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H0205...........................................................by BUSINESS
UCC - SECURED TRANSACTIONS - Amends, repeals and adds to existing law
relating to secured transactions to provide for security agreements; to
provide for perfection and priority of security interests; to provide for
rights of third parties; to provide for filing of financial statements; to
provide for default; to provide for transition; and to provide for
application of the Uniform Commercial Code to certain liens.
02/12 House intro - 1st rdg - to printing
02/13 Rpt prt - to Bus
02/16 Rpt out - rec d/p - to 2nd rdg
02/19 2nd rdg - to 3rd rdg
02/22 3rd rdg - PASSED - 61-0-9
AYES -- Barraclough, Barrett, Bedke, Bell, Bieter, Black, Bolz,
Bradford, Bruneel, Callister, Campbell, Chase, Clark, Collins, Crow,
Cuddy, Deal, Denney, Ellis, Ellsworth, Eskridge, Field(13),
Field(20), Gagner, Hadley, Harwood, Henbest, Higgins, Hornbeck,
Jaquet, Jones, Kellogg, Kendell, Kunz, Langford, Loertscher, Mader,
Marley, McKague, Meyer, Mortensen, Moss, Moyle, Pearce, Pischner,
Pomeroy, Raybould, Roberts, Robison, Sali, Schaefer, Sellman,
Shepherd, Smith, Smylie, Stone, Tilman, Trail, Wheeler, Wood, Young
NAYS -- None
Absent and excused -- Boe, Gould, Hammond, Lake, Montgomery,
Ridinger, Stevenson, Swan, Mr. Speaker
Floor Sponsor -- Gagner
Title apvd - to Senate
02/23 Senate intro - 1st rdg - to Com/HuRes
03/07 Rpt out - rec d/p - to 2nd rdg
03/08 2nd rdg - to 3rd rdg
03/15 3rd rdg - PASSED - 32-1-2
AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
Burtenshaw, Cameron, Danielson, Darrington, Davis, Deide, Dunklin,
Frasure, Geddes, Goedde, Ingram, Ipsen, Keough, King-Barrutia, Lee,
Noh, Richardson, Risch, Sandy, Schroeder, Sims, Sorensen, Stegner,
Stennett, Thorne, Wheeler, Whitworth
NAYS -- Hawkins
Absent and excused -- Lodge, Williams
Floor Sponsor -- Davis
Title apvd - to House
03/19 To enrol
03/20 Rpt enrol - Sp signed
03/21 Pres signed - to Governor
03/26 Governor signed
Session Law Chapter 208
Effective: 07/01/01
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature First Regular Session - 2001
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 205
BY BUSINESS COMMITTEE
1 AN ACT
2 RELATING TO THE UNIFORM COMMERCIAL CODE; REPEALING CHAPTER 9, TITLE 28, IDAHO
3 CODE; AMENDING TITLE 28, IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 9,
4 TITLE 28, IDAHO CODE, TO PROVIDE A SHORT TITLE, TO PROVIDE DEFINITIONS AND
5 AN INDEX OF DEFINITIONS, TO PROVIDE FOR A PURCHASE-MONEY SECURITY INTER-
6 EST, APPLICATION OF PAYMENTS AND THE BURDEN OF ESTABLISHING A PURCHASE-
7 MONEY SECURITY INTEREST, TO PROVIDE FOR CONTROL OF A DEPOSIT ACCOUNT, TO
8 PROVIDE FOR CONTROL OF ELECTRONIC CHATTEL PAPER, TO PROVIDE FOR CONTROL OF
9 INVESTMENT PROPERTY, TO PROVIDE FOR CONTROL OF A LETTER OF CREDIT RIGHT,
10 TO PROVIDE FOR THE SUFFICIENCY OF DESCRIPTION, TO PROVIDE FOR THE SCOPE OF
11 THE CHAPTER, TO PROVIDE FOR SECURITY INTERESTS ARISING UNDER CHAPTER 2 OR
12 CHAPTER 12, TITLE 28, IDAHO CODE, TO PROVIDE THE GENERAL EFFECTIVENESS OF
13 A SECURITY AGREEMENT, TO PROVIDE THAT TITLE TO THE COLLATERAL IS IMMATE-
14 RIAL, TO PROVIDE FOR ATTACHMENT AND ENFORCEABILITY OF A SECURITY INTEREST,
15 TO PROVIDE FOR AFTER-ACQUIRED PROPERTY AND FUTURE ADVANCES, TO PROVIDE FOR
16 USE OR DISPOSITION OF COLLATERAL, TO PROVIDE FOR A SECURITY INTEREST ARIS-
17 ING IN THE PURCHASE OR DELIVERY OF A FINANCIAL ASSET, TO PROVIDE THE
18 RIGHTS AND DUTIES OF A SECURED PARTY HAVING POSSESSION OR CONTROL OF COL-
19 LATERAL, TO PROVIDE ADDITIONAL DUTIES OF A SECURED PARTY HAVING CONTROL OF
20 COLLATERAL, TO PROVIDE THE DUTIES OF A SECURED PARTY IF THE ACCOUNT DEBTOR
21 HAS BEEN NOTIFIED OF AN ASSIGNMENT, TO PROVIDE FOR A REQUEST FOR AN
22 ACCOUNTING AND A REQUEST REGARDING A LIST OF COLLATERAL OR STATEMENT OF
23 ACCOUNT, TO PROVIDE THE LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY
24 INTERESTS, TO PROVIDE THE LAW GOVERNING PERFECTION AND PRIORITY OF AGRI-
25 CULTURAL LIENS, TO PROVIDE THE LAW GOVERNING PERFECTION AND PRIORITY OF
26 SECURITY INTERESTS IN GOODS COVERED BY A CERTIFICATE OF TITLE, TO PROVIDE
27 THE LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN DEPOSIT
28 ACCOUNTS, TO PROVIDE THE LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY
29 INTERESTS IN INVESTMENT PROPERTY, TO PROVIDE THE LAW GOVERNING PERFECTION
30 AND PRIORITY OF SECURITY INTERESTS IN LETTER OF CREDIT RIGHTS, TO PROVIDE
31 FOR LOCATION OF DEBTOR, TO PROVIDE WHEN A SECURITY INTEREST OR AGRICUL-
32 TURAL LIEN IS PERFECTED AND TO PROVIDE FOR CONTINUITY OF PERFECTION, TO
33 PROVIDE WHEN A SECURITY INTEREST IS PERFECTED UPON ATTACHMENT, TO PROVIDE
34 WHEN A FILING IS REQUIRED TO PERFECT A SECURITY INTEREST OR AGRICULTURAL
35 LIEN AND TO PROVIDE EXCEPTIONS, TO PROVIDE FOR PERFECTION OF SECURITY
36 INTERESTS IN PROPERTY SUBJECT TO CERTAIN STATUTES, REGULATIONS AND TREA-
37 TIES, TO PROVIDE FOR PERFECTION OF SECURITY INTERESTS IN CHATTEL PAPER,
38 DEPOSIT ACCOUNTS, DOCUMENTS, GOODS COVERED BY DOCUMENTS, INSTRUMENTS,
39 INVESTMENT PROPERTY, LETTER OF CREDIT RIGHTS AND MONEY, TO PROVIDE FOR
40 PERFECTION BY PERMISSIVE FILING AND FOR TEMPORARY PERFECTION WITHOUT FIL-
41 ING OR TRANSFER OF POSSESSION, TO PROVIDE WHEN POSSESSION BY OR DELIVERY
42 TO A SECURED PARTY PERFECTS A SECURITY INTEREST WITHOUT FILING, TO PROVIDE
43 FOR PERFECTION BY CONTROL, TO PROVIDE A SECURED PARTY'S RIGHTS ON DISPOSI-
44 TION OF COLLATERAL AND IN PROCEEDS, TO PROVIDE FOR CONTINUED PERFECTION OF
45 A SECURITY INTEREST FOLLOWING A CHANGE IN GOVERNING LAW, TO PROVIDE THE
46 INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE OF A SECURITY INTEREST OR
2
1 AGRICULTURAL LIEN, TO PROVIDE WHEN A DEBTOR RETAINS NO INTEREST IN A RIGHT
2 TO PAYMENT THAT IS SOLD AND TO PROVIDE THE RIGHTS AND TITLE OF A SELLER OF
3 AN ACCOUNT OR CHATTEL PAPER WITH RESPECT TO CREDITORS AND PURCHASERS, TO
4 PROVIDE THE RIGHTS AND TITLE OF A CONSIGNEE WITH RESPECT TO CREDITORS AND
5 PURCHASERS, TO PROVIDE WHEN A BUYER OF GOODS TAKES FREE OF A SECURITY
6 INTEREST, TO PROVIDE FOR A LICENSEE OF A GENERAL INTANGIBLE AND A LESSEE
7 OF GOODS IN THE ORDINARY COURSE OF BUSINESS, TO PROVIDE PRIORITIES AMONG
8 CONFLICTING SECURITY INTERESTS IN AND AGRICULTURAL LIENS ON THE SAME COL-
9 LATERAL, TO PROVIDE FOR SECURITY INTERESTS IN CROPS FOR PROVISION OF AGRI-
10 CULTURAL CHEMICALS, TO PROVIDE FOR FUTURE ADVANCES, TO PROVIDE THE PRIOR-
11 ITY OF PURCHASE-MONEY SECURITY INTERESTS, TO PROVIDE THE PRIORITY OF
12 SECURITY INTERESTS IN TRANSFERRED COLLATERAL, TO PROVIDE THE PRIORITY OF
13 SECURITY INTERESTS CREATED BY A NEW DEBTOR, TO PROVIDE THE PRIORITY OF
14 SECURITY INTERESTS IN A DEPOSIT ACCOUNT, TO PROVIDE THE PRIORITY OF SECU-
15 RITY INTERESTS IN INVESTMENT PROPERTY, TO PROVIDE THE PRIORITY OF SECURITY
16 INTERESTS IN A LETTER OF CREDIT RIGHT, TO PROVIDE THE PRIORITY OF A PUR-
17 CHASER OF CHATTEL PAPER OR AN INSTRUMENT, TO PROVIDE THE PRIORITY OF
18 RIGHTS OF PURCHASERS OF INSTRUMENTS, DOCUMENTS, AND SECURITIES UNDER OTHER
19 CHAPTERS AND THE PRIORITY OF INTERESTS IN FINANCIAL ASSETS AND SECURITY
20 ENTITLEMENTS UNDER CHAPTER 8, TITLE 28, IDAHO CODE, TO PROVIDE FOR THE
21 TRANSFER OF MONEY AND A TRANSFER OF FUNDS FROM A DEPOSIT ACCOUNT, TO PRO-
22 VIDE THE PRIORITY OF CERTAIN LIENS ARISING BY OPERATION OF LAW, TO PROVIDE
23 THE PRIORITY OF SECURITY INTERESTS IN FIXTURES AND CROPS, TO PROVIDE FOR
24 ACCESSIONS, TO PROVIDE FOR COMMINGLED GOODS, TO PROVIDE THE PRIORITY OF
25 SECURITY INTERESTS IN GOODS COVERED BY A CERTIFICATE OF TITLE, TO PROVIDE
26 THE PRIORITY OF A SECURITY INTEREST OR AGRICULTURAL LIEN PERFECTED BY A
27 FILED FINANCING STATEMENT PROVIDING CERTAIN INCORRECT INFORMATION, TO PRO-
28 VIDE THAT PRIORITY IS SUBJECT TO SUBORDINATION BY AGREEMENT, TO PROVIDE
29 THE EFFECTIVENESS OF A RIGHT OF RECOUPMENT OR SET-OFF AGAINST A DEPOSIT
30 ACCOUNT, TO PROVIDE A BANK'S RIGHTS AND DUTIES WITH RESPECT TO A DEPOSIT
31 ACCOUNT, TO PROVIDE FOR THE BANK'S RIGHT TO REFUSE TO ENTER INTO OR DIS-
32 CLOSE THE EXISTENCE OF A CONTROL AGREEMENT, TO PROVIDE FOR ALIENABILITY OF
33 DEBTOR'S RIGHTS, TO PROVIDE THAT A SECURED PARTY IS NOT OBLIGATED ON A
34 CONTRACT OF THE DEBTOR OR IN TORT, TO PROVIDE FOR AN AGREEMENT NOT TO
35 ASSERT DEFENSES AGAINST AN ASSIGNEE, TO PROVIDE FOR RIGHTS ACQUIRED BY AN
36 ASSIGNEE AND CLAIMS AND DEFENSES AGAINST AN ASSIGNEE, TO PROVIDE FOR MODI-
37 FICATION OF AN ASSIGNED CONTRACT, TO PROVIDE FOR DISCHARGE OF THE ACCOUNT
38 DEBTOR UPON PAYMENT TO THE ASSIGNOR, TO PROVIDE FOR NOTIFICATION OF THE
39 ASSIGNMENT, TO PROVIDE IDENTIFICATION AND PROOF OF ASSIGNMENT AND TO PRO-
40 VIDE FOR RESTRICTIONS ON ASSIGNMENT, TO PROVIDE FOR RESTRICTIONS ON THE
41 CREATION OR ENFORCEMENT OF A SECURITY INTEREST IN A LEASEHOLD INTEREST OR
42 IN THE LESSOR'S RESIDUAL INTEREST, TO PROVIDE WHEN RESTRICTIONS ON THE
43 ASSIGNMENT OF PROMISSORY NOTES, HEALTH CARE INSURANCE RECEIVABLES AND CER-
44 TAIN INTANGIBLES IS INEFFECTIVE, TO PROVIDE WHEN RESTRICTIONS ON THE
45 ASSIGNMENT OF LETTER OF CREDIT RIGHTS IS INEFFECTIVE, TO PROVIDE THE
46 OFFICE FOR FILING A FINANCING STATEMENT, TO PROVIDE THE CONTENTS OF A
47 FINANCING STATEMENT, TO PROVIDE FOR THE RECORD OF A MORTGAGE AS A FINANC-
48 ING STATEMENT, TO PROVIDE FOR THE TIME OF FILING A FINANCING STATEMENT AND
49 TO PROVIDE FOR A FINANCING STATEMENT COVERING FARM PRODUCTS, TO PROVIDE
50 FOR SUFFICIENCY OF THE NAME OF THE DEBTOR AND SECURED PARTY, TO PROVIDE
51 FOR A SUFFICIENT INDICATION OF THE COLLATERAL, TO PROVIDE FOR FILING AND
52 COMPLIANCE WITH OTHER STATUTES AND TREATIES FOR CONSIGNMENTS, LEASES,
53 OTHER BAILMENTS AND OTHER TRANSACTIONS, TO PROVIDE THE EFFECT OF ERRORS OR
54 OMISSIONS, TO PROVIDE THE EFFECT OF CERTAIN EVENTS ON THE EFFECTIVENESS OF
55 A FINANCING STATEMENT, TO PROVIDE THE EFFECTIVENESS OF A FINANCING STATE-
3
1 MENT IF A NEW DEBTOR BECOMES BOUND BY A SECURITY AGREEMENT, TO PROVIDE THE
2 PERSONS ENTITLED TO FILE A RECORD, TO PROVIDE THE EFFECTIVENESS OF A FILED
3 RECORD, TO PROVIDE FOR THE SECURED PARTY OF RECORD, TO PROVIDE FOR AMEND-
4 MENT OF A FINANCING STATEMENT, TO PROVIDE FOR A TERMINATION STATEMENT, TO
5 PROVIDE FOR ASSIGNMENT OF THE POWERS OF A SECURED PARTY OF RECORD, TO PRO-
6 VIDE THE DURATION AND EFFECTIVENESS OF A FINANCING STATEMENT AND THE
7 EFFECT OF A LAPSED FINANCING STATEMENT, TO PROVIDE WHAT CONSTITUTES FILING
8 AND THE EFFECTIVENESS OF FILING, TO PROVIDE THE EFFECT OF INDEXING ERRORS,
9 TO PROVIDE FOR A CLAIM CONCERNING AN INACCURATE OR WRONGFULLY FILED
10 RECORD, TO PROVIDE FOR NUMBERING, MAINTAINING AND INDEXING RECORDS AND
11 COMMUNICATING INFORMATION PROVIDED IN RECORDS, TO PROVIDE FOR ACCEPTANCE
12 OF AND A REFUSAL TO ACCEPT A RECORD BY A FILING OFFICE, TO PROVIDE THE
13 UNIFORM FORMS FOR A WRITTEN FINANCING STATEMENT AND AN AMENDMENT, TO PRO-
14 VIDE FOR MAINTENANCE AND DESTRUCTION OF RECORDS, TO PROVIDE FOR INFORMA-
15 TION FROM A FILING OFFICE, TO PROVIDE FOR THE SALE OR LICENSE OF RECORDS
16 AND TO PROVIDE FOR MASTER LISTS OF FARM PRODUCTS, TO PROVIDE FOR A DELAY
17 BY A FILING OFFICE, TO PROVIDE FOR FEES, TO PROVIDE FOR PROMULGATION OF
18 RULES BY THE SECRETARY OF STATE, TO PROVIDE FOR RIGHTS AFTER DEFAULT AND
19 UPON JUDICIAL ENFORCEMENT, AND TO PROVIDE FOR CONSIGNOR OR BUYER OF
20 ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES OR PROMISSORY NOTES, TO PRO-
21 VIDE FOR WAIVER AND VARIANCE OF RIGHTS AND DUTIES, TO PROVIDE FOR AN
22 AGREEMENT ON STANDARDS CONCERNING RIGHTS AND DUTIES, TO PROVIDE THE PROCE-
23 DURE IF A SECURITY AGREEMENT COVERS REAL PROPERTY OR FIXTURES, TO PROVIDE
24 FOR AN UNKNOWN DEBTOR OR SECONDARY OBLIGOR, TO PROVIDE THE TIME OF DEFAULT
25 FOR AN AGRICULTURAL LIEN, TO PROVIDE FOR COLLECTION AND ENFORCEMENT BY A
26 SECURED PARTY, TO PROVIDE FOR APPLICATION OF THE PROCEEDS OF COLLECTION OR
27 ENFORCEMENT AND TO PROVIDE THE LIABILITY FOR A DEFICIENCY AND RIGHT TO
28 SURPLUS, TO PROVIDE THE SECURED PARTY'S RIGHT TO TAKE POSSESSION AFTER
29 DEFAULT, TO PROVIDE FOR DISPOSITION OF COLLATERAL AFTER DEFAULT, TO PRO-
30 VIDE FOR NOTIFICATION BEFORE DISPOSITION OF COLLATERAL, TO PROVIDE FOR
31 TIMELINESS OF NOTIFICATION BEFORE DISPOSITION OF COLLATERAL, TO PROVIDE
32 THE CONTENTS AND FORM OF NOTIFICATION BEFORE DISPOSITION OF COLLATERAL IN
33 GENERAL AND IN A CONSUMER GOODS TRANSACTION, TO PROVIDE FOR APPLICATION OF
34 THE PROCEEDS OF DISPOSITION, TO PROVIDE THE LIABILITY FOR A DEFICIENCY AND
35 THE RIGHT TO SURPLUS, TO PROVIDE FOR AN EXPLANATION OF THE CALCULATION OF
36 A SURPLUS OR A DEFICIENCY, TO PROVIDE THE RIGHTS OF A TRANSFEREE OF COL-
37 LATERAL, TO PROVIDE THE RIGHTS AND DUTIES OF CERTAIN SECONDARY OBLIGORS,
38 TO PROVIDE FOR A TRANSFER OF RECORD OR LEGAL TITLE, TO PROVIDE FOR ACCEP-
39 TANCE OF COLLATERAL IN FULL OR PARTIAL SATISFACTION OF AN OBLIGATION AND
40 FOR COMPULSORY DISPOSITION OF COLLATERAL, TO PROVIDE FOR NOTIFICATION OF A
41 PROPOSAL TO ACCEPT COLLATERAL AND FOR THE EFFECT OF AN ACCEPTANCE OF COL-
42 LATERAL, TO PROVIDE FOR A RIGHT TO REDEEM COLLATERAL, TO PROVIDE FOR
43 WAIVER OF A DISPOSITION NOTIFICATION OR A REDEMPTION RIGHT, TO PROVIDE
44 REMEDIES FOR A SECURED PARTY'S FAILURE TO COMPLY WITH CHAPTER 9, TITLE 28,
45 IDAHO CODE, TO PROVIDE FOR AN ACTION IN WHICH A DEFICIENCY OR SURPLUS IS
46 IN ISSUE, TO PROVIDE FOR A DETERMINATION OF WHETHER CONDUCT WAS COMMER-
47 CIALLY REASONABLE, TO PROVIDE FOR NONLIABILITY AND A LIMITATION OF THE
48 LIABILITY OF A SECURED PARTY AND FOR THE LIABILITY OF A SECONDARY OBLIGOR,
49 TO PROVIDE A SAVINGS CLAUSE, TO PROVIDE FOR A SECURITY INTEREST PERFECTED
50 BEFORE THE EFFECTIVE DATE OF THE ACT AND FOR A SECURITY INTEREST UNPER-
51 FECTED BEFORE THE EFFECTIVE DATE OF THE ACT, TO PROVIDE THE EFFECTIVENESS
52 OF ACTION TAKEN BEFORE THE EFFECTIVE DATE OF THE ACT, TO PROVIDE WHEN AN
53 INITIAL FINANCING STATEMENT SUFFICES TO CONTINUE THE EFFECTIVENESS OF A
54 FINANCING STATEMENT, TO PROVIDE FOR PREEFFECTIVE-DATE FINANCING STATEMENT,
55 TO PROVIDE THE PERSONS ENTITLED TO FILE AN INITIAL FINANCING STATEMENT OR
4
1 A CONTINUATION STATEMENT AND TO PROVIDE FOR THE LAW GOVERNING PRIORITY;
2 AMENDING SECTION 28-1-105, IDAHO CODE, TO PROVIDE APPROPRIATE CODE REFER-
3 ENCES AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 28-1-201, IDAHO
4 CODE, TO REDEFINE "BUYER IN THE ORDINARY COURSE OF BUSINESS" AND "SECURITY
5 INTEREST," TO INCLUDE A SECURITY INTEREST WITHIN THE DEFINITION OF
6 "PURCHASE" AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 28-2-103,
7 IDAHO CODE, TO PROVIDE CORRECT CODE REFERENCES AND TO MAKE TECHNICAL COR-
8 RECTIONS; AMENDING SECTION 28-2-210, IDAHO CODE, TO PROVIDE THAT A SECU-
9 RITY INTEREST IN THE SELLER'S INTEREST UNDER A CONTRACT IS NOT A PROHIB-
10 ITED TRANSFER UNLESS ENFORCEMENT RESULTS IN A DELEGATION OF MATERIAL PER-
11 FORMANCE, TO PROVIDE THE SELLER'S LIABILITY IN THAT EVENT AND TO MAKE
12 TECHNICAL CORRECTIONS; AMENDING SECTION 28-2-326, IDAHO CODE, TO DELETE
13 OBSOLETE PROVISIONS AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION
14 28-2-502, IDAHO CODE, TO PROVIDE THE BUYER'S RIGHT TO GOODS ON THE
15 SELLER'S REPUDIATION AND FAILURE TO DELIVER AND TO MAKE TECHNICAL CORREC-
16 TIONS; AMENDING SECTION 28-2-716, IDAHO CODE, TO PROVIDE WHEN THE BUYER'S
17 RIGHT OF REPLEVIN VESTS IN THE CASE OF GOODS BOUGHT FOR PERSONAL, FAMILY
18 OR HOUSEHOLD PURPOSES; AMENDING SECTION 28-4-210, IDAHO CODE, TO PROVIDE A
19 CORRECT CODE REFERENCE AND TO MAKE TECHNICAL CORRECTIONS; AMENDING PART 1,
20 CHAPTER 5, TITLE 28, IDAHO CODE, BY THE ADDITION OF A NEW SECTION
21 28-5-120, IDAHO CODE, TO PROVIDE FOR THE SECURITY INTEREST OF AN ISSUER OR
22 NOMINATED PERSON IN A DOCUMENT; AMENDING SECTION 28-7-209A, IDAHO CODE, TO
23 PROVIDE A CORRECT CODE REFERENCE; AMENDING SECTION 28-7-503, IDAHO CODE,
24 TO PROVIDE CORRECT CODE REFERENCES AND TO MAKE TECHNICAL CORRECTIONS;
25 AMENDING SECTION 28-8-103, IDAHO CODE, TO PROVIDE CORRECT CODE REFERENCES;
26 AMENDING SECTION 28-8-106, IDAHO CODE, TO PROVIDE THAT A PURCHASER HAS
27 CONTROL OF A SECURITY ENTITLEMENT IF ANOTHER PERSON HAS CONTROL OF THE
28 SECURITY ENTITLEMENT ON BEHALF OF THE PURCHASER AND TO PROVIDE CORRECT
29 CODE REFERENCES; AMENDING SECTION 28-8-110, IDAHO CODE, TO PROVIDE FOR A
30 SECURITIES INTERMEDIARY'S JURISDICTION IN PARTICULAR CIRCUMSTANCES AND TO
31 MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 28-8-301, IDAHO CODE, TO PRO-
32 VIDE ADDITIONAL CIRCUMSTANCES WHEN A SECURITIES INTERMEDIARY ACTING ON
33 BEHALF OF THE PURCHASER ACQUIRES POSSESSION OF A SECURITY CERTIFICATE;
34 AMENDING SECTION 28-8-302, IDAHO CODE, TO DELETE THE REQUIREMENT FOR
35 DELIVERY BEFORE A PURCHASER ACQUIRES RIGHTS IN A CERTIFICATED OR
36 UNCERTIFICATED SECURITY; AMENDING SECTION 28-8-510, IDAHO CODE, TO PROVIDE
37 FOR APPLICATION OF THE SECTION IN CASES NOT COVERED BY THE PRIORITY RULES
38 OF CHAPTER 9, TITLE 28, IDAHO CODE, TO PROVIDE FOR PRIORITY WITH RESPECT
39 TO PURCHASERS OF A SECURITY ENTITLEMENT HAVING CONTROL AND TO MAKE A TECH-
40 NICAL CORRECTION; AMENDING SECTION 28-12-103, IDAHO CODE, TO PROVIDE COR-
41 RECT CODE REFERENCES AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION
42 28-12-303, IDAHO CODE, TO PROVIDE CORRECT CODE REFERENCES, TO DELETE OBSO-
43 LETE PROVISIONS AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION
44 28-12-307, IDAHO CODE, TO PROVIDE CORRECT CODE REFERENCES AND TO PROVIDE
45 WHEN A LESSEE TAKES A LEASEHOLD INTEREST SUBJECT TO A SECURITY INTEREST
46 HELD BY A LESSOR'S CREDITOR; AMENDING SECTION 28-12-309, IDAHO CODE, TO
47 PROVIDE CORRECT NOMENCLATURE AND CODE REFERENCES AND TO MAKE TECHNICAL
48 CORRECTIONS; AMENDING SECTION 28-50-116, IDAHO CODE, TO PROVIDE A CORRECT
49 CODE REFERENCE; AMENDING CHAPTER 3, TITLE 45, IDAHO CODE, BY THE ADDITION
50 OF A NEW SECTION 45-318, IDAHO CODE, TO PROVIDE APPLICABILITY OF THE UNI-
51 FORM COMMERCIAL CODE; AMENDING SECTION 8-506A, IDAHO CODE, TO PROVIDE A
52 CORRECT CODE REFERENCE AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION
53 31-2402, IDAHO CODE, TO PROVIDE CORRECT CODE REFERENCES AND TO MAKE TECH-
54 NICAL CORRECTIONS; AMENDING SECTION 45-1909, IDAHO CODE, TO PROVIDE COR-
55 RECT CODE REFERENCES; AMENDING SECTION 49-120, IDAHO CODE, TO PROVIDE A
5
1 CORRECT CODE REFERENCE; AMENDING CHAPTER 2, TITLE 57, IDAHO CODE, BY THE
2 ADDITION OF A NEW SECTION 57-232, IDAHO CODE, TO PROVIDE FOR THE CREATION
3 AND PERFECTION OF GOVERNMENT SECURITY INTERESTS; AND PROVIDING AN EFFEC-
4 TIVE DATE.
5 Be It Enacted by the Legislature of the State of Idaho:
6 SECTION 1. That Chapter 9, Title 28, Idaho Code, be, and the same is
7 hereby repealed.
8 SECTION 2. That Title 28, Idaho Code, be, and the same is hereby amended
9 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
10 ter 9, Title 28, Idaho Code, and to read as follows:
11 CHAPTER 9
12 SECURED TRANSACTIONS
13 PART 1.
14 GENERAL PROVISIONS
15 28-9-101. SHORT TITLE. This chapter may be cited as "Uniform Commercial
16 Code -- Secured Transactions."
17 28-9-102. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In this chapter:
18 (1) "Accession" means goods that are physically united with other goods
19 in such a manner that the identity of the original goods is not lost.
20 (2) "Account," except as used in "account for," means a right to payment
21 of a monetary obligation, whether or not earned by performance: (i) for
22 property that has been or is to be sold, leased, licensed, assigned, or
23 otherwise disposed of; (ii) for services rendered or to be rendered; (iii)
24 for a policy of insurance issued or to be issued; (iv) for a secondary
25 obligation incurred or to be incurred; (v) for energy provided or to be
26 provided; (vi) for the use or hire of a vessel under a charter or other
27 contract; (vii) arising out of the use of a credit or charge card or
28 information contained on or for use with the card; or (viii) as winnings
29 in a lottery or other game of chance operated or sponsored by a state,
30 governmental unit of a state, or a person licensed or authorized to oper-
31 ate the game by a state or governmental unit of a state. The term includes
32 health care insurance receivables. The term does not include: (i) rights
33 to payment evidenced by chattel paper or an instrument; (ii) commercial
34 tort claims; (iii) deposit accounts; (iv) investment property; (v) letter
35 of credit rights or letters of credit; or (vi) rights to payment for money
36 or funds advanced or sold, other than rights arising out of the use of a
37 credit or charge card or information contained on or for use with the
38 card.
39 (3) "Account debtor" means a person obligated on an account, chattel
40 paper, or general intangible. The term does not include persons obligated
41 to pay a negotiable instrument, even if the instrument constitutes part of
42 chattel paper.
43 (4) "Accounting," except as used in "accounting for," means a record:
44 (A) authenticated by a secured party;
45 (B) indicating the aggregate unpaid secured obligations as of a date
46 not more than thirty-five (35) days earlier or thirty-five (35) days
47 later than the date of the record; and
48 (C) identifying the components of the obligations in reasonable
6
1 detail.
2 (5) "Agricultural lien" means an interest, other than a security inter-
3 est, in farm products:
4 (A) which secures payment or performance of an obligation for:
5 (i) goods or services furnished in connection with a debtor's
6 farming operation; or
7 (ii) rent on real property leased by a debtor in connection
8 with its farming operation;
9 (B) which is created by statute in favor of a person that:
10 (i) in the ordinary course of its business furnished goods or
11 services to a debtor in connection with a debtor's farming oper-
12 ation; or
13 (ii) leased real property to a debtor in connection with the
14 debtor's farming operation; and
15 (C) whose effectiveness does not depend on the person's possession
16 of the personal property.
17 (6) "As-extracted collateral" means:
18 (A) oil, gas, or other minerals that are subject to a security
19 interest that:
20 (i) is created by a debtor having an interest in the minerals
21 before extraction; and
22 (ii) attaches to the minerals as extracted; or
23 (B) accounts arising out of the sale at the wellhead or minehead of
24 oil, gas, or other minerals in which the debtor had an interest
25 before extraction.
26 (7) "Authenticate" means:
27 (A) to sign; or
28 (B) to execute or otherwise adopt a symbol, or encrypt or similarly
29 process a record in whole or in part, with the present intent of the
30 authenticating person to identify the person and adopt or accept a
31 record.
32 (8) "Bank" means an organization that is engaged in the business of bank-
33 ing. The term includes savings banks, savings and loan associations,
34 credit unions and trust companies.
35 (9) "Cash proceeds" means proceeds that are money, checks, deposit
36 accounts, or the like.
37 (10) "Certificate of title" means a certificate of title with respect to
38 which a statute provides for the security interest in question to be indi-
39 cated on the certificate as a condition or result of the security
40 interest's obtaining priority over the rights of a lien creditor with
41 respect to the collateral.
42 (11) "Chattel paper" means a record or records that evidence both a mone-
43 tary obligation and a security interest in specific goods, a security
44 interest in specific goods and software used in the goods, a security
45 interest in specific goods and license of software used in the goods, a
46 lease of specific goods, or a lease of specific goods and license of soft-
47 ware used in the goods. In this paragraph, "monetary obligation" means a
48 monetary obligation secured by the goods or owed under a lease of the
49 goods and includes a monetary obligation with respect to software used in
50 the goods. The term does not include: (i) charters or other contracts
51 involving the use or hire of a vessel; or (ii) records that evidence a
52 right to payment arising out of the use of a credit or charge card or
53 information contained on or for use with the card. If a transaction is
54 evidenced by records that include an instrument or series of instruments,
55 the group of records taken together constitutes chattel paper.
7
1 (12) "Collateral" means the property subject to a security interest or
2 agricultural lien. The term includes:
3 (A) proceeds to which a security interest attaches;
4 (B) accounts, chattel paper, payment intangibles, and promissory
5 notes that have been sold; and
6 (C) goods that are the subject of a consignment.
7 (13) "Commercial tort claim" means a claim arising in tort with respect to
8 which:
9 (A) the claimant is an organization; or
10 (B) the claimant is an individual and the claim:
11 (i) arose in the course of the claimant's business or profes-
12 sion; and
13 (ii) does not include damages arising out of personal injury to
14 or the death of an individual.
15 (14) "Commodity account" means an account maintained by a commodity inter-
16 mediary in which a commodity contract is carried for a commodity customer.
17 (15) "Commodity contract" means a commodity futures contract, an option on
18 a commodity futures contract, a commodity option, or another contract if
19 the contract or option is:
20 (A) traded on or subject to the rules of a board of trade that has
21 been designated as a contract market for such a contract pursuant to
22 federal commodities laws; or
23 (B) traded on a foreign commodity board of trade, exchange, or mar-
24 ket, and is carried on the books of a commodity intermediary for a
25 commodity customer.
26 (16) "Commodity customer" means a person for which a commodity intermedi-
27 ary carries a commodity contract on its books.
28 (17) "Commodity intermediary" means a person that:
29 (A) is registered as a futures commission merchant under federal
30 commodities law; or
31 (B) in the ordinary course of its business provides clearance or
32 settlement services for a board of trade that has been designated as
33 a contract market pursuant to federal commodities law.
34 (18) "Communicate" means:
35 (A) to send a written or other tangible record;
36 (B) to transmit a record by any means agreed upon by the persons
37 sending and receiving the record; or
38 (C) in the case of transmission of a record to or by a filing
39 office, to transmit a record by any means prescribed by filing office
40 rule.
41 (19) "Consignee" means a merchant to which goods are delivered in a con-
42 signment.
43 (20) "Consignment" means a transaction, regardless of its form, in which a
44 person delivers goods to a merchant for the purpose of sale and:
45 (A) the merchant:
46 (i) deals in goods of that kind under a name other than the
47 name of the person making delivery;
48 (ii) is not an auctioneer; and
49 (iii) is not generally known by its creditors to be substan-
50 tially engaged in selling the goods of others;
51 (B) with respect to each delivery, the aggregate value of the goods
52 is one thousand dollars ($1,000) or more at the time of delivery;
53 (C) the goods are not consumer goods immediately before delivery;
54 and
55 (D) the transaction does not create a security interest that secures
8
1 an obligation.
2 (21) "Consignor" means a person that delivers goods to a consignee in a
3 consignment.
4 (22) "Consumer debtor" means a debtor in a consumer transaction.
5 (23) "Consumer goods" means goods that are used or bought for use primar-
6 ily for personal, family or household purposes.
7 (24) "Consumer goods transaction" means a consumer transaction in which:
8 (A) an individual incurs an obligation primarily for personal, fam-
9 ily or household purposes; and
10 (B) a security interest in consumer goods secures the obligation.
11 (25) "Consumer obligor" means an obligor who is an individual and who
12 incurred the obligation as part of a transaction entered into primarily
13 for personal, family or household purposes.
14 (26) "Consumer transaction" means a transaction in which: (i) an individ-
15 ual incurs an obligation primarily for personal, family or household pur-
16 poses; (ii) a security interest secures the obligation; and (iii) the col-
17 lateral is held or acquired primarily for personal, family or household
18 purposes. The term includes consumer goods transactions.
19 (27) "Continuation statement" means an amendment of a financing statement
20 which:
21 (A) identifies, by its file number, the initial financing statement
22 to which it relates; and
23 (B) indicates that it is a continuation statement for, or that it is
24 filed to continue the effectiveness of, the identified financing
25 statement.
26 (28) "Debtor" means:
27 (A) a person having an interest, other than a security interest or
28 other lien, in the collateral, whether or not the person is an obli-
29 gor;
30 (B) a seller of accounts, chattel paper, payment intangibles or
31 promissory notes; or
32 (C) a consignee.
33 (29) "Deposit account" means a demand, time, savings, passbook, or similar
34 account maintained with a bank. The term does not include investment
35 property or accounts evidenced by an instrument.
36 (30) "Document" means a document of title or a receipt of the type
37 described in section 28-7-201(2).
38 (31) "Electronic chattel paper" means chattel paper evidenced by a record
39 or records consisting of information stored in an electronic medium.
40 (32) "Encumbrance" means a right, other than an ownership interest, in
41 real property. The term includes mortgages and other liens on real prop-
42 erty.
43 (33) "Equipment" means goods other than inventory, farm products or con-
44 sumer goods.
45 (34) "Farm products" means goods, other than standing timber, with respect
46 to which the debtor is engaged in a farming operation and which are:
47 (A) crops grown, growing, or to be grown, including:
48 (i) crops produced on trees, vines and bushes; and
49 (ii) aquatic goods produced in aquacultural operations;
50 (B) livestock, born or unborn, including aquatic goods produced in
51 aquacultural operations;
52 (C) supplies used or produced in a farming operation; or
53 (D) products of crops or livestock in their unmanufactured states.
54 (35) "Farming operation" means raising, cultivating, propagating, fatten-
55 ing, grazing, or any other farming, livestock, or aquacultural operation.
9
1 (36) "File number" means the number assigned to an initial financing
2 statement pursuant to section 28-9-519(a).
3 (37) "Filing office" means an office designated in section 28-9-501 as the
4 place to file a financing statement.
5 (38) "Filing office rule" means a rule adopted pursuant to section
6 28-9-526.
7 (39) "Financing statement" means a record or records composed of an ini-
8 tial financing statement and any filed record relating to the initial
9 financing statement.
10 (40) "Fixture filing" means the filing of a financing statement covering
11 goods that are or are to become fixtures and satisfying section
12 28-9-502(a) and (b). The term includes the filing of a financing statement
13 covering goods of a transmitting utility which are or are to become fix-
14 tures.
15 (41) "Fixtures" means goods that have become so related to particular real
16 property that an interest in them arises under real property law.
17 (42) "General intangible" means any personal property, including things in
18 action, other than accounts, chattel paper, commercial tort claims,
19 deposit accounts, documents, goods, instruments, investment property, let-
20 ter of credit rights, letters of credit, money, and oil, gas, or other
21 minerals before extraction. The term includes payment intangibles and
22 software.
23 (43) "Good faith" means honesty in fact and the observance of reasonable
24 commercial standards of fair dealing.
25 (44) "Goods" means all things that are movable when a security interest
26 attaches. The term includes: (i) fixtures; (ii) standing timber that is to
27 be cut and removed under a conveyance or contract for sale; (iii) the
28 unborn young of animals; (iv) crops grown, growing, or to be grown, even
29 if the crops are produced on trees, vines or bushes; and (v) manufactured
30 homes. The term also includes a computer program embedded in goods and any
31 supporting information provided in connection with a transaction relating
32 to the program if: (i) the program is associated with the goods in such a
33 manner that it customarily is considered part of the goods; or (ii) by
34 becoming the owner of the goods, a person acquires a right to use the pro-
35 gram in connection with the goods. The term does not include a computer
36 program embedded in goods that consist solely of the medium in which the
37 program is embedded. The term also does not include accounts, chattel
38 paper, commercial tort claims, deposit accounts, documents, general intan-
39 gibles, instruments, investment property, letter of credit rights, letters
40 of credit, money, or oil, gas, or other minerals before extraction.
41 (45) "Governmental unit" means a subdivision, agency, department, county,
42 parish, municipality, or other unit of the government of the United
43 States, a state, or a foreign country. The term includes an organization
44 having a separate corporate existence if the organization is eligible to
45 issue debt on which interest is exempt from income taxation under the laws
46 of the United States.
47 (46) "Health care insurance receivable" means an interest in or claim
48 under a policy of insurance which is a right to payment of a monetary
49 obligation for health care goods or services provided.
50 (47) "Instrument" means a negotiable instrument or any other writing that
51 evidences a right to the payment of a monetary obligation, is not itself a
52 security agreement or lease, and is of a type that in the ordinary course
53 of business is transferred by delivery with any necessary indorsement or
54 assignment. The term does not include: (i) investment property; (ii) let-
55 ters of credit; or (iii) writings that evidence a right to payment arising
10
1 out of the use of a credit or charge card or information contained on or
2 for use with the card.
3 (48) "Inventory" means goods, other than farm products, which:
4 (A) are leased by a person as lessor;
5 (B) are held by a person for sale or lease or to be furnished under
6 a contract of service;
7 (C) are furnished by a person under a contract of service; or
8 (D) consist of raw materials, work in process, or materials used or
9 consumed in a business.
10 (49) "Investment property" means a security, whether certificated or
11 uncertificated, security entitlement, securities account, commodity con-
12 tract or commodity account.
13 (50) "Jurisdiction of organization," with respect to a registered organi-
14 zation, means the jurisdiction under whose law the organization is orga-
15 nized.
16 (51) "Letter of credit right" means a right to payment or performance
17 under a letter of credit, whether or not the beneficiary has demanded or
18 is at the time entitled to demand payment or performance. The term does
19 not include the right of a beneficiary to demand payment or performance
20 under a letter of credit.
21 (52) "Lien creditor" means:
22 (A) a creditor that has acquired a lien on the property involved by
23 attachment, levy, or the like;
24 (B) an assignee for benefit of creditors from the time of assign-
25 ment;
26 (C) a trustee in bankruptcy from the date of the filing of the peti-
27 tion; or
28 (D) a receiver in equity from the time of appointment.
