TABLE OF CONTENTS

GENERAL PROVISIONS

SECURED TRANSACTIONS; SALES OF ACCOUNTS AND CHATTEL PAPER

Perfection Without Filing or Transfer of Possession. 21

9-523. Information From Filing Office. 44

9-524. Assignment of Functions to Third Party. 44

Party. 51

Liability of Secondary Obligor. 56

GENERAL PROVISIONS

PART 1. SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER OF THE ACT

1-101. Short Title.

This Title shall be known and may be cited as Choctaw Commercial Transactions Act of 2002.

1-102. Scope.

This Chapter, and all subsequent Chapters and Sections of this Title, shall apply to the over-all processes and procedures for engaging in commercial activities which are under the jurisdiction of the Texas Band of Choctaw Indians.

1-103. Purposes; Rules of Construction.

(1) Underlying purposes and policies of this Title are:

(a) to simplify, and clarify the law governing commercial transactions within the Choctaw Indian Community; and

(b) to promote the continued expansion of commercial practices within the Choctaw Indian Community.

(2) This Title shall be liberally construed and applied to promote its underlying purposes and policies.

1-104. Supplementary General Principles of Law.

Unless specifically modified or deleted by a particular provision of this Title or other recognized and applicable law, the principles of law and equity, including laws relating to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating legal concept shall supplement this title. The adoption of this code does not preempt any applicable consumer protection laws.

1-105. Construction Against Implicit Repeal.

No part of this Title shall be impliedly repealed by subsequent legislation if such construction can reasonably be avoided.

1-106. Territorial Application of the Title.

Except as provided elsewhere in this Title, this Title applies to all transactions which are under the jurisdiction of the Texas Band of Choctaw Indians.

1-107. Remedies to Be Liberally Administered.

(1) The remedies provided by this Title shall be liberally administered so that the aggrieved party may be put in the same position as if the other party had fully performed. Consequential, special or punitive damages may not be had unless specifically provided for in this Title or in other applicable law.

(2) Any right or obligation declared by this Title is enforceable by action unless the provision declaring it specifies a different and limited effect.

1-108. Waiver or Renunciation of Claim or Right After Breach.

Any claim or right arising out of an alleged breach can be discharged in whole or in part without consideration by a written waiver or renunciation signed and delivered by the aggrieved party.

If the application of any provision or clause of this Title is held invalid by a court of competent jurisdiction, such invalidity shall not affect other provisions or applications of this Title, if the remaining provisions can still be given effect without the invalid provisions or application.

1-110. Special Limitation on Application of Code.

Notwithstanding any other provision of this Title to the contrary, this Title shall not apply to any exclusively barter transaction in which the market value of all the goods and services involved in the transaction does not exceed $XXX. Such transactions shall be governed by the customs and traditions of the Texas Choctaws.

1-111. Choctaw Business Committee Administration of the Commercial Transactions; Regulations.

The Choctaw Business Committee, or its designated successor, shall be charged with the administration of this Title. The Choctaw Business Committee or its designated successor is authorized to promulgate upon review and approval of the appropriate tribal legislative body, regulations and revisions regarding those matters designated to be governed by this Title.

PART 2. DEFINITIONS AND PRINCIPLES OF INTERPRETATION

(1) "Account" means any right to payment for goods sold or leased or for services rendered which is not evidenced by an instrument or chattel paper, whether or not it has been earned by performance.

(2) "Accord and Satisfaction" means the discharge of a debt where the parties agree to exchange money or an item of value as a full and complete payment of the debt. The amount of money or value of the item exchanged does not need to equal the debt which is being discharged.

(3) "Action" in the sense of a judicial proceeding includes recoupment, counterclaim, set-off, suit in equity and any other proceedings in which rights are determined.

(4) "Aggrieved party" means a party entitled to resort to a remedy.

(5) "Agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing, usage of trade or course of performance as provided in this Title. Whether an agreement has legal consequences is determined by the provisions of this Title, if applicable; otherwise by recognized contract principle.

(6) "Attach" means the ability to enforce a claim against a debtor with respect to collateral

(7) "Bank" means any person or institution that receives deposits, makes loans, or performs other money-related functions.

(8) "Barter" means to exchange goods or services without exchanging money.

(9) "Bearer form" means a security or similar commercial paper that is not registered on the books of the issuer. Such a security or paper is payable to the person having possession of the paper.

(10) "Bill of lading" means a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods, and includes an airbill.

(11) "Branch" means any division or separate facility of an organization or business entity and includes a separately incorporated foreign branch of a bank.

(12) "Burden of establishing" a fact means the burden of persuading the trier of fact that the existence of the fact is more probable than its non-existence.

(13) "Buyer in ordinary course of business" means a person who, in good faith and without knowledge that the sale is in violation of the ownership rights or security interest of a third party in the goods, buys in the regular business practice from a person in the business of selling goods of that kind. This definition does not extend to pawnbrokers. All persons who sell minerals or the like (including oil and gas) at wellhead or minehead shall be deemed to be persons in the business of selling goods of that kind. "Buying" may be for cash, secured or unsecured credit, contract for sale, exchange of other property. Transfers in bulk or as security for or in total or partial satisfaction of a money debt do not constitute buying.

(14) "Cash Proceeds" means money, checks, deposit accounts and the like.

(15) "Certificated security" means a recognized interest in property, an enterprise or an obligation of the issuer which is:

(a) represented by an instrument issued in bearer or registered form;

(b) of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment; and

(c) either one of a class or series or by its terms divisible into a class or series of shares, participation's, interests, or obligations.

(16) "Chattel paper" means a written instrument which evidence both a monetary obligation and a security interest in, or a lease of specific goods. A charter or other contract involving the use or hire of a vessel is not chattel paper.

(17) "Check" means a draft, other than a document draft, payable on demand and drawn on a bank or a cashier's check or teller's check. An item may be a check even though it is described on its face by another term, such as "money order."

(18) "Collateral" means property subject to a security interest, and includes accounts and chattel paper which have been sold.

(19) "Consequential Damages" means any indirect losses or injuries which are not the direct result from an action or failure to act. See also Special Damages and Punitive Damages.

(20) "Conspicuous": A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals (such as: NON-NEGOTIABLE BILL OF LADING) is conspicuous. Language in the body of a form is "conspicuous" if it is in larger type or contrasting type or color. In a telegram any stated term is "conspicuous."

(21) "Consignee" is the person receiving goods to sale in accordance with the terms of an agreement with the consignor.

(22) "Consignment" is the act of placing goods with another for sale with the understanding that the consignee will pay the consignor for any goods sold and will return any unsold goods.

(23) "Consignor" is the person giving the goods to a consignee to sale.

(24) "Construction Mortgage" means a mortgage that secures an obligation incurred for the construction of an improvement on land including the acquisition cost of the land, if the recorded writing so indicates.

(25) "Consumer" means any real person.

(26) "Consumer Goods" means goods that are used or bought for use primarily for personal, family or household purposes.

(27) "Contract" means the total legal obligation which results from the parties' agreement as affected by this Title and any other recognized and applicable rules of law.

(28) "Contract for Sale" means an agreement for both the present sale of goods and a contract to sell goods at a future time.

(29) "Course of performance" means the understanding which develops by conduct without objection between two parties during the performance of a contract.

(30) "Creditor" means a person or organization to whom a debt is owed and includes a general creditor, a secured creditor, a lien creditor and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity and an executor or administrator of an insolvent debtor's or assignor's estate.

(31) "Debtor" means the person who owes payment or other performance of the obligation, whether or not the person owns or has rights in the collateral, and includes the seller of accounts or chattel paper. Where the debtor and the owner of the collateral are not the same person, the term "debtor" means the owner of the collateral in any provision of this Title dealing with the collateral, the obligor in any provision dealing with the obligation, and may include both where the context so requires.

(32) "Defendant" means a person or organization against whom a legal action is brought and includes a person in the position of defendant in a cross-action or counterclaim.

(33) "Delivery" means the voluntary transfer of possession with respect to instruments, documents of title, chattel paper or certificated securities.

(34) "Document of title" includes bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers. To be a document of title a document must purport to be issued by or addressed to person in possession of the goods and purport to cover goods in the person's possession.

(35) "Encumbrance" includes real estate mortgages and other liens on real estate and all other rights in real estate that are not ownership interests.

(36) "Entitlement holder" means a person identified in the records of a securities intermediary as the person having a security entitlement against the securities intermediary.

(37) "Entitlement order" means a notification communicated to a securities intermediary directing transfer or redemption of a financial asset to which the entitlement holder has a security entitlement.

(38) "Equipment" means goods which are used or bought for use primarily in business (including farming or a profession) or by a debtor who is a non profit organization or a governmental subdivision or agency or if the goods are not included in the definitions of inventory, farm products or consumer goods.

