| | | jurisdiction governed both questions of perfection and those of | | priority. This Article generally adopts that approach. See | | paragraph (1) [Maine cite paragraph (a)]. But the approach may | | create problems if the debtor and collateral are located in | | different jurisdictions. For example, assume a security interest | | in equipment located in Pennsylvania is perfected by filing in | | Illinois, where the debtor is located. If the law of the | | jurisdiction in which the debtor is located were to govern | | priority, then the priority of an execution lien on goods located | | in Pennsylvania would be governed by rules enacted by the | | Illinois legislature. |
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| | | To address this problem, paragraph (3)(C) [Maine cite pargarph | | (c) subparagraph (iii)] divorces questions of perfection from | | questions of "the effect of perfection or nonperfection and the | | priority of a security interest." Under paragraph (3)(C) [Maine | | cite paragraph (c), subparagraph (iii)], the rights of competing | | claimants to tangible collateral are resolved by reference to the | | law of the jurisdiction in which the collateral is located. A | | similar bifurcation applied to security interests in investment | | property under former Section 9-103(6). See Section 9-305 [Maine | | cite section 9-1305]. |
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| | | Paragraph (3)(C) [Maine cite paragraph (c), subparagraph | | (iii)] applies the law of the situs to determine priority only | | with respect to goods (including fixtures), instruments, money, | | negotiable documents, and tangible chattel paper. Compare former | | Section 9-103(1), which applied the law of the location of the | | collateral to documents, instruments, and "ordinary" (as opposed | | to "mobile") goods. This Article does not distinguish among | | types of goods. The ordinary/mobile goods distinction appears to | | address concerns about where to file and search, rather than | | concerns about priority. There is no reason to preserve this | | distinction under the bifurcated approach. |
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| | | Particularly serious confusion may arise when the choice-of- | | law rules of a given jurisdiction result in each of two competing | | security interests in the same collateral being governed by a | | different priority rule. The potential for this confusion | | existed under former Section 9-103(4) with respect to chattel | | paper: Perfection by possession was governed by the law of the | | location of the paper, whereas perfection by filing was governed | | by the law of the location of the debtor. Consider the mess that | | would have been created if the language or interpretation of | | former Section 9-308 were to differ in the two relevant States, | | or if one of the relevant jurisdictions (e.g., a foreign country) | | had not adopted Article 9. The potential for confusion could | | have been exacerbated when a secured party perfected both by | | taking possession in the State where the collateral is located | | (State A) and by filing in | | the State where |
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