29 (53) "Manufactured home" means a structure, transportable in one (1) or
30 more sections, which, in the traveling mode, is eight (8) body feet or
31 more in width or forty (40) body feet or more in length, or, when erected
32 on site, is three hundred twenty (320) or more square feet, and which is
33 built on a permanent chassis and designed to be used as a dwelling with or
34 without a permanent foundation when connected to the required utilities,
35 and includes the plumbing, heating, air conditioning, and electrical sys-
36 tems contained therein. The term includes any structure that meets all of
37 the requirements of this paragraph except the size requirements and with
38 respect to which the manufacturer voluntarily files a certification
39 required by the United States secretary of housing and urban development
40 and complies with the standards established under title 42 of the United
41 States Code.
42 (54) "Manufactured home transaction" means a secured transaction:
43 (A) that creates a purchase-money security interest in a manufac-
44 tured home, other than a manufactured home held as inventory; or
45 (B) in which a manufactured home, other than a manufactured home
46 held as inventory, is the primary collateral.
47 (55) "Mortgage" means a consensual interest in real property, including
48 fixtures, which secures payment or performance of an obligation.
49 (56) "New debtor" means a person that becomes bound as debtor under sec-
50 tion 28-9-203(d) by a security agreement previously entered into by
51 another person.
52 (57) "New value" means: (i) money; (ii) money's worth in property, ser-
53 vices or new credit; or (iii) release by a transferee of an interest in
54 property previously transferred to the transferee. The term does not
55 include an obligation substituted for another obligation.
11
1 (58) "Noncash proceeds" means proceeds other than cash proceeds.
2 (59) "Obligor" means a person that, with respect to an obligation secured
3 by a security interest in or an agricultural lien on the collateral: (i)
4 owes payment or other performance of the obligation; (ii) has provided
5 property other than the collateral to secure payment or other performance
6 of the obligation; or (iii) is otherwise accountable in whole or in part
7 for payment or other performance of the obligation. The term does not
8 include issuers or nominated persons under a letter of credit.
9 (60) "Original debtor," except as used in section 28-9-310(c), means a
10 person that, as debtor, entered into a security agreement to which a new
11 debtor has become bound under section 28-9-203(d).
12 (61) "Payment intangible" means a general intangible under which the
13 account debtor's principal obligation is a monetary obligation.
14 (62) "Person related to," with respect to an individual, means:
15 (A) the spouse of the individual;
16 (B) a brother, brother-in-law, sister, or sister-in-law of the indi-
17 vidual;
18 (C) an ancestor or lineal descendant of the individual or the
19 individual's spouse; or
20 (D) any other relative, by blood or marriage, of the individual or
21 the individual's spouse who shares the same home with the individual.
22 (63) "Person related to," with respect to an organization, means:
23 (A) a person directly or indirectly controlling, controlled by, or
24 under common control with the organization;
25 (B) an officer or director of, or a person performing similar func-
26 tions with respect to, the organization;
27 (C) an officer or director of, or a person performing similar func-
28 tions with respect to, a person described in subparagraph (A) of this
29 paragraph;
30 (D) the spouse of an individual described in subparagraph (A), (B)
31 or (C) of this paragraph; or
32 (E) an individual who is related by blood or marriage to an individ-
33 ual described in subparagraph (A), (B), (C) or (D) of this paragraph
34 and shares the same home with the individual.
35 (64) "Proceeds" means the following property:
36 (A) whatever is acquired upon the sale, lease, license, exchange or
37 other disposition of collateral;
38 (B) whatever is collected on, or distributed on account of, collat-
39 eral;
40 (C) rights arising out of collateral;
41 (D) to the extent of the value of collateral, claims arising out of
42 the loss, nonconformity, or interference with the use of, defects or
43 infringement of rights in, or damage to, the collateral; or
44 (E) to the extent of the value of collateral and to the extent pay-
45 able to the debtor or the secured party, insurance payable by reason
46 of the loss or nonconformity of, defects or infringement of rights
47 in, or damage to, the collateral.
48 (65) "Promissory note" means an instrument that evidences a promise to pay
49 a monetary obligation, does not evidence an order to pay, and does not
50 contain an acknowledgment by a bank that the bank has received for deposit
51 a sum of money or funds.
52 (66) "Proposal" means a record authenticated by a secured party which
53 includes the terms on which the secured party is willing to accept collat-
54 eral in full or partial satisfaction of the obligation it secures pursuant
55 to sections 28-9-620, 28-9-621 and 28-9-622.
12
1 (67) "Public-finance transaction" means a secured transaction in connec-
2 tion with which:
3 (A) debt securities are issued;
4 (B) all or a portion of the securities issued have an initial stated
5 maturity of at least twenty (20) years; and
6 (C) the debtor, obligor, secured party, account debtor or other per-
7 son obligated on collateral, assignor or assignee of a secured obli-
8 gation, or assignor or assignee of a security interest is a state or
9 a governmental unit of a state.
10 (68) "Pursuant to commitment," with respect to an advance made or other
11 value given by a secured party, means pursuant to the secured party's
12 obligation, whether or not a subsequent event of default or other event
13 not within the secured party's control has relieved or may relieve the
14 secured party from its obligation.
15 (69) "Record," except as used in "for record," "of record," "record or
16 legal title," and "record owner," means information that is inscribed on a
17 tangible medium or which is stored in an electronic or other medium and is
18 retrievable in perceivable form.
19 (70) "Registered organization" means an organization organized solely
20 under the law of a single state or the United States and as to which the
21 state or the United States must maintain a public record showing the orga-
22 nization to have been organized.
23 (71) "Secondary obligor" means an obligor to the extent that:
24 (A) the obligor's obligation is secondary; or
25 (B) the obligor has a right of recourse with respect to an obliga-
26 tion secured by collateral against the debtor, another obligor, or
27 property of either.
28 (72) "Secured party" means:
29 (A) a person in whose favor a security interest is created or pro-
30 vided for under a security agreement, whether or not any obligation
31 to be secured is outstanding;
32 (B) a person that holds an agricultural lien;
33 (C) a consignor;
34 (D) a person to which accounts, chattel paper, payment intangibles
35 or promissory notes have been sold;
36 (E) a trustee, indenture trustee, agent, collateral agent, or other
37 representative in whose favor a security interest or agricultural
38 lien is created or provided for; or
39 (F) a person that holds a security interest arising under section
40 28-2-401, 28-2-505, 28-2-711(3), 28-4-210, 28-5-120 or 28-12-508(5).
41 (73) "Security agreement" means an agreement that creates or provides for
42 a security interest.
43 (74) "Send," in connection with a record or notification, means:
44 (A) to deposit in the mail, deliver for transmission, or transmit by
45 any other usual means of communication, with postage or cost of
46 transmission provided for, addressed to any address reasonable under
47 the circumstances; or
48 (B) to cause the record or notification to be received within the
49 time that it would have been received if properly sent under subpara-
50 graph (A) of this paragraph.
51 (75) "Software" means a computer program and any supporting information
52 provided in connection with a transaction relating to the program. The
53 term does not include a computer program that is included in the defini-
54 tion of goods.
55 (76) "State" means a state of the United States, the District of Columbia,
13
1 Puerto Rico, the United States Virgin Islands, or any territory or insular
2 possession subject to the jurisdiction of the United States.
3 (77) "Supporting obligation" means a letter of credit right or secondary
4 obligation that supports the payment or performance of an account, chattel
5 paper, a document, a general intangible, an instrument or investment prop-
6 erty.
7 (78) "Tangible chattel paper" means chattel paper evidenced by a record or
8 records consisting of information that is inscribed on a tangible medium.
9 (79) "Termination statement" means an amendment of a financing statement
10 which:
11 (A) identifies, by its file number, the initial financing statement
12 to which it relates; and
13 (B) indicates either that it is a termination statement or that the
14 identified financing statement is no longer effective.
15 (80) "Transmitting utility" means a person primarily engaged in the busi-
16 ness of:
17 (A) operating a railroad, subway, street railway, or trolley bus;
18 (B) transmitting communications electrically, electromagnetically or
19 by light;
20 (C) transmitting goods by pipeline or sewer; or
21 (D) transmitting or producing and transmitting electricity, steam,
22 gas or water.
23 (b) The following definitions in other chapters apply to this chapter:
24 "Applicant" section 28-5-102.
25 "Beneficiary" section 28-5-102.
26 "Broker" section 28-8-102.
27 "Certificated security" section 28-8-102.
28 "Check" section 28-3-104.
29 "Clearing corporation" section 28-8-102.
30 "Contract for sale" section 28-2-106.
31 "Customer" section 28-4-104.
32 "Entitlement holder" section 28-8-102.
33 "Financial asset" section 28-8-102.
34 "Holder in due course" section 28-3-302.
35 "Issuer" (with respect to a letter of credit
36 or letter of credit right) section 28-5-102.
37 "Issuer" (with respect to a security) section 28-8-201.
38 "Lease" section 28-12-103.
39 "Lease agreement" section 28-12-103.
40 "Lease contract" section 28-12-103.
41 "Leasehold interest" section 28-12-103.
42 "Lessee" section 28-12-103.
43 "Lessee in ordinary course of business" section 28-12-103.
44 "Lessor" section 28-12-103.
45 "Lessor's residual interest" section 28-12-103.
46 "Letter of credit" section 28-5-102.
47 "Merchant" section 28-2-104.
48 "Negotiable instrument" section 28-3-104.
49 "Nominated person" section 28-5-102.
50 "Note" section 28-3-104.
51 "Proceeds of a letter of credit" section 28-5-114.
52 "Prove" section 28-3-103.
53 "Sale" section 28-2-106.
54 "Securities account" section 28-8-501.
55 "Securities intermediary" section 28-8-102.
14
1 "Security" section 28-8-102.
2 "Security certificate" section 28-8-102.
3 "Security entitlement" section 28-8-102.
4 "Uncertificated security" section 28-8-102.
5 (c) Chapter 1, title 28, contains general definitions and principles of
6 construction and interpretation applicable throughout this chapter.
7 28-9-103. PURCHASE-MONEY SECURITY INTEREST -- APPLICATION OF PAYMENTS --
8 BURDEN OF ESTABLISHING. (a) In this section:
9 (1) "Purchase-money collateral" means goods or software that secures a
10 purchase-money obligation incurred with respect to that collateral; and
11 (2) "Purchase-money obligation" means an obligation of an obligor incur-
12 red as all or part of the price of the collateral or for value given to
13 enable the debtor to acquire rights in or the use of the collateral if the
14 value is in fact so used.
15 (b) A security interest in goods is a purchase-money security interest:
16 (1) To the extent that the goods are purchase-money collateral with
17 respect to that security interest;
18 (2) If the security interest is in inventory that is or was purchase-
19 money collateral, also to the extent that the security interest secures a
20 purchase-money obligation incurred with respect to other inventory in
21 which the secured party holds or held a purchase-money security interest;
22 and
23 (3) Also to the extent that the security interest secures a purchase-
24 money obligation incurred with respect to software in which the secured
25 party holds or held a purchase-money security interest.
26 (c) A security interest in software is a purchase-money security interest
27 to the extent that the security interest also secures a purchase-money obliga-
28 tion incurred with respect to goods in which the secured party holds or held a
29 purchase-money security interest if:
30 (1) The debtor acquired its interest in the software in an integrated
31 transaction in which it acquired an interest in the goods; and
32 (2) The debtor acquired its interest in the software for the principal
33 purpose of using the software in the goods.
34 (d) The security interest of a consignor in goods that are the subject of
35 a consignment is a purchase-money security interest in inventory.
36 (e) If the extent to which a security interest is a purchase-money secu-
37 rity interest depends on the application of a payment to a particular obliga-
38 tion, the payment must be applied:
39 (1) In accordance with any reasonable method of application to which the
40 parties agree;
41 (2) In the absence of the parties' agreement to a reasonable method, in
42 accordance with any intention of the obligor manifested at or before the
43 time of payment; or
44 (3) In the absence of an agreement to a reasonable method and a timely
45 manifestation of the obligor's intention, in the following order:
46 (A) to obligations that are not secured; and
47 (B) if more than one (1) obligation is secured, to obligations
48 secured by purchase-money security interests in the order in which
49 those obligations were incurred.
50 (f) A purchase-money security interest does not lose its status as such,
51 even if:
52 (1) The purchase-money collateral also secures an obligation that is not
53 a purchase-money obligation;
54 (2) Collateral that is not purchase-money collateral also secures the
15
1 purchase-money obligation; or
2 (3) The purchase-money obligation has been renewed, refinanced, consoli-
3 dated or restructured.
4 (g) A secured party claiming a purchase-money security interest has the
5 burden of establishing the extent to which the security interest is a
6 purchase-money security interest.
7 28-9-104. CONTROL OF DEPOSIT ACCOUNT. (a) A secured party has control of
8 a deposit account if:
9 (1) The secured party is the bank with which the deposit account is main-
10 tained;
11 (2) The debtor, secured party, and bank have agreed in an authenticated
12 record that the bank will comply with instructions originated by the
13 secured party directing disposition of the funds in the deposit account
14 without further consent by the debtor; or
15 (3) The secured party becomes the bank's customer with respect to the
16 deposit account.
17 (b) A secured party that has satisfied subsection (a) of this section has
18 control, even if the debtor retains the right to direct the disposition of
19 funds from the deposit account.
20 28-9-105. CONTROL OF ELECTRONIC CHATTEL PAPER. A secured party has con-
21 trol of electronic chattel paper if the record or records comprising the chat-
22 tel paper are created, stored and assigned in such a manner that:
23 (1) A single authoritative copy of the record or records exists which is
24 unique, identifiable and, except as otherwise provided in subsections (4), (5)
25 and (6) of this section, unalterable;
26 (2) The authoritative copy identifies the secured party as the assignee
27 of the record or records;
28 (3) The authoritative copy is communicated to and maintained by the
29 secured party or its designated custodian;
30 (4) Copies or revisions that add or change an identified assignee of the
31 authoritative copy can be made only with the participation of the secured
32 party;
33 (5) Each copy of the authoritative copy and any copy of a copy is readily
34 identifiable as a copy that is not the authoritative copy; and
35 (6) Any revision of the authoritative copy is readily identifiable as an
36 authorized or unauthorized revision.
37 28-9-106. CONTROL OF INVESTMENT PROPERTY. (a) A person has control of a
38 certificated security, uncertificated security, or security entitlement as
39 provided in section 28-8-106.
40 (b) A secured party has control of a commodity contract if:
41 (1) The secured party is the commodity intermediary with which the com-
42 modity contract is carried; or
43 (2) The commodity customer, secured party and commodity intermediary have
44 agreed that the commodity intermediary will apply any value distributed on
45 account of the commodity contract as directed by the secured party without
46 further consent by the commodity customer.
47 (c) A secured party having control of all security entitlements or com-
48 modity contracts carried in a securities account or commodity account has con-
49 trol over the securities account or commodity account.
50 28-9-107. CONTROL OF LETTER OF CREDIT RIGHT. A secured party has control
51 of a letter of credit right to the extent of any right to payment or perfor-
16
1 mance by the issuer or any nominated person if the issuer or nominated person
2 has consented to an assignment of proceeds of the letter of credit under sec-
3 tion 28-5-114(3) or otherwise applicable law or practice.
4 28-9-108. SUFFICIENCY OF DESCRIPTION. (a) Except as otherwise provided in
5 subsections (c), (d) and (e) of this section, a description of personal or
6 real property is sufficient, whether or not it is specific, if it reasonably
7 identifies what is described.
8 (b) Except as otherwise provided in subsection (d) of this section, a
9 description of collateral reasonably identifies the collateral if it identi-
10 fies the collateral by:
11 (1) Specific listing;
12 (2) Category;
13 (3) Except as otherwise provided in subsection (e) of this section, a
14 type of collateral defined in the uniform commercial code;
15 (4) Quantity;
16 (5) Computational or allocational formula or procedure; or
17 (6) Except as otherwise provided in subsection (c) of this section, any
18 other method, if the identity of the collateral is objectively determin-
19 able.
20 (c) A description of collateral as "all the debtor's assets" or "all the
21 debtor's personal property" or using words of similar import does not reason-
22 ably identify the collateral.
23 (d) Except as otherwise provided in subsection (e) of this section, a
24 description of a security entitlement, securities account or commodity account
25 is sufficient if it describes:
26 (1) The collateral by those terms or as investment property; or
27 (2) The underlying financial asset or commodity contract.
28 (e) A description only by type of collateral defined in the uniform com-
29 mercial code is an insufficient description of:
30 (1) A commercial tort claim; or
31 (2) In a consumer transaction, consumer goods, a security entitlement, a
32 securities account or a commodity account.
33 28-9-109. SCOPE. (a) Except as otherwise provided in subsections (c) and
34 (d), this chapter applies to:
35 (1) A transaction, regardless of its form, that creates a security inter-
36 est in personal property or fixtures by contract;
37 (2) An agricultural lien;
38 (3) A sale of accounts, chattel paper, payment intangibles or promissory
39 notes;
40 (4) A consignment;
41 (5) A security interest arising under section 28-2-401, 28-2-505,
42 28-2-711(3) or 28-12-508(5), as provided in section 28-9-110; and
43 (6) A security interest arising under section 28-4-210 or 28-5-120.
44 (b) The application of this chapter to a security interest in a secured
45 obligation is not affected by the fact that the obligation is itself secured
46 by a transaction or interest to which this chapter does not apply.
47 (c) This chapter does not apply to the extent that:
48 (1) A statute, regulation, or treaty of the United States preempts this
49 chapter;
50 (2) Another statute of this state expressly governs the creation, perfec-
51 tion, priority or enforcement of a security interest created by this state
52 or a governmental unit of this state;
53 (3) A statute of another state, a foreign country, or a governmental unit
17
1 of another state or a foreign country, other than a statute generally
2 applicable to security interests, expressly governs creation, perfection,
3 priority or enforcement of a security interest created by the state,
4 country or governmental unit; or
5 (4) The rights of a transferee beneficiary or nominated person under a
6 letter of credit are independent and superior under section 28-5-114.
7 (d) This chapter does not apply to:
8 (1) A landlord's lien, other than an agricultural lien;
9 (2) A lien, other than an agricultural lien, given by statute or other
10 rule of law for services or materials, but section 28-9-333 applies with
11 respect to priority of the lien;
12 (3) An assignment of a claim for wages, salary or other compensation of
13 an employee;
14 (4) A sale of accounts, chattel paper, payment intangibles or promissory
15 notes as part of a sale of the business out of which they arose;
16 (5) An assignment of accounts, chattel paper, payment intangibles or
17 promissory notes which is for the purpose of collection only;
18 (6) An assignment of a right to payment under a contract to an assignee
19 that is also obligated to perform under the contract;
20 (7) An assignment of a single account, payment intangible or promissory
21 note to an assignee in full or partial satisfaction of a preexisting
22 indebtedness;
23 (8) A transfer of an interest in or an assignment of a claim under a pol-
24 icy of insurance, other than an assignment by or to a health care provider
25 of a health care insurance receivable and any subsequent assignment of the
26 right to payment, but sections 28-9-315 and 28-9-322 apply with respect to
27 proceeds and priorities in proceeds;
28 (9) An assignment of a right represented by a judgment, other than a
29 judgment taken on a right to payment that was collateral;
30 (10) A right of recoupment or set-off, but:
31 (A) section 28-9-340 applies with respect to the effectiveness of
32 rights of recoupment or set-off against deposit accounts; and
33 (B) section 28-9-404 applies with respect to defenses or claims of
34 an account debtor;
35 (11) The creation or transfer of an interest in or lien on real property,
36 including a lease or rents thereunder, except to the extent that provision
37 is made for:
38 (A) liens on real property in sections 28-9-203 and 28-9-308;
39 (B) fixtures in section 28-9-334;
40 (C) fixture filings in sections 28-9-501, 28-9-502, 28-9-512,
41 28-9-516 and 28-9-519; and
42 (D) security agreements covering personal and real property in sec-
43 tion 28-9-604;
44 (12) An assignment of a claim arising in tort, other than a commercial
45 tort claim, but sections 28-9-315 and 28-9-322 apply with respect to pro-
46 ceeds and priorities in proceeds; or
47 (13) A claim or right to receive compensation for injuries or sickness as
48 described in 26 U.S.C. section 104(a)(1), as amended from time to time.
49 28-9-110. SECURITY INTERESTS ARISING UNDER CHAPTER 2 OR 12, TITLE 28,
50 IDAHO CODE. A security interest arising under section 28-2-401, 28-2-505,
51 28-2-711(3) or 28-12-508(5) is subject to this chapter. However, until the
52 debtor obtains possession of the goods:
53 (1) The security interest is enforceable, even if section
54 28-9-203(b)(3) has not been satisfied;
18
1 (2) Filing is not required to perfect the security interest;
2 (3) The rights of the secured party after default by the debtor are gov-
3 erned by chapter 2 or 12, title 28, Idaho Code; and
4 (4) The security interest has priority over a conflicting security inter-
5 est created by the debtor.
6 PART 2.
7 EFFECTIVENESS OF SECURITY AGREEMENT --
8 ATTACHMENT OF SECURITY INTEREST --
9 RIGHTS OF PARTIES TO SECURITY AGREEMENT
10 28-9-201. GENERAL EFFECTIVENESS OF SECURITY AGREEMENT. (a) Except as
11 otherwise provided in the uniform commercial code, a security agreement is
12 effective according to its terms between the parties, against purchasers of
13 the collateral, and against creditors.
14 (b) A transaction subject to this chapter is subject to any applicable
15 rule of law which establishes a different rule for consumers, to the Idaho
16 credit code, chapters 41 through 49, title 28, Idaho Code, and any rules pro-
17 mulgated thereunder and to the Idaho credit union act, chapter 21, title 26,
18 Idaho Code, and any rules promulgated thereunder.
19 (c) In case of conflict between this chapter and a rule of law, statute
20 or rule described in subsection (b) of this section, the rule of law, statute
21 or rule controls. Failure to comply with a statute or rule described in sub-
22 section (b) of this section has only the effect the statute or rule specifies.
23 (d) This chapter does not:
24 (1) Validate any rate, charge, agreement or practice that violates a rule
25 of law, statute or rule described in subsection (b) of this section; or
26 (2) Extend the application of the rule of law, statute or rule to a
27 transaction not otherwise subject to it.
28 28-9-202. TITLE TO COLLATERAL IMMATERIAL. Except as otherwise provided
29 with respect to consignments or sales of accounts, chattel paper, payment
30 intangibles or promissory notes, the provisions of this chapter with regard to
31 rights and obligations apply whether title to collateral is in the secured
32 party or the debtor.
33 28-9-203. ATTACHMENT AND ENFORCEABILITY OF SECURITY INTEREST -- PROCEEDS
34 -- SUPPORTING OBLIGATIONS -- FORMAL REQUISITES. (a) A security interest
35 attaches to collateral when it becomes enforceable against the debtor with
36 respect to the collateral, unless an agreement expressly postpones the time of
37 attachment.
38 (b) Except as otherwise provided in subsections (c) through (i) of this
39 section, a security interest is enforceable against the debtor and third par-
40 ties with respect to the collateral only if:
41 (1) Value has been given;
42 (2) The debtor has rights in the collateral or the power to transfer
43 rights in the collateral to a secured party; and
44 (3) One (1) of the following conditions is met:
45 (A) the debtor has authenticated a security agreement that provides
46 a description of the collateral and, if the security interest covers
47 timber to be cut, a description of the land concerned;
48 (B) the collateral is not a certificated security and is in the pos-
49 session of the secured party under section 28-9-313 pursuant to the
50 debtor's security agreement;
51 (C) the collateral is a certificated security in registered form and
19
1 the security certificate has been delivered to the secured party
2 under section 28-8-301 pursuant to the debtor's security agreement;
3 or
4 (D) the collateral is deposit accounts, electronic chattel paper,
5 investment property, or letter of credit rights, and the secured
6 party has control under section 28-9-104, 28-9-105, 28-9-106 or
7 28-9-107 pursuant to the debtor's security agreement.
8 (c) Subsection (b) of this section is subject to section 28-4-210 on the
9 security interest of a collecting bank, section 28-5-120 on the security
10 interest of a letter of credit issuer or nominated person, section 28-9-110 on
11 a security interest arising under chapter 2 or 12, title 28, and section
12 28-9-206 on security interests in investment property.
13 (d) A person becomes bound as debtor by a security agreement entered into
14 by another person if, by operation of law other than this chapter or by con-
15 tract:
16 (1) The security agreement becomes effective to create a security inter-
17 est in the person's property; or
18 (2) The person becomes generally obligated for the obligations of the
19 other person, including the obligation secured under the security agree-
20 ment, and acquires or succeeds to all or substantially all of the assets
21 of the other person.
22 (e) If a new debtor becomes bound as debtor by a security agreement
23 entered into by another person:
24 (1) The agreement satisfies subsection (b)(3) of this section with
25 respect to existing or after-acquired property of the new debtor to the
26 extent the property is described in the agreement; and
27 (2) Another agreement is not necessary to make a security interest in the
28 property enforceable.
29 (f) The attachment of a security interest in collateral gives the secured
30 party the rights to proceeds provided by section 28-9-315 and is also attach-
31 ment of a security interest in a supporting obligation for the collateral.
32 (g) The attachment of a security interest in a right to payment or per-
33 formance secured by a security interest or other lien on personal or real
34 property is also attachment of a security interest in the security interest,
35 mortgage or other lien.
36 (h) The attachment of a security interest in a securities account is also
37 attachment of a security interest in the security entitlements carried in the
38 securities account.
39 (i) The attachment of a security interest in a commodity account is also
40 attachment of a security interest in the commodity contracts carried in the
41 commodity account.
42 28-9-204. AFTER-ACQUIRED PROPERTY -- FUTURE ADVANCES. (a) Except as
43 otherwise provided in subsection (b) of this section, a security agreement may
44 create or provide for a security interest in after-acquired collateral.
45 (b) A security interest does not attach under a term constituting an
46 after-acquired property clause to:
47 (1) Consumer goods, other than an accession when given as additional
48 security, unless the debtor acquires rights in them within ten (10) days
49 after the secured party gives value; or
50 (2) A commercial tort claim.
51 (c) A security agreement may provide that collateral secures, or that
52 accounts, chattel paper, payment intangibles or promissory notes are sold in
53 connection with, future advances or other value, whether or not the advances
54 or value are given pursuant to commitment.
20
1 28-9-205. USE OR DISPOSITION OF COLLATERAL PERMISSIBLE. (a) A security
2 interest is not invalid or fraudulent against creditors solely because:
3 (1) The debtor has the right or ability to:
4 (A) use, commingle or dispose of all or part of the collateral,
5 including returned or repossessed goods;
6 (B) collect, compromise, enforce or otherwise deal with collateral;
7 (C) accept the return of collateral or make repossessions; or
8 (D) use, commingle or dispose of proceeds; or
9 (2) The secured party fails to require the debtor to account for proceeds
10 or replace collateral.
11 (b) This section does not relax the requirements of possession if attach-
12 ment, perfection or enforcement of a security interest depends upon possession
13 of the collateral by the secured party.
14 28-9-206. SECURITY INTEREST ARISING IN PURCHASE OR DELIVERY OF FINANCIAL
15 ASSET. (a) A security interest in favor of a securities intermediary attaches
16 to a person's security entitlement if:
17 (1) The person buys a financial asset through the securities intermediary
18 in a transaction in which the person is obligated to pay the purchase
19 price to the securities intermediary at the time of the purchase; and
20 (2) The securities intermediary credits the financial asset to the
21 buyer's securities account before the buyer pays the securities intermedi-
22 ary.
23 (b) The security interest described in subsection (a) of this section
24 secures the person's obligation to pay for the financial asset.
25 (c) A security interest in favor of a person that delivers a certificated
26 security or other financial asset represented by a writing attaches to the
27 security or other financial asset if:
28 (1) The security or other financial asset:
29 (A) in the ordinary course of business is transferred by delivery
30 with any necessary indorsement or assignment; and
31 (B) is delivered under an agreement between persons in the business
32 of dealing with such securities or financial assets; and
33 (2) The agreement calls for delivery against payment.
34 (d) The security interest described in subsection (c) of this section
35 secures the obligation to make payment for the delivery.
36 28-9-207. RIGHTS AND DUTIES OF SECURED PARTY HAVING POSSESSION OR CONTROL
37 OF COLLATERAL. (a) Except as otherwise provided in subsection (d) of this sec-
38 tion, a secured party shall use reasonable care in the custody and preserva-
39 tion of collateral in the secured party's possession. In the case of chattel
40 paper or an instrument, reasonable care includes taking necessary steps to
41 preserve rights against prior parties unless otherwise agreed.
42 (b) Except as otherwise provided in subsection (d) of this section, if a
43 secured party has possession of collateral:
44 (1) Reasonable expenses, including the cost of insurance and payment of
45 taxes or other charges, incurred in the custody, preservation, use or
46 operation of the collateral are chargeable to the debtor and are secured
47 by the collateral;
48 (2) The risk of accidental loss or damage is on the debtor to the extent
49 of a deficiency in any effective insurance coverage;
50 (3) The secured party shall keep the collateral identifiable, but fungi-
51 ble collateral may be commingled; and
52 (4) The secured party may use or operate the collateral:
53 (A) for the purpose of preserving the collateral or its value;
21
1 (B) as permitted by an order of a court having competent jurisdic-
2 tion; or
3 (C) except in the case of consumer goods, in the manner and to the
4 extent agreed by the debtor.
5 (c) Except as otherwise provided in subsection (d) of this section, a
6 secured party having possession of collateral or control of collateral under
7 section 28-9-104, 28-9-105, 28-9-106 or 28-9-107:
8 (1) May hold as additional security any proceeds, except money or funds,
9 received from the collateral;
10 (2) Shall apply money or funds received from the collateral to reduce the
11 secured obligation, unless remitted to the debtor; and
12 (3) May create a security interest in the collateral.
13 (d) If the secured party is a buyer of accounts, chattel paper, payment
14 intangibles, or promissory notes or a consignor:
15 (1) Subsection (a) of this section does not apply unless the secured
16 party is entitled under an agreement:
17 (A) to charge back uncollected collateral; or
18 (B) otherwise to full or limited recourse against the debtor or a
19 secondary obligor based on the nonpayment or other default of an
20 account debtor or other obligor on the collateral; and
21 (2) Subsections (b) and (c) of this section do not apply.
22 28-9-208. ADDITIONAL DUTIES OF SECURED PARTY HAVING CONTROL OF COLLAT-
23 ERAL. (a) This section applies to cases in which there is no outstanding
24 secured obligation and the secured party is not committed to make advances,
25 incur obligations, or otherwise give value.
26 (b) Within ten (10) days after receiving an authenticated demand by the
27 debtor:
28 (1) A secured party having control of a deposit account under section
29 28-9-104(a)(2) shall send to the bank with which the deposit account is
30 maintained an authenticated statement that releases the bank from any fur-
31 ther obligation to comply with instructions originated by the secured
32 party;
33 (2) A secured party having control of a deposit account under section
34 28-9-104(a)(3) shall:
35 (A) pay the debtor the balance on deposit in the deposit account; or
36 (B) transfer the balance on deposit into a deposit account in the
37 debtor's name;
38 (3) A secured party, other than a buyer, having control of electronic
39 chattel paper under section 28-9-105 shall:
40 (A) communicate the authoritative copy of the electronic chattel
41 paper to the debtor or its designated custodian;
42 (B) if the debtor designates a custodian that is the designated cus-
43 todian with which the authoritative copy of the electronic chattel
44 paper is maintained for the secured party, communicate to the custo-
45 dian an authenticated record releasing the designated custodian from
46 any further obligation to comply with instructions originated by the
47 secured party and instructing the custodian to comply with instruc-
48 tions originated by the debtor; and
49 (C) take appropriate action to enable the debtor or its designated
50 custodian to make copies of or revisions to the authoritative copy
51 which add or change an identified assignee of the authoritative copy
52 without the consent of the secured party;
53 (4) A secured party having control of investment property under section
54 28-8-106(4)(b) or 28-9-106(b) shall send to the securities intermediary or
22
1 commodity intermediary with which the security entitlement or commodity
2 contract is maintained an authenticated record that releases the securi-
3 ties intermediary or commodity intermediary from any further obligation to
4 comply with entitlement orders or directions originated by the secured
5 party; and
6 (5) A secured party having control of a letter of credit right under sec-
7 tion 28-9-107 shall send to each person having an unfulfilled obligation
8 to pay or deliver proceeds of the letter of credit to the secured party an
9 authenticated release from any further obligation to pay or deliver pro-
10 ceeds of the letter of credit to the secured party.
11 28-9-209. DUTIES OF SECURED PARTY IF ACCOUNT DEBTOR HAS BEEN NOTIFIED OF
12 ASSIGNMENT. (a) Except as otherwise provided in subsection (c), this section
13 applies if:
14 (1) There is no outstanding secured obligation; and
15 (2) The secured party is not committed to make advances, incur obliga-
16 tions, or otherwise give value.
17 (b) Within ten (10) days after receiving an authenticated demand by the
18 debtor, a secured party shall send to an account debtor that has received
19 notification of an assignment to the secured party as assignee under section
20 28-9-406(a) an authenticated record that releases the account debtor from any
21 further obligation to the secured party.
22 (c) This section does not apply to an assignment constituting the sale of
23 an account, chattel paper or payment intangible.
24 28-9-210. REQUEST FOR ACCOUNTING -- REQUEST REGARDING LIST OF COLLATERAL
25 OR STATEMENT OF ACCOUNT. (a) In this section:
26 (1) "Request" means a record of a type described in paragraph (2), (3) or
27 (4) of this subsection.
28 (2) "Request for an accounting" means a record authenticated by a debtor
29 requesting that the recipient provide an accounting of the unpaid obliga-
30 tions secured by collateral and reasonably identifying the transaction or
31 relationship that is the subject of the request.
32 (3) "Request regarding a list of collateral" means a record authenticated
33 by a debtor requesting that the recipient approve or correct a list of
34 what the debtor believes to be the collateral securing an obligation and
35 reasonably identifying the transaction or relationship that is the subject
36 of the request.
37 (4) "Request regarding a statement of account" means a record authenti-
38 cated by a debtor requesting that the recipient approve or correct a
39 statement indicating what the debtor believes to be the aggregate amount
40 of unpaid obligations secured by collateral as of a specified date and
41 reasonably identifying the transaction or relationship that is the subject
42 of the request.
43 (b) Subject to subsections (c), (d), (e) and (f) of this section, a
44 secured party, other than a buyer of accounts, chattel paper, payment intangi-
45 bles, or promissory notes or a consignor, shall comply with a request within
46 fourteen (14) days after receipt:
47 (1) In the case of a request for an accounting, by authenticating and
48 sending to the debtor an accounting; and
49 (2) In the case of a request regarding a list of collateral or a request
50 regarding a statement of account, by authenticating and sending to the
51 debtor an approval or correction.
52 (c) A secured party that claims a security interest in all of a particu-
53 lar type of collateral owned by the debtor may comply with a request regarding
23
1 a list of collateral by sending to the debtor an authenticated record includ-
2 ing a statement to that effect within fourteen (14) days after receipt.
3 (d) A person that receives a request regarding a list of collateral,
4 claims no interest in the collateral when it receives the request, and claimed
5 an interest in the collateral at an earlier time shall comply with the request
6 within fourteen (14) days after receipt by sending to the debtor an authenti-
7 cated record:
8 (1) Disclaiming any interest in the collateral; and
9 (2) If known to the recipient, providing the name and mailing address of
10 any assignee of or successor to the recipient's interest in the collat-
11 eral.
12 (e) A person that receives a request for an accounting or a request
13 regarding a statement of account, claims no interest in the obligations when
14 it receives the request, and claimed an interest in the obligations at an ear-
15 lier time shall comply with the request within fourteen (14) days after
16 receipt by sending to the debtor an authenticated record:
17 (1) Disclaiming any interest in the obligations; and
18 (2) If known to the recipient, providing the name and mailing address of
19 any assignee of or successor to the recipient's interest in the obliga-
20 tions.
21 (f) A debtor is entitled without charge to one (1) response to a request
22 under this section during any six (6) month period. The secured party may
23 require payment of a charge not exceeding twenty-five dollars ($25.00) for
24 each additional response.
25 PART 3.
26 PERFECTION AND PRIORITY
27 28-9-301. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS.
28 Except as otherwise provided in sections 28-9-303 through 28-9-306, the fol-
29 lowing rules determine the law governing perfection, the effect of perfection
30 or nonperfection, and the priority of a security interest in collateral:
31 (1) Except as otherwise provided in this section, while a debtor is
32 located in a jurisdiction, the local law of that jurisdiction governs perfec-
33 tion, the effect of perfection or nonperfection, and the priority of a secu-
34 rity interest in collateral.
35 (2) While collateral is located in a jurisdiction, the local law of that
36 jurisdiction governs perfection, the effect of perfection or nonperfection,
37 and the priority of a possessory security interest in that collateral.
38 (3) Except as otherwise provided in subsection (4) of this section, while
39 negotiable documents, goods, instruments, money or tangible chattel paper is
40 located in a jurisdiction, the local law of that jurisdiction governs:
41 (A) Perfection of a security interest in the goods by filing a fixture
42 filing;
43 (B) Perfection of a security interest in timber to be cut; and
44 (C) The effect of perfection or nonperfection and the priority of a
45 nonpossessory security interest in the collateral.
46 (4) The local law of the jurisdiction in which the wellhead or minehead
47 is located governs perfection, the effect of perfection or nonperfection, and
48 the priority of a security interest in as-extracted collateral.
49 28-9-302. LAW GOVERNING PERFECTION AND PRIORITY OF AGRICULTURAL LIENS.
50 While farm products are located in a jurisdiction, the local law of that
51 jurisdiction governs perfection, the effect of perfection or nonperfection,
52 and the priority of an agricultural lien on the farm products.
24
1 28-9-303. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN
2 GOODS COVERED BY A CERTIFICATE OF TITLE. (a) This section applies to goods
3 covered by a certificate of title, even if there is no other relationship
4 between the jurisdiction under whose certificate of title the goods are cov-
5 ered and the goods or the debtor.
6 (b) Goods become covered by a certificate of title when a valid applica-
7 tion for the certificate of title and the applicable fee are delivered to the
8 appropriate authority. Goods cease to be covered by a certificate of title at
9 the earlier of the time the certificate of title ceases to be effective under
10 the law of the issuing jurisdiction or the time the goods become covered sub-
11 sequently by a certificate of title issued by another jurisdiction.
12 (c) The local law of the jurisdiction under whose certificate of title
13 the goods are covered governs perfection, the effect of perfection or
14 nonperfection, and the priority of a security interest in goods covered by a
15 certificate of title from the time the goods become covered by the certificate
16 of title until the goods cease to be covered by the certificate of title.
17 28-9-304. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN
18 DEPOSIT ACCOUNTS. (a) The local law of a bank's jurisdiction governs perfec-
19 tion, the effect of perfection or nonperfection, and the priority of a secu-
20 rity interest in a deposit account maintained with that bank.
21 (b) The following rules determine a bank's jurisdiction for purposes of
22 this part:
23 (1) If an agreement between the bank and the debtor governing the deposit
24 account expressly provides that a particular jurisdiction is the bank's
25 jurisdiction for purposes of this part, this chapter, or the uniform com-
26 mercial code, that jurisdiction is the bank's jurisdiction.
27 (2) If paragraph (1) of this subsection does not apply and an agreement
28 between the bank and its customer governing the deposit account expressly
29 provides that the agreement is governed by the law of a particular juris-
30 diction, that jurisdiction is the bank's jurisdiction.
31 (3) If neither paragraph (1) nor (2) of this subsection applies and an
32 agreement between the bank and its customer governing the deposit account
33 expressly provides that the deposit account is maintained at an office in
34 a particular jurisdiction, that jurisdiction is the bank's jurisdiction.
35 (4) If none of the preceding paragraphs apply, the bank's jurisdiction is
36 the jurisdiction in which the office identified in an account statement as
37 the office serving the customer's account is located.
38 (5) If none of the preceding paragraphs apply, the bank's jurisdiction is
39 the jurisdiction in which the chief executive office of the bank is
40 located.
41 28-9-305. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN
42 INVESTMENT PROPERTY. (a) Except as otherwise provided in subsection (c) of
43 this section, the following rules apply:
44 (1) While a security certificate is located in a jurisdiction, the local
45 law of that jurisdiction governs perfection, the effect of perfection or
46 nonperfection, and the priority of a security interest in the certificated
47 security represented thereby.
48 (2) The local law of the issuer's jurisdiction as specified in section
49 28-8-110(4) governs perfection, the effect of perfection or nonperfection,
50 and the priority of a security interest in an uncertificated security.
51 (3) The local law of the securities intermediary's jurisdiction as speci-
52 fied in section 28-8-110(5) governs perfection, the effect of perfection
53 or nonperfection, and the priority of a security interest in a security
25
1 entitlement or securities account.
2 (4) The local law of the commodity intermediary's jurisdiction governs
3 perfection, the effect of perfection or nonperfection, and the priority of
4 a security interest in a commodity contract or commodity account.
5 (b) The following rules determine a commodity intermediary's jurisdiction
6 for purposes of this part:
7 (1) If an agreement between the commodity intermediary and commodity cus-
8 tomer governing the commodity account expressly provides that a particular
9 jurisdiction is the commodity intermediary's jurisdiction for purposes of
10 this part, this chapter, or the uniform commercial code, that jurisdiction
11 is the commodity intermediary's jurisdiction.
12 (2) If paragraph (1) of this subsection does not apply and an agreement
13 between the commodity intermediary and commodity customer governing the
14 commodity account expressly provides that the agreement is governed by the
15 law of a particular jurisdiction, that jurisdiction is the commodity
16 intermediary's jurisdiction.
17 (3) If neither paragraph (1) nor (2) of this subsection applies and an
18 agreement between the commodity intermediary and commodity customer gov-
19 erning the commodity account expressly provides that the commodity account
20 is maintained at an office in a particular jurisdiction, that jurisdic-
21 tion is the commodity intermediary's jurisdiction.
22 (4) If none of the preceding paragraphs apply, the commodity
23 intermediary's jurisdiction is the jurisdiction in which the office iden-
24 tified in an account statement as the office serving the commodity
25 customer's account is located.
26 (5) If none of the preceding paragraphs apply, the commodity
27 intermediary's jurisdiction is the jurisdiction in which the chief execu-
28 tive office of the commodity intermediary is located.
29 (c) The local law of the jurisdiction in which the debtor is located gov-
30 erns:
31 (1) Perfection of a security interest in investment property by filing;
32 (2) Automatic perfection of a security interest in investment property
33 created by a broker or securities intermediary; and
34 (3) Automatic perfection of a security interest in a commodity contract
35 or commodity account created by a commodity intermediary.