(39) "Farm Products" means goods which are crops, livestock, supplies used or produced in farming operations, or are products or crops or livestock in their unmanufactured states (such as ginned cotton, woolclip, maple syrup, milk and eggs), and if they are in the possession of a debtor engaged in raising, fattening, grazing, or other farming operations. If goods are farm products they are neither equipment nor inventory.

(40) "Fault" means wrongful act, omission or breach.

(41) "Financing statement" means a document setting out a secured party's security interest the collateral. A financing statement includes the original financing statement and any amendments.

(42) "Fixture" means goods when they become so related to particular real estate that an interest in them arises under real estate law.

(43) "General Damages" means damages which are usual and customary in the type of transaction at issue. They may be pled in broad terms which provides sufficient information to the opposing party as to the nature of the damages.

(44) "General Intangibles" means any personal property (including things in action) other than goods, accounts, chattel paper, documents, instruments and money.

(45) "Genuine" means free of forgery or counterfeiting.

(46) "Good faith" means honesty in fact in the conduct or transaction concerned.

(47) "Goods" includes all things which are movable at the time the security interest attaches or which are fixtures and includes "Consumer goods", "Equipment", "Farm products", and "Inventory" but does not include money, documents, instruments, accounts, chattel paper, general intangibles, or natural resources (minerals or the like including oil and gas) before extraction. "Goods" also includes standing timber which is to be cut and removed under a conveyance or contract for sale, the unborn young of animals, and growing crops.

(48) "Holder" with respect to a negotiable instrument payable to the bearer, means the person in possession of the instrument, in the case of an instrument payable to an identified person, if the identified person is in possession, with respect to a document of title means the person in possession if the goods are deliverable to bearer or to the order of the person in possession.

(49) "Holder in due course" means the holder of an instrument if:

(a) the instrument when issued or negotiated to the holder does not bear apparent evidence of forgery, alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and

(b) the holder took the instrument:

(i) for value;

(ii) in good faith;

(iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment or another instrument issued as part of the same series;

(iv) without notice than the instrument contains an unauthorized signature or has been altered;

(v) without notice of any claim to the instrument; and

(vi) without notice than any party has a defense or claim in recoupment.

(50) "Honor" means to pay or to accept and pay, or where a credit so engages to purchase or discount a draft complying with the terms of the credit.

(51) "Indian country" as defined by 18 U.S.C Sec. 1151 means:

(a) land within the limits of any Indian reservation under the jurisdiction of the United States government, notwithstanding the issuance of any patent, and, including rights-of-way running through the reservation; Note: application of (a) does not apply to the Texas Choctaws as of date of ratification.

(b) all dependent Indian communities within the borders of the United States whether the original or subsequently acquired territory thereof, and whether within or without the limits of a state; and

(c) all Indian allotments, the Indian titles to which have not been extinguished, including rights-of way running through the same.

(52) "Insolvency proceedings" includes any assignment for the benefit of creditors or other proceedings intended to liquidate or rehabilitate the estate of the person involved.

(53) "Insolvent" means a person or organization who either has ceased to pay their debts in the ordinary course of business or cannot pay their debts as they become due or is insolvent within the meaning of the federal bankruptcy law.

(54) "Instrument" means a negotiable instrument or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in ordinary course of business transferred by delivery with any necessary endorsement or assignment. The term does not include investment property.

(55) "Inventory" means goods which are held by a person who holds them for sale or lease or to be furnished under contracts or service or if the person has so furnished them, or if they are raw materials, work in process or materials used or consumed in a business. Inventory of a person is not to be classified as equipment.

(56) "Investment Property" means a security, whether certificated or uncertificated, a security entitlement, a securities account, a commodity contract, or a commodity account.

(57) "Lien creditor" means a creditor who has acquired a lien on the property involved by attachment, levy or the like and includes an assignee for benefit of creditors from the time of assignment, and a trustee in bankruptcy from the date of the filing of the petition or a receiver in equity from the time of appointment.

(58) "Money" means a medium of exchange authorized or adopted by a sovereign entity and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.

(59) "Mortgage" means a consensual interest created by a real estate mortgage, a trust deed on real estate, or the like.

(60) "Notifies" means a person or organization taking such steps as may be reasonably required to inform another in ordinary course, independent of whether or not such other actually comes to know of it.

(61) "Organization" includes a corporation, government or government subdivision or agency, business trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity.

(62) "Party", means a person who has engaged in a transaction or made an agreement within the scope of this Title.

(63) "Payment intangible" means a general intangible under which the account debtor's principal obligation is to pay money.

(64) "Punitive Damages" means damages which are not related to the actual injury or harm suffered but which are awarded as a deterrent to keep a particularly malicious or willful act from happening again.

(65) "Person" an individual.

(66) "Presumption" or "presumed" means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its nonexistence.

(67) "Proceeds" includes whatever is received upon the sale, exchange, collection or other disposition of collateral or proceeds. Insurance payable by reason of loss or damage to the collateral is proceeds, except to the extent that it is payable to a person other than a party to the security agreement. Money, checks, deposit accounts, and the like are "cash proceeds". All other proceeds are "non-cash proceeds".

(68) "Purchase" includes taking by sale, discount, negotiation, mortgage, pledge, lien, issue or re-issue, gift or any other voluntary transaction creating an interest in property.

(69) "Purchase money security interest" means a security interest that is:

(a) taken or retained by the seller in the collateral to secure all or part of its price; or

(b) taken by a person who (by making advances to incurring an obligation) gives value to enable the debtor to acquire rights in or the use of collateral, if such value is in fact so used.

(70) "Purchaser" means a person who takes by purchase.

(71) "Pursuant to commitment" means that the secured party is bound to make an advance, whether or not a subsequent event of default, or other event not within the secured party's control has relieved or may relieve the secured party from the obligation.

(72) "Reasonable Time" means any time which is not manifestly unreasonable. Determination depends on the nature, purpose and circumstance of such action and may be fixed by agreement.

(73) "Remedy" means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.

(74) "Representative" means any person empowered to act for another and includes an agent, an officer of a corporation or association, and a trustee, executor or administrator of an estate.

(75) "Sale" means the passing of title or interest from the seller to the buyer for a price.

(76) "Security" means property that has been designated as financial backing for a loan or other obligation. It is either certificated or uncertificated security. If a security is certificated, the terms security and certificated security may mean either intangible interest, the instrument representing that interest, or both, as the context requires.

(77) "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer is limited in effect to a reservation of a "security interest".

Whether a transaction creates a lease or security interest is determined by the facts of each case; however, a transaction creates a security interest if the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee: and

(a) the original term of the lease is equal to or greater than the remaining economic life of the goods;

(b) the lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;

(c) the lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement; or

(d) the lessee has an option to become the owner of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement.

A transaction does not create a security interest merely because it provides that:

(a) the present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or is greater than the fair market value of the goods at the time the lease is entered into;

(b) the lessee assumes risk of loss of the goods, or agrees to pay taxes, insurance, filing, recording, or registration fees, or service or maintenance costs with respect to the goods;

(c) the lessee has an option to renew the lease or to become the owner of the goods;

(d) the lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time option is to be performed; or

(e) the lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.

For purposes of this subsection:

(a) Additional consideration is not nominal if:

(i) when the option to renew the lease is granted to the lessee the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed; or

(ii) when the option to become the owner of the goods is granted to the lessee the price is stated to be the fair market value of the goods determined at the time the option is to be performed. Additional consideration is nominal if it is less than the lessee's reasonably predictable cost of performing under the lease agreement if the option is not exercised;

(b) "Reasonably predictable" and "remaining economic life of the goods" are to be determined with reference to the facts and circumstances at the time the transaction is entered into; and

(c) "Present value" means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate is not manifestly unreasonable at the time the transaction is entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.

(78) "Send" means to properly address and deposit in the mail or deliver for transmission by any other recognized and acceptable means of communication, with postage or cost or transmission provided for.

(79) "Sign" means to identify a document or record by means of a signature, mark, or other symbol with intent to authenticate the writing.

(80) "Special Damages" means damages which are unique to the course of conduct between the parties and which must be specifically enumerated in order to provide the opposing party with the necessary information to inform them of the damages.

(81) "Standard trade practices" means a sequence of previous conduct between the parties to a particular transaction which establishes a common basis of understanding for interpreting their expressions and other conduct.

(82) "Surety" includes guarantor.

(83) "Telegram" includes a message transmitted by radio, teletype, cable, any mechanical method of transmission, or the like.

(84) "Term" means that portion of an agreement which relates to a particular matter.

(85) "Trade fixture" means property placed on or within real estate for the purpose of conducting a trade or business. Trade fixtures are presumed not to become annexed to the real estate.

(86) "Transmitting utility" means any person primarily engaged in the railroad, street railway or trolley bus business, the electric or electronics communications transmission business, the transmission of goods by pipeline, or the transmission or the production and transmission of electricity, steam, gas or water, or the provision of sewer service.

