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307 Nebraska Reports

FIRST STATE BANK NEB. v. MP NEXLEVEL

Cite as 307 Neb. 198

First State Bank Nebraska, appellant, 

v. MP Nexlevel, LLC, appellee.

___ N.W.2d ___

Filed September 18, 2020. No. S-19-543.

1. Summary Judgment: Appeal and Error. An appellate court will affirm 

a lower court’s grant of summary judgment if the pleadings and admitted evidence show that there is no genuine issue as to any material facts 

or as to the ultimate inferences that may be drawn from those facts and 

that the moving party is entitled to judgment as a matter of law.

2. ____: ____. In reviewing a summary judgment, an appellate court views 

the evidence in the light most favorable to the party against whom the 

judgment was granted and gives that party the benefit of all reasonable 

inferences deducible from the evidence.

3. Statutes: Appeal and Error. Statutory interpretation presents a question of law, for which an appellate court has an obligation to reach an 

independent conclusion irrespective of the decision made by the court 

below.

4. Uniform Commercial Code: Secured Transactions: Security 

Interests. Article 9 of the Uniform Commercial Code, as adopted by 

Nebraska, provides a comprehensive scheme for the regulation of security interests.

5. Uniform Commercial Code: Secured Transactions. Article 9 of the 

Uniform Commercial Code, in part, applies to both a sale of certain 

payment rights—accounts, chattel paper, intangibles, and promissory 

notes—and the grant of an interest in specified payment rights to secure 

an obligation.

6. Uniform Commercial Code: Secured Transactions: Debtors and 

Creditors. In the case of a debtor granting a party payment rights to 

secure an obligation, part 6 of article 9 of the Uniform Commercial 

Code provides enforcement rights of the secured party in the event of 

a default by the debtor, as well as certain limitations on the exercise of 

those rights for the protection of the defaulting debtors, other creditors, 

and other affected persons.

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

11/06/2020 08:07 AM CST
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FIRST STATE BANK NEB. v. MP NEXLEVEL

Cite as 307 Neb. 198

7. ____: ____: ____. Part 4 of article 9 of the Uniform Commercial Code 

primarily addresses the rights and duties of account debtors and other 

persons obligated on collateral who are not, themselves, parties to a 

secured transaction.

8. Statutes: Appeal and Error. In construing a statute, statutory language 

is to be given its plain and ordinary meaning, and an appellate court will 

not resort to interpretation to ascertain the meaning of statutory words 

which are plain, direct, and unambiguous.

9. Statutes: Legislature: Intent. Components of a series or collection of 

statutes pertaining to a certain subject matter are in pari materia and 

should be conjunctively considered and construed to determine the 

intent of the Legislature, so that different provisions are consistent, harmonious, and sensible.

10. Uniform Commercial Code: Statutes. While official comments to the 

Uniform Commercial Code, as adopted by Nebraska, are not binding, 

they are persuasive in matters of statutory interpretation.

11. Uniform Commercial Code: Secured Transactions: Assignments: 

Words and Phrases. Unless there is a good reason for the definition of 

“assignment” to apply more narrowly in a given context, “assignment” 

under article 9 of the Uniform Commercial Code includes both an outright transfer of ownership and a contingent transfer for security.

12. ____: ____: ____: ____. The determination of whether a sale or grant of 

an interest amounts to an “assignment” as used in a given statute under 

article 9 of the Uniform Commercial Code depends upon the context of 

the statute and the interest given.

13. Uniform Commercial Code: Secured Transactions: Security 

Interests: Assignments: Words and Phrases. “Assignment” and its 

derivatives under Neb. U.C.C. § 9-406(a) (Reissue 2001 & Cum. Supp. 

2018) apply to presently exercisable security interests.

14. Uniform Commercial Code: Secured Transactions: Notice. Whether 

a notice is sufficient under Neb. U.C.C. § 9-406(a) (Reissue 2001 & 

Cum. Supp. 2018) depends upon the facts of each case.

