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DEERING'S CALIFORNIA CODES ANNOTATED Copyright (c) 2011 by Matthew Bender & Company, Inc. a member of the LexisNexis Group. All rights reserved. *** This document is current through urgency Chapter 453 & Extra. Sess. Ch. 16 *** of the 2011 Session Special Notice: Chapters enacted between October 20, 2009, and November 2, 2010, are subject to repeal by Proposition 22. UNIFORM COMMERCIAL CODE Division 9. Secured Transactions Chapter 2. Effectiveness of Security Agreement: Attachment of Security Interest: Rights of Parties to Security Agreement GO TO CALIFORNIA CODES ARCHIVE DIRECTORY Cal U Com Code 9203 (2011) 9203. Attachment of security interest; Enforceability (a) A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment. (b) Except as otherwise provided in subdivisions (c) to (i), inclusive, a security interest is enforceable against the debtor and third parties with respect to the collateral only if each of the following conditions is satisfied: (1) Value has been given. (2) The debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party. (3) One of the following conditions is met: (A) The debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned. (B) The collateral is not a certificated security and is in the possession of the secured party under Section 9313 pursuant to the debtor's security agreement. (C) The collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under Section 8301 pursuant to the debtor's security agreement. (D) The collateral is deposit accounts, electronic chattel paper, investment property, letter-of-credit rights, or electronic documents and the secured party has control under Section 7106, 9104, 9105, 9106, or 9107 pursuant to the debtor's security agreement. (c) Subdivision (b) is subject to Section 4210 on the security interest of a collecting bank, Section 5118 on the security interest of a letter-of-credit issuer or nominated person, Section 9110 on a security interest arising under Division 2 (commencing with Section 2101) or Division 10 (commencing with Section 10101), and Section 9206 on security interests in investment property. (d) A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this division or by contract, either of the following conditions is satisfied:

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(1) The security agreement becomes effective to create a security interest in the person's property. (2) The person becomes generally obligated for the obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person. (e) If a new debtor becomes bound as debtor by a security agreement entered into by another person, both of the following apply: (1) The agreement satisfies paragraph (3) of subdivision (b) with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement. (2) Another agreement is not necessary to make a security interest in the property enforceable. (f) The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by Section 9315 and is also attachment of a security interest in a supporting obligation for the collateral. (g) The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage, or other lien. (h) The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account. (i) The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account. HISTORY: Added Stats 1999 ch 991 35 (SB 45), operative July 1, 2001. Amended Stats 2006 ch 254 53 (SB 1481), effective January 1, 2007. NOTES: Amendments:

2006 Amendment: (1) Amended subd (b)(3)(D) by substituting (a) "letter-of-credit rights, or electronic documents" for "or letter-of-credit rights," after "investment property,"; and (b) "Section 7106," for "Section" after "has control under"; and (2) added the comma after "by another person" in subd (e).

Former Sections: Former 9203, similar to the present section and to present UCC 9201, was enacted Stats 1963 ch 819, effective January 1, 1965, amended Stats 1974 ch 997 16, effective January 1, 1976, Stats 1981 ch 724 5, Stats 1982 ch 1082 4, Stats 1983 ch 1124 13, operative July 1, 1984, Stats 1984 ch 927 9, Stats 1994 ch 668 11, Stats 1996 ch 497 15, operative January 1, 1997, and repealed Stats 1999 ch 991 34, operative July 1, 2001.

Historical Derivation: (a) Former UCC 8321, as added Stats 1984 ch 927 6, amended Stats 1986 ch 766 3. (b) Former UCC 9115, as added Stats 1996 ch 497 13. (c) Former UCC 9203, as enacted Stats 1963 ch 819, amended Stats 1974 ch 997 16, Stats 1981 ch 724 5, Stats 1982 ch 1082 4, Stats 1983 ch 1124 13, Stats 1984 ch 927 9, Stats 1994 ch 668 11, Stats 1996 ch 497 15.

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(d) Former CC 2988, as enacted 1872, amended Stats 1935 ch 716 2. (e) Former CC 3014, as added Stats 1935 ch 716 1, amended Stats 1939 ch 1022 1, Stats 1955 ch 292 2.

