send the copy to the person.

27 (b) If a person files a record other than a written
28 record, the filing office shall communicate to the person
29 an acknowledgment that provides:

31 (i) The information in the record;

33 (ii) The number assigned to the record pursuant
34 to section 34.1-9-519(a)(i); and

36 (iii) The date and time of the filing of the
37 record.

39 (c) The filing office shall communicate or otherwise
40 make available in a record the following information to any
41 person that requests it:

43 (i) Whether there is on file on a date and time
44 specified by the filing office, but not a date earlier than
45 three (3) business days before the filing office receives
46 the request, any financing statement that:

Page 113

1 (A) Designates a particular debtor;

3 (B) Has not lapsed under section 34.1-9-515
4 with respect to all secured parties of record; and

6 (C) If the request so states, has lapsed
7 under section 34.1-9-515 and a record of which is
8 maintained by the filing office under section
9 34.1-9-522(a).

11 (ii) The date and time of filing of each
12 financing statement; and

14 (iii) The information provided in each financing
15 statement.

17 (d) In complying with its duty under subsection (c),
18 the filing office may communicate information in any
19 medium. However, if requested, the filing office shall
20 communicate information by issuing its written certificate.

22 (e) The filing office shall perform the acts required
23 by subsections (a) through (d) at the time and in the
24 manner prescribed by filing-office rule, but not later than
25 two (2) business days after the filing office receives the
26 request.

28 (f) At least weekly, the secretary of state shall
29 offer to sell or license to the public on a nonexclusive
30 basis, in bulk, copies of all records filed in it under
31 this part, in every medium from time to time available to
32 the filing office.

34 34.1-9-524. Delay by filing office.

36 (a) Delay by the filing office beyond a time limit
37 prescribed by this part is excused if:

39 (i) The delay is caused by interruption of
40 communication or computer facilities, war, emergency
41 conditions, failure of equipment or other circumstances
42 beyond control of the filing office; and

44 (ii) The filing office exercises reasonable
45 diligence under the circumstances.

47 34.1-9-525. Fees.

Page 114

2 (a) Except as otherwise provided in subsection (e),
3 fees for services rendered by the filing office under this
4 part must be set by rule adopted by the secretary of state.
5 The rule must set the fees for filing and indexing a record
6 under this article on the following basis:

8 (i) If a record presented for filing is
9 communicated to the filing office in writing and consists
10 of more than two (2) pages, the fee for filing and indexing
11 the record must be at least twice the amount of the fee for
12 a record communicated in writing that consists of one (1)
13 or two (2) pages; and

15 (ii) If the record is communicated by another
16 medium authorized by filing-office rule, the fee for filing
17 and indexing the record must be no more than half the
18 amount of the fee for a record communicated in writing that
19 consists of one (1) or two (2) pages.

21 (b) There is no subsection (b).

23 (c) The number of names required to be indexed does
24 not affect the amount of the fees in subsections (a) and
25 (b).

27 (d) The rule adopted pursuant to subsection (a) must
28 set the fee for responding to a request for information
29 from the filing office, including for communicating whether
30 there is on file any financing statement naming a
31 particular debtor. A fee for responding to a request
32 communicated in writing must be not less than twice the
33 amount of the fee for responding to a request communicated
34 by another medium authorized by filing-office rule. This
35 subsection does not require that a fee be charged for
36 remote access searching of the filing office data base.
37 The rule adopted pursuant to subsection (a) need not
38 specify a fee for remote access searching of the filing
39 office data base.

41 (e) This section does not require a fee with respect
42 to a record of mortgage that is effective as a financing
43 statement filed as a fixture filing or as a financing
44 statement covering as-extracted collateral or timber to be
45 cut under section 34.1-9-502(c). However, the recording
46 and satisfaction fees that otherwise would be applicable to
47 the record of mortgage apply.

Page 115

2 34.1-9-526. Filing-office rules.

4 (a) The secretary of state shall adopt and publish
5 rules to implement this article. The filing-office rules
6 must be:

8 (i) Consistent with this article; and

10 (ii) Adopted and published in accordance with
11 the Wyoming Administrative Procedure Act.

13 (b) To keep the filing-office rules and practices of
14 the filing office in harmony with the rules and practices
15 of filing offices in other jurisdictions that enact
16 substantially this part, and to keep the technology used by
17 the filing office compatible with the technology used by
18 filing offices in other jurisdictions that enact
19 substantially this part, the secretary of state, so far as
20 is consistent with the purposes, policies and provisions of
21 this article, in adopting, amending and repealing
22 filing-office rules, shall:

24 (i) Consult with filing offices in other
25 jurisdictions that enact substantially this part; and

27 (ii) Consult the most recent version of the
28 Model Rules promulgated by the International Association of
29 Corporate Administrators or any successor organization; and

31 (iii) Take into consideration the rules and
32 practices of, and the technology used by, filing offices in
33 other jurisdictions that enact substantially this part.

35 34.1-9-527. Duty to report.

37 (a) The secretary of state shall report before
38 January 1 of each odd numbered year to the legislature on
39 the operation of the filing office. The report must
40 contain a statement of the extent to which:

42 (i) The filing-office rules are not in harmony
43 with the rules of filing offices in other jurisdictions
44 that enact substantially this part and the reasons for
45 these variations; and

Page 116

1 (ii) The filing-office rules are not in harmony
2 with the most recent version of the Model Rules promulgated
3 by the International Association of Corporate
4 Administrators, or any successor organization, and the
5 reasons for these variations.

7 PART 6

8 DEFAULT

10 34.1-9-601. Rights after default; judicial
11 enforcement; consignor or buyer of accounts, chattel paper,
12 payment intangibles or promissory notes.

14 (a) After default, a secured party has the rights
15 provided in this part and, except as otherwise provided in
16 section 34.1-9-602, those provided by agreement of the
17 parties. A secured party:

19 (i) May reduce a claim to judgment, foreclose or
20 otherwise enforce the claim, security interest or
21 agricultural lien by any available judicial procedure; and

23 (ii) If the collateral is documents, may proceed
24 either as to the documents or as to the goods they cover.

26 (b) A secured party in possession of collateral or
27 control of collateral under section 34.1-9-104, 34.1-9-105,
28 34.1-9-106 or 34.1-9-107 has the rights and duties provided
29 in section 34.1-9-207.

31 (c) The rights under subsections (a) and (b) are
32 cumulative and may be exercised simultaneously.

34 (d) Except as otherwise provided in subsection (g)
35 and section 34.1-9-605, after default, a debtor and an
36 obligor have the rights provided in this part and by
37 agreement of the parties.

39 (e) If a secured party has reduced its claim to
40 judgment, the lien of any levy that may be made upon the
41 collateral by virtue of an execution based upon the
42 judgment relates back to the earliest of:

44 (i) The date of perfection of the security
45 interest or agricultural lien in the collateral;

Page 117

1 (ii) The date of filing a financing statement
2 covering the collateral; or

4 (iii) Any date specified in a statute under
5 which the agricultural lien was created.

7 (f) A sale pursuant to an execution is a foreclosure
8 of the security interest or agricultural lien by judicial
9 procedure within the meaning of this section. A secured
10 party may purchase at the sale and thereafter hold the
11 collateral free of any other requirements of this article.

13 (g) Except as otherwise provided in section
14 34.1-9-607(c), this part imposes no duties upon a secured
15 party that is a consignor or is a buyer of accounts,
16 chattel paper, payment intangibles or promissory notes.

18 34.1-9-602. Waiver and variance of rights and duties.

20 (a) Except as otherwise provided in section
21 34.1-9-624, to the extent that they give rights to a debtor
22 or obligor and impose duties on a secured party, the debtor
23 or obligor may not waive or vary the rules stated in the
24 following listed sections:

26 (i) Section 34.1-9-207(b)(iv)(C), which deals
27 with use and operation of the collateral by the secured
28 party;

30 (ii) Section 34.1-9-210, which deals with
31 requests for an accounting and requests concerning a list
32 of collateral and statement of account;

34 (iii) Section 34.1-9-607(c), which deals with
35 collection and enforcement of collateral;

37 (iv) Sections 34.1-9-608(a) and 34.1-9-615(c) to
38 the extent that they deal with application or payment of
39 noncash proceeds of collection, enforcement or disposition;

41 (v) Sections 34.1-9-608(a) and 34.1-9-615(d) to
42 the extent that they require accounting for or payment of
43 surplus proceeds of collateral;

45 (vi) Section 34.1-9-609 to the extent that it
46 imposes upon a secured party that takes possession of

Page 118

1 collateral without judicial process the duty to do so
2 without breach of the peace;

4 (vii) Sections 34.1-9-610(b), 34.1-9-611,
5 34.1-9-613 and 34.1-9-614, which deal with disposition of
6 collateral;

8 (viii) Section 34.1-9-615(f), which deals with
9 calculation of a deficiency or surplus when a disposition
10 is made to the secured party, a person related to the
11 secured party, or a secondary obligor;

13 (ix) Section 34.1-9-616, which deals with
14 explanation of the calculation of a surplus or deficiency;

16 (x) Sections 34.1-9-620, 34.1-9-621 and
17 34.1-9-622, which deal with acceptance of collateral in
18 satisfaction of obligation;

20 (xi) Section 34.1-9-623, which deals with
21 redemption of collateral;

23 (xii) Section 34.1-9-624, which deals with
24 permissible waivers; and

26 (xiii) Sections 34.1-9-625 and 34.1-9-626, which
27 deal with the secured party's liability for failure to
28 comply with this article.

30 34.1-9-603. Agreement on standards concerning rights
31 and duties.

33 (a) The parties may determine by agreement the
34 standards measuring the fulfillment of the rights of a
35 debtor or obligor and the duties of a secured party under a
36 rule stated in section 34.1-9-602 if the standards are not
37 manifestly unreasonable.

39 (b) Subsection (a) does not apply to the duty under
40 section 34.1-9-609 to refrain from breaching the peace.

42 34.1-9-604. Procedure if security agreement covers
43 real property or fixtures.

45 (a) If a security agreement covers both personal and
46 real property, a secured party may proceed:

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1 (i) Under this part as to the personal property
2 without prejudicing any rights with respect to the real
3 property; or

5 (ii) As to both the personal property and the
6 real property in accordance with the rights with respect to
7 the real property, in which case the other provisions of
8 this part do not apply.

10 (b) Subject to subsection (c), if a security
11 agreement covers goods that are or become fixtures, a
12 secured party may proceed:

14 (i) Under this part; or

16 (ii) In accordance with the rights with respect
17 to real property, in which case the other provisions of
18 this part do not apply.

20 (c) Subject to the other provisions of this part, if
21 a secured party holding a security interest in fixtures has
22 priority over all owners and encumbrancers of the real
23 property, the secured party, after default, may remove the
24 collateral from the real property.

26 (d) A secured party that removes collateral shall
27 promptly reimburse any encumbrancer or owner of the real
28 property, other than the debtor, for the cost of repair of
29 any physical injury caused by the removal. The secured
30 party need not reimburse the encumbrancer or owner for any
31 diminution in value of the real property caused by the
32 absence of the goods removed or by any necessity of
33 replacing them. A person entitled to reimbursement may
34 refuse permission to remove until the secured party gives
35 adequate assurance for the performance of the obligation to
36 reimburse.

38 34.1-9-605. Unknown debtor or secondary obligor.

40 (a) A secured party does not owe a duty based on its
41 status as secured party:

43 (i) To a person that is a debtor or obligor,
44 unless the secured party knows:

46 (A) That the person is a debtor or obligor;

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1 (B) The identity of the person; and

3 (C) How to communicate with the person; or

5 (ii) To a secured party or lienholder that has
6 filed a financing statement against a person, unless the
7 secured party knows:

9 (A) That the person is a debtor; and

11 (B) The identity of the person.