(87) "Tribe" means the Texas Band of Choctaw Indians (also known as the Yawani Choctaws, Angelina River Choctaws, Thompson-Choctaws), or in a historical sense the entire Mount Tabor Indian Community under the title of Texas Cherokees and Associate Bands (1839-1999) as the successor government of the Texas Cherokee Nation also known as the Texas Cherokees and Twelve Associated Tribes (1819-1839).

(88) "Unauthorized" signature means one made without actual, implied, or apparent authority and includes a forgery.

(89) "Usage of trade" means the prevailing and accepted customs within a particular trade or industry with preference being given to customs within the jurisdiction of the Texas Band of Choctaw Indians.

(90) "Value". Except as otherwise provided with respect to negotiable instruments and bank collections a person gives "value" for rights if the person acquires them:

(a) generally, in return for any consideration sufficient to support a simple contract;

(b) in return for a binding commitment to extend credit or for the extension of immediately available credit whether or not drawn upon and whether or not a chargeback is provided for in the event of difficulties in collection;

(c) as security for or in total or partial satisfaction of a pre-existing claim; or

(d) by accepting delivery pursuant to a pre-existing contract for purchase.

(91) "Warehouse receipt" means a receipt issued by a person engaged in the business of storing goods for hire.

(92) "Written" or "writing" means any printed, typewritten or other form of communication reduced to tangible form.

1-202. Prima Facie Evidence by Third Party Documents.

A document purporting to be: a bill of lading; policy or certificate of insurance; official weigher's or inspector's certificate; consular invoice; or any other document authorized or required by contract, to be issued, shall be prima facie evidence of its own authenticity and genuineness and of the facts stated in the document.

1-203. Obligation of Good Faith.

Every contract or duty within this Title imposes an obligation of good faith in its performance or enforcement.

1-204. Notice.

(1) The time and circumstances under which a notice or notification may cease to be effective are determined by the nature, purpose, and circumstances of the transaction.

(2) Notice, knowledge or notification received by an organization is effective for a particular transaction:

(a) from the time when it is brought to the attention of the individual conducting that transaction; or

(b) from the time when it would have been brought to that person's attention if the organization had exercised due diligence.

1-205. Course of Dealing and Usage of Trade.

(1) A course of dealing between parties and any usage of trade in the vocation or trade in which they are engaged, or of which they are or should be aware may be considered for purposes of:

(a) determining the meaning of ambiguous terms in an agreement; or

(b) supplementing or qualifying the terms of an agreement.

(2) The express terms of an agreement and standard trade practices shall be construed, wherever reasonable as consistent with each other. When such construction is unreasonable:

(a) Express terms control standard trade practices; and

(b) Past trade practices control usage of trade.

(3) The standard trade practices in the place where any part of performance is to occur may be used in interpreting the agreement relating to that part of the performance.

(4) Evidence offered by one party relating to standard trade practices is not admissible unless and until sufficient notice has been given to the other party.

1-206. Performance or Acceptance Under Reservation of Rights.

(1) A party who performs or promises performance in a manner demanded, or proposed by the other party, does not waive any rights, provided the party explicitly reserves those rights. Such words as "without prejudice", "under protest" or the like are sufficient to reserve those rights.

(2) Subsection (1) does not apply to an accord and satisfaction.

1-207. Option to Accelerate at Will.

(1) A term providing that one party or the parties successor in interest may accelerate payment, performance, require collateral or require additional collateral "at will", "when insecure" or words of similar import shall only be effective upon a good faith belief that the prospect of payment or performance is impaired.

(2) Any party or the party's successor in interest desiring to accelerate payment, performance, require collateral or require additional collateral must obtain leave of the court, unless the debtor agrees to the terms of the acceleration at the time the option is exercised.

(3) A judicial decree under Section 9-608 allowing a secured party to repossess collateral shall include an order of acceleration if the secured party has made such a request in the pleadings.

(4) The burden of establishing lack of good faith initially is on the party against whom the power has been exercised. Upon presentation of prima facia evidence of lack of good faith, the burden of proof shifts to the party exercising the power. The party exercising the power must present a commercially reasonable justification beyond a reasonable doubt for the exercise of the power.

1-208. Subordinated Obligations.

An obligation may be designated as subordinate to payment of another obligation of the debtor, or a creditor may subordinate the creditors right to payment of an obligation by agreement with either the debtor or another creditor of the debtor. Such a subordination does not create a security interest as against either the debtor or a subordinated creditor.

1-209. Statute of Frauds for Kinds of Personal Property Not Otherwise Covered.

Except in the cases described in 1-110, a contract for the sale or personal property is not enforceable by way of action or defense beyond five thousand dollars in amount or value or remedy unless there is a writing which indicates that a contract for sale has been made between the parties at a defined or stated price, reasonably identifies the subject matter, and is signed by the party, or the parties authorized agent, the against whom enforcement is sought.

SECURED TRANSACTIONS; SALES OF ACCOUNTS AND CHATTEL PAPER

PART 1. GENERAL PROVISIONS

Sub-Part 1. Short Title.

9-101. Short Title.

This Article may be cited as Commercial Transactions--Secured Transactions.

Sub-Part 2. Concepts.

9-102. Control Over Investment Property.

(1) Control of a certificated security in bearer form is effective when the security is delivered to the purchaser.

(2) Control of a certificated security in registered form is effective when the security is delivered to the purchaser, and:

(a) the certificate is indorsed to the purchaser or in blank by an effective indorsement; or

(b) the certificate is registered in the name of the purchaser, upon original issue or registration of transfer by the issuer.

(3) Control of an uncertificated security is effective if:

(a) the uncertificated security is delivered to the purchaser; or

(b) the issuer has agreed that it will comply with the instructions originated by the purchaser without further consent by the registered owner.

(4) A purchaser has control of a security entitlement if:

(a) the purchaser becomes the entitlement holder; or

(b) the securities intermediary has agreed that it will comply with entitlement order originated by the purchaser without further consent by the entitlement holder.

(5) If an interest in a security entitlement is granted by the entitlement holder to the entitlement holder's own securities intermediary, the security intermediary has control.

(6) A purchaser who has satisfied the requirements of subsection (3)(b) or (4)(b) has control even if the registered owner or the entitlement holder retains the right to:

(a) make substitutions of the uncertificated security or security entitlement;

(b) originate instructions or entitlement orders to the issuer or securities intermediary; or

(c) otherwise to deal with the uncertificated security or security entitlement.

(7) An issuer or a securities intermediary may not enter into an agreement of the kind described in 9-102(3)(b) or (4)(b) without the consent of the registered owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into such an agreement even though the registered owner or entitlement holder so directs. An issuer or securities intermediary that has entered into such an agreement is not required to confirm the existence of the agreement to another party unless requested to do so by the registered owner or entitlement holder.

(8) (a) A secured party has control over a commodity contract if the commodity customer, the commodity intermediary, and the secured party agree that the commodity intermediary will apply any value distributed under the commodity contract as directed by the secured party without consent by the commodity customer.

(b) If a commodity customer grants a security interest in a commodity contract to its own commodity intermediary, the commodity intermediary has control as a secured party.

Sub-Part 3. Applicability of Article.

9-103. Sufficiency of Description.

(1) Except as otherwise provided in 9-103(2), a description of personal property or real estate is sufficient if it reasonably identifies what is described.

(2) A description of a deposit account is sufficient only if it describes the deposit account either by item; as all of the debtor's deposit accounts; or as an identified class of the debtor's deposit accounts.

(3) (a) A description of collateral in a security agreement or financing statement is sufficient to create or perfect a security interest in a certificated security, uncertificated security, security entitlement, securities account, commodity contract, or commodity account:

(i) if it describes the collateral by those terms;

(ii) as investment property; or

(iii) by description of the underlying security, financial asset, or commodity contract.

(b) A description of investment property collateral in a security agreement or financing statement is sufficient if it identifies the collateral by specific listing, by category, by quantity, by a computational or allocational formula or procedure, or by any other method, if the identity of the collateral is objectively determinable.

9-104. Policy and Scope of Article.

(CBC NOTE) Where the tribe has a retail installment selling act or small loan act, that legislation should be carefully examined to determine what changes in those acts are needed to conform them to this Title. This Title primarily sets out rules defining rights of a secured party against persons dealing with the debtor; it does not prescribe regulations and controls which may be necessary to curb abuses arising in the small loan business or in the financing of consumer purchases on credit. Accordingly there is no intention to repeal existing regulatory acts in those fields. [See Section 9-106 and the Note thereto.]

9-105. Transactions Excluded from Article.

