N.D. Cent. Code § 41-09-51
(9-331) Priority of rights of purchasers of controllable accounts, controllable electronic records, controllable payment intangibles, documents, instruments, and securities under other articles - Priority of interests in financial assets and security entitlements and protection against assertion of claim under chapters 41-08 and 41-12
Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) This chapter does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated, or a protected purchaser of a security. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in chapters 41-03, 41-07, and 41-08.
(1) This chapter does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated, or a protected purchaser of a security. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in chapters 41-03, 41-07, and 41-08.
(2) This chapter does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under chapter 41-08.
(2) This chapter does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under chapter 41-08.
(3) Filing under this chapter does not constitute notice of a claim or defense to the holders, purchasers, or persons described in subsections 1 and 2.
(3) Filing under this chapter does not constitute notice of a claim or defense to the holders, purchasers, or persons described in subsections 1 and 2.
(4) Financial Assets and Security Entitlements. New subsection (b) provides explicit protection for those who deal with financial assets and security entitlements and who are immunized from liability under Article 8. See, e.g., Sections 8-502, 8-503(e), 8-510, 8-511. The new subsection makes explicit in Article 9 what is implicit in former Article 9 and explicit in several provisions of Article 8. It does not change the law.
(5) Collections by Junior Secured Party. Under this section, a secured party with a junior security interest in receivables (accounts, chattel paper, promissory notes, or payment intangibles) may collect and retain the proceeds of those receivables free of the claim of a senior secured party to the same receivables, if the junior secured party is a holder in due course of the proceeds. In order to qualify as a holder in due course, the junior must satisfy the requirements of Section 3-302, which include taking in “good faith.” This means that the junior not only must act “honestly” but also must observe “reasonable commercial standards of fair dealing” under the particular circumstances. See Section 9-102(a). Although “good faith” does not impose a general duty of inquiry, e.g., a search of the records in filing offices, there may be circumstances in which “reasonable commercial standards of fair dealing” would require such a search.
Official source: North Dakota Legislative Branch. Reproduced from public-domain North Dakota statutes; confirm against the official source for the current text. Not legal advice.