Printable Format84-9-317. Interests that take priority over or take free of security interest or agricultural lien. (a) Conflicting security interests and rights of lien creditors. A security interest or agricultural lien is subordinate to the rights of:
(1) A person entitled to priority under K.S.A. 2024 Supp. 84-9-322, and amendments thereto; and
(2) except as otherwise provided in subsection (e), a person that becomes a lien creditor before the earlier of the time:
(A) The security interest or agricultural lien is perfected; or
(B) on the conditions specified in K.S.A. 2024 Supp. 84-9-203(b)(3), and amendments thereto, is met and a financing statement covering the collateral is filed.
(b) Buyers that receive delivery. Except as otherwise provided in subsection (e), a buyer, other than a secured party, of tangible chattel paper, tangible documents, goods, instruments, or a certificated security takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.
(c) Lessees that receive delivery. Except as otherwise provided in subsection (e), a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.
(d) Licensees and buyers of certain collateral. A licensee of a general intangible or a buyer, other than a secured party, of collateral other than tangible chattel paper, tangible documents, goods, instruments or a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.
(e) Purchase-money security interest. Except as otherwise provided in K.S.A. 2024 Supp. 84-9-320 and 84-9-321, and amendments thereto, if a person files a financing statement with respect to a purchase-money security interest before or within 20 days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor which arise between the time the security interest attaches and the time of filing.
History: L. 2000, ch. 142, § 37; L. 2002, ch. 159, § 13; L. 2007, ch. 90, § 75; L. 2012, ch. 84, § 6; July 1, 2013.
KANSAS COMMENT, 1996
This section does not vary from the 1995 Official Text and has not been amended. It establishes that personal liability of a secured party does not result from the fact of the security interest, or from the fact that the secured party has given his debtor liberty of sale or use of the collateral. Pre-UCC Kansas law was probably in accord. See Grieving v. La Plante, 156 K. 196, 131 P.2d 898 (1942), holding that the fact that merchandise is sold under the trade name of the owner of the property does not establish agency between the owner and the seller who occupies the property. Compare Adair v. Transcontinental Oil Co., 184 K. 454, 338 P.2d 79 (1959), allowing an oil and gas lien against a conditional vendor of the lease on a theory of agency by operation of law.
Potentially the most important application of this section is to limit the exposure of an assignee of chattel paper or accounts. For example, if a bank buys chattel paper from a dealer who is selling microwave ovens, the bank could not normally be held liable in tort for radiation injuries sustained by consumer purchasers of the ovens. However, for a decision which deals with the application of this section to the assignee of contract rights of a construction subcontractor, and imposes some affirmative liability on the assignee, see Farmers Acceptance Corp. v. DeLozier, 496 P.2d 1016 (Colo. 1972). For a more detailed discussion of an assignee's exposure, see Kansas Comment 1996 to 84-9-118, which is closely related.
Revisor's Note:
Former section 84-9-317 was repealed by L. 2000, ch. 142, § 155 and the number reassigned to the current text.
Law Review and Bar Journal References:
"Revised Article 9 in Kansas," Hon. John K. Pearson, 51 K.L.R. 769, 847 (2003).
CASE ANNOTATIONS
1. Interest of estate in proceeds of crops planted held free of any claim or lien of creditor. In re Stout, 284 B.R. 511, 513 (2002).
2. Mentioned; UCC provides that security interest generally subordinate to judicial lien before the security interest is perfected. In re Barker, 358 B.R. 399, 406 (2007).
3. Security interest is subordinate to rights of lien creditor before security interest is perfected. In re Jackson, 358 B.R. 412, 415 (2007).
4. Unperfected security interest is subordinate to rights of lien creditor. In re Wedman, 374 B.R. 819, 825 (2007).
5. Unperfected security interest subordinated to rights of person who became creditor prior to perfection. In re Hicks, 491 F.3d 1136, 1140 (2007).
6. Lender's perfected purchase money security interest in vehicle was superior to creditor's judgment lien and to interest of buyer who purchased vehicle at sheriff's sale. Stanley Bank v. Parish, 46 Kan. App. 2d 422, 264 P.3d 491 (2011).