Okla. Stat. tit. 12A § 1-9-109

Current through Laws 2024, c. 453.

Section 1-9-109 - Scope of article

(a) Except as otherwise provided in subsections (c) and (d) of this section, this article applies to:

(1) a transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;

(2) an agricultural lien;

(3) a sale of accounts, chattel paper, payment intangibles, or promissory notes;

(4) a consignment;

(5) a security interest arising under Section 2-401, Section 2-505, paragraph (3) of Section 2-711, or paragraph (5) of Section 2A-508 of this title, as provided in Section 1-9-110 of this title; and

(6) a security interest arising under Section 4-210 or 5-118 of this title.

(b) The application of this article to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this article does not apply.

(c) This article does not apply to the extent that:

(1) a statute, regulation, or treaty of the United States preempts this article;

(2) another statute of this state expressly governs the creation, perfection, priority, or enforcement of a security interest created by this state or a governmental unit of this state;

(3) a statute of another state, a foreign country, or a governmental unit of another state or a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority, or enforcement of a security interest created by the state, country, or governmental unit; or

(4) the rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under Section 5-114 of this title.

(d) This article does not apply to:

(1) a landlord's lien, other than an agricultural lien;

(2) a lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but Section 1-9-333 of this title applies with respect to priority of the lien;

(3) an assignment of a claim for wages, salary, or other compensation of an employee;

(4) a sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;

(5) an assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of collection only;

(6) an assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract;

(7) an assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;

(8) a transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health-care provider of a health-care-insurance receivable and any subsequent assignment of the right to payment, but Sections 1-9-315 and 1-9-322 of this title apply with respect to proceeds and priorities in proceeds;

(9) an assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;

(10) a right of recoupment or set-off, but:

(A) Section 1-9-340 of this title applies with respect to the effectiveness of rights of recoupment or set-off against deposit accounts; and

(B) Section 1-9-404 of this title applies with respect to defenses or claims of an account debtor;

(11) the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:

(A) liens on real property in Sections 1-9-203 and 1-9-308 of this title;

(B) fixtures in Section 1-9-334 of this title;

(C) fixture filings in Sections 1-9-501, 1-9-502, 1-9-512, 1-9-516, and 1-9-519 of this title; and

(D) security agreements covering personal and real property in Section 1-9-604 of this title; or

(12) an assignment of a claim arising in tort, other than a commercial tort claim, but Sections 1-9-315 and 1-9-322 of this title apply with respect to proceeds and priorities in proceeds.

Okla. Stat. tit. 12A, § 1-9-109

Added by Laws 2000 , SB 1519, c. 371, § 9, eff. 7/1/2001; Amended by Laws 2004 , SB 1584, c. 153, § 2, eff. 11/1/2004.aw, many exclusions are modified, and Article 9 applies to a limited extent, to priority (as in the case of a statutory lien dependent upon possession in revised section 9-333) or priority and proceeds (as in the case of deposit accounts in revised sections 9-315 and 9-322 ).

Oklahoma Code Comment

Revised section 9-109 combines former sections 9-102 and 9-104 and makes a number of changes. Perhaps the most important change is to considerably expand the transactions or collateral to which Article 9 applies. Thus, revised Article 9, unlike former Article 9, applies to:

. Agricultural liens. These are non-possessory, non-consensual liens in farm products that secure payment or performance of an obligation for goods or services furnished in connection with a debtor's farming operation or rent on real property leased by a debtor in connection with its farming operation in favor of a person that in the ordinary course of its business furnished goods or services to a debtor in connection with the debtor's farming operation or leased real property to a debtor in connection with the debtor's farming operation. See revised sections 9-102(a)(5) and 9-109(a)(2) . Cf. under former law, Agistor Credit Corp. v. Unruh, 571 P.2d 1220 (Okla. 1977); Leger Mill Co., Inc. v. Kleen-Leen, Inc., 563 P.2d 132 (Okla. 1977).

. A sale of payment intangibles (a general intangible under which the account debtor's principal obligation is a monetary obligation-- section 9-102(a)(61) ) or promissory notes (an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds-- section 9-102(a)(65) ) . Sales of accounts also are covered, except as excluded in revised section 9-109(d)(4) through (7) , which follow former section 9-104 , and while sales of accounts were covered under former Article 9, nevertheless because the definition of "account" is considerably expanded under revised section 9-102(a)(2) , the coverage under revised section 9-109(a)(3) is greater.

. Revised Article 9 includes assignments (1) by or to a health care provider of a health care insurance receivable and any subsequent right to payment, (2) of commercial tort claims, and (3) of deposit accounts (other than in a consumer transaction). Revised sections 9-102(a)(46), (13), (29), 9-109(a)(1) and (d) ( 8), ( 12) and ( 13) .