13 34.1-9-606. Time of default for agricultural lien.

15 For purposes of this part, a default occurs in connection
16 with an agricultural lien at the time the secured party
17 becomes entitled to enforce the lien in accordance with the
18 statute under which it was created.

20 34.1-9-607. Collection and enforcement by secured
21 party.

23 (a) If so agreed, and in any event after default, a
24 secured party:

26 (i) May notify an account debtor or other person
27 obligated on collateral to make payment or otherwise render
28 performance to or for the benefit of the secured party;

30 (ii) May take any proceeds to which the secured
31 party is entitled under section 34.1-9-315;

33 (iii) May enforce the obligations of an account
34 debtor or other person obligated on collateral and exercise
35 the rights of the debtor with respect to the obligation of
36 the account debtor or other person obligated on collateral
37 to make payment or otherwise render performance to the
38 debtor, and with respect to any property that secures the
39 obligations of the account debtor or other person obligated
40 on the collateral;

42 (iv) If it holds a security interest in a
43 deposit account perfected by control under section
44 34.1-9-104(a)(i), may apply the balance of the deposit
45 account to the obligation secured by the deposit account;
46 and

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1 (v) If it holds a security interest in a deposit
2 account perfected by control under section
3 34.1-9-104(a)(ii) or (iii), may instruct the bank to pay
4 the balance of the deposit account to or for the benefit of
5 the secured party.

7 (b) If necessary to enable a secured party to
8 exercise under paragraph (a)(iii) the right of a debtor to
9 enforce a mortgage nonjudicially, the secured party may
10 record in the office in which a record of the mortgage is
11 recorded:

13 (i) A copy of the security agreement that
14 creates or provides for a security interest in the
15 obligation secured by the mortgage; and

17 (ii) The secured party's sworn affidavit in
18 recordable form stating that:

20 (A) A default has occurred; and

22 (B) The secured party is entitled to
23 enforce the mortgage nonjudicially.

25 (c) A secured party shall proceed in a commercially
26 reasonable manner if the secured party:

28 (i) Undertakes to collect from or enforce an
29 obligation of an account debtor or other person obligated
30 on collateral; and

32 (ii) Is entitled to charge back uncollected
33 collateral or otherwise to full or limited recourse against
34 the debtor or a secondary obligor.

36 (d) A secured party may deduct from the collections
37 made pursuant to subsection (c) reasonable expenses of
38 collection and enforcement, including reasonable attorney's
39 fees and legal expenses incurred by the secured party.

41 (e) This section does not determine whether an
42 account debtor, bank or other person obligated on
43 collateral owes a duty to a secured party.

45 34.1-9-608. Application of proceeds of collection or
46 enforcement; liability for deficiency and right to surplus.

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1 (a) If a security interest or agricultural lien
2 secures payment or performance of an obligation, the
3 following rules apply:

5 (i) A secured party shall apply or pay over for
6 application the cash proceeds of collection or enforcement
7 under W.S. 34.1-9-607 in the following order to:

9 (A) The reasonable expenses of collection
10 and enforcement and, to the extent provided for by
11 agreement and not prohibited by law, reasonable attorney's
12 fees and legal expenses incurred by the secured party;

14 (B) The satisfaction of obligations secured
15 by the security interest or agricultural lien under which
16 the collection or enforcement is made; and

18 (C) The satisfaction of obligations secured
19 by any subordinate security interest in or other lien on
20 the collateral subject to the security interest or
21 agricultural lien under which the collection or enforcement
22 is made if the secured party receives an authenticated
23 demand for proceeds before distribution of the proceeds is
24 completed.

26 (ii) If requested by a secured party, a holder
27 of a subordinate security interest or other lien shall
28 furnish reasonable proof of the interest or lien within a
29 reasonable time. Unless the holder complies, the secured
30 party need not comply with the holder's demand under
31 subparagraph (a)(i)(C);

33 (iii) A secured party need not apply or pay over
34 for application noncash proceeds of collection and
35 enforcement under W.S. 34.1-9-607 unless the failure to do
36 so would be commercially unreasonable. A secured party
37 that applies or pays over for application noncash proceeds
38 shall do so in a commercially reasonable manner;

40 (iv) A secured party shall account to and pay a
41 debtor for any surplus, and the obligor is liable for any
42 deficiency.

44 (b) If the underlying transaction is a sale of
45 accounts, chattel paper, payment intangibles or promissory
46 notes, the debtor is not entitled to any surplus, and the
47 obligor is not liable for any deficiency.

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2 34.1-9-609. Secured party's right to take possession
3 after default.

5 (a) After default, a secured party:

7 (i) May take possession of the collateral; and

9 (ii) Without removal, may render equipment
10 unusable and dispose of collateral on a debtor's premises
11 under section 34.1-9-610.

13 (b) A secured party may proceed under subsection (a):

15 (i) Pursuant to judicial process; or

17 (ii) Without judicial process, if it proceeds
18 without breach of the peace.

20 (c) If so agreed, and in any event after default, a
21 secured party may require the debtor to assemble the
22 collateral and make it available to the secured party at a
23 place to be designated by the secured party which is
24 reasonably convenient to both parties.

26 34.1-9-610. Disposition of collateral after default.

28 (a) After default, a secured party may sell, lease,
29 license or otherwise dispose of any or all of the
30 collateral in its present condition or following any
31 commercially reasonable preparation or processing.

33 (b) Every aspect of a disposition of collateral,
34 including the method, manner, time, place and other terms,
35 must be commercially reasonable. If commercially
36 reasonable, a secured party may dispose of collateral by
37 public or private proceedings, by one (1) or more
38 contracts, as a unit or in parcels, and at any time and
39 place and on any terms.

41 (c) A secured party may purchase collateral:

43 (i) At a public disposition; or

45 (ii) At a private disposition only if the
46 collateral is of a kind that is customarily sold on a

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1 recognized market or the subject of widely distributed
2 standard price quotations.

4 (d) A contract for sale, lease, license or other
5 disposition includes the warranties relating to title,
6 possession, quiet enjoyment and the like which by operation
7 of law accompany a voluntary disposition of property of the
8 kind subject to the contract.

10 (e) A secured party may disclaim or modify warranties
11 under subsection (d):

13 (i) In a manner that would be effective to
14 disclaim or modify the warranties in a voluntary
15 disposition of property of the kind subject to the contract
16 of disposition; or

18 (ii) By communicating to the purchaser a record
19 evidencing the contract for disposition and including an
20 express disclaimer or modification of the warranties.

22 (f) A record is sufficient to disclaim warranties
23 under subsection (e) if it indicates "there is no warranty
24 relating to title, possession, quiet enjoyment or the like
25 in this disposition" or uses words of similar import.

27 34.1-9-611. Notification before disposition of
28 collateral.

30 (a) In this section, "notification date" means the
31 earlier of the date on which:

33 (i) A secured party sends to the debtor and any
34 secondary obligor an authenticated notification of
35 disposition; or

37 (ii) The debtor and any secondary obligor waive
38 the right to notification.

40 (b) Except as otherwise provided in subsection (d), a
41 secured party that disposes of collateral under section
42 34.1-9-610 shall send to the persons specified in
43 subsection (c) a reasonable authenticated notification of
44 disposition.

46 (c) To comply with subsection (b), the secured party
47 shall send an authenticated notification of disposition to:

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2 (i) The debtor;

4 (ii) Any secondary obligor; and

6 (iii) If the collateral is other than consumer
7 goods:

9 (A) Any other person from which the secured
10 party has received, before the notification date, an
11 authenticated notification of a claim of an interest in the
12 collateral;

14 (B) Any other secured party or lienholder
15 that, ten (10) days before the notification date, held a
16 security interest in or other lien on the collateral
17 perfected by the filing of a financing statement that:

19 (I) Identified the collateral;

21 (II) Was indexed under the debtor's
22 name as of that date; and

24 (III) Was filed in the office in which
25 to file a financing statement against the debtor covering
26 the collateral as of that date; and

28 (C) Any other secured party that, ten (10)
29 days before the notification date, held a security interest
30 in the collateral perfected by compliance with a statute,
31 regulation or treaty described in section 34.1-9-311(a).

33 (d) Subsection (b) does not apply if the collateral
34 is perishable or threatens to decline speedily in value or
35 is of a type customarily sold on a recognized market.

37 (e) A secured party complies with the requirement for
38 notification prescribed by subparagraph (c)(iii)(B) if:

40 (i) Not later than twenty (20) days or earlier
41 than thirty (30) days before the notification date, the
42 secured party requests, in a commercially reasonable
43 manner, information concerning financing statements indexed
44 under the debtor's name in the office indicated in
45 subparagraph (c)(iii)(B); and

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1 (ii) Before the notification date, the secured
2 party:

4 (A) Did not receive a response to the
5 request for information; or

7 (B) Received a response to the request for
8 information and sent an authenticated notification of
9 disposition to each secured party or other lienholder named
10 in that response whose financing statement covered the
11 collateral.

13 34.1-9-612. Timeliness of notification before
14 disposition of collateral.

16 (a) Except as otherwise provided in subsection (b),
17 whether a notification is sent within a reasonable time is
18 a question of fact.

20 (b) In a transaction other than a consumer
21 transaction, a notification of disposition sent after
22 default and ten (10) days or more before the earliest time
23 of disposition set forth in the notification is sent within
24 a reasonable time before the disposition.

26 34.1-9-613. Contents and form of notification before
27 disposition of collateral: general.

29 (a) Except in a consumer-goods transaction, the
30 following rules apply:

32 (i) The contents of a notification of
33 disposition are sufficient if the notification:

35 (A) Describes the debtor and the secured
36 party;

38 (B) Describes the collateral that is the
39 subject of the intended disposition;

41 (C) States the method of intended
42 disposition;

44 (D) States that the debtor is entitled to
45 an accounting of the unpaid indebtedness and states the
46 charge, if any, for an accounting; and

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1 (E) States the time and place of a public
2 disposition or the time after which any other disposition
3 is to be made.

5 (ii) Whether the contents of a notification that
6 lacks any of the information specified in paragraph (i) are
7 nevertheless sufficient is a question of fact;

9 (iii) The contents of a notification providing
10 substantially the information specified in paragraph (i)
11 are sufficient, even if the notification includes:

13 (A) Information not specified by that
14 paragraph; or

16 (B) Minor errors that are not seriously
17 misleading.

19 (iv) A particular phrasing of the notification
20 is not required;

22 (v) The following form of notification and the
23 form appearing in section 34.1-9-614(c), when completed,
24 each provides sufficient information:

26 NOTIFICATION OF DISPOSITION OF COLLATERAL

28 To: (Name of debtor, obligor or other person to
29 which the notification is sent)

30 From: (Name, address and telephone number of
31 secured party)

32 Name of Debtor(s): (Include only if debtor(s) are not
33 an addressee)

35 For a public disposition:

36 We will sell (or lease or license, as applicable) the
37 (describe collateral) to the highest qualified bidder in
38 public as follows:

39 Day and Date:

40 Time:

41 Place: _________

42 For a private disposition:

43 We will sell (or lease or license, as applicable) the
44 (describe collateral) privately sometime after .... day and
45 .... date.

46 You are entitled to an accounting of the unpaid
47 indebtedness secured by the property that we intend to sell

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1 (or lease or license, as applicable) for a charge of $ ....
2 You may request an accounting by calling us at ....
3 telephone number.

5 34.1-9-614. Contents and form of notification before
6 disposition of collateral: consumer-goods transaction.

