Ark. Code Ann. § 4-9-315 (2026)

Research References

ALR.

Government agricultural program payments as proceeds of agricultural products under former UCC § 9-306. 79 A.L.R.4th 903.

Ark. L. Notes.

Laurence, Update: Some Practical Advice on How to Create a Security Interest in a Deposit Account, 2002 Arkansas L. Notes 45.

Case Notes

Assignment.

Where debtor has notice of assignment, payment to an assignor, or discharge or release by him, is no defense to the claim of the assignee under the pre-2001 version of this chapter. Pulpwood Suppliers, Inc. v. First Nat'l Bank, 21 Ark. App. 147, 729 S.W.2d 425 (1987) (decision under prior law).

Continuing Interest.

The plaintiff had security interest as a first preferred lien in mobile homes and could sell the mobile homes to satisfy the lien because the defendant buyer of these homes was not a buyer in “the ordinary course of business” and was not acting “in good faith and without knowledge” at the time of purchase of the mobile homes, where he was fully aware that the plaintiff had floorplanned and financed the homes and held a security in each of these mobile homes. Rex Fin. Corp. v. Marshall, 406 F. Supp. 567 (W.D. Ark. 1976) (decision under prior law).

Priority.

The plain meaning and logical implications of sections such as former §§ 4-9-306 and 4-9-504 may be preempted by a pervasive spirit of priority that supports giving a senior secured party a claim to the proceeds of a junior creditor's sale of collateral. Stotts v. Johnson, 302 Ark. 439, 791 S.W.2d 351 (1990) (decision under prior law).

Proceeds.

Where a creditor financed an automobile for a dealer who sold the automobile and sold the financing agreement to another creditor, the original creditor's interest would attach only to the proceeds of the sale. Commercial Credit Corp. v. National Credit Corp., 251 Ark. 702, 473 S.W.2d 881 (1971) (decision under prior law).

The claim of first bank to a lien in the account balances of persons and corporation who had filed bankruptcy petition was rejected because it was junior to the claim of setoff of second bank by the express provisions of the pre-2001 version of this chapter since the evidence was undisputed that cash proceeds from sale of first bank's collateral was commingled with other funds in the account at the second bank. In re Hoffman, 51 B.R. 42 (Bankr. W.D. Ark. 1985) (decision under prior law).

Payments to debtor under dairy termination program were not proceeds as defined in this section or as contemplated in note and security agreement. Bank of N. Ark. v. Owens, 76 B.R. 672 (E.D. Ark. 1987), aff'd, 884 F.2d 330 (8th Cir. 1989) (decision under prior law).

Dairy termination payments are not proceeds from the sale of dairy cattle. Bank of N. Ark. v. Owens, 884 F.2d 330 (8th Cir. 1989) (decision under prior law).

The rules employed to distinguish the “identifiable proceeds” from other funds are liberally construed in the creditor's favor by use of the “intermediate-balance rule”; if a presumption such as the lowest intermediate balance rule were not used, no funds placed in an account with funds from other sources could be “identified.” Metro. Nat'l Bank v. La Sher Oil Co., 81 Ark. App. 269, 101 S.W.3d 252 (2003).

Where a business served a writ of garnishment on a bank, but the bank had a secured interest in “proceeds” from the customer's accounts receivables, the bank could keep the money because the deposits in the customer's account were “identifiable proceeds.” Metro. Nat'l Bank v. La Sher Oil Co., 81 Ark. App. 269, 101 S.W.3d 252 (2003).

Ratification of Sale.

Delay in filing replevin suit until one and a half years after judicial sale alone did not amount to ratification of the sale. Brown v. Arkoma Coal Corp., 276 Ark. 322, 634 S.W.2d 390 (1982) (decision under prior law).

Repossession of Collateral.

Where finance company entered into financial agreement with seller of mobile homes to extend credit for the purchase of inventory in exchange for an assignment by the seller of all chattel paper arising from the sale of the inventory, and where, after purchaser of a mobile home defaulted, the seller repossessed the collateral and, subsequent to filing bankruptcy petition, sold the mobile home, the finance company had a perfected security interest superior to the seller's trustee in bankruptcy and was entitled to the sale proceeds since the financing company's initial perfected security interest in the mobile home as collateral became both a perfected security interest in the proceeds of the sale against the seller under former subsection (2) and an after-sale security interest in the collateral against the purchaser, due to the assignment of the chattel paper with the lien noted on the certificate of title. Upon default by the purchaser, the financing company's prior perfected security interest in the collateral reattached under former subsection (5)(a) as if in effect continuously and, thus, the financing company's chattel paper security interest supplemented and did not supplant its inventory security interest and the company did not abdicate or subrogate its inventory security interest in the chattel paper security interest. In re Frontier Mobile Home Sales, Inc., 635 F.2d 726 (8th Cir. 1980) (decision under prior law).

Setoff.

The provisions of former subdivision (4)(d) of this section were subject to the provisions of former subdivision (4)(d)(i) of this section, which provided that the perfected security interest in proceeds was subject to any right of setoff. Heckathorn Constr. Co. v. Bass Mechanical Contractors, 84 B.R. 1009 (Bankr. W.D. Ark. 1988) (decision under prior law).

Summary Judgment Denied.

Direct lienholder was not entitled to summary judgment pursuant to this section as there were material issues of fact as to whether the dealership was authorized to sell the vehicles at issue. Ford Motor Credit Co., LLC v. First Nat'l Bank of Crossett, 2016 Ark. App. 408, 500 S.W.3d 188 (2016).

Unperfected Interests.

Where one lender purchased the security instrument the buyer of an automobile gave to the automobile dealer and another lender held the title to the automobile as the result of a floor financing agreement with the dealer but neither lender had perfected its security interest, the lender who had purchased the buyer's contract was entitled to have the title registered to perfect its lien. Commercial Credit Corp. v. National Credit Corp., 251 Ark. 541, 473 S.W.2d 876 (1971) (decision under prior law).

Waiver of Security Interest.

Credit association whose members were planter-borrowers could not follow proceeds of crops to third-party purchasers, since its common practice was to let its members dispose of their crops at will and, thus, it had waived its security interest in the crops. Planters' Prod. Credit Ass'n v. Bowles, 256 Ark. 1063, 511 S.W.2d 645 (1974), superseded by statute as stated in, Holmes v. Riceland Foods, Inc., 261 Ark. 27, 546 S.W.2d 414 (1977) (decision under prior law).

Filing of petition seeking to stay the distribution of the proceeds of a judicial sale on certain property in which petitioner claimed a security interest did not constitute a waiver of the security interest. Brown v. Arkoma Coal Corp., 276 Ark. 322, 634 S.W.2d 390 (1982) (decision under prior law).

Cited: Holmes v. Riceland Foods, Inc., 261 Ark. 27, 546 S.W.2d 414 (1977); United States v. Riceland Foods, Inc., 504 F. Supp. 1258 (E.D. Ark. 1981); Honey v. United States, 963 F.2d 1083 (8th Cir. 1992); Lawhon Farm Supply, Inc. v. Hayes, 316 Ark. 69, 870 S.W.2d 729 (1994) (decisions under prior law).