KANSAS COMMENT, 1996

This section, which does not vary from the 1995 Official Text, defines two of the more important types of "intangible" collateral. The term "account" would include not only traditional accounts receivable for goods sold and delivered and services rendered, but also many executory contract rights, such as the proceeds from a plumbing contract under which the work has not yet been performed. The right to the payment is an "account" if it has not been reified into an instrument or chattel paper. The 1972 Official Text combined the definitions of "accounts" and "contract rights." As the Official Comments make clear, accounts may include many ancillary covenants that will not prevent an item from being classified as an account. Accounts are also notable for the many rights to receive money that are not "accounts." Any right to payment that is not for goods sold or leased or services rendered or to be rendered is not an account. If the underlying transaction is a sale of realty, sale of an intangible or is a loan, for example, the right to payment would not be an account but some other intangible, often a general intangible.

The term "general intangibles" continues to be a catch-all to pick up collateral which does not fit any other Article 9 category. It would include, for example, an expected recovery from a condemnation action (Board of County Comm'rs v. Berkeley Village, 580 P.2d 1251 (Colo. App. 1978)), a tax refund, computer software, patent rights, trademarks, goodwill, a vendor's interest in an installment land contract, certain partnership interests in commercial real estate (Madison National Bank v. Newrath, 275 A.2d 495 (Md. 1971)), a liquor license (In re Matto's Inc., 30 U.C.C. Rep. 1684 (E.D. Mich. (Bankr.) 1981)), and other off-beat intangible collateral. When the secured party is not sure how to categorize intangible collateral, either the collateral should be described by item, or the description should use all reasonable types, and the filing(s) should be made accordingly.

Revisor's Note:

Former section 84-9-106 was repealed by L. 2000, ch. 142, § 155 and the number reassigned to the current text.

Law Review and Bar Journal References:

"Survey of Kansas Law: Secured Transactions," J. Eugene Balloun, 16 K.L.R. 437, 438 (1968).

"The New UCC Article 9 Amendments," Barkley Clark, 44 J.B.A.K. 131, 132 (1975).

Legislative survey, "Changes in Article Nine of the Kansas Commercial Code," Alan Tipton, 15 W.L.J. 212, 220, 221 (1976).

"Survey of Kansas Law: Secured Transactions," J. Eugene Balloun, 32 K.L.R. 351, 355 (1984).

"A Brief Overview of Revised Article 9 in Kansas," John K. Pearson and J. Scott Pohl, 72 J.K.B.A. No. 8, 22 (2003).

CASE ANNOTATIONS

1. Subrogation pursuant to surety contract not a "security interest" within meaning of statute. United States Fidelity & Guaranty Co. v. First State Bank, 208 Kan. 738, 749, 494 P.2d 1149.

2. Even if credit memo obtained by debtor was not proceeds, it was perfected account by filing with Secretary of State. In Re SMS, Inc., 15 B.R. 496, 499 (1981).

3. Right to receive payments under a contract for deed is a "general intangible"; must be perfected by filing with secretary of state. In re Southern, 32 B.R. 761, 762, 765 (1983).

4. Filing of financing statement required to perfect security interest. First Nat'l Bank of Gaylord v. Autrey, 9 Kan. App. 2d 96, 98, 673 P.2d 448 (1984).

5. PIK payments in the nature of executory contracts or accounts rather than general intangibles. In re Lions Farms, Inc., 54 B.R. 241, 244 (1985).

6. Patent and trademark office filing system as preempting UCC with respect to patent assignments examined. In re Otto Fabric, Inc., 55 B.R. 654, 656 (1985).

7. Right to payment from commodities futures trading account included in definition of general intangibles. In re Bucyrus Grain Co., Inc., 67 B.R. 336, 340 (1986).

8. Cited; computer software operational programs held taxable as tangible personal property; application programs held intangible property not subject thereto. In re Tax Protest of Strayer, 239 Kan. 136, 142, 143, 716 P.2d 588 (1986).

9. Cited; voluntary transfer of professional corporation stock to one not qualified (K.S.A. 17-2707) held null and void under K.S.A. 17-2712. Central State Bank v. Albright, 12 Kan. App. 2d 175, 179, 180, 737 P.2d 65 (1987).

10. Cited; disposition of vendor's interest in contract for deed (K.S.A. 60-2401, 60-2406) examined. City of Arkansas City v. Anderson, 12 Kan. App. 2d 490, 494, 749 P.2d 505 (1988).

11. PIK certificates as nonnegotiable, creditor's protection of security interest therein, right to proceeds therefrom determined. In re George, 85 B.R. 133, 134, 145 (1988).

12. Unpaid PIK diversion payments as right under executory contracts classified as accounts examined. In re Schneider, 864 F.2d 683, 685, 94 B.R. [40], [42] (1988).

13. Priority between right of setoff and perfected security interest examined. Bank of Kansas v. Hutchinson Health Services, Inc., 13 Kan. App. 2d 421, 425, 773 P.2d 660 (1989).

14. Security agreement and financing statements covering general intangibles included copyrights, trademarks and patents. In Re Topsy's Shoppes, Inc. of Kansas, 118 B.R. 797, 800 (1990).

15. Article 9 inapplicable to priority dispute between two creditors concerning surplus proceeds from foreclosure sale of real estate. Kinsley State Bank v. Waters, 18 Kan. App. 2d 413, 417, 854 P.2d 311 (1993).

16. Whether annuity contract purchased for debtor's benefit in personal injury settlement qualified as spendthrift trust examined. In re Hayes, 168 B.R. 717, 724, 727 (1994).