Okla. Stat. tit. 12A § 1-9-315

Current through Laws 2024, c. 328.

Section 1-9-315 - Secured party's rights on disposition of collateral and in proceeds

(a) Except as otherwise provided in this article and in paragraph (2) of Section 2-403 of this title:

(1) a security interest or agricultural lien continues in collateral notwithstanding sale, lease, license, exchange, or other disposition thereof unless the secured party authorized the disposition free of the security interest or agricultural lien; and

(2) a security interest attaches to any identifiable proceeds of collateral.

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

(1) if the proceeds are goods, to the extent provided by Section 1-9-336 of this title; and

(2) if the proceeds are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this article with respect to commingled property of the type involved.

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

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

(1) the following conditions are satisfied:

(A) a filed financing statement covers the original collateral;

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

(C) the proceeds are not acquired with cash proceeds;

(2) the proceeds are identifiable cash proceeds; or

(3) the security interest in the proceeds is perfected other than under subsection (c) of this section when the security interest attaches to the proceeds or within twenty (20) days thereafter.

(e) If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under paragraph (1) of subsection (d) of this section becomes unperfected at the later of:

(1) when the effectiveness of the filed financing statement lapses under Section 1-9-515 of this title or is terminated under Section 1-9-513 of this title; or

(2) the twenty-first day after the security interest attaches to the proceeds.

Okla. Stat. tit. 12A, § 1-9-315

Added by Laws 2000 , SB 1519, c. 371, § 35, eff. 7/1/2001.

Oklahoma Code Comment

The revised definition of "proceeds" at revised section 9-102(a)(58) expands the scope of old section 9-306 , and the importance of continuing perfection under revised section 9-315 . Former section 9-306(1) primarily (albeit not solely) used a "transactional disposition/actual replacement-substitution" test for determining whether or not specific personalty was "proceeds." It stated this test as follows: "whatever is received upon the sale, exchange, collection or other disposition of collateral or proceeds." Former section 9-306(1) departed from this test in three limited instances: (1) "payments from a third party tort-feasor or his or her insurer;" (2) "(i)nsurance payable from any source by reason of loss or damage to the collateral ... except to the extent that it is payable to a person other than a party to the security agreement;" and (3) "(a)ny payments or distributions made with respect to investment property collateral." In all of these instances the proceeds in question do not arise from a "transactional disposition" of the original collateral or an earlier generation of proceeds. Consequently, former section 9-306(1) relied on a distinct test in defining these three classes of property as "proceeds." This alternative test has been referred to as involving "property closely associated with the original collateral." This concept is expanded in revised Article 9.

Revised section 9-102(a)(64) carries both of these tests forward and broadens their respective ranges. Section 9-102(a)(64)(A) does so with respect to the "transactional disposition/ actual replacement B substitution" test by adding the further transactional types of "lease" and "license" to the list of qualifying methods of disposition. Section 9-102(a)(64)(B), (C) and (D) do so with respect to the alternative "property closely associated with the original collateral" test in a variety of even more significant ways. Section 9- 102(a)(64)(B) extends the idea of "distributions on account of collateral as proceeds" beyond the single category of "investment property" to cover any type of Article 9 B controlled personalty. Section 9-102(a)(64)(D) , relying on the second test, breaks new ground by deeming a wide variety of claims arising out of the loss of or injury to the collateral to be "proceeds." Finally, section 9-102(a)(64)(C) is an impressively open-ended, residual provision which, also pursuant to the second test, defines as "proceeds" any other (than, presumably those addressed in section 9-102(a)(64)(B), (D) and (E) ) "rights arising out of the collateral."

Turning to the text of revised section 9-315 , it states, inter alia, rules regulating the automatic attachment and perfection of a security interest in proceeds. Among the requisites imposed by these rules is that the proceeds must be "identifiable" as proceeds of the original collateral. This requisite has been carried forward from former section 9-306 . While not defined in the text of or Comments to old section 9-306 , the word "identifiable" was read by a majority of the courts interpreting that section to have a bifurcated meaning. If the proceeds in question were not mingled with other like property, then those cases held "identifiable" to mean "factually" traceable pursuant to the law of evidence. Conversely, if the proceeds in question were commingled with other like property, then those courts held that "identifiable" meant, in the alternative, "artificially" traceable under special UCC and extra-UCC law. A pre-revision Oklahoma case adopting this bifurcated meaning is Anderson, Clayton & Co. v. First American Bank of Erick, Okla., 614 P.2d 1091 (Okla. 1980). Revised section 9-315(b) as amplified by Official Comment 3, in part explicitly and in part by implication, embraces the bifurcated interpretation of this word. Morever, with respect to commingled proceeds, section 9-315(b) draws the further distinction between case sub-types involving "goods" and "non-goods," and indicates which of two sets of special, UCC and extra-UCC artificial tracing rules will determine the issue of "identifiability" in each case subtype.

Another point of interest regarding the text of section 9-315 is its silence on the subject of proceeds of agricultural liens. Revised section 9-109(a)(2) brings such liens under the coverage of UCC Article 9 for the first time. Notwithstanding, Official Comment 9 to section 9-315 indicates that revised Article 9 does not govern "proceeds" of agricultural liens (as opposed to such liens per se). Thus, issues concerning "proceeds" of agricultural liens are left to be resolved under non-UCC law. The explanation for this treatment is that agricultural liens are not security interests (despite their limited inclusion in Article 9); creation, attachment and scope of the agricultural lien remain outside of Article 9, and whether the lien extends to proceeds is clearly such an issue (and is thus left to non-Article 9 law).