Secured Transactions Assignment 37

1. Secured TransactionsAssignment 37 Statutory Liens Agricultural Liens and Oil and Gas interests Against Secured Creditors

2. Personal Property Competitors Secured party Judgment lien PMSI Bankruptcy trustee Debtor Execution lien Tax lien Seller Statutory lien Buyer

3. Real Estate Competitors Mortgage Purchase money mortgage Judgment lien Bankruptcy trustee Debtor Fixture filings Tax lien Seller BFP for value Mechanic’s lien

4. Obligation Lien Collateral

5. Obligation Lien Collateral Security interestsStatutory liensJudicial liens Article 9 SI Agricultural Judgment Mortgages Mechanic’s Execution Other SI Tax Attachment Landlord’sGarnishment Charging Equitable Retaining Hospital Warehouse

6. Statutory Lien Issues • Does a lien exist? Read the statute. • How must the lienor perfect? Read the statute Does §9-310(a) require a financing statement (Ag lien?) • What is the lien’s priority? Read the statute Default rule for non-possessory lien: first in time Default rule for possessory lien: ranks first, §9-333(b)

7. Possessory Statutory Liens §9-333 (b) A possessory lien on goods has priority over a security interest . . . unless . . created by a statute that expressly provides otherwise

8. Possessory Statutory Liens §9-333 (b) A possessory lien on goods has priority over a security interest . . . unless . . created by a statute that expressly provides otherwise (a) “[P]ossessory lien” means an interest, other than a security interest or an agricultural lien: (1) which secures payment . . . for services or materials furnished with respect to goods by a person in the ordinary course of the person’s business; (2) which is created by statute or rule of law in favor of the person; (3) whose effectiveness depends on . . . possession of the goods

9. Filing requirements for statutory liens Some lien statutes impose filing requirements (most do not)

10. Filing requirements for statutory liens Some lien statutes impose filing requirements (most do not) Maine garage keeper’s lien

11. Filing requirements for statutory liens Some lien statutes impose filing requirements (most do not) Maine garage keeper’s lien Mechanic’s liens

12. Filing requirements for statutory liens Some lien statutes impose filing requirements (most do not) Maine garage keeper’s lien Mechanic’s liens, §9-310 imposes a filing requirement for “agricultural liens” (new in 2001).

13. Agricultural Liens Hypo: Owner rents farmland to tenant who grows corn. Does landlord have a lien under Oregon statute, p. 609? Probably yes. §9-102(a)(44). Corn is “chattels” Is this landlord’s lien an agricultural lien? §9-102(a)(5). Agricultural lien means an interest in farm products . . . (A) which secures payment . . . for . . . rent . . . on real property leased to a debtor in connection with its farming operation (B) which is created by statute in favor of a person that . . . leased real property to a debtor in connection with the debtor’s farming operation; and (C) whose effectiveness does not depend on . . .possession

14. Agricultural Liens Hypo: Owner rents farmland to tenant who grows corn. Does landlord have a lien under Oregon statute, p. 609? Probably yes. §9-102(a)(44). Corn is “chattels” Is this landlord’s lien an agricultural lien? Yes, landlord must file §9-102(a)(5). Agricultural lien means an interest in farm products . . . (A) which secures payment . . . for . . . rent . . . on real property leased to a debtor in connection with its farming operation (B) which is created by statute in favor of a person that . . . leased real property to a debtor in connection with the debtor’s farming operation; and (C) whose effectiveness does not depend on . . .possession

15. Agricultural Liens General Choice of Law Rules 9-301 – Location of the debtor not collateral.

16. Agricultural Liens General Choice of Law Rules 9-301 – Location of the debtor not collateral. Agricultural Liens – Location of the collateral. “While farm products are located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of an agricultural lien on the farm products.” 9-302 This means filings against the same collateral could be in two different states, one for the agricultural lien one for the security interest.

