Printable Format84-9-112 through 84-9-116.
KANSAS COMMENT, 1996
This section, which does not vary from the 1995 Official Text, prescribes the duties of the secured party where the owner of the collateral is not the obligor. For the related definition of "debtor," which is broad enough to contemplate the owner of collateral used as collateral for another's debt, see 84-9-105(1)(d). The duties set forth in subsections (a) through (e) are conditioned on the secured party's knowledge that the person who owes the obligation is not the owner of the collateral. The secured party apparently is under no duty of inquiry, but under the provisions of 84-9-203 the security agreement must be signed by the debtor and the debtor must have rights in the collateral. The security agreement would reveal the owner of the collateral in most conceivable cases, absent a subsequent covert sale. This section establishes the governing rules among the third party owner, the true debtor, and the secured party. Most of the duties spelled out in this section relate to the primary obligor's default. The collateral owner gets any surplus from a foreclosure sale, has a right to redeem the collateral, may recover penalties for creditor misbehavior, and gets notification if the secured party proposes to retain the collateral in satisfaction of the debt under 84-9-505. Curiously, this section does not list the right to receive notice of any foreclosure sale under 84-9-504(3), but this omission should be seen as a drafting oversight rather than a limit on the broad definition of "debtor" under 84-9-105(1)(d). For a good case holding that the foreclosing creditor has a duty to notify the hypothecator, see Rushton v. Shea, 423 F. Supp. 468 (D. Del. 1976).
Revisor's Note:
Former sections 84-9-112 through 84-9-116 were repealed by L. 2000, ch. 142, ยง 155.
CASE ANNOTATIONS
1. One not privy to security agreement not personally liable for debt. Clark Jewelers v. Satterthwaite, 8 Kan. App. 2d 569, 571, 662 P.2d 1301 (1983).
2. Interest as lessee in growing crops not the same as owner of collateral being foreclosed for third party's debts. First Nat'l Bank v. Milford, 239 Kan. 151, 155, 718 P.2d 1291 (1986).