Ohio Code 1309.328 – Priority of security interests in investment property – UCC 9-328
The following rules govern priority among conflicting security interests in the same investment property:
Terms Used In Ohio Code 1309.328
- Account: includes health-care insurance receivables. See Ohio Code 1309.102
- Another: when used to designate the owner of property which is the subject of an offense, includes not only natural persons but also every other owner of property. See Ohio Code 1.02
- Collateral: means the property subject to a security interest or agricultural lien, including:
(a) Proceeds to which a security interest attaches;
(b) Accounts, chattel paper, payment intangibles, and promissory notes that have been sold; and
(c) Goods that are the subject of a consignment. See Ohio Code 1309.102
- Commodity account: means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer. See Ohio Code 1309.102
- Commodity contract: means a commodity futures contract, an option on a commodity futures contract, a commodity option, or another contract if the contract or option is:
(a) Traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to the federal commodities laws; or
(b) Traded on a foreign commodity board of trade, exchange, or market and is carried on the books of a commodity intermediary for a commodity customer. See Ohio Code 1309.102
- Commodity intermediary: means a person that:
(a) Is registered as a futures commission merchant under the federal commodities laws; or
(b) In the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to the federal commodities laws. See Ohio Code 1309.102
- Contract: A legal written agreement that becomes binding when signed.
- Entitlement: A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.
- Investment property: means a security, whether certificated or uncertificated, a security entitlement, a securities account, a commodity contract, or a commodity account. See Ohio Code 1309.102
- Person: includes an individual, corporation, business trust, estate, trust, partnership, and association. See Ohio Code 1.59
- Property: means real and personal property. See Ohio Code 1.59
- Secured party: means :
(a) A person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;
(b) A person that holds an agricultural lien;
(c) A consignor;
(d) A person to whom accounts, chattel paper, payment intangibles, or promissory notes have been sold;
(e) A trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for; or
(f) A person who holds a security interest arising under section 1302. See Ohio Code 1309.102
(A) A security interest held by a secured party having control of investment property under section 1309.106 of the Revised Code has priority of a security interest held by a secured party that does not have control of the investment property.
(B) Except as otherwise provided in divisions (C) and (D) of this section, conflicting security interests held by secured parties each of which has control under section 1309.106 of the Revised Code rank according to priority in time of:
(1) If the collateral is a security, obtaining control;
(2) If the collateral is a security entitlement carried in a securities account and:
(a) If the secured party obtained control under division (D)(1) of section 1308.24 of the Revised Code, the secured party’s becoming the person for which the securities account is maintained;
(b) If the secured party obtained control under division (D)(2) of section 1308.24 of the Revised Code, the securities intermediary’s agreement to comply with the secured party’s entitlement orders with respect to security entitlements carried or to be carried in the securities account; or
(c) If the secured party obtained control through another person under division (D)(3) of section 1308.24 of the Revised Code, the time on which priority would be based under this paragraph if the other person were the secured party; or
(3) If the collateral is a commodity contract carried with a commodity intermediary, the satisfaction of the requirement for control specified in division (B)(2) of section 1309.106 of the Revised Code with respect to commodity contracts carried or to be carried with the commodity intermediary.
(C) A security interest held by a securities intermediary in a security entitlement or a securities account maintained with the securities intermediary has priority over a conflicting security interest held by another secured party.
(D) A security interest held by a commodity intermediary in a commodity contract or a commodity account maintained with the commodity intermediary has priority over a conflicting security interest held by another secured party.
(E) A security interest in a certificated security in registered form that is perfected by taking delivery under division (A) of section 1309.313 of the Revised Code and not by control under section 1309.314 of the Revised Code has priority over a conflicting security interest perfected by a method other than control.
(F) Conflicting security interests created by a broker, a securities intermediary, or a commodity intermediary that are perfected without control under section 1309.106 of the Revised Code rank equally.
(G) In all other cases, priority between conflicting security interests in investment property is governed by sections 1309.322 and 1309.323 of the Revised Code.