Okla. Stat. tit. 12A § 1-9-618
Okla. Stat. tit. 12A, § 1-9-618
Oklahoma Code Comment
New section 9-618 is similar to old section 9-504(5) . New section 9-618 also provides for a right of the secured party to assign the security interest. Such an assignment under section 9-618(b) does not constitute a disposition of collateral under Article 9, but under new section 9-618(b) an assignment, transfer or subrogation relieves the assignor-secured party of its duties. This provision is contrary to and apparently overrules the general Oklahoma law governing assignment. See Walker v. Mills, 76 P.2d 697 (Okla. 1938).
In re Ford Motor Co., 27 UCC Rep Serv. 1118 (FTC 1979), illustrates a typical financing arrangement between an automobile dealer and its financer. In this action the dealer was obligated to repurchase retail installment contracts of its customers upon their default. Under new section 9-618, upon such a reassignment the dealer would be an assignee and responsible to hold a commercially reasonable sale of the repossessed automobile securing the contract, and the cash proceeds received on resale by the assignee would be required to be applied in accordance with new section 9-615, a result similar to the decision reached by the FTC in Ford.
Under new section 9-618 , a secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party if the secondary obligor: (1) receives an assignment from the secured party; (2) the secondary obligor receives a transfer of collateral from the secured party and the secondary obligor agrees to accept the rights and assumes the duties of the secured party; or (3) the secondary obligor is subrogated to the right of a secured party with respect to the collateral. In other words, if by operation of law, such as in Oklahoma, a guarantor pays the primary obligation as required by the guaranty, the guarantor is subrogated to the rights and duties of the lender/secured party. Moore v. White, 603 P.2d 1119 (Okla. 1979). Therefore, whether the secondary obligor desires or intends it or not, under new section 9-618 the guarantor in these circumstances becomes obligated to perform the duties of the secured party. Under old section 9-504(5) , the guarantor had the duties but did not necessarily have the obligation to perform the duties. The latter could hardly be considered a fair result, especially if the lender/secured party has done some wrong to the debtor. Arguably the guarantor, who pays his or her obligation, because of this section may become liable to the debtor to perform a duty which the secured party failed to perform resulting in damages to the debtor and, thus, could be liable to the debtor for such damages.