7. Goods Covered by Document of Title. Subsection (c) [Maine cite subsection (3)] applies to goods in the possession of a bailee who has issued a negotiable document covering the goods. Subsection (d) [Maine cite subsection (4)] applies to goods in the possession of a bailee who has issued a nonnegotiable document of title, including a document of title that is "non- negotiable" under Section 7-104. Section 9-313 [Maine cite section 9-1313] governs perfection of a security interest in goods in the possession of a bailee who has not issued a document of title.

Subsection (c) [Maine cite subsection (3)] clarifies the perfection and priority rules in former Section 9-304(2). Consistently with the provisions of Article 7, subsection (c) takes the position that, as long as a negotiable document covering goods is outstanding, title to the goods is, so to say, locked up in the document. Accordingly, a security interest in goods covered by a negotiable document may be perfected by perfecting a security interest in the document. The security interest also may be perfected by another method, e.g., by filing. The priority rule in subsection (c) [Maine cite subsection (3)] governs only priority between (i) a security interest in goods which is perfected by perfecting in the document and (ii) a security interest in the goods which becomes perfected by another method while the goods are covered by the document.

Example 1: While wheat is in a grain elevator and covered by a negotiable warehouse receipt, Debtor creates a security interest in the wheat in favor of SP-1 and SP-2. SP-1 perfects by filing a financing statement covering "wheat." Thereafter, SP-2 perfects by filing a financing statement describing the warehouse receipt. Subsection (c)(1) provides that SP-2's security interest is perfected. Subsection (c)(2) [Maine cite subsection (3), paragraph (b)] provides that SP-2's security interest is senior to SP-1's.

Example 2: The facts are as in Example 1, but SP-1's security interest attached and was perfected before the goods were delivered to the grain elevator. Subsection (c)(2) [Maine cite subsection (3), paragraph (b)] does not apply, because SP-1's security interest did not become perfected during the time that the wheat was in the possession of a bailee. Rather, the first- to-file-or-perfect priority rule applies. See Section 9-322 [Maine cite section 9-1322].