N.Y. Uniform Commercial Code Law § 9-330: Priority of Purchaser of Chattel Paper or Instrument

Section 9--330. Priority of Purchaser of Chattel Paper or Instrument.

(a) Purchaser's priority: security interest claimed merely as

proceeds. A purchaser of chattel paper has priority over a security

interest in the chattel paper which 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, takes possession of

each authoritative tangible copy of the record evidencing the

chattel paper, and obtains control under Section 9--105 of

each authoritative electronic copy of the record evidencing

the chattel paper; and

(2) the authoritative copies of the record evidencing the chattel

paper do not indicate that the chattel paper has been

assigned to an identified assignee other than the purchaser.

(b) Purchaser's priority: other security interests. A purchaser of

chattel paper has priority over a security interest in the chattel paper

which is claimed other than merely as proceeds of inventory subject to a

security interest if the purchaser gives new value, takes possession of

each authoritative tangible copy of the record evidencing the chattel

paper, and obtains control under Section 9--105 of each authoritative

electronic copy of the record evidencing the 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) Chattel paper purchaser's priority in proceeds. Except as

otherwise provided in Section 9--327, 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 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) Instrument purchaser's priority. 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) Holder of purchase-money security interest gives new value. 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) Indication of assignment gives knowledge. For purposes of

subsections (b) and (d), if the authoritative copies of the record

evidencing chattel paper or an instrument indicate that the chattel

paper or instrument 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.