(1) Except as provided in 9-105(2), this Article does not apply to:

(a) a security interest subject to any federal statute, regulation or applicable treaty, to the extent that such statute, regulation or treaty preempts tribal law and governs the rights of participating parties or third parties affected by the transaction;

(b) a landlord's lien;

(c) a lien given by statute or other rule of law for services or materials except as provided in Section 9-331;

(d) a transfer of a claim for wages, salary or other compensation of an employee;

(e) a transfer by a government or governmental subdivision or agency;

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

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

(h) a transfer of a right to payment under a contract to an assignee who is also to do the performance under the contract;

(i) a transfer of a single account, or payment intangibles to an assignee in whole or partial satisfaction of a preexisting indebtedness;

(j) a transfer of an interest or claim under any insurance policy, except:

(i) a transfer by a healthcare provider of a right to payment arising out of the furnishing of healthcare goods or services; and

(ii) as provided with respect to proceeds (Section 9-313) and priorities in proceeds (Section 9-319);

(k) a right represented by a judgment (other than a judgment taken on a right to payment which was collateral);

(l) any right of set-off as provided in 9-338;

(m) a transfer in whole or in part of any claim arising out of tort; or

(2) The application of this Title is limited to the extent that provision is made within this Title for:

(a) fixtures in Section 9-332, or

(b) the creation or transfer of an interest, including a lease or rents, or lien on real estate.

9-106. Applicibiliy of Other Statutes.

A transaction, although subject to this Title, may also be subject to the requirements found in Texas State Statutes. In case of conflict between the provisions of this Title and any other statute, the more specific statute controls. Failure to comply with an applicable statute has only the effect the statute specifies.

PART 2. VALIDITY OF SECURITY AGREEMENT, ATTACHMENT OF SECURITY INTEREST, AND RIGHTS OF PARTIES TO SECURITY AGREEMENT

Sub-Part 1. Validity and Attachment.

9-201. General Validity of Security Agreement.

(1) Except as otherwise provided by this Title, a security agreement is effective according to its terms between the parties, against subsequent purchasers of the collateral and against creditors.

(2) Nothing in this Title validates any practice illegal under any statute or regulation governing usury, small loans, retail installment sales, or the like, or extends the application of any such statute or regulation to any transaction not otherwise subject to the statute or regulation.

9-202. Title to Collateral Immaterial.

Rights, obligations and remedies under this Title apply whether title to the collateral is in the Debtor or Secured Party except as otherwise provided with respect to consignments, sales or accounts, chattel paper or payment intangibles.

9-203. Attachment and Enforceability of Security Interest; Proceeds; Support Obligations; Formal Requisites.

(1) A security interest is not enforceable against the Debtor or third parties with respect to the collateral and does not attach unless:

(a) (i) the collateral is in the possession of the Secured Party pursuant to the debtor's agreement,

(ii) the collateral is investment property or a deposit account and the Secured Party has control pursuant to the Debtor's agreement; or

(iii) the debtor has signed a security agreement which contains a description of the collateral. When the security interest covers crops growing, crops to be grown or timber to be cut the description must also include a description of the land concerned;

(b) value has been given; and

(c) the Debtor has rights in the collateral.

(2) Attachment provisions in 9-202(1) are in addition to attachment provisions on:

(a) a security interest in investment property (9-206);

(b) the requirements on new debtors (9-203(3)).

(3) If a new Debtor becomes bound as Debtor by a security agreement entered into by a predecessor in interest, the agreement satisfies the requirement of Section 9-203(1)(a) as to existing or after acquired property of the new debtor to the extent the property is described in the agreement. No other agreement is necessary to make a security interest in the property enforceable.

(4) A security interest attaches when it becomes enforceable against the debtor with respect to the collateral. Attachment occurs as soon as all of the events specified in Section 9-203(1) have taken place unless explicit agreement by the parties postpones the time of attaching.

(5) Unless otherwise agreed:

(a) a security agreement gives the secured party the rights to proceeds provided by Section 9-313; or

(b) attachment of a security interest in collateral is also attachment of a security interest in a support obligation with respect to the collateral;

9-204. After-Acquired Property; Future Advances.

(1) Except as provided in 9-204(2), a security agreement may create or provide for a security interest in after acquired collateral.

(2) No security interest attaches to Consumer Goods under an after-acquired property clause, except:

(a) to accessions (Section 9-333) when given as additional security; or

(b) the debtor acquires rights to the after acquired Consumer Goods within ten days after the secured party gives value.

(3) A security agreement may provide that collateral secures or that accounts, chattel paper, or payment intangibles are sold in connection with future advances or other value, whether or not the advances or value are given "pursuant to commitment."

9-205. Use or Disposition of Collateral Without Accounting Permissible.

(1) A security interest is not invalid or fraudulent against creditors by reason of:

(a) liberty in the debtor to:

(i) use, commingle, or dispose of all or part of the collateral (including returned or repossessed goods);

(ii) collect, compromise, enforce, or otherwise deal with collateral;

(iii) accept the return of goods or make authorized repossessions; or

(iv) use, commingle or dispose of proceeds; or

(b) the secured party failing to require the debtor to account for proceeds or replace collateral.

(2) This section does not relax the requirements of possession where perfection, or enforcement of a security interest depends upon possession of the collateral by the secured party or by a bailee.

9-206. Security Interest Arising in Purchase or Delivery of Financial Asset.

(1) (a) A securities intermediary has a security interest in the buyer's security entitlement if:

(i) a person buys a financial asset through a securities intermediary;

(ii) in a transaction in which the buyer is obligated to pay the purchase price to the securities intermediary at the time of the purchase; and

(iii) the securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary.

(b) A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.

(2) If a certificated security, or other financial asset represented by a writing which in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment, is delivered pursuant to an agreement between persons in the business of dealing with such securities or financial assets and the agreement calls for delivery versus payment, the person delivering the certificate or other financial asset has a security interest in the certificated security or other financial asset securing the seller's right to receive payment. A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.

Sub-Part 2. Validity and Attachment.

9-207. Rights and Duties When Collateral Is in Secured Party's Possession.

(1) If a security interest secures an obligation, or a buyer of accounts, chattel paper, or payment intangibles is entitled by agreement to charge back uncollected collateral or otherwise entitled to full or limited recourse against the debtor or against a secondary obligor, the secured party shall use reasonable care in the custody and preservation of collateral in the secured party's possession. In the case of an instrument or chattel paper, reasonable care includes taking any necessary steps to preserve rights against prior parties unless otherwise agreed.

(2) Unless otherwise agreed and not withstanding any contrary provision in Section 9-602, if a security interest secures an obligation and collateral is in the secured party's possession:

(a) reasonable expenses, including the cost of any insurance and payment of taxes or other related charges incurred in the custody, preservation, use or operation of the collateral are chargeable to the debtor and are secured by the collateral;

(b) the risk of accidental loss or damage is on the secured party to the extent of a deficiency in any effective insurance coverage;

(c) the secured party may hold as additional security any increase or profits (except money) received from the collateral, but money received, unless remitted to the debtor, must be applied to reduce the secured obligation;

(d) the secured party must keep the collateral identifiable but collateral of which any unit is by nature or usage of trade the equivalent of any other like unit may be commingled; and

(e) the secured party may create additional security interests in the collateral upon terms which do not impair the rights of pre-existing security interests.

(3) A secured party is liable for any loss caused by the failure to meet any obligation imposed by Section 9-207(1) or (2) but the secured party does not loose its security interest.

(4) A secured party may use or operate the collateral:

(a) for the purpose of preserving the collateral;

(b) for the purpose of preserving the collateral's value;

(c) pursuant to tribal court order; or

(d) in the manner and to the extent provided in the security agreement. A security agreement may not restrict the use or operation of a consumer good.

9-208. Request for Accounting, List of Collateral or Statement of Account.

(1) A debtor may sign a statement indicating what the debtor believes to be the total amount of unpaid indebtedness as of a specified date and send it to the secured party with a request that the statement be approved or corrected and returned to the debtor.

(2) The secured party shall comply with a request pursuant to Section 9-208(1) within two weeks after receipt by sending a written correction or approval. If the secured party fails to comply without reasonable excuse, the secured party is liable for any loss caused to the debtor for noncompliance.

(a) If the debtor has properly included in a request pursuant to Section 9-208(1), a good faith statement of the obligation or a list of the collateral or both, the secured party may claim a security interest only as shown in the statement against person's misled by the secured party's noncompliance.

(b) If the security agreement or any other record kept by the secured party identifies the collateral, a debtor may similarly request the secured party to approve or correct a list of the collateral.

(c) If the secured party claims a security interest in all of a particular type of collateral owned by the debtor the secured party may indicate that fact in the reply and need not approve or correct an itemized list of such collateral.

(3) If the secured party no longer has an interest in the obligation or collateral at the time the request is received, the secured party shall disclose the name and address of any successor in interest known to the secured party and is liable for any loss caused to the debtor as a result of failure to disclose this information. A successor in interest is not subject to this section until a request is received by the successor.

(4) A debtor is entitled to such a statement once every six months without charge. The secured party may require payment of a charge not exceeding $5.00 for each additional statement furnished.

PART 3. PERFECTION OF SECURITY INTERESTS.

Sub-Part 1. Law Governing Perfection and Priority.