36 28-9-306. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN
37 LETTER OF CREDIT RIGHTS. (a) Subject to subsection (c) of this section, the
38 local law of the issuer's jurisdiction or a nominated person's jurisdiction
39 governs perfection, the effect of perfection or nonperfection, and the prior-
40 ity of a security interest in a letter of credit right if the issuer's juris-
41 diction or nominated person's jurisdiction is a state.
42 (b) For purposes of this part, an issuer's jurisdiction or nominated
43 person's jurisdiction is the jurisdiction whose law governs the liability of
44 the issuer or nominated person with respect to the letter of credit right as
45 provided in section 28-5-116.
46 (c) This section does not apply to a security interest that is perfected
47 only under section 28-9-308(d).
48 28-9-307. LOCATION OF DEBTOR. (a) In this section, "place of business"
49 means a place where a debtor conducts its affairs.
50 (b) Except as otherwise provided in this section, the following rules
51 determine a debtor's location:
52 (1) A debtor who is an individual is located at the individual's princi-
53 pal residence.
26
1 (2) A debtor that is an organization and has only one (1) place of busi-
2 ness is located at its place of business.
3 (3) A debtor that is an organization and has more than one (1) place of
4 business is located at its chief executive office.
5 (c) Subsection (b) of this section applies only if a debtor's residence,
6 place of business, or chief executive office, as applicable, is located in a
7 jurisdiction whose law generally requires information concerning the existence
8 of a nonpossessory security interest to be made generally available in a fil-
9 ing, recording or registration system as a condition or result of the security
10 interest's obtaining priority over the rights of a lien creditor with respect
11 to the collateral. If subsection (b) of this section does not apply, the
12 debtor is located in the District of Columbia.
13 (d) A person that ceases to exist, have a residence, or have a place of
14 business continues to be located in the jurisdiction specified by subsections
15 (b) and (c) of this section.
16 (e) A registered organization that is organized under the law of a state
17 is located in that state.
18 (f) Except as otherwise provided in subsection (i) of this section, a
19 registered organization that is organized under the law of the United States
20 and a branch or agency of a bank that is not organized under the law of the
21 United States or a state are located:
22 (1) In the state that the law of the United States designates, if the law
23 designates a state of location;
24 (2) In the state that the registered organization, branch or agency des-
25 ignates, if the law of the United States authorizes the registered organi-
26 zation, branch or agency to designate its state of location; or
27 (3) In the District of Columbia, if neither paragraph (1) nor paragraph
28 (2) of this subsection applies.
29 (g) A registered organization continues to be located in the jurisdiction
30 specified by subsection (e) or (f) of this section notwithstanding:
31 (1) The suspension, revocation, forfeiture or lapse of the registered
32 organization's status as such in its jurisdiction of organization; or
33 (2) The dissolution, winding up, or cancellation of the existence of the
34 registered organization.
35 (h) The United States is located in the District of Columbia.
36 (i) A branch or agency of a bank that is not organized under the law of
37 the United States or a state is located in the state in which the branch or
38 agency is licensed, if all branches and agencies of the bank are licensed in
39 only one (1) state.
40 (j) A foreign air carrier under the federal aviation act of 1958, as
41 amended, is located at the designated office of the agent upon which service
42 of process may be made on behalf of the carrier.
43 (k) This section applies only for purposes of this part.
44 28-9-308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED --
45 CONTINUITY OF PERFECTION. (a) Except as otherwise provided in this section and
46 section 28-9-309, a security interest is perfected if it has attached and all
47 of the applicable requirements for perfection in sections 28-9-310 through
48 28-9-316 have been satisfied. A security interest is perfected when it
49 attaches if the applicable requirements are satisfied before the security
50 interest attaches.
51 (b) An agricultural lien is perfected if it has become effective and all
52 of the applicable requirements for perfection in section 28-9-310 have been
53 satisfied. An agricultural lien is perfected when it becomes effective if the
54 applicable requirements are satisfied before the agricultural lien becomes
27
1 effective.
2 (c) A security interest or agricultural lien is perfected continuously if
3 it is originally perfected by one (1) method under this chapter and is later
4 perfected by another method under this chapter, without an intermediate period
5 when it was unperfected.
6 (d) Perfection of a security interest in collateral also perfects a secu-
7 rity interest in a supporting obligation for the collateral.
8 (e) Perfection of a security interest in a right to payment or perfor-
9 mance also perfects a security interest in a security interest, mortgage or
10 other lien on personal or real property securing the right.
11 (f) Perfection of a security interest in a securities account also per-
12 fects a security interest in the security entitlements carried in the securi-
13 ties account.
14 (g) Perfection of a security interest in a commodity account also per-
15 fects a security interest in the commodity contracts carried in the commodity
16 account.
17 28-9-309. SECURITY INTEREST PERFECTED UPON ATTACHMENT. The following
18 security interests are perfected when they attach:
19 (1) A purchase-money security interest in consumer goods, except as
20 otherwise provided in section 28-9-311(b) with respect to consumer goods that
21 are subject to a statute or treaty described in section 28-9-311(a);
22 (2) An assignment of accounts or payment intangibles which does not by
23 itself or in conjunction with other assignments to the same assignee transfer
24 a significant part of the assignor's outstanding accounts or payment intangi-
25 bles;
26 (3) A sale of a payment intangible;
27 (4) A sale of a promissory note;
28 (5) A security interest created by the assignment of a health care insur-
29 ance receivable to the provider of the health care goods or services;
30 (6) A security interest arising under section 28-2-401, 28-2-505,
31 28-2-711(3) or 28-12-508(5), until the debtor obtains possession of the col-
32 lateral;
33 (7) A security interest of a collecting bank arising under section
34 28-4-210;
35 (8) A security interest of an issuer or nominated person arising under
36 section 28-5-120;
37 (9) A security interest arising in the delivery of a financial asset
38 under section 28-9-206(c);
39 (10) A security interest in investment property created by a broker or
40 securities intermediary;
41 (11) A security interest in a commodity contract or a commodity account
42 created by a commodity intermediary;
43 (12) An assignment for the benefit of all creditors of the transferor and
44 subsequent transfers by the assignee thereunder; and
45 (13) A security interest created by an assignment of a beneficial interest
46 in a decedent's estate.
47 28-9-310. WHEN FILING REQUIRED TO PERFECT SECURITY INTEREST OR AGRICUL-
48 TURAL LIEN -- SECURITY INTERESTS AND AGRICULTURAL LIENS TO WHICH FILING PROVI-
49 SIONS DO NOT APPLY. (a) Except as otherwise provided in subsection (b) of this
50 section and section 28-9-312(b), a financing statement must be filed to per-
51 fect all security interests and agricultural liens.
52 (b) The filing of a financing statement is not necessary to perfect a
53 security interest:
28
1 (1) That is perfected under section 28-9-308(d), (e), (f) or (g);
2 (2) That is perfected under section 28-9-309 when it attaches;
3 (3) In property subject to a statute, regulation or treaty described in
4 section 28-9-311(a);
5 (4) In goods in possession of a bailee which is perfected under section
6 28-9-312(d)(1) or (2);
7 (5) In certificated securities, documents, goods or instruments which is
8 perfected without filing or possession under section 28-9-312(e), (f) or
9 (g);
10 (6) In collateral in the secured party's possession under section
11 28-9-313;
12 (7) In a certificated security which is perfected by delivery of the
13 security certificate to the secured party under section 28-9-313;
14 (8) In deposit accounts, electronic chattel paper, investment property,
15 or letter of credit rights which is perfected by control under section
16 28-9-314;
17 (9) In proceeds which is perfected under section 28-9-315; or
18 (10) That is perfected under section 28-9-316.
19 (c) If a secured party assigns a perfected security interest or agricul-
20 tural lien, a filing under this chapter is not required to continue the per-
21 fected status of the security interest against creditors of and transferees
22 from the original debtor.
23 28-9-311. PERFECTION OF SECURITY INTERESTS IN PROPERTY SUBJECT TO CERTAIN
24 STATUTES, REGULATIONS AND TREATIES. (a) Except as otherwise provided in sub-
25 section (d) of this section, the filing of a financing statement is not neces-
26 sary or effective to perfect a security interest in property subject to:
27 (1) A statute, regulation or treaty of the United States whose require-
28 ments for a security interest's obtaining priority over the rights of a
29 lien creditor with respect to the property preempt section 28-9-310(a);
30 (2) Section 49-510, Idaho Code; or
31 (3) A certificate of title statute of another jurisdiction which provides
32 for a security interest to be indicated on the certificate as a condition
33 or result of the security interest's obtaining priority over the rights of
34 a lien creditor with respect to the property.
35 (b) Compliance with the requirements of a statute, regulation or treaty
36 described in subsection (a) of this section for obtaining priority over the
37 rights of a lien creditor is equivalent to the filing of a financing statement
38 under this chapter. Except as otherwise provided in subsection (d) of this
39 section and sections 28-9-313 and 28-9-316(d) and (e) for goods covered by a
40 certificate of title, a security interest in property subject to a statute,
41 regulation or treaty described in subsection (a) of this section may be per-
42 fected only by compliance with those requirements, and a security interest so
43 perfected remains perfected notwithstanding a change in the use or transfer of
44 possession of the collateral.
45 (c) Except as otherwise provided in subsection (d) of this section and
46 section 28-9-316(d) and (e), duration and renewal of perfection of a security
47 interest perfected by compliance with the requirements prescribed by a stat-
48 ute, regulation or treaty described in subsection (a) of this section are gov-
49 erned by the statute, regulation or treaty. In other respects, the security
50 interest is subject to this chapter.
51 (d) During any period in which collateral subject to a statute specified
52 in subsection (a)(2) of this section is inventory held for sale or lease by a
53 person or leased by that person as lessor and that person is in the business
54 of selling or leasing goods of that kind, this section does not apply to a
29
1 security interest in that collateral created by that person as debtor.
2 28-9-312. PERFECTION OF SECURITY INTERESTS IN CHATTEL PAPER, DEPOSIT
3 ACCOUNTS, DOCUMENTS, GOODS COVERED BY DOCUMENTS, INSTRUMENTS, INVESTMENT PROP-
4 ERTY, LETTER OF CREDIT RIGHTS AND MONEY -- PERFECTION BY PERMISSIVE FILING --
5 TEMPORARY PERFECTION WITHOUT FILING OR TRANSFER OF POSSESSION. (a) A security
6 interest in chattel paper, negotiable documents, instruments or investment
7 property may be perfected by filing.
8 (b) Except as otherwise provided in section 28-9-315(c) and (d) for pro-
9 ceeds:
10 (1) A security interest in a deposit account may be perfected only by
11 control under section 28-9-314;
12 (2) And except as otherwise provided in section 28-9-308(d), a security
13 interest in a letter of credit right may be perfected only by control
14 under section 28-9-314; and
15 (3) A security interest in money may be perfected only by the secured
16 party's taking possession under section 28-9-313.
17 (c) While goods are in the possession of a bailee that has issued a nego-
18 tiable document covering the goods:
19 (1) A security interest in the goods may be perfected by perfecting a
20 security interest in the document; and
21 (2) A security interest perfected in the document has priority over any
22 security interest that becomes perfected in the goods by another method
23 during that time.
24 (d) While goods are in the possession of a bailee that has issued a non-
25 negotiable document covering the goods, a security interest in the goods may
26 be perfected by:
27 (1) Issuance of a document in the name of the secured party;
28 (2) The bailee's receipt of notification of the secured party's interest;
29 or
30 (3) Filing as to the goods.
31 (e) A security interest in certificated securities, negotiable documents
32 or instruments is perfected without filing or the taking of possession for a
33 period of twenty (20) days from the time it attaches to the extent that it
34 arises for new value given under an authenticated security agreement.
35 (f) A perfected security interest in a negotiable document or goods in
36 possession of a bailee, other than one that has issued a negotiable document
37 for the goods, remains perfected for twenty (20) days without filing if the
38 secured party makes available to the debtor the goods or documents represent-
39 ing the goods for the purpose of:
40 (1) Ultimate sale or exchange; or
41 (2) Loading, unloading, storing, shipping, transshipping, manufacturing,
42 processing or otherwise dealing with them in a manner preliminary to their
43 sale or exchange.
44 (g) A perfected security interest in a certificated security or instru-
45 ment remains perfected for twenty (20) days without filing if the secured
46 party delivers the security certificate or instrument to the debtor for the
47 purpose of:
48 (1) Ultimate sale or exchange; or
49 (2) Presentation, collection, enforcement, renewal or registration of
50 transfer.
51 (h) After the twenty (20) day period specified in subsection (e), (f) or
52 (g) of this section expires, perfection depends upon compliance with this
53 chapter.
30
1 28-9-313. WHEN POSSESSION BY OR DELIVERY TO SECURED PARTY PERFECTS SECU-
2 RITY INTEREST WITHOUT FILING. (a) Except as otherwise provided in subsection
3 (b) of this section, a secured party may perfect a security interest in nego-
4 tiable documents, goods, instruments, money or tangible chattel paper by tak-
5 ing possession of the collateral. A secured party may perfect a security
6 interest in certificated securities by taking delivery of the certificated
7 securities under section 28-8-301.
8 (b) With respect to goods covered by a certificate of title issued by
9 this state, a secured party may perfect a security interest in the goods by
10 taking possession of the goods only in the circumstances described in section
11 28-9-316(d).
12 (c) With respect to collateral other than certificated securities and
13 goods covered by a document, a secured party takes possession of collateral in
14 the possession of a person other than the debtor, the secured party or a les-
15 see of the collateral from the debtor in the ordinary course of the debtor's
16 business, when:
17 (1) The person in possession authenticates a record acknowledging that it
18 holds possession of the collateral for the secured party's benefit; or
19 (2) The person takes possession of the collateral after having authenti-
20 cated a record acknowledging that it will hold possession of collateral
21 for the secured party's benefit.
22 (d) If perfection of a security interest depends upon possession of the
23 collateral by a secured party, perfection occurs no earlier than the time the
24 secured party takes possession and continues only while the secured party
25 retains possession.
26 (e) A security interest in a certificated security in registered form is
27 perfected by delivery when delivery of the certificated security occurs under
28 section 28-8-301, and remains perfected by delivery until the debtor obtains
29 possession of the security certificate.
30 (f) A person in possession of collateral is not required to acknowledge
31 that it holds possession for a secured party's benefit.
32 (g) If a person acknowledges that it holds possession for the secured
33 party's benefit:
34 (1) The acknowledgment is effective under subsection (c) of this section
35 or section 28-8-301(1), even if the acknowledgment violates the rights of
36 a debtor; and
37 (2) Unless the person otherwise agrees, or law other than this chapter
38 otherwise provides, the person does not owe any duty to the secured party
39 and is not required to confirm the acknowledgment to another person.
40 (h) A secured party having possession of collateral does not relinquish
41 possession by delivering the collateral to a person other than the debtor or a
42 lessee of the collateral from the debtor in the ordinary course of the
43 debtor's business if the person was instructed before the delivery or is
44 instructed contemporaneously with the delivery:
45 (1) To hold possession of the collateral for the secured party's benefit;
46 or
47 (2) To redeliver the collateral to the secured party.
48 (i) A secured party does not relinquish possession, even if a delivery
49 under subsection (h) of this section violates the rights of a debtor. A per-
50 son to which collateral is delivered under subsection (h) of this section does
51 not owe any duty to the secured party and is not required to confirm the
52 delivery to another person unless the person otherwise agrees, or law other
53 than this chapter otherwise provides.
54 28-9-314. PERFECTION BY CONTROL. (a) A security interest in investment
31
1 property, deposit accounts, letter of credit rights, or electronic chattel
2 paper may be perfected by control of the collateral under section 28-9-104,
3 28-9-105, 28-9-106 or 28-9-107.
4 (b) A security interest in deposit accounts, electronic chattel paper, or
5 letter of credit rights is perfected by control under section 28-9-104,
6 28-9-105 or 28-9-107, when the secured party obtains control and remains per-
7 fected by control only while the secured party retains control.
8 (c) A security interest in investment property is perfected by control
9 under section 28-9-106 from the time the secured party obtains control and
10 remains perfected by control until:
11 (1) The secured party does not have control; and
12 (2) One (1) of the following occurs:
13 (A) if the collateral is a certificated security, the debtor has or
14 acquires possession of the security certificate;
15 (B) if the collateral is an uncertificated security, the issuer has
16 registered or registers the debtor as the registered owner; or
17 (C) if the collateral is a security entitlement, the debtor is or
18 becomes the entitlement holder.
19 28-9-315. SECURED PARTY'S RIGHTS ON DISPOSITION OF COLLATERAL AND IN PRO-
20 CEEDS. (a) Except as otherwise provided in this chapter and in section
21 28-2-403(2):
22 (1) A security interest or agricultural lien continues in collateral not-
23 withstanding sale, lease, license, exchange or other disposition thereof
24 unless the secured party authorized the disposition free of the security
25 interest or agricultural lien; and
26 (2) A security interest attaches to any identifiable proceeds of collat-
27 eral.
28 (b) Proceeds that are commingled with other property are identifiable
29 proceeds:
30 (1) If the proceeds are goods, to the extent provided by section
31 28-9-336; and
32 (2) If the proceeds are not goods, to the extent that the secured party
33 identifies the proceeds by a method of tracing, including application of
34 equitable principles, that is permitted under law other than this chapter
35 with respect to commingled property of the type involved.
36 (c) A security interest in proceeds is a perfected security interest if
37 the security interest in the original collateral was perfected.
38 (d) A perfected security interest in proceeds becomes unperfected on the
39 twenty-first day after the security interest attaches to the proceeds unless:
40 (1) The following conditions are satisfied:
41 (A) a filed financing statement covers the original collateral;
42 (B) the proceeds are collateral in which a security interest may be
43 perfected by filing in the office in which the financing statement
44 has been filed; and
45 (C) the proceeds are not acquired with cash proceeds;
46 (2) The proceeds are identifiable cash proceeds; or
47 (3) The security interest in the proceeds is perfected other than under
48 subsection (c) of this section when the security interest attaches to the
49 proceeds or within twenty (20) days thereafter.
50 (e) If a filed financing statement covers the original collateral, a
51 security interest in proceeds which remains perfected under subsection (d)(1)
52 of this section becomes unperfected at the later of:
53 (1) When the effectiveness of the filed financing statement lapses under
54 section 28-9-515 or is terminated under section 28-9-513; or
32
1 (2) The twenty-first day after the security interest attaches to the pro-
2 ceeds.
3 28-9-316. CONTINUED PERFECTION OF SECURITY INTEREST FOLLOWING CHANGE IN
4 GOVERNING LAW. (a) A security interest perfected pursuant to the law of the
5 jurisdiction designated in section 28-9-301(1) or 28-9-305(c) remains per-
6 fected until the earliest of:
7 (1) The time perfection would have ceased under the law of that jurisdic-
8 tion;
9 (2) The expiration of four (4) months after a change of the debtor's
10 location to another jurisdiction; or
11 (3) The expiration of one (1) year after a transfer of collateral to a
12 person that thereby becomes a debtor and is located in another jurisdic-
13 tion.
14 (b) If a security interest described in subsection (a) of this section
15 becomes perfected under the law of the other jurisdiction before the earliest
16 time or event described in that subsection, it remains perfected thereafter.
17 If the security interest does not become perfected under the law of the other
18 jurisdiction before the earliest time or event, it becomes unperfected and is
19 deemed never to have been perfected as against a purchaser of the collateral
20 for value.
21 (c) A possessory security interest in collateral, other than goods cov-
22 ered by a certificate of title and as-extracted collateral consisting of
23 goods, remains continuously perfected if:
24 (1) The collateral is located in one (1) jurisdiction and subject to a
25 security interest perfected under the law of that jurisdiction;
26 (2) Thereafter the collateral is brought into another jurisdiction; and
27 (3) Upon entry into the other jurisdiction, the security interest is per-
28 fected under the law of the other jurisdiction.
29 (d) Except as otherwise provided in subsection (e) of this section, a
30 security interest in goods covered by a certificate of title which is per-
31 fected by any method under the law of another jurisdiction when the goods
32 become covered by a certificate of title from this state remains perfected
33 until the security interest would have become unperfected under the law of the
34 other jurisdiction had the goods not become so covered.
35 (e) A security interest described in subsection (d) of this section
36 becomes unperfected as against a purchaser of the goods for value and is
37 deemed never to have been perfected as against a purchaser of the goods for
38 value if the applicable requirements for perfection under section 28-9-311(b)
39 or 28-9-313 are not satisfied before the earlier of:
40 (1) The time the security interest would have become unperfected under
41 the law of the other jurisdiction had the goods not become covered by a
42 certificate of title from this state; or
43 (2) The expiration of four (4) months after the goods had become so cov-
44 ered.
45 (f) A security interest in deposit accounts, letter of credit rights, or
46 investment property which is perfected under the law of the bank's jurisdic-
47 tion, the issuer's jurisdiction, a nominated person's jurisdiction, the secu-
48 rities intermediary's jurisdiction, or the commodity intermediary's jurisdic-
49 tion, as applicable, remains perfected until the earlier of:
50 (1) The time the security interest would have become unperfected under
51 the law of that jurisdiction; or
52 (2) The expiration of four (4) months after a change of the applicable
53 jurisdiction to another jurisdiction.
54 (g) If a security interest described in subsection (f) of this section
33
1 becomes perfected under the law of the other jurisdiction before the earlier
2 of the time or the end of the period described in that subsection, it remains
3 perfected thereafter. If the security interest does not become perfected
4 under the law of the other jurisdiction before the earlier of that time or the
5 end of that period, it becomes unperfected and is deemed never to have been
6 perfected as against a purchaser of the collateral for value.
7 28-9-317. INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE OF SECURITY
8 INTEREST OR AGRICULTURAL LIEN. (a) A security interest or agricultural lien is
9 subordinate to the rights of:
10 (1) A person entitled to priority under section 28-9-322; and
11 (2) Except as otherwise provided in subsection (e) of this section, a
12 person that becomes a lien creditor before the earlier of the time:
13 (A) the security interest or agricultural lien is perfected; or
14 (B) one (1) of the conditions specified in section 28-9-203(b)(3) is
15 met and a financing statement covering the collateral is filed.
16 (b) Except as otherwise provided in subsection (e) of this section, a
17 buyer, other than a secured party, of tangible chattel paper, documents,
18 goods, instruments or a security certificate takes free of a security interest
19 or agricultural lien if the buyer gives value and receives delivery of the
20 collateral without knowledge of the security interest or agricultural lien and
21 before it is perfected.
22 (c) Except as otherwise provided in subsection (e) of this section, a
23 lessee of goods takes free of a security interest or agricultural lien if the
24 lessee gives value and receives delivery of the collateral without knowledge
25 of the security interest or agricultural lien and before it is perfected.
26 (d) A licensee of a general intangible or a buyer, other than a secured
27 party, of accounts, electronic chattel paper, general intangibles, or invest-
28 ment property other than a certificated security takes free of a security
29 interest if the licensee or buyer gives value without knowledge of the secu-
30 rity interest and before it is perfected.
31 (e) Except as otherwise provided in sections 28-9-320 and 28-9-321, if a
32 person files a financing statement with respect to a purchase-money security
33 interest before or within twenty (20) days after the debtor receives delivery
34 of the collateral, the security interest takes priority over the rights of a
35 buyer, lessee, or lien creditor which arise between the time the security
36 interest attaches and the time of filing.
37 28-9-318. NO INTEREST RETAINED IN RIGHT TO PAYMENT THAT IS SOLD -- RIGHTS
38 AND TITLE OF SELLER OF ACCOUNT OR CHATTEL PAPER WITH RESPECT TO CREDITORS AND
39 PURCHASERS. (a) A debtor that has sold an account, chattel paper, payment
40 intangible or promissory note does not retain a legal or equitable interest in
41 the collateral sold.
42 (b) For purposes of determining the rights of creditors of, and pur-
43 chasers for value of an account or chattel paper from, a debtor that has sold
44 an account or chattel paper, while the buyer's security interest is unper-
45 fected, the debtor is deemed to have rights and title to the account or chat-
46 tel paper identical to those the debtor sold.
47 28-9-319. RIGHTS AND TITLE OF CONSIGNEE WITH RESPECT TO CREDITORS AND
48 PURCHASERS. (a) Except as otherwise provided in subsection (b) of this sec-
49 tion, for purposes of determining the rights of creditors of, and purchasers
50 for value of goods from, a consignee, while the goods are in the possession of
51 the consignee, the consignee is deemed to have rights and title to the goods
52 identical to those the consignor had or had power to transfer.
34
1 (b) For purposes of determining the rights of a creditor of a consignee,
2 law other than this chapter determines the rights and title of a consignee
3 while goods are in the consignee's possession if, under this part, a perfected
4 security interest held by the consignor would have priority over the rights of
5 the creditor.
6 28-9-320. BUYER OF GOODS. (a) Except as otherwise provided in subsection
7 (e) of this section, a buyer in ordinary course of business, other than a per-
8 son buying farm products from a person engaged in farming operations, takes
9 free of a security interest created by the buyer's seller, even if the secu-
10 rity interest is perfected and the buyer knows of its existence. A buyer who,
11 in the ordinary course of business, buys farm products from a person engaged
12 in farming operations or a commission merchant or selling agent who in the
13 ordinary course of business sells farm products for a person engaged in farm-
14 ing operations shall take and sell free of a security interest created by his
15 seller, even though the security interest is perfected and the buyer or com-
16 mission merchant or selling agent knows of the existence of such interest, if
17 he has registered with the secretary of state pursuant to section 28-9-523(h)
18 and the security interest is not listed on the most recent master list or
19 cumulative supplement distributed by the secretary of state pursuant to sec-
20 tion 28-9-523(i), unless he has received written notification, as that term is
21 used in applicable federal law and regulation, of the security interest from
22 the secretary of state, his seller or the secured party.
23 (b) Except as otherwise provided in subsection (e) of this section, a
24 buyer of goods from a person who used or bought the goods for use primarily
25 for personal, family or household purposes takes free of a security interest,
26 even if perfected, if the buyer buys:
27 (1) Without knowledge of the security interest;
28 (2) For value;
29 (3) Primarily for the buyer's personal, family or household purposes; and
30 (4) Before the filing of a financing statement covering the goods.
31 (c) To the extent that it affects the priority of a security interest
32 over a buyer of goods under subsection (b) of this section, the period of
33 effectiveness of a filing made in the jurisdiction in which the seller is
34 located is governed by section 28-9-316(a) and (b).
35 (d) A buyer in ordinary course of business buying oil, gas, or other min-
36 erals at the wellhead or minehead or after extraction takes free of an inter-
37 est arising out of an encumbrance.
38 (e) Subsections (a) and (b) of this section do not affect a security
39 interest in goods in the possession of the secured party under section
40 28-9-313.
41 28-9-321. LICENSEE OF GENERAL INTANGIBLE AND LESSEE OF GOODS IN ORDINARY
42 COURSE OF BUSINESS. (a) In this section, "licensee in ordinary course of busi-
43 ness" means a person that becomes a licensee of a general intangible in good
44 faith, without knowledge that the license violates the rights of another per-
45 son in the general intangible, and in the ordinary course from a person in the
46 business of licensing general intangibles of that kind. A person becomes a
47 licensee in the ordinary course if the license to the person comports with the
48 usual or customary practices in the kind of business in which the licensor is
49 engaged or with the licensor's own usual or customary practices.
50 (b) A licensee in ordinary course of business takes its rights under a
51 nonexclusive license free of a security interest in the general intangible
52 created by the licensor, even if the security interest is perfected and the
53 licensee knows of its existence.
35
1 (c) A lessee in ordinary course of business takes its leasehold interest
2 free of a security interest in the goods created by the lessor, even if the
3 security interest is perfected and the lessee knows of its existence.
4 28-9-322. PRIORITIES AMONG CONFLICTING SECURITY INTERESTS IN AND AGRICUL-
5 TURAL LIENS ON SAME COLLATERAL. (a) Except as otherwise provided in this sec-
6 tion, priority among conflicting security interests and agricultural liens in
7 the same collateral is determined according to the following rules:
8 (1) Conflicting perfected security interests and agricultural liens rank
9 according to priority in time of filing or perfection. Priority dates from
10 the earlier of the time a filing covering the collateral is first made or
11 the security interest or agricultural lien is first perfected, if there is
12 no period thereafter when there is neither filing nor perfection.
13 (2) A perfected security interest or agricultural lien has priority over
14 a conflicting unperfected security interest or agricultural lien.
15 (3) The first security interest or agricultural lien to attach or become
16 effective has priority if conflicting security interests and agricultural
17 liens are unperfected.
18 (b) For the purposes of subsection (a)(1) of this section:
19 (1) The time of filing or perfection as to a security interest in collat-
20 eral is also the time of filing or perfection as to a security interest in
21 proceeds; and
22 (2) The time of filing or perfection as to a security interest in collat-
23 eral supported by a supporting obligation is also the time of filing or
24 perfection as to a security interest in the supporting obligation.
25 (c) Except as otherwise provided in subsection (f) of this section, a
26 security interest in collateral which qualifies for priority over a conflict-
27 ing security interest under section 28-9-327, 28-9-328, 28-9-329, 28-9-330 or
28 28-9-331 also has priority over a conflicting security interest in:
29 (1) Any supporting obligation for the collateral; and
30 (2) Proceeds of the collateral if:
31 (A) the security interest in proceeds is perfected;
32 (B) the proceeds are cash proceeds or of the same type as the col-
33 lateral; and
34 (C) in the case of proceeds that are proceeds of proceeds, all
35 intervening proceeds are cash proceeds, proceeds of the same type as
36 the collateral, or an account relating to the collateral.
37 (d) Subject to subsection (e) of this section and except as otherwise
38 provided in subsection (f) of this section, if a security interest in chattel
39 paper, deposit accounts, negotiable documents, instruments, investment prop-
40 erty, or letter of credit rights is perfected by a method other than filing,
41 conflicting perfected security interests in proceeds of the collateral rank
42 according to priority in time of filing.
43 (e) Subsection (d) of this section applies only if the proceeds of the
44 collateral are not cash proceeds, chattel paper, negotiable documents, instru-
45 ments, investment property or letter of credit rights.
46 (f) Subsections (a) through (e) of this section are subject to:
47 (1) Subsection (g) of this section and the other provisions of this part;
48 (2) Section 28-4-210 with respect to a security interest of a collecting
49 bank;
50 (3) Section 28-5-120 with respect to a security interest of an issuer or
51 nominated person; and
52 (4) Section 28-9-110 with respect to a security interest arising under
53 chapter 2 or 12.
54 (g) A perfected agricultural lien on collateral has priority over a con-
36
1 flicting security interest in or agricultural lien on the same collateral if
2 the statute creating the agricultural lien so provides.
3 28-9-322A. SECURITY INTERESTS IN CROPS FOR PROVISION OF AGRICULTURAL
4 CHEMICALS. (a) As used in this section:
5 (1) "Agricultural chemical" means fertilizers and other chemicals applied
6 to crops or land which is to be used for the raising of crops, including
7 pesticides, soil amendments and plant regulators.
8 (2) "Fall agricultural chemical security interest" means a security
9 interest in specific crops growing or to be grown granted by a grower to a
10 supplier to secure the grower's obligation to repay value given by the
11 supplier to enable the grower to purchase from the supplier (A) agricul-
12 tural chemicals to apply to such crops or to land on which such crops will
13 be grown, and (B) application of such agricultural chemicals if such
14 application is performed by the supplier. To qualify as a fall agricul-
15 tural chemical security interest, the security interest must also satisfy
16 the following conditions:
17 (i) Before supplying the agricultural chemicals to the grower, the
18 supplier and grower provide the lender with a notification statement
19 and opportunity to respond in accordance with this section;
20 (ii) The security interest is perfected within twenty (20) days
21 after the agricultural chemicals are delivered to the grower; and
22 (iii) The agricultural chemicals are actually applied to the grower's
23 land or crops during the period September 1 through December 15.
24 (3) "Grower" shall mean a specified debtor of a lender.
25 (4) "Lender" shall mean the holder of an existing perfected security
26 interest in crops of a grower.
27 (5) "Letter of response" shall mean a statement by a lender containing
28 the information specified in subsection (j) of this section.
29 (6) "Notification statement" shall mean a statement by a supplier con-
30 taining the information specified in subsection (h) of this section.
31 (7) "Supplier" shall mean a person who supplies agricultural chemicals to
32 a grower.
33 (b) A supplier may obtain a fall agricultural chemical security interest
34 as provided in this section. To the extent not otherwise expressly provided in
35 this section, the provisions of this chapter apply to a fall agricultural
36 chemical security interest. The amount secured by a fall agricultural security
37 interest shall be the lesser of: (i) the agreed charges for the agricultural
38 chemicals and application costs provided pursuant to the notification state-
39 ment; or (ii) the amount of the anticipated charges as reflected in the noti-
40 fication statement.
41 (c) A fall agricultural chemical security interest attaches to the exist-
42 ing crops upon the land where the agricultural chemical is applied, or if
43 crops are not planted at the time of the application, to the next production
44 crop from that land. It does not attach to crops already harvested or which
45 are harvested before December 15 from such land, or to crops to be grown on
46 such land after the next production crop, or to crops grown on other land than
47 that identified in the notification statement.
48 (d) A fall agricultural chemical security interest is perfected by filing
49 a financing statement.
50 (e) A fall agricultural chemical security interest shall have priority
51 over a conflicting security interest in the same crops and identifiable pro-
52 ceeds thereof except for a prior perfected fall agricultural chemical security
53 interest. In the event of any commingling of crops or proceeds covered by a
54 fall agricultural chemical security interest with other crops or proceeds, the
37
1 burden of proving the applicability of the fall agricultural chemical security
2 interest to any particular crops or proceeds is on the supplier asserting it.
3 (f) Nothing in this section is intended to limit the priority of agricul-
4 tural liens established by the statutes creating such liens, and a perfected
5 agricultural lien shall have priority over a conflicting security interest
6 (including a fall agricultural chemical security interest) if the statute cre-
7 ating the agricultural lien provides such priority.
8 (g) A supplier may notify the lender that the supplier intends to supply
9 agricultural chemicals to the grower and that the supplier requests the lender
10 to issue a letter of response. In order to so notify the lender, the supplier
11 shall provide a notification statement to the lender in an envelope marked
12 CROP SECURITY INTEREST NOTIFICATION STATEMENT, sent by certified mail
13 addressed to the lender at the address for such lender shown on such lender's
14 most recently filed UCC-1F financing statement regarding that grower.
15 (h) A notification statement shall contain:
16 (1) The name, address and signature of the supplier providing the notifi-
17 cation statement;
18 (2) The date the notification statement was prepared;
19 (3) The name and address of the lender;
20 (4) The name and address of the person to whom the lender's response to
21 the supplier should be addressed;
22 (5) A description and anticipated date of the application of agricultural
23 chemicals and the anticipated charges for the agricultural chemicals,
24 including anticipated application costs;
25 (6) The name, address and signature of the grower to whom the supplier
26 furnished or intends to furnish agricultural chemicals;
27 (7) A reasonable description of the real estate sufficient to identify
28 the same where the agricultural chemicals are to be applied;
29 (8) The name and address of the owner (if other than the grower) of such
30 real property;
31 (9) A description of the crops growing or to be grown on such real prop-
32 erty as to which the supplier intends to supply agricultural chemicals and
33 upon which the supplier claims or intends to obtain a security interest;
34 (10) The social security number or federal tax identification number of
35 the grower to whom the supplier intends to provide agricultural chemicals;
36 and
37 (11) The social security number or federal tax identification number of
38 the supplier providing the notice.
39 (i) Within fifteen (15) days after actual receipt of a notification
40 statement, the lender shall deposit in the U.S. mail, certified, a letter of
41 response to the supplier. A copy of the lender's letter of response shall be
42 sent to the grower.
43 (j) A letter of response shall contain the name, address and signature of
44 the lender, and either
45 (1) A statement by the lender that there is an outstanding commitment for
46 operating financing from the lender to the grower, and that the lender
47 shall reserve the amount in the notification statement for the purpose of
48 honoring drafts or other demands for payment by the supplier accompanied
49 by invoices signed by the grower or other proof of delivery signed by the
50 grower; or
51 (2) A statement by the lender that the lender shall subordinate the pri-
52 ority of its security interest in specified crops of the grower to the
53 priority of the security interest in such crops obtained or to be obtained
54 by the supplier, and specifying that the maximum amount of such subordina-
55 tion shall be the amount stated in the notification statement; or
38
1 (3) A statement by the lender that it declines to either reserve funds or
2 subordinate its security interest.
3 (k) If the lender's letter of response states that the lender declines to
4 either reserve funds or subordinate its security interest, the respective
5 rights of the lender and the supplier are not affected by this section and the
6 relative priority between the lender's security interest in crops, and any
7 security interest obtained by the supplier in such crops, shall be determined
8 according to the ordinary rules governing the priority of conflicting security
9 interests in the same collateral, unless the supplier's security interest is a
10 fall agricultural chemical security interest.
11 (l) If the lender does not mail its letter of response to the supplier
12 within fifteen (15) days after receiving the notification statement, and the
13 supplier has perfected a security interest in such crops or perfects such
14 security interest within ten (10) days after the expiration of the fifteen
15 (15) day period for the lender to respond, the supplier's perfected security
16 interest in such crops shall take priority over the lender's perfected secu-
17 rity interest in such crops, but only to the extent of the lesser of (1) the
18 amount stated in the notification statement, or (2) the unpaid agreed charges
19 for the agricultural chemicals identified in the notification statement and
20 actually applied to, or for the benefit of, such crops.
21 (m) Any amounts repaid by any person on the grower's obligation for which
22 the supplier has obtained an agricultural chemical security interest shall
23 reduce the value of the agricultural chemical security interest on a dollar-
24 for-dollar basis, and amounts may not be reborrowed or readvanced under the
25 same notification statement. If the supplier receives proceeds of any collat-
26 eral of the lender (other than proceeds of the crops covered by the fall agri-
27 cultural security interest), such proceeds shall be turned over to the lender.
28 In order to obtain the benefits of this section, any additional sales of agri-
29 cultural chemicals not included in the original notification statement must be
30 the subject of a new notification statement, to which the lender may issue a
31 new letter of response.
32 (n) No one but the supplier shall be entitled to rely on a letter of
33 response. Rights (if any) under a letter of response are not assignable,
34 except in connection with an assignment by the supplier of the entire security
35 interest to which such letter of response relates. By issuing a letter of
36 response and performing thereunder, the lender does not become a partner,
37 joint venturer or fiduciary of either the grower or the supplier.
38 (o) (1) The secretary of state shall publish a form substantially as
39 follows:
40 Name of supplier.........................................................
41 Address..................................................................
42 SSN/TIN..................................................................
43 Date notification statement was prepared.................................
44 Name of lender...........................................................
45 Address..................................................................
46 Name of person to whom lender's response to supplier should be addressed.
47 Address..................................................................
48 Description and anticipated date of the application of agricultural chem-
49 icals....................................................................
50 Anticipated charges for the agricultural chemicals.......................
39
1 Anticipated charges for application, if not included in charges for chem-
2 icals....................................................................
3 Name of grower...........................................................
4 Address..................................................................
5 SSN/TIN..................................................................
6 Reasonable description of the real estate where the agricultural chemi-
7 cals are to be applied...................................................
8 .........................................................................
9 Name of owner of real property (if other than grower)....................
10 .........................................................................
11 Address..................................................................
12 Crops growing or to be grown on such real property as to which the sup-
13 plier intends to supply agricultural chemicals and upon which supplier
14 intends to obtain a security interest....................................
15 .........................................................................
16 Signature of supplier....................................................
17 Signature of grower......................................................
18 (2) On the reverse side of the form described in subsection (1) of this
19 section, the secretary of state shall provide a form for the lender's let-
20 ter of response, substantially as follows:
21 Name of lender...........................................................
22 Address..................................................................
23 Lender responds to notification statement as follows (choose one):
24 An outstanding commitment for operating financing exists
25 for this grower. Of that commitment, lender hereby
26 reserves the amount specified in the notification state-
27 ment for the purpose of honoring drafts or other demands
28 for payment by supplier, accompanied by invoices signed by
29 grower or other proof of delivery signed by grower.
30 Lender hereby subordinates the priority of its security
31 interest in (specify crops) .................... of grower
32 to the priority of the security interest in such crops
33 obtained or to be obtained by supplier, such subordination
34 to be in the amount specified in the notification state-
35 ment.
36 Lender declines to either reserve funds or subordinate its
37 security interest.
38 Signature of lender.................................................
39 (3) Suppliers and lenders are required to use the form pub-
40 lished by the secretary of state.
40
1 28-9-323. FUTURE ADVANCES. (a) Except as otherwise provided in subsection
2 (c) of this section, for purposes of determining the priority of a perfected
3 security interest under section 28-9-322(a)(1), perfection of the security
4 interest dates from the time an advance is made to the extent that the secu-
5 rity interest secures an advance that:
6 (1) Is made while the security interest is perfected only:
7 (A) under section 28-9-309 when it attaches; or
8 (B) temporarily under section 28-9-312(e), (f) or (g); and
9 (2) Is not made pursuant to a commitment entered into before or while the
10 security interest is perfected by a method other than under section
11 28-9-309 or 28-9-312(e), (f) or (g).
12 (b) Except as otherwise provided in subsection (c) of this section, a
13 security interest is subordinate to the rights of a person that becomes a lien
14 creditor to the extent that the security interest secures an advance made more
15 than forty-five (45) days after the person becomes a lien creditor unless the
16 advance is made:
17 (1) Without knowledge of the lien; or
18 (2) Pursuant to a commitment entered into without knowledge of the lien.
19 (c) Subsections (a) and (b) of this section do not apply to a security
20 interest held by a secured party that is a buyer of accounts, chattel paper,
21 payment intangibles, or promissory notes or a consignor.
22 (d) Except as otherwise provided in subsection (e) of this section, a
23 buyer of goods other than a buyer in ordinary course of business takes free of
24 a security interest to the extent that it secures advances made after the ear-
25 lier of:
26 (1) The time the secured party acquires knowledge of the buyer's pur-
27 chase; or
28 (2) Forty-five (45) days after the purchase.
29 (e) Subsection (d) of this section does not apply if the advance is made
30 pursuant to a commitment entered into without knowledge of the buyer's pur-
31 chase and before the expiration of the forty-five (45) day period.
32 (f) Except as otherwise provided in subsection (g) of this section, a
33 lessee of goods, other than a lessee in ordinary course of business, takes the
34 leasehold interest free of a security interest to the extent that it secures
35 advances made after the earlier of:
36 (1) The time the secured party acquires knowledge of the lease; or
37 (2) Forty-five (45) days after the lease contract becomes enforceable.