Official Comments on Uniform Commercial Code: 1. Source. Former Sections 9-203, 9-115(2), (6). 2. Creation, Attachment, and Enforceability. Subsection (a) states the general rule that a security interest attaches to collateral only when it becomes enforceable against the debtor. Subsection (b) specifies the circumstances under which a security interest becomes enforceable. Subsection (b) states three basic prerequisites to the existence of a security interest: value (paragraph (1)), rights or power to transfer rights in collateral (paragraph (2)), and agreement plus satisfaction of an evidentiary requirement (paragraph (3)). When all of these elements exist, a security interest becomes enforceable between the parties and attaches under subsection (a). Subsection (c) identifies certain exceptions to the general rule of subsection (b). 3. Security Agreement; Authentication. Under subsection (b)(3), enforceability requires the debtor's security agreement and compliance with an evidentiary requirement in the nature of a Statute of Frauds. Paragraph (3)(A) represents the most basic of the evidentiary alternatives, under which the debtor must authenticate a security agreement that provides a description of the collateral. Under Section 9-102, a "security agreement" is "an agreement that creates or provides for a security interest." Neither that definition nor the requirement of paragraph (3)(A) rejects the deeply rooted doctrine that a bill of sale, although absolute in form, may be shown in fact to have been given as security. Under this Article, as under prior law, a debtor may show by parol evidence that a transfer purporting to be absolute was in fact for security. Similarly, a self-styled "lease" may serve as a security agreement if the agreement creates a security interest. See Section 1-201(37) (distinguishing security interest from lease). 4. Possession, Delivery, or Control Pursuant to Security Agreement. The other alternatives in subsection (b)(3) dispense with the requirement of an authenticated security agreement and provide alternative evidentiary tests. Under paragraph (3)(B), the secured party's possession substitutes for the debtor's authentication under paragraph (3)(A) if the secured party's possession is "pursuant to the debtor's security agreement." That phrase refers to the debtor's agreement to the secured party's possession for the purpose of creating a security interest. The phrase should not be confused with the phrase "debtor has authenticated a security agreement," used in paragraph (3)(A), which contemplates the debtor's authentication of a record. In the unlikely event that possession is obtained without the debtor's agreement, possession would not suffice as a substitute for an authenticated security agreement. However, once the security interest has become enforceable and has attached, it is not impaired by the fact that the secured party's possession is maintained without the agreement of a subsequent debtor (e.g., a transferee). Possession as contemplated by Section 9-313 is possession for purposes of subsection (b)(3)(B), even though it may not constitute possession "pursuant to the debtor's agreement" and consequently might not serve as a substitute for an authenticated security agreement under subsection (b)(3)(A). Subsection (b)(3)(C) provides that delivery of a certificated security to the secured party under Section 8-301 pursuant to the debtor's security agreement is sufficient as a substitute for an authenticated security agreement. Similarly, under subsection (b)(3)(D), control of investment property, a deposit account, electronic chattel paper, or a letter-of-credit right satisfies the evidentiary test if control is pursuant to the debtor's security agreement. 5. Collateral Covered by Other Statute or Treaty. One evidentiary purpose of the formal requisites stated in subsection (b) is to minimize the possibility of future disputes as to the terms of a security agreement (e.g., as to the property that stands as collateral for the obligation secured). One should distinguish the evidentiary functions of the formal requisites of attachment and enforceability (such as the requirement that a security agreement contain a description of the collateral) from the more limited goals of "notice filing" for financing statements under Part 5, explained in Section 9-502, Comment 2. When perfection is achieved by compliance with the requirements of a statute or treaty described in Section 9-311(a), such as a federal recording act or a certificate-of-title statute, the manner of describing the collateral in a registry imposed by the statute or treaty may or may not be adequate for purposes of this section and Section 9-108. However, the description contained in the security agreement, not the description in a public registry or on a certificate of title, controls for purposes of this section. 6. Debtor's Rights; Debtor's Power to Transfer Rights. Subsection (b)(2) conditions attachment on the debtor's having "rights in the collateral or the power to transfer rights in the collateral to a secured party." A debtor's limited rights in collateral, short of full ownership, are sufficient for a security interest to attach. However, in accordance with basic

