Secured Transactions - February 23, 2022 PDF

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Secured Transactions - 02/23/Assignment 16P16. Leonard Drapkowski’s only valuable possession is his... §9-102(a)(52): defines the term lien creditor. A creditor who has acquired a lien on the property by attachment, levy, or the like. §9-317(a)(2) 9-311(b) §9-201: unless otherwise indicated in this ...

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Secured Transactions - 02/23/2022

Assignment 16 P16.1. Leonard Drapkowski’s only valuable possession is his… §9-102(a)(52): defines the term lien creditor. A creditor who has acquired a lien on the property by attachment, levy, or the like. §9-317(a)(2) 9-311(b) §9-201: unless otherwise indicated in this code, the secured agreement is effective against the world at the time of execution. (a) Now where does Felicia stand? UMVCTA § 20(b). UCC §§ 9-102(a)(52), 9-317(a) (2), and 9-311(b). Does she have a judicial lien on the car? No, she is still an unsecured creditor and has not gotten a writ of execution to levy on the car [judicial liens are created and perfected at the time of levying]. Note that her judgment lien was created after Bernie perfected his interest by notation on the certificate of title. (b) Can you go ahead with execution levy? If you can, should you? UCC § 9-401. Can she still execute the levy? If you have the writ of execution and levy the car, this would make her a lien creditor. §9-102(a)(54). How do you decide between Bernie and Ex-Wife?? Got to 9-317(a)(2): applies to conflicts between secured parties and lien holders  “A security interest is subordinate to a lien creditor” if the secured party can [1] perfect interest, or [2] filing a financial statement before the person becomes a lien creditor. Here Bernie has perfected his security interest and gotten a security agreement and financial statement. 9-311(a)(2): provides that the filing of a financial statement requirement is ineffective, if the property is governed by any certificate of title statue Cars that are inventory To perfect a security interest in the car, you need to have it on the certificate of title. The other problem is . . .Is that 12,000 a real debt? Or is it more likely that this secured transaction was an attempt to defraud creditors of collecting.

P16.3. As the most junior attorney in a firm that represents… 9-109, 9-310, 9-501 (a) Keith Pipes, an auto mechanic This is the creation of a security interest, and would therefore fall under the scope of art. 9 §9-109. The tools would seem to fall outside the range of property which does not require a financing statement, and would therefore need a financing statement. Search under the name of the debtor, in the state, etc.

The tools may become a fixture by becoming a part of the real property, i.e. a sale of such real property is considered to include the fixture. Musselman: [1] Classification of Collateral. Look to 9-102  4 types- consumer goods (a) (23), equipment (a)(33), farm products (a)(34), inventory (a)(48). (b) Bernie Wolfson, an inventor who lives in San Diego… §9-311(a)(1), 9-109(c)(1). Under §9-109(c)(1): article 9 does not apply to the extent that a statute, regulation, or treaty of the US preempts this article. §9-311(a)(1)Where a system of filing has been established under federal law, Perfection can only occur through compliance with that system. Mussel/Man- Patents are filed in the state system In re Pasteurized Eggs. A patent would likely be a general intangible (c) Your client is a New York bank that plans Search the UCC state filing offices in New York. United States Copyright Office. With regard to copyrights or receivables generated by copyrights, the US Copyright Office preempts Art. 9 therefore one must file in the Copyright office to perfect. -Copyright requires that you must file a financing statement for each copyright, here it would be 119 separate filings. (d) Your client is an Indiana bank planning to… 9-311(b): (1) Dealer’s inventory: must get the status of the cars. Cars are pre-empted by the car title system, you must comply with that certificate of title statute. You must perfect on each certificate of title. Unless they are a dealer – then this doesn’t apply 9311(d). (2) Automobiles not for sale- here you need to get the certificates of (3) accounts receivable from the sale of automobiles- this would be an account under 9-102(a)(2). (4) Federal filing neither required or permitted for trademarks. How to know which cars are covered by financing statement and which ones are not? Look at the car titles for each car, and CarsNew car inventory- have a manufacturer’s certificate of origin. Used Cars- has seller sign power of attorney to transfer the title.