8 (a) In a consumer-goods transaction, the following
9 rules apply:

11 (i) A notification of disposition must provide
12 the following information:

14 (A) The information specified in section
15 34.1-9-613(a)(i);

17 (B) A description of any liability for a
18 deficiency of the person to which the notification is sent;

20 (C) A telephone number from which the
21 amount that must be paid to the secured party to redeem the
22 collateral under section 34.1-9-623 is available; and

24 (D) A telephone number or mailing address
25 from which additional information concerning the
26 disposition and the obligation secured is available.

28 (ii) A particular phrasing of the notification
29 is not required;

31 (iii) The following form of notification, when
32 completed, provides sufficient information:

34 Name and address of secured party ___

35 Date

37 NOTICE OF OUR PLAN TO SELL PROPERTY

39 Name and address of any obligor who is also a debtor __

40 Subject: (Identification of Transaction)

42 We have your (describe collateral), because you broke
43 promises in our agreement.

45 For a public disposition:

47 We will sell (describe collateral) at public sale. A sale

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1 could include a lease or license. The sale will be held as
2 follows:

3 Date:

4 Time:

5 Place: _________

6 You may attend the sale and bring bidders if you want.

8 For a private disposition:

9 We will sell (describe collateral) at private sale sometime
10 after .... date. A sale could include a lease or license.

12 The money that we get from the sale, after paying our
13 costs, will reduce the amount you owe. If we get less
14 money than you owe, you (will or will not, as applicable)
15 still owe us the difference. If we get more money than you
16 owe, you will get the extra money, unless we must pay it to
17 someone else.

19 You can get the property back at any time before we sell it
20 by paying us the full amount you owe (not just the past due
21 payments), including our expenses. To learn the exact
22 amount you must pay, call us at .... telephone number.

24 If you want us to explain to you in writing how we have
25 figured the amount that you owe us, you may call us at ...
26 telephone number or write us at .... secured party's
27 address and request a written explanation. We will charge
28 you $ .... for the explanation if we sent you another
29 written explanation of the amount you owe us within the
30 last six (6) months.

32 If you need more information about the sale call us at ....
33 telephone number or write us at .... secured party's
34 address.

36 We are sending this notice to the following other people
37 who have an interest in (describe collateral) or who owe
38 money under your agreement:

39 Names of all other debtors and obligors, if any __

41 (iv) A notification in the form of paragraph
42 (iii) is sufficient, even if additional information appears
43 at the end of the form;

45 (v) A notification in the form of paragraph
46 (iii) is sufficient, even if it includes errors in
47 information not required by paragraph (i), unless the error

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1 is misleading with respect to rights arising under this
2 article;

4 (vi) If a notification under this section is not
5 in the form of paragraph (iii), law other than this article
6 determines the effect of including information not required
7 by paragraph (i).

9 34.1-9-615. Application of proceeds of disposition;
10 liability for deficiency and right to surplus.

12 (a) A secured party shall apply or pay over for
13 application the cash proceeds of disposition under W.S.
14 34.1-9-610 in the following order to:

16 (i) The reasonable expenses of retaking,
17 holding, preparing for disposition, processing and
18 disposing, and, to the extent provided for by agreement and
19 not prohibited by law, reasonable attorney's fees and legal
20 expenses incurred by the secured party;

22 (ii) The satisfaction of obligations secured by
23 the security interest or agricultural lien under which the
24 disposition is made;

26 (iii) The satisfaction of obligations secured by
27 any subordinate security interest in or other subordinate
28 lien on the collateral if:

30 (A) The secured party receives from the
31 holder of the subordinate security interest or other lien
32 an authenticated demand for proceeds before distribution of
33 the proceeds is completed; and

35 (B) In a case in which a consignor has an
36 interest in the collateral, the subordinate security
37 interest or other lien is senior to the interest of the
38 consignor; and

40 (iv) A secured party that is a consignor of the
41 collateral if the secured party receives from the consignor
42 an authenticated demand for proceeds before distribution of
43 the proceeds is completed.

45 (b) If requested by a secured party, a holder of a
46 subordinate security interest or other lien shall furnish
47 reasonable proof of the interest or lien within a

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1 reasonable time. Unless the holder does so, the secured
2 party need not comply with the holder's demand under
3 paragraph (a)(iii).

5 (c) A secured party need not apply or pay over for
6 application noncash proceeds of disposition under W.S.
7 34.1-9-610 unless the failure to do so would be
8 commercially unreasonable. A secured party that applies or
9 pays over for application noncash proceeds shall do so in a
10 commercially reasonable manner.

12 (d) If the security interest under which a
13 disposition is made secures payment or performance of an
14 obligation, after making the payments and applications
15 required by subsection (a) and permitted by subsection (c):

17 (i) Unless paragraph (a)(iv) requires the
18 secured party to apply or pay over cash proceeds to a
19 consignor, the secured party shall account to and pay a
20 debtor for any surplus; and

22 (ii) The obligor is liable for any deficiency.

24 (e) If the underlying transaction is a sale of
25 accounts, chattel paper, payment intangibles or promissory
26 notes:

28 (i) The debtor is not entitled to any surplus;
29 and

31 (ii) The obligor is not liable for any
32 deficiency.

34 (f) The surplus or deficiency following a disposition
35 is calculated based on the amount of proceeds that would
36 have been realized in a disposition complying with this
37 part to a transferee other than the secured party, a person
38 related to the secured party or a secondary obligor if:

40 (i) The transferee in the disposition is the
41 secured party, a person related to the secured party or a
42 secondary obligor; and

44 (ii) The amount of proceeds of the disposition
45 is significantly below the range of proceeds that a
46 complying disposition to a person other than the secured

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1 party, a person related to the secured party, or a
2 secondary obligor would have brought.

4 (g) A secured party that receives cash proceeds of a
5 disposition in good faith and without knowledge that the
6 receipt violates the rights of the holder of a security
7 interest or other lien that is not subordinate to the
8 security interest or agricultural lien under which the
9 disposition is made:

11 (i) Takes the cash proceeds free of the security
12 interest or other lien;

14 (ii) Is not obligated to apply the proceeds of
15 the disposition to the satisfaction of obligations secured
16 by the security interest or other lien; and

18 (iii) Is not obligated to account to or pay the
19 holder of the security interest or other lien for any
20 surplus.

22 34.1-9-616. Explanation of calculation of surplus or
23 deficiency.

25 (a) In this section:

27 (i) "Explanation" means a writing that:

29 (A) States the amount of the surplus or
30 deficiency;

32 (B) Provides an explanation in accordance
33 with subsection (c) of how the secured party calculated the
34 surplus or deficiency;

36 (C) States, if applicable, that future
37 debits, credits, charges, including additional credit
38 service charges or interest, rebates and expenses may
39 affect the amount of the surplus or deficiency; and

41 (D) Provides a telephone number or mailing
42 address from which additional information concerning the
43 transaction is available.

45 (ii) "Request" means a record:

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1 (A) Authenticated by a debtor or consumer
2 obligor;

4 (B) Requesting that the recipient provide
5 an explanation; and

7 (C) Sent after disposition of the
8 collateral under section 34.1-9-610.

10 (b) In a consumer-goods transaction in which the
11 debtor is entitled to a surplus or a consumer obligor is
12 liable for a deficiency under section 34.1-9-615, the
13 secured party shall:

15 (i) Send an explanation to the debtor or
16 consumer obligor, as applicable, after the disposition and:

18 (A) Before or when the secured party
19 accounts to the debtor and pays any surplus or first makes
20 written demand on the consumer obligor after the
21 disposition for payment of the deficiency; and

23 (B) Within fourteen (14) days after receipt
24 of a request; or

26 (ii) In the case of a consumer obligor who is
27 liable for a deficiency, within fourteen (14) days after
28 receipt of a request, send to the consumer obligor a record
29 waiving the secured party's right to a deficiency.

31 (c) To comply with subparagraph (a)(i)(B), a writing
32 must provide the following information in the following
33 order:

35 (i) The aggregate amount of obligations secured
36 by the security interest under which the disposition was
37 made, and, if the amount reflects a rebate of unearned
38 interest or credit service charge, an indication of that
39 fact, calculated as of a specified date:

41 (A) If the secured party takes or receives
42 possession of the collateral after default, not more than
43 thirty-five (35) days before the secured party takes or
44 receives possession; or

46 (B) If the secured party takes or receives
47 possession of the collateral before default or does not

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1 take possession of the collateral, not more than
2 thirty-five (35) days before the disposition.

4 (ii) The amount of proceeds of the disposition;

6 (iii) The aggregate amount of the obligations
7 after deducting the amount of proceeds;

9 (iv) The amount, in the aggregate or by type,
10 and types of expenses, including expenses of retaking,
11 holding, preparing for disposition, processing and
12 disposing of the collateral, and attorney's fees secured by
13 the collateral which are known to the secured party and
14 relate to the current disposition;

16 (v) The amount, in the aggregate or by type, and
17 types of credits, including rebates of interest or credit
18 service charges, to which the obligor is known to be
19 entitled and which are not reflected in the amount in
20 paragraph (i); and

22 (vi) The amount of the surplus or deficiency.

24 (d) A particular phrasing of the explanation is not
25 required. An explanation complying substantially with the
26 requirements of subsection (a) is sufficient, even if it
27 includes minor errors that are not seriously misleading.

29 (e) A debtor or consumer obligor is entitled without
30 charge to one (1) response to a request under this section
31 during any six (6) month period in which the secured party
32 did not send to the debtor or consumer obligor an
33 explanation pursuant to paragraph (b)(i). The secured party
34 may require payment of a charge not exceeding twenty-five
35 dollars ($25.00) for each additional response.

37 34.1-9-617. Rights of transferee of collateral.

39 (a) A secured party's disposition of collateral after
40 default:

42 (i) Transfers to a transferee for value all of
43 the debtor's rights in the collateral;

45 (ii) Discharges the security interest under
46 which the disposition is made; and

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1 (iii) Discharges any subordinate security
2 interest or other subordinate lien.

4 (b) A transferee that acts in good faith takes free
5 of the rights and interests described in subsection (a),
6 even if the secured party fails to comply with this article
7 or the requirements of any judicial proceeding.

9 (c) If a transferee does not take free of the rights
10 and interests described in subsection (a), the transferee
11 takes the collateral subject to:

13 (i) The debtor's rights in the collateral;

15 (ii) The security interest or agricultural lien
16 under which the disposition is made; and

18 (iii) Any other security interest or other lien.

20 34.1-9-618. Rights and duties of certain secondary
21 obligors.

23 (a) A secondary obligor acquires the rights and
24 becomes obligated to perform the duties of the secured
25 party after the secondary obligor:

27 (i) Receives an assignment of a secured
28 obligation from the secured party;

30 (ii) Receives a transfer of collateral from the
31 secured party and agrees to accept the rights and assume
32 the duties of the secured party; or

34 (iii) Is subrogated to the rights of a secured
35 party with respect to collateral.

37 (b) An assignment, transfer or subrogation described
38 in subsection (a):

40 (i) Is not a disposition of collateral under
41 section 34.1-9-610; and

43 (ii) Relieves the secured party of further
44 duties under this article.

46 34.1-9-619. Transfer of record or legal title.

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1 (a) In this section, "transfer statement" means a
2 record authenticated by a secured party stating:

4 (i) That the debtor has defaulted in connection
5 with an obligation secured by specified collateral;

7 (ii) That the secured party has exercised its
8 post-default remedies with respect to the collateral;

10 (iii) That, by reason of the exercise, a
11 transferee has acquired the rights of the debtor in the
12 collateral; and

14 (iv) The name and mailing address of the secured
15 party, debtor and transferee.