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personal property conveyancing principles, the baseline rule is that a security interest attaches only to whatever rights a debtor may have, broad or limited as those rights may be. Certain exceptions to the baseline rule enable a debtor to transfer, and a security interest to attach to, greater rights than the debtor has. See Part 3, Subpart 3 (priority rules). The phrase, "or the power to transfer rights in the collateral to a secured party," accommodates those exceptions. In some cases, a debtor may have power to transfer another person's rights only to a class of transferees that excludes secured parties. See, e.g., Section 2-403(2) (giving certain merchants power to transfer an entruster's rights to a buyer in ordinary course of business). Under those circumstances, the debtor would not have the power to create a security interest in the other person's rights, and the condition in subsection (b)(2) would not be satisfied. 7. New Debtors. Subsection (e) makes clear that the enforceability requirements of subsection (b)(3) are met when a new debtor becomes bound under an original debtor's security agreement. If a new debtor becomes bound as debtor by a security agreement entered into by another person, the security agreement satisfies the requirement of subsection (b)(3) as to the existing and after-acquired property of the new debtor to the extent the property is described in the agreement. Subsection (d) explains when a new debtor becomes bound. Persons who become bound under paragraph (2) are limited to those who both become primarily liable for the original debtor's obligations and succeed to (or acquire) its assets. Thus, the paragraph excludes sureties and other secondary obligors as well as persons who become obligated through veil piercing and other non-successorship doctrines. In many cases, paragraph (2) will exclude successors to the assets and liabilities of a division of a debtor. See also Section 9-508, Comment 3. 8. Supporting Obligations. Under subsection (f), a security interest in a "supporting obligation" (defined in Section 9-102) automatically follows from a security interest in the underlying, supported collateral. This result was implicit under former Article 9. Implicit in subsection (f) is the principle that the secured party's interest in a supporting obligation extends to the supporting obligation only to the extent that it supports the collateral in which the secured party has a security interest. Complex issues may arise, however, if a supporting obligation supports many separate obligations of a particular account debtor and if the supported obligations are separately assigned as security to several secured parties. The problems may be exacerbated if a supporting obligation is limited to an aggregate amount that is less than the aggregate amount of the obligations it supports. This Article does not contain provisions dealing with competing claims to a limited supporting obligation. As under former Article 9, the law of suretyship and the agreements of the parties will control. 9. Collateral Follows Right to Payment or Performance. Subsection (g) codifies the common-law rule that a transfer of an obligation secured by a security interest or other lien on personal or real property also transfers the security interest or lien. See Restatement (3d), Property (Mortgages) 5.4(a) (1997). See also Section 9-308(e) (analogous rule for perfection). 10. Investment Property. Subsections (h) and (i) make clear that attachment of a security interest in a securities account or commodity account is also attachment in security entitlements or commodity contracts carried in the accounts.

Cross References: Sufficiency of description of property for creation of security interest: UCC 9108. Enforceability of security interest: UCC 9203. Default under security agreement: UCC 9601 et seq. Consumer credit contract provision for security interest in investment property pledged as collateral: CC 1799.103.

Collateral References: Matthew Bender (R) Practice Guide: Cal. Debt Collection and Enforcement of Judgments 5.33, 5.35, 5.36[1]. Cal. Legal Forms, (Matthew Bender(R)) 42.06, 42.12, 42.12, 42.120, 42.130, 42.200, 42.211, 43.132, 48.06, 48.17, 48.141, 48.260, 49.06.

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Secured Trans Under the UCC (Matthew Bender) Part II, "Perfection of Security Interests". 1 Witkin Summary (10th ed) Contracts 343. 4 Witkin Summary (10th ed) Negotiable Instruments 106, 143. 4 Witkin Summary (10th ed) Secured Transactions in Personal Property 24, 26, 27, 35, 50, 51, 52, 53, 54, 55, 56, 57, 59, 85, 106, 115, 167. Cal Jur 3d (Rev) Consumer and Borrower Protection Laws 181, 217. Taking security interests in personal property in California. CEB Action Guide (Spring 1989). Enforcing security interests in personal property in California: How and when to do it. CEB Action Guide, Summer 1990. A primer on holding and transferring securities under new Commercial Code Article 8: part 2. 19 CEB Bus L Rep 7. Miller & Starr, Cal Real Estate 3d 1:65, 11:182, 17:5, 17:6, 17:11 17:13, 17:31, 17:33, 17:70. Hierarchy Notes: Div. 9 Note Div. 9, Ch. 2 Note

