Okla. Stat. tit. 12A § 1-9-331

Current through Laws 2024, c. 453.

Section 1-9-331 - Priority of rights of purchasers of controllable accounts, controllable electronic records, Controllable payment intangibles, documents, instruments, and securities under other articles; priority of interests in financial assets and security entitlements and protection against assertion of claim under articles 8 and 12

(a) This article does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated, a protected purchaser of a security, or a qualifying purchaser of a controllable account, controllable electronic record, or controllable payment intangible. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in Articles 3, 7, 8, and 12 of this title.

(b) This article does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under Article 8 or 12 of this title.

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

Okla. Stat. tit. 12A, § 1-9-331

Amended by Laws 2024 , c. 13, s. 69, eff. 11/1/2024.

Added by Laws 2000 , SB 1519, c. 371, § 58, eff. 7/1/2001.

Oklahoma Code Comment

Section 9-331 provides priority rules as between an Article 9 secured party and parties asserting rights under UCC Articles 3, 7, or 8. Section 9- 331(a) defers broadly to these other UCC Articles, for example specifying that Article 9 does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated, or a protected purchaser of a security. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in Articles 3, 7, or 8. However, the holders and purchasers referenced in section 9-331 do not always take priority over a security interest. For example, section 9-331(a) adds the clause "to the extent provided in Articles 3, 7, and 8" to former section 9-309 . But the deference to these other Articles is complete. For example, revised sections 9- 403(d) and 9-404(c) and (d) are carefully worded to avoid interference with the rights of a holder in due course under Article 3, and section 9-331 preserves the rule at Article 3 section 3-602 that payment discharges liability on an instrument only if made to the party entitled to enforce the instrument.

Revised Article 9 also does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under Article 8. And revised section 9-331(c) provides that filing under revised Article 9 does not constitute notice of a claim or defense to the holders, purchasers, or other persons protected under section 9-331(a) and (b) .

A junior secured party who receives a check as proceeds of an account does not defeat the rights of a senior secured party, unless (1) the junior is a holder in due course, or (2) the junior secured party does not know that the retention of the check violates the rights of the senior secured party. A junior secured party may have trouble qualifying as a holder in due course in any event because it would often have notice of the senior party's claim to the check including in appropriate circumstances, a duty of inquiry to satisfy the duty of good faith. See UCC section 1-203 and revised section 9-102(a) (43) .