17 (b) A transfer statement entitles the transferee to
18 the transfer of record of all rights of the debtor in the
19 collateral specified in the statement in any official
20 filing, recording, registration or certificate-of-title
21 system covering the collateral. If a transfer statement is
22 presented with the applicable fee and request form to the
23 official or office responsible for maintaining the system,
24 the official or office shall:

26 (i) Accept the transfer statement;

28 (ii) Promptly amend its records to reflect the
29 transfer; and

31 (iii) If applicable, issue a new appropriate
32 certificate of title in the name of the transferee.

34 (c) A transfer of the record or legal title to
35 collateral to a secured party under subsection (b) or
36 otherwise is not of itself a disposition of collateral
37 under this article and does not of itself relieve the
38 secured party of its duties under this article.

40 34.1-9-620. Acceptance of collateral in full or
41 partial satisfaction of obligation; compulsory disposition
42 of collateral.

44 (a) Except as otherwise provided in subsection (g), a
45 secured party may accept collateral in full or partial
46 satisfaction of the obligation it secures only if:

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1 (i) The debtor consents to the acceptance under
2 subsection (c);

4 (ii) The secured party does not receive, within
5 the time set forth in subsection (d), a notification of
6 objection to the proposal authenticated by:

8 (A) A person to which the secured party was
9 required to send a proposal under section 34.1-9-621; or

11 (B) Any other person, other than the
12 debtor, holding an interest in the collateral subordinate
13 to the security interest that is the subject of the
14 proposal.

16 (iii) If the collateral is consumer goods, the
17 collateral is not in the possession of the debtor when the
18 debtor consents to the acceptance; and

20 (iv) Subsection (e) does not require the secured
21 party to dispose of the collateral or the debtor waives the
22 requirement pursuant to section 34.1-9-624.

24 (b) A purported or apparent acceptance of collateral
25 under this section is ineffective unless:

27 (i) The secured party consents to the acceptance
28 in an authenticated record or sends a proposal to the
29 debtor; and

31 (ii) The conditions of subsection (a) are met.

33 (c) For purposes of this section:

35 (i) A debtor consents to an acceptance of
36 collateral in partial satisfaction of the obligation it
37 secures only if the debtor agrees to the terms of the
38 acceptance in a record authenticated after default; and

40 (ii) A debtor consents to an acceptance of
41 collateral in full satisfaction of the obligation it
42 secures only if the debtor agrees to the terms of the
43 acceptance in a record authenticated after default or the
44 secured party:

46 (A) Sends to the debtor after default a
47 proposal that is unconditional or subject only to a

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1 condition that collateral not in the possession of the
2 secured party be preserved or maintained;

4 (B) In the proposal, proposes to accept
5 collateral in full satisfaction of the obligation it
6 secures; and

8 (C) Does not receive a notification of
9 objection authenticated by the debtor within twenty (20)
10 days after the proposal is sent.

12 (d) To be effective under paragraph (a)(ii), a
13 notification of objection must be received by the secured
14 party:

16 (i) In the case of a person to which the
17 proposal was sent pursuant to section 34.1-9-621, within
18 twenty (20) days after notification was sent to that
19 person; and

21 (ii) In other cases:

23 (A) Within twenty (20) days after the last
24 notification was sent pursuant to section 34.1-9-621; or

26 (B) If a notification was not sent, before
27 the debtor consents to the acceptance under subsection (c).

29 (e) A secured party that has taken possession of
30 collateral shall dispose of the collateral pursuant to
31 section 34.1-9-610 within the time specified in subsection
32 (f) if:

34 (i) Sixty percent (60%) of the cash price has
35 been paid in the case of a purchase-money security interest
36 in consumer goods; or

38 (ii) Sixty percent (60%) of the principal amount
39 of the obligation secured has been paid in the case of a
40 nonpurchase-money security interest in consumer goods.

42 (f) To comply with subsection (e), the secured party
43 shall dispose of the collateral:

45 (i) Within ninety (90) days after taking
46 possession; or

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1 (ii) Within any longer period to which the
2 debtor and all secondary obligors have agreed in an
3 agreement to that effect entered into and authenticated
4 after default.

6 (g) In a consumer transaction, a secured party may
7 not accept collateral in partial satisfaction of the
8 obligation it secures.

10 34.1-9-621. Notification of proposal to accept
11 collateral.

13 (a) A secured party that desires to accept collateral
14 in full or partial satisfaction of the obligation it
15 secures shall send its proposal to:

17 (i) Any person from which the secured party has
18 received, before the debtor consented to the acceptance, an
19 authenticated notification of a claim of an interest in the
20 collateral;

22 (ii) Any other secured party or lienholder that,
23 ten (10) days before the debtor consented to the
24 acceptance, held a security interest in or other lien on
25 the collateral perfected by the filing of a financing
26 statement that:

28 (A) Identified the collateral;

30 (B) Was indexed under the debtor's name as
31 of that date; and

33 (C) Was filed in the office or offices in
34 which to file a financing statement against the debtor
35 covering the collateral as of that date; and

37 (iii) Any other secured party that, ten (10)
38 days before the debtor consented to the acceptance, held a
39 security interest in the collateral perfected by compliance
40 with a statute, regulation or treaty described in section
41 34.1-9-311(a).

43 (b) A secured party that desires to accept collateral
44 in partial satisfaction of the obligation it secures shall
45 send its proposal to any secondary obligor in addition to
46 the persons described in subsection (a).

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1 34.1-9-622. Effect of acceptance of collateral.

3 (a) A secured party's acceptance of collateral in
4 full or partial satisfaction of the obligation it secures:

6 (i) Discharges the obligation to the extent
7 consented to by the debtor;

9 (ii) Transfers to the secured party all of a
10 debtor's rights in the collateral;

12 (iii) Discharges the security interest or
13 agricultural lien that is the subject of the debtor's
14 consent and any subordinate security interest or other
15 subordinate lien; and

17 (iv) Terminates any other subordinate interest.

19 (b) A subordinate interest is discharged or
20 terminated under subsection (a), even if the secured party
21 fails to comply with this article.

23 34.1-9-623. Right to redeem collateral.

25 (a) A debtor, any secondary obligor or any other
26 secured party or lienholder may redeem collateral.

28 (b) To redeem collateral, a person shall tender:

30 (i) Fulfillment of all obligations secured by
31 the collateral; and

33 (ii) The reasonable expenses and attorney's fees
34 described in section 34.1-9-615(a)(i).

36 (c) A redemption may occur at any time before a
37 secured party:

39 (i) Has collected collateral under section
40 34.1-9-607;

42 (ii) Has disposed of collateral or entered into
43 a contract for its disposition under section 34.1-9-610; or

45 (iii) Has accepted collateral in full or partial
46 satisfaction of the obligation it secures under section
47 34.1-9-622.

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2 34.1-9-624. Waiver.

4 (a) A debtor or secondary obligor may waive the right
5 to notification of disposition of collateral under section
6 34.1-9-611 only by an agreement to that effect entered into
7 and authenticated after default.

9 (b) A debtor may waive the right to require
10 disposition of collateral under section 34.1-9-620(e) only
11 by an agreement to that effect entered into and
12 authenticated after default.

14 (c) Except in a consumer-goods transaction, a debtor
15 or secondary obligor may waive the right to redeem
16 collateral under section 34.1-9-623 only by an agreement to
17 that effect entered into and authenticated after default.

19 SUBPART 2

20 NONCOMPLIANCE WITH ARTICLE

22 34.1-9-625. Remedies for secured party's failure to
23 comply with article.

25 (a) If it is established that a secured party is not
26 proceeding in accordance with this article, a court may
27 order or restrain collection, enforcement or disposition of
28 collateral on appropriate terms and conditions.

30 (b) Subject to subsections (c), (d) and (f), a person
31 is liable for damages in the amount of any loss caused by a
32 failure to comply with this article. Loss caused by a
33 failure to comply may include loss resulting from the
34 debtor's inability to obtain, or increased costs of,
35 alternative financing.

37 (c) Except as otherwise provided in section
38 34.1-9-628:

40 (i) A person that, at the time of the failure,
41 was a debtor, was an obligor, or held a security interest
42 in or other lien on the collateral may recover damages
43 under subsection (b) for its loss; and

45 (ii) If the collateral is consumer goods, a
46 person that was a debtor or a secondary obligor at the time
47 a secured party failed to comply with this part may recover

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1 for that failure in any event an amount not less than the
2 credit service charge plus ten percent (10%) of the
3 principal amount of the obligation or the time-price
4 differential plus ten percent (10%) of the cash price.

6 (d) A debtor whose deficiency is eliminated under
7 section 34.1-9-626 may recover damages for the loss of any
8 surplus. However, a debtor or secondary obligor whose
9 deficiency is eliminated or reduced under section
10 34.1-9-626 may not otherwise recover under subsection (b)
11 for noncompliance with the provisions of this part relating
12 to collection, enforcement, disposition or acceptance.

14 (e) In addition to any damages recoverable under
15 subsection (b), the debtor, consumer obligor or person
16 named as a debtor in a filed record, as applicable, may
17 recover five hundred dollars ($500.00) in each case from a
18 person that:

20 (i) Fails to comply with section 34.1-9-208;

22 (ii) Fails to comply with section 34.1-9-209;

24 (iii) Files a record that the person is not
25 entitled to file under section 34.1-9-509(a);

27 (iv) Fails to cause the secured party of record
28 to file or send a termination statement as required by
29 section 34.1-9-513(a) or (c);

31 (v) Fails to comply with section
32 34.1-9-616(b)(i) and whose failure is part of a pattern, or
33 consistent with a practice, of noncompliance; or

35 (vi) Fails to comply with section
36 34.1-9-616(b)(ii).

38 (f) A debtor or consumer obligor may recover damages
39 under subsection (b) and, in addition, five hundred dollars
40 ($500.00) in each case from a person that, without
41 reasonable cause, fails to comply with a request under
42 section 34.1-9-210. A recipient of a request under section
43 34.1-9-210 which never claimed an interest in the
44 collateral or obligations that are the subject of a request
45 under that section has a reasonable excuse for failure to
46 comply with the request within the meaning of this
47 subsection.

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2 (g) If a secured party fails to comply with a request
3 regarding a list of collateral or a statement of account
4 under section 34.1-9-210, the secured party may claim a
5 security interest only as shown in the list or statement
6 included in the request as against a person that is
7 reasonably misled by the failure.

9 34.1-9-626. Action in which deficiency or surplus is
10 in issue.

12 (a) In an action arising from a transaction, other
13 than a consumer transaction, in which the amount of a
14 deficiency or surplus is in issue, the following rules
15 apply:

17 (i) A secured party need not prove compliance
18 with the provisions of this part relating to collection,
19 enforcement, disposition or acceptance unless the debtor or
20 a secondary obligor places the secured party's compliance
21 in issue;

23 (ii) If the secured party's compliance is placed
24 in issue, the secured party has the burden of establishing
25 that the collection, enforcement, disposition or acceptance
26 was conducted in accordance with this part;

28 (iii) Except as otherwise provided in section
29 34.1-9-628, if a secured party fails to prove that the
30 collection, enforcement, disposition or acceptance was
31 conducted in accordance with the provisions of this part
32 relating to collection, enforcement, disposition or
33 acceptance, the liability of a debtor or a secondary
34 obligor for a deficiency is limited to an amount by which
35 the sum of the secured obligation, expenses and attorney's
36 fees exceeds the greater of:

38 (A) The proceeds of the collection,
39 enforcement, disposition or acceptance; or

41 (B) The amount of proceeds that would have
42 been realized had the noncomplying secured party proceeded
43 in accordance with the provisions of this part relating to
44 collection, enforcement, disposition or acceptance.