NOTES OF DECISIONS Decisions Under Current Law 1. Perfection of Interest 2. Attachment of Interest 3. Unenforceable or Invalid Interests Generally Decisions Under Former UCC 8321 1. In General Decisions Under Former UCC 9203 1. In General 2. Unenforceable or Invalid Interests Generally 3. Perfection of Interest 4. Provision of Value Decisions Under Current Law 1. Perfection of Interest Commodity company's lender's motion for summary judgment was granted as to the conversion claims of dairy farms, where the farms had made prepayments to the commodity company for cattle feed and the lender had subsequently taken the prepayments to enforce its security interest in the company's accounts receivable or general intangibles; the commodity company did not hold the funds in trust for the farms, and as general unsecured creditors of the company, the farms stood behind the lender, which held a prior perfected security interest in the prepayments. Weststeyn Dairy 2 v. Eades Commodities Co. (2003, ED Cal) 280 F Supp 2d 1044, 2003 US Dist LEXIS 20738. Trial court had no authority to sell defendant's property or to distribute the proceeds as restitution because the People's notice did not substantially comply with Pen C 186.11. Defendant granted a valid security interest to his attorney for attorney fees; although the trial court's order deprived defendant of possession, he still had title and could encumber the property under UCC 9203(b)(2) and CCP 697.730(a). People v. Green (2004, Cal App 4th Dist) 125 Cal App 4th 360, 22 Cal Rptr 3d 736, 2004 Cal App LEXIS 2227. Former defense counsel's claimed security interest in property seized under Pen C 186.11 was valid under UCC 9203(b)(2). There was no evidence that the transfer was intended to avoid payment of restitution, and counsel could not have known that the property was purchased with stolen funds because the trial court specifically found insufficient evidence that the property had been purchased with stolen funds. People v. Green (2004, Cal App 4th Dist) 125 Cal App 4th 360, 22 Cal Rptr 3d 736, 2004 Cal App LEXIS 2227. Plaintiffs were entitled to summary judgment on their claim to establish a valid security interest in a steam locomotive that was enforceable against a guarantor under UCC 9203(b)(1)-(3) because the uncontroverted facts demonstrated that:

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(1) value was given by plaintiffs in exchange for a security interest in the steam locomotive; (2) the guarantor, which had guaranteed a corporation's performance of a promissory note, had rights in the steam locomotive; (3) there was a valid security agreement that described the steam locomotive as collateral; (4) the corporation breached the guaranteed note; and (5) the guarantor failed to pay plaintiffs any sums due from the corporation under the note in accordance with the written guaranty. Cecil v. Rocky Mt. Ry. & Mining Museum (2008, ED Cal) 2008 US Dist LEXIS 14482. Where a motion picture distributor entered into a distribution rights agreement with a producer, secured by the producer's proceeds from the distribution rights, and then sublicensed the distribution rights to a third party for a 10-year period, the distributor was not a secured party because its secured rights did not become enforceable until after the expiration of the sublicense period. Morgan Creek Prods., Inc. v. Franchise Pictures LLC (In re Franchise Pictures LLC) (2008) 2008 Bankr LEXIS 399. (Unpublished) Combined note failed to contain words granting a present security interest. It spoke in the future tense, i.e., the combined note shall be secured by a written security agreement, which suggested that the grant of a security interest would be given in another document; it was not being granted by the combined note. Gray v. Assali (In re McGrath) (2008) 2008 Bankr LEXIS 984. 2. Attachment of Interest Because a third-party claimant failed to meet its CCP 720.360 burden of proving that deposit accounts on which a lien creditor, as defined in UCC 9102(a)(52)(A)(i), had levied were the accounts governed by the claimant's control agreements or that it had met one of the conditions in UCC 9203(b)(3), and filed a financing statement covering the accounts subject to the levy, its evidence of priority under UCC 9317(a)(2) was insufficient to release the levied property; the claimant did not establish control under UCC 9104(a), 9312(b)(1), 9314(b), and it did not prove that it filed a financing statement in California under UCC 9301, subd. (2), 9501, subd. (a)(2), or that the deposit accounts were not in California. Full Throttle Films, Inc. v. National Mobile Television (2009, 2d Dist) 180 Cal App 4th 1438, 103 Cal Rptr 3d 560, 2009 Cal App LEXIS 2118. Bank had a valid security interest granted by a bankruptcy debtor in a deposit account at the bank of a wholly owned subsidiary of the debtor, since the bank had sufficient rights in the account to support the security interest; the debtor exercised exclusive control over the account, and the subsidiary impliedly consented to the security interest through an officer of the debtor who signed loan documents and the depository certificate and who was also the president of the subsidiary. Wachovia Bank, Nat'l Assoc. v. WL Homes, LLC (In re WL Homes, LLC) (2011) 2011 Bankr LEXIS 1934. 3. Unenforceable or Invalid Interests Generally Secured creditor's claim against a corporation's Chapter 11 bankruptcy estate took priority over a claim filed by a business that also loaned money to the corporation because the business did not have a properly perfected security interest that attached to the corporation's property under UCC 9203 at the time the creditor acquired its interest in the corporation's property. A promissory note the business received was signed by an individual and guaranteed by the corporation, it did not adequately describe property belonging to the corporation that was subject to a security interest, and the business did not file a financing statement pursuant to UCC 9310 that met the requirements of UCC 9511. In re Karykeion, Inc. (2010) 2010 Bankr LEXIS 3522. Decisions Under Former UCC 8321 1. In General A former wife's security interest in stock owned by her former husband, based on the amounts awarded to her in a dissolution judgment, took priority over the later judgment lien of the former husband's creditor. Possession of the stock certificates was transferred by the former husband to the clerk of the court to secure the debt to former wife. This constituted notice to the world in general, and the creditor in particular, that the former husband's ownership rights were encumbered. The former wife had a perfected security interest in the stock from the time the court took possession on her behalf, and an unauthorized transfer to the sheriff's office pursuant to a levy of execution did not deprive her of that security interest. In re Marriage of Braendle (1996, Cal App 2d Dist) 46 Cal App 4th 1037, 54 Cal Rptr 2d 397, 1996 Cal App LEXIS 574. Decisions Under Former UCC 9203 1. In General In a case in which a new car dealer had transferred a vehicle to a used car dealer, then upon dishonor of the used car dealer's draft had designated itself as legal owner in an application for registration and eventually repossessed the automobile from the purchasers from the used car dealer, the new car dealer was not privileged to become legal owner of