38 (g) Subsection (f) of this section does not apply if the advance is made
39 pursuant to a commitment entered into without knowledge of the lease and
40 before the expiration of the forty-five (45) day period.
41 28-9-324. PRIORITY OF PURCHASE-MONEY SECURITY INTERESTS. (a) Except as
42 otherwise provided in subsection (g) of this section, a perfected purchase-
43 money security interest in goods other than inventory or livestock has prior-
44 ity over a conflicting security interest in the same goods and, except as
45 otherwise provided in section 28-9-327, a perfected security interest in its
46 identifiable proceeds also has priority, if the purchase-money security inter-
47 est is perfected when the debtor receives possession of the collateral or
48 within twenty (20) days thereafter.
49 (b) Subject to subsection (c) of this section and except as otherwise
50 provided in subsection (g) of this section, a perfected purchase-money secu-
51 rity interest in inventory has priority over a conflicting security interest
52 in the same inventory, has priority over a conflicting security interest in
53 chattel paper or an instrument constituting proceeds of the inventory and in
54 proceeds of the chattel paper, if so provided in section 28-9-330, and, except
41
1 as otherwise provided in section 28-9-327, also has priority in identifiable
2 cash proceeds of the inventory to the extent the identifiable cash proceeds
3 are received on or before the delivery of the inventory to a buyer, if:
4 (1) The purchase-money security interest is perfected when the debtor
5 receives possession of the inventory;
6 (2) The purchase-money secured party sends an authenticated notification
7 to the holder of the conflicting security interest;
8 (3) The holder of the conflicting security interest receives the notifi-
9 cation within five (5) years before the debtor receives possession of the
10 inventory; and
11 (4) The notification states that the person sending the notification has
12 or expects to acquire a purchase-money security interest in inventory of
13 the debtor and describes the inventory.
14 (c) Subsections (b)(2) through (b)(4) of this section apply only if the
15 holder of the conflicting security interest had filed a financing statement
16 covering the same types of inventory:
17 (1) If the purchase-money security interest is perfected by filing,
18 before the date of the filing; or
19 (2) If the purchase-money security interest is temporarily perfected
20 without filing or possession under section 28-9-312(f), before the begin-
21 ning of the twenty (20) day period thereunder.
22 (d) Subject to subsection (e) of this section and except as otherwise
23 provided in subsection (g) of this section, a perfected purchase-money secu-
24 rity interest in livestock that are farm products has priority over a con-
25 flicting security interest in the same livestock and, except as otherwise pro-
26 vided in section 28-9-327, a perfected security interest in their identifiable
27 proceeds and identifiable products in their unmanufactured states also has
28 priority, if:
29 (1) The purchase-money security interest is perfected when the debtor
30 receives possession of the livestock;
31 (2) The purchase-money secured party sends an authenticated notification
32 to the holder of the conflicting security interest;
33 (3) The holder of the conflicting security interest receives the notifi-
34 cation within six (6) months before the debtor receives possession of the
35 livestock; and
36 (4) The notification states that the person sending the notification has
37 or expects to acquire a purchase-money security interest in livestock of
38 the debtor and describes the livestock.
39 (e) Subsections (d)(2) through (d)(4) of this section apply only if the
40 holder of the conflicting security interest had filed a financing statement
41 covering the same types of livestock:
42 (1) If the purchase-money security interest is perfected by filing,
43 before the date of the filing; or
44 (2) If the purchase-money security interest is temporarily perfected
45 without filing or possession under section 28-9-312(f), before the begin-
46 ning of the twenty (20) day period thereunder.
47 (f) Except as otherwise provided in subsection (g) of this section, a
48 perfected purchase-money security interest in software has priority over a
49 conflicting security interest in the same collateral and, except as otherwise
50 provided in section 28-9-327, a perfected security interest in its identifi-
51 able proceeds also has priority, to the extent that the purchase-money secu-
52 rity interest in the goods in which the software was acquired for use has pri-
53 ority in the goods and proceeds of the goods under this section.
54 (g) If more than one (1) security interest qualifies for priority in the
55 same collateral under subsection (a), (b), (d) or (f) of this section:
42
1 (1) A security interest securing an obligation incurred as all or part of
2 the price of the collateral has priority over a security interest securing
3 an obligation incurred for value given to enable the debtor to acquire
4 rights in or the use of collateral; and
5 (2) In all other cases, section 28-9-322(a) applies to the qualifying
6 security interests.
7 28-9-325. PRIORITY OF SECURITY INTERESTS IN TRANSFERRED COLLATERAL. (a)
8 Except as otherwise provided in subsection (b) of this section, a security
9 interest created by a debtor is subordinate to a security interest in the same
10 collateral created by another person if:
11 (1) The debtor acquired the collateral subject to the security interest
12 created by the other person;
13 (2) The security interest created by the other person was perfected when
14 the debtor acquired the collateral; and
15 (3) There is no period thereafter when the security interest is unper-
16 fected.
17 (b) Subsection (a) of this section subordinates a security interest only
18 if the security interest:
19 (1) Otherwise would have priority solely under section 28-9-322(a) or
20 28-9-324; or
21 (2) Arose solely under section 28-2-711(3) or 28-12-508(5).
22 28-9-326. PRIORITY OF SECURITY INTERESTS CREATED BY NEW DEBTOR. (a) Sub-
23 ject to subsection (b) of this section, a security interest created by a new
24 debtor which is perfected by a filed financing statement that is effective
25 solely under section 28-9-508 in collateral in which a new debtor has or
26 acquires rights is subordinate to a security interest in the same collateral
27 which is perfected other than by a filed financing statement that is effective
28 solely under section 28-9-508.
29 (b) The other provisions of this part determine the priority among con-
30 flicting security interests in the same collateral perfected by filed financ-
31 ing statements that are effective solely under section 28-9-508. However, if
32 the security agreements to which a new debtor became bound as debtor were not
33 entered into by the same original debtor, the conflicting security interests
34 rank according to priority in time of the new debtor's having become bound.
35 28-9-327. PRIORITY OF SECURITY INTERESTS IN DEPOSIT ACCOUNT. The follow-
36 ing rules govern priority among conflicting security interests in the same
37 deposit account:
38 (1) A security interest held by a secured party having control of the
39 deposit account under section 28-9-104 has priority over a conflicting secu-
40 rity interest held by a secured party that does not have control.
41 (2) Except as otherwise provided in subsections (3) and (4) of this sec-
42 tion, security interests perfected by control under section 28-9-314 rank
43 according to priority in time of obtaining control.
44 (3) Except as otherwise provided in subsection (4) of this section, a
45 security interest held by the bank with which the deposit account is main-
46 tained has priority over a conflicting security interest held by another
47 secured party.
48 (4) A security interest perfected by control under section 28-9-104(a)(3)
49 has priority over a security interest held by the bank with which the deposit
50 account is maintained.
51 28-9-328. PRIORITY OF SECURITY INTERESTS IN INVESTMENT PROPERTY. The fol-
43
1 lowing rules govern priority among conflicting security interests in the same
2 investment property:
3 (1) A security interest held by a secured party having control of invest-
4 ment property under section 28-9-106 has priority over a security interest
5 held by a secured party that does not have control of the investment property.
6 (2) Except as otherwise provided in subsections (3) and (4) of this sec-
7 tion, conflicting security interests held by secured parties each of which has
8 control under section 28-9-106 rank according to priority in time of:
9 (A) If the collateral is a security, obtaining control;
10 (B) If the collateral is a security entitlement carried in a securities
11 account and:
12 (i) if the secured party obtained control under section
13 28-8-106(4)(a), the secured party's becoming the person for which the
14 securities account is maintained;
15 (ii) if the secured party obtained control under section
16 28-8-106(4)(b), the securities intermediary's agreement to comply
17 with the secured party's entitlement orders with respect to security
18 entitlements carried or to be carried in the securities account; or
19 (iii) if the secured party obtained control through another person
20 under section 28-8-106(4)(c), the time on which priority would be
21 based under this paragraph if the other person were the secured
22 party; or
23 (C) If the collateral is a commodity contract carried with a commodity
24 intermediary, the satisfaction of the requirement for control specified in
25 section 28-9-106(b)(2) with respect to commodity contracts carried or to
26 be carried with the commodity intermediary.
27 (3) A security interest held by a securities intermediary in a security
28 entitlement or a securities account maintained with the securities intermedi-
29 ary has priority over a conflicting security interest held by another secured
30 party.
31 (4) A security interest held by a commodity intermediary in a commodity
32 contract or a commodity account maintained with the commodity intermediary has
33 priority over a conflicting security interest held by another secured party.
34 (5) A security interest in a certificated security in registered form
35 which is perfected by taking delivery under section 28-9-313(a) and not by
36 control under section 28-9-314 has priority over a conflicting security inter-
37 est perfected by a method other than control.
38 (6) Conflicting security interests created by a broker, securities inter-
39 mediary or commodity intermediary which are perfected without control under
40 section 28-9-106 rank equally.
41 (7) In all other cases, priority among conflicting security interests in
42 investment property is governed by sections 28-9-322 and 28-9-323.
43 28-9-329. PRIORITY OF SECURITY INTERESTS IN LETTER OF CREDIT RIGHT. The
44 following rules govern priority among conflicting security interests in the
45 same letter of credit right:
46 (1) A security interest held by a secured party having control of the
47 letter of credit right under section 28-9-107 has priority to the extent of
48 its control over a conflicting security interest held by a secured party that
49 does not have control.
50 (2) Security interests perfected by control under section 28-9-314 rank
51 according to priority in time of obtaining control.
52 28-9-330. PRIORITY OF PURCHASER OF CHATTEL PAPER OR INSTRUMENT. (a) A
53 purchaser of chattel paper has priority over a security interest in the chat-
44
1 tel paper which is claimed merely as proceeds of inventory subject to a secu-
2 rity interest if:
3 (1) In good faith and in the ordinary course of the purchaser's business,
4 the purchaser gives new value and takes possession of the chattel paper or
5 obtains control of the chattel paper under section 28-9-105; and
6 (2) The chattel paper does not indicate that it has been assigned to an
7 identified assignee other than the purchaser.
8 (b) A purchaser of chattel paper has priority over a security interest in
9 the chattel paper which is claimed other than merely as proceeds of inventory
10 subject to a security interest if the purchaser gives new value and takes pos-
11 session of the chattel paper or obtains control of the chattel paper under
12 section 28-9-105 in good faith, in the ordinary course of the purchaser's
13 business, and without knowledge that the purchase violates the rights of the
14 secured party.
15 (c) Except as otherwise provided in section 28-9-327, a purchaser having
16 priority in chattel paper under subsection (a) or (b) of this section also has
17 priority in proceeds of the chattel paper to the extent that:
18 (1) Section 28-9-322 provides for priority in the proceeds; or
19 (2) The proceeds consist of the specific goods covered by the chattel
20 paper or cash proceeds of the specific goods, even if the purchaser's
21 security interest in the proceeds is unperfected.
22 (d) Except as otherwise provided in section 28-9-331(a), a purchaser of
23 an instrument has priority over a security interest in the instrument per-
24 fected by a method other than possession if the purchaser gives value and
25 takes possession of the instrument in good faith and without knowledge that
26 the purchase violates the rights of the secured party.
27 (e) For purposes of subsections (a) and (b) of this section, the holder
28 of a purchase-money security interest in inventory gives new value for chattel
29 paper constituting proceeds of the inventory.
30 (f) For purposes of subsections (b) and (d) of this section, if chattel
31 paper or an instrument indicates that it has been assigned to an identified
32 secured party other than the purchaser, a purchaser of the chattel paper or
33 instrument has knowledge that the purchase violates the rights of the secured
34 party.
35 28-9-331. PRIORITY OF RIGHTS OF PURCHASERS OF INSTRUMENTS, DOCUMENTS AND
36 SECURITIES UNDER OTHER CHAPTERS -- PRIORITY OF INTERESTS IN FINANCIAL ASSETS
37 AND SECURITY ENTITLEMENTS UNDER CHAPTER 8. (a) This chapter does not limit the
38 rights of a holder in due course of a negotiable instrument, a holder to which
39 a negotiable document of title has been duly negotiated, or a protected pur-
40 chaser of a security. These holders or purchasers take priority over an ear-
41 lier security interest, even if perfected, to the extent provided in chapters
42 3, 7 and 8.
43 (b) This chapter does not limit the rights of or impose liability on a
44 person to the extent that the person is protected against the assertion of a
45 claim under chapter 8.
46 (c) Filing under this chapter does not constitute notice of a claim or
47 defense to the holders, or purchasers, or persons described in subsections (a)
48 and (b) of this section.
49 28-9-332. TRANSFER OF MONEY -- TRANSFER OF FUNDS FROM DEPOSIT ACCOUNT.
50 (a) A transferee of money takes the money free of a security interest unless
51 the transferee acts in collusion with the debtor in violating the rights of
52 the secured party.
53 (b) A transferee of funds from a deposit account takes the funds free of
45
1 a security interest in the deposit account unless the transferee acts in col-
2 lusion with the debtor in violating the rights of the secured party.
3 28-9-333. PRIORITY OF CERTAIN LIENS ARISING BY OPERATION OF LAW. (a) In
4 this section, "possessory lien" means an interest, other than a security
5 interest or an agricultural lien:
6 (1) Which secures payment or performance of an obligation for services or
7 materials furnished with respect to goods by a person in the ordinary
8 course of the person's business;
9 (2) Which is created by statute or rule of law in favor of the person;
10 and
11 (3) Whose effectiveness depends on the person's possession of the goods.
12 (b) A possessory lien on goods has priority over a security interest in
13 the goods unless the lien is created by a statute that expressly provides
14 otherwise.
15 28-9-334. PRIORITY OF SECURITY INTERESTS IN FIXTURES AND CROPS. (a) A
16 security interest under this chapter may be created in goods that are fixtures
17 or may continue in goods that become fixtures. A security interest does not
18 exist under this chapter in ordinary building materials incorporated into an
19 improvement on land.
20 (b) This chapter does not prevent creation of an encumbrance upon fix-
21 tures under real property law.
22 (c) In cases not governed by subsections (d) through (h) of this section,
23 a security interest in fixtures is subordinate to a conflicting interest of an
24 encumbrancer or owner of the related real property other than the debtor.
25 (d) Except as otherwise provided in subsection (h) of this section, a
26 perfected security interest in fixtures has priority over a conflicting inter-
27 est of an encumbrancer or owner of the real property if the debtor has an
28 interest of record in or is in possession of the real property and:
29 (1) The security interest is a purchase-money security interest;
30 (2) The interest of the encumbrancer or owner arises before the goods
31 become fixtures; and
32 (3) The security interest is perfected by a fixture filing before the
33 goods become fixtures or within twenty (20) days thereafter.
34 (e) A perfected security interest in fixtures has priority over a con-
35 flicting interest of an encumbrancer or owner of the real property if:
36 (1) The debtor has an interest of record in the real property or is in
37 possession of the real property and the security interest:
38 (A) is perfected by a fixture filing before the interest of the
39 encumbrancer or owner is of record; and
40 (B) has priority over any conflicting interest of a predecessor in
41 title of the encumbrancer or owner;
42 (2) Before the goods become fixtures, the security interest is perfected
43 by any method permitted by this chapter and the fixtures are readily
44 removable:
45 (A) factory or office machines;
46 (B) equipment that is not primarily used or leased for use in the
47 operation of the real property; or
48 (C) replacements of domestic appliances that are consumer goods;
49 (3) The conflicting interest is a lien on the real property obtained by
50 legal or equitable proceedings after the security interest was perfected
51 by any method permitted by this chapter; or
52 (4) The security interest is:
53 (A) created in a manufactured home in a manufactured home transac-
46
1 tion; and
2 (B) perfected pursuant to a statute described in section
3 28-9-311(a)(2).
4 (f) A security interest in fixtures, whether or not perfected, has prior-
5 ity over a conflicting interest of an encumbrancer or owner of the real prop-
6 erty if:
7 (1) The encumbrancer or owner has, in an authenticated record, consented
8 to the security interest or disclaimed an interest in the goods as fix-
9 tures; or
10 (2) The debtor has a right to remove the goods as against the encum-
11 brancer or owner.
12 (g) The priority of the security interest under subsection (f)(2) of this
13 section continues for a reasonable time if the debtor's right to remove the
14 goods as against the encumbrancer or owner terminates.
15 (h) A mortgage is a construction mortgage to the extent that it secures
16 an obligation incurred for the construction of an improvement on land, includ-
17 ing the acquisition cost of the land, if a recorded record of the mortgage so
18 indicates. Except as otherwise provided in subsections (e) and (f) of this
19 section, a security interest in fixtures is subordinate to a construction
20 mortgage if a record of the mortgage is recorded before the goods become fix-
21 tures and the goods become fixtures before the completion of the construction.
22 A mortgage has this priority to the same extent as a construction mortgage to
23 the extent that it is given to refinance a construction mortgage.
24 (i) A perfected security interest in crops growing on real property has
25 priority over a conflicting interest of an encumbrancer or owner of the real
26 property if the debtor has an interest of record in or is in possession of the
27 real property.
28 28-9-335. ACCESSIONS. (a) A security interest may be created in an acces-
29 sion and continues in collateral that becomes an accession.
30 (b) If a security interest is perfected when the collateral becomes an
31 accession, the security interest remains perfected in the collateral.
32 (c) Except as otherwise provided in subsections (d) and (g) of this sec-
33 tion, the other provisions of this part determine the priority of a security
34 interest in an accession.
35 (d) Except as otherwise provided in subsection (g) of this section, a
36 security interest in an accession is subordinate to a security interest in
37 the whole which is perfected by compliance with the requirements of a certifi-
38 cate of title statute under section 28-9-311(b).
39 (e) After default, subject to part 6, a secured party may remove an
40 accession from other goods if the security interest in the accession has pri-
41 ority over the claims of every person having an interest in the whole.
42 (f) A secured party that removes an accession from other goods under sub-
43 section (e) of this section shall promptly reimburse any holder of a security
44 interest or other lien on, or owner of, the whole or of the other goods, other
45 than the debtor, for the cost of repair of any physical injury to the whole or
46 the other goods. The secured party need not reimburse the holder or owner for
47 any diminution in value of the whole or the other goods caused by the absence
48 of the accession removed or by any necessity for replacing it. A person enti-
49 tled to reimbursement may refuse permission to remove until the secured party
50 gives adequate assurance for the performance of the obligation to reimburse.
51 (g) A security interest in an accession has priority over a security
52 interest in the whole which is perfected by compliance with the requirements
53 of a certificate-of-title statute under subsection (b) of section 28-9-311,
54 Idaho Code, if the security interest in the accession is a purchase money
47
1 security interest that is perfected when the debtor receives possession of the
2 accession or within twenty (20) days thereafter.
3 28-9-336. COMMINGLED GOODS. (a) In this section, "commingled goods" means
4 goods that are physically united with other goods in such a manner that their
5 identity is lost in a product or mass.
6 (b) A security interest does not exist in commingled goods as such. How-
7 ever, a security interest may attach to a product or mass that results when
8 goods become commingled goods.
9 (c) If collateral becomes commingled goods, a security interest attaches
10 to the product or mass.
11 (d) If a security interest in collateral is perfected before the collat-
12 eral becomes commingled goods, the security interest that attaches to the
13 product or mass under subsection (c) of this section is perfected.
14 (e) Except as otherwise provided in subsection (f) of this section, the
15 other provisions of this part determine the priority of a security interest
16 that attaches to the product or mass under subsection (c) of this section.
17 (f) If more than one (1) security interest attaches to the product or
18 mass under subsection (c) of this section, the following rules determine pri-
19 ority:
20 (1) A security interest that is perfected under subsection (d) of this
21 section has priority over a security interest that is unperfected at the
22 time the collateral becomes commingled goods.
23 (2) If more than one (1) security interest is perfected under subsection
24 (d) of this section, the security interests rank equally in proportion to
25 the value of the collateral at the time it became commingled goods.
26 28-9-337. PRIORITY OF SECURITY INTERESTS IN GOODS COVERED BY CERTIFICATE
27 OF TITLE. If, while a security interest in goods is perfected by any method
28 under the law of another jurisdiction, this state issues a certificate of
29 title that does not show that the goods are subject to the security interest
30 or contain a statement that they may be subject to security interests not
31 shown on the certificate:
32 (1) A buyer of the goods, other than a person in the business of selling
33 goods of that kind, takes free of the security interest if the buyer gives
34 value and receives delivery of the goods after issuance of the certificate and
35 without knowledge of the security interest; and
36 (2) The security interest is subordinate to a conflicting security inter-
37 est in the goods that attaches, and is perfected under section 28-9-311(b),
38 after issuance of the certificate and without the conflicting secured party's
39 knowledge of the security interest.
40 28-9-338. PRIORITY OF SECURITY INTEREST OR AGRICULTURAL LIEN PERFECTED BY
41 FILED FINANCING STATEMENT PROVIDING CERTAIN INCORRECT INFORMATION. If a secu-
42 rity interest or agricultural lien is perfected by a filed financing statement
43 providing information described in section 28-9-516(b)(5) which is incorrect
44 at the time the financing statement is filed:
45 (1) The security interest or agricultural lien is subordinate to a con-
46 flicting perfected security interest in the collateral to the extent that the
47 holder of the conflicting security interest gives value in reasonable reliance
48 upon the incorrect information; and
49 (2) A purchaser, other than a secured party, of the collateral takes free
50 of the security interest or agricultural lien to the extent that, in reason-
51 able reliance upon the incorrect information, the purchaser gives value and,
52 in the case of chattel paper, documents, goods, instruments, or a security
48
1 certificate, receives delivery of the collateral.
2 28-9-339. PRIORITY SUBJECT TO SUBORDINATION. This article does not pre-
3 clude subordination by agreement by a person entitled to priority.
4 28-9-340. EFFECTIVENESS OF RIGHT OF RECOUPMENT OR SET-OFF AGAINST DEPOSIT
5 ACCOUNT. (a) Except as otherwise provided in subsection (c) of this section, a
6 bank with which a deposit account is maintained may exercise any right of
7 recoupment or set-off against a secured party that holds a security interest
8 in the deposit account.
9 (b) Except as otherwise provided in subsection (c) of this section, the
10 application of this chapter to a security interest in a deposit account does
11 not affect a right of recoupment or set-off of the secured party as to a
12 deposit account maintained with the secured party.
13 (c) The exercise by a bank of a set-off against a deposit account is
14 ineffective against a secured party that holds a security interest in the
15 deposit account which is perfected by control under section 28-9-104(a)(3), if
16 the set-off is based on a claim against the debtor.
17 28-9-341. BANK'S RIGHTS AND DUTIES WITH RESPECT TO DEPOSIT ACCOUNT.
18 Except as otherwise provided in section 28-9-340(c), and unless the bank
19 otherwise agrees in an authenticated record, a bank's rights and duties with
20 respect to a deposit account maintained with the bank are not terminated, sus-
21 pended or modified by:
22 (1) The creation, attachment or perfection of a security interest in the
23 deposit account;
24 (2) The bank's knowledge of the security interest; or
25 (3) The bank's receipt of instructions from the secured party.
26 28-9-342. BANK'S RIGHT TO REFUSE TO ENTER INTO OR DISCLOSE EXISTENCE OF
27 CONTROL AGREEMENT. This chapter does not require a bank to enter into an
28 agreement of the kind described in section 28-9-104(a)(2), even if its cus-
29 tomer so requests or directs. A bank that has entered into such an agreement
30 is not required to confirm the existence of the agreement to another person
31 unless requested to do so by its customer.
32 PART 4.
33 RIGHTS OF THIRD PARTIES
34 28-9-401. ALIENABILITY OF DEBTOR'S RIGHTS. (a) Except as otherwise pro-
35 vided in subsection (b) of this section and sections 28-9-406, 28-9-407,
36 28-9-408 and 28-9-409, whether a debtor's rights in collateral may be volun-
37 tarily or involuntarily transferred is governed by law other than this chap-
38 ter.
39 (b) An agreement between the debtor and secured party which prohibits a
40 transfer of the debtor's rights in collateral or makes the transfer a default
41 does not prevent the transfer from taking effect.
42 28-9-402. SECURED PARTY NOT OBLIGATED ON CONTRACT OF DEBTOR OR IN TORT.
43 The existence of a security interest, agricultural lien, or authority given to
44 a debtor to dispose of or use collateral, without more, does not subject a
45 secured party to liability in contract or tort for the debtor's acts or omis-
46 sions.
47 28-9-403. AGREEMENT NOT TO ASSERT DEFENSES AGAINST ASSIGNEE. (a) In this
49
1 section, "value" has the meaning provided in section 28-3-303(1).
2 (b) Except as otherwise provided in this section, an agreement between an
3 account debtor and an assignor not to assert against an assignee any claim or
4 defense that the account debtor may have against the assignor is enforceable
5 by an assignee that takes an assignment:
6 (1) For value;
7 (2) In good faith;
8 (3) Without notice of a claim of a property or possessory right to the
9 property assigned; and
10 (4) Without notice of a defense or claim in recoupment of the type that
11 may be asserted against a person entitled to enforce a negotiable instru-
12 ment under section 28-3-305(1).
13 (c) Subsection (b) of this section does not apply to defenses of a type
14 that may be asserted against a holder in due course of a negotiable instrument
15 under section 28-3-305(2).
16 (d) In a consumer transaction, if a record evidences the account debtor's
17 obligation, law other than this chapter requires that the record include a
18 statement to the effect that the rights of an assignee are subject to claims
19 or defenses that the account debtor could assert against the original obligee,
20 and the record does not include such a statement:
21 (1) The record has the same effect as if the record included such a
22 statement; and
23 (2) The account debtor may assert against an assignee those claims and
24 defenses that would have been available if the record included such a
25 statement.
26 (e) This section is subject to law other than this chapter which estab-
27 lishes a different rule for an account debtor who is an individual and who
28 incurred the obligation primarily for personal, family or household purposes.
29 (f) Except as otherwise provided in subsection (d) of this section, this
30 section does not displace law other than this chapter which gives effect to an
31 agreement by an account debtor not to assert a claim or defense against an
32 assignee.
33 28-9-404. RIGHTS ACQUIRED BY ASSIGNEE -- CLAIMS AND DEFENSES AGAINST
34 ASSIGNEE. (a) Unless an account debtor has made an enforceable agreement not
35 to assert defenses or claims, and subject to subsections (b) through (e) of
36 this section, the rights of an assignee are subject to:
37 (1) All terms of the agreement between the account debtor and assignor
38 and any defense or claim in recoupment arising from the transaction that
39 gave rise to the contract; and
40 (2) Any other defense or claim of the account debtor against the assignor
41 which accrues before the account debtor receives a notification of the
42 assignment authenticated by the assignor or the assignee.
43 (b) Subject to subsection (c) of this section and except as otherwise
44 provided in subsection (d) of this section, the claim of an account debtor
45 against an assignor may be asserted against an assignee under subsection (a)
46 of this section only to reduce the amount the account debtor owes.
47 (c) This section is subject to law other than this chapter which estab-
48 lishes a different rule for an account debtor who is an individual and who
49 incurred the obligation primarily for personal, family or household purposes.
50 (d) In a consumer transaction, if a record evidences the account debtor's
51 obligation, law other than this chapter requires that the record include a
52 statement to the effect that the account debtor's recovery against an assignee
53 with respect to claims and defenses against the assignor may not exceed
54 amounts paid by the account debtor under the record, and the record does not
50
1 include such a statement, the extent to which a claim of an account debtor
2 against the assignor may be asserted against an assignee is determined as if
3 the record included such a statement.
4 (e) This section does not apply to an assignment of a health care insur-
5 ance receivable.
6 28-9-405. MODIFICATION OF ASSIGNED CONTRACT. (a) A modification of or
7 substitution for an assigned contract is effective against an assignee if made
8 in good faith. The assignee acquires corresponding rights under the modified
9 or substituted contract. The assignment may provide that the modification or
10 substitution is a breach of contract by the assignor. This subsection is sub-
11 ject to subsections (b) through (d) of this section.
12 (b) Subsection (a) of this section applies to the extent that:
13 (1) The right to payment or a part thereof under an assigned contract has
14 not been fully earned by performance; or
15 (2) The right to payment or a part thereof has been fully earned by per-
16 formance and the account debtor has not received notification of the
17 assignment under section 28-9-406(a).
18 (c) This section is subject to law other than this chapter which estab-
19 lishes a different rule for an account debtor who is an individual and who
20 incurred the obligation primarily for personal, family or household purposes.
21 (d) This section does not apply to an assignment of a health care insur-
22 ance receivable.
23 28-9-406. DISCHARGE OF ACCOUNT DEBTOR -- NOTIFICATION OF ASSIGNMENT --
24 IDENTIFICATION AND PROOF OF ASSIGNMENT -- RESTRICTIONS ON ASSIGNMENT OF
25 ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES AND PROMISSORY NOTES INEFFECTIVE.
26 (a) Subject to subsections (b) through (i) of this section, an account debtor
27 on an account, chattel paper or a payment intangible may discharge its obliga-
28 tion by paying the assignor until, but not after, the account debtor receives
29 a notification, authenticated by the assignor or the assignee, that the amount
30 due or to become due has been assigned and that payment is to be made to the
31 assignee. After receipt of the notification, the account debtor may discharge
32 its obligation by paying the assignee and may not discharge the obligation by
33 paying the assignor.
34 (b) Subject to subsection (h) of this section, notification is ineffec-
35 tive under subsection (a) of this section:
36 (1) If it does not reasonably identify the rights assigned;
37 (2) To the extent that an agreement between an account debtor and a
38 seller of a payment intangible limits the account debtor's duty to pay a
39 person other than the seller and the limitation is effective under law
40 other than this chapter; or
41 (3) At the option of an account debtor, if the notification notifies the
42 account debtor to make less than the full amount of any installment or
43 other periodic payment to the assignee, even if:
44 (A) only a portion of the account, chattel paper or payment intangi-
45 ble has been assigned to that assignee;
46 (B) a portion has been assigned to another assignee; or
47 (C) the account debtor knows that the assignment to that assignee is
48 limited.
49 (c) Subject to subsection (h) of this section, if requested by the
50 account debtor, an assignee shall seasonably furnish reasonable proof that the
51 assignment has been made. Unless the assignee complies, the account debtor may
52 discharge its obligation by paying the assignor, even if the account debtor
53 has received a notification under subsection (a) of this section.
51
1 (d) Except as otherwise provided in subsection (e) of this section and
2 sections 28-9-407 and 28-12-303, and subject to subsection (h) of this sec-
3 tion, a term in an agreement between an account debtor and an assignor or in a
4 promissory note is ineffective to the extent that it:
5 (1) Prohibits, restricts or requires the consent of the account debtor or
6 person obligated on the promissory note to the assignment or transfer of,
7 or the creation, attachment, perfection or enforcement of a security
8 interest in, the account, chattel paper, payment intangible or promissory
9 note; or
10 (2) Provides that the assignment or transfer or the creation, attachment,
11 perfection, or enforcement of the security interest may give rise to a
12 default, breach, right of recoupment, claim, defense, termination, right
13 of termination, or remedy under the account, chattel paper, payment intan-
14 gible or promissory note.
15 (e) Subsection (d) of this section does not apply to the sale of a pay-
16 ment intangible or promissory note.
17 (f) Except as otherwise provided in sections 28-9-407 and 28-12-303 and
18 subject to subsections (h) and (i) of this section, a rule of law, statute,
19 rule or regulation that prohibits, restricts, or requires the consent of a
20 government, governmental body or official, or account debtor to the assignment
21 or transfer of, or creation of a security interest in, an account or chattel
22 paper is ineffective to the extent that the rule of law, statute, rule or reg-
23 ulation:
24 (1) Prohibits, restricts or requires the consent of the government, gov-
25 ernmental body or official, or account debtor to the assignment or trans-
26 fer of, or the creation, attachment, perfection, or enforcement of a
27 security interest in the account or chattel paper; or
28 (2) Provides that the assignment or transfer or the creation, attachment,
29 perfection or enforcement of the security interest may give rise to a
30 default, breach, right of recoupment, claim, defense, termination, right
31 of termination or remedy under the account or chattel paper.
32 (g) Subject to subsection (h) of this section, an account debtor may not
33 waive or vary its option under subsection (b)(3) of this section.
34 (h) This section is subject to law other than this chapter which estab-
35 lishes a different rule for an account debtor who is an individual and who
36 incurred the obligation primarily for personal, family or household purposes.
37 (i) This section does not apply to an assignment of a health care insur-
38 ance receivable, an award of compensation made pursuant to the crime victims
39 compensation act, chapter 10, title 72, Idaho Code, or a lottery prize subject
40 to the provisions of chapter 74, title 67, Idaho Code.
41 28-9-407. RESTRICTIONS ON CREATION OR ENFORCEMENT OF SECURITY INTEREST IN
42 LEASEHOLD INTEREST OR IN LESSOR'S RESIDUAL INTEREST. (a) Except as otherwise
43 provided in subsection (b) of this section, a term in a lease agreement is
44 ineffective to the extent that it:
45 (1) Prohibits, restricts or requires the consent of a party to the lease
46 to the assignment or transfer of, or the creation, attachment, perfection,
47 or enforcement of a security interest in, an interest of a party under the
48 lease contract or in the lessor's residual interest in the goods; or
49 (2) Provides that the assignment or transfer or the creation, attachment,
50 perfection or enforcement of the security interest may give rise to a
51 default, breach, right of recoupment, claim, defense, termination, right
52 of termination, or remedy under the lease.
53 (b) Except as otherwise provided in section 28-12-303(7), a term
54 described in subsection (a)(2) of this section is effective to the extent that
52
1 there is:
2 (1) A transfer by the lessee of the lessee's right of possession or use
3 of the goods in violation of the term; or
4 (2) A delegation of a material performance of either party to the lease
5 contract in violation of the term.
6 (c) The creation, attachment, perfection or enforcement of a security
7 interest in the lessor's interest under the lease contract or the lessor's
8 residual interest in the goods is not a transfer that materially impairs the
9 lessee's prospect of obtaining return performance or materially changes the
10 duty of or materially increases the burden or risk imposed on the lessee
11 within the purview of section 28-12-303(4) unless, and then only to the extent
12 that, enforcement actually results in a delegation of material performance of
13 the lessor.
14 28-9-408. RESTRICTIONS ON ASSIGNMENT OF PROMISSORY NOTES, HEALTH CARE
15 INSURANCE RECEIVABLES, AND CERTAIN GENERAL INTANGIBLES INEFFECTIVE. (a) Except
16 as otherwise provided in subsection (b) of this section, a term in a promis-
17 sory note or in an agreement between an account debtor and a debtor which
18 relates to a health care insurance receivable or a general intangible, includ-
19 ing a contract, permit, license, or franchise, and which term prohibits,
20 restricts, or requires the consent of the person obligated on the promissory
21 note or the account debtor to, the assignment or transfer of, or creation,
22 attachment, or perfection of a security interest in, the promissory note,
23 health care insurance receivable, or general intangible, is ineffective to the
24 extent that the term:
25 (1) Would impair the creation, attachment or perfection of a security
26 interest; or
27 (2) Provides that the assignment or transfer or the creation, attachment,
28 or perfection of the security interest may give rise to a default, breach,
29 right of recoupment, claim, defense, termination, right of termination, or
30 remedy under the promissory note, health care insurance receivable, or
31 general intangible.
32 (b) Subsection (a) of this section applies to a security interest in a
33 payment intangible or promissory note only if the security interest arises out
34 of a sale of the payment intangible or promissory note.
35 (c) A rule of law, statute, rule or regulation that prohibits, restricts,
36 or requires the consent of a government, governmental body or official, person
37 obligated on a promissory note, or account debtor to the assignment or trans-
38 fer of, or creation of a security interest in, a promissory note, health care
39 insurance receivable, or general intangible, including a contract, permit,
40 license, or franchise between an account debtor and a debtor, is ineffective
41 to the extent that the rule of law, statute or regulation:
42 (1) Would impair the creation, attachment or perfection of a security
43 interest; or
44 (2) Provides that the assignment or transfer or the creation, attachment,
45 or perfection of the security interest may give rise to a default, breach,
46 right of recoupment, claim, defense, termination, right of termination, or
47 remedy under the promissory note, health care insurance receivable, or
48 general intangible.
49 (d) To the extent that a term in a promissory note or in an agreement
50 between an account debtor and a debtor which relates to a health care insur-
51 ance receivable or general intangible or a rule of law, statute or regulation
52 described in subsection (c) of this section would be effective under law other
53 than this chapter but is ineffective under subsection (a) or (c) of this sec-
54 tion, the creation, attachment, or perfection of a security interest in the
53
1 promissory note, health care insurance receivable, or general intangible:
2 (1) Is not enforceable against the person obligated on the promissory
3 note or the account debtor;
4 (2) Does not impose a duty or obligation on the person obligated on the
5 promissory note or the account debtor;
6 (3) Does not require the person obligated on the promissory note or the
7 account debtor to recognize the security interest, pay or render perfor-
8 mance to the secured party, or accept payment or performance from the
9 secured party;
10 (4) Does not entitle the secured party to use or assign the debtor's
11 rights under the promissory note, health care insurance receivable, or
12 general intangible, including any related information or materials fur-
13 nished to the debtor in the transaction giving rise to the promissory
14 note, health care insurance receivable, or general intangible;
15 (5) Does not entitle the secured party to use, assign, possess, or have
16 access to any trade secrets or confidential information of the person
17 obligated on the promissory note or the account debtor; and
18 (6) Does not entitle the secured party to enforce the security interest
19 in the promissory note, health care insurance receivable, or general
20 intangible.
21 28-9-409. RESTRICTIONS ON ASSIGNMENT OF LETTER OF CREDIT RIGHTS INEFFEC-
22 TIVE. (a) A term in a letter of credit or a rule of law, statute, rule, regu-
23 lation, custom or practice applicable to the letter of credit which prohib-
24 its, restricts or requires the consent of an applicant, issuer or nominated
25 person to a beneficiary's assignment of or creation of a security interest in
26 a letter of credit right is ineffective to the extent that the term or rule of
27 law, statute, rule, regulation, custom or practice:
28 (1) Would impair the creation, attachment or perfection of a security
29 interest in the letter of credit right; or
30 (2) Provides that the assignment or the creation, attachment or perfec-
31 tion of the security interest may give rise to a default, breach, right of
32 recoupment, claim, defense, termination, right of termination, or remedy
33 under the letter of credit right.
34 (b) To the extent that a term in a letter of credit is ineffective under
35 subsection (a) of this section but would be effective under law other than
36 this chapter or a custom or practice applicable to the letter of credit, to
37 the transfer of a right to draw or otherwise demand performance under the let-
38 ter of credit, or to the assignment of a right to proceeds of the letter of
39 credit, the creation, attachment, or perfection of a security interest in the
40 letter of credit right:
41 (1) Is not enforceable against the applicant, issuer, nominated person or
42 transferee beneficiary;
43 (2) Imposes no duties or obligations on the applicant, issuer, nominated
44 person or transferee beneficiary; and
45 (3) Does not require the applicant, issuer, nominated person or trans-
46 feree beneficiary to recognize the security interest, pay or render per-
47 formance to the secured party, or accept payment or other performance from
48 the secured party.
49 PART 5.
50 FILING
51 28-9-501. FILING OFFICE. (a) Except as otherwise provided in subsection
52 (b) of this section, if the local law of this state governs perfection of a
54
1 security interest or agricultural lien, the office in which to file a financ-
2 ing statement to perfect the security interest or agricultural lien is:
3 (1) The office designated for the filing or recording of a record of a
4 mortgage on the related real property, if:
5 (A) the collateral is as-extracted collateral or timber to be cut;
6 or
7 (B) the financing statement is filed as a fixture filing and the
8 collateral is goods that are or are to become fixtures; or
9 (2) The office of the secretary of state or any office duly authorized by
10 the secretary of state, in all other cases, including a case in which the
11 collateral is goods that are or are to become fixtures and the financing
12 statement is not filed as a fixture filing.
13 (b) The office in which to file a financing statement to perfect a secu-
14 rity interest in collateral, including fixtures, of a transmitting utility is
15 the office of the secretary of state. The financing statement also constitutes
16 a fixture filing as to the collateral indicated in the financing statement
17 which is or is to become a fixture.
18 28-9-502. CONTENTS OF FINANCING STATEMENT -- RECORD OF MORTGAGE AS
19 FINANCING STATEMENT -- TIME OF FILING FINANCING STATEMENT -- FARM PRODUCTS.
20 (a) Subject to subsection (b) of this section, a financing statement is suffi-
21 cient only if it:
22 (1) Provides the name of the debtor;
23 (2) Provides the name of the secured party or a representative of the
24 secured party; and
25 (3) Indicates the collateral covered by the financing statement.
26 (b) Except as otherwise provided in section 28-9-501(b), to be suffi-
27 cient, a financing statement that covers as-extracted collateral or timber to
28 be cut, or which is filed as a fixture filing and covers goods that are or are
29 to become fixtures, must satisfy subsection (a) of this section and also:
30 (1) Indicate that it covers this type of collateral;
31 (2) Indicate that it is to be filed in the real property records;
32 (3) Provide a description of the real property to which the collateral is
33 related sufficient to give constructive notice of a mortgage under the law
34 of this state if the description were contained in a record of the mort-
35 gage of the real property; and
36 (4) If the debtor does not have an interest of record in the real prop-
37 erty, provide the name of a record owner.
38 (c) A record of a mortgage is effective, from the date of recording, as a
39 financing statement filed as a fixture filing or as a financing statement cov-
40 ering as-extracted collateral or timber to be cut only if:
41 (1) The record indicates the goods or accounts that it covers;
42 (2) The goods are or are to become fixtures related to the real property
43 described in the record or the collateral is related to the real property
44 described in the record and is as-extracted collateral or timber to be
45 cut;
46 (3) The record satisfies the requirements for a financing statement in
47 this section other than an indication that it is to be filed in the real
48 property records; and
49 (4) The record is recorded.
50 (d) A financing statement may be filed before a security agreement is
51 made or a security interest otherwise attaches.
52 (e) A financing statement covering farm products is sufficient if it con-
53 tains the following information:
54 (1) The name and address of the debtor;
55
1 (2) The debtor's signature;
2 (3) The name, address and signature of the secured party;
3 (4) The social security number of the debtor, or in the case of a debtor
4 doing business other than as an individual, the debtor's internal revenue
5 service taxpayer identification number;
6 (5) A description by category of the farm products subject to the secu-
7 rity interest and the amount of such products, where applicable;
8 (6) A reasonable description of the real estate where the farm products
9 are produced or located. This provision may be satisfied by a designation
10 of the county or counties, and a legal description is not required.