46 (iv) For purposes of subparagraph (a)(iii)(B),
47 the amount of proceeds that would have been realized is

Page 144

1 equal to the sum of the secured obligation, expenses and
2 attorney's fees unless the secured party proves that the
3 amount is less than that sum;

5 (v) If a deficiency or surplus is calculated
6 under section 34.1-9-615(f), the debtor or obligor has the
7 burden of establishing that the amount of proceeds of the
8 disposition is significantly below the range of prices that
9 a complying disposition to a person other than the secured
10 party, a person related to the secured party or a secondary
11 obligor would have brought.

13 (b) The limitation of the rules in subsection (a) to
14 transactions other than consumer transactions is intended
15 to leave to the court the determination of the proper rules
16 in consumer transactions. The court may not infer from that
17 limitation the nature of the proper rule in consumer
18 transactions and may continue to apply established
19 approaches.

21 34.1-9-627. Determination of whether conduct was
22 commercially reasonable.

24 (a) The fact that a greater amount could have been
25 obtained by a collection, enforcement, disposition or
26 acceptance at a different time or in a different method
27 from that selected by the secured party is not of itself
28 sufficient to preclude the secured party from establishing
29 that the collection, enforcement, disposition or acceptance
30 was made in a commercially reasonable manner.

32 (b) A disposition of collateral is made in a
33 commercially reasonable manner if the disposition is made:

35 (i) In the usual manner on any recognized
36 market;

38 (ii) At the price current in any recognized
39 market at the time of the disposition; or

41 (iii) Otherwise in conformity with reasonable
42 commercial practices among dealers in the type of property
43 that was the subject of the disposition.

45 (c) A collection, enforcement, disposition or
46 acceptance is commercially reasonable if it has been
47 approved:

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2 (i) In a judicial proceeding;

4 (ii) By a bona fide creditors' committee;

6 (iii) By a representative of creditors; or

8 (iv) By an assignee for the benefit of
9 creditors.

11 (d) Approval under subsection (c) need not be
12 obtained, and lack of approval does not mean that the
13 collection, enforcement, disposition or acceptance is not
14 commercially reasonable.

16 34.1-9-628. Nonliability and limitation on liability
17 of secured party; liability of secondary obligor.

19 (a) Unless a secured party knows that a person is a
20 debtor or obligor, knows the identity of the person, and
21 knows how to communicate with the person:

23 (i) The secured party is not liable to the
24 person, or to a secured party or lienholder that has filed
25 a financing statement against the person, for failure to
26 comply with this article; and

28 (ii) The secured party's failure to comply with
29 this article does not affect the liability of the person
30 for a deficiency.

32 (b) A secured party is not liable because of its
33 status as secured party:

35 (i) To a person that is a debtor or obligor,
36 unless the secured party knows:

38 (A) That the person is a debtor or obligor;

40 (B) The identity of the person; and

42 (C) How to communicate with the person; or

44 (ii) To a secured party or lienholder that has
45 filed a financing statement against a person, unless the
46 secured party knows:

Page 146

1 (A) That the person is a debtor; and

3 (B) The identity of the person.

5 (c) A secured party is not liable to any person, and
6 a person's liability for a deficiency is not affected,
7 because of any act or omission arising out of the secured
8 party's reasonable belief that a transaction is not a
9 consumer-goods transaction or a consumer transaction or
10 that goods are not consumer goods, if the secured party's
11 belief is based on its reasonable reliance on:

13 (i) A debtor's representation concerning the
14 purpose for which collateral was to be used, acquired or
15 held; or

17 (ii) An obligor's representation concerning the
18 purpose for which a secured obligation was incurred.

20 (d) A secured party is not liable to any person under
21 section 34.1-9-625(c)(ii) for its failure to comply with
22 section 34.1-9-616.

24 (e) A secured party is not liable under section
25 34.1-9-625(c)(ii) more than once with respect to any one
26 (1) secured obligation.

28 PART 7

29 TRANSITION

31 34.1-9-701. Effective date.

33 This act takes effect on July 1, 2001. References in this
34 part to "this Act" refer to the legislative enactment by
35 which this part is added to article 9 of title 34.
36 References in this part to "former article 9" are to
37 article of title 34 as in effect immediately before this
38 act takes effect.

40 34.1-9-702. Savings clause.

42 (a) Except as otherwise provided in this part, this
43 act applies to a transaction or lien within its scope, even
44 if the transaction or lien was entered into or created
45 before this act takes effect.

Page 147

1 (b) Except as otherwise provided in subsection (c)
2 and sections 34.1-9-703 through 34.1-9-709:

4 (i) Transactions and liens that were not
5 governed by former article 9, were validly entered into or
6 created before this act takes effect, and would be subject
7 to this act if they had been entered into or created after
8 this act takes effect, and the rights, duties and interests
9 flowing from those transactions and liens remain valid
10 after this act takes effect; and

12 (ii) The transactions and liens may be
13 terminated, completed, consummated and enforced as required
14 or permitted by this act or by the law that otherwise would
15 apply if this act had not taken effect.

17 (c) This act does not affect an action, case or
18 proceeding commenced before this act takes effect.

20 34.1-9-703. Security interest perfected before
21 effective date.

23 (a) A security interest that is enforceable
24 immediately before this act takes effect and would have
25 priority over the rights of a person that becomes a lien
26 creditor at that time is a perfected security interest
27 under this act if, when this act takes effect, the
28 applicable requirements for enforceability and perfection
29 under this act are satisfied without further action.

31 (b) Except as otherwise provided in section
32 34.1-9-705, if, immediately before this act takes effect, a
33 security interest is enforceable and would have priority
34 over the rights of a person that becomes a lien creditor at
35 that time, but the applicable requirements for
36 enforceability or perfection under this act are not
37 satisfied when this act takes effect, the security
38 interest:

40 (i) Is a perfected security interest for one (1)
41 year after this act takes effect;

43 (ii) Remains enforceable thereafter only if the
44 security interest becomes enforceable under section
45 34.1-9-203 before the year expires; and

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1 (iii) Remains perfected thereafter only if the
2 applicable requirements for perfection under this act are
3 satisfied before the year expires.

5 34.1-9-704. Security interest unperfected before
6 effective date.

8 (a) A security interest that is enforceable
9 immediately before this act takes effect but which would be
10 subordinate to the rights of a person that becomes a lien
11 creditor at that time:

13 (i) Remains an enforceable security interest for
14 one (1) year after this act takes effect;

16 (ii) Remains enforceable thereafter if the
17 security interest becomes enforceable under section
18 34.1-9-203 when this act takes effect or within one (1)
19 year thereafter; and

21 (iii) Becomes perfected:

23 (A) Without further action, when this act
24 takes effect if the applicable requirements for perfection
25 under this act are satisfied before or at that time; or

27 (B) When the applicable requirements for
28 perfection are satisfied if the requirements are satisfied
29 after that time.

31 34.1-9-705. Effectiveness of action taken before
32 effective date.

34 (a) If action, other than the filing of a financing
35 statement, is taken before this act takes effect and the
36 action would have resulted in priority of a security
37 interest over the rights of a person that becomes a lien
38 creditor had the security interest become enforceable
39 before this act takes effect, the action is effective to
40 perfect a security interest that attaches under this act
41 within one (1) year after this act takes effect. An
42 attached security interest becomes unperfected one (1) year
43 after this act takes effect unless the security interest
44 becomes a perfected security interest under this act before
45 the expiration of that period.

Page 149

1 (b) The filing of a financing statement before this
2 act takes effect is effective to perfect a security
3 interest to the extent the filing would satisfy the
4 applicable requirements for perfection under this act.

6 (c) This act does not render ineffective an effective
7 financing statement that, before this act takes effect, is
8 filed and satisfies the applicable requirements for
9 perfection under the law of the jurisdiction governing
10 perfection as provided in former section 34.1-9-103.
11 However, except as otherwise provided in subsections (d)
12 and (e) and section 34.1-9-706, the financing statement
13 ceases to be effective at the earlier of:

15 (i) The time the financing statement would have
16 ceased to be effective under the law of the jurisdiction in
17 which it is filed; or

19 (ii) June 30, 2006.

21 (d) The filing of a continuation statement after this
22 act takes effect does not continue the effectiveness of the
23 financing statement filed before this act takes effect.
24 However, upon the timely filing of a continuation statement
25 after this act takes effect and in accordance with the law
26 of the jurisdiction governing perfection as provided in
27 Part 3, the effectiveness of a financing statement filed in
28 the same office in that jurisdiction before this act takes
29 effect continues for the period provided by the law of that
30 jurisdiction.

32 (e) Paragraph (c)(ii) applies to a financing
33 statement that, before this act takes effect, is filed
34 against a transmitting utility and satisfies the applicable
35 requirements for perfection under the law of the
36 jurisdiction governing perfection as provided in former
37 section 34.1-9-103 only to the extent that Part 3 provides
38 that the law of a jurisdiction other than jurisdiction in
39 which the financing statement is filed governs perfection
40 of a security interest in collateral covered by the
41 financing statement.

43 (f) A financing statement that includes a financing
44 statement filed before this act takes effect and a
45 continuation statement filed after this act takes effect is
46 effective only to the extent that it satisfies the
47 requirements of Part 5 for an initial financing statement.

Page 150

2 34.1-9-706. When initial financing statement suffices
3 to continue effectiveness of financing statement.

5 (a) The filing of an initial financing statement in
6 the office specified in section 34.1-9-501 continues the
7 effectiveness of a financing statement filed before this
8 act takes effect if:

10 (i) The filing of an initial financing statement
11 in that office would be effective to perfect a security
12 interest under this act;

14 (ii) The preeffective date financing statement
15 was filed in an office in another state or another office
16 in this state; and

18 (iii) The initial financing statement satisfies
19 subsection (c).

21 (b) The filing of an initial financing statement
22 under subsection (a) continues the effectiveness of the
23 prefecture date financing statement:

25 (i) If the initial financing statement is filed
26 before this act takes effect, for the period provided in
27 former section 34.1-9-403 with respect to a financing
28 statement; and

30 (ii) If the initial financing statement is filed
31 after this act takes effect, for the period provided in
32 section 34.1-9-515 with respect to an initial financing
33 statement.

35 (c) To be effective for purposes of subsection (a),
36 an initial financing statement must:

38 (i) Satisfy the requirements of Part 5 for an
39 initial financing statement;

41 (ii) Identify the preeffective date financing
42 statement by indicating the office in which the financing
43 statement was filed and providing the dates of filing and
44 file numbers, if any, of the financing statement and of the
45 most recent continuation statement filed with respect to
46 the financing statement; and

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1 (iii) Indicate that the preeffective date
2 financing statement remains effective.

4 34.1-9-707. Amendment of preeffective date financing
5 statement.

7 (a) In this section, "pre-effective-date financing
8 statement" means a financing statement filed before this
9 act takes effect.

11 (b) After this act takes effect, a person may add or
12 delete collateral covered by, continue or terminate the
13 effectiveness of, or otherwise amend the information
14 provided in, a preeffective date financing statement only
15 in accordance with the law of the jurisdiction governing
16 perfection as provided in part 3. However, the
17 effectiveness of a preeffective date financing statement
18 also may be terminated in accordance with the law of the
19 jurisdiction in which the financing statement is filed.

21 (c) Except as otherwise provided in subsection (d) of
22 this section, if the law of this state governs perfection
23 of a security interest, the information in a preeffective
24 date financing statement may be amended after this act
25 takes effect only if:

27 (i) The preeffective date financing statement
28 and an amendment are filed in the office specified in
29 section 34.1-9-501;

31 (ii) An amendment is filed in the office
32 specified in section 34.1-9-501 concurrently with, or after
33 the filing in that office of, an initial financing
34 statement that satisfies section 34.1-9-706(c); or

36 (iii) An initial financing statement that
37 provides the information as amended and satisfies section
38 34.1-9-706(c) is filed in the office specified in section
39 23.1-9-501.

