Law Commons^™

Three Against Two: On The Difference Between Property And Contract And The Example Of Deposit Accounts In Bankruptcy, Jeanne L. Schroeder, David G. Carlson

Articles

In Citizen's Bank v. Strumpf (1995), Justice Scalia announced that deposit accounts are not "property". Five years later, the Uniform Commercial Code was amended to make deposit accounts collateral for the depositary bank maintaining the account, thereby crowding the field previously occupied by the common law right of setoff. Security interests attach to personal "property." Security interests attach to deposit accounts. Deposit accounts, by syllogistic logic, are property. Does this mean that the UCC has overruled the Supreme Court? We argue not. A deposit account is a mere contract in the two-person universe that contract law presupposes. A deposit account …

Lessons From Case Study Of Secured Transactions With Bitcoin, Xuan-Thao Nguyen

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There has been some discussion about the flaws in using secured transactions law, Article 9 of the Uniform Commercial Code (U.C.C.), to govern commercial transactions involving Bitcoins as collateral. Flaws necessitate the urgency of immediately fixing of the existing law. In the case of Bitcoins there is still much to learn about the marketplace for secured transactions with Bitcoins as collateral. The rapid change in technology, the speed of new ideas proposed, the constant announcements of adoption and adaptation of smart contracts in transactions, the volatility in cryptocurrency value, the endless reports of scams, and the rise of dark pools …

Collateralizing Intellectual Property, Xuan-Thao Nguyen

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This Article identifies and critiques the collateralization of intellectual property, revealing the complexity of intersecting secured transaction law, namely Article 9 of the Uniform Commercial Code, and doctrinal intellectual property laws such as patent law, copyright law, and trademark law. The inquiry challenges the silence surrounding the pervasive use of intellectual property as collateral in secured financing and suggests changes to the existing framework on secured financing law.

The Article proceeds as follows: Part II discusses the normative intellectual property rights for patents, copyrights, and trademarks and how such rights are utilized as corporate assets. Part III describes different forms …

Chuck And Steve's Peccadillo (Symposium: Threats To Secured Lending And Asset Securitization), James J. White

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Are investors in securitized receivables to be treated as the owners of an asset whose sale has taken it beyond the reach of the trustee in bankruptcy of their sellers? O are they to be treated as holders of a security interest in the transferred asset who have left behind an interest in the sellers' hands that would cause the asset to be subject to claims and interference by the sellers' grasping trustee? By adopting contrasting-arguably conflicting-statements in two subsections of a single section, the drafters of 1999 Article 9 have thrust this issue in the faces of courts and …

Commercial Law Collides With Cyberspace: The Trouble With Perfection – Insecurity Interests In The New Corporate Asset, Xuan-Thao Nguyen

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The recent downturn in the economy, particularly in the e-commerce sector, reveals many e-companies heading toward bankruptcy with cyberassets, such as domain names, as their most valuable corporate assets. Lending institutions and other creditors that have extended loans to such e-companies obviously want to get their hands on these bankrupt estates. Which creditor will have priority in the new cybercollateral of domain names? The answer to creditor priority questions may depend on whether domain names are intangible property for purposes of secured transactions. If so, should security interests in domain names be perfected under the Uniform Commercial Code or under …

Reforming Article 9 Priorities In Light Of Old Ignorance And New Filing Rules (Symposium: 'Managing The Paper Trail': Evaluating And Reforming The Article 9 Filing System), James J. White

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The other papers in this Symposium demonstrate that we have the technical capacity to build a filing system that will exceed the expectations of Grant Gilmore in every dimension.1 With more thought about what is put into the system and more clever software to get it out, the most sophisticated system possible under current technology will store and produce enough information about a debtor to give the ACLU a fright. All of the issues on improving the filing system are important, but I do not concern myself with any of them directly. I am here discuss a different question. In …

Work And Play In Revising Article 9 (Symposium On The Revision Of Article 9 Of The Uniform Commercial Code), James J. White

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For Professors Harris and Mooney the time has come to distinguish between work and play. Debating whether security is efficient is play. Revising Article 9 is work. Even Professor Schwartz does not argue for the abolition of Article 9; he merely reiterates the "puzzle" of secured credit and argues in his playful fashion that security might not be efficient.' Were it not for the fact that this debate might give us some insights about certain priority rules (such as those having to do with purchase money), it would be pure intellectual masturbation, a game with no purpose other than to …