17. Agricultural Liens Farm and Crops located in Oklahoma Buyer of Crops located in Kansas Landlord Located in Texas Agricultural Lien All Assets Farmer Located in Texas Bank Lender With blanket lien Loan

18. Agricultural Liens and Crops located in Oklahoma Article 9 Security Interests governed by Texas law but agricultural liens by Oklahoma law. Note different states have different variations of BIOCOB rules and Proceeds for farm products. Buyer of Crops located in Kansas Landlord Located in Texas Agricultural Lien All Assets Farmer Located in Texas Bank Lender With blanket lien Loan

19. Food Security Act BIOCOB, a commission merchant, and a selling agent take farm products free of a security interest created by the seller, unless: (i) SP or the seller gives a complying notice of the security interest within one year prior to the sale; or

20. Food Security Act (ii) SP has filed a financing statement in a central filing system each state may create and either the buyer, merchant or agent has received a list of such filings, reflecting the secured party’s filing (such list to be distributed periodically to registered buyers, merchants and agents by the central filing agency), or the buyer, merchant or agent has failed to register with the central filing agency to receive such lists; or

21. Food Security Act (iii) SP has filed a financing statement in the central filing system and the buyer, merchant or agent (not being registered to receive the lists described above) has been notified thereof in writing by the central filing agency in response to a specific inquiry made by the buyer, merchant or agent. Oklahoma adopted such a system in 9-307.1 through 9-307.8 and provides for filings in SOS of EFS which differ from Financing Statements and do not replace them.

22. Perishable Agricultural Commodities Act

23. Perishable Agricultural Commodities Act Problem 32.6 Inventory Lender Security Interest Speakers Sara Dealers PMSI

24. Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, Problem 32.6 Inventory Lender Security Interest Speakers Sara Dealers PMSI

25. Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, Problem 32.6 Inventory Lender Security Interest Speakers Sara Dealers PMSI

26. Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities Problem 32.6 Inventory Lender Security Interest Speakers Sara Dealers PMSI

27. Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” Problem 32.6 Inventory Lender Security Interest Speakers Sara Dealers PMSI

28. Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders. Problem 32.6 Inventory Lender Security Interest Speakers Sara Dealers PMSI

29. Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders. PACA: Farmer has priority over inventory lender Inventory Lender Security Interest Fruits & vegetables Farmer Dealers Debt

30. Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders. PACA: Farmer has priority over inventory lender Inventory Lender Inventory Lender 2 Security Interest Security Interest Fruits & vegetables Fruits & vegetables Farmer Dealers Dealer 2 Debt Cash

31. Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders. PACA: Farmer has priority over inventory lender Inventory Lender Inventory Lender 2 Security Interest Security Interest Fruits & vegetables Fruits & vegetables Farmer Dealers Dealer 2 Debt Cash Does Farmer have priority over Inventory Lender 2?

32. Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders. PACA: Farmer has priority over inventory lender Inventory Lender Inventory Lender 2 Security Interest Security Interest Fruits & vegetables Fruits & vegetables Farmer Dealers Dealer 2 Debt Cash Does Farmer have priority over Inventory Lender 2?

33. Perishable Agricultural Commodities Act “The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” The “statutory trust” grants to sellers and suppliers a priority in payment over even secured lenders. Same result under the Packers and Stockyards Act (PSA) Inventory Lender Security Interest Cattle Farmer Dealers Debt

34. Other Agricultural Finance Issues • Are Crops proceeds of seeds?

35. Other Agricultural Finance Issues • Are Crops proceeds of seeds? Some say yes some say no.

36. Other Agricultural Finance Issues • Are Crops proceeds of seeds? Some say yes some say no. • Agricultural lien statutes vary in the treatment of proceeds, some include proceeds of the farm products some do not.

37. Other Agricultural Finance Issues • Are Crops proceeds of seeds? Some say yes some say no. • Agricultural lien statutes vary in the treatment of proceeds, some include proceeds of the farm products some do not. • Statutes also vary the treatment of BIOCOBS allowing them to take free of Agricultural liens or not.