Assignment 17 UCC § 9-502(a) (a) Sufficiency of financing statement Subject to subsection (b), a financing statement is sufficient only if it: (1) provides the name of the debtor; (2) provides the name of the secured party or a representative of the secured party; and (3) indicates the collateral covered by the financing statement.

UCC § 9-519(c)(1), (h) (c) Indexing: general. Except as otherwise provided in subsections (d) and (e), the filing office shall: (1) index an initial financing statement according to the name of the debtor and index all filed records relating to the initial financing statement in a manner that associates with one another an initial financing statement and all filed records relating to the initial financing statement; (h) Timeliness of filing office performance. The filing office shall perform the acts required by subsections (a) through (e) at the time and in the manner prescribed by filing-office rule, but not later than two business days after the filing office receives the record in question.

UCC § 9-516(a) (a) What constitutes filing Except as otherwise provided in subsection (b), communication of a record to a filing office and tender of the filing fee or acceptance of the record by the filing office constitutes filing.

UCC § 9-517 § 9-517. EFFECT OF INDEXING ERRORS. The failure of the filing office to index a record correctly does not affect the effectiveness of the filed record.

UCC § 9-503(a)(1) (a) Sufficiency of debtor's name. A financing statement sufficiently provides the name of the debtor: (1) except as otherwise provided in paragraph (3), if the debtor is a registered organization, or the collateral is held in a trust that is a registered organization, only if the financing statement provides the name that is stated to be the registered organization’s name on the public organic record of most recently filed with or issued or enacted by the registered organization’s jurisdiction of organization which purports to state, amend, or restate the registered organization’s name;

UCC § 9-503(a)(4), (a)(5), (a)(6), (b) [Alternative A] (4) subject to subsection (g), if the debtor is an individual to whom this State has issued a [driver’s license] that has not expired, only if the financing statement provides the name of the individual which is indicated on the [driver’s license]; (5) if the debtor is an individual to whom paragraph (4) does not apply, only if the financing statement provides the individual name of the debtor or the surname and first personal name of the debtor; and (6) in other cases: (A) if the debtor has a name, only if the financing statement provides the organizational name of the debtor; and (B) if the debtor does not have a name, only if it provides the names of the partners, members, associates, or other persons comprising the debtor, in a manner that each name provided would be sufficient if the person named were the debtor. (b) [Additional debtor-related information.] A financing statement that provides the name of the debtor in accordance with subsection (a) is not rendered ineffective by the absence of: (1) a trade name or other name of the debtor; or (2) unless required under subsection (a)(6)(B), names of partners, members, associates, or other persons comprising the debtor. [Alternative B] (4) if the debtor is an individual, only if the financing statement:

(A) provides the individual name of the debtor; (B) provides the surname and first personal name of the debtor; or (C) subject to subsection (g), provides the name of the individual which is indicated on a [driver’s license] that this State has issued to the individual and which has not expired; and (5) in other cases: (A) if the debtor has a name, only if the financing statement provides the organizational name of the debtor; and (B) if the debtor does not have a name, only if the financing statement provides the names of the partners, members, associates, or other persons comprising the debtor, in a manner that each name provided would be sufficient if the person named were the debtor.

UCC § 9-503(c) (c) Debtor's trade name insufficient A financing statement that provides only the debtor's trade name does not sufficiently provide the name of the debtor.

UCC § 9-506(a), (b), (c) (a) Minor errors and omissions A financing statement substantially satisfying the requirements of this part is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading. (b) Financing statement seriously misleading Except as otherwise provided in subsection (c), a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 9-503(a) is seriously misleading. (c) Financing statement not seriously misleading If a search of the records of the filing office under the debtor's correct name, using the filing office's standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with Section 9-503(a), the name provided does not make the financing statement seriously misleading.

UCC § 9-102(a)(28)(A), (71) (28) "Debtor" means: (A) a person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor; (71) "Registered organization" means an organization organized solely under the law of a single State or the United States by the filing of a public organic record with, the issuance of a public organic record by, or the enactment of legislation by the State or the United States. The term includes a business trust that is formed or organized under the law of a single State if a statute of the State governing business trusts requires that the business trust’s organic record be filed with the State.