11 (f) A financing statement described in subsection (e) of this section
12 must be amended in writing within three (3) months, and similarly signed and
13 filed, to reflect any material changes. In the event such form is not incorpo-
14 rated within the financing statement, the effectiveness and continuation of
15 that form is to be treated as if it were a part of the financing statement
16 with which it is filed.
17 28-9-503. NAME OF DEBTOR AND SECURED PARTY. (a) A financing statement
18 sufficiently provides the name of the debtor:
19 (1) If the debtor is a registered organization, only if the financing
20 statement provides the name of the debtor indicated on the public record
21 of the debtor's jurisdiction of organization which shows the debtor to
22 have been organized;
23 (2) If the debtor is a decedent's estate, only if the financing statement
24 provides the name of the decedent and indicates that the debtor is an
25 estate;
26 (3) If the debtor is a trust or a trustee acting with respect to property
27 held in trust, only if the financing statement:
28 (A) provides the name specified for the trust in its organic docu-
29 ments or, if no name is specified, provides the name of the settlor
30 and additional information sufficient to distinguish the debtor from
31 other trusts having one (1) or more of the same settlors; and
32 (B) indicates, in the debtor's name or otherwise, that the debtor is
33 a trust or is a trustee acting with respect to property held in
34 trust; and
35 (4) In other cases:
36 (A) if the debtor has a name, only if it provides the individual or
37 organizational name of the debtor; and
38 (B) if the debtor does not have a name, only if it provides the
39 names of the partners, members, associates or other persons compris-
40 ing the debtor.
41 (b) A financing statement that provides the name of the debtor in accor-
42 dance with subsection (a) of this section is not rendered ineffective by the
43 absence of:
44 (1) A trade name or other name of the debtor; or
45 (2) Unless required under subsection (a)(4)(B) of this section, names of
46 partners, members, associates or other persons comprising the debtor.
47 (c) A financing statement that provides only the debtor's trade name does
48 not sufficiently provide the name of the debtor.
49 (d) Failure to indicate the representative capacity of a secured party or
50 representative of a secured party does not affect the sufficiency of a financ-
51 ing statement.
52 (e) A financing statement may provide the name of more than one (1)
53 debtor and the name of more than one (1) secured party.
56
1 28-9-504. INDICATION OF COLLATERAL. A financing statement sufficiently
2 indicates the collateral that it covers if the financing statement provides:
3 (1) A description of the collateral pursuant to section 28-9-108; or
4 (2) An indication that the financing statement covers all assets or all
5 personal property.
6 28-9-505. FILING AND COMPLIANCE WITH OTHER STATUTES AND TREATIES FOR
7 CONSIGNMENTS, LEASES, OTHER BAILMENTS, AND OTHER TRANSACTIONS. (a) A con-
8 signor, lessor, or other bailor of goods, a licensor, or a buyer of a payment
9 intangible or promissory note may file a financing statement, or may comply
10 with a statute or treaty described in section 28-9-311(a), using the terms
11 "consignor," "consignee," "lessor," "lessee," "bailor," "bailee," "licensor,"
12 "licensee," "owner," "registered owner," "buyer," "seller," or words of simi-
13 lar import, instead of the terms "secured party" and "debtor."
14 (b) This part applies to the filing of a financing statement under sub-
15 section (a) of this section and, as appropriate, to compliance that is equiva-
16 lent to filing a financing statement under section 28-9-311(b), but the filing
17 or compliance is not of itself a factor in determining whether the collateral
18 secures an obligation. If it is determined for another reason that the col-
19 lateral secures an obligation, a security interest held by the consignor, les-
20 sor, bailor, licensor, owner or buyer which attaches to the collateral is per-
21 fected by the filing or compliance.
22 28-9-506. EFFECT OF ERRORS OR OMISSIONS. (a) A financing statement sub-
23 stantially satisfying the requirements of this part is effective, even if it
24 has minor errors or omissions, unless the errors or omissions make the financ-
25 ing statement seriously misleading.
26 (b) Except as otherwise provided in subsection (c) of this section, a
27 financing statement that fails sufficiently to provide the name of the debtor
28 in accordance with section 28-9-503(a) is seriously misleading.
29 (c) If a search of the records of the filing office under the debtor's
30 correct name, using the filing office's standard search logic, if any, would
31 disclose a financing statement that fails sufficiently to provide the name of
32 the debtor in accordance with section 28-9-503(a), the name provided does not
33 make the financing statement seriously misleading.
34 (d) For purposes of section 28-9-508(b), the "debtor's correct name" in
35 subsection (c) of this section means the correct name of the new debtor.
36 28-9-507. EFFECT OF CERTAIN EVENTS ON EFFECTIVENESS OF FINANCING STATE-
37 MENT. (a) A filed financing statement remains effective with respect to col-
38 lateral that is sold, exchanged, leased, licensed, or otherwise disposed of
39 and in which a security interest or agricultural lien continues, even if the
40 secured party knows of or consents to the disposition.
41 (b) Except as otherwise provided in subsection (c) of this section and
42 section 28-9-508, a financing statement is not rendered ineffective if, after
43 the financing statement is filed, the information provided in the financing
44 statement becomes seriously misleading under section 28-9-506.
45 (c) If a debtor so changes its name that a filed financing statement
46 becomes seriously misleading under section 28-9-506:
47 (1) The financing statement is effective to perfect a security interest
48 in collateral acquired by the debtor before, or within four (4) months
49 after, the change; and
50 (2) The financing statement is not effective to perfect a security inter-
51 est in collateral acquired by the debtor more than four (4) months after
52 the change, unless an amendment to the financing statement which renders
57
1 the financing statement not seriously misleading is filed within four (4)
2 months after the change.
3 28-9-508. EFFECTIVENESS OF FINANCING STATEMENT IF NEW DEBTOR BECOMES
4 BOUND BY SECURITY AGREEMENT. (a) Except as otherwise provided in this section,
5 a filed financing statement naming an original debtor is effective to perfect
6 a security interest in collateral in which a new debtor has or acquires rights
7 to the extent that the financing statement would have been effective had the
8 original debtor acquired rights in the collateral.
9 (b) If the difference between the name of the original debtor and that of
10 the new debtor causes a filed financing statement that is effective under sub-
11 section (a) of this section to be seriously misleading under section
12 28-9-506:
13 (1) The financing statement is effective to perfect a security interest
14 in collateral acquired by the new debtor before, and within four (4)
15 months after, the new debtor becomes bound under section 28-9-203(d); and
16 (2) The financing statement is not effective to perfect a security inter-
17 est in collateral acquired by the new debtor more than four (4) months
18 after the new debtor becomes bound under section 28-9-203(d) unless an
19 initial financing statement providing the name of the new debtor is filed
20 before the expiration of that time.
21 (c) This section does not apply to collateral as to which a filed financ-
22 ing statement remains effective against the new debtor under section
23 28-9-507(a).
24 28-9-509. PERSONS ENTITLED TO FILE A RECORD. (a) A person may file an
25 initial financing statement, amendment that adds collateral covered by a
26 financing statement, or amendment that adds a debtor to a financing statement
27 only if:
28 (1) The debtor authorizes the filing in an authenticated record or pursu-
29 ant to subsection (b) or (c) of this section; or
30 (2) The person holds an agricultural lien that has become effective at
31 the time of filing and the financing statement covers only collateral in
32 which the person holds an agricultural lien.
33 (b) By authenticating or becoming bound as debtor by a security agree-
34 ment, a debtor or new debtor authorizes the filing of an initial financing
35 statement, and an amendment, covering:
36 (1) The collateral described in the security agreement; and
37 (2) Property that becomes collateral under section 28-9-315(a)(2),
38 whether or not the security agreement expressly covers proceeds.
39 (c) By acquiring collateral in which a security interest or agricultural
40 lien continues under section 28-9-315(a)(1), a debtor authorizes the filing of
41 an initial financing statement, and an amendment, covering the collateral and
42 property that becomes collateral under section 28-9-315(a)(2).
43 (d) A person may file an amendment other than an amendment that adds col-
44 lateral covered by a financing statement or an amendment that adds a debtor to
45 a financing statement only if:
46 (1) The secured party of record authorizes the filing; or
47 (2) The amendment is a termination statement for a financing statement as
48 to which the secured party of record has failed to file or send a termina-
49 tion statement as required by section 28-9-513(a) or (c), the debtor
50 authorizes the filing, and the termination statement indicates that the
51 debtor authorized it to be filed.
52 (e) If there is more than one (1) secured party of record for a financing
53 statement, each secured party of record may authorize the filing of an amend-
58
1 ment under subsection (d) of this section.
2 28-9-510. EFFECTIVENESS OF FILED RECORD. (a) A filed record is effective
3 only to the extent that it was filed by a person that may file it under sec-
4 tion 28-9-509.
5 (b) A record authorized by one (1) secured party of record does not
6 affect the financing statement with respect to another secured party of
7 record.
8 (c) A continuation statement that is not filed within the six (6) month
9 period prescribed by section 28-9-515(d) is ineffective.
10 28-9-511. SECURED PARTY OF RECORD. (a) A secured party of record with
11 respect to a financing statement is a person whose name is provided as the
12 name of the secured party or a representative of the secured party in an ini-
13 tial financing statement that has been filed. If an initial financing state-
14 ment is filed under section 28-9-514(a), the assignee named in the initial
15 financing statement is the secured party of record with respect to the financ-
16 ing statement.
17 (b) If an amendment of a financing statement which provides the name of a
18 person as a secured party or a representative of a secured party is filed, the
19 person named in the amendment is a secured party of record. If an amendment is
20 filed under section 28-9-514(b), the assignee named in the amendment is a
21 secured party of record.
22 (c) A person remains a secured party of record until the filing of an
23 amendment of the financing statement which deletes the person.
24 28-9-512. AMENDMENT OF FINANCING STATEMENT. (a) Subject to section
25 28-9-509, a person may add or delete collateral covered by, continue or termi-
26 nate the effectiveness of, or, subject to subsection (e) of this section,
27 otherwise amend the information provided in, a financing statement by filing
28 an amendment that:
29 (1) Identifies, by its file number, the initial financing statement to
30 which the amendment relates; and
31 (2) If the amendment relates to an initial financing statement filed or
32 recorded in a filing office described in section 28-9-501(a)(1), provides
33 the information specified in section 28-9-502(b).
34 (b) Except as otherwise provided in section 28-9-515, the filing of an
35 amendment does not extend the period of effectiveness of the financing state-
36 ment.
37 (c) A financing statement that is amended by an amendment that adds col-
38 lateral is effective as to the added collateral only from the date of the fil-
39 ing of the amendment.
40 (d) A financing statement that is amended by an amendment that adds a
41 debtor is effective as to the added debtor only from the date of the filing of
42 the amendment.
43 (e) An amendment is ineffective to the extent it:
44 (1) Purports to delete all debtors and fails to provide the name of a
45 debtor to be covered by the financing statement; or
46 (2) Purports to delete all secured parties of record and fails to provide
47 the name of a new secured party of record.
48 28-9-513. TERMINATION STATEMENT. (a) A secured party shall cause the
49 secured party of record for a financing statement to file a termination state-
50 ment for the financing statement if the financing statement covers consumer
51 goods and:
59
1 (1) There is no obligation secured by the collateral covered by the
2 financing statement and no commitment to make an advance, incur an obliga-
3 tion, or otherwise give value; or
4 (2) The debtor did not authorize the filing of the initial financing
5 statement.
6 (b) To comply with subsection (a) of this section, a secured party shall
7 cause the secured party of record to file the termination statement:
8 (1) Within one (1) month after there is no obligation secured by the col-
9 lateral covered by the financing statement and no commitment to make an
10 advance, incur an obligation, or otherwise give value; or
11 (2) If earlier, within twenty (20) days after the secured party receives
12 an authenticated demand from a debtor.
13 (c) In cases not governed by subsection (a) of this section, within
14 twenty (20) days after a secured party receives an authenticated demand from a
15 debtor, the secured party shall cause the secured party of record for a
16 financing statement to send to the debtor a termination statement for the
17 financing statement or file the termination statement in the filing office if:
18 (1) Except in the case of a financing statement covering accounts or
19 chattel paper that has been sold or goods that are the subject of a con-
20 signment, there is no obligation secured by the collateral covered by the
21 financing statement and no commitment to make an advance, incur an obliga-
22 tion, or otherwise give value;
23 (2) The financing statement covers accounts or chattel paper that has
24 been sold but as to which the account debtor or other person obligated has
25 discharged its obligation;
26 (3) The financing statement covers goods that were the subject of a con-
27 signment to the debtor but are not in the debtor's possession; or
28 (4) The debtor did not authorize the filing of the initial financing
29 statement.
30 (d) Except as otherwise provided in section 28-9-510, upon the filing of
31 a termination statement with the filing office, the financing statement to
32 which the termination statement relates ceases to be effective. Except as
33 otherwise provided in section 28-9-510, for purposes of sections 28-9-519(g),
34 28-9-522(a) and 28-9-523(c), the filing with the filing office of a termina-
35 tion statement relating to a financing statement that indicates that the
36 debtor is a transmitting utility also causes the effectiveness of the financ-
37 ing statement to lapse.
38 28-9-514. ASSIGNMENT OF POWERS OF SECURED PARTY OF RECORD. (a) Except as
39 otherwise provided in subsection (c) of this section, an initial financing
40 statement may reflect an assignment of all of the secured party's power to
41 authorize an amendment to the financing statement by providing the name and
42 mailing address of the assignee as the name and address of the secured party.
43 (b) Except as otherwise provided in subsection (c) of this section, a
44 secured party of record may assign of record all or part of its power to
45 authorize an amendment to a financing statement by filing in the filing office
46 an amendment of the financing statement which:
47 (1) Identifies, by its file number, the initial financing statement to
48 which it relates;
49 (2) Provides the name of the assignor; and
50 (3) Provides the name and mailing address of the assignee.
51 (c) An assignment of record of a security interest in a fixture covered
52 by a record of a mortgage which is effective as a financing statement filed as
53 a fixture filing under section 28-9-502(c) may be made only by an assignment
54 of record of the mortgage in the manner provided by law of this state other
60
1 than the uniform commercial code.
2 28-9-515. DURATION AND EFFECTIVENESS OF FINANCING STATEMENT -- EFFECT OF
3 LAPSED FINANCING STATEMENT. (a) Except as otherwise provided in subsections
4 (b), (e), (f) and (g) of this section, a filed financing statement is effec-
5 tive for a period of five (5) years after the date of filing.
6 (b) Except as otherwise provided in subsections (e), (f) and (g) of this
7 section, an initial financing statement filed in connection with a public
8 finance transaction or manufactured home transaction is effective for a period
9 of thirty (30) years after the date of filing if it indicates that it is
10 filed in connection with a public finance transaction or manufactured home
11 transaction.
12 (c) The effectiveness of a filed financing statement lapses on the expi-
13 ration of the period of its effectiveness unless before the lapse a continua-
14 tion statement is filed pursuant to subsection (d) of this section. Upon
15 lapse, a financing statement ceases to be effective and any security interest
16 or agricultural lien that was perfected by the financing statement becomes
17 unperfected, unless the security interest is perfected otherwise. If the secu-
18 rity interest or agricultural lien becomes unperfected upon lapse, it is
19 deemed never to have been perfected as against a purchaser of the collateral
20 for value.
21 (d) A continuation statement may be filed only within six (6) months
22 before the expiration of the five (5) year period specified in subsection (a)
23 of this section or the thirty (30) year period specified in subsection (b) of
24 this section, whichever is applicable.
25 (e) Except as otherwise provided in section 28-9-510, upon timely filing
26 of a continuation statement, the effectiveness of the initial financing state-
27 ment continues for a period of five (5) years commencing on the day on which
28 the financing statement would have become ineffective in the absence of the
29 filing. Upon the expiration of the five (5) year period, the financing state-
30 ment lapses in the same manner as provided in subsection (c) of this section,
31 unless, before the lapse, another continuation statement is filed pursuant to
32 subsection (d) of this section. Succeeding continuation statements may be
33 filed in the same manner to continue the effectiveness of the initial financ-
34 ing statement.
35 (f) If a debtor is a transmitting utility and a filed financing statement
36 so indicates, the financing statement is effective until a termination state-
37 ment is filed.
38 (g) A record of a mortgage that is effective as a financing statement
39 filed as a fixture filing under section 28-9-502(c) remains effective as a
40 financing statement filed as a fixture filing until the mortgage is released
41 or satisfied of record or its effectiveness otherwise terminates as to the
42 real property.
43 28-9-516. WHAT CONSTITUTES FILING -- EFFECTIVENESS OF FILING. (a) Except
44 as otherwise provided in subsection (b) of this section, communication of a
45 record to a filing office and tender of the filing fee or acceptance of the
46 record by the filing office constitutes filing.
47 (b) Filing does not occur with respect to a record that a filing office
48 refuses to accept because:
49 (1) The record is not communicated by a method or medium of communication
50 authorized by the filing office;
51 (2) An amount equal to or greater than the applicable filing fee is not
52 tendered;
53 (3) The filing office is unable to index the record because:
61
1 (A) in the case of an initial financing statement, the record does
2 not provide a name for the debtor;
3 (B) in the case of an amendment or correction statement, the record:
4 (i) does not identify the initial financing statement as
5 required by section 28-9-512 or 28-9-518, as applicable; or
6 (ii) identifies an initial financing statement whose effective-
7 ness has lapsed under section 28-9-515;
8 (C) in the case of an initial financing statement that provides the
9 name of a debtor identified as an individual or an amendment that
10 provides a name of a debtor identified as an individual which was not
11 previously provided in the financing statement to which the record
12 relates, the record does not identify the debtor's last name; or
13 (D) in the case of a record filed, or recorded, in the filing office
14 described in section 28-9-501(a)(1), the record does not provide a
15 sufficient description of the real property to which it relates;
16 (4) In the case of an initial financing statement or an amendment that
17 adds a secured party of record, the record does not provide a name and
18 mailing address for the secured party of record;
19 (5) In the case of an initial financing statement or an amendment that
20 provides a name of a debtor which was not previously provided in the
21 financing statement to which the amendment relates, the record does not:
22 (A) provide a mailing address for the debtor;
23 (B) indicate whether the debtor is an individual or an organization;
24 or
25 (C) if the financing statement indicates that the debtor is an orga-
26 nization, provide:
27 (i) a type of organization for the debtor;
28 (ii) a jurisdiction of organization for the debtor; or
29 (iii) an organizational identification number for the debtor or
30 indicate that the debtor has none;
31 (6) In the case of an assignment reflected in an initial financing state-
32 ment under section 28-9-514(a) or an amendment filed under section
33 28-9-514(b), the record does not provide a name and mailing address for
34 the assignee;
35 (7) In the case of a continuation statement, the record is not filed
36 within the six (6) month period prescribed by section 28-9-515(d);
37 (8) In the case of a financing statement covering farm products, the
38 financing statement does not contain all of the information specified in
39 section 28-9-502(e) and does not conform to the official form for farm
40 products financing statements published by the secretary of state; or
41 (9) In the case of an amendment or correction statement relating to a
42 financing statement covering farm products, the amendment or correction
43 statement does not conform to the official form for amendment or correc-
44 tion statements relating to financing statements covering farm products
45 published by the secretary of state.
46 (c) For purposes of subsection (b) of this section:
47 (1) A record does not provide information if the filing office is unable
48 to read or decipher the information; and
49 (2) A record that does not indicate that it is an amendment or identify
50 an initial financing statement to which it relates, as required by section
51 28-9-512, 28-9-514 or 28-9-518, is an initial financing statement.
52 (d) A record that is communicated to the filing office with tender of the
53 filing fee, but which the filing office refuses to accept for a reason other
54 than one set forth in subsection (b) of this section, is effective as a filed
55 record except as against a purchaser of the collateral which gives value in
62
1 reasonable reliance upon the absence of the record from the files.
2 28-9-517. EFFECT OF INDEXING ERRORS. The failure of the filing office to
3 index a record correctly does not affect the effectiveness of the filed
4 record.
5 28-9-518. CLAIM CONCERNING INACCURATE OR WRONGFULLY FILED RECORD. (a) A
6 person may file in the filing office a correction statement with respect to a
7 record indexed there under the person's name if the person believes that the
8 record is inaccurate or was wrongfully filed.
9 (b) A correction statement must:
10 (1) Identify the record to which it relates by the file number assigned
11 to the initial financing statement to which the record relates;
12 (2) Indicate that it is a correction statement; and
13 (3) Provide the basis for the person's belief that the record is inaccu-
14 rate and indicate the manner in which the person believes the record
15 should be amended to cure any inaccuracy or provide the basis for the
16 person's belief that the record was wrongfully filed.
17 (c) The filing of a correction statement does not affect the effective-
18 ness of an initial financing statement or other filed record.
19 28-9-519. NUMBERING, MAINTAINING, AND INDEXING RECORDS -- COMMUNICATING
20 INFORMATION PROVIDED IN RECORDS. (a) For each record filed in a filing office,
21 the filing office shall:
22 (1) Assign a unique number to the filed record;
23 (2) Create a record that bears the number assigned to the filed record
24 and the date and time of filing;
25 (3) Maintain the filed record for public inspection; and
26 (4) Index the filed record in accordance with subsections (c), (d) and
27 (e) of this section.
28 (b) A file number assigned after January 1, 2002, must include a digit
29 that:
30 (1) Is mathematically derived from or related to the other digits of the
31 file number; and
32 (2) Aids the filing office in determining whether a number communicated
33 as the file number includes a single digit or transpositional error.
34 (c) Except as otherwise provided in subsections (d) and (e) of this sec-
35 tion, the filing office shall:
36 (1) Index an initial financing statement according to the name of the
37 debtor and index all filed records relating to the initial financing
38 statement in a manner that associates with one another an initial financ-
39 ing statement and all filed records relating to the initial financing
40 statement; and
41 (2) Index a record that provides a name of a debtor which was not previ-
42 ously provided in the financing statement to which the record relates also
43 according to the name that was not previously provided.
44 (d) If a financing statement is filed as a fixture filing or covers as-
45 extracted collateral or timber to be cut, it must be filed for record and the
46 filing office shall index it:
47 (1) Under the names of the debtor and of each owner of record shown on
48 the financing statement as if they were the mortgagors under a mortgage of
49 the real property described; and
50 (2) To the extent that the law of this state provides for indexing of
51 records of mortgages under the name of the mortgagee, under the name of
52 the secured party as if the secured party were the mortgagee thereunder,
63
1 or, if indexing is by description, as if the financing statement were a
2 record of a mortgage of the real property described.
3 (e) If a financing statement is filed as a fixture filing or covers as-
4 extracted collateral or timber to be cut, the filing office shall index an
5 assignment filed under section 28-9-514(a) or an amendment filed under section
6 28-9-514(b):
7 (1) Under the name of the assignor as grantor; and
8 (2) To the extent that the law of this state provides for indexing a
9 record of the assignment of a mortgage under the name of the assignee,
10 under the name of the assignee.
11 (f) The filing office shall maintain a capability:
12 (1) To retrieve a record by the name of the debtor and by the file number
13 assigned to the initial financing statement to which the record relates;
14 and
15 (2) To associate and retrieve with one another an initial financing
16 statement and each filed record relating to the initial financing state-
17 ment.
18 (g) The filing office may not remove a debtor's name from the index until
19 one (1) year after the effectiveness of a financing statement naming the
20 debtor lapses under section 28-9-515 with respect to all secured parties of
21 record.
22 (h) The filing office shall perform the acts required by subsections (a)
23 through (e) of this section at the time and in the manner prescribed by filing
24 office rule, but not later than two (2) business days after the filing office
25 receives the record in question.
26 (i) Subsections (b) and (h) of this section do not apply to a filing
27 office described in section 28-9-501(a)(1).
28 28-9-520. ACCEPTANCE AND REFUSAL TO ACCEPT RECORD. (a) A filing office
29 shall refuse to accept a record for filing for a reason set forth in section
30 28-9-516(b) and may refuse to accept a record for filing only for a reason set
31 forth in section 28-9-516(b).
32 (b) If a filing office refuses to accept a record for filing, it shall
33 communicate to the person that presented the record the fact of and reason for
34 the refusal and the date and time the record would have been filed had the
35 filing office accepted it. The communication must be made at the time and in
36 the manner prescribed by filing office rule but, in the case of a filing
37 office described in section 28-9-501(a)(2), in no event more than two (2)
38 business days after the filing office receives the record.
39 (c) A filed financing statement satisfying section 28-9-502(a) and (b) is
40 effective, even if the filing office is required to refuse to accept it for
41 filing under subsection (a) of this section. However, section 28-9-338 applies
42 to a filed financing statement providing information described in section
43 28-9-516(b)(5) which is incorrect at the time the financing statement is
44 filed.
45 (d) If a record communicated to a filing office provides information that
46 relates to more than one (1) debtor, this part applies as to each debtor sepa-
47 rately.
64
1 28-9-521. UNIFORM FORM OF WRITTEN FINANCING STATEMENT AND AMENDMENT. (a)
2 A filing office that accepts written records may not refuse to accept a writ-
3 ten initial financing statement in the following form and format except for a
4 reason set forth in section 28-9-516(b):
65
66
1 (b) A filing office that accepts written records may not refuse to accept
2 a written record in the following form and format except for a reason set
3 forth in section 28-9-516(b):
67
68
1 28-9-522. MAINTENANCE AND DESTRUCTION OF RECORDS. (a) The filing office
2 shall maintain a record of the information provided in a filed financing
3 statement for at least one (1) year after the effectiveness of the financing
4 statement has lapsed under section 28-9-515 with respect to all secured par-
5 ties of record. The record must be retrievable by using the name of the
6 debtor and by using the file number assigned to the initial financing state-
7 ment to which the record relates.
8 (b) Except to the extent that a statute governing disposition of public
9 records provides otherwise, the filing office immediately may destroy any
10 written record evidencing a financing statement. However, if the filing
11 office destroys a written record, it shall maintain another record of the
12 financing statement which complies with subsection (a) of this section.
13 28-9-523. INFORMATION FROM FILING OFFICE -- SALE OR LICENSE OF RECORDS --
14 FARM PRODUCTS -- MASTER LISTS. (a) If a person that files a written record
15 requests an acknowledgment of the filing, the filing office shall send to the
16 person an image of the record showing the number assigned to the record pursu-
17 ant to section 28-9-519(a)(1) and the date and time of the filing of the
18 record. However, if the person furnishes a copy of the record to the filing
19 office, the filing office may instead:
20 (1) Note upon the copy the number assigned to the record pursuant to sec-
21 tion 28-9-519(a)(1) and the date and time of the filing of the record; and
22 (2) Send the copy to the person.
23 (b) If a person files a record other than a written record, the filing
24 office shall communicate to the person an acknowledgment that provides:
25 (1) The information in the record;
26 (2) The number assigned to the record pursuant to section 28-9-519(a)(1);
27 and
28 (3) The date and time of the filing of the record.
29 (c) The filing office shall communicate or otherwise make available in a
30 record the following information to any person that requests it:
31 (1) Whether there is on file on a date and time specified by the filing
32 office, but not a date earlier than three (3) business days before the
33 filing office receives the request, any financing statement that:
34 (A) designates a particular debtor;
35 (B) has not lapsed under section 28-9-515 with respect to all
36 secured parties of record; and
37 (C) if the request so states, has lapsed under section 28-9-515 and
38 a record of which is maintained by the filing office under section
39 28-9-522(a);
40 (2) The date and time of filing of each financing statement; and
41 (3) The information provided in each financing statement.
42 (d) In complying with its duty under subsection (c) of this section, the
43 filing office may communicate information in any medium. However, if
44 requested, the filing office shall communicate information by issuing a
45 record that can be admitted into evidence in the courts of this state without
46 extrinsic evidence of its authenticity.
47 (e) The filing office shall perform the acts required by subsections (a)
48 through (d) of this section at the time and in the manner prescribed by filing
49 office rule, but in the case of a filing office described in section
50 28-9-501(a)(2), not later than two (2) business days after the filing office
51 receives the request.
52 (f) At least weekly, the filing office shall offer to sell or license to
53 the public on a nonexclusive basis, in bulk, copies of all records filed in it
54 under this part, in every medium from time to time available to the filing
69
1 office.
2 (g) The secretary of state shall maintain a central filing system con-
3 taining the information filed with his office pursuant to section 28-9-502(e).
4 Under this system the secretary shall record the date and time of filing and
5 compile the information into a master list organized according to farm prod-
6 ucts. The list shall be organized within each farm product category in alpha-
7 betical order according to the last name of the borrower or, in the case of
8 borrowers doing business other than as individuals, the first word in the name
9 of such borrower. The list shall be further organized according to and contain
10 information required by federal law and regulation. The secretary of state
11 shall, by duly adopted administrative rule, designate the categories of farm
12 products to be used in compiling the master list. The secretary of state may
13 establish and maintain, pursuant to duly adopted administrative rule, a sepa-
14 rate system for filing of financing statements and search, retrieval and dis-
15 semination of information relating to financing statements for farm products,
16 and require separate search requests for such information pursuant to a fee
17 schedule to be established in such administrative rule.
18 (h) The secretary of state shall maintain a list of all buyers of farm
19 products, commission merchants, and selling agents who register with the sec-
20 retary of state indicating an interest in receiving the lists described in
21 subsection (i) of this section.
22 (i) The secretary of state shall distribute complete master lists for
23 each farm product category at least quarterly to each buyer, commission mer-
24 chant and selling agent registered under subsection (h) of this section and
25 distribute either complete lists or cumulative supplements, which supplements
26 shall be issued not less frequently than semimonthly, of financing statements
27 covering farm products filed subsequent to the last date of filing for financ-
28 ing statements on the last preceding quarterly master list, which the buyer,
29 commission merchant or selling agent has requested. The date of receipt for
30 lists and supplements shall be the third calendar day following the date of
31 mailing by the secretary of state, or in the event the mail is not delivered
32 on that day, the first day thereafter on which mail is delivered.
33 (j) Upon the request of any person the secretary of state shall provide,
34 within twenty-four (24) hours, an oral confirmation of the filing of the
35 financing statement covering farm products followed by a written confirmation.
36 (k) Upon request of any person, the filing officer shall furnish copies
37 of particular filed financing statements covering farm products or statements
38 of assignment covering farm products at a uniform cost of one dollar ($1.00)
39 per page if the requestor provides the filing officer with the file numbers of
40 the statement to be copied.
41 28-9-524. DELAY BY FILING OFFICE. Delay by the filing office beyond a
42 time limit prescribed by this part is excused if:
43 (1) The delay is caused by interruption of communication or computer
44 facilities, war, emergency conditions, failure of equipment, or other circum-
45 stances beyond control of the filing office; and
46 (2) The filing office exercises reasonable diligence under the circum-
47 stances.
48 28-9-525. FEES. (a) Except as otherwise provided in subsection (e) of
49 this section, the fee for filing and indexing a record under this part, other
50 than an initial financing statement of the kind described in section
51 28-9-502(c), is:
52 (1) Six dollars ($6.00) if the record is communicated in writing and con-
53 sists of one (1) or two (2) pages;
70
1 (2) Twelve dollars ($12.00) if the record is communicated in writing and
2 consists of more than two (2) pages; and
3 (3) Three dollars ($3.00) if the record is communicated by another medium
4 authorized by filing office rule.
5 (b) Except as otherwise provided in subsection (e) of this section, the
6 fee for filing and indexing an initial financing statement of the kind
7 described in section 28-9-502(c) is the amount specified in subsection (c) of
8 this section, if applicable.
9 (c) The number of names required to be indexed does not affect the amount
10 of the fee in subsections (a) and (b) of this section.
11 (d) The fee for responding to a request for information from the filing
12 office, including for issuing a certificate showing whether there is on file
13 any financing statement naming a particular debtor, is twelve dollars
14 ($12.00).
15 (e) This section does not require a fee with respect to a record of a
16 mortgage which is effective as a financing statement filed as a fixture filing
17 or as a financing statement covering as-extracted collateral or timber to be
18 cut under section 28-9-502(c). However, the recording and satisfaction fees
19 that otherwise would be applicable to the record of the mortgage apply.
20 (f) The secretary of state shall, by administrative rule, establish a fee
21 schedule for filing and indexing and other matters relating to filing of
22 financing statements covering farm products and for public access to the sec-
23 retary of state's files which are open to public inspection. A secured party
24 shall provide an itemization of fees paid by the secured party for filing,
25 searches or other matters related to filing of financing statements covering
26 farm products pertaining to that debtor.
27 28-9-526. FILING OFFICE RULES. (a) The secretary of state shall promul-
28 gate rules to implement this chapter. The filing office rules must be:
29 (1) Consistent with this chapter; and
30 (2) Promulgated in accordance with the administrative procedure act,
31 chapter 52, title 67, Idaho Code.
32 (b) To keep the filing office rules and practices of the filing office in
33 harmony with the rules and practices of filing offices in other jurisdictions
34 that enact substantially this part, and to keep the technology used by the
35 filing office compatible with the technology used by filing offices in other
36 jurisdictions that enact substantially this part, the secretary of state, so
37 far as is consistent with the purposes, policies and provisions of this chap-
38 ter, in adopting, amending and repealing filing office rules, shall:
39 (1) Consult with filing offices in other jurisdictions that enact sub-
40 stantially this part; and
41 (2) Consult the most recent version of the model rules promulgated by the
42 international association of corporate administrators or any successor
43 organization; and
44 (3) Take into consideration the rules and practices of, and the technol-
45 ogy used by, filing offices in other jurisdictions that enact substan-
46 tially this part.
47 PART 6.
48 DEFAULT
49 28-9-601. RIGHTS AFTER DEFAULT -- JUDICIAL ENFORCEMENT -- CONSIGNOR OR
50 BUYER OF ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES OR PROMISSORY NOTES. (a)
51 After default, a secured party has the rights provided in this part and,
52 except as otherwise provided in section 28-9-602, those provided by agreement
71
1 of the parties. A secured party:
2 (1) May reduce a claim to judgment, foreclose or otherwise enforce the
3 claim, security interest or agricultural lien by any available judicial
4 procedure; and
5 (2) If the collateral is documents, may proceed either as to the docu-
6 ments or as to the goods they cover.
7 (b) A secured party in possession of collateral or control of collateral
8 under section 28-9-104, 28-9-105, 28-9-106 or 28-9-107 has the rights and
9 duties provided in section 28-9-207.
10 (c) The rights under subsections (a) and (b) of this section are cumula-
11 tive and may be exercised simultaneously.
12 (d) Except as otherwise provided in subsection (g) of this section and
13 section 28-9-605, after default, a debtor and an obligor have the rights pro-
14 vided in this part and by agreement of the parties.
15 (e) If a secured party has reduced its claim to judgment, the lien of any
16 levy that may be made upon the collateral by virtue of an execution based upon
17 the judgment relates back to the earliest of:
18 (1) The date of perfection of the security interest or agricultural lien
19 in the collateral;
20 (2) The date of filing a financing statement covering the collateral; or
21 (3) Any date specified in a statute under which the agricultural lien was
22 created.
23 (f) A sale pursuant to an execution is a foreclosure of the security
24 interest or agricultural lien by judicial procedure within the meaning of this
25 section. A secured party may purchase at the sale and thereafter hold the col-
26 lateral free of any other requirements of this chapter.
27 (g) Except as otherwise provided in section 28-9-607(c), this part
28 imposes no duties upon a secured party that is a consignor or is a buyer of
29 accounts, chattel paper, payment intangibles, or promissory notes.
30 28-9-602. WAIVER AND VARIANCE OF RIGHTS AND DUTIES. Except as otherwise
31 provided in section 28-9-624, to the extent that they give rights to a debtor
32 or obligor and impose duties on a secured party, the debtor or obligor may not
33 waive or vary the rules stated in the following listed sections:
34 (1) Section 28-9-207(b)(4)(C), which deals with use and operation of the
35 collateral by the secured party;
36 (2) Section 28-9-210, which deals with requests for an accounting and
37 requests concerning a list of collateral and statement of account;
38 (3) Section 28-9-607(c), which deals with collection and enforcement of
39 collateral;
40 (4) Sections 28-9-608(a) and 28-9-615(c) to the extent that they deal
41 with application or payment of noncash proceeds of collection, enforcement, or
42 disposition;
43 (5) Sections 28-9-608(a) and 28-9-615(d) to the extent that they require
44 accounting for or payment of surplus proceeds of collateral;
45 (6) Section 28-9-609 to the extent that it imposes upon a secured party
46 that takes possession of collateral without judicial process the duty to do so
47 without breach of the peace;
48 (7) Sections 28-9-610(b), 28-9-611, 28-9-613 and 28-9-614, which deal
49 with disposition of collateral;
50 (8) Section 28-9-615(f), which deals with calculation of a deficiency or
51 surplus when a disposition is made to the secured party, a person related to
52 the secured party, or a secondary obligor;
53 (9) Section 28-9-616, which deals with explanation of the calculation of
54 a surplus or deficiency;
72
1 (10) Sections 28-9-620, 28-9-621 and 28-9-622, which deal with acceptance
2 of collateral in satisfaction of obligation;
3 (11) Section 28-9-623, which deals with redemption of collateral;
4 (12) Section 28-9-624, which deals with permissible waivers; and
5 (13) Sections 28-9-625 and 28-9-626, which deal with the secured party's
6 liability for failure to comply with this chapter.
7 28-9-603. AGREEMENT ON STANDARDS CONCERNING RIGHTS AND DUTIES. (a) The
8 parties may determine by agreement the standards measuring the fulfillment of
9 the rights of a debtor or obligor and the duties of a secured party under a
10 rule stated in section 28-9-602 if the standards are not manifestly unreason-
11 able.
12 (b) Subsection (a) of this section does not apply to the duty under sec-
13 tion 28-9-609 to refrain from breaching the peace.
14 28-9-604. PROCEDURE IF SECURITY AGREEMENT COVERS REAL PROPERTY OR FIX-
15 TURES. (a) If a security agreement covers both personal and real property, a
16 secured party may proceed:
17 (1) Under this part as to the personal property without prejudicing any
18 rights with respect to the real property; or
19 (2) As to both the personal property and the real property in accordance
20 with the rights with respect to the real property, in which case the other
21 provisions of this part do not apply.
22 (b) Subject to subsection (c) of this section, if a security agreement
23 covers goods that are or become fixtures, a secured party may proceed:
24 (1) Under this part; or
25 (2) In accordance with the rights with respect to real property, in which
26 case the other provisions of this part do not apply.
27 (c) Subject to the other provisions of this part, if a secured party
28 holding a security interest in fixtures has priority over all owners and
29 encumbrancers of the real property, the secured party, after default, may
30 remove the collateral from the real property.
31 (d) A secured party that removes collateral shall promptly reimburse any
32 encumbrancer or owner of the real property, other than the debtor, for the
33 cost of repair of any physical injury caused by the removal. The secured party
34 need not reimburse the encumbrancer or owner for any diminution in value of
35 the real property caused by the absence of the goods removed or by any neces-
36 sity of replacing them. A person entitled to reimbursement may refuse permis-
37 sion to remove until the secured party gives adequate assurance for the per-
38 formance of the obligation to reimburse.
39 28-9-605. UNKNOWN DEBTOR OR SECONDARY OBLIGOR. A secured party does not
40 owe a duty based on its status as secured party:
41 (1) To a person that is a debtor or obligor, unless the secured party
42 knows:
43 (A) That the person is a debtor or obligor;
44 (B) The identity of the person; and
45 (C) How to communicate with the person; or
46 (2) To a secured party or lienholder that has filed a financing statement
47 against a person, unless the secured party knows:
48 (A) That the person is a debtor; and
49 (B) The identity of the person.
50 28-9-606. TIME OF DEFAULT FOR AGRICULTURAL LIEN. For purposes of this
51 part, a default occurs in connection with an agricultural lien at the time the
73
1 secured party becomes entitled to enforce the lien in accordance with the
2 statute under which it was created.
3 28-9-607. COLLECTION AND ENFORCEMENT BY SECURED PARTY. (a) If so agreed,
4 and in any event after default, a secured party:
5 (1) May notify an account debtor or other person obligated on collateral
6 to make payment or otherwise render performance to or for the benefit of
7 the secured party;
8 (2) May take any proceeds to which the secured party is entitled under
9 section 28-9-315;
10 (3) May enforce the obligations of an account debtor or other person
11 obligated on collateral and exercise the rights of the debtor with respect
12 to the obligation of the account debtor or other person obligated on col-
13 lateral to make payment or otherwise render performance to the debtor, and
14 with respect to any property that secures the obligations of the account
15 debtor or other person obligated on the collateral;
16 (4) If it holds a security interest in a deposit account perfected by
17 control under section 28-9-104(a)(1), may apply the balance of the deposit
18 account to the obligation secured by the deposit account; and
19 (5) If it holds a security interest in a deposit account perfected by
20 control under section 28-9-104(a)(2) or (3), may instruct the bank to pay
21 the balance of the deposit account to or for the benefit of the secured
22 party.
23 (b) If necessary to enable a secured party to exercise, under subsection
24 (a)(3) of this section, the right of a debtor to enforce a mortgage
25 nonjudicially, the secured party may record in the office in which a record of
26 the mortgage is recorded:
27 (1) A copy of the security agreement that creates or provides for a secu-
28 rity interest in the obligation secured by the mortgage; and
29 (2) The secured party's sworn affidavit in recordable form stating that:
30 (A) a default has occurred; and
31 (B) the secured party is entitled to enforce the mortgage
32 nonjudicially.
33 (c) A secured party shall proceed in a commercially reasonable manner if
34 the secured party:
35 (1) Undertakes to collect from or enforce an obligation of an account
36 debtor or other person obligated on collateral; and
37 (2) Is entitled to charge back uncollected collateral or otherwise to
38 full or limited recourse against the debtor or a secondary obligor.
39 (d) A secured party may deduct from the collections made pursuant to sub-
40 section (c) of this section reasonable expenses of collection and enforcement,
41 including reasonable attorney's fees and legal expenses incurred by the
42 secured party.
43 (e) This section does not determine whether an account debtor, bank, or
44 other person obligated on collateral owes a duty to a secured party.