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record of the vehicle as an unpaid seller, and the repossession, not being legally privileged, was both wrongful and fraudulent and constituted a conversion, where the purchasers from the used car dealer paid cash and a bank draft and thus were either good faith purchasers for value of the vehicle or buyers thereof in the ordinary course of business, where, furthermore, the new car dealer took the draft and the receipt from the used car dealer stating it had not been paid but retained no security interest in the vehicle, a purported perfection of such interest being illegal, and where in any event, therefore, even assuming the new car dealer did have a security interest in the car, its lack of possession thereof and the used car dealer's failure to sign a security agreement rendered such interest unenforceable under former UCC 9203 (see present UCC 9203). English v. Ralph Williams Ford (1971, Cal App 2d Dist) 17 Cal App 3d 1038, 95 Cal Rptr 501, 1971 Cal App LEXIS 1551. Promissory note was sufficiently descriptive for purposes of former UCC 9203 (see present UCC 9203) in providing that it was "secured by a security interest in subject personal property as per invoices" where incorporation by reference of the extrinsic invoices was appropriate and where a more specific description of the collateral was contained in the financing statement. In re Amex-Protein Development Corp. (1974, 9th Cir Cal) 504 F2d 1056, 1974 US App LEXIS 6818. In a limited class of cases, restitution claims against a secured creditor by an unsecured creditor are allowed. However, the mere fact the secured creditor benefitted from the conduct of the unsecured creditor will not suffice. Something more is required to displace the secured creditor's favored position. That "something" is either conduct by the secured creditor or the nature of the unsecured creditor's contribution to the collateral. The mere fact of augmenting or enhancing the collateral's value is by itself insufficiently notable to justify special equitable protection; if allowed, the exception would swallow the rule. Thus, liability premised on the secured creditor's acquiescence when an unsecured creditor provides goods or services to their common debtor is unacceptable, as it would overturn the interlocking notice-filing and priority provisions of the Uniform Commercial Code. Knox v. Phoenix Leasing, Inc. (1994, Cal App 1st Dist) 29 Cal App 4th 1357, 35 Cal Rptr 2d 141, 1994 Cal App LEXIS 1101. As a matter of California law, an unrecorded deed of trust did not create a security interest in proceeds of the subject property, even between the parties. Such an interest was a necessary predicate of each of a creditor's causes of action against the debtors; dismissal affirmed. The only language in the deed of trust which arguably described the sale proceeds for purposes of former UCC 9203(1)(a) was the boilerplate legal description: the rents, issues, and profits thereof. This phrase does not equate with "proceeds." The personal guaranty merely reiterated the obligation of the promissory note, and contained no language which purported to grant a security interest in anything. Lin v. Ehrle (In re Ehrle) (1995, BAP 9th Cir Cal) 189 BR 771, 1995 Bankr LEXIS 1781. In a dispute between retailers and a capital corporation over entitlement to proceeds of cents-off coupons redeemed by the debtor, a coupon clearing house to which retailers submitted coupons in bulk, the clearing house had sufficient rights in the coupon proceeds to grant the capital corporation, which extended a revolving line of credit to the clearing house and had a security interest in its inventory and accounts, a valid security interest, which properly attached to the coupon proceeds. Both the service agreements and the conduct of the parties indicated that the coupon service had rights in the coupon proceeds beyond mere possession. Foothill Capital Corp. v. Clare's Food Mkt. (In re Coupon Clearing Serv.) (1997, 9th Cir Cal) 113 F3d 1091, 1997 US App LEXIS 11714. Under former UCC 9203(1), a security interest in property does not attach against a debtor, or any third party, until (1) the debtor has signed a security agreement, (2) value has been given, and (3) the signing debtor has rights in the collateral. Colusa Cmty. Hosp. Ass'n v. First N. Bank and Trust (In re Chama, Inc.) (2000, Bankr D Del) 265 BR 662, 2000 Bankr LEXIS 1893. 2. Unenforceable or Invalid Interests Generally In a case in which a new car dealer had transferred a vehicle to a used car dealer, then upon dishonor of the used car dealer's draft had designated itself as legal owner in an application for registration and eventually repossessed the automobile from the purchasers from the used car dealer, the new car dealer was not privileged to become legal owner of record of the vehicle as an unpaid seller, and the repossession, not being legally privileged, was both wrongful and fraudulent and constituted a conversion, where the purchasers from the used car dealer paid cash and a bank draft and thus were either good faith purchasers for value of the vehicle or buyers thereof in the ordinary course of business, where, furthermore, the new car dealer took the draft and the receipt from the used car dealer stating it had not been paid but retained no security interest in the vehicle, a purported perfection of such interest being illegal, and where in any event, therefore, even assuming the new car dealer did have a security interest in the car, its lack of possession thereof and the