UCC § 1-201(b)(25), (27) (25) "Organization" means a person other than an individual. (27) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity.

UCC § 9-523(c), (e) (c) [Communication of requested information.] The filing office shall communicate or otherwise make available in a record the following information to any person that requests it: (1) whether there is on file on a date and time specified by the filing office, but not a date earlier than three business days before the filing office receives the request, any financing statement that: (A) designates a particular debtor [or, if the request so states, designates a particular debtor at the address specified in the request]; (B) has not lapsed under Section 9-515 with respect to all secured parties of record; and (C) if the request so states, has lapsed under Section 9-515 and a record of which is maintained by the filing office under Section 9-522(a);

(2) the date and time of filing of each financing statement; and (3) the information provided in each financing statement. (e) [Timeliness of filing office performance.] The filing office shall perform the acts required by subsections (a) through (d) at the time and in the manner prescribed by filing-office rule, but not later than two business days after the filing office receives the request.

UCC § 9-524 Delay by the filing office beyond a time limit prescribed by this part is excused if: (1) the delay is caused by interruption of communication or computer facilities, war, emergency conditions, failure of equipment, or other circumstances beyond control of the filing office; and (2) the filing office exercises reasonable diligence under the circumstances.

Problem Set 17 P17.1. Your client, Center Bank and Trust (CBT), plans… §9-503- if the debtor is a registered organization, the name of the debtor indicated on the public record of the debtor’s jurisdiction of organization which shows the debtor to have been organized. 9-102(a)(70)- registered organization defined. MUST BE EXACTLY THE SAME as the corporate name. If not, a registered organization go to 9-503(a)(4) 1 You will need to find out whether or not this is a registered organization? 2 When Corp  get a list of assets, and make sure that the corporation owns the collateral. Hire an accounting firm, that demonstrate title to accounts, inventory, see who the buyers were. 2 b. If not a corporation, “trade name”- under 9-503(c) the trade name is insufficient to give notice to the world. Instead, use the exact legal name of the debtor, 9-503(a) (4)(A). The problem is what is the exact legal name? Your actual legal name is what you are known by generally in the community for non-fraudulent purposes. Safe harbor might be. §9-506: Minor Errors and Omissions. If you can determine the correct name of the debtor, then run a search, if the financing statement turns up, it is not seriously misleading. Hypo: Say we find out his correct exact legal name is actually Robert Joseph McErny. Should we search under variations? HELL NO, we did everything right, every other financing statement filed would be seriously misleading.

We’re focusing on the name of the debtor, which is the most important, because it’s how you index records. The most common way of perfecting a security interest is to file a financing statement. So it’s important that a financing state comports with all requirements.

17.2 How are you going to do these searches? Under 9-502 you can search under the legal names. Here, because you have a hard copy, (1) Susan Alexander If you have the exact legal name that you submit – and nothing comes up, then you are free and clear. Here we have a hard copy, what’s the standard? Look to every Alexander? With a hard copy you can see everyone’s name. How far do you have to go to conduct a “reasonably diligent search”??? Compare the address you have to the names containing Alexander. If the court implies a duty of reasonable diligence, then the financing statement is under 9-506(c). (2) John Phillip (“Jack”) Smith- there will be a ton of hits. (3) Tessie’s Tire City- You need to decide whether this is a trade name, LLC, corporation, etc.? Corp look in SOS public records, Gen Part- look for partnership agreement and see what the name of the partnership is, or if just a sole proprietor, trade names are insufficient, therefore need to get their legal name. 17.3 Let’s assume John Phillip Smith is the exact legal name of the debtor. You would probably need to search all 112 filings, because §9-506(c) says that every single one of those filings is effective notice to you as a potential secured creditor. 17.8: (a) If the filing office receives an original financing statement on Wednesday, by what day must the filing office index it (and thereby render it searchable)? UCC §§9 ‐519(a) and (h). (b) If the filing office complies with these sections, the last search report that did not include reference to this financing statement would go out on the following Wednesday. Can you see why? UCC §§9‐523(c) and (e). (c) What happens to a filing office that does not comply with these sections? UCC §§9‐524, Comment 8 to UCC §9‐523....