41 (d) If the law of this state governs perfection of a
42 security interest, the effectiveness of a preeffective date
43 financing statement may be continued only under section
44 34.1-9-705(d) and (f) or 34.1-9-706.

46 (e) Whether or not the law of this state governs
47 perfection of a security interest, the effectiveness of a

Page 152

1 preeffective date financing statement filed in this state
2 may be terminated after this act takes effect by filing a
3 termination statement in the office in which the
4 preeffective date financing statement is filed, unless an
5 initial financing statement that satisfies section
6 34.1-9-706(c) has been filed in the office specified by the
7 law of the jurisdiction governing perfection as provided in
8 part 3 as the office in which to file a financing
9 statement.

11 34.1-9-708. Persons entitled to file initial
12 financing statement or continuation statement.

14 (a) A person may file an initial financing statement
15 or a continuation statement under this part if:

17 (i) The secured party of record authorizes the
18 filing; and

20 (ii) The filing is necessary under this part:

22 (A) To continue the effectiveness of a
23 financing statement filed before this act takes effect; or

25 (B) To perfect or continue the perfection
26 of a security interest.

28 34.1-9-709. Priority.

30 (a) This act determines the priority of conflicting
31 claims to collateral. However, if the relative priorities
32 of the claims were established before this act takes
33 effect, former article 9 determines priority.

35 (b) For purposes of section 34.1-9-322(a), the
36 priority of a security interest that becomes enforceable
37 under section 34.1-9-203 of this act dates from the time
38 this act takes effect if the security interest is perfected
39 under this act by the filing of a financing statement
40 before this act takes effect which would not have been
41 effective to perfect the security interest under former
42 article 9. This subsection does not apply to conflicting
43 security interests each of which is perfected by the filing
44 of such a financing statement.

46 Section 2. W.S. 31-2-701 and 34.1-5-118 are created
47 to read:

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2 ARTICLE 7

3 MOTOR VEHICLE SECURITY INTERESTS

5 31-2-701. Perfection of a security interest in a
6 vehicle or motor vehicle.

8 (a) Two (2) steps are required for perfection of a
9 security interest in a vehicle or motor vehicle required to
10 be licensed as hereinafter defined:

12 (i) A financing statement or security agreement
13 must be filed in the office of the county clerk of the
14 county in which the vehicle is located; and

16 (ii) A notation of the security interest must be
17 endorsed on the certificate of title to the vehicle or
18 motor vehicle, the endorsement to be made concurrently with
19 the filing of the financing statement or security
20 agreement.

22 (b) Each owner of a vehicle or motor vehicle
23 concerning which an original or substitute certificate of
24 title has been issued who encumbers the title thereto,
25 shall deliver the certificate to the holder of the security
26 interest who, within five (5) days thereafter, shall
27 deliver the certificate to the clerk of the county in which
28 the vehicle is located, and the clerk shall then endorse on
29 the face of the certificate appropriate notation showing
30 the date and amount of the security interest, and the name
31 of the secured party. If such clerk issued the certificate,
32 he shall immediately endorse the same security interest
33 data on the certificate copy on file in his office. If the
34 certificate was issued in some other county or state, he
35 shall promptly transmit to the state or county officer who
36 issued the certificate the same security interest data and
37 such other officer shall promptly endorse same on the
38 certificate copy on file in his office. Every financing
39 statement or security agreement when filed pursuant to the
40 provisions of this subsection shall take effect and be in
41 force from and after the time of filing and not before, as
42 to all creditors, subsequent purchasers, and holders of a
43 security interest in good faith for valuable consideration
44 and without notice.

46 (c) When a termination statement has been filed
47 pursuant to W.S. 34.1-9-404, the owner of the motor vehicle

Page 154

1 shall present the certificate of title to the county clerk
2 in whose office the financing statement has been filed, and
3 the county clerk shall endorse a statement of the
4 termination of the security interest on the face of the
5 certificate. If the clerk issued the certificate of title,
6 he shall endorse a like statement of termination of the
7 security interest on the certificate copy on file in his
8 office, but otherwise he shall promptly transmit to the
9 state or county officer who issued the certificate of title
10 the statement of termination for endorsement on the
11 certificate copy on file in his office.

13 (d) The term "vehicle or motor vehicle required to be
14 licensed" and the words "vehicle" and "motor vehicle" as
15 used in this section means and includes all vehicles, motor
16 vehicles, house trailers, trailers, semitrailers, motor
17 coaches, trailer coaches, trucks, motorcycles and mobile
18 homes required by the motor vehicle laws of the state of
19 Wyoming to have a certificate of title or required to be
20 registered or licensed under the laws of this state and
21 includes off-road recreational vehicles for which a
22 certificate of title has been issued under the laws of this
23 state.

25 (e) Any security interest in a mobile home required
26 to have a certificate of title under W.S. 31-2-501 through
27 31-2-508 which was perfected prior to July 1, 1985, is not
28 invalid or ineffective solely because a notation of the
29 security interest is not endorsed on the certificate of
30 title.

32 34.1-5-118. Security interest of issuer or nominated
33 person.

35 (a) An issuer or nominated person has a security
36 interest in a document presented under a letter of credit
37 to the extent that the issuer or nominated person honors or
38 gives value for the presentation.

40 (b) So long as and to the extent that an issuer or
41 nominated person has not been reimbursed or has not
42 otherwise recovered the value given with respect to a
43 security interest in a document under subsection (a) of
44 this section, the security interest continues and is
45 subject to article 9, but:

Page 155

1 (i) A security agreement is not necessary to
2 make the security interest enforceable under W.S.
3 34.1-9-203(b)(iii);

5 (ii) If the document is presented in a medium
6 other than a written or other tangible medium, the security
7 interest is perfected; and

9 (iii) If the document is presented in a written
10 or other tangible medium and is not a certificated
11 security, chattel paper, a document of title, an instrument
12 or a letter of credit, the security interest is perfected
13 and has priority over a conflicting security interest in
14 the document so long as the debtor does not have possession
15 of the document.

17 Section 3. W.S. 34-21-1107, 34.1-1-105(b)(vi) and by
18 creating a new paragraph (ix), 34.1-1-201(a)(ix), (xxxii)
19 and (xxxvii)(intro), 34.1-2-103(c), 34.1-2-210(b), by
20 creating a new subsection (c) and by renumbering (c)
21 through (e) as (d) through (f), 34.1-2-326(b),
22 34.1-2-502(a), by creating a new subsection (b) and by
23 renumbering (b) as (c), 34.1-2-716(c), 34.1-2.A-103(c),
24 34.1-2.A-303(a), (b), (d) and (e)(intro),
25 34.1-2.A-307(b)(intro) and by creating a new subsection
26 (e), 34.1-2.A-309(a)(ii), 34.1-4-210(c)(i),
27 34.1-7-503(a)(i), 34.1-8-103(f), 34.1-8-106(d)(i), (ii), by
28 creating a new paragraph (iii) and (f), 34.1-8-110(e),
29 34.1-8-301(a)(iii), 34.1-8-302(a), 34.1-8-510(a), (c) and
30 by creating a new subsection (d) and 37-4-103 are amended
31 to read:

33 34-21-1107. Fees.

35 (a) The secretary of state shall, ~~collect the~~
36 ~~following fees:~~ while determining appropriate fees under
37 W.S. 34.1-9-525 for original financing statements,
38 determine appropriate fees for effective financing
39 statement filings, statements of amendments, continuation,
40 assignment and release and for statements of termination by
41 rules. The rules must be adopted in accordance with the
42 Wyoming Administrative Procedure Act.

44 ~~(i)~~ ~~For filing and indexing an original~~
45 ~~financing statement containing farm products as collateral~~
46 ~~or an original effective financing statement or reproduced~~
47 ~~copy thereof or both a financing statement and an effective~~

Page 156

1 ~~financing statement, if filed together on the same debtor~~
2 ~~using the same standard form........................$~~ ~~15.00~~

4 ~~(ii)~~ ~~For statements of amendments, continuation,~~
5 ~~assignment and release to an original financing statement~~
6 ~~which contained farm products as collateral or for~~
7 ~~statements of amendment and continuation to an original~~
8 ~~effective financing statement or for any one (1) of these~~
9 ~~statements made to both the financing statement and the~~
10 ~~effective financing statement of the same debtor's~~
11 ~~originally combined filing of a financing statement and~~
12 ~~effective financing statement, if filed together on the~~
13 ~~same standard form...................................$15.00~~

15 ~~(iii)~~ ~~For each additional listing of a farm~~
16 ~~product, a county or combination thereof in excess of the~~
17 ~~first ten (10) listed $~~ 2~~.00~~

19 ~~(iv)~~ ~~Penalty for presenting a standard statement~~
20 ~~form with attachments or presenting a nonstandard form $10.00~~

22 ~~(v)~~ ~~For each written confirmation to an oral or~~
23 ~~written name inquiry on the central filing system $~~ ~~5.00~~

25 ~~(vi)~~ ~~For annual registration under W.S.~~
26 ~~34-21-1102(a)(iv) $~~ ~~50.00~~

28 ~~(vii)~~ ~~For amending annual registration under~~
29 ~~W.S. 34-21-1102(a)(iv) $~~ ~~10.00~~

31 ~~(viii)~~ ~~(A)~~ ~~For either a statewide crop list by~~
32 ~~county or a statewide livestock list provided on~~
33 ~~microfiche, the annual fee is~~ ~~FREE~~

35 ~~(B)~~ ~~For both a statewide crop list by~~
36 ~~county and a statewide livestock list provided on~~
37 ~~microfiche, the annual fee is $~~ ~~50.00~~

39 ~~(ix)~~ ~~For either a statewide crop list or a~~
40 ~~statewide livestock list on paper, the annual fee is $100.00~~

42 ~~(x)~~ ~~For each farm product list which is~~
43 ~~requested less than statewide or less than all crop years~~
44 ~~an additional annual fee of $150.00~~

46 ~~(xi)~~ ~~For statements of termination to an~~
47 ~~original financing statement which contained farm products~~

Page 157

1 ~~as collateral, for statements of termination to an original~~
2 ~~effective financing statement or for any statements of~~
3 ~~termination made to both the financing statement and the~~
4 ~~effective financing statement of the same debtor's~~
5 ~~originally combined filing of a financing statement and~~
6 ~~effective financing statement, if filed together on the~~
7 ~~same standard form $~~ ~~5.00~~

9 34.1-1-105. Territorial application of the act;
10 parties' power to choose applicable law.

12 (b) Where one (1) of the following provisions of this
13 act specifies the applicable law, that provision governs
14 and a contrary agreement is effective only to the extent
15 permitted by the law (including the conflict of laws rules)
16 so specified:

18 (vi) Policy and scope of the article on secured
19 transactions. ~~Sections 34.1-9-102 and 34.1-9-103~~ Section
20 34.1-9-109;

22 (ix) Law governing perfection, the effect of
23 perfection or nonperfection, and the priority of security
24 interests and agricultural liens. Sections 34.1-9-301
25 through 34.1-9-307.

27 34.1-1-201. General definitions.