45 28-9-608. APPLICATION OF PROCEEDS OF COLLECTION OR ENFORCEMENT -- LIABIL-
46 ITY FOR DEFICIENCY AND RIGHT TO SURPLUS. (a) If a security interest or agri-
47 cultural lien secures payment or performance of an obligation, the following
48 rules apply:
49 (1) A secured party shall apply or pay over for application the cash pro-
50 ceeds of collection or enforcement under section 28-9-607 in the following
51 order to:
52 (A) the reasonable expenses of collection and enforcement and, to
53 the extent provided for by agreement and not prohibited by law, rea-
74
1 sonable attorney's fees and legal expenses incurred by the secured
2 party;
3 (B) the satisfaction of obligations secured by the security interest
4 or agricultural lien under which the collection or enforcement is
5 made; and
6 (C) the satisfaction of obligations secured by any subordinate secu-
7 rity interest in or other lien on the collateral subject to the secu-
8 rity interest or agricultural lien under which the collection or
9 enforcement is made if the secured party receives an authenticated
10 demand for proceeds before distribution of the proceeds is completed.
11 (2) If requested by a secured party, a holder of a subordinate security
12 interest or other lien shall furnish reasonable proof of the interest or
13 lien within a reasonable time. Unless the holder complies, the secured
14 party need not comply with the holder's demand under subsection (1)(C) of
15 this section.
16 (3) A secured party need not apply or pay over for application noncash
17 proceeds of collection and enforcement under section 28-9-607 unless the
18 failure to do so would be commercially unreasonable. A secured party that
19 applies or pays over for application noncash proceeds shall do so in a
20 commercially reasonable manner.
21 (4) A secured party shall account to and pay a debtor for any surplus,
22 and the obligor is liable for any deficiency.
23 (b) If the underlying transaction is a sale of accounts, chattel paper,
24 payment intangibles or promissory notes, the debtor is not entitled to any
25 surplus, and the obligor is not liable for any deficiency.
26 28-9-609. SECURED PARTY'S RIGHT TO TAKE POSSESSION AFTER DEFAULT. (a)
27 After default, a secured party:
28 (1) May take possession of the collateral; and
29 (2) Without removal, may render equipment unusable and dispose of collat-
30 eral on a debtor's premises under section 28-9-610.
31 (b) A secured party may proceed under subsection (a) of this section:
32 (1) Pursuant to judicial process; or
33 (2) Without judicial process, if it proceeds without breach of the peace.
34 (c) If so agreed, and in any event after default, a secured party may
35 require the debtor to assemble the collateral and make it available to the
36 secured party at a place to be designated by the secured party which is rea-
37 sonably convenient to both parties.
38 28-9-610. DISPOSITION OF COLLATERAL AFTER DEFAULT. (a) After default, a
39 secured party may sell, lease, license or otherwise dispose of any or all of
40 the collateral in its present condition or following any commercially reason-
41 able preparation or processing.
42 (b) Every aspect of a disposition of collateral, including the method,
43 manner, time, place, and other terms, must be commercially reasonable. If com-
44 mercially reasonable, a secured party may dispose of collateral by public or
45 private proceedings, by one (1) or more contracts, as a unit or in parcels,
46 and at any time and place and on any terms.
47 (c) A secured party may purchase collateral:
48 (1) At a public disposition; or
49 (2) At a private disposition only if the collateral is of a kind that is
50 customarily sold on a recognized market or the subject of widely distrib-
51 uted standard price quotations.
52 (d) A contract for sale, lease, license, or other disposition includes
53 the warranties relating to title, possession, quiet enjoyment, and the like
75
1 which by operation of law accompany a voluntary disposition of property of the
2 kind subject to the contract.
3 (e) A secured party may disclaim or modify warranties under subsection
4 (d) of this section:
5 (1) In a manner that would be effective to disclaim or modify the warran-
6 ties in a voluntary disposition of property of the kind subject to the
7 contract of disposition; or
8 (2) By communicating to the purchaser a record evidencing the contract
9 for disposition and including an express disclaimer or modification of the
10 warranties.
11 (f) A record is sufficient to disclaim warranties under subsection (e) of
12 this section if it indicates "There is no warranty relating to title, posses-
13 sion, quiet enjoyment, or the like in this disposition" or uses words of simi-
14 lar import.
15 28-9-611. NOTIFICATION BEFORE DISPOSITION OF COLLATERAL. (a) In this sec-
16 tion, "notification date" means the earlier of the date on which:
17 (1) A secured party sends to the debtor and any secondary obligor an
18 authenticated notification of disposition; or
19 (2) The debtor and any secondary obligor waive the right to notification.
20 (b) Except as otherwise provided in subsection (d) of this section, a
21 secured party that disposes of collateral under section 28-9-610 shall send to
22 the persons specified in subsection (c) of this section a reasonable authenti-
23 cated notification of disposition.
24 (c) To comply with subsection (b) of this section, the secured party
25 shall send an authenticated notification of disposition to:
26 (1) The debtor;
27 (2) Any secondary obligor; and
28 (3) If the collateral is other than consumer goods:
29 (A) any other person from which the secured party has received,
30 before the notification date, an authenticated notification of a
31 claim of an interest in the collateral;
32 (B) any other secured party or lienholder that, ten (10) days before
33 the notification date, held a security interest in or other lien on
34 the collateral perfected by the filing of a financing statement that:
35 (i) identified the collateral;
36 (ii) was indexed under the debtor's name as of that date; and
37 (iii) was filed in the office in which to file a financing
38 statement against the debtor covering the collateral as of that
39 date; and
40 (C) any other secured party that, ten (10) days before the notifica-
41 tion date, held a security interest in the collateral perfected by
42 compliance with a statute, regulation, or treaty described in section
43 28-9-311(a).
44 (d) Subsection (b) of this section does not apply if the collateral is
45 perishable or threatens to decline speedily in value or is of a type custom-
46 arily sold on a recognized market.
47 (e) A secured party complies with the requirement for notification pre-
48 scribed by subsection (c)(3)(B) of this section if:
49 (1) Not later than twenty (20) days or earlier than thirty (30) days
50 before the notification date, the secured party requests, in a commer-
51 cially reasonable manner, information concerning financing statements
52 indexed under the debtor's name in the office indicated in subsection
53 (c)(3)(B) of this section; and
54 (2) Before the notification date, the secured party:
76
1 (A) did not receive a response to the request for information; or
2 (B) received a response to the request for information and sent an
3 authenticated notification of disposition to each secured party or
4 other lienholder named in that response whose financing statement
5 covered the collateral.
6 28-9-612. TIMELINESS OF NOTIFICATION BEFORE DISPOSITION OF COLLATERAL.
7 (a) Except as otherwise provided in subsection (b) of this section, whether a
8 notification is sent within a reasonable time is a question of fact.
9 (b) A notification of disposition sent after default and ten (10) days or
10 more before the earliest time of disposition set forth in the notification is
11 sent within a reasonable time before the disposition.
12 28-9-613. CONTENTS AND FORM OF NOTIFICATION BEFORE DISPOSITION OF COLLAT-
13 ERAL -- GENERAL. Except in a consumer goods transaction, the following rules
14 apply:
15 (1) The contents of a notification of disposition are sufficient if the
16 notification:
17 (A) Describes the debtor and the secured party;
18 (B) Describes the collateral that is the subject of the intended disposi-
19 tion;
20 (C) States the method of intended disposition;
21 (D) States that the debtor is entitled to an accounting of the unpaid
22 indebtedness and states the charge, if any, for an accounting; and
23 (E) States the time and place of a public disposition or the time after
24 which any other disposition is to be made.
25 (2) Whether the contents of a notification that lacks any of the informa-
26 tion specified in subsection (1) of this section are nevertheless sufficient
27 is a question of fact.
28 (3) The contents of a notification providing substantially the informa-
29 tion specified in subsection (1) of this section are sufficient, even if the
30 notification includes:
31 (A) Information not specified by subsection (1) of this section; or
32 (B) Minor errors that are not seriously misleading.
33 (4) A particular phrasing of the notification is not required.
34 (5) The following form of notification and the form appearing in section
35 28-9-614(3), when completed, each provides sufficient information:
36 NOTIFICATION OF DISPOSITION OF COLLATERAL
37 To: .................(Name of debtor, obligor, or other person to which
38 the notification is sent).............
39 From: ...................(Name, address, and telephone number of secured
40 party)..............
41 Name of Debtor(s): ...........(Include only if debtor(s) are not an
42 addressee)..........
43 (For a public disposition:)
44 We will sell (or lease or license, as applicable) the ........(describe
45 collateral)....... (to the highest qualified bidder) in public as follows:
46 Day and Date: ................................................
47 Time: ................................................
48 Place: ................................................
49 (For a private disposition:)
50 We will sell (or lease or license, as applicable) the ........(describe
51 collateral)......... privately sometime after ................(day and
52 date)..........
77
1 You are entitled to an accounting of the unpaid indebtedness secured by
2 the property that we intend to sell (or lease or license, as applicable) (for
3 a charge of $.........). You may request an accounting by calling us at
4 .........(telephone number)........
5 28-9-614. CONTENTS AND FORM OF NOTIFICATION BEFORE DISPOSITION OF COLLAT-
6 ERAL -- CONSUMER GOODS TRANSACTION. In a consumer goods transaction, the fol-
7 lowing rules apply:
8 (1) A notification of disposition must provide the following information:
9 (A) The information specified in section 28-9-613(1);
10 (B) A description of any liability for a deficiency of the person to
11 which the notification is sent;
12 (C) A telephone number from which the amount that must be paid to the
13 secured party to redeem the collateral under section 28-9-623 is avail-
14 able; and
15 (D) A telephone number or mailing address from which additional informa-
16 tion concerning the disposition and the obligation secured is available.
17 (2) A particular phrasing of the notification is not required.
18 (3) The following form of notification, when completed, provides suffi-
19 cient information:
20 ........(Name and address of secured party).............
21 ........(Date)..........................................
22 NOTICE OF OUR PLAN TO SELL PROPERTY
23 ........(Name and address of any obligor who is also a debtor)..........
24 Subject: .........(Identification of Transaction).......................
25 We have your ............(describe collateral)..........., because you
26 broke promises in our agreement.
27 (For a public disposition:)
28 We will sell .................(describe collateral)................ at
29 public sale. A sale could include a lease or license. The sale will be held
30 as follows:
31 Date: ............................
32 Time: ............................
33 Place: ............................
34 You may attend the sale and bring bidders if you want.
35 (For a private disposition:)
36 We will sell ...............(describe collateral).............. at private
37 sale sometime after .........(date)....... A sale could include a lease or
38 license.
39 The money that we get from the sale (after paying our costs) will reduce
40 the amount you owe. If we get less money than you owe, you ..............(will
41 or will not, as applicable)....... still owe us the difference. If we get
42 more money than you owe, you will get the extra money, unless we must pay it
43 to someone else.
44 You can get the property back at any time before we sell it by paying us
45 the full amount you owe (not just the past due payments), including our
46 expenses. To learn the exact amount you must pay, call us at
47 .......(telephone number).......
48 If you want us to explain to you in writing how we have figured the amount
49 that you owe us, you may call us at ..........(telephone number).......... (or
50 write us at ..........(secured party's address)............) and request a
78
1 written explanation. (We will charge you $............. for the explanation
2 if we sent you another written explanation of the amount you owe us within the
3 last six months.)
4 If you need more information about the sale call us at .....(telephone
5 number)..... (or write us at ............(secured party's
6 address)................). We are sending this notice to the following other
7 people who have an interest in .............(describe collat-
8 eral)............... or who owe money under your agreement: ............(Names
9 of all other debtors and obligors, if any)...........
10 (4) A notification in the form of subsection (3) of this section is suf-
11 ficient, even if additional information appears at the end of the form.
12 (5) A notification in the form of subsection (3) of this section is suf-
13 ficient, even if it includes errors in information not required by subsection
14 (1) of this section, unless the error is misleading with respect to rights
15 arising under this chapter.
16 (6) If a notification under this section is not in the form of subsection
17 (3) of this section, law other than this chapter determines the effect of
18 including information not required by subsection (1) of this section.
19 28-9-615. APPLICATION OF PROCEEDS OF DISPOSITION -- LIABILITY FOR DEFI-
20 CIENCY AND RIGHT TO SURPLUS. (a) A secured party shall apply or pay over for
21 application the cash proceeds of disposition under section 28-9-610 in the
22 following order to:
23 (1) The reasonable expenses of retaking, holding, preparing for disposi-
24 tion, processing and disposing, and, to the extent provided for by agree-
25 ment and not prohibited by law, reasonable attorney's fees and legal
26 expenses incurred by the secured party;
27 (2) The satisfaction of obligations secured by the security interest or
28 agricultural lien under which the disposition is made;
29 (3) The satisfaction of obligations secured by any subordinate security
30 interest in or other subordinate lien on the collateral if:
31 (A) the secured party receives from the holder of the subordinate
32 security interest or other lien an authenticated demand for proceeds
33 before distribution of the proceeds is completed; and
34 (B) in a case in which a consignor has an interest in the collat-
35 eral, the subordinate security interest or other lien is senior to
36 the interest of the consignor; and
37 (4) A secured party that is a consignor of the collateral if the secured
38 party receives from the consignor an authenticated demand for proceeds
39 before distribution of the proceeds is completed.
40 (b) If requested by a secured party, a holder of a subordinate security
41 interest or other lien shall furnish reasonable proof of the interest or lien
42 within a reasonable time. Unless the holder does so, the secured party need
43 not comply with the holder's demand under subsection (a)(3) of this section.
44 (c) A secured party need not apply or pay over for application noncash
45 proceeds of disposition under section 28-9-610 unless the failure to do so
46 would be commercially unreasonable. A secured party that applies or pays over
47 for application noncash proceeds shall do so in a commercially reasonable man-
48 ner.
49 (d) If the security interest under which a disposition is made secures
50 payment or performance of an obligation, after making the payments and appli-
51 cations required by subsection (a) of this section and permitted by subsection
52 (c) of this section:
53 (1) Unless subsection (a)(4) of this section requires the secured party
54 to apply or pay over cash proceeds to a consignor, the secured party shall
79
1 account to and pay a debtor for any surplus; and
2 (2) The obligor is liable for any deficiency.
3 (e) If the underlying transaction is a sale of accounts, chattel paper,
4 payment intangibles or promissory notes:
5 (1) The debtor is not entitled to any surplus; and
6 (2) The obligor is not liable for any deficiency.
7 (f) The surplus or deficiency following a disposition is calculated based
8 on the amount of proceeds that would have been realized in a disposition com-
9 plying with this part to a transferee other than the secured party, a person
10 related to the secured party, or a secondary obligor if:
11 (1) The transferee in the disposition is the secured party, a person
12 related to the secured party or a secondary obligor; and
13 (2) The amount of proceeds of the disposition is significantly below the
14 range of proceeds that a complying disposition to a person other than the
15 secured party, a person related to the secured party, or a secondary obli-
16 gor would have brought.
17 (g) A secured party that receives cash proceeds of a disposition in good
18 faith and without knowledge that the receipt violates the rights of the holder
19 of a security interest or other lien that is not subordinate to the security
20 interest or agricultural lien under which the disposition is made:
21 (1) Takes the cash proceeds free of the security interest or other lien;
22 (2) Is not obligated to apply the proceeds of the disposition to the sat-
23 isfaction of obligations secured by the security interest or other lien;
24 and
25 (3) Is not obligated to account to or pay the holder of the security
26 interest or other lien for any surplus.
27 28-9-616. EXPLANATION OF CALCULATION OF SURPLUS OR DEFICIENCY. (a) In
28 this section:
29 (1) "Explanation" means a writing that:
30 (A) states the amount of the surplus or deficiency;
31 (B) provides an explanation in accordance with subsection (c) of
32 this section of how the secured party calculated the surplus or defi-
33 ciency;
34 (C) states, if applicable, that future debits, credits, charges,
35 including additional credit service charges or interest, rebates, and
36 expenses may affect the amount of the surplus or deficiency; and
37 (D) provides a telephone number or mailing address from which addi-
38 tional information concerning the transaction is available.
39 (2) "Request" means a record:
40 (A) authenticated by a debtor or consumer obligor;
41 (B) requesting that the recipient provide an explanation; and
42 (C) sent after disposition of the collateral under section 28-9-610.
43 (b) In a consumer goods transaction in which the debtor is entitled to a
44 surplus or a consumer obligor is liable for a deficiency under section
45 28-9-615, the secured party shall:
46 (1) Send an explanation to the debtor or consumer obligor, as applicable,
47 after the disposition and:
48 (A) before or when the secured party accounts to the debtor and pays
49 any surplus or first makes written demand on the consumer obligor
50 after the disposition for payment of the deficiency; and
51 (B) within fourteen (14) days after receipt of a request; or
52 (2) In the case of a consumer obligor who is liable for a deficiency,
53 within fourteen (14) days after receipt of a request, send to the consumer
54 obligor a record waiving the secured party's right to a deficiency.
80
1 (c) To comply with subsection (a)(1)(B) of this section, a writing must
2 provide the following information in the following order:
3 (1) The aggregate amount of obligations secured by the security interest
4 under which the disposition was made, and, if the amount reflects a rebate
5 of unearned interest or credit service charge, an indication of that fact,
6 calculated as of a specified date:
7 (A) if the secured party takes or receives possession of the collat-
8 eral after default, not more than thirty-five (35) days before the
9 secured party takes or receives possession; or
10 (B) if the secured party takes or receives possession of the collat-
11 eral before default or does not take possession of the collateral,
12 not more than thirty-five (35) days before the disposition;
13 (2) The amount of proceeds of the disposition;
14 (3) The aggregate amount of the obligations after deducting the amount of
15 proceeds;
16 (4) The amount, in the aggregate or by type, and types of expenses,
17 including expenses of retaking, holding, preparing for disposition, proc-
18 essing, and disposing of the collateral, and attorney's fees secured by
19 the collateral which are known to the secured party and relate to the cur-
20 rent disposition;
21 (5) The amount, in the aggregate or by type, and types of credits,
22 including rebates of interest or credit service charges, to which the
23 obligor is known to be entitled and which are not reflected in the amount
24 in paragraph (1) of this subsection; and
25 (6) The amount of the surplus or deficiency.
26 (d) A particular phrasing of the explanation is not required. An explana-
27 tion complying substantially with the requirements of subsection (a) of this
28 section is sufficient, even if it includes minor errors that are not seriously
29 misleading.
30 (e) A debtor or consumer obligor is entitled without charge to one (1)
31 response to a request under this section during any six (6) month period in
32 which the secured party did not send to the debtor or consumer obligor an
33 explanation pursuant to subsection (b)(1) of this section. The secured party
34 may require payment of a charge not exceeding twenty-five dollars ($25.00) for
35 each additional response.
36 28-9-617. RIGHTS OF TRANSFEREE OF COLLATERAL. (a) A secured party's dis-
37 position of collateral after default:
38 (1) Transfers to a transferee for value all of the debtor's rights in the
39 collateral;
40 (2) Discharges the security interest under which the disposition is made;
41 and
42 (3) Discharges any subordinate security interest or other subordinate
43 lien.
44 (b) A transferee that acts in good faith takes free of the rights and
45 interests described in subsection (a) of this section, even if the secured
46 party fails to comply with this chapter or the requirements of any judicial
47 proceeding.
48 (c) If a transferee does not take free of the rights and interests
49 described in subsection (a) of this section, the transferee takes the collat-
50 eral subject to:
51 (1) The debtor's rights in the collateral;
52 (2) The security interest or agricultural lien under which the disposi-
53 tion is made; and
54 (3) Any other security interest or other lien.
81
1 28-9-618. RIGHTS AND DUTIES OF CERTAIN SECONDARY OBLIGORS. (a) A second-
2 ary obligor acquires the rights and becomes obligated to perform the duties of
3 the secured party after the secondary obligor:
4 (1) Receives an assignment of a secured obligation from the secured
5 party;
6 (2) Receives a transfer of collateral from the secured party and agrees
7 to accept the rights and assume the duties of the secured party; or
8 (3) Is subrogated to the rights of a secured party with respect to col-
9 lateral.
10 (b) An assignment, transfer or subrogation described in subsection (a) of
11 this section:
12 (1) Is not a disposition of collateral under section 28-9-610; and
13 (2) Relieves the secured party of further duties under this chapter.
14 28-9-619. TRANSFER OF RECORD OR LEGAL TITLE. (a) In this section,
15 "transfer statement" means a record authenticated by a secured party stating:
16 (1) That the debtor has defaulted in connection with an obligation
17 secured by specified collateral;
18 (2) That the secured party has exercised its postdefault remedies with
19 respect to the collateral;
20 (3) That, by reason of the exercise, a transferee has acquired the rights
21 of the debtor in the collateral; and
22 (4) The name and mailing address of the secured party, debtor and trans-
23 feree.
24 (b) A transfer statement entitles the transferee to the transfer of
25 record of all rights of the debtor in the collateral specified in the state-
26 ment in any official filing, recording, registration, or certificate of title
27 system covering the collateral. If a transfer statement is presented with the
28 applicable fee and request form to the official or office responsible for
29 maintaining the system, the official or office shall:
30 (1) Accept the transfer statement;
31 (2) Promptly amend its records to reflect the transfer; and
32 (3) If applicable, issue a new appropriate certificate of title in the
33 name of the transferee.
34 (c) A transfer of the record or legal title to collateral to a secured
35 party under subsection (b) of this section or otherwise is not of itself a
36 disposition of collateral under this chapter and does not of itself relieve
37 the secured party of its duties under this chapter.
38 28-9-620. ACCEPTANCE OF COLLATERAL IN FULL OR PARTIAL SATISFACTION OF
39 OBLIGATION -- COMPULSORY DISPOSITION OF COLLATERAL. (a) A secured party may
40 accept collateral in full or partial satisfaction of the obligation it secures
41 only if:
42 (1) The debtor consents to the acceptance under subsection (c) of this
43 section;
44 (2) The secured party does not receive, within the time set forth in sub-
45 section (d) of this section, a notification of objection to the proposal
46 authenticated by:
47 (A) a person to which the secured party was required to send a pro-
48 posal under section 28-9-621; or
49 (B) any other person, other than the debtor, holding an interest in
50 the collateral subordinate to the security interest that is the sub-
51 ject of the proposal; and
52 (3) Subsection (e) of this section does not require the secured party to
53 dispose of the collateral or the debtor waives the requirement pursuant to
82
1 section 28-9-624.
2 (b) A purported or apparent acceptance of collateral under this section
3 is ineffective unless:
4 (1) The secured party consents to the acceptance in an authenticated
5 record or sends a proposal to the debtor; and
6 (2) The conditions of subsection (a) of this section are met.
7 (c) For purposes of this section:
8 (1) A debtor consents to an acceptance of collateral in partial satisfac-
9 tion of the obligation it secures only if the debtor agrees to the terms
10 of the acceptance in a record authenticated after default; and
11 (2) A debtor consents to an acceptance of collateral in full satisfaction
12 of the obligation it secures only if the debtor agrees to the terms of the
13 acceptance in a record authenticated after default or the secured party:
14 (A) sends to the debtor after default a proposal that is uncondi-
15 tional or subject only to a condition that collateral not in the pos-
16 session of the secured party be preserved or maintained;
17 (B) in the proposal, proposes to accept collateral in full satisfac-
18 tion of the obligation it secures; and
19 (C) does not receive a notification of objection authenticated by
20 the debtor within twenty (20) days after the proposal is sent.
21 (d) To be effective under subsection (a)(2) of this section, a notifica-
22 tion of objection must be received by the secured party:
23 (1) In the case of a person to which the proposal was sent pursuant to
24 section 28-9-621, within twenty (20) days after notification was sent to
25 that person; and
26 (2) In other cases:
27 (A) within twenty (20) days after the last notification was sent
28 pursuant to section 28-9-621; or
29 (B) if a notification was not sent, before the debtor consents to
30 the acceptance under subsection (c) of this section.
31 (e) A secured party that has taken possession of collateral shall dispose
32 of the collateral pursuant to section 28-9-610 within the time specified in
33 subsection (f) of this section if:
34 (1) Sixty percent (60%) of the cash price has been paid in the case of a
35 purchase-money security interest in consumer goods; or
36 (2) Sixty percent (60%) of the principal amount of the obligation secured
37 has been paid in the case of a nonpurchase-money security interest in con-
38 sumer goods.
39 (f) To comply with subsection (e) of this section, the secured party
40 shall dispose of the collateral:
41 (1) Within ninety (90) days after taking possession; or
42 (2) Within any longer period to which the debtor and all secondary obli-
43 gors have agreed in an agreement to that effect entered into and authenti-
44 cated after default.
45 28-9-621. NOTIFICATION OF PROPOSAL TO ACCEPT COLLATERAL. (a) A secured
46 party that desires to accept collateral in full or partial satisfaction of the
47 obligation it secures shall send its proposal to:
48 (1) Any person from which the secured party has received, before the
49 debtor consented to the acceptance, an authenticated notification of a
50 claim of an interest in the collateral;
51 (2) Any other secured party or lienholder that, ten (10) days before the
52 debtor consented to the acceptance, held a security interest in or other
53 lien on the collateral perfected by the filing of a financing statement
54 that:
83
1 (A) identified the collateral;
2 (B) was indexed under the debtor's name as of that date; and
3 (C) was filed in the office or offices in which to file a financing
4 statement against the debtor covering the collateral as of that date;
5 and
6 (3) Any other secured party that, ten (10) days before the debtor con-
7 sented to the acceptance, held a security interest in the collateral per-
8 fected by compliance with a statute, regulation, or treaty described in
9 section 28-9-311(a).
10 (b) A secured party that desires to accept collateral in partial satis-
11 faction of the obligation it secures shall send its proposal to any secondary
12 obligor in addition to the persons described in subsection (a) of this sec-
13 tion.
14 28-9-622. EFFECT OF ACCEPTANCE OF COLLATERAL. (a) A secured party's
15 acceptance of collateral in full or partial satisfaction of the obligation it
16 secures:
17 (1) Discharges the obligation to the extent consented to by the debtor;
18 (2) Transfers to the secured party all of a debtor's rights in the col-
19 lateral;
20 (3) Discharges the security interest or agricultural lien that is the
21 subject of the debtor's consent and any subordinate security interest or
22 other subordinate lien; and
23 (4) Terminates any other subordinate interest.
24 (b) A subordinate interest is discharged or terminated under subsection
25 (a) of this section, even if the secured party fails to comply with this chap-
26 ter.
27 28-9-623. RIGHT TO REDEEM COLLATERAL. (a) A debtor, any secondary obli-
28 gor, or any other secured party or lienholder may redeem collateral.
29 (b) To redeem collateral, a person shall tender:
30 (1) Fulfillment of all obligations secured by the collateral; and
31 (2) The reasonable expenses and attorney's fees described in section
32 28-9-615(a)(1).
33 (c) A redemption may occur at any time before a secured party:
34 (1) Has collected collateral under section 28-9-607;
35 (2) Has disposed of collateral or entered into a contract for its dispo-
36 sition under section 28-9-610; or
37 (3) Has accepted collateral in full or partial satisfaction of the obli-
38 gation it secures under section 28-9-622.
39 28-9-624. WAIVER. (a) A debtor or secondary obligor may waive the right
40 to notification of disposition of collateral under section 28-9-611 only by an
41 agreement to that effect entered into and authenticated after default.
42 (b) A debtor may waive the right to require disposition of collateral
43 under section 28-9-620(e) only by an agreement to that effect entered into and
44 authenticated after default.
45 (c) Except in a consumer goods transaction, a debtor or secondary obligor
46 may waive the right to redeem collateral under section 28-9-623 only by an
47 agreement to that effect entered into and authenticated after default.
48 28-9-625. REMEDIES FOR SECURED PARTY'S FAILURE TO COMPLY WITH CHAPTER.
49 (a) If it is established that a secured party is not proceeding in accordance
50 with this chapter, a court may order or restrain collection, enforcement or
51 disposition of collateral on appropriate terms and conditions.
84
1 (b) Subject to subsections (c) and (d) of this section, a person is lia-
2 ble for damages in the amount of any loss caused by a failure to comply with
3 this chapter. Loss caused by a failure to comply may include loss resulting
4 from the debtor's inability to obtain, or increased costs of, alternative
5 financing.
6 (c) Except as otherwise provided in section 28-9-628:
7 (1) A person that, at the time of the failure, was a debtor, was an obli-
8 gor, or held a security interest in or other lien on the collateral may
9 recover damages under subsection (b) of this section for its loss; and
10 (2) If the collateral is consumer goods, a person that was a debtor or a
11 secondary obligor at the time a secured party failed to comply with this
12 part may recover for that failure in any event, an amount not less than
13 the credit service charge plus ten percent (10%) of the principal amount
14 of the obligation or the time price differential plus ten percent (10%) of
15 the cash price.
16 (d) A debtor whose deficiency is eliminated under section 28-9-626 may
17 recover damages for the loss of any surplus. However, a debtor or secondary
18 obligor whose deficiency is eliminated or reduced under section 28-9-626 may
19 not otherwise recover under subsection (b) of this section for noncompliance
20 with the provisions of this part relating to collection, enforcement, disposi-
21 tion or acceptance.
22 (e) In addition to any damages recoverable under subsection (b) of this
23 section, the debtor, consumer obligor or person named as a debtor in a filed
24 record, as applicable, may recover one hundred dollars ($100) in each case
25 from a person that:
26 (1) Files a record that the person is not entitled to file under section
27 28-9-509(a);
28 (2) Fails to cause the secured party of record to file or send a termina-
29 tion statement as required by section 28-9-513(a) or (c).
30 (f) If a secured party fails to comply with a request regarding a list of
31 collateral or a statement of account under section 28-9-210, the secured party
32 may claim a security interest only as shown in the statement included in the
33 request as against a person that is reasonably misled by the failure.
34 28-9-626. ACTION IN WHICH DEFICIENCY OR SURPLUS IS IN ISSUE. In an action
35 arising from a transaction, other than a consumer transaction, in which the
36 amount of a deficiency or surplus is in issue, the following rules apply:
37 (a) A secured party need not prove compliance with the provisions of this
38 part relating to collection, enforcement, disposition or acceptance unless the
39 debtor or a secondary obligor places the secured party's compliance in issue.
40 (b) If the secured party's compliance is placed in issue, the secured
41 party has the burden of establishing that the collection, enforcement, dispo-
42 sition or acceptance was conducted in accordance with this part.
43 (c) Except as otherwise provided in section 28-9-628, if a secured party
44 fails to prove that the collection, enforcement, disposition or acceptance was
45 conducted in accordance with the provisions of this part relating to collec-
46 tion, enforcement, disposition or acceptance, the liability of a debtor or a
47 secondary obligor for a deficiency is limited to an amount by which the sum of
48 the secured obligation, expenses and attorney's fees exceeds the greater of:
49 (1) The proceeds of the collection, enforcement, disposition or accep-
50 tance; or
51 (2) The amount of proceeds that would have been realized had the noncom-
52 plying secured party proceeded in accordance with the provisions of this
53 part relating to collection, enforcement, disposition or acceptance.
54 (d) For purposes of subsection (c)(2) of this section, the amount of pro-
85
1 ceeds that would have been realized is equal to the sum of the secured obliga-
2 tion, expenses and attorney's fees unless the secured party proves that the
3 amount is less than that sum.
4 (e) If a deficiency or surplus is calculated under section 28-9-615(f),
5 the debtor or obligor has the burden of establishing that the amount of pro-
6 ceeds of the disposition is significantly below the range of prices that a
7 complying disposition to a person other than the secured party, a person
8 related to the secured party, or a secondary obligor would have brought.
9 28-9-627. DETERMINATION OF WHETHER CONDUCT WAS COMMERCIALLY REASONABLE.
10 (a) The fact that a greater amount could have been obtained by a collection,
11 enforcement, disposition or acceptance at a different time or in a different
12 method from that selected by the secured party is not of itself sufficient to
13 preclude the secured party from establishing that the collection, enforcement,
14 disposition or acceptance was made in a commercially reasonable manner.
15 (b) A disposition of collateral is made in a commercially reasonable man-
16 ner if the disposition is made:
17 (1) In the usual manner on any recognized market;
18 (2) At the price current in any recognized market at the time of the dis-
19 position; or
20 (3) Otherwise in conformity with reasonable commercial practices among
21 dealers in the type of property that was the subject of the disposition.
22 (c) A collection, enforcement, disposition or acceptance is commercially
23 reasonable if it has been approved:
24 (1) In a judicial proceeding;
25 (2) By a bona fide creditors' committee;
26 (3) By a representative of creditors; or
27 (4) By an assignee for the benefit of creditors.
28 (d) Approval under subsection (c) of this section need not be obtained,
29 and lack of approval does not mean that the collection, enforcement, disposi-
30 tion or acceptance is not commercially reasonable.
31 28-9-628. NONLIABILITY AND LIMITATION ON LIABILITY OF SECURED PARTY --
32 LIABILITY OF SECONDARY OBLIGOR. (a) Unless a secured party knows that a person
33 is a debtor or obligor, knows the identity of the person, and knows how to
34 communicate with the person:
35 (1) The secured party is not liable to the person, or to a secured party
36 or lienholder that has filed a financing statement against the person, for
37 failure to comply with this chapter; and
38 (2) The secured party's failure to comply with this chapter does not
39 affect the liability of the person for a deficiency.
40 (b) A secured party is not liable because of its status as secured party:
41 (1) To a person that is a debtor or obligor, unless the secured party
42 knows:
43 (A) that the person is a debtor or obligor;
44 (B) the identity of the person; and
45 (C) how to communicate with the person; or
46 (2) To a secured party or lienholder that has filed a financing statement
47 against a person, unless the secured party knows:
48 (A) that the person is a debtor; and
49 (B) the identity of the person.
50 (c) A secured party is not liable to any person, and a person's liability
51 for a deficiency is not affected, because of any act or omission arising out
52 of the secured party's reasonable belief that a transaction is not a consumer
53 goods transaction or a consumer transaction or that goods are not consumer
86
1 goods, if the secured party's belief is based on its reasonable reliance on:
2 (1) A debtor's representation concerning the purpose for which collateral
3 was to be used, acquired or held; or
4 (2) An obligor's representation concerning the purpose for which a
5 secured obligation was incurred.
6 (d) A secured party is not liable to any person under section
7 28-9-625(c)(2) for its failure to comply with section 28-9-616.
8 (e) A secured party is not liable under section 28-9-625(c)(2) more than
9 once with respect to any one (1) secured obligation.
10 PART 7.
11 TRANSITION
12 28-9-701. [RESERVED.]
13 28-9-702. SAVINGS CLAUSE. (a) Except as otherwise provided in this part,
14 this act applies to a transaction or lien within its scope, even if the trans-
15 action or lien was entered into or created before this act takes effect.
16 (b) Except as otherwise provided in subsection (c) of this section and
17 sections 28-9-703 through 28-9-709:
18 (1) Transactions and liens that were not governed by former chapter 9,
19 title 28, Idaho Code, were validly entered into or created before this act
20 takes effect, and would be subject to this act if they had been entered
21 into or created after this act takes effect, and the rights, duties, and
22 interests flowing from those transactions and liens remain valid after
23 this act takes effect; and
24 (2) The transactions and liens may be terminated, completed, consummated
25 and enforced as required or permitted by this act or by the law that
26 otherwise would apply if this act had not taken effect.
27 (c) This act does not affect an action, case or proceeding commenced
28 before this act takes effect.
29 28-9-703. SECURITY INTEREST PERFECTED BEFORE EFFECTIVE DATE. (a) A secu-
30 rity interest that is enforceable immediately before this act takes effect and
31 would have priority over the rights of a person that becomes a lien creditor
32 at that time is a perfected security interest under this act if, when this act
33 takes effect, the applicable requirements for enforceability and perfection
34 under this act are satisfied without further action.
35 (b) Except as otherwise provided in section 28-9-705, if, immediately
36 before this act takes effect, a security interest is enforceable and would
37 have priority over the rights of a person that becomes a lien creditor at that
38 time, but the applicable requirements for enforceability or perfection under
39 this act are not satisfied when this act takes effect, the security interest:
40 (1) Is a perfected security interest for one (1) year after this act
41 takes effect;
42 (2) Remains enforceable thereafter only if the security interest becomes
43 enforceable under section 28-9-203 before the year expires; and
44 (3) Remains perfected thereafter only if the applicable requirements for
45 perfection under this act are satisfied before the year expires.
46 28-9-704. SECURITY INTEREST UNPERFECTED BEFORE EFFECTIVE DATE. A security
47 interest that is enforceable immediately before this act takes effect but
48 which would be subordinate to the rights of a person that becomes a lien cred-
49 itor at that time:
50 (1) Remains an enforceable security interest for one (1) year after this
87
1 act takes effect;
2 (2) Remains enforceable thereafter if the security interest becomes
3 enforceable under section 28-9-203 when this act takes effect or within one
4 (1) year thereafter; and
5 (3) Becomes perfected:
6 (A) Without further action, when this act takes effect if the applicable
7 requirements for perfection under this act are satisfied before or at that
8 time; or
9 (B) When the applicable requirements for perfection are satisfied if the
10 requirements are satisfied after that time.
11 28-9-705. EFFECTIVENESS OF ACTION TAKEN BEFORE EFFECTIVE DATE. (a) If
12 action, other than the filing of a financing statement, is taken before this
13 act takes effect and the action would have resulted in priority of a security
14 interest over the rights of a person that becomes a lien creditor had the
15 security interest become enforceable before this act takes effect, the action
16 is effective to perfect a security interest that attaches under this act
17 within one (1) year after this act takes effect. An attached security interest
18 becomes unperfected one (1) year after this act takes effect unless the secu-
19 rity interest becomes a perfected security interest under this act before the
20 expiration of that period.
21 (b) The filing of a financing statement before this act takes effect is
22 effective to perfect a security interest to the extent the filing would sat-
23 isfy the applicable requirements for perfection under this act.
24 (c) This act does not render ineffective an effective financing statement
25 that, before this act takes effect, is filed and satisfies the applicable
26 requirements for perfection under the law of the jurisdiction governing per-
27 fection as provided in former section 28-9-103. However, except as otherwise
28 provided in subsections (d) and (e) of this section and section 28-9-706, the
29 financing statement ceases to be effective at the earlier of:
30 (1) The time the financing statement would have ceased to be effective
31 under the law of the jurisdiction in which it is filed; or
32 (2) June 30, 2006.
33 (d) The filing of a continuation statement after this act takes effect
34 does not continue the effectiveness of the financing statement filed before
35 this act takes effect. However, upon the timely filing of a continuation
36 statement after this act takes effect and in accordance with the law of the
37 jurisdiction governing perfection as provided in part 3, the effectiveness of
38 a financing statement filed in the same office in that jurisdiction before
39 this act takes effect continues for the period provided by the law of that
40 jurisdiction.
41 (e) Subsection (c)(2) of this section applies to a financing statement
42 that, before this act takes effect, is filed against a transmitting utility
43 and satisfies the applicable requirements for perfection under the law of the
44 jurisdiction governing perfection as provided in former section 28-9-103 only
45 to the extent that part 3 provides that the law of a jurisdiction other than
46 jurisdiction in which the financing statement is filed governs perfection of
47 a security interest in collateral covered by the financing statement.
48 (f) A financing statement that includes a financing statement filed
49 before this act takes effect and a continuation statement filed after this act
50 takes effect is effective only to the extent that it satisfies the require-
51 ments of part 5 for an initial financing statement.
52 28-9-706. WHEN INITIAL FINANCING STATEMENT SUFFICES TO CONTINUE EFFEC-
53 TIVENESS OF FINANCING STATEMENT. (a) The filing of an initial financing state-
88
1 ment in the office specified in section 28-9-501 continues the effectiveness
2 of a financing statement filed before this act takes effect if:
3 (1) The filing of an initial financing statement in that office would be
4 effective to perfect a security interest under this act;
5 (2) The preeffective-date financing statement was filed in an office in
6 another state or another office in this state; and
7 (3) The initial financing statement satisfies subsection (c) of this sec-
8 tion.
9 (b) The filing of an initial financing statement under subsection (a) of
10 this section continues the effectiveness of the preeffective-date financing
11 statement:
12 (1) If the initial financing statement is filed before this act takes
13 effect, for the period provided in former section 28-9-403 with respect to
14 a financing statement; and
15 (2) If the initial financing statement is filed after this act takes
16 effect, for the period provided in section 28-9-515 with respect to an
17 initial financing statement.
18 (c) To be effective for purposes of subsection (a) of this section, an
19 initial financing statement must:
20 (1) Satisfy the requirements of part 5 for an initial financing state-
21 ment;
22 (2) Identify the preeffective-date financing statement by indicating the
23 office in which the financing statement was filed and providing the dates
24 of filing and file numbers, if any, of the financing statement and of the
25 most recent continuation statement filed with respect to the financing
26 statement; and
27 (3) Indicate that the preeffective-date financing statement remains
28 effective.
29 28-9-707. AMENDMENT OF PREEFFECTIVE-DATE FINANCING STATEMENT. A person
30 may file an initial financing statement or a continuation statement under this
31 part if:
32 (a) In this section, "preeffective-date financing statement" means a
33 financing statement filed before this act takes effect.
34 (b) After this act takes effect, a person may add or delete collateral
35 covered by, continue or terminate the effectiveness of, or otherwise amend the
36 information provided in, a preeffective-date financing statement only in
37 accordance with the law of the jurisdiction governing perfection as provided
38 in part 3. However, the effectiveness of a preeffective-date financing state-
39 ment also may be terminated in accordance with the law of the jurisdiction in
40 which the financing statement is filed.
41 28-9-708. PERSONS ENTITLED TO FILE INITIAL FINANCING STATEMENT OR CONTIN-
42 UATION STATEMENT. A person may file an initial financing statement or a con-
43 tinuation statement under this part if:
44 (1) The secured party of record authorizes the filing; and
45 (2) The filing is necessary under this part:
46 (A) To continue the effectiveness of a financing statement filed before
47 this act takes effect; or
48 (B) To perfect or continue the perfection of a security interest.
49 28-9-709. PRIORITY. (a) This act determines the priority of conflicting
50 claims to collateral. However, if the relative priorities of the claims were
51 established before this act takes effect, former chapter 9, title 28, deter-
52 mines priority.
89
1 (b) For purposes of section 28-9-322(a), the priority of a security
2 interest that becomes enforceable under section 28-9-203 of this act dates
3 from the time this act takes effect if the security interest is perfected
4 under this act by the filing of a financing statement before this act takes
5 effect which would not have been effective to perfect the security interest
6 under former chapter 9, title 28. This subsection does not apply to conflict-
7 ing security interests, each of which is perfected by the filing of such a
8 financing statement.
9 SECTION 3. That Section 28-1-105, Idaho Code, be, and the same is hereby
10 amended to read as follows:
11 28-1-105. TERRITORIAL APPLICATION OF THE ACT -- PARTIES' POWER TO CHOOSE
12 APPLICABLE LAW. (1) Except as provided hereafter in this section, when a
13 transaction bears a reasonable relation to this state and also to another
14 state or nation the parties may agree that the law either of this state or of
15 such other state or nation shall govern their rights and duties. Failing such
16 agreement this act applies to transactions bearing an appropriate relation to
17 this state.