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used car dealer's failure to sign a security agreement rendered such interest unenforceable under former UCC 9203(1). English v. Ralph Williams Ford (1971, Cal App 2d Dist) 17 Cal App 3d 1038, 95 Cal Rptr 501, 1971 Cal App LEXIS 1551. The trial court properly ruled that a bank, as assignee of a conditional sales contract, did not have a valid security interest in a boat manufactured by defendant, and the trial court properly entered judgment for defendant in a conversion action brought by the bank, where defendant's instructions to its warehouse agent concerning the release of the boat to the seller, from whom the bank acquired the conditional sales contract, required that the warehouse agent receive from the seller a certified or cashier's check before delivering the boat to the seller, where no such payment was ever made by the seller to the warehouse agent, and where the buyer never received possession of the boat, which remained at all times in possession of the warehouse agent. Accordingly, the evidence supported the trial court's finding that the buyer did not acquire any ownership interest in the boat and had no authority to pledge the boat as security. The mere existence of a conditional sale contract and the purported granting of a security interest were insufficient to prove the bank's right to possession in the absence of proof that the security interest was enforceable. (UCC 9203(c)). Chartered Bank of London v. Chrysler Corp. (1981, Cal App 2d Dist) 115 Cal App 3d 755, 171 Cal Rptr 748, 1981 Cal App LEXIS 1393. Although a creditor appeared to have met the three requirements delineated in UCC 9203 for attachment and enforceability of a security interest, transactions lacked the intent to create a security interest. No documents were executed by the debtor manifesting its intention to give the creditor a security interest. The terms for a security interest appeared only on the creditor's forms. The parties stipulated that they never discussed these terms and that the debtor never signed the invoices or any other agreement containing these terms. The invoices alone were insufficient to form a security interest because pre-printed agreements used by a creditor do not create a security interest if the debtor never intended the collateral to be used for this purpose. Expeditors Int'l. v. Official Creditors Comm. of CFLC, Inc. (In re CFLC, Inc.) (1999, 9th Cir) 166 F3d 1012, 1999 US App LEXIS 1381. 3. Perfection of Interest For a bank to stand in the position of a secured party there must be a written agreement signed by the debtor which creates or provides for a security interest and which contains a description of the collateral pursuant to former UCC 9203(1)(b) (now 9203 and 9201) and former UCC 9105(1)(h). Nunnemaker Transp. Co. v. United California Bank (1972, 9th Cir Cal) 456 F2d 28, 1972 US App LEXIS 11341. Bank and a debtor entered into a security agreement that was sufficient to create a security interest under former UCC 9203(1)(b) and 9105(1)(h), and the security interest was perfected where filing was unnecessary under the former UCC 9302(1)(g) but notice had been given by the bank as assignee to the account debtor of the bank's priority as required by former UCC 9302(1)(g); as such, a transfer within the provisions of the Bankruptcy Act, 60a(2) had occurred. Nunnemaker Transp. Co. v. United California Bank (1972, 9th Cir Cal) 456 F2d 28, 1972 US App LEXIS 11341. The seller of a franchised bicycle dealership received from the buyer a down payment, a promissory note, and a signed security agreement that, without mentioning after-acquired property, specified as collateral his fixtures, equipment, accessories, and inventory of 100 bicycles, and on the buyer's subsequent default the seller, without having filed a financing statement former UCC 9203 (see present UCC 9203), 9401(see now UCC 9501) in connection with the security agreement, repossessed the buyer's entire stock, which, by then, included 50 of the original bicycles and nearly 200 others acquired from third parties. Under such circumstances, the seller had a purchase money security interest, former UCC 9107 (see now UCC 9103) in his original property, which was thus exempt from the bulk transfer law under UCC 6103, but the seller's interest in the inventory replacements and additions could not qualify as a purchase money security interest, and their repossession constituted a bulk transfer (UCC 6102) that, because the seller failed to file the 10-day notice to creditors under UCC 6105, was void. Such after-acquired goods could therefore be applied to settle the claim of one of the third parties who, as another creditor of the buyer, obtained a lien on them a year later by way of attachment and judgment against him. Raleigh Industries of America, Inc. v. Tassone (1977, Cal App 2d Dist) 74 Cal App 3d 692, 141 Cal Rptr 641, 1977 Cal App LEXIS 1961. The failure to perfect a security interest does not nullify that interest. UCC 9201 (general validity of security agreement), contains no requirement of perfection, and exceptions to the general rule of validity arise only where there is a specific provision in the code providing otherwise. Thus, an unperfected security interest is enforceable against all parties unless the holder of a later-acquired interest qualifies under some other provision of the code. The unperfected interest is not null and void. The only requirements for validity are those set out in UCC 9203: a signed agreement, value given, and the debtor's rights in the collateral. Once these are met, an enforceable security interest exists. A failure to file a financing statement does not affect the validity of a security agreement. While the filing of a financing statement is an