29 (a) Subject to additional definitions contained in
30 the subsequent articles of this act which are applicable
31 to specific articles or parts thereof, and unless the
32 context otherwise requires, in this act:

34 (ix) "Buyer in ordinary course of business"
35 means a person ~~who~~ that buys goods in good faith, ~~and~~
36 without knowledge that the sale ~~to him is in violation of~~
37 violates the ~~ownership~~ rights ~~or security interest~~ of a
38 ~~third party~~ another person in the goods, and ~~buys~~ in the
39 ordinary course from a person, other than a pawnbroker, in
40 the business of selling goods of that kind. ~~but does not~~
41 ~~include a pawnbroker. "Buying"~~ A person buys goods in the
42 ordinary course if the sale to the person comports with the
43 usual or customary practices in the kind of business in
44 which the seller is engaged or with the seller's own usual
45 or customary practices. A person that sells oil, gas or
46 other minerals at the wellhead or minehead is a person in
47 the business of selling goods of that kind. A buyer in

Page 158

1 ordinary course of business may be buy for cash, or by
2 exchange of other property, or on secured or unsecured
3 credit, and ~~includes receiving~~ may acquire goods or
4 documents of title under a preexisting contract for sale.
5 ~~but does not include a transfer in bulk or as security for~~
6 ~~or in total or partial satisfaction of a money debt~~ Only a
7 buyer that takes possession of the goods or has a right to
8 recover the goods from the seller under article 2 may be a
9 buyer in ordinary course of business. A person that
10 acquires goods in a transfer in bulk or as security for or
11 in total or partial satisfaction of a money debt is not a
12 buyer in ordinary course of business;

14 (xxxii) "Purchase" includes taking by sale,
15 discount, negotiation, mortgage, pledge, lien, security
16 interest, issue or reissue, gift or any other voluntary
17 transaction creating an interest in property;

19 (xxxvii) "Security interest" means an interest
20 in personal property or fixtures which secures payment or
21 performance of an obligation. ~~The retention or reservation~~
22 ~~of title by a seller of goods notwithstanding shipment or~~
23 ~~delivery to the buyer (section 34.1-2-401) is limited in~~
24 ~~effect to a reservation of a "security interest".~~ The term
25 also includes any interest of a consignor and a buyer of
26 accounts, or chattel paper ~~which~~ a payment intangible, or a
27 promissory note in a transaction that is subject to article
28 9. The special property interest of a buyer of goods on
29 identification of those goods to a contract for sale under
30 section 34.1-2-401 is not a "security interest", but a
31 buyer may also acquire a "security interest" by complying
32 with article 9. ~~Unless a consignment is intended as~~
33 ~~security, reservation of title thereunder is not a~~
34 ~~"security interest" but a consignment in any event is~~
35 ~~subject to the provisions on consignment sales (section~~
36 ~~34.1-2-326)~~ Except as otherwise provided in section
37 34.1-2-505, the right of a seller or lessor of goods under
38 article 2 or 2A to retain or acquire possession of the
39 goods is not a "security interest", but a seller or lessor
40 may also acquire a "security interest" by complying with
41 article 9. The retention or reservation of title by a
42 seller of goods notwithstanding shipment or delivery to the
43 buyer (section 34.1-2-401) is limited in effect to a
44 reservation of a "security interest".

46 34.1-2-103. Definitions and index of definitions.

Page 159

1 (c) The following definitions in other articles apply
2 to this article:

4 "Check". W.S. 34.1-3-104.

5 "Consignee". W.S. 34.1-7-102.

6 "Consignor". W.S. 34.1-7-102.

7 "Consumer goods". W.S. ~~34.1-9-109~~ 34.1-9-102.

8 "Dishonor". W.S. ~~34.1-3-507~~ 34.1-3-502.

9 "Draft". W.S. 34.1-3-104.

11 34.1-2-210. Delegation of performance; assignment of
12 rights.

14 (b) Except as otherwise provided in section
15 34.1-9-406, unless otherwise agreed, all rights of either
16 seller or buyer can be assigned except where the assignment
17 would materially change the duty of the other party, or
18 increase materially the burden or risk imposed on him by
19 his contract, or impair materially his chance of obtaining
20 return performance. A right to damages for breach of the
21 whole contract or a right arising out of the assignor's due
22 performance of his entire obligation can be assigned
23 despite agreement otherwise.

25 (c) The creation, attachment, perfection or
26 enforcement of a security interest in the seller's interest
27 under a contract is not a transfer that materially changes
28 the duty of or increases materially the burden or risk
29 imposed on the buyer or impairs materially the buyer's
30 chance of obtaining return performance within the purview
31 of subsection (b) unless, and then only to the extent that,
32 enforcement actually results in a delegation of material
33 performance of the seller. Even in that event, the
34 creation, attachment, perfection and enforcement of the
35 security interest remain effective, but (1) the seller is
36 liable to the buyer for damages caused by the delegation to
37 the extent that the damages could not reasonably be
38 prevented by the buyer, and (2) a court having jurisdiction
39 may grant other appropriate relief, including cancellation
40 of the contract for sale or an injunction against
41 enforcement of the security interest or consummation of the
42 enforcement.

44 ~~(c)~~(d) Unless the circumstances indicate the contrary
45 a prohibition of assignment of "the contract" is to be
46 construed as barring only the delegation to the assignee of
47 the assignor's performance.

Page 160

2 ~~(d)~~(e) An assignment of "the contract" or of "all my
3 rights under the contract" or an assignment in similar
4 general terms is an assignment of rights and unless the
5 language or the circumstances (as in an assignment for
6 security) indicate the contrary, it is a delegation of
7 performance of the duties of the assignor and its
8 acceptance by the assignee constitutes a promise by him to
9 perform those duties. This promise is enforceable by either
10 the assignor or the other party to the original contract.

12 ~~(e)~~(f) The other party may treat any assignment which
13 delegates performance as creating reasonable grounds for
14 insecurity and may without prejudice to his rights against
15 the assignor demand assurances from the assignee (section
16 34.1-2-609).

18 34.1-2-326. Sale on approval and sale or return;
19 consignment sales and rights of creditors.

21 (b) ~~Except as provided in subsection (c),~~ Goods held
22 on approval are not subject to the claims of the buyer's
23 creditors until acceptance, goods held on sale or return
24 are subject to such claims while in the buyer's possession.

26 34.1-2-502. Buyer's right to goods on seller's
27 repudiation, failure to deliver or insolvency.

29 (a) Subject to ~~subsection~~ subsections (b) and (c) and
30 even though the goods have not been shipped a buyer who has
31 paid a part or all of the price of goods in which he has a
32 special property under the provisions of the immediately
33 preceding section may on making and keeping good a tender
34 of any unpaid portion of their price recover them from the
35 seller if:

37 (i) In the case of goods bought for personal,
38 family or household purposes, the seller repudiates or
39 fails to deliver as required by the contract; or

41 (ii) In all cases, the seller becomes insolvent
42 within ten (10) days after receipt of the first installment
43 on their price.

45 (b) The buyer's right to recover the goods under
46 paragraph (a)(i) vests upon acquisition of a special

Page 161

1 property, even if the seller had not then repudiated or
2 failed to deliver.

4 ~~(b)~~(c) If the identification creating his special
5 property has been made by the buyer he acquires the right
6 to recover the goods only if they conform to the contract
7 for sale.

9 34.1-2-716. Buyer's right to specific performance or
10 replevin.

12 (c) The buyer has a right of replevin for goods
13 identified to the contract if after reasonable effort he is
14 unable to effect cover for such goods or the circumstances
15 reasonably indicate that such effort will be unavailing or
16 if the goods have been shipped under reservation and
17 satisfaction of the security interest in them has been made
18 or tendered. In the case of goods bought for personal,
19 family or household purposes, the buyer's right of replevin
20 vests upon acquisition of a special property, even if the
21 seller had not then repudiated or failed to deliver.

23 34.1-2.A-103. Definitions and index of definitions.

25 (c) The following definitions in other articles apply
26 to this article:

27 "Account". Section ~~34.1-9-106~~ 34.1-9-102(a)(ii).

28 "Between merchants". Section 34.1-2-104(c).

29 "Buyer". Section 34.1-2-103(a)(i).

30 "Chattel paper". Section ~~34.1-9-105(a)(ii)~~
31 34.1-9-102(a)(xi).

32 "Consumer goods". Section ~~34.1-9-109(a)~~
33 34.1-9-102(a)(xxiii).

34 "Document". Section ~~34.1-9-105(a)(vi)~~
35 34.1-9-102(a)(xxx).

36 "Entrusting". Section 34.1-2-403(c).

37 ~~"General intangibles".~~ ~~Section 34.1-9-106.~~

38 "General intangible". Section 34.1-9-102(a)(xlii).

39 "Good faith". Section 34.1-2-103(a)(ii).

40 "Instrument". Section ~~34.1-9-105(a)(ix)~~
41 34.1-9-102(a)(xlvii).

42 "Merchant". Section 34.1-2-104(a).

43 "Mortgage". Section 34.1-9-105(a)(x).

44 "Pursuant to commitment". Section 34.1-9-105(a)(xi).

45 "Receipt". Section 34.1-2-103(a)(iii).

46 "Sale". Section 34.1-2-106(a).

47 "Sale on approval". Section 34.1-2-326.

Page 162

1 "Sale or return". Section 34.1-2-326.

2 "Seller". Section 34.1-2-103(a)(iv).

4 34.1-2.A-303. Alienability of party's interest under
5 lease contract or of lessor's residual interest in goods;
6 delegation of performance; transfer of rights.

8 (a) As used in this section, "creation of a security
9 interest" includes the sale of a lease contract that is
10 subject to article 9, secured transactions, by reason of
11 section ~~34.1-9-102(a)(ii)~~ 34.1-9-109(a)(iii).

13 (b) Except as provided in ~~subsections (c) and~~
14 subsection (d) and section 34.1-9-407, a provision in a
15 lease agreement which (1) prohibits the voluntary or
16 involuntary transfer, including a transfer by sale,
17 sublease, creation or enforcement of a security interest,
18 or attachment, levy, or other judicial process, of an
19 interest of a party under the lease contract or of the
20 lessor's residual interest in the goods, or (2) makes such
21 a transfer an event of default, gives rise to the rights
22 and remedies provided in subsection (e), but a transfer
23 that is prohibited or is an event of default under the
24 lease agreement is otherwise effective.

26 ~~(d)~~(c) A provision in a lease agreement which (1)
27 prohibits a transfer of a right to damages for default with
28 respect to the whole lease contract or of a right to
29 payment arising out of the transferor's due performance of
30 the transferor's entire obligation, or (2) makes such a
31 transfer an event of default, is not enforceable, and such
32 a transfer is not a transfer that materially impairs the
33 prospect of obtaining return performance by, materially
34 changes the duty of, or materially increases the burden or
35 risk imposed on, the other party to the lease contract
36 within the purview of subsection ~~(e)~~ (d).

38 ~~(e)~~(d) Subject to ~~subsections (c) and (d)~~ subsection
39 (e) and section 34.1-9-407:

41 34.1-2.A-307. Priority of liens arising by attachment
42 or levy on, security interests in, and other claims to
43 goods.

45 (b) Except as otherwise provided in ~~subsections (c)~~
46 ~~and~~ subsection (d) and in sections 34.1-2.A-306 and

Page 163

1 34.1-2.A-308, a creditor of a lessor takes subject to the
2 lease contract unless:

4 (e) Except as otherwise provided in sections
5 34.1-9-717, 34.1-9-321 and 34.1-9-323, a lessee takes a
6 leasehold interest subject to a security interest held by a
7 creditor of the lessor.

9 34.1-2.A-309. Lessor's and lessee's rights when goods
10 become fixtures.

12 (a) In this section:

14 (ii) A "fixture filing" is the filing, in the
15 office where a record of a mortgage on the real estate
16 would be filed or recorded, of a financing statement
17 covering goods that are or are to become fixtures and
18 conforming to the requirements of section ~~34.1-9-402(e)~~
19 34.1-9-502(a) and (b);

21 34.1-4-210. Security interest of collecting bank in
22 items accompanying documents and proceeds.