38. Problem 37.1.b, page 621 Tomatoes Norman Farms American Produce Bad check

39. Problem 37.1.b, page 621 Tomatoes Tomatoes Star Markets Norman Farms American Produce Cash Bad check

40. Problem 37.1.b, page 621 Tomatoes Tomatoes Tomatoes Star Markets Retail customers Norman Farms American Produce Cash Cash Bad check

41. Problem 37.1.b, page 621 Tomatoes Tomatoes Tomatoes Star Markets Retail customers Norman Farms American Produce Cash Cash Cash Bad check Haunt’s Cannery Tomatoes

42. Problem 37.1.b, page 621 Tomatoes Tomatoes Tomatoes Star Markets Retail customers Norman Farms American Produce Cash Cash Cash Tomatoes Bad check Haunt’s Cannery Publix Tomatoes Account

43. Problem 37.1.b, page 621 Tomatoes Tomatoes Tomatoes Star Markets Retail customers Norman Farms American Produce Cash Cash Norman did not retain a security interest in the tomatoes Cash Tomatoes Bad check Haunt’s Cannery Publix Tomatoes Account

44. Problem 37.1.b, page 621 Tomatoes Tomatoes Tomatoes Star Markets Retail customers Norman Farms American Produce Cash Cash Norman did not retain a security interest in the tomatoes PACA: “The seller . . . retains a trust claim over these commod-ities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” Cash Tomatoes Bad check Haunt’s Cannery Publix Tomatoes Account

45. Problem 37.1.b, page 621 Tomatoes Tomatoes Tomatoes Star Markets Retail customers Norman Farms American Produce Cash Cash Norman did not retain a security interest in the tomatoes PACA: “The seller . . . retains a trust claim over these commod-ities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” The trust reaches sales to “dealers” (“any person engaged in the business of buying or selling in wholesale quantities . . .“) Cash Tomatoes Bad check Haunt’s Cannery Publix Tomatoes Account

46. Problem 37.1.b, page 621 Tomatoes Tomatoes Tomatoes Star Markets Retail customers Norman Farms American Produce Cash Cash Norman did not retain a security interest in the tomatoes PACA: “The seller . . . retains a trust claim over these commod-ities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” The trust reaches sales to “dealers” (“any person engaged in the business of buying or selling in wholesale quantities . . .“) Against what sources can Norman proceed? Cash Tomatoes Bad check Haunt’s Cannery Publix Tomatoes Account

47. Problem 37.1.b, page 621 Tomatoes Tomatoes Tomatoes Star Markets Retail customers Norman Farms American Produce Cash Cash Norman did not retain a security interest in the tomatoes PACA: “The seller . . . retains a trust claim over these commod-ities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” The trust reaches sales to “dealers” (“any person engaged in the business of buying or selling in wholesale quantities . . .“) Against what sources can Norman proceed? What is Norman’s priority against Haunt’s accounts lender? Cash Tomatoes Bad check Haunt’s Cannery Publix Tomatoes Account

48. Problem 37.1.b, page 621 Tomatoes Tomatoes Tomatoes Star Markets Retail customers Norman Farms American Produce Cash Cash Norman did not retain a security interest in the tomatoes PACA: “The seller . . . retains a trust claim over these commod-ities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.” The trust reaches sales to “dealers” (“any person engaged in the business of buying or selling in wholesale quantities . . .“) Against what sources can Norman proceed? What is Norman’s priority against Haunt’s accounts lender? Norman is prior. Cash Tomatoes Bad check Haunt’s Cannery Publix Tomatoes Account

49. Mineral Interests Before extraction Oklahoma treats mineral rights as a real property interest. Once oil and gas are extracted they are goods, personal property.

50. Mineral Interests Before extraction Oklahoma treats mineral rights as a real property interest. State law where property located governs Once oil and gas are extracted they are goods, personal property. For article 9, state law where debtor located governs.