18 (2) Where one (1) of the following provisions of this act specifies the
19 applicable law, that provision governs and a contrary agreement is effective
20 only to the extent permitted by the law, (including the conflict of laws
21 rules), so specified:
22 Rights of creditors against sold goods. Section 28-2-402.
23 Applicability of the chapter on Lleases. Sections 28-12-105 and 28-12-106.
24 Applicability of the chapter on Bbank Ddeposits and Ccollections. Section
25 28-4-102.
26 Governing law in the part on Ffunds Ttransfers. Section 28-4-638.
27 Letters of Ccredit. Section 28-5-116.
28 Applicability of the chapter on Iinvestment Ssecurities. Section 28-8-110.
29 Policy and scope of the chapter on Secured Transactions. Sections 28-9-102
30 and 28-9-103.
31 Law governing perfection, the effect of perfection or nonperfection, the
32 priority of security interests and agricultural liens. Sections 28-9-301
33 through 28-9-307.
34 SECTION 4. That Section 28-1-201, Idaho Code, be, and the same is hereby
35 amended to read as follows:
36 28-1-201. GENERAL DEFINITIONS. Subject to additional definitions con-
37 tained in the subsequent chapters of this act which are applicable to specific
38 chapters or parts thereof, and unless the context otherwise requires, in this
39 act:
40 (1) "Action" in the sense of a judicial proceeding includes recoupment,
41 counterclaim, set-off, suit in equity and any other proceedings in which
42 rights are determined.
43 (2) "Aggrieved party" means a party entitled to resort to a remedy.
44 (3) "Agreement" means the bargain of the parties in fact as found in
45 their language or by implication from other circumstances including course of
46 dealing or usage of trade or course of performance as provided in this act
47 (sections 28-1-205 and 28-2-208). Whether an agreement has legal consequences
48 is determined by the provisions of this act, if applicable; otherwise by the
49 law of contracts (section 28-1-103). (Compare "contract.")
50 (4) "Bank" means any person engaged in the business of banking, including
51 any insured bank, whether chartered by federal or state law, any insured sav-
90
1 ings and loan association, whether insured by federal or state law, and any
2 insured credit union, whether chartered by federal or state law, offering
3 deposit or other accounts on which the depositor or account holder is permit-
4 ted to make withdrawals by negotiable or transferable instrument, payment
5 orders of withdrawal, telephone transfers, or other similar items for the pur-
6 pose of making payments or transfers to third persons or others, including
7 demand deposits, negotiable order of withdrawal accounts, savings deposits
8 subject to automatic transfers, and share draft accounts.
9 (5) "Bearer" means the person in possession of an instrument, document of
10 title, or security payable to bearer or indorsed in blank.
11 (6) "Bill of lading" means a document evidencing the receipt of goods for
12 shipment issued by a person engaged in the business of transporting or for-
13 warding goods, and includes an airbill. "Airbill" means a document serving for
14 air transportation as a bill of lading does for marine or rail transportation,
15 and includes an air consignment note or air waybill.
16 (7) "Branch" includes a separately incorporated foreign branch of a bank.
17 (8) "Burden of establishing" a fact means the burden of persuading the
18 triers of fact that the existence of the fact is more probable than its nonex-
19 istence.
20 (9) "Buyer in ordinary course of business" means a person who that buys
21 goods in good faith, and without knowledge that the sale to him is in viola-
22 tion of violates the ownership rights or security interest of a third party
23 another person in the goods, and buys in the ordinary course from a person,
24 other than a pawnbroker, in the business of selling goods of that kind. but
25 does not include a pawnbroker. All persons who sell minerals or the like
26 (including oil and gas) at wellhead or minehead shall be deemed to be persons
27 A person buys goods in the ordinary course if the sale to the person comports
28 with the usual or customary practices in the kind of business in which the
29 seller is engaged or with the seller's own usual or customary practices. A
30 person that sells oil, gas or other minerals at the wellhead or minehead is a
31 person in the business of selling goods of that kind. "Buying" A buyer in
32 ordinary course of business may be buy for cash, or by exchange of other
33 property, or on secured or unsecured credit, and includes receiving may
34 acquire goods or documents of title under a pre-existing preexisting contract
35 for sale. but does not include a transfer in bulk or as security for or in
36 total or partial satisfaction of a money debt. Only a buyer that takes posses-
37 sion of the goods or has a right to recover the goods from the seller under
38 chapter 2, title 28, Idaho Code, may be a buyer in ordinary course of busi-
39 ness. A person that acquires goods in a transfer in bulk or as security for or
40 in total or partial satisfaction of a money debt is not a buyer in ordinary
41 course of business.
42 (10) "Conspicuous." A term or clause is conspicuous when it is so written
43 that a reasonable person against whom it is to operate ought to have noticed
44 it. A printed heading in capitals (as: NON-NEGOTIABLE BILL OF LADING) is con-
45 spicuous. Language in the body of a form is "conspicuous" if it is in larger
46 or other contrasting type or color. But in a telegram any stated term is
47 "conspicuous." Whether a term or clause is "conspicuous" or not is for deci-
48 sion by the court.
49 (11) "Contract" means the total legal obligation which results from the
50 parties' agreement as affected by this act and any other applicable rules of
51 law. (Compare "agreement.")
52 (12) "Creditor" includes a general creditor, a secured creditor, a lien
53 creditor and any representative of creditors, including an assignee for the
54 benefit of creditors, a trustee in bankruptcy, a receiver in equity and an
55 executor or administrator of an insolvent debtor's or assignor's estate.
91
1 (13) "Defendant" includes a person in the position of defendant in a
2 cross-action or counterclaim.
3 (14) "Delivery" with respect to instruments, documents of title, chattel
4 paper or securities means voluntary transfer of possession.
5 (15) "Document of title" includes bill of lading, dock warrant, dock
6 receipt, warehouse receipt or order for the delivery of goods, and also any
7 other document which in the regular course of business or financing is treated
8 as adequately evidencing that the person in possession of it is entitled to
9 receive, hold and dispose of the document and the goods it covers. To be a
10 document of title a document must purport to be issued by or addressed to a
11 bailee and purport to cover goods in the bailee's possession which are either
12 identified or are fungible portions of an identified mass.
13 (16) "Fault" means wrongful act, omission or breach.
14 (17) "Fungible" with respect to goods or securities means goods or securi-
15 ties of which any unit is, by nature or usage of trade, the equivalent of any
16 other like unit. Goods which are not fungible shall be deemed fungible for the
17 purposes of this act to the extent that under a particular agreement or docu-
18 ment unlike units are treated as equivalents.
19 (18) "Genuine" means free of forgery or counterfeiting.
20 (19) "Good faith" means honesty in fact in the conduct or transaction con-
21 cerned.
22 (20) "Holder" with respect to a negotiable instrument, means the person in
23 possession if the instrument is payable to bearer or, in the case of an
24 instrument payable to an identified person, if the identified person is in
25 possession. "Holder" with respect to a document of title, means the person in
26 possession if the goods are deliverable to bearer or to the order of the per-
27 son in possession.
28 (21) To "honor" is to pay or to accept and pay, or where a credit so
29 engages to purchase or discount a draft complying with the terms of the
30 credit.
31 (22) "Insolvency proceedings" includes any assignment for the benefit of
32 creditors or other proceedings intended to liquidate or rehabilitate the
33 estate of the person involved.
34 (23) A person is "insolvent" who either has ceased to pay his debts in the
35 ordinary course of business or cannot pay his debts as they become due or is
36 insolvent within the meaning of the federal bankruptcy law.
37 (24) "Money" means a medium of exchange authorized or adopted by a domes-
38 tic or foreign government and includes a monetary unit of account established
39 by an intergovernmental organization or by agreement between two (2) or more
40 nations.
41 (25) A person has "notice" of a fact when:
42 (a) hHe has actual knowledge of it; or
43 (b) hHe has received a notice or notification of it; or
44 (c) fFrom all the facts and circumstances known to him at the time in
45 question he has reason to know that it exists.
46 A person "knows" or has "knowledge" of a fact when he has actual knowledge
47 of it. "Discover" or "learn" or a word or phrase of similar import refers to
48 knowledge rather than to reason to know. The time and circumstances under
49 which a notice or notification may cease to be effective are not determined by
50 this act.
51 (26) A person "notifies" or "gives" a notice or notification to another by
52 taking such steps as may be reasonably required to inform the other in ordi-
53 nary course whether or not such other actually comes to know of it. A person
54 "receives" a notice or notification when:
55 (a) iIt comes to his attention; or
92
1 (b) iIt is duly delivered at the place of business through which the con-
2 tract was made or at any other place held out by him as the place for
3 receipt of such communications.
4 (27) Notice, knowledge or a notice or notification received by an organi-
5 zation is effective for a particular transaction from the time when it is
6 brought to the attention of the individual conducting that transaction, and in
7 any event from the time when it would have been brought to his attention if
8 the organization had exercised due diligence. An organization exercises due
9 diligence if it maintains reasonable routines for communicating significant
10 information to the person conducting the transaction and there is reasonable
11 compliance with the routines. Due diligence does not require an individual
12 acting for the organization to communicate information unless such communica-
13 tion is part of his regular duties or unless he has reason to know of the
14 transaction and that the transaction would be materially affected by the
15 information.
16 (28) "Organization" includes a corporation, government or governmental
17 subdivision or agency, business trust, estate, trust, partnership or associa-
18 tion, two (2) or more persons having a joint or common interest, or any other
19 legal or commercial entity.
20 (29) "Party," as distinct from "third party," means a person who has
21 engaged in a transaction or made an agreement within this act.
22 (30) "Person" includes an individual or an organization (See section
23 28-1-102).
24 (31) "Presumption" or "presumed" means that the trier of fact must find
25 the existence of the fact presumed unless and until evidence is introduced
26 which would support a finding of its nonexistence.
27 (32) "Purchase" includes taking by sale, discount, negotiation, mortgage,
28 pledge, lien, security interest, issue or reissue, gift or any other voluntary
29 transaction creating an interest in property.
30 (33) "Purchaser" means a person who takes by purchase.
31 (34) "Remedy" means any remedial right to which an aggrieved party is
32 entitled with or without resort to a tribunal.
33 (35) "Representative" includes an agent, an officer of a corporation or
34 association, and a trustee, executor or administrator of an estate, or any
35 other person empowered to act for another.
36 (36) "Rights" includes remedies.
37 (37) "Security interest" means an interest in personal property or fix-
38 tures which secures payment or performance of an obligation. The retention or
39 reservation of title by a seller of goods notwithstanding shipment or delivery
40 to the buyer (section 28-2-401) is limited in effect to a reservation of a
41 "security interest." The term also includes any interest of a consignor and a
42 buyer of accounts, or chattel paper, which a payment intangible, or a promis-
43 sory note in a transaction that is subject to chapter 9, title 28, Idaho Code.
44 The special property interest of a buyer of goods on identification of those
45 goods to a contract for sale under section 28-2-401 is not a "security inter-
46 est," but a buyer may also acquire a "security interest" by complying with
47 chapter 9, title 28, Idaho Code. Unless a consignment is intended as security,
48 reservation of title thereunder is not a "security interest" but a consignment
49 in any event is subject to the provisions on consignment sales (section
50 28-2-326). Except as otherwise provided in section 28-2-205, the right of a
51 seller or lessor of goods under chapter 2 or chapter 12, title 28, Idaho Code,
52 to retain or acquire possession of the goods is not a "security interest," but
53 a seller or lessor may also acquire a "security interest" by complying with
54 chapter 9, title 28, Idaho Code. The retention or reservation of title by a
55 seller of goods notwithstanding shipment or delivery to the buyer (section
93
1 28-2-401) is limited in effect to a reservation of a "security interest."
2 Whether a transaction creates a lease or security interest is determined
3 by the facts of each case; however, a transaction creates a security interest
4 if the consideration the lessee is to pay the lessor for the right to posses-
5 sion and use of the goods is an obligation for the term of the lease not sub-
6 ject to termination by the lessee, and:
7 (a) tThe original term of the lease is equal to or greater than the
8 remaining economic life of the goods; or
9 (b) tThe lessee is bound to renew the lease for the remaining economic
10 life of the goods or is bound to become the owner of the goods; or
11 (c) tThe lessee has an option to renew the lease for the remaining eco-
12 nomic life of the goods for no additional consideration or nominal addi-
13 tional consideration upon compliance with the lease agreement; or
14 (d) tThe lessee has an option to become the owner of the goods for no
15 additional consideration or nominal additional consideration upon compli-
16 ance with the lease agreement.
17 A transaction does not create a security interest merely because it pro-
18 vides that:
19 (a) tThe present value of the consideration the lessee is obligated to
20 pay the lessor for the right to possession and use of the goods is sub-
21 stantially equal to or is greater than the fair market value of the goods
22 at the time the lease is entered into; or
23 (b) tThe lessee assumes risk of loss of the goods, or agrees to pay
24 taxes, insurance, filing, recording, or registration fees, or service or
25 maintenance costs with respect to the goods; or
26 (c) tThe lessee has an option to renew the lease or to become the owner
27 of the goods; or
28 (d) tThe lessee has an option to renew the lease for a fixed rent that is
29 equal to or greater than the reasonably predictable fair market rent for
30 the use of the goods for the term of the renewal at the time the option is
31 to be performed; or
32 (e) tThe lessee has an option to become the owner of the goods for a
33 fixed price that is equal to or greater than the reasonably predictable
34 fair market value of the goods at the time the option is to be performed.
35 For purposes of this subsection (37):
36 Additional consideration is not nominal if (i) when the option to renew
37 the lease is granted to the lessee the rent is stated to be the fair market
38 rent for the use of the goods for the term of the renewal determined at the
39 time the option is to be performed, or (ii) when the option to become the
40 owner of the goods is granted to the lessee the price is stated to be the fair
41 market value of the goods determined at the time the option is to be per-
42 formed.
43 Additional consideration is nominal if it is less than the lessee's rea-
44 sonably predictable cost of performing under the lease agreement if the option
45 is not exercised.
46 "Reasonably predictable" and "remaining economic life of the goods" are to
47 be determined with reference to the facts and circumstances at the time the
48 transaction is entered into.
49 "Present value" means the amount as of a date certain of one (1) or more
50 sums payable in the future, discounted to the date certain. The discount is
51 determined by the interest rate specified by the parties if the rate is not
52 manifestly unreasonable at the time the transaction is entered into; other-
53 wise, the discount is determined by a commercially reasonable rate that takes
54 into account the facts and circumstances of each case at the time the transac-
55 tion was entered into.
94
1 (38) "Send" in connection with any writing or notice means to deposit in
2 the mail or deliver for transmission by any other usual means of communication
3 with postage or cost of transmission provided for and properly addressed and
4 in the case of an instrument to an address specified thereon or otherwise
5 agreed, or if there be none to any address reasonable under the circumstances.
6 The receipt of any writing or notice within the time at which it would have
7 arrived if properly sent has the effect of a proper sending.
8 (39) "Signed" includes any symbol executed or adopted by a party with
9 present intention to authenticate a writing.
10 (40) "Surety" includes guarantor.
11 (41) "Telegram" includes a message transmitted by radio, teletype, cable,
12 any mechanical method of transmission, or the like.
13 (42) "Term" means that portion of an agreement which relates to a particu-
14 lar matter.
15 (43) "Unauthorized" signature means one made without actual, implied or
16 apparent authority and includes a forgery.
17 (44) "Value." Except as otherwise provided with respect to negotiable
18 instruments and bank collections (sections 28-3-303, 28-4-208 and 28-4-209) a
19 person gives "value" for rights if he acquires them:
20 (a) iIn return for a binding commitment to extend credit or for the
21 extension of immediately available credit whether or not drawn upon and
22 whether or not a chargeback is provided for in the event of difficulties
23 in collection; or
24 (b) aAs security for or in total or partial satisfaction of a pre-
25 existing preexisting claim; or
26 (c) bBy accepting delivery pursuant to a pre-existing preexisting con-
27 tract for purchase; or
28 (d) gGenerally, in return for any consideration sufficient to support a
29 simple contract.
30 (45) "Warehouse receipt" means a receipt issued by a person engaged in the
31 business of storing goods for hire.
32 (46) "Written" or "writing" includes printing, typewriting or any other
33 intentional reduction to tangible form.
34 SECTION 5. That Section 28-2-103, Idaho Code, be, and the same is hereby
35 amended to read as follows:
36 28-2-103. DEFINITIONS AND INDEX OF DEFINITIONS. (1) In this chapter
37 unless the context otherwise requires:
38 (a) "Buyer" means a person who buys or contracts to buy goods.
39 (b) "Good faith" in the case of a merchant means honesty in fact and the
40 observance of reasonable commercial standards of fair dealing in the
41 trade.
42 (c) "Receipt" of goods means taking physical possession of them.
43 (d) "Seller" means a person who sells or contracts to sell goods.
44 (2) Other definitions applying to this chapter or to specified Pparts
45 thereof, and the sections in which they appear are:
46 "Acceptance." Section 28-2-606.
47 "Banker's credit." Section 28-2-325.
48 "Between merchants." Section 28-2-104.
49 "Cancellation." Section 28-2-106.
50 "Commercial unit." Section 28-2-105.
51 "Confirmed credit." Section 28-2-325.
52 "Conforming to contract." Section 28-2-106.
53 "Contract for sale." Section 28-2-106.
95
1 "Cover." Section 28-2-712.
2 "Entrusting." Section 28-2-403.
3 "Financing agency." Section 28-2-104.
4 "Future goods." Section 28-2-105.
5 "Goods." Section 28-2-105.
6 "Identification." Section 28-2-501.
7 "InstalmentInstallment contract." Section 28-2-612.
8 "Letter of credit." Section 28-2-325.
9 "Lot." Section 28-2-105.
10 "Merchant." Section 28-2-104.
11 "Overseas." Section 28-2-323.
12 "Person in position of seller." Section 28-2-707.
13 "Present sale." Section 28-2-106.
14 "Sale." Section 28-2-106.
15 "Sale on approval." Section 28-2-326.
16 "Sale or return." Section 28-2-326.
17 "Termination." Section 28-2-106.
18 (3) The following definitions in other chapters apply to this chapter:
19 "Check." Section 28-3-104.
20 "Consignee." Section 28-7-102.
21 "Consignor." Section 28-7-102.
22 "Consumer goods." Section 28-9-1092.
23 "Dishonor." Section 28-3-5072.
24 "Draft." Section 28-3-104.
25 (4) In addition, chapter 1, title 28, Idaho Code, contains general defi-
26 nitions and principles of construction and interpretation applicable through-
27 out this chapter.
28 SECTION 6. That Section 28-2-210, Idaho Code, be, and the same is hereby
29 amended to read as follows:
30 28-2-210. DELEGATION OF PERFORMANCE -- ASSIGNMENT OF RIGHTS. (1) A party
31 may perform his duty through a delegate unless otherwise agreed or unless the
32 other party has a substantial interest in having his original promisor perform
33 or control the acts required by the contract. No delegation of performance
34 relieves the party delegating of any duty to perform or any liability for
35 breach.
36 (2) Except as otherwise provided in section 28-9-406, uUnless otherwise
37 agreed, all rights of either seller or buyer can be assigned except where the
38 assignment would materially change the duty of the other party, or increase
39 materially the burden or risk imposed on him by his contract, or impair mate-
40 rially his chance of obtaining return performance. A right to damages for
41 breach of the whole contract or a right arising out of the assignor's due per-
42 formance of his entire obligation can be assigned despite agreement otherwise.
43 (3) The creation, attachment, perfection or enforcement of a security
44 interest in the seller's interest under a contract is not a transfer that
45 materially changes the duty of or increases materially the burden or risk
46 imposed on the buyer or impairs materially the buyer's chance of obtaining
47 return performance within the purview of subsection (2) of this section
48 unless, and then only to the extent that, enforcement actually results in a
49 delegation of material performance of the seller. Even in that event, the cre-
50 ation, attachment, perfection and enforcement of the security interest remain
51 effective, but: (i) the seller is liable to the buyer for damages caused by
52 the delegation to the extent that the damages could not reasonably be pre-
53 vented by the buyer; and (ii) a court having jurisdiction may grant other
96
1 appropriate relief, including cancellation of the contract for sale or an
2 injunction against enforcement of the security interest or consummation of the
3 enforcement.
4 (4) Unless the circumstances indicate the contrary, a prohibition of
5 assignment of "the contract" is to be construed as barring only the delegation
6 to the assignee of the assignor's performance.
7 (45) An assignment of "the contract" or of "all my rights under the con-
8 tract" or an assignment in similar general terms is an assignment of rights
9 and unless the language or the circumstances, (as in an assignment for secu-
10 rity), indicate the contrary, it is a delegation of performance of the duties
11 of the assignor and its acceptance by the assignee constitutes a promise by
12 him to perform those duties. This promise is enforceable by either the
13 assignor or the other party to the original contract.
14 (56) The other party may treat any assignment which delegates performance
15 as creating reasonable grounds for insecurity and may without prejudice to his
16 rights against the assignor demand assurances from the assignee (section
17 28-2-609).
18 SECTION 7. That Section 28-2-326, Idaho Code, be, and the same is hereby
19 amended to read as follows:
20 28-2-326. SALE ON APPROVAL AND SALE OR RETURN -- CONSIGNMENT SALES AND
21 RIGHTS OF CREDITORS. (1) Unless otherwise agreed, if delivered goods may be
22 returned by the buyer even though they conform to the contract, the transac-
23 tion is:
24 (a) aA "sale on approval" if the goods are delivered primarily for use,;
25 and
26 (b) aA "sale or return" if the goods are delivered primarily for resale.
27 (2) Except as provided in subsection (3), gGoods held on approval are not
28 subject to the claims of the buyer's creditors until acceptance; goods held on
29 sale or return are subject to such claims while in the buyer's possession.
30 (3) Where goods are delivered to a person for sale and such person main-
31 tains a place of business at which he deals in goods of the kind involved,
32 under a name other than the name of the person making delivery, then with
33 respect to claims of creditors of the person conducting the business the goods
34 are deemed to be on sale or return. The provisions of this subsection are
35 applicable even though an agreement purports to reserve title to the person
36 making delivery until payment or resale or uses such words as "on consignment"
37 or "on memorandum." However, this subsection is not applicable if the person
38 making delivery
39 (a) complies with an applicable law providing for a consignor's interest
40 or the like to be evidenced by a sign, or
41 (b) establishes that the person conducting the business is generally
42 known by his creditors to be substantially engaged in selling the goods of
43 others, or
44 (c) complies with the filing provisions of the chapter on Secured Trans-
45 actions (chapter 9).
46 (4) Any "or return" term of a contract for sale is to be treated as a sep-
47 arate contract for sale within the statute of frauds section of this chapter
48 (section 28-2-201) and as contradicting the sale aspect of the contract within
49 the provisions of this chapter on parol or extrinsic evidence (section
50 28-2-202).
51 SECTION 8. That Section 28-2-502, Idaho Code, be, and the same is hereby
52 amended to read as follows:
97
1 28-2-502. BUYER'S RIGHT TO GOODS ON SELLER'S REPUDIATION, FAILURE TO
2 DELIVER, OR INSOLVENCY. (1) Subject to subsections (2) and (3) and even though
3 the goods have not been shipped a buyer who has paid a part or all of the
4 price of goods in which he has a special property under the provisions of the
5 immediately preceding section 28-2-501, may on making and keeping good a ten-
6 der of any unpaid portion of their price recover them from the seller if:
7 (a) In the case of goods bought for personal, family or household pur-
8 poses, the seller repudiates or fails to deliver as required by the con-
9 tract; or
10 (b) In all cases, the seller becomes insolvent within ten (10) days after
11 receipt of the first instalment installment on their price.
12 (2) The buyer's right to recover the goods under subsection (1)(a) vests
13 upon acquisition of a special property, even if the seller had not then
14 repudiated or failed to deliver.
15 (3) If the identification creating his special property has been made by
16 the buyer he acquires the right to recover the goods only if they conform to
17 the contract for sale.
18 SECTION 9. That Section 28-2-716, Idaho Code, be, and the same is hereby
19 amended to read as follows:
20 28-2-716. BUYER'S RIGHT TO SPECIFIC PERFORMANCE OR CLAIM AND DELIVERY.
21 (1) Specific performance may be decreed where the goods are unique or in other
22 proper circumstances.
23 (2) The decree for specific performance may include such terms and condi-
24 tions as to payment of the price, damages, or other relief as the court may
25 deem just.
26 (3) The buyer has a right to maintain a claim and delivery action for
27 goods identified to the contract if after reasonable effort he is unable to
28 effect cover for such goods or the circumstances reasonably indicate that such
29 effort will be unavailing or if the goods have been shipped under reservation
30 and satisfaction of the security interest in them has been made or tendered.
31 In the case of goods bought for personal, family or household purposes, the
32 buyer's right of replevin vests upon acquisition of a special property, even
33 if the seller had not then repudiated or failed to deliver.
34 SECTION 10. That Section 28-4-210, Idaho Code, be, and the same is hereby
35 amended to read as follows:
36 28-4-210. SECURITY INTEREST OF COLLECTING BANK IN ITEMS, ACCOMPANYING
37 DOCUMENTS AND PROCEEDS. (1) A collecting bank has a security interest in an
38 item and any accompanying documents or the proceeds of either:
39 (a) iIn case of an item deposited in an account, to the extent to which
40 credit given for the item has been withdrawn or applied;
41 (b) iIn case of an item for which it has given credit available for with-
42 drawal as of right, to the extent of the credit given, whether or not the
43 credit is drawn upon or there is a right of charge-back; or
44 (c) iIf it makes an advance on or against the item.
45 (2) If credit given for several items received at one (1) time or pursu-
46 ant to a single agreement is withdrawn or applied in part, the security inter-
47 est remains upon all the items, any accompanying documents or the proceeds of
48 either. For the purpose of this section, credits first given are first with-
49 drawn.
50 (3) Receipt by a collecting bank of a final settlement for an item is a
51 realization on its security interest in the item, accompanying documents and
98
1 proceeds. So long as the bank does not receive final settlement for the item
2 or give up possession of the item or accompanying documents for purposes other
3 than collection, the security interest continues to that extent and is subject
4 to the provisions of chapter 9, title 28, Idaho Code, but:
5 (a) nNo security agreement is necessary to make the security interest
6 enforceable (section 28-9-203(1b)(3)(aA));
7 (b) nNo filing is required to perfect the security interest; and
8 (c) tThe security interest has priority over conflicting perfected secu-
9 rity interests in the item, accompanying documents or proceeds.
10 SECTION 11. That Chapter 5, Part 1, Title 28, Idaho Code, be, and the
11 same is hereby amended by the addition thereto of a NEW SECTION, to be known
12 and designated as Section 28-5-120, Idaho Code, and to read as follows:
13 28-5-120. SECURITY INTEREST OF ISSUER OR NOMINATED PERSON. (a) An issuer
14 or nominated person has a security interest in a document presented under a
15 letter of credit to the extent that the issuer or nominated person honors or
16 gives value for the presentation.
17 (b) So long as and to the extent that an issuer or nominated person has
18 not been reimbursed or has not otherwise recovered the value given with
19 respect to a security interest in a document under subsection (a) of this sec-
20 tion, the security interest continues and is subject to chapter 9, title 28,
21 Idaho Code, but:
22 (1) A security agreement is not necessary to make the security interest
23 enforceable under section 28-9-203(b)(3);
24 (2) If the document is presented in a medium other than a written or
25 other tangible medium, the security interest is perfected; and
26 (3) If the document is presented in a written or other tangible medium
27 and is not a certificated security, chattel paper, a document of title, an
28 instrument, or a letter of credit, the security interest is perfected and
29 has priority over a conflicting security interest in the document so long
30 as the debtor does not have possession of the document. This act applies
31 to a letter of credit that is issued on or after the effective date of
32 this act. This act does not apply to a transaction, event, obligation, or
33 duty arising out of or associated with a letter of credit that was issued
34 before the effective date of this act.
35 SECTION 12. That Section 28-7-209A, Idaho Code, be, and the same is
36 hereby amended to read as follows:
37 28-7-209A. LIENS OF AGRICULTURAL COMMODITY WAREHOUSEMEN. (1) An agricul-
38 tural commodity warehouseman, as such term is defined in subsection (2) of
39 this section has a lien, dependent upon possession, upon any agricultural com-
40 modity deposited with the warehouseman, or stored in or upon the
41 warehouseman's premises, and any proceeds of sale of such agricultural commod-
42 ity, which lien shall secure payment of any and all lawful charges incurred or
43 payable for the storage, preservation, transportation, labor, weighing, test-
44 ing, processing, milling, improvement, sale or similar expense incurred with
45 regard to such agricultural commodity.
46 (2) As used in this section, the term "agricultural commodity warehouse-
47 man" shall include any person, partnership, corporation or other lawful busi-
48 ness organization which owns or operates a warehousing, storage, weighing,
49 milling or processing facility which is predominantly employed for the purpose
50 of storing, keeping, preserving, processing, milling, cleaning, bagging, box-
51 ing or otherwise handling any agricultural commodity for or to the benefit of
99
1 the owner or depositor thereof.
2 (3) Notwithstanding the provisions of section 28-7-209, Idaho Code, or
3 any of the provisions of chapters 7 or 9, title 28, Idaho Code, the lien cre-
4 ated in favor of an agricultural commodity warehouseman in this section shall
5 have the priority conferred upon other statutory liens under section
6 28-9-31033, Idaho Code.
7 (4) If the charges secured by the lien conferred in this section shall
8 not have been paid by or before the date called for by any contract, agreement
9 or document to title between the agricultural commodity warehouseman and the
10 owner or depositor of such agricultural commodity, or thirty (30) days after
11 written demand for payment shall have been made upon the owner or depositor,
12 whichever shall be earlier, the lien may be enforced in the manner specified
13 in section 28-7-210(1), Idaho Code.
14 (5) The provisions of this section and the lien created hereby shall be
15 applicable to any agricultural commodity deposited or stored with any agricul-
16 tural commodity warehouseman within this state after March 1, 1992.
17 SECTION 13. That Section 28-7-503, Idaho Code, be, and the same is hereby
18 amended to read as follows:
19 28-7-503. DOCUMENT OF TITLE TO GOODS DEFEATED IN CERTAIN CASES. (1) A
20 document of title confers no right in goods against a person who before issu-
21 ance of the document had a legal interest or a perfected security interest in
22 them and who neither:
23 (a) dDelivered or entrusted them or any document of title covering them
24 to the bailor or his nominee with actual or apparent authority to ship,
25 store or sell or with power to obtain delivery under this chapter (section
26 28-7-403) or with power of disposition under this act (sections 28-2-403
27 and 28-9-30720) or other statute or rule of law; nor
28 (b) aAcquiesced in the procurement by the bailor or his nominee of any
29 document of title.
30 (2) Title to goods based upon an unaccepted delivery order is subject to
31 the rights of anyone to whom a negotiable warehouse receipt or bill of lading
32 covering the goods has been duly negotiated. Such a title may be defeated
33 under the next section 28-7-504, Idaho Code, to the same extent as the rights
34 of the issuer or a transferee from the issuer.
35 (3) Title to goods based upon a bill of lading issued to a freight for-
36 warder is subject to the rights of anyone to whom a bill issued by the freight
37 forwarder is duly negotiated; but delivery by the carrier in accordance with
38 Ppart 4 of this chapter pursuant to its own bill of lading discharges the
39 carrier's obligation to deliver.
40 SECTION 14. That Section 28-8-103, Idaho Code, be, and the same is hereby
41 amended to read as follows:
42 28-8-103. RULES FOR DETERMINING WHETHER CERTAIN OBLIGATIONS AND INTERESTS
43 ARE SECURITIES OR FINANCIAL ASSETS. (1) A share or similar equity interest
44 issued by a corporation, business trust, joint stock company or similar entity
45 is a security.
46 (2) An "investment company security" is a security. "Investment company
47 security" means a share or similar equity interest issued by an entity that is
48 registered as an investment company under the federal investment company laws,
49 an interest in a unit investment trust that is so registered, or a face-amount
50 certificate issued by a face-amount certificate company that is so registered.
51 Investment company security does not include an insurance policy or endowment
100
1 policy or annuity contract issued by an insurance company.
2 (3) An interest in a partnership or limited liability company is not a
3 security unless it is dealt in or traded on securities exchanges or in securi-
4 ties markets, its terms expressly provide that it is a security governed by
5 this chapter, or it is an investment company security. However, an interest
6 in a partnership or limited liability company is a financial asset if it is
7 held in a securities account.
8 (4) A writing that is a security certificate is governed by this chapter
9 and not by chapter 3, title 28, even though it also meets the requirements of
10 chapter 3, title 28. However, a negotiable instrument governed by chapter 3,
11 title 28, is a financial asset if it is held in a securities account.
12 (5) An option or similar obligation issued by a clearing corporation to
13 its participants is not a security, but is a financial asset.
14 (6) A commodity contract, as defined in section 28-9-11502(a)(15), is not
15 a security or a financial asset.
16 SECTION 15. That Section 28-8-106, Idaho Code, be, and the same is hereby
17 amended to read as follows:
18 28-8-106. CONTROL. (1) A purchaser has "control" of a certificated secu-
19 rity in bearer form if the certificated security is delivered to the pur-
20 chaser.
21 (2) A purchaser has "control" of a certificated security in registered
22 form if the certificated security is delivered to the purchaser, and:
23 (a) The certificate is indorsed to the purchaser or in blank by an effec-
24 tive indorsement; or
25 (b) The certificate is registered in the name of the purchaser, upon
26 original issue or registration of transfer by the issuer.
27 (3) A purchaser has "control" of an uncertificated security if:
28 (a) The uncertificated security is delivered to the purchaser; or
29 (b) The issuer has agreed that it will comply with instructions origi-
30 nated by the purchaser without further consent by the registered owner.
31 (4) A purchaser has "control" of a security entitlement if:
32 (a) The purchaser becomes the entitlement holder; or
33 (b) The securities intermediary has agreed that it will comply with enti-
34 tlement orders originated by the purchaser without further consent by the
35 entitlement holder; or
36 (c) Another person has control of the security entitlement on behalf of
37 the purchaser or, having previously acquired control of the security enti-
38 tlement, acknowledges that it has control on behalf of the purchaser.
39 (5) If an interest in a security entitlement is granted by the entitle-
40 ment holder to the entitlement holder's own securities intermediary, the secu-
41 rities intermediary has control.
42 (6) A purchaser who has satisfied the requirements of subsection (3)(b)
43 or (4)(b) of this section has control, even if the registered owner in the
44 case of subsection (3)(b) of this section, or the entitlement holder in the
45 case of subsection (4)(b) of this section, retains the right to make substitu-
46 tions for the uncertificated security or security entitlement, to originate
47 instructions or entitlement orders to the issuer or securities intermediary,
48 or otherwise to deal with the uncertificated security or security entitlement.
49 (7) An issuer or a securities intermediary may not enter into an agree-
50 ment of the kind described in subsection (3)(b) or (4)(b) of this section
51 without the consent of the registered owner or entitlement holder, but an
52 issuer or a securities intermediary is not required to enter into such an
53 agreement even though the registered owner or entitlement holder so directs.
101
1 An issuer or securities intermediary that has entered into such an agreement
2 is not required to confirm the existence of the agreement to another party
3 unless requested to do so by the registered owner or entitlement holder.
4 SECTION 16. That Section 28-8-110, Idaho Code, be, and the same is hereby
5 amended to read as follows:
6 28-8-110. APPLICABILITY AND CHOICE OF LAW. (1) The local law of the
7 issuer's jurisdiction, as specified in subsection (4) of this section, gov-
8 erns:
9 (a) The validity of a security;
10 (b) The rights and duties of the issuer with respect to registration of
11 transfer;
12 (c) The effectiveness of registration of transfer by the issuer;
13 (d) Whether the issuer owes any duties to an adverse claimant to a secu-
14 rity; and
15 (e) Whether an adverse claim can be asserted against a person to whom
16 transfer of a certificated or uncertificated security is registered or a
17 person who obtains control of an uncertificated security.
18 (2) The local law of the securities intermediary's jurisdiction, as spec-
19 ified in subsection (5) of this section, governs:
20 (a) Acquisition of a security entitlement from the securities intermedi-
21 ary;
22 (b) The rights and duties of the securities intermediary and entitlement
23 holder arising out of a security entitlement;
24 (c) Whether the securities intermediary owes any duties to an adverse
25 claimant to a security entitlement; and
26 (d) Whether an adverse claim can be asserted against a person who
27 acquires a security entitlement from the securities intermediary or a per-
28 son who purchases a security entitlement or interest therein from an enti-
29 tlement holder.
30 (3) The local law of the jurisdiction in which a security certificate is
31 located at the time of delivery governs whether an adverse claim can be
32 asserted against a person to whom the security certificate is delivered.
33 (4) "Issuer's jurisdiction" means the jurisdiction under which the issuer
34 of the security is organized or, if permitted by the law of that jurisdiction,
35 the law of another jurisdiction specified by the issuer. An issuer organized
36 under the law of this state may specify the law of another jurisdiction as the
37 law governing the matters specified in subsections (1)(b) through (1)(e) of
38 this section.
39 (5) The following rules determine a "securities intermediary's jurisdic-
40 tion" for purposes of this section:
41 (a) If an agreement between the securities intermediary and its entitle-
42 ment holder specifies that it is governed by the law of a particular
43 jurisdiction governing the securities account expressly provides that a
44 particular jurisdiction is the securities intermediary's jurisdiction for
45 purposes of this part, this chapter, or this act, that jurisdiction is the
46 securities intermediary's jurisdiction.
47 (b) If paragraph (a) of this subsection does not apply and an agreement
48 between the securities intermediary and its entitlement holder governing
49 the securities account expressly provides that the agreement is governed
50 by the law of a particular jurisdiction, that jurisdiction is the securi-
51 ties intermediary's jurisdiction.
52 (c) If neither paragraph (a) nor paragraph (b) of this section applies
53 and an agreement between the securities intermediary and its entitlement
102
1 holder does not specify the governing law as provided in paragraph (a) of
2 this subsection, but governing the securities account expressly specifies
3 provides that the securities account is maintained at an office in a par-
4 ticular jurisdiction, that jurisdiction is the securities intermediary's
5 jurisdiction.
6 (cd) If an agreement between the securities intermediary and its entitle-
7 ment holder does not specify a jurisdiction as provided in paragraph (a)
8 or (b) of this subsection none of the preceding paragraphs apply, the
9 securities intermediary's jurisdiction is the jurisdiction in which is
10 located the office identified in an account statement as the office serv-
11 ing the entitlement holder's account is located.
12 (de) If an agreement between the securities intermediary and its entitle-
13 ment holder does not specify a jurisdiction as provided in paragraph (a)
14 or (b) of this subsection, and an account statement does not identify an
15 office serving the entitlement holder's account as provided in paragraph
16 (c) of this subsection none of the preceding paragraphs apply, the securi-
17 ties intermediary's jurisdiction is the jurisdiction in which is located
18 the chief executive office of the securities intermediary is located.
19 (6) A securities intermediary's jurisdiction is not determined by the
20 physical location of certificates representing financial assets, or by the
21 jurisdiction in which is organized the issuer of the financial asset with
22 respect to which an entitlement holder has a security entitlement, or by the
23 location of facilities for data processing or other record keeping recordkeep-
24 ing concerning the account.
25 SECTION 17. That Section 28-8-301, Idaho Code, be, and the same is hereby
26 amended to read as follows:
27 28-8-301. DELIVERY. (1) Delivery of a certificated security to a pur-
28 chaser occurs when:
29 (a) The purchaser acquires possession of the security certificate;
30 (b) Another person, other than a securities intermediary, either acquires
31 possession of the security certificate on behalf of the purchaser or, hav-
32 ing previously acquired possession of the certificate, acknowledges that
33 it holds for the purchaser; or
34 (c) A securities intermediary acting on behalf of the purchaser acquires
35 possession of the security certificate, only if the certificate is in reg-
36 istered form and has been is: (i) registered in the name of the purchaser,
37 (ii) payable to the order of the purchaser, or (iii) specially indorsed to
38 the purchaser by an effective indorsement and has not been indorsed to the
39 securities intermediary or in blank.
40 (2) Delivery of an uncertificated security to a purchaser occurs when:
41 (a) The issuer registers the purchaser as the registered owner, upon
42 original issue or registration of transfer; or
43 (b) Another person, other than a securities intermediary, either becomes
44 the registered owner of the uncertificated security on behalf of the pur-
45 chaser or, having previously become the registered owner, acknowledges
46 that it holds for the purchaser.
47 SECTION 18. That Section 28-8-302, Idaho Code, be, and the same is hereby
48 amended to read as follows:
49 28-8-302. RIGHTS OF PURCHASER. (1) Except as otherwise provided in sub-
50 sections (2) and (3) of this section, upon delivery a purchaser of a certifi-
51 cated or uncertificated security to a purchaser, the purchaser acquires all
103
1 rights in the security that the transferor had or had power to transfer.
2 (2) A purchaser of a limited interest acquires rights only to the extent
3 of the interest purchased.
4 (3) A purchaser of a certificated security who as a previous holder had
5 notice of an adverse claim does not improve its position by taking from a pro-
6 tected purchaser.
7 SECTION 19. That Section 28-8-510, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 28-8-510. RIGHTS OF PURCHASER OF SECURITY ENTITLEMENT FROM ENTITLEMENT
10 HOLDER. (1) In a case not covered by the priority rules in chapter 9, title
11 28, Idaho Code, or the rules stated in subsection (3) of this section, aAn
12 action based on an adverse claim to a financial asset or security entitlement,
13 whether framed in conversion, replevin, constructive trust, equitable lien, or
14 other theory, may not be asserted against a person who purchases a security
15 entitlement, or an interest therein, from an entitlement holder if the pur-
16 chaser gives value, does not have notice of the adverse claim, and obtains
17 control.
18 (2) If an adverse claim could not have been asserted against an entitle-
19 ment holder under section 28-8-502, the adverse claim cannot be asserted
20 against a person who purchases a security entitlement, or an interest therein,
21 from the entitlement holder.