24 (c) Receipt by a collecting bank of a final
25 settlement for an item is a realization on its security
26 interest in the item, accompanying documents, and proceeds.
27 So long as the bank does not receive final settlement for
28 the item or give up possession of the item or accompanying
29 documents for purposes other than collection, the security
30 interest continues to that extent and is subject to article
31 9, but:

33 (i) No security agreement is necessary to make
34 the security interest enforceable (section ~~34.1-9-203(a)(i)~~
35 34.1-9-203(b)(iii)(A));

37 34.1-7-503. Document of title to goods defeated in
38 certain cases.

40 (a) A document of title confers no right in goods
41 against a person who before issuance of the document had a
42 legal interest or a perfected security interest in them and
43 who neither:

45 (i) Delivered or entrusted them or any document
46 of title covering them to the bailor or his nominee with
47 actual or apparent authority to ship, store or sell or with

Page 164

1 power to obtain delivery under this article (section
2 34.1-7-403) or with power of disposition under this act
3 (sections 34.1-2-403 and ~~34.1-9-307~~ 34.1-9-320) or other
4 statute or rule of law; nor

6 34.1-8-103. Rules for determining whether certain
7 obligations and interests are securities or financial
8 assets.

10 (f) A commodity contract, as defined in W.S.
11 ~~34.1-9-115~~ 34.1-9-102(a)(xv), is not a security or a
12 financial asset.

14 34.1-8-106. Control.

16 (d) A purchaser has "control" of a security
17 entitlement if:

19 (i) The purchaser becomes the entitlement
20 holder; or

22 (ii) The securities intermediary has agreed that
23 it will comply with entitlement orders originated by the
24 purchaser without further consent by the entitlement
25 holder;. or

27 (iii) Another person has control of the security
28 entitlement on behalf of the purchaser or, having
29 previously acquired control of the security entitlement,
30 acknowledges that it has control on behalf of the
31 purchaser.

33 (f) A purchaser who has satisfied the requirements of
34 ~~paragraph (c)(ii) or (d)(ii)~~ subsection (c) or (d) of this
35 section has control, even if the registered owner in the
36 case of ~~paragraph (c)(ii)~~ subsection (c) or the entitlement
37 holder in the case of ~~paragraph (d)(ii)~~ subsection (d)
38 retains the right to make substitutions for the
39 uncertificated security or security entitlement, to
40 originate instructions or entitlement orders to the issuer
41 or securities intermediary, or otherwise to deal with the
42 uncertificated security or security entitlement.

44 34.1-8-110. Applicability; choice of law.

46 (e) The following rules determine a "securities
47 intermediary's jurisdiction" for purposes of this section:

Page 165

2 (i) If an agreement between the securities
3 intermediary and its entitlement holder ~~specifies that it~~
4 ~~is governed by the law of a particular jurisdiction~~
5 governing the securities account expressly provides that a
6 particular jurisdiction is the securities intermediary's
7 jurisdiction for purposes of this part, this article or
8 this act, that jurisdiction is the securities
9 intermediary's jurisdiction;

11 (ii) If paragraph (i) does not apply and an
12 agreement between the securities intermediary and its
13 entitlement holder governing the securities account
14 expressly provides that the agreement is governed by the
15 law of a particular jurisdiction, that jurisdiction is the
16 securities intermediary's jurisdiction;

18 ~~(ii)~~(iii) If neither paragraph (i) nor (ii)
19 applies and an agreement between the securities
20 intermediary and its entitlement holder ~~does not specify~~
21 ~~the governing law as provided in paragraph (i) of this~~
22 ~~subsection, but~~ governing the securities account expressly
23 ~~specifies~~ provides that the securities account is
24 maintained at an office in a particular jurisdiction, that
25 jurisdiction is the securities intermediary's jurisdiction;

27 ~~(iii)~~(iv) If ~~an agreement between the securities~~
28 ~~intermediary and its entitlement holder does not specify a~~
29 ~~jurisdiction as provided in paragraph (i) or (ii) of this~~
30 ~~subsection~~ none of the preceding paragraphs applies, the
31 securities intermediary's jurisdiction is the jurisdiction
32 in which ~~is located~~ the office identified in an account
33 statement as the office serving the entitlement holder's
34 account is located;

36 ~~(iv)~~(v) If ~~an agreement between the securities~~
37 ~~intermediary and its entitlement holder does not specify a~~
38 ~~jurisdiction as provided in paragraph (i) or (ii) of this~~
39 ~~subsection and an account statement does not identify an~~
40 ~~office serving the entitlement holder's account as provided~~
41 ~~in paragraph (iii) of this subsection~~ none of the preceding
42 paragraphs applies, the securities intermediary's
43 jurisdiction is the jurisdiction in which ~~is located~~ the
44 chief executive office of the securities intermediary is
45 located.

47 34.1-8-301. Delivery.

Page 166

2 (a) Delivery of a certificated security to a
3 purchaser occurs when:

5 (iii) A securities intermediary acting on behalf
6 of the purchaser acquires possession of the security
7 certificate, only if the certificate is in registered form
8 and ~~has been~~ is (1) registered in the name of the
9 purchaser, (2) payable to the order of the purchaser, or
10 (3) specially indorsed to the purchaser by an effective
11 indorsement and has not been indorsed to the securities
12 intermediary or in blank.

14 34.1-8-302. Rights of purchaser.

16 (a) Except as otherwise provided in subsections (b)
17 and (c) of this section, ~~upon delivery~~ a purchaser of a
18 certificated or uncertificated security ~~to a purchaser, the~~
19 ~~purchaser~~ acquires all rights in the security that the
20 transferor had or had power to transfer.

22 34.1-8-510. Rights of purchaser of security
23 entitlement from entitlement holder.

25 (a) In a case not covered by the priority rules in
26 article 9 or the rules stated in subsection (c), an action
27 based on an adverse claim to a financial asset or security
28 entitlement, whether framed in conversion, replevin,
29 constructive trust, equitable lien, or other theory, may
30 not be asserted against a person who purchases a security
31 entitlement, or an interest therein, from an entitlement
32 holder if the purchaser gives value, does not have notice
33 of the adverse claim, and obtains control.

35 (c) In a case not covered by the priority rules in
36 article 9, a purchaser for value of a security entitlement,
37 or an interest therein, who obtains control has priority
38 over a purchaser of a security entitlement, or an interest
39 therein, who does not obtain control. ~~Purchasers~~ Except as
40 otherwise provided in subsection (d), purchasers who have
41 control rank ~~equally, except that~~ according to priority in
42 time of:

44 (i) The purchaser's becoming the person for whom
45 the securities account, in which the security entitlement
46 is carried, is maintained, if the purchaser obtained
47 control under section 34.1-8-106(d)(i);

Page 167

2 (ii) The securities intermediary's agreement to
3 comply with the purchaser's entitlement orders with respect
4 to security entitlements carried or to be carried in the
5 securities account in which the security entitlement is
6 carried, if the purchaser obtained control under section
7 34.1-8-106(d)(ii); or

9 (iii) If the purchaser obtained control through
10 another person under section 34.1-8-106(d)(iii), the time
11 on which priority would be based under this subsection if
12 the other person were the secured party.

14 (d) A securities intermediary as purchaser has
15 priority over a conflicting purchaser who has control
16 unless otherwise agreed by the securities intermediary.

18 37-4-103. Filing security interests.

20 ~~(a)~~ ~~Notwithstanding sections 9-302(3), as amended,~~
21 ~~9-302(4), as amended, 9-401(1), as amended, and 9-402 of~~
22 ~~the Uniform Commercial Code:~~

24 ~~(i)~~(a) If filing is required under the Uniform
25 Commercial Code, the proper place to file in order to
26 perfect a security interest in personal property or
27 fixtures of a transmitting utility is in the office of the
28 secretary of state.;

30 ~~(ii)~~(b) When the financing statement covers goods of
31 a transmitting utility which are or are to become fixtures,
32 no description of the real estate concerned is required.;

34 ~~(iii)~~(c) A security interest in rolling stock of a
35 transmitting utility may be perfected either as provided in
36 section 20(c) of the Interstate Commerce Act or by filing a
37 financing statement pursuant to the Uniform Commercial Code
38 as provided in subsection ~~(i)~~ (a).

40 Section 4. W.S. 34.1-2-326(c), 34.1-2.A-303(c) and
41 34.1-2.A-307(b)(ii), (iii), (c) and (d) are repealed.

43 Section 5.

45 (a) In this section:

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1 (i) "Local filing office" means a filing office,
2 other than the secretary of state's office, that is
3 designated as the proper place to file a financing
4 statement under section 34.1-9-401(a) of former article 9.
5 The term applies only with respect to a record that covers
6 a type of collateral as to which the filing office is
7 designated in that section as the proper place to file.

9 (ii) "Former article 9 records" means:

11 (A) Financing statements and other records
12 that have been filed in a local-filing office before July
13 1, 2001, and that are, or upon processing and indexing will
14 be, reflected in the index maintained, as of June 30, 2001,
15 by the local-filing office for financing statements and
16 other records filed in the local-filing office before July
17 1, 2001; and

19 (B) The index as of June 30, 2001;

21 (C) The term does not include records
22 presented to a local-filing office for filing after June
23 30, 2001, whether or not the records relate to financing
24 statements filed in the local-filing office before July 1,
25 2001.

27 (iii) "Mortgage," "as-extracted collateral",
28 "fixture filing", "goods", and "fixtures" have the meanings
29 set forth in revised article 9 for those terms.

31 (b) A local-filing office must not accept for filing
32 a record presented after June 30, 2001, whether or not the
33 record relates to a financing statement filed in the
34 local-filing office before July 1, 2001.

36 (c) Until July 1, 2008, each local-filing office must
37 maintain all former article 9 records in accordance with
38 former article 9. A former article 9 record that is not
39 reflected on the index maintained at June 30, 2001, by the
40 local-filing office must be processed and indexed, and
41 reflected on the index as of June 30, 2001, as soon as
42 practicable but in any event no later than July 30, 2001.

44 (d) Until at least June 30, 2008, each local filing
45 office must respond to requests for information with
46 respect to former article 9 records relating to a debtor
47 and issue certificates, in accordance with former article

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1 9. The fees charged for responding to requests for
2 information relating to a debtor and issuing certificates
3 with respect to former article 9 records must be the fees
4 in effect under former article 9 on June 30, 2001, unless a
5 different fee is later set by the local filing office.

7 (e) After June 30, 2008, each local-filing office may
8 remove and destroy, in accordance with any then applicable
9 record retention law of this state, all former article 9
10 records, including the related index.

12 (f) This section does not apply to financing
13 statements or security agreements filed at the local-filing
14 office to protect interests in motor vehicles or with
15 respect to financing statements and other records, to a
16 filing office in which mortgages or records of mortgages on
17 real property are required to be filed or recorded, if:

19 (i) The collateral is timber to be cut or as
20 extracted collateral; or

22 (ii) The record is or relates to a financing
23 statement filed as a fixture filing and the collateral is
24 goods that are or are to become fixtures.

26 Section 6. There is appropriated from the general
27 fund to the office of the secretary of state an amount of
28 one million sixty-two thousand dollars ($1,062,000.00) for
29 the purposes of this act. The secretary of state is
30 authorized two (2) full-time positions.

32 Section 7. The secretary of state shall utilize a
33 local area network computer operations system and have the
34 system operational by July 1, 2002, for purposes of fully
35 implementing this act.

37 Section 8. This act is effective July 1, 2001.

39 (END)

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