9-301. Perfection and Priority of Certain Possessory and Nonpossessory Security Interests.

(1) The following rules apply to a possessory or nonpossessory security interest in collateral other than goods covered by a certificate of title described in Section 9-303, deposit accounts, investment property, and minerals and related accounts described in Section 9-306.

(2) Except as otherwise provided in this section, perfection and the effect of perfection or non-perfection of a security interest in collateral are governed by the law of the (Tribe Name).

9-302. Perfection and Priority of Agricultural Liens.

(1) Perfection of an agricultural lien on collateral derived from land found within the exterior boundaries of tribally owned lands is governed by the laws of the Texas Band of Choctaw Indians.

(2) While collateral is located in any jurisdiction, the effect of perfection or nonperfection and the priority of an agricultural lien on the collateral are governed by the law of the (Tribe Name).

9-303. Perfection and Priority of Security Interests in Goods Covered by a Certificate of Title.

(1) This subsection applies to goods covered by a certificate of title issued under (Tribal) Law or from any other jurisdiction under which indication of a security interest on the certificate is required as a condition of perfection.

(2) Goods become covered by a certificate of title when an appropriate application for the certificate and the applicable fee are delivered to the appropriate authority.

(3) Perfection, the effect of perfection or non-perfection, and the priority of the security interest are governed by the local law of the jurisdiction under whose certificate the goods are covered. This security interest is valid from the time the goods become covered by the certificate until the time the certificate becomes ineffective under the law of that jurisdiction or the time the goods become covered by a certificate of title from another jurisdiction.

9-304. Perfection and Priority of Security Interests in Deposit Accounts.

Perfection, the effect of perfection or nonperfection, and the priority of a security interest in a deposit account are governed by the laws of the Texas Band of Choctaw Indians.

9-305. Perfection and Priority of Security Interests in Investment Property.

(1) Except as otherwise provided in section 9-305(2), the following rules apply to a security interest in investment property:

(a) While a security certificate is located within (Tribe Name) jurisdiction, perfection, the effect of perfection or nonperfection, and the priority of a security interest in the certificated security represented thereby are governed by the law of the (Tribe Name).

(b) Perfection, the effect of perfection or nonperfection, and the priority of a security interest in an uncertificated security are governed by the local law of the issuer's jurisdiction.

(c) Perfection, the effect of perfection or non-perfection, and the priority of a security interest in a security entitlement or securities account are governed by the law of the (Tribe Name).

(d) Perfection, the effect of perfection or non-perfection, and the priority of a security interest in a commodity contract or commodity account are governed by the law of the (Tribe Name).

(2) The laws of the Texas Choctaws governs perfection of a security interest created by filing, automatic perfection of a security interest in investment property granted by a broker or securities intermediary, and automatic perfection of a security interest in a commodity contract or commodity account granted by a commodity intermediary.

9-306. Perfection and Priority of Security Interest in Minerals.

Perfection, the effect of perfection or non-perfection and the priority of a security interest that is created by a debtor having an interest in minerals or the like (including oil and gas) before extraction and which attaches upon extraction, or which attaches to an account resulting from the sale of the collateral at the wellhead or minehead are governed by the laws of the Texas Choctaws. This section does not apply to tribal resources held in trust.

9-307. Location of Debtor.

(1) A registered entity is located in the jurisdiction of its organization.

(2) Any other debtor is located at its place of business if it has only one, at its chief executive office if it has more than one place of business, and at the debtor's residence if the debtor has no place of business.

Sub-Part 2. Perfection.

9-308. When Security Interest or Agricultural Lien is Perfected; Continuity of Perfection.

(1) A security interest is perfected when it has attached and when all of the applicable steps required for perfection have been taken as specified in Sections 9-309 through 9-313. If such steps are taken before the security interest attaches, it is perfected at the time it attaches.

(2) An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection specified in Section 9-309 and 9-313 have been met. If the steps are taken before the agricultural lien becomes effective, it is perfected when it becomes effective.

(3) A security interest or agricultural lien originally perfected in any manner permitted under this Title and subsequently perfected in another manner permitted under this Title shall be deemed to be continuously perfected for the purpose of this Title provided there was no intermediary period when the security interest or agricultural lien was unperfected.

(4) Perfection of a security interest in an account, chattel paper, a document, an instrument, a general intangible, or a security also perfects a security interest in a support obligation for the collateral.

(5) Perfection of a security interest in a securities account also perfects a security interest in all security entitlements carried in the securities account. Perfection of a security interest in a commodity account also perfects a security interest in all commodity contracts carried in the commodity account.

(6) Notwithstanding other law to the contrary, perfection of a security interest in a right to payment or performance, other than a right to payment evidenced by chattel paper, also perfects a security interest in a lien on property securing the right.

9-309. When Filing Is Required to Perfect Security Interest or Agricultural Lien; Security Interests and Agricultural Liens to Which Filing Provisions of This Article Do Not Apply.

(1) A financing statement must be filed to perfect all security interests and agricultural liens, except the following:

(a) a security interest in collateral in the secured parties possession under Section 9-311;

(b) a security interest perfected under Section 9-314(1), (3) or (4);

(c) a security interest in instruments certificated securities, chattel paper, or documents perfected without filing or possession under Section 9-310(4) or (5);

(d) a security interest in or agricultural lien on proceeds under Section 9-313(5);

(e) a security interest in a support obligation under Section 9-308(4);

(f) a security interest created by an assignment of a beneficial interest in a trust or a decedent's estate;

(g) a purchase money security interest in consumer goods; but 9-309(4) applies to consumer goods that are subject to a federal statute or applicable treaty described in 9-309(3);

(h) an assignment of accounts or payment intangibles which does not alone, or in conjunction with other assignments to the same assignee, transfer a significant part of the assignor's outstanding accounts or payment intangibles;

(i) an assignment for the benefit of all the creditors of the transferor, and subsequent transfers by the assignee;

(j) a security interest arising in the purchase or delivery of a financial asset under Section 9-206;

(k) a security interest in investment property created by a broker or securities intermediary;

(l) a security interest in a commodity contract or a commodity account created by a commodity intermediary;

(m) a security interest in a letter of credit and proceeds of the letter of credit which is perfected without filing under Section 9-312;

(n) a security interest in property subject to a federal statute, regulation, or applicable treaty described in 9-309(3);

(o) a security interest in a deposit account which is perfected without filing under Section 9-312; and

(p) a sale of a payment intangible.

(2) If a secured party assigns a perfected security interest, no filing under this Title is required in order to continue the perfected status of the security interest against creditors and transferees from the original debtor.

(3) The filing of a financing statement otherwise required by this Title is not necessary or effective to perfect a security interest in property subject to:

(a) federal statutes, regulations or applicable treaties of the United States which provides for:

(i) national or international registration;

(ii) national or international certificate of title; or

(iii) which specifies a place of filing different from that specified in this Title for filing of the security interest; or

(b) the following tribal regulations, [list any certificate of title statute covering automobiles, trailers, mobile homes, boats, farm tractors, or the like, and any central filing statute *.] During any period in which collateral is inventory held for sale by a person who is in the business of selling goods of that kind, the filing provisions of this Title (Part 4) apply to a security interest in that collateral created by the person as debtor; or

Note: It is recommended that the provisions of certificate of title regulations for perfection of security interests by notation on the certificates should be amended to exclude coverage of inventory held for sale.

(c) a certificate of title statute of another jurisdiction under the law of which indication of a security interest on the certificate is required as a condition or result of perfection (Section 9-303).

(4) Compliance with the requirements prescribed by a statute, regulation, or treaty described in Section 9-309(3) for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under this article. Except as otherwise provided in Sections 9-311 and 9-314(3) for goods covered by a certificate of title, a security interest in property subject to a statute, regulation, or treaty described in Section 9-309(3) can be perfected only by compliance with those requirements, and a security interest so perfected remains perfected notwithstanding a change in the use or transfer of possession of the collateral. Except as otherwise provided in Section 9-314(3), duration and renewal of perfection of a security interest perfected by compliance with the requirements prescribed by the statute, regulation, or treaty are governed by the statute, regulation, or treaty. In other respects the security interest is subject to this article.

9-310. Perfection of Security Interest in Instruments, Documents, and Goods Covered by Documents; Perfection by Permissive Filing; Temporary Perfection Without Filing or Transfer of Possession.

(1) A security interest in instruments, chattel paper, investment property or negotiable documents may be perfected by filing. Except as otherwise provided in Section 9-313(5) for cash proceeds:

(a) a security interest in money can be perfected only by the secured party's taking possession (Section 9-311);

(b) a security interest in a deposit account can be perfected only by control (Section 9-312); and

(c) except as otherwise provided in Section 9-308(4) for support obligations, a security interest in a letter of credit and proceeds of the letter of credit can be perfected only by control (Section 9-312).