22 (3) In a case not covered by the priority rules in chapter 9, title 28,
23 Idaho Code, a purchaser for value of a security entitlement, or an interest
24 therein, who obtains control has priority over a purchaser of a security enti-
25 tlement, or an interest therein, who does not obtain control. Except as other-
26 wise provided in subsection (4) of this section, pPurchasers who have control
27 rank equally, except that a according to priority in time of:
28 (a) The purchaser's becoming the person for whom the securities account,
29 in which the security entitlement is carried, is maintained, if the pur-
30 chaser obtained control under section 28-8-106(4)(a);
31 (b) The securities intermediary's agreement to comply with the
32 purchaser's entitlement orders with respect to security entitlements car-
33 ried or to be carried in the securities account in which the security
34 entitlement is carried, if the purchaser obtained control under section
35 28-8-106(4)(b); or
36 (c) If the purchaser obtained control through another person under sec-
37 tion 28-8-106(4)(c), the time on which priority would be based under this
38 subsection if the other person were the secured party.
39 (4) A securities intermediary as purchaser has priority over a conflict-
40 ing purchaser who has control unless otherwise agreed by the securities inter-
41 mediary.
42 SECTION 20. That Section 28-12-103, Idaho Code, be, and the same is
43 hereby amended to read as follows:
44 28-12-103. DEFINITIONS AND INDEX OF DEFINITIONS. (1) In this chapter
45 unless the context otherwise requires:
46 (a) "Buyer in ordinary course of business" means a person who in good
47 faith and without knowledge that the sale to him is in violation of the
48 ownership rights or security interest or leasehold interest of a third
49 party in the goods, buys in ordinary course from a person in the business
50 of selling goods of that kind but does not include a pawnbroker. "Buying"
51 may be for cash or by exchange of other property or on secured or unse-
104
1 cured credit and includes receiving goods or documents of title under a
2 pre-existing preexisting contract for sale but does not include a transfer
3 in bulk or as security for or in total or partial satisfaction of a money
4 debt.
5 (b) "Cancellation" occurs when either party puts an end to the lease con-
6 tract for default by the other party.
7 (c) "Commercial unit" means such a unit of goods as by commercial usage
8 is a single whole for purposes of lease and division of which materially
9 impairs its character or value on the market or in use. A commercial unit
10 may be a single article, as a machine, or a set of articles, as a suite of
11 furniture or a line of machinery, or a quantity, as a gross or carload, or
12 any other unit treated in use or in the relevant market as a single whole.
13 (d) "Conforming" goods or performance under a lease contract means goods
14 or performance that are in accordance with the obligations under the lease
15 contract.
16 (e) "Consumer lease" means a lease that a lessor regularly engaged in the
17 business of leasing or selling makes to a lessee who is an individual and
18 who takes under the lease primarily for a personal, family or household
19 purpose, if the total payments to be made under the lease contract,
20 excluding payments for options to renew or buy, do not exceed twenty-five
21 thousand dollars ($25,000).
22 (f) "Fault" means wrongful act, omission, breach or default.
23 (g) "Finance lease" means a lease with respect to which:
24 (i) The lessor does not select, manufacture, or supply the goods;
25 (ii) The lessor acquires the goods or the right to possession and
26 use of the goods in connection with the lease; and
27 (iii) One of the following occurs:
28 (A) The lessee receives a copy of the contract by which the
29 lessor acquired the goods or the right to possession and use of
30 the goods before signing the lease contract;
31 (B) The lessee's approval of the contract by which the lessor
32 acquired the goods or the right to possession and use of the
33 goods is a condition to effectiveness of the lease contract;
34 (C) The lessee, before signing the lease contract, receives an
35 accurate and complete statement designating the promises and
36 warranties, and any disclaimers of warranties, limitations or
37 modifications of remedies, or liquidated damages, including
38 those of a third party, such as the manufacturer of the goods,
39 provided to the lessor by the person supplying the goods in con-
40 nection with or as part of the contract by which the lessor
41 acquired the goods or the right to possession and use of the
42 goods; or
43 (D) If the lease is not a consumer lease, the lessor, before
44 the lessee signs the lease contract, informs the lessee in writ-
45 ing:
46 a. Of the identity of the person supplying the goods to
47 the lessor, unless the lessee has selected that person and
48 directed the lessor to acquire the goods or the right to
49 possession and use of the goods from that person;
50 b. That the lessee is entitled under this article chapter
51 to the promises and warranties, including those of any
52 third party, provided to the lessor by the person supplying
53 the goods in connection with or as part of the contract by
54 which the lessor acquired the goods or the right to posses-
55 sion and use of the goods; and
105
1 c. That the lessee may communicate with the person supply-
2 ing the goods to the lessor and receive an accurate and
3 complete statement of those promises and warranties,
4 including any disclaimers and limitations of them or of
5 remedies.
6 (h) "Goods" means all things that are movable at the time of identifica-
7 tion to the lease contract, or are fixtures (section 28-12-309), but the
8 term does not include money, documents, instruments, accounts, chattel
9 paper, general intangibles, or minerals or the like, including oil and
10 gas, before extraction. The term also includes the unborn young of ani-
11 mals.
12 (i) "Installment lease contract" means a lease contract that authorizes
13 or requires the delivery of goods in separate lots to be separately
14 accepted, even though the lease contract contains a clause "each delivery
15 is a separate lease" or its equivalent.
16 (j) "Lease" means a transfer of the right to possession and use of goods
17 for a term in return for consideration, but a sale, including a sale on
18 approval or a sale or return, or retention or creation of a security
19 interest is not a lease. Unless the context clearly indicates otherwise,
20 the term includes a sublease.
21 (k) "Lease agreement" means the bargain, with respect to the lease, of
22 the lessor and the lessee in fact as found in their language or by impli-
23 cation from other circumstances including course of dealing or usage of
24 trade or course of performance as provided in this chapter. Unless the
25 context clearly indicates otherwise, the term includes a sublease agree-
26 ment.
27 (l) "Lease contract" means the total legal obligation that results from
28 the lease agreement as affected by this chapter and any other applicable
29 rules of law. Unless the context clearly indicates otherwise, the term
30 includes a sublease contract.
31 (m) "Leasehold interest" means the interest of the lessor or the lessee
32 under a lease contract.
33 (n) "Lessee" means a person who acquires the right to possession and use
34 of goods under a lease. Unless the context clearly indicates otherwise,
35 the term includes a sublessee.
36 (o) "Lessee in ordinary course of business" means a person who in good
37 faith and without knowledge that the lease to him is in violation of the
38 ownership rights or security interest or leasehold interest of a third
39 party in the goods leases in ordinary course from a person in the business
40 of selling or leasing goods of that kind but does not include a pawnbro-
41 ker. "Leasing" may be for cash or by exchange of other property or on
42 secured or unsecured credit and includes receiving goods or documents of
43 title under a pre-existing preexisting lease contract but does not include
44 a transfer in bulk or as security for or in total or partial satisfaction
45 of a money debt.
46 (p) "Lessor" means a person who transfers the right to possession and use
47 of goods under a lease. Unless the context clearly indicates otherwise,
48 the term includes a sublessor.
49 (q) "Lessor's residual interest" means the lessor's interest in the goods
50 after expiration, termination or cancellation of the lease contract.
51 (r) "Lien" means a charge against or interest in goods to secure payment
52 of a debt or performance of an obligation, but the term does not include a
53 security interest.
54 (s) "Lot" means a parcel or a single article that is the subject matter
55 of a separate lease or delivery, whether or not it is sufficient to per-
106
1 form the lease contract.
2 (t) "Merchant lessee" means a lessee that is a merchant with respect to
3 goods of the kind subject to the lease.
4 (u) "Present value" means the amount as of a date certain of one (1) or
5 more sums payable in the future, discounted to the date certain. The dis-
6 count is determined by the interest rate specified by the parties if the
7 rate was not manifestly unreasonable at the time the transaction was
8 entered into; otherwise, the discount is determined by a commercially rea-
9 sonable rate that takes into account the facts and circumstances of each
10 case at the time the transaction was entered into.
11 (v) "Purchase" includes taking by sale, lease, mortgage, security inter-
12 est, pledge, gift or any other voluntary transaction creating an interest
13 in goods.
14 (w) "Sublease" means a lease of goods the right to possession and use of
15 which was acquired by the lessor as a lessee under an existing lease.
16 (x) "Supplier" means a person from whom a lessor buys or leases goods to
17 be leased under a finance lease.
18 (y) "Supply contract" means a contract under which a lessor buys or
19 leases goods to be leased.
20 (z) "Termination" occurs when either party pursuant to a power created by
21 agreement or law puts an end to the lease contract otherwise than for
22 default.
23 (2) Other definitions applying to this chapter and the sections in which
24 they appear are:
25 "Accessions." Section 28-12-310(1).
26 "Construction mortgage." Section 28-12-309(1)(d).
27 "Encumbrance." Section 28-12-309(1)(e).
28 "Fixtures." Section 28-12-309(1)(a).
29 "Fixture filing." Section 28-12-309(1)(b).
30 "Purchase money lease." Section 28-12-309(1)(c).
31 (3) The following definitions in other chapters apply to this chapter:
32 "Account." Section 28-9-1062(a)(2).
33 "Between merchants." Section 28-2-104(3).
34 "Buyer." Section 28-2-103(1)(a).
35 "Chattel paper." Section 28-9-1052(1a)(b11).
36 "Consumer goods." Section 28-9-1092(1a)(23).
37 "Document." Section 28-9-1052(1a)(f30).
38 "Entrusting." Section 28-2-403(3).
39 "General intangibles." Section 28-9-1062(a)(42).
40 "Good faith." Section 28-1-201(19).
41 "Instrument." Section 28-9-1052(1a)(i47).
42 "Merchant." Section 28-2-104(1).
43 "Mortgage." Section 28-9-1052(1a)(j55).
44 "Pursuant to commitment." Section 28-9-1052(1a)(k68).
45 "Receipt." Section 28-2-103(1)(c).
46 "Sale." Section 28-2-106(1).
47 "Sale on approval." Section 28-2-326.
48 "Sale or return." Section 28-2-326.
49 "Seller." Section 28-2-103(1)(d).
50 (4) In addition, chapter 1, title 28, contains general definitions and
51 principles of construction and interpretation applicable throughout this chap-
52 ter.
53 SECTION 21. That Section 28-12-303, Idaho Code, be, and the same is
54 hereby amended to read as follows:
107
1 28-12-303. ALIENABILITY OF PARTY'S INTEREST UNDER LEASE CONTRACT OR OR OF
2 LESSOR'S RESIDUAL INTEREST IN GOODS -- DELEGATION OF PERFORMANCE -- TRANSFER
3 OF RIGHTS. (1) As used in this section, "creation of a security interest"
4 includes the sale of a lease contract that is subject to chapter 9, title 28,
5 Idaho Code, secured transactions, by reason of section 28-9-10 29(1a)(b3).
6 (2) Except as provided in subsections (3) and (4) of this section and
7 section 28-9-407, a provision in a lease agreement which: (i) prohibits the
8 voluntary or involuntary transfer, including a transfer by sale, sublease,
9 creation or enforcement of a security interest, or attachment, levy, or other
10 judicial process, of an interest of a party under the lease contract or of the
11 lessor's residual interest in the goods, or (ii) makes such a transfer an
12 event of default, gives rise to the rights and remedies provided in subsection
13 (54) of this section, but a transfer that is prohibited or is an event of
14 default under the lease agreement is otherwise effective.
15 (3) A provision in a lease agreement which (i) prohibits the creation or
16 enforcement of a security interest in an interest of a party under the lease
17 contract or in the lessor's residual interest in the goods, or (ii) makes such
18 a transfer an event of default, is not enforceable unless, and then only to
19 the extent that, there is an actual transfer by the lessee of the lessee's
20 right of possession or use of the goods in violation of the provision or an
21 actual delegation of a material performance of either party to the lease con-
22 tract in violation of the provision. Neither the granting nor the enforcement
23 of a security interest in (i) the lessor's interest under the lease contract
24 or (ii) the lessor's residual interest in the goods is a transfer that materi-
25 ally impairs the prospect of obtaining return performance by, materially
26 changes the duty of, or materially increases the burden or risk imposed on,
27 the lessee within the purview of subsection (5) of this section unless, and
28 then only to the extent that, there is an actual delegation of a material per-
29 formance of the lessor.
30 (4) A provision in a lease agreement which: (i) prohibits a transfer of a
31 right to damages for default with respect to the whole lease contract or of a
32 right to payment arising out of the transferor's due performance of the
33 transferor's entire obligation, or (ii) makes such a transfer an event of
34 default, is not enforceable, and such a transfer is not a transfer that mate-
35 rially impairs the prospect of obtaining return performance by, materially
36 changes the duty of, or materially increases the burden or risk imposed on,
37 the other party to the lease contract within the purview of subsection (54) of
38 this section.
39 (54) Subject to the provisions of subsections (3) and (4) of this section
40 and section 28-9-407:
41 (a) If a transfer is made which is made an event of default under a lease
42 agreement, the party to the lease contract not making the transfer, unless
43 that party waives the default or otherwise agrees, has the rights and
44 remedies described in section 28-12-501(2);
45 (b) If paragraph (a) of this subsection is not applicable and if a trans-
46 fer is made that: (i) is prohibited under a lease agreement or (ii) mate-
47 rially impairs the prospect of obtaining return performance by, materially
48 changes the duty of, or materially increases the burden or risk imposed
49 on, the other party to the lease contract, unless the party not making the
50 transfer agrees at any time to the transfer in the lease contract or
51 otherwise, then, except as limited by contract, (i) the transferor is lia-
52 ble to the party not making the transfer for damages caused by the trans-
53 fer to the extent that the damages could not reasonably be prevented by
54 the party not making the transfer and (ii) a court having jurisdiction
55 may grant other appropriate relief, including cancellation of the lease
108
1 contract or an injunction against the transfer.
2 (65) A transfer of "the lease" or of "all my rights under the lease,",
3 or a transfer in similar general terms, is a transfer of rights and, unless
4 the language or the circumstances, as in a transfer for security, indicate the
5 contrary, the transfer is a delegation of duties by the transferor to the
6 transferee. Acceptance by the transferee constitutes a promise by the trans-
7 feree to perform those duties. The promise is enforceable by either the trans-
8 feror or the other party to the lease contract.
9 (76) Unless otherwise agreed by the lessor and the lessee, a delegation
10 of performance does not relieve the transferor as against the other party of
11 any duty to perform or of any liability for default.
12 (87) In a consumer lease, to prohibit the transfer of an interest of a
13 party under the lease contract or to make a transfer an event of default, the
14 language must be specific, by a writing, and conspicuous.
15 SECTION 22. That Section 28-12-307, Idaho Code, be, and the same is
16 hereby amended to read as follows:
17 28-12-307. PRIORITY OF LIENS ARISING BY ATTACHMENT OR LEVY ON, SECURITY
18 INTERESTS IN, AND OTHER CLAIMS TO GOODS. (1) Except as otherwise provided in
19 section 28-12-306, a creditor of a lessee takes subject to the lease contract.
20 (2) Except as otherwise provided in subsections (3) and (4) of this sec-
21 tion and in sections 28-12-306 and 28-12-308, a creditor of a lessor takes
22 subject to the lease contract unless:
23 (a) Tthe creditor holds a lien that attached to the goods before the
24 lease contract became enforceable;
25 (b) The creditor holds a security interest in the goods and the lessee
26 did not give value and receive delivery of the goods without knowledge of
27 the security interest; or
28 (c) The creditor holds a security interest in the goods which was per-
29 fected (section 28-9-303) before the lease contract became enforceable.
30 (3) A lessee in the ordinary course of business takes the leasehold
31 interest free of a security interest in the goods created by the lessor even
32 though the security interest is perfected (section 28-9-303) and the lessee
33 knows of its existence.
34 (4) A lessee other than a lessee in the ordinary course of business takes
35 the leasehold interest free of a security interest to the extent that it
36 secures future advances made after the secured party acquires knowledge of the
37 lease or more than forty-five (45) days after the lease contract becomes
38 enforceable, whichever first occurs, unless the future advances are made pur-
39 suant to a commitment entered into without knowledge of the lease and before
40 the expiration of the forty-five (45) day period.
41 (3) Except as otherwise provided in sections 28-9-317, 28-9-321 and
42 28-9-323, a lessee takes a leasehold interest subject to a security interest
43 held by a creditor of the lessor.
44 SECTION 23. That Section 28-12-309, Idaho Code, be, and the same is
45 hereby amended to read as follows:
46 28-12-309. LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS BECOME FIXTURES. (1)
47 In this section:
48 (a) Goods are "fixtures" when they become so related to particular real
49 estate that an interest in them arises under real estate law;
50 (b) A "fixture filing" is the filing, in the office where a record of a
51 mortgage on the real estate would be filed or recorded, of a financing
109
1 statement covering goods that are or are to become fixtures and conforming
2 to the requirements of section 28-9-4502(5a) and (b);
3 (c) A lease is a "purchase money lease" unless the lessee has possession
4 or use of the goods or the right to possession or use of the goods before
5 the lease agreement is enforceable;
6 (d) A mortgage is a "construction mortgage" to the extent it secures an
7 obligation incurred for the construction of an improvement on land includ-
8 ing the acquisition cost of the land, if the recorded writing so indi-
9 cates; and
10 (e) "Encumbrance" includes real estate mortgages and other liens on real
11 estate and all other rights in real estate that are not ownership inter-
12 ests.
13 (2) Under this chapter a lease may be of goods that are fixtures or may
14 continue in goods that become fixtures, but no lease exists under this chapter
15 of ordinary building materials incorporated into an improvement on land.
16 (3) The provisions of this chapter do not prevent creation of a lease of
17 fixtures pursuant to real estate law.
18 (4) The perfected interest of a lessor of fixtures has priority over a
19 conflicting interest of an encumbrancer or owner of the real estate if:
20 (a) The lease is a purchase money lease, the conflicting interest of the
21 encumbrancer or owner arises before the goods become fixtures, the inter-
22 est of the lessor is perfected by a fixture filing before the goods become
23 fixtures or within ten (10) days thereafter, and the lessee has an inter-
24 est of record in the real estate or is in possession of the real estate;
25 or
26 (b) The interest of the lessor is perfected by a fixture filing before
27 the interest of the encumbrancer or owner is of record, the lessor's
28 interest has priority over any conflicting interest of a predecessor in
29 title of the encumbrancer or owner, and the lessee has an interest of
30 record in the real estate or is in possession of the real estate.
31 (5) The interest of a lessor of fixtures, whether or not perfected, has
32 priority over the conflicting interest of an encumbrancer or owner of the real
33 estate if:
34 (a) The fixtures are readily removable factory or office machines,
35 readily removable equipment that is not primarily used or leased for use
36 in the operation of the real estate, or readily removable replacements of
37 domestic appliances that are goods subject to a consumer lease, and before
38 the goods become fixtures the lease contract is enforceable; or
39 (b) The conflicting interest is a lien on the real estate obtained by
40 legal or equitable proceedings after the lease contract is enforceable; or
41 (c) The encumbrancer or owner has consented in writing to the lease or
42 has disclaimed an interest in the goods as fixtures; or
43 (d) The lessee has a right to remove the goods as against the encum-
44 brancer or owner. If the lessee's right to remove terminates, the priority
45 of the interest of the lessor continues for a reasonable time.
46 (6) Notwithstanding the provisions of subsection (4)(a) of this section
47 but otherwise subject to the provisions of subsections (4) and (5) of this
48 section, the interest of a lessor of fixtures, including the lessor's residual
49 interest, is subordinate to the conflicting interest of an encumbrancer of the
50 real estate under a construction mortgage recorded before the goods become
51 fixtures if the goods become fixtures before the completion of the construc-
52 tion. To the extent given to refinance a construction mortgage, the conflict-
53 ing interest of an encumbrancer of the real estate under a mortgage has this
54 priority to the same extent as the encumbrancer of the real estate under the
55 construction mortgage.
110
1 (7) In cases not within the preceding subsections, priority between the
2 interest of a lessor of fixtures, including the lessor's residual interest,
3 and the conflicting interest of an encumbrancer or owner of the real estate
4 who is not the lessee is determined by the priority rules governing conflict-
5 ing interests in real estate.
6 (8) If the interest of a lessor of fixtures, including the lessor's
7 residual interest, has priority over all conflicting interests of all owners
8 and encumbrancers of the real estate, the lessor or the lessee may: (i) on
9 default, expiration, termination, or cancellation of the lease agreement but
10 subject to the lease agreement and this chapter, or (ii) if necessary to
11 enforce his other rights and remedies of the lessor or lessee under this chap-
12 ter, remove the goods from the real estate, free and clear of all conflicting
13 interests of all owners and encumbrancers of the real estate, but the lessor
14 or lessee must reimburse any encumbrancer or owner of the real estate who is
15 not the lessee and who has not otherwise agreed for the cost of repair of any
16 physical injury, but not for any diminution in value of the real estate caused
17 by the absence of the goods removed or by any necessity of replacing them. A
18 person entitled to reimbursement may refuse permission to remove until the
19 party seeking removal gives adequate security for the performance of this
20 obligation.
21 (9) Even though the lease agreement does not create a security interest,
22 the interest of a lessor of fixtures, including the lessor's residual inter-
23 est, is perfected by filing a financing statement as a fixture filing for
24 leased goods that are or are to become fixtures in accordance with the rele-
25 vant provisions of the chapter on secured transactions (chapter 9, title 28,
26 Idaho Code).
27 SECTION 24. That Section 28-50-116, Idaho Code, be, and the same is
28 hereby amended to read as follows:
29 28-50-116. TRANSFERABLE RECORD. (a) In this section, "transferable
30 record" means an electronic record that:
31 (1) Would be a note under chapter 3, title 28, Idaho Code (uniform com-
32 mercial code -- negotiable instruments) or a document under chapter 7,
33 title 28, Idaho Code (uniform commercial code -- warehouse receipts, bills
34 of lading and other documents of title) if the electronic record were in
35 writing; and
36 (2) The issuer of the electronic record expressly has agreed is a trans-
37 ferable record.
38 (b) A person has control of a transferable record if a system employed
39 for evidencing the transfer of interests in the transferable record reliably
40 establishes that person as the person to which the transferable record was
41 issued or transferred.
42 (c) A system satisfies subsection (b) of this section, and a person is
43 deemed to have control of a transferable record, if the transferable record is
44 created, stored and assigned in such a manner that:
45 (1) A single authoritative copy of the transferable record exists which
46 is unique, identifiable, and, except as otherwise provided in paragraphs
47 (4), (5) and (6) of this subsection, unalterable;
48 (2) The authoritative copy identifies the person asserting control as:
49 (A) The person to which the transferable record was issued; or
50 (B) If the authoritative copy indicates that the transferable record
51 has been transferred, the person to which the transferable record was
52 most recently transferred;
53 (3) The authoritative copy is communicated to and maintained by the per-
111
1 son asserting control or its designated custodian;
2 (4) Copies or revisions that add or change an identified assignee of the
3 authoritative copy can be made only with the consent of the person assert-
4 ing control;
5 (5) Each copy of the authoritative copy and any copy of a copy is readily
6 identifiable as a copy that is not the authoritative copy; and
7 (6) Any revision of the authoritative copy is readily identifiable as
8 authorized or unauthorized.
9 (d) Except as otherwise agreed, a person having control of a transferable
10 record is the holder, as defined in section 28-1-201(20), Idaho Code, of the
11 transferable record and has the same rights and defenses as a holder of an
12 equivalent record or writing under chapters 1 through 12, title 28, Idaho Code
13 (uniform commercial code), including, if the applicable statutory requirements
14 under section 28-3-302(1), 28-7-501 or 28-9-30830, Idaho Code, are satisfied,
15 the rights and defenses of a holder in due course, a holder to which a nego-
16 tiable document of title has been duly negotiated, or a purchaser, respec-
17 tively. Delivery, possession and indorsement are not required to obtain or
18 exercise any of the rights under this subsection.
19 (e) Except as otherwise agreed, an obligor under a transferable record
20 has the same rights and defenses as an equivalent obligor under equivalent
21 records or writings under chapters 1 through 12, title 28, Idaho Code (uniform
22 commercial code).
23 (f) If requested by a person against which enforcement is sought, the
24 person seeking to enforce the transferable record shall provide reasonable
25 proof that the person is in control of the transferable record. Proof may
26 include access to the authoritative copy of the transferable record and
27 related business records sufficient to review the terms of the transferable
28 record and to establish the identity of the person having control of the
29 transferable record.
30 SECTION 25. That Chapter 3, Title 45, Idaho Code, be, and the same is
31 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
32 ignated as Section 45-318, Idaho Code, and to read as follows:
33 45-318. APPLICABILITY OF UNIFORM COMMERCIAL CODE. The liens provided for
34 by this chapter are "agricultural liens" as defined in section 28-9-102, Idaho
35 Code. The perfection and effect of perfection or nonperfection of the liens
36 provided by this chapter are governed by uniform commercial code article 9,
37 secured transactions (chapter 9, title 28, Idaho Code). In the event of any
38 conflict between the provisions of this chapter relating to perfection and the
39 effect of perfection or nonperfection of any lien provided by this chapter and
40 the provisions of chapter 9, title 28, Idaho Code, relating to those same
41 issues, the provisions of chapter 9, title 28, Idaho Code, shall prevail.
42 SECTION 26. That Section 8-506A, Idaho Code, be, and the same is hereby
43 amended to read as follows:
44 8-506A. ATTACHMENT OF A DEBTOR'S INTEREST IN PERSONAL PROPERTY SUBJECT TO
45 SECURITY AGREEMENT -- ATTACHMENT OF DEFENDANT'S INTEREST IN MORTGAGE OR TRUST
46 DEED -- ATTACHMENT OF DEFENDANT'S INTEREST IN SECURITY AGREEMENT. Personal
47 property subject to a security interest, a defendant's equity of redemption in
48 personal property and a defendant's interest in a real estate mortgage or deed
49 of trust or as secured party under a security agreement may be attached by
50 the following methods, and no other:
51 (a) Personal property capable of manual delivery may be attached by tak-
112
1 ing possession, provided all secured parties with a perfected security inter-
2 est therein under the Idaho Uuniform Ccommercial Ccode consent thereto in
3 writing, and the attachment shall be subject to the rights of any secured
4 party under a perfected security agreement, but otherwise would be to the same
5 effect and in the same manner as if the property were not subject to the secu-
6 rity agreement.
7 (b) If any secured party with a perfected security interest does not con-
8 sent in writing that the sheriff take possession of the personal property, the
9 attaching creditor must pay or tender to the secured party the amount due on
10 the security agreement before the officer may take the property into posses-
11 sion. The attaching creditor upon so redeeming shall be subrogated to the
12 rights of the secured party under the security agreement, and the secured
13 party shall, upon payment or tender assign the security agreement, note or
14 notes so paid, and any filed financing statements to the attaching creditor.
15 Upon any sale by judicial proceedings, any amounts owing to the attaching
16 creditor on the security agreement so redeemed, with lawful interest thereon,
17 shall first be paid to the attaching creditor.
18 (c) If the attaching creditor so elects and instructs the sheriff, the
19 equity of redemption of the defendant in the personal property subject to a
20 perfected security agreement shall be attached. Such attachment is made by
21 serving upon the secured party, upon the defendant, and upon the person in
22 possession of the property, if other than the defendant or secured party, if
23 said parties can be found within the county where the property is situated, a
24 copy of the writ of attachment, together with a notice signed by the sheriff,
25 describing the property attached, giving the name of the secured party, and
26 stating the interest of the defendant in the property attached, and by causing
27 the notice to be filed in the office where a security agreement or financing
28 statement on said property should be filed to perfect the security according
29 to the Idaho Uuniform Ccommercial Ccode or other applicable law. The sheriff
30 shall make the filing by mail if in an office outside his county, and shall
31 also file with the notice in any office where a financing statement should be
32 filed for the property, a financing statement describing the property
33 attached, the prior security agreement, and signed by the attaching creditor
34 or his agent as secured party and for the defendant as debtor by the sheriff.
35 The filing officer shall receive and file the financing statement and index
36 the same pursuant to part 5, chapter 9, title 28, chapter 9, part 4, Idaho
37 Code. Service and filing as above provided shall operate as an attachment of
38 the property described in the notice, subject to the prior rights of the
39 secured party under the security agreement; possession of the property shall
40 not be taken by the sheriff. Compliance with the foregoing is constructive
41 notice to the world of the attachment. Provided, however, that this section
42 shall not be constructive notice to a bona fide purchaser for value of any
43 motor vehicle who has actual or constructive possession of the vehicle and who
44 has relied on the certificate of title for determination by said purchaser as
45 to secured parties shown thereon; nothing in this section shall relieve any
46 person from complying with section 49-504, Idaho Code.
47 When the sale of such property attached under this subdivision subsection
48 (c) is made on writ of execution obtained by such creditor, the proceeds must
49 be applied as in the case of any other execution sale. The purchaser at any
50 such sale acquires all title and rights of the judgment debtor in the property
51 sold, as of the time the attachment was levied, subject to the perfected secu-
52 rity agreement including all liens if any thereunder, securing obligations to
53 be created after the security agreement was made in cases where such obliga-
54 tions have actually been created, and are by law entitled to priority over
55 attaching creditors, and is entitled to the possession of such property sub-
113
1 ject, however, to the rights of the secured party.
2 Any transfer of encumbrance of the attached interest of the debtor-
3 defendant is void as against the attaching creditor, but this provision shall
4 not be construed as forbidding or invalidating any transfer or disposition of
5 the property lawfully made pursuant to the prior security agreement, or any
6 other right exercised or acquired thereunder.
7 (d) Any interest of the defendant as mortgagee of a real estate mortgage
8 or beneficiary of a trust deed on real estate whether held directly or as an
9 assignee, may be attached. The sheriff must record with the county recorder
10 where the real property is located a copy of the writ along with a notice in
11 writing, naming the defendant, describing the real property, and identifying
12 the recording information on the real estate mortgage or trust deed, and stat-
13 ing that the defendant's interest therein is attached, and by serving copies
14 of the notice and writ upon the defendant and upon the mortgagor of the mort-
15 gage or trustor of the trust deed if they can be located within the county
16 where the property is located. The recorder shall index the same as an assign-
17 ment of the defendant's interest in the mortgage or deed of trust, and it
18 shall be constructive notice to the world of the attachment. The attachment
19 shall be subject to the rights of a holder in due course of a note or notes
20 secured by the mortgage or trust deed, whether acquired before or after the
21 attachment.
22 (e) Any interest of the defendant as secured party of a security agree-
23 ment, whether held directly or as an assignee, shall be attached by the sher-
24 iff filing with the filing office where the security agreement or financing
25 statement pursuant thereto is or should by law be filed, a copy of the writ
26 along with a notice in writing, naming the defendant, describing the property
27 listed in the financing statement or filed security statement, identifying the
28 parties to the security agreement, and stating that the defendant's interest
29 therein is attached. The sheriff shall serve a copy of the notice and writ
30 upon the defendant and upon the debtor under the security agreement, if they
31 can be located within the county where the property is located. The sheriff
32 may file the copy of the writ or notice by mail if the filing officer is out-
33 side the county. The filing officer shall index the same as an assignment of
34 the defendant's interest in the security agreements, and it shall be construc-
35 tive notice to the world. The attachment shall be subject to the rights of a
36 holder in due course of a note or notes secured by the security agreement,
37 whether acquired before or after the attachment.
38 SECTION 27. That Section 31-2402, Idaho Code, be, and the same is hereby
39 amended to read as follows:
40 31-2402. INSTRUMENTS TO BE RECORDED. He must, upon the payment of his
41 fees for the same, record separately, in large and well-bound separate books,
42 in legible handwriting, typewriting or by photographic reproduction:
43 1. Deeds, grants, transfers and mortgages of real estate, releases of
44 mortgages, powers of attorney to convey real estate and leases which have been
45 acknowledged or proved and transcripts of judgments or decrees which affect
46 the title or possession of real property, including water rights, any part of
47 which is situate in the county of which the person is the recorder.
48 2. Certificates of marriage and marriage contracts.
49 3. Wills admitted to probate.
50 4. Official bonds.
51 5. Notices of mechanics' liens.
52 6. Transcripts of judgments which by law are made liens upon real estate.
53 7. Notices of attachments upon real estate.
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1 8. Notices of the pendency of an action affecting real estate, the title
2 thereto or possession thereof.
3 9. Instruments describing or relating to the separate property of married
4 women.
5 10. Notices of preemption claims.
6 11. Certified copies of any petitions, with the schedules omitted, filed
7 in, and certified copies of any order or decree made or entered in, any pro-
8 ceeding under the Nnational Bbankruptcy Aact.
9 12. Financing statements under the Uuniform Ccommercial Ccode which cover
10 timber to be cut, minerals or the like (including oil and gas), accounts sub-
11 ject to subsection (5) of pursuant to section 28-9-10301, Idaho Code, or fix-
12 tures.
13 13. Notice of order of a general adjudication in conformance with section
14 42-1408A, Idaho Code.
15 14. Such other writings as are required or permitted by law to be
16 recorded.
17 SECTION 28. That Section 45-1909, Idaho Code, be, and the same is hereby
18 amended to read as follows:
19 45-1909. DUTIES OF SECRETARY OF STATE. (1) The secretary of state shall
20 maintain notices of state lien in his information management system in a form
21 that permits them to be reduced to written form.
22 (2) The secretary of state will provide information concerning state
23 liens on the same conditions and in the same form as he provides information
24 on financing statements pursuant to subsections (2) and (7) of section
25 28-9-407523, Idaho Code.
26 (3) The secretary of state will compile and publish a list of all effec-
27 tive notices of state lien which the filing agencies have identified as per-
28 taining to debtors who are agricultural producers. The list will be published
29 on the same schedule and conditions as the list of liens in farm crops which
30 is published pursuant to section 45-312, Idaho Code. The list of notices of
31 state lien may be appended to the list of liens in farm crops, and no fee
32 shall be charged in addition to the fee for the list of liens in farm crops.
33 Failure of a filing agency to identify a debtor as an agricultural producer
34 shall not adversely affect perfection of a state lien for any purpose.
35 SECTION 29. That Section 49-120, Idaho Code, be, and the same is hereby
36 amended to read as follows:
37 49-120. DEFINITIONS -- S.
38 (1) "Saddlemount combination" means a combination of vehicles in which a
39 truck or truck tractor tows one (1), two (2) or three (3) trucks or truck
40 tractors, each connected by a saddle to the frame or fifth wheel of the vehi-
41 cle in front of it. The saddle is a mechanism that connects the front axle of
42 the towed vehicle to the frame or fifth wheel of the vehicle in front and
43 functions like a fifth wheel kingpin connection. A smaller vehicle mounted
44 completely on the frame of either the first or last vehicle may be used in a
45 saddlemount combination.
46 (2) "Safety glazing materials" means glazing materials so constructed,
47 treated or combined with other materials as to reduce substantially, in com-
48 parison with ordinary sheet glass or plate glass, the likelihood of injury to
49 persons by objects from exterior sources or by these safety glazing materials
50 when they may be cracked or broken.
51 (3) "Safety zone" means the area or space officially set apart within a
115
1 highway for the exclusive use of pedestrians and which is protected or is so
2 marked or indicated by adequate signs as to be plainly visible at all times
3 while set apart as a safety zone.
4 (4) "Salvage pool" means a licensed vehicle dealer engaged primarily in
5 the business of disposing of salvage vehicles, recovered stolen vehicles, or
6 both.
7 (5) "School bus" means every motor vehicle that complies with the color
8 and identification requirements set forth in the most recent edition of
9 "Minimum Standards for School Buses" and is used to transport children to or
10 from school or in connection with school approved activities and includes
11 buses operated by contract carriers.
12 (6) "Secretary" means the secretary of transportation of the United
13 States.
14 (7) "Security agreement." (See section 28-9-1052, Idaho Code)
15 (8) "Security interest." (See section 28-1-201, Idaho Code)
16 (9) "Sell," "sold," "buy," and "purchase," mean and include, as used in
17 sections 49-2401 through 49-2406, Idaho Code, exchange, barter, gift, and
18 offer or contract to sell or buy.
19 (10) "Semitrailer." (See "Trailer," section 49-121, Idaho Code)
20 (11) "Serious traffic violation" means conviction of an offense specified
21 in 49 CFR part 383 while operating a commercial motor vehicle.
22 (12) "Sidewalk" means that portion of a street between the curb lines, or
23 the lateral lines of a roadway, and the adjacent property lines intended for
24 use by pedestrians.
25 (13) "Signal." (See "Railroad sign," section 49-119, Idaho Code)
26 (14) "Skills test" means an actual demonstration of ability to exercise
27 ordinary and reasonable control in the operation of a motor vehicle.
28 (15) "Slow moving vehicle" means any vehicle not normally operated upon
29 the highways.
30 (16) "Snow tire." (See "Tires," section 49-121, Idaho Code)
31 (17) "Sold." (See "Sell," "buy," and "purchase," this section)
32 (18) "Solid rubber tire." (See "Tires," section 49-121, Idaho Code)
33 (19) "Special license plate" means a license plate that is made available
34 to the public as a personal alternative to the standard issue license plate.
35 No special program fee shall be charged for the registration or plates issued
36 under sections 49-403, 49-403A, 49-404, 49-405, 49-410, 49-415, 49-415A and
37 49-415B, Idaho Code.
38 (20) "Special mobile equipment" means every vehicle not designed or used
39 primarily for the transportation of persons or property and only incidentally
40 operated or moved over a highway, including: ditch-digging apparatus, well-
41 boring apparatus and road construction and maintenance machinery such as
42 asphalt spreaders, bituminous mixers, bucket loaders, tractors other than
43 truck tractors, ditchers, leveling graders, finishing machines, motor graders,
44 road rollers, scarifiers, earth moving carry-alls and scrapers, power shovels
45 and drag lines, and self-propelled cranes, and earth moving equipment. The
46 term does not include travel trailers, dump trucks, truck mounted transit
47 mixers, cranes or shovels, or other vehicles designed for the transportation
48 of persons or property to which machinery has been attached.
49 (21) "Specially constructed vehicle." (See "Vehicle," section 49-123,
50 Idaho Code)
51 (22) "Stand" or "standing" means the halting of a vehicle, whether occu-
52 pied or not, otherwise than temporarily for the purpose of and while actually
53 engaged in receiving or discharging passengers.
54 (23) "State" means a state, territory or possession of the United States,
55 the District of Columbia, the Commonwealth of Puerto Rico or a province of
116
1 Canada.
2 (24) "Stop" means the act of or complete cessation from movement.
3 (25) "Stopping" means the act of any halting even momentarily of a vehi-
4 cle.
5 (26) "Street." (See "Highways," section 49-109, Idaho Code)
6 (27) "Street rod" means any pre-1949 vehicle which has had a significant
7 drive train update from a more modern vehicle. Changes may include engine,
8 transmission, rear axle, and other suspension components. The body will be,
9 or resemble the same as the manufacturer's original issue after its first sale
10 after manufacture.
11 (28) "Studded tire." (See "Tires," section 49-121, Idaho Code)
12 (29) "Substandard width lane" means a lane that is too narrow for a bicy-
13 cle and a motor vehicle to travel safely side by side within the lane.
14 (30) "Supplemental lot" means a physically separate location owned and
15 maintained by a licensed dealer or manufacturer within the same or adjacent
16 county as the principal place of business which meets all the requirements for
17 a principal place of business.
18 (31) "Suspension of driver's license" means the temporary withdrawal by
19 formal action of the department or as otherwise provided in this title of a
20 person's driver's license or privilege to operate a motor vehicle on the pub-
21 lic highways, which temporary withdrawal shall be for a period specifically
22 designated by the department.
23 (32) "Suspension of vehicle registration" means the temporary withdrawal
24 by formal action of the department or as otherwise provided in this title of a
25 person's vehicle registration or, in the case of fleets of vehicles, all vehi-
26 cle registrations in each fleet operated by a company. Upon suspension, the
27 privileges of operating the vehicle or vehicles on Idaho highways is termi-
28 nated until the difficulty that caused the suspension is corrected and notifi-
29 cation is provided that the suspension has been lifted.
30 SECTION 30. That Chapter 2, Title 57, Idaho Code, be, and the same is
31 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
32 ignated as Section 57-232, Idaho Code, and to read as follows:
33 57-232. CREATION AND PERFECTION OF GOVERNMENT SECURITY INTERESTS. (1) The
34 revenues, fees, rents, charges, taxes or other property pledged by a govern-
35 mental unit for the purpose of securing its bonds, which pledge is hereby
36 authorized, are immediately subject to the lien of the pledge, and the lien
37 shall be a perfected lien upon the effective date of the security agreement.
38 No physical delivery of any security agreement or any other act is required.
39 Neither the security agreement nor a financing statement need be filed or
40 recorded under the uniform commercial code or otherwise. The lien of any
41 pledge is valid, binding, perfected and enforceable from the time the pledge
42 is made. The lien of the pledge shall have priority based on the time of the
43 creation of the pledge unless otherwise provided in the security agreement.
44 The lien of the pledge shall have priority as against all parties having
45 claims of any kind in tort, contract, or otherwise against the governing body,
46 irrespective of whether the parties have notice of the lien. Each pledge and
47 security agreement made for the benefit or security of any of the bonds shall
48 continue to be effective until the principal, interest, and premium, if any,
49 on the bonds have been fully paid or provision for payment has been made, or
50 until the lien created by the security agreement has been released by agree-
51 ment of the parties in interest or as provided by the security agreement that
52 created the lien.
53 (2) As used in this section:
117
1 (a) "Bonds" means any bond, note, lease or other obligation of a govern-
2 mental unit;
3 (b) "Governmental unit" has the meaning assigned in section 28-9-102,
4 Idaho Code;
5 (c) "Pledge" means the creation of a security interest of any kind;
6 (d) "Property" means any property or interests therein, other than real
7 property; and
8 (e) "Security agreement" means any resolution, ordinance, indenture, doc-
9 ument, or other agreement or instrument under which the revenues, fees,
10 rents, charges, taxes or other property are pledged to secure the bonds.
11 (3) This section expressly governs the creation, perfection, priority and
12 enforcement of a security interest created by the state or a governmental unit
13 of the state, notwithstanding any provisions in chapter 9, title 28, Idaho
14 Code, to the contrary.
15 SECTION 31. This act shall be in full force and effect on and after July
16 1, 2001.
STATEMENT OF PURPOSE
RS 10613C1
This legislation repeals existing Article 9 of the Uniform
Commercial Code covering Scured Transactions and enacts a new
Article 9. The legislation is a result of the work of the
National Conference of Commisioners on Uniform State Laws to
update the laws governing secured transactions - transactions
which involve the granting of credit secured by personal
property.
FISCAL LEGISLATION
This legislation will have no fiscal impact.
Contact
Name: Dale G. Higer, former Commissioner
Idaho Commission on Uniform State Laws
Phone: 387-4288
STATEMENT OF PURPOSE/FISCAL NOTE H 205