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additional step that would perfect the creditor's interest and give the creditor priority against other creditors in respect to the goods described in the security agreement, filing is not necessary to create the security interest itself. The purpose of perfection is simply to make the security interest safe against creditors and transferees of the debtor. Turbinator, Inc. v. Superior Court (1995, Cal App 4th Dist) 33 Cal App 4th 443, 39 Cal Rptr 2d 342, 1995 Cal App LEXIS 275. In a breach of contract action brought against a film producer by an individual who had contracted with defendant to arrange financing for the production of a motion picture, in which the trial court entered judgment in favor of plaintiff pursuant to the parties' written stipulation, the trial court neither abused its discretion nor erred in denying the third party claims of the film's two distributors, who asserted that they acquired a security interest in the film materials superior to plaintiff's execution lien by virtue of a "negative pickup" contractual arrangement with defendant, under which they incurred an obligation to pay third parties on defendant's behalf. The distributors failed to satisfy the requirements of former UCC 9203 (enforceability of security interest) (see present UCC 9203), since they failed to provide sufficient evidence that they provided value to defendant, within the meaning of the statute. Moreover, even assuming that they acquired a security interest in the film materials, they failed to perfect the interest pursuant to UCC 9302 (see now UCC 9310), which required the filing of a financing statement to perfect a security interest. The three financing statements that were filed failed to include both of the distributors' names as secured parties, rendering any security interest unperfected. As an unperfected security interest, any such interest held by the distributors was inferior to plaintiff's interest. LeFlore v. Grass Harp Productions, Inc. (1997, Cal App 2d Dist) 57 Cal App 4th 824, 67 Cal Rptr 2d 340, 1997 Cal App LEXIS 716. A debtor's receipt and payment of invoices containing terms for a general lien in goods in favor of a creditor did not amount to an agreement for a security interest under UCC 9105, subd. (1)(l) (now subd. (a)(73)) (agreement that creates or provides for security interest is security agreement). As a matter of law, the repetitive sending by the creditor to the debtor of terms which the creditor wished to be made part of the oral contract was not evidence of course of dealing because an agreement did not exist as to the security interest which could be supplemented by such evidence. Also, Article 2 (UCC 2207, subd. (2), governing additional terms in an acceptance or confirmation) did not apply to the secured, service transactions involved. The creditor did not have a security interest or lien in property of the bankruptcy estate. Expeditors Int'l v. Official Creditors Comm. of CFLC, Inc. (In re CFLC, Inc.) (1997, BAP 9th Cir Cal) 209 BR 508, 1997 Bankr LEXIS 821, aff'd (1999, 9th Cir) 166 F3d 1012, 1999 US App LEXIS 1381. As to whether a company had a valid security interest in a washing machine, television and VCR in a reaffirmation agreement between it and the debtors, to support the reaffirmation agreement, the court found that the company showed no evidence of a security interest in the goods apart from a statement on the charge slip signed by the debtor when the goods were purchased. This was insufficient to create a valid security interest under California law. The descriptions in the charge slips for the television and VCR were insufficient for California Commercial Code purposes to create a security interest in those items. In re Carlos (1997, Bankr CD Cal) 215 BR 52, 1997 Bankr LEXIS 1813. 4. Provision of Value In a breach of contract action brought against a film producer by an individual who had contracted with defendant to arrange financing for the production of a motion picture, in which the trial court entered judgment in favor of plaintiff pursuant to the parties' written stipulation, the trial court neither abused its discretion nor erred in denying the third party claims of the film's two distributors, who asserted that they acquired a security interest in the film materials superior to plaintiff's execution lien by virtue of a "negative pickup" contractual arrangement with defendant, under which they incurred an obligation to pay third parties on defendant's behalf. The distributors failed to satisfy the requirements of former UCC 9203 (see present UCC 9203) (enforceability of security interest), since they failed to provide sufficient evidence that they provided value to defendant, within the meaning of the statute. Moreover, even assuming that they acquired a security interest in the film materials, they failed to perfect the interest pursuant to former UCC 9302 (see now UCC 9310), which required the filing of a financing statement to perfect a security interest. The three financing statements that were filed failed to include both of the distributors' names as secured parties, rendering any security interest unperfected. As an unperfected security interest, any such interest held by the distributors was inferior to plaintiff's interest. LeFlore v. Grass Harp Productions, Inc. (1997, Cal App 2d Dist) 57 Cal App 4th 824, 67 Cal Rptr 2d 340, 1997 Cal App LEXIS 716. In a breach of contract action brought against a film producer by an individual who had contracted with defendant to arrange financing for the production of a motion picture, in which the trial court entered judgment in favor of plaintiff pursuant to the parties' written stipulation, the trial court neither abused its discretion nor erred in denying the third party claim of the film's guarantor, asserting that it acquired a superior security interest in the film materials superior to plain-