15. Uniform Commercial Code: Secured Transactions: Assignments: 

Notice. In order to be sufficient under Neb. U.C.C. § 9-406(a) and (b)(1) 

(Reissue 2001 & Cum. Supp. 2018), a notice has to reasonably identify 

the rights assigned and demand payment to the assignee.

16. Uniform Commercial Code: Secured Transactions: Notice. A reasonable identification need not identify the right to payment with specificity, and “magic words” are not required for a notice under Neb. U.C.C. 

§ 9-406(a) (Reissue 2001 & Cum. Supp. 2018) to be effective.

17. Uniform Commercial Code: Secured Transactions: Debtors and 

Creditors. Neb. U.C.C. § 9-406(a) (Reissue 2001 & Cum. Supp. 2018) 

can modify an account debtor’s obligations under its agreement with 
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FIRST STATE BANK NEB. v. MP NEXLEVEL

Cite as 307 Neb. 198

the debtor if certain criteria are met, and Neb. U.C.C. § 9-607(a)(3) 

(Reissue 2001 & Cum. Supp. 2018) permits the secured party to enforce 

the account debtor’s obligations.

18. Uniform Commercial Code: Secured Transactions. Default under 

article 9 of the Uniform Commercial Code is not contingent on an adjudication or agreement.

19. ____: ____. Article 9 of the Uniform Commercial Code leaves to the 

agreement of the parties the circumstances giving rise to a default; 

default is whatever the security agreement says it is.

20. ____: ____. Under Neb. U.C.C. § 9-607(a)(3) (Reissue 2001 & Cum. 

Supp. 2018), it is unnecessary for a secured party to first become the 

owner of the collateral pursuant to a disposition or acceptance.

21. ____: ____. Under Neb. U.C.C. § 9-607(a)(3) (Reissue 2001 & Cum. 

Supp. 2018), a secured party may collect and enforce obligations 

included in collateral in its capacity as a secured party.

22. Standing: Jurisdiction: Parties. Standing refers to whether a party had, 

at the commencement of the litigation, a personal stake in the outcome 

of the litigation that would warrant a court’s or tribunal’s exercising its 

jurisdiction and remedial powers on the party’s behalf.

23. Standing: Words and Phrases. Standing involves a real interest in the 

cause of action, meaning some legal or equitable right, title, or interest 

in the subject matter of the controversy.

24. Standing: Claims: Parties. To have standing, a litigant must assert the 

litigant’s own rights and interests, and cannot rest a claim on the legal 

rights or interests of third parties.

Appeal from the District Court for Lancaster County: 

Susan I. Strong, Judge. Reversed and remanded for further 

proceedings.

Brandon R. Tomjack and Nicholas A. Buda, of Baird Holm, 

L.L.P., for appellant.

Michael S. Degan, of Kutak Rock, L.L.P., for appellee.

Anthony Schutz for amicus curiae Commercial Law Amicus 

Initiative.

Robert J. Hallstrom and Gerald M. Stilmock, of Brandt, 

Horan, Hallstrom & Stilmock, for amicus curiae Nebraska 

Bankers Association, Inc.
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FIRST STATE BANK NEB. v. MP NEXLEVEL

Cite as 307 Neb. 198

Heavican, C.J., Cassel, Funke, Papik, and Freudenberg, JJ.

Funke, J.

First State Bank Nebraska (First State) challenges the district 

court’s order dismissing its claims against MP Nexlevel, LLC. 

MP Nexlevel contracted to pay Husker Underground Utilities 

& Construction, LLC (Husker Underground), for certain construction services. First State held a security interest in Husker 

Underground’s accounts due to separate loan agreements. 

When Husker Underground failed to meet its loan obligations, 

First State sought direct payment of MP Nexlevel’s obligations 

under the contract by sending MP Nexlevel notices of Husker 

Underground’s default. Despite the notices, MP Nexlevel continued to submit its payments to Husker Underground, and 

First State brought suit against MP Nexlevel for performance 

under the contract.

First State challenges the district court’s finding that it 

lacked standing because it was not a party to the contract, Neb. 