(2) A security interest in goods in the possession of a bailee that has issued a negotiable document covering the goods is perfected by perfecting a security interest in the document. Any security interest in the goods otherwise perfected during the period is subordinate to the security interest perfected in the document.

(3) A security interest in goods in the possession of a bailee that has issued a non-negotiable document covering the goods is perfected by:

(a) issuance of a document in the name of the secured party;

(b) the bailee's receipt of notification of the secured party's interest; or

(c) filing as to the goods.

(4) A security interest in instruments is perfected without filing or the taking of possession for a period of 21 days from the time it attaches. In order for the security interest to attach the secured party must have given new value under a written security agreement.

(5) A security interest remains perfected for a period of 21 days without filing if a secured party having a perfected security interest in an instrument, certified security, negotiable document or goods in possession of a bailee other than a bailee who has issued a negotiable document for those goods:

(a) makes available to the debtor the goods or documents representing the goods:

(i) for the purpose of ultimate sale or exchange; or

(ii) for the purpose of loading, unloading, storing, shipping, manufacturing, processing or otherwise dealing with the goods in a manner preliminary to their sale or exchange, but priority among conflicting security interests in the goods is subject to Section 9-322; or

(b) delivers the instrument or certified security to the debtor for the purpose of:

(i) ultimate sale or exchange; or

(ii) presentation, collection, renewal or registration of transfer.

(6) After the 21 day period in 9-310(4) and (5) expires, perfection depends upon compliance with this article.

9-311. When Possession by Secured Party Perfects Security Interest Without Filing.

(1) Except as otherwise provided in 9-311(2), a security interest in goods, instruments (other than certificated securities), money, negotiable documents or chattel paper may be perfected by the secured party's taking possession of the collateral. A security interest in certificated securities may be perfected by the secured party's taking possession of the security certificates.

(2) A security interest in goods covered by a certificate of title issued by this Indian Band may be perfected by the secured party's taking possession of the collateral only in the circumstances described in Section 9-314(3).

(3) This subsection applies to collateral other than goods covered by a document.

(a) A security interest is perfected by possession when the secured party takes possession, without a relation back, and continues only while the secured party retains possession, unless otherwise specified in this article.

(b) If the collateral is in the possession of a person other than the debtor, a secured party or a lessee in the ordinary course of the debtor's business takes possession when the person in possession acknowledges in writing that it holds possession for the secured party's or lessee's benefit.

(c) If a person, other than the debtor, the secured party, or a lessee in the ordinary course of the debtor's business takes possession of the collateral after having acknowledged in writing that it will hold possession of collateral for the secured party's or lessee's benefit, the secured party or lessee takes possession when the person takes possession.

(4) A person in possession of collateral is not required to acknowledge that it holds possession for a secured party's benefit.

(5) If a person acknowledges that it holds possession for the secured party's benefit:

(a) the acknowledgment is effective under subsection (c) even if the acknowledgment violates the rights of a debtor; and

(b) unless the person otherwise agrees or other law otherwise provides, the person owes no duties to the secured party and is not required to confirm the acknowledgment to another person.

(6) A security interest may be perfected as otherwise provided in this article before or after a period of possession by a secured party.

9-312. Perfection by Control.

(1) A security interest in investment property, a deposit account, or a letter of credit and proceeds of the letter of credit may be perfected by control of the collateral under Section 9-102 or 9-110.

(2) A security interest is perfected by control from the time the secured party obtains control without a relation back and continues only while control is retained.

(3) A security interest may be otherwise perfected as provided in this article before or after the period of control by the secured party.

9-313. Proceeds; Secured Party's Rights on Disposition of Collateral; Secured Party's Rights in Proceeds .

(1) Money, checks, deposit accounts, and the like are cash proceeds. All other proceeds are noncash proceeds.

(2) Except as otherwise provided in this article, a security interest continues in collateral notwithstanding sale, lease, license, exchange, or other disposition thereof, and also attaches to any identifiable proceeds, unless the secured party authorized the disposition free of the security interest in the security agreement or through subsequent agreement. Other law determines whether an agricultural lien continues on collateral notwithstanding disposition or becomes effective as to proceeds.

(3) Proceeds that are commingled with other property are identifiable proceeds:

(a) if the proceeds are goods, to the extent provided by Section 9-334; and

(b) if the proceeds are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under other law with respect to commingled property of the type involved.

(4) A security interest in or agricultural lien on proceeds is a perfected security interest or agricultural lien if the interest in or lien on the original collateral was perfected. The security interest in or agricultural lien on proceeds ceases to be a perfected interest or lien and becomes unperfected on the 21st day after the security interest attaches to the proceeds or the agricultural lien becomes effective as to the proceeds unless:

(a) a filed financing statement covers the original collateral and the proceeds are collateral in which a security interest may be perfected by filing in the office in which the financing statement has been filed and, if the proceeds are acquired with cash proceeds or funds from a deposit account, the description of collateral in the financing statement indicates the type of property constituting the proceeds;

(b) the proceeds are identifiable cash proceeds; or

(c) the security interest in or agricultural lien on the proceeds is perfected before the 21st day after the security interest attaches to the proceeds or the agricultural lien becomes effective as to the proceeds.

(5) Except as otherwise provided in 9-313(4), a security interest in or agricultural lien on proceeds can be perfected only by the methods or under the circumstances permitted in this article for original collateral of the same type.

(6) If a filed financing statement covers the original collateral, a security interest in or an agricultural lien on proceeds which remains perfected under 9-313(4)(a) becomes unperfected when the effectiveness of the filed financing statement lapses under Section 9-516 or is terminated under Section 9-511, but in no event before the 21st day after the security interest attaches to the proceeds or the agricultural lien becomes effective as to the proceeds.

9-314. Perfection of Security Interest or Agricultural Lien Following Change in Applicable Law.

(1) This subsection applies to an agricultural lien and to a nonpossessory security interest in collateral other than goods covered by a certificate of title (Section 9-303), deposit accounts, investment property, and minerals and related accounts described in Section 9-306. A security interest or agricultural lien perfected under the law of the jurisdiction in which the debtor is located remains perfected until the expiration of four months after a change of the debtor's location to within the jurisdiction of the Texas Choctaws, or until perfection would have ceased under the law of the first jurisdiction, whichever occurs first. If it becomes perfected under the laws of the Texas Choctaws before the end of that period, the security interest or agricultural lien continues perfected thereafter. If it does not become perfected under the laws of the Texas Choctaws before the end of that period, the security interest or agricultural lien becomes unperfected and is deemed never to have been perfected.

(2) This subsection applies to a possessory security interest in collateral, other than goods covered by a certificate of title (Section 9-303) and minerals described in Section 9-306. A security interest remains continuously perfected if:

(a) the collateral is located in one jurisdiction and subject to a security interest perfected under the law of that jurisdiction;

(b) thereafter the collateral is brought into the jurisdiction of the Texas Band of Choctaw Indians; and

(c) upon entry into the jurisdiction of the Texas Choctaws the security interest is perfected under the laws of the constitution of the Texas Band of Choctaw Indians.

(3) This subsection applies to goods covered by a certificate of title (Section 9-303). If a security interest in goods is perfected by any method under the law of another jurisdiction and the goods become covered by a certificate of title requirement from this jurisdiction the security interest remains perfected until the earlier of the time the security interest would have become unperfected under the law of the other jurisdiction or the expiration of four months after the goods have become located within this jurisdiction. If the security is perfected under Section 9-309(4) or 9-311 before the prior perfection ceases to be effective, the security interest continues perfected thereafter. If it does not become perfected under Section 9-309(4) or Section 9-311 before the earlier of that time or the expiration of that period, the security interest becomes unperfected and is deemed never to have been perfected.

(4) A security interest perfected under the law of the depositary institution's jurisdiction, the securities intermediary's jurisdiction, or the commodity intermediary's jurisdiction, which ever is applicable, remains perfected until the expiration of four months after a change of the depositary institution's jurisdiction, or until perfection would have ceased under the law of the first jurisdiction, whichever occurs first. If it becomes perfected under the laws of the Texas Choctaws before the end of that period, the security interest continues perfected thereafter. If it does not become perfected under the laws of the Texas Choctaws before the end of that period, the security interest becomes unperfected and is deemed never to have been perfected.

Sub-Part 3. Priority.

9-315. Interests That Take Priority Over and Take Free of Unperfected Security Interests or Agricultural Lien.

(1) An unperfected security interest is subordinate to the rights of:

(a) persons entitled to priority under Section 9-319; and

(b) a person who becomes a lien creditor before the security interest is perfected.

(2) Except as otherwise provided in 9-315(5), a buyer of goods, instruments, documents, a security certificate, or chattel paper that is not a secured party takes free of a security interest if the buyer gives value and receives delivery of the collateral without knowledge of the security interest and before it is perfected.

(3) Except as otherwise provided in 9-315(5), a lessee of goods takes free of a security interest if the lessee receives delivery of the collateral without knowledge of the security interest and before it is perfected.