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tiff's execution lien by virtue of a "negative pickup" contractual arrangement with defendant, under which it incurred an obligation to pay third parties on defendant's behalf. The guarantor failed to establish that a miscarriage of justice occurred in the denial of its claim. The guarantor failed to satisfy the requirements of former UCC 9203 (see present 9203) (enforceability of security interest), since it failed to present sufficient evidence that it provided value to defendant, within the meaning of the statute. There was no proof specifically establishing that the trial court ignored evidence that the guarantor had given value to defendant; thus, it was presumed that the court did consider the evidence submitted. Considering all of the evidence before the trial court, it reasonably could have found that the guarantor had not given value covered by a perfected security interest. LeFlore v. Grass Harp Productions, Inc. (1997, Cal App 2d Dist) 57 Cal App 4th 824, 67 Cal Rptr 2d 340, 1997 Cal App LEXIS 716. Creditors were in possession of certain light filters according to an agreement with debtors that creditors ship the property from the United Kingdom to the United States. The agreement between the parties said the creditors would have a lien on the debtors' property. The creditors gave value by acquiring rights in the debtors' property as security for a preexisting claim, the balance on the debtors' account. When the debtors' supplier gave the creditors possession of the light filters for shipment, title passed to the creditors. The bankruptcy court did not provide the creditors the proper procedural safeguards before avoiding their lien. Expeditors Int'l v. Citicorp N. Am. (In re Colortran) (1997, BAP 9th Cir Cal) 218 BR 507, 1997 Bankr LEXIS 2224.

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