U.C.C. § 9-607(a) (Reissue 2001 & Cum. Supp. 2018) did not 

authorize it to enforce MP Nexlevel’s obligations under the 

contract, and Neb. U.C.C. § 9-406(a) (Reissue 2001 & Cum. 

Supp. 2018) did not apply, because First State held a security 

interest rather than an assignment of Husker Underground’s 

rights to payment under the contract. For the reasons set 

forth herein, we reverse the judgment of the district court and 

remand this matter for further proceedings consistent with 

this opinion.

BACKGROUND

First State is a domestic bank chartered by and registered 

in the State of Nebraska. MP Nexlevel is a Minnesota limited liability company performing excavation, trenching, and 

other services for Nebraska customers as well as customers in 

other states.

In January 2018, MP Nexlevel and Husker Underground 

entered into a subcontract agreement whereby Husker Underground promised to perform certain construction services. 
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FIRST STATE BANK NEB. v. MP NEXLEVEL

Cite as 307 Neb. 198

As Husker Underground performed these services, it would 

submit invoices to MP Nexlevel for payment. MP Nexlevel 

was generally required to pay these amounts within 45 days 

of approval. Husker Underground performed these services 

throughout 2018. First State was not a party to the subcontract 

or any other agreement between MP Nexlevel and Husker 

Underground.

Between May and June 2016, First State loaned money to 

Husker Underground pursuant to various promissory notes and 

agreements. These agreements included a May promissory note 

executed in the original principal amount of $50,000, a June 

promissory note in the original principal amount of $635,500, 

and a May business manager agreement with business and 

professionals in which First State agreed, in part, to purchase 

certain accounts receivable from Husker Underground. Husker 

Underground secured these agreements by granting First State 

a security interest in virtually all of its assets, including its 

accounts and accounts receivable. First State filed three financing statements with the Nebraska Secretary of State to perfect 

these security interests. MP Nexlevel was not a party to any 

agreement between First State and Husker Underground and 

had no actual knowledge of the two parties’ relationship.

Husker Underground failed to make payments to First State 

when due, including failing to pay the May note in full upon 

maturity. As such, in August 2018, First State filed a lawsuit 

against Husker Underground, alleging Husker Underground 

was in default under the agreements and seeking a judgment 

for the payment of the remaining obligations. On January 23, 

2019, the district court entered a stipulated order, signed by 

Husker Underground representatives, granting summary judgment in favor of First State.

Prior to filing suit against Husker Underground, First State 

sent three notices to MP Nexlevel in May, July, and August 

2018. These notices alleged that Husker Underground had 

defaulted on loans from First State, that Husker Underground 

had granted First State a security interest in its accounts, and 

that Husker Underground assigned First State its rights to 
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FIRST STATE BANK NEB. v. MP NEXLEVEL

Cite as 307 Neb. 198

receive payments from MP Nexlevel as a result of its default. 

The notices directed MP Nexlevel to pay all amounts owed 

on Husker Underground’s accounts to First State directly and 

warned that failure to do so could result in adverse consequences for MP Nexlevel. Attached was a copy of a Uniform 

Commercial Code (UCC) financing statement identifying the 

security interest in Husker Underground’s accounts.

Once MP Nexlevel received the May 2018 notice, it contacted representatives at First State and Husker Underground. 

As to the communication with First State, affidavits offered by 

the parties alleged slightly varying facts as to MP Nexlevel’s 

representations on whether it would comply with the notice’s 

directions. Pat Carlson, an MP Nexlevel accounting supervisor, 

stated that he telephoned Miranda Hobelman, of First State,

in order to gather additional information, including the 

amount [First State] claimed it was owed by Husker 

Underground. I informed [Hobelman] that [MP Nexlevel] 

would review and decide the matter after due consideration of [MP Nexlevel’s] legal rights and responsibilities, 

if any, to [First State] and Husker Underground.

Hobelman, First State’s general counsel and a senior vice president, stated:

. . . I received a telephone call from . . . Carlson 

with MP Nex[l]evel who[] acknowledged receipt of 

[First State’s] May Notice and otherwise stated that MP 

Nexlevel would be cooperating