(4) A buyer of accounts, general intangibles, or investment property other than a security certificate which is not a secured party takes free of a security interest if the buyer gives value without knowledge of the security interest and before it is perfected.

(5) If the secured party files, with respect to a purchase money security interest, before or within 20 days after the debtor receives possession of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor which arises between the time the security interest attaches and the time of filing.

9-316. Rights and Title of Consignee and Seller of Account or Chattel Paper With Respect to Creditors and Purchasers.

(1) Goods purchased for personal, family or household use and goods having a value of less than $125.00 which are delivered or consigned do not become the property of the deliveree or consignee unless the deliveree or consignee purchases and fully pays for the goods. A deliveree or consignee may still act as the deliver's agent for purposes of transfering title to a buyer of these goods. Payment received by the deliveree or consignee upon selling of the goods, may be reduced by any commissions, fees or expenses expressly agreed to by the deliverer with the remaining payment amount being the property of the deliverer and not subject to any claims by the delivere's or consignee's creditors.

(2) For purposes of determining the rights of creditors of, and purchasers of an account or chattel paper from, a debtor that has sold an account or chattel paper, while the buyer's security interest is unperfected, the debtor has rights and title to the account or chattel paper identical to those the debtor sold.

9-317. Protection of Buyers of Goods.

(1) This section does not affect a security interest in goods in the possession of the secured party under Section 9-311.

(2) A buyer in the ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the seller, even if the security interest is perfected and the buyer knows of its existence.

(3) A buyer of consumer goods takes free of a security interest, even though perfected, if the buyer purchases the goods:

(a) without knowledge of the security interest;

(b) for value; and

(c) for the buyers own personal, family or household purposes unless prior to the buyer's purchase the secured party has filed a financing statement covering the goods.

9-318. Lessees of Goods in Ordinary Course of Business.

A lessee of goods in ordinary course of business of the lessor takes the leasehold interest free of a security interest in the goods created by the lessor even though the security interest is perfected and the lessee knows of its existence.

9-319. Priorities Among Conflicting Security Interests and Agricultural Liens in the Same Collateral.

(1) Except as otherwise provided in this part, with respect to a security interest of a collecting bank, and with respect to a security interest of an issuer or nominated person, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules:

(a) Conflicting security interests rank according to priority in time of filing or perfection. Priority dates from the time a filing is first made covering the collateral or the time the security interest is first perfected, whichever is earlier, if there is no period thereafter when there is neither filing nor perfection.

(b) So long as conflicting security interests are unperfected, the first to attach has priority.

(2) For the purposes of 9-319(1), a date of filing or perfection as to collateral is also a date of filing or perfection as to proceeds.

9-320. Future Advances.

(1) This subsection applies only to a security interest that secures an obligation. For purposes of determining the priority of a security interest under Section 9-319(2), perfection of the security interest dates from the time an advance is made if the security interest secures an advance made, other than pursuant to commitment, while the security interest is temporarily perfected under Section 9-310(4) or (5) and by no other method, .

(2) This subsection applies only to a security interest that secures an obligation. A security interest is subordinate to the rights of a person that becomes a lien creditor while the security interest is perfected only to the extent that it secures advances made more than 45 days after the person becomes a lien creditor, unless the advance is made without knowledge of the lien or pursuant to a commitment entered into without knowledge of the lien.

(3) A buyer of goods, other than a buyer in ordinary course of business, takes free of a security interest to the extent that it secures advances made after the secured party acquires knowledge of the buyer's purchase, or more than 45 days after the purchase, whichever occurs first, unless the advance is made pursuant to a commitment entered into without knowledge of the buyer's purchase and before the expiration of the 45-day period. This subsection does not affect a security interest in goods in the possession of the secured party under Section 9-311.

(4) A lessee of goods other than a lessee of goods in ordinary course of business takes the leasehold interest free of a security interest to the extent that it secures advances made after the secured party acquires knowledge of the lease or more than 45 days after the lease contract becomes enforceable, whichever first occurs, unless the future advances are made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the 45-day period.

9-321. Priority of Production Money Security Interests and Agricultural Liens.

(1) Except as otherwise provided in 9-321(5), if the requirements of 9-321(2) are met, a perfected production money security interest in production money crops has priority over a conflicting security interest in the same crops and, except as otherwise provided in Section 9-326, also has priority in their identifiable proceeds. A production money security interest has priority under this subsection only to the extent that the conflicting security interest secures obligations incurred more than 24 months before the production money secured party first gives new value to enable the debtor to produce the crops.

(2) A production money security interest has priority under 9-321(1) if:

(a) the production money security interest is perfected by filing when the production money secured party first gives new value to enable the debtor to produce the crops;

(b) the production money secured party gives written notification to the holder of the conflicting security interest before the production money secured party first gives new value to enable the debtor to produce the crops if the holder had filed a financing statement covering the crops before the date of the filing made by the production money secured party; and

(c) the notification states that the production money secured party has or expects to acquire a production money security interest in the debtor's crops and contains a description of the crops.

(3) Except as otherwise provided in 9-321(4), if more than one security interest qualifies for priority in the same collateral under 9-321(1), the security interests rank according to priority in time of filing under Section 9-319(2).

(4) If a statute provides that an agricultural lien in collateral has priority over a conflicting security interest or agricultural lien in the same collateral, the statute governs priority if the agricultural lien is perfected.

(5) To the extent that a person holds both an agricultural lien and a production money security interest in the same collateral securing the same obligations, the rules of priority applicable to agricultural liens govern priority.

9-322. Priority of Purchase Money Security Interests.

(1) Except as otherwise provided in 9-322(5), a perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory and, except as otherwise provided in Section 9-326, also has priority in its identifiable cash proceeds to the extent the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer if:

(a) the purchase money security interest is perfected when the debtor receives possession of the inventory;

(b) the holder of the purchase money security interest gives written notice to the holder of the conflicting security interest if the holder had filed a financing statement covering the same types of inventory;

(i) before the date of a filing made by the purchase money secured party or;

(ii) before the beginning of the 20 day period where the purchase money security interest is temporarily perfected without filing or possession under Section 9-310(5);

(c) the holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory ; and

(d) the notification states that the person giving the notice has or expects to acquire a purchase money security interest in inventory of the debtor, describing the inventory by item or type.

(2) If a purchase money security interest in inventory has priority over a conflicting security interest under 9-322(1), a security interest held by the purchase money secured party in chattel paper constituting proceeds of the inventory has priority over a conflicting security interest in the chattel paper if:

(a) the purchase money secured party takes possession of the chattel paper in good faith;

(b) in the ordinary course of the secured party's business; and

(c) without knowledge that the security interest violates the rights of the holder of the conflicting security interest.

(3) Except as otherwise provided in 9-322(5), a perfected purchase money security interest in livestock that are farm products has priority over a conflicting security interest in the same livestock and, except as otherwise provided in Section 9-326, also has priority in its identifiable proceeds and identifiable products in their unmanufactured states if:

(a) the purchase money security interest is perfected when the debtor receives possession of the livestock;

(b) the purchase money secured party gives written notification to the holder of the conflicting security interest if the holder had filed a financing statement covering the same types of livestock before the date of a the filing made by the purchase money secured party, or before the beginning of the 20 day period if the purchase money security interest is temporarily perfected without filing or possession under Section 9-310(5);

(c) the holder of the conflicting security interest receives the notification within six months before the debtor receives possession of the livestock ; and

(d) the notification states that the person giving the notice has or expects to acquire a purchase money security interest in livestock of the debtor, describing the livestock by item or type.

(4) Except as otherwise provided in 9-322(5), a purchase money security interest in collateral other than inventory or livestock has priority over a conflicting security interest in the same collateral and, except as otherwise provided in Section 9-326, also has priority in its identifiable proceeds if the purchase money security interest is perfected when the debtor receives possession of the collateral or within 20 days thereafter.

(5) If more than one security interest qualifies for priority in the same collateral under 9-322(1), (3), or (4):

(a) a security interest securing an obligation incurred as the price of the collateral has priority over a security interest securing an obligation incurred by an obligor for value given to enable the debtor to acquire rights in collateral; and

(b) in all other cases, Section 9-319(2) applies to the qualifying security interests.

9-323. Priority of Security Interests in Transferred Collateral.

(1) If a debtor acquires property subject to a perfected security interest created by another person, any security interest created by the debtor is subordinate to the security interest created by the other person, if there is no period when the prior security interest is unperfected, notwithstanding anything to the contrary in this part.

(2) If a debtor acquires property subject to an unperfected security interest created by the other person or which becomes unperfected at any time thereafter, the other sections of this subpart govern, as applicable.

9-324. Priority of Security Interests Created by New Debtor.

(1) A perfected security interest in collateral that is effective solely by a filed financing statement under Section 9-510, which a new debtor has or acquires rights is subordinate to a security interest in the same collateral that is perfected in another manner.

