Okla. Stat. tit. 12A § 1-9-323
Okla. Stat. tit. 12A, § 1-9-323
Oklahoma Code Comment
Section 9-322(a)(1) continues the coverage and rule for future advances recognized under old section 9-312(7) . First National Bank and Trust v. Security National Bank and Trust, 676 P.2d 837 (Okla. 1984). Future advances do not have priority if the security interest is not perfected. Federal Deposit Insurance Corporation v. Hastie, 2 F.3rd 1042 (10th Cir. 1993).
There are two ways that the priority of a prior filed financing statement will apply to subsequent obligations of the debtor to the secured party (i.e., future advances). First is the taking of a new security agreement describing the collateral at the time of each new advance or obligation. In this event, a future advances clause is not needed as the security interest will attach under section 9-203 pursuant to each new security agreement. The other method is if a security agreement covers future advances. In this event a new security agreement is not needed for each advance, as the future advances clause satisfies the requirement for a security agreement as a prerequisite for attachment under section 9-203 . See revised section 9-204(c) . Either way, attachment is achieved under section 9-203 and perfection will occur if there is a filed financing statement that describes the collateral. See revised sections 9-203 and 9-308(a) . 9-204(c). In either event, priority would be based on the date of filing regardless of the date of attachment. 9-322(a)(1). In order for a secured party to take advantage of priority under a future advances clause, the security agreement must clearly indicate that future advances are covered. Texas Kenworth Co. v. First National Bank of Bethany, 564 P.2d 222 (Okla. S. Ct. 1977). The revision rejects the implication in Texas Kenworth, that any consideration is given to the time of attachment for priority purposes, except to the limited extent discussed below under revised section 9- 323(a)(1)(A) . Revised sections 9-322 and 9-323 also reject the holding in Texas Kenworth that a future advances clause is the exclusive means to create attachment as to future advances; any customary means under section 9-203 will suffice. The future advance clause in the security agreement will survive repayment of the original obligation and will rearise on the making of the future advance. In re Tulsa Indus. Facilities, Inc., 186 B.R. 517, 27 UCC Rep Serv. 2d 1027 (Bankr. N.D. Okla., 1995).
Because of the limitation on priority in revised section 9-323(b) and because of the possibility that a security agreement might not cover future advances, it may be beneficial to know what kinds of obligations and advances will be considered to be a part of the original obligation. Refinancing the original debt and extending the time for payment is part of the original obligation and is not a future advance. Blue v. H-K Corp., 629 P.2d 790 (Okla. ct. app. 1981). The same is true for interest on advances, foreclosure expenses, and other expenses of collection. P. E. B. Commentary No. 2.
The authority for a secured party to provide that its security interest covers future advances is found in revised section 9-204(c) . Official Comment 5 to that section indicates that the revision rejects cases which require that the future advances meet specific tests to be covered, such as whether the debt "was of the same or a similar type or class as earlier advances of obligations secured by the collateral," as having no foundation in the statute. The intent of the Comment is consistent with the definition of "agreement" as the "bargain of the parties as found in their language ... " See UCC section 1-201(3) . Presumably the test that the future advance must have been "in contemplation of the parties at the time the agreement was executed" would be similarly rejected. See Security National Bank and Trust Co. v. Dentsply Professional Plan, 617 P.2d 1340 (Okla. S. Ct. 1980). Additional tests from real property law (such as the necessity of definitively describing presently outstanding obligations) and from the law of guaranties should be similarly rejected. Even under those tests, an overdraft in a business checking account properly qualified as a future advance following a loan to purchase business equipment. Security National Bank, 617 P.2d 1340 (Okla. S. Ct. 1980). To an oil and gas company, a loan for completion costs and working capital has been held to be a future advance following a loan for acreage acquisition. In re Continental Resources Corp., 799 F.2d 622 (10th Cir. 1986). Nevertheless, careful draftsmanship is advised in describing future obligations to be covered by a security interest. When in doubt, a new security agreement should be obtained describing the new obligation.
To a limited extent, the time of attachment is pertinent to a determination of priority. If the security interest is only perfected upon attachment under revised section 9-309 , the date of the advance is the date of priority.
Former section 9-301(4) is carried forward at revised section 9-323(b) . This subsection must be read in conjunction with the definition of "lien creditor" in section 9-102(a)(52) . This term does not include every creditor with a lien. It does not include creditors with consensual, but unenforceable, liens. Nor does it include creditors with liens arising by operation of law. The only creditors with liens included are those private parties or governmental entities who have subjected the collateral to outside control by the process of attachment, levy or the like.
Revised sections 9-323(f) and (g) embody former section 2A-307(4) .