. Consignments of the type formerly covered in section 2-326(3) . See revised sections 9-102(a)(20) and 9-109(a)(4) .

Revised section 9-109(a)(1) also conforms to the revised test for when a lease is treated as a secured transaction by deleting reference to the intent of the parties; the economics of the transaction now determine its characterization. Contra as to emphasizing intent under former law: American Triticale, Inc. v. Nytco Services, Inc., 664 F.2d 1136 (10th Cir. 1981); Georgia-Pacific Corp. v. Lumber Products Co., 590 P.2d 661 (Okla. 1979), First Nat. Bank & Trust Co. of Stillwater v. McKown, 867 P.2d 1342 (Okl. App. 1993). But see as consistent, In re Breece, 58 B.R. 379 (Bankr. N.D. Okla. 1986); Matter of Fashion Optical, Ltd. 653 F.2d 1385 (10th Cir. 1981); In re Novack, 88 B.R. 353 (Bankr. N.D. Okla. 1988). Other cases under prior law as to when a transaction creates a security interest remain valid. See Poteau State Bank v. Denwalt, 597 P.2d 756 (Okla. 1979); Kellenberger v. Bob Meyers Moving & Storage Co., Inc., 595 P.2d 1229 (Okla. App. 1979); Morton Booth Co. v. Tiara Furniture, Inc., 564 P.2d 210 (Okla. 1977).

As under former Article 9, the fact an obligation is secured by a transaction or interest to which Article 9 does not apply does not affect the application of Article 9 to that obligation. Revised sections 9-109(b) ; O'Dell v. Kunkel's, Inc., 581 P.2d 878 (Okla. 1978); Farmers State Bank in Afton v. Ballew, 626 P.2d 337 (Okla. 1981).

Revised section 9-109(c) and (d) continue former excluded transactions from Article 9, but also in some cases reduce the transactions or collateral excluded from Article 9. Thus Article 9 does not apply when federal or other superior law does. Revised section 9-109(c)(1) ; Farmers and Merchants Nat. Bank v. Fairview State Bank, 766 P.2d 330 (Okla. 1988). Unfortunately, the reach of federal law where the collateral is intellectual property like a patent, trademark or copyright is presently unclear. See, e.g., In re Peregine Entertainment, Ltd., 116 B.R. 194 (C.D. Calif. 1990). The same is true for the application of Article 9 to a secured transaction with an Indian tribe or member of a tribe. See, e.g., Brown v. Babbitt Ford, Inc., 571 P.2d 689 (Ariz. App. 1977). However, to the extent that Peregrine relied on old Article 9 as a basis for that decision, it may be undercut by the more narrow deference to federal law at revised section 9-109(c)(1) .

Nor does Article 9 apply to a non-possessory statutory lien that is not an agricultural lien. Revised section 9-109(d)(2) ; Farmers State Bank in Afton v. Ballew, 626 P.2d 337 (Okla. 1981); Frontier Federal Sav. and Loan Ass'n v. Commercial Bank, N.A. 806 P.2d 1140 (Okla. 1990). Article 9 does not apply to a right of recoupment or set-off. Revised section 9-109(d)(10) ; First Nat. Bank and Trust Co. v. Iowa Beef Processors, Inc. 626 F.2d 764 (10th Cir. 1980) (but see also revised section 9-340). Article 9 does not apply to the creation or transfer of an interest in real estate or rents, except for fixtures and limited exceptions. Revised section 9-109(d)(11) ; F.D.I.C. v. Hulsey, 22 F.3d 1472 (10th Cir. 1994). Most cases treat income from real estate other than rent as Article 9 collateral. See, e.g., In re Kearney Hotel Partners, 92 B.R. 95 (Bankr. S.D.N.Y. 1988); In re Freeborn, 617 P.2d 424 (Wash. 1980). This view is codified at revised section 9-102(a)(2) , which defines Article 9 "accounts" to include rights to payment "for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of.... "

The former, total exclusion of security interests created by governmental debtors is modified to exclude such only to the extent another Oklahoma statute expressly governs the creation, perfection, priority or enforcement of a security interest created by the state or a governmental unit. Revised section 9-109(c)(2) . The practical effect is little if any change since few such statutes, if any, exist. Also, as under former law, many exclusions are modified, and Article 9 applies to a limited extent, to priority (as in the case of a statutory lien dependent upon possession in revised section 9-333) or priority and proceeds (as in the case of deposit accounts in revised sections 9-315 and 9-322).

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