Tex.
Bus. & Com. Code Section 9.330
Priority of Purchaser of Chattel Paper or Instrument
(a)
A purchaser of chattel paper has priority over a security interest in the chattel paper that is claimed merely as proceeds of inventory subject to a security interest if:(1)
in good faith and in the ordinary course of the purchaser’s business, the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under Section 9.105 (Control of Electronic Chattel Paper); and(2)
the chattel paper does not indicate that it has been assigned to an identified assignee other than the purchaser.(b)
A purchaser of chattel paper has priority over a security interest in the chattel paper that is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under Section 9.105 (Control of Electronic Chattel Paper) in good faith, in the ordinary course of the purchaser’s business, and without knowledge that the purchase violates the rights of the secured party.(c)
Except as otherwise provided in Section 9.327 (Priority of Security Interests in Deposit Account), a purchaser having priority in chattel paper under Subsection (a) or (b) also has priority in proceeds of the chattel paper to the extent that:(1)
Section 9.322 (Priorities Among Conflicting Security Interests in and Agricultural Liens on Same Collateral) provides for priority in the proceeds; or(2)
the proceeds consist of the specific goods covered by the chattel paper or cash proceeds of the specific goods, even if the purchaser’s security interest in the proceeds is unperfected.(d)
Except as otherwise provided in Section 9.331(a), a purchaser of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party.(e)
For purposes of Subsections (a) and (b), the holder of a purchase-money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory.(f)
For purposes of Subsections (b) and (d), if chattel paper or an instrument indicates that it has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party.(b)
This chapter does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under Chapter 8 (Security Instruments) or 12 (Rights and Duties of Consumers and Merchants).(c)
Filing under this chapter does not constitute notice of a claim or defense to the holders, or purchasers, or persons described in Subsections (a) and (b).
Source:
Section 9.330 — Priority of Purchaser of Chattel Paper or Instrument, https://statutes.capitol.texas.gov/Docs/BC/htm/BC.9.htm#9.330 (accessed Jun. 5, 2024).