Preference Conundrums, James J. White, Daniel Israel

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Every law teacher and many law students and practitioners understand the intellectual sport to be found in Section 547 on preference law. Because the preference rules are so intricate, rigorously logical-but really not logical-they command more than their fair attention, not only in law school but also in continuing legal education and even in the courts. Our purpose in this article is not to answer any of the difficult questions or to give a global explanation of preference law. Rather it is to confront a few of the conundrums in Section 547 and to follow the paths of those conundrums …

Revising Article 9 To Reduce Wasteful Litigation, James J. White

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For reasons that are unclear to me, the committees reviewing the articles of the Uniform Commercial Code and drafting revisions are congenitally conservative. Perhaps these committees take their charge too seriously, namely, to revise, not to revolutionize. Perhaps their intimate knowledge of the subject matter exaggerates the importance of each section and consequently magnifies the apparent size of every change. In any case, my own experience with two such committees tells me that the members quickly become focused on revisions and amendments that any outsider would describe as modest. To the extent that the revision of any of the articles …

Dancing On The Edge Of Article 9, James J. White

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Despite the fact that Article 9 is a much more comprehensive personal property security statute than was ever found in American law prior to its enactment, cases continue to present issues on the scope of the Article. Gone are the cases in which a court was called upon to determine whether a "conditional sales contract" could be dealt with under the "factor's lien" law; it is now clear that all such personal property security devices are governed by Article 9. Yet many problems remain for the unwary lawyer. I will identify several and deal in detail with three of these …

Efficiency Justifications For Personal Property Security, James J. White

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In February of 1983 Pan American World Airways issued 100 million dollars of convertible secured notes. As security for these notes it put up three Boeing 747 SP aircraft, two 747-100 aircraft, and one McDonnell Douglas DC10-30. The appraised value of these aircraft was 157 million dollars. To the extent possible under the law, Pan American made these aircraft subject to the claims of the owners of the new notes. On default, the note holders would have the first claim on these aircraft, would have the right to repossess them outside of bankruptcy, and would have the right to the …

The Recent Erosion Of The Secured Creditor's Rights Through Cases, Rules And Statutory Changes In Bankruptcy Law, James J. White

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One can view the law of creditors' rights as a series of cyclesin which alternatively the rights of the creditor and then those of the debtor are in ascendancy. Looking back through Americanlegislative history, one sees both the state legislatures and the Congress intervening on behalf of debtors in a variety of ways onmany occasions. An early example of such intervention was the enactment, particularly in the Midwest and West, of generous exemption laws that removed a variety of property beyond the reach of general creditors. A second example is the enactment of usury laws, which continue to be a …

Allocation Of Scarce Goods Under Section 2-615 Of The Uniform Commercial Code: A Comparison Of Some Rival Models, James J. White

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Section 2-615 of the Uniform Commercial Code authorizes a contract seller to allocate goods in short supply when full performance has become commercially impracticable. Most of the cases under and commentary on that section have focused on the issue of commercial impracticability. The allocation aspects of the section have attracted much more modest attention in the cases and in the scholarly journals. The purpose of this article is to examine critically the allocation rule set out in section 2-615(b). That subsection authorizes a seller, upon a finding of commercial impracticability, to allocate "in any manner which is fair and reasonable." …

The Abolition Of Self-Help Repossession: The Poor Pay Even More, James J. White

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In this paper I propose to identify possible ways in which a court could uphold the constitutionality of section 9-503 without an explicit rejection of Fuentes v. Shevin. It is my thesis that Fuentes v. Shevin is probably an undesirable outcome, and that the application of the same doctrine to self-help repossession is certainly undesirable and would constitute due process gone berserk. My arguments will not be novel; each has been suggested by the courts that have considered this matter, or by the briefs of the lawyers who have argued these cases. I cannot even claim to have collected the …

Representing The Low Income Consumer In Repossessions, Resales And Deficiency Judgment Cases, James J. White

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The goal of this article is to lend a helping hand to the debtor's lawyer in his job of defending deficiency judgment suits brought following the repossession and resale of a debtor's encumbered personal property. Although some of the following discussion is relevant to the defense of any creditor's suit, and some applies to representation of the debtor prior to repossession or resale, the focal point of the discussion is the low-income consumer who has lost his automobile, television or some other "hard good" and has become a defendant in a suit brought by his secured creditor for a deficiency …