(2) If more than one security interest in the same collateral is subordinate under this subsection, the other rules stated in this subpart determine the priority of the subordinated security interests.

9-325. Priority of Security Interests in Investment Property.

Priority between conflicting security interests in the same investment property is governed by the following rules:

(a) A security interest of a secured party who has control over investment property has priority over a security interest of a secured party who does not have control over the investment property.

(b) A possessory security interest in a security certificate in registered form has priority over a conflicting security interest perfected by a method other than control.

(c) Except as otherwise provided in section 9-325(d) and (e), conflicting security interests of secured parties each of whom has control rank equally.

(d) Except as otherwise agreed by the securities intermediary, a security interest in a security entitlement or a securities account granted to the debtor's own securities intermediary has priority over any security interest granted by the debtor to another secured party.

(e) Except as otherwise agreed by the commodity intermediary, a security interest in a commodity contract or a commodity account granted to the debtor's own commodity intermediary has priority over any security interest granted by the debtor to another secured party.

(f) Conflicting security interests granted by a broker, a securities intermediary, or a commodity intermediary which are perfected without control rank equally.

(g) In all other cases, priority between conflicting security interests in investment property is governed by Section 9-319(2) and (3) and 9-320(1).

9-326. Priority of Security Interests in Deposit Accounts.

Priority among conflicting security interests in the same deposit account is governed by the following rules:

(a) A security interest held by a secured party that has control over the deposit account has priority over a conflicting security interest held by a secured party that does not have control.

(b) Except as otherwise provided in 9-326(c) and (d), security interests perfected by control rank equally.

(c) Except as otherwise provided in 9-326(d), a security interest held by the depositary institution with which the deposit account is maintained has priority over a conflicting security interest held by another secured party.

(d) A security interest perfected by control has priority over a security interest held by the depositary institution with which the deposit account is maintained.

9-327. Priority of Security Interests in Letters of Credit.

Priority among conflicting security interests in the same letter of credit and proceeds of the letter of credit is governed by the following rules:

(a) A security interest held by a secured party that has control over the letter of credit and proceeds of the letter of credit has priority over a conflicting security interest held by a secured party that does not have control.

(b) Except as otherwise provided in 9-327(c), security interests perfected by control rank equally.

(c) A security interest held by a transferee beneficiary has priority over a conflicting security interest held by another secured party.

9-328. Purchase of Chattel Paper and Instruments.

(1) A purchaser of chattel paper or an instrument has priority over a security interest in the chattel paper or instrument and, except as otherwise provided in Section 9-326, in its proceeds if the purchaser gives new value and takes possession of the chattel paper or instrument:

(a) in good faith;

(b) in the ordinary course of the purchaser's business; and

(c) without knowledge that the purchase violates the rights of the secured party.

(2) For purposes of 9-328(1), if chattel paper or an instrument indicates that it has been assigned to an identified assignee, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the assignee.

(3) A possessory security interest in an instrument has priority over a conflicting security interest perfected by another method.

9-329. Rights of Purchasers of Instruments, Documents and Securities Under Other Law.

(1) Nothing in this article limits the rights of:

(a) a holder in due course of a negotiable instrument,

(b) a holder to whom a negotiable document of title has been duly negotiated, or

(c) a protected purchaser of a security.

(2) These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided under applicable law. Filing under this article does not constitute notice of the security interest to those holders or purchasers.

9-330. Transfer of Money; Transfer of Funds From Deposit Account.

(1) A transferee of money takes the money free of a security interest unless the transferee acts in collusion with the debtor in violating the rights of the secured party.

(2) A transferee of funds from a deposit account takes the funds free of a security interest in the deposit account unless the transferee acts in collusion with the debtor in violating the rights of the secured party.

9-331. Priority of Certain Liens Arising by Operation of Law.

(1) When a person in the ordinary course of business furnishes services or materials with respect to goods subject to a security interest, a lien upon goods in the possession of such person given by statute or rule of law for such materials or services takes priority over a perfected security interest unless the lien is statutory and the statute expressly provides otherwise.

(2) A perfected security interest or an unperfected security interest is subordinate to any Tribal Lien in existence when the security interest is created.

9-332. Priority of Security Interests in Fixtures.

(1) A mortgage is a construction mortgage to the extent that it secures an obligation incurred for the construction of an improvement on land including the acquisition cost of the land, if the recorded writing so indicates.

(2) A security interest under this Title may be created in goods which are fixtures or may continue in goods that become fixtures, but no security interest exists in ordinary building materials incorporated into an improvement on land.

(3) This Title does not prevent creation of an encumbrance upon fixtures pursuant to real estate law.

(4) A perfected security interest in fixtures has priority over the conflicting interest of an encumbrancer or owner of the real estate if:

(a) (i) the security interest is a purchase money security interest;

(ii) the interest of the encumbrancer or owner arises before the goods become fixtures;

(iii) the security interest is perfected by a fixture filing before the goods become fixtures or within ten days thereafter; and

(iv) the debtor has an interest of record in the real estate or is in possession of the real estate; or

(b) (i) the security interest is perfected by a fixture filing before the interest of the encumbrancer or owner is of record;

(ii) the security interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner; and

(iii) the debtor has an interest of record in the real estate or is in possession of the real estate; or

(c) (i) the fixtures are readily removable factory or office machines or readily removable replacements of domestic appliances which are consumer goods; and

(ii) before the goods become fixtures the security interest is perfected by any method permitted by this Title; or

(d) the conflicting interest is a lien on the real estate obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this Title.

(5) A security interest in fixtures, whether or not perfected, has priority over the conflicting interest of an encumbrancer or owner of the real estate if:

(a) the encumbrancer or owner has consented in writing to the security interest or has disclaimed an interest in the goods as fixtures; or

(b) the debtor has a right to remove the fixture(s) as against the encumbrancer or owner.

(6) If the debtor's right terminates, the priority of the security interest continues for a period of ninety days, beginning on the date the debtor's rights terminate.

(7) Notwithstanding Section 9-332(4)(a) but otherwise subject to sections 9-332(4), (5) and (6), a security interest in fixtures is subordinate to a construction mortgage recorded before the goods become fixtures if the goods become fixtures before the completion of the construction. To the extent that a mortgage is given to refinance a construction mortgage, the mortgage has the same priority date as the construction mortgage.

(6) In all other instances, a security interest in fixtures is subordinate to the conflicting interest of an encumbrancer or owner of the related real estate who is not the debtor.

(7) When the secured party has priority over all owners and encumbrances of the real estate, on default the secured party may remove the collateral from the real estate. However, the secured party must reimburse any encumbrancer or owner of the real estate who is not the debtor for any physical injury to the real estate, but not for any diminution in value caused by the absence of the goods removed or by any necessity of replacing them. A person entitled to reimbursement may require the secured party give adequate security through a performance bond or otherwise prior to removal of the collateral.

9-333. Accessions.

(1) A security interest in goods which attaches before the goods are installed or affixed to other goods takes priority over the claims of all other persons to which the initial goods were installed or affixed. The attached security interest in goods prior to installation or affixation is limited to those goods installed or affixed but does not include the goods to which the initial goods were installed or affixed except as stated in section 9-333(3).

(2) A security interest which attaches to goods after they become part of a whole:

(a) is valid against all persons subsequently acquiring interests in the whole except as stated in section 9-333(3); and

(b) is invalid against any person with an interest in the whole at the time the security interest attaches to the goods, who has not in writing consented to the security interest or disclaimed an interest in the goods as part of the whole.

(3) A security interest described in sections 9-333(1) and (2) made or contracted for without knowledge of the security interest and before the security interest is perfected do not take priority over:

(a) a subsequent purchaser for value of any interest in the whole;

(b) a creditor with a lien on the whole subsequently obtained by judicial proceedings; or

(c) a creditor with a prior perfected security interest in the whole to the extent that the creditor makes subsequent advances.

(4) A purchaser of the whole at a foreclosure sale other than the holder of a perfected security interest purchasing at the holder's own foreclosure sale, is a subsequent purchaser within this section.

(5) When the secured party has an interest in accessions which has priority over the claims of all persons who have interest in the whole, on default the secured party may remove the collateral from the whole. However, the secured party must reimburse any encumbrancer or owner of the whole who is not the debtor for the cost of repair of any physical injury to the whole, but not for any diminution in value of the whole caused by the absence of the goods removed or by any necessity of replacing them. A person entitled to reimbursement may require the secured party give adequate security through a performance bond or otherwise prior to removal of the collateral.

9-334. Priority When Goods Are Commingled or Processed.

(1) If a security interest in goods was perfected and subsequently the goods, or a part thereof, have become part of a product or mass, the security interest continues in the product or mass if:

(a) the goods are manufactured, processed, assembled or commingled in a manner that causes their identity to be lost; or

(b) a financing statement covering the original goods also covers the product into which the goods have been manufactured, processed or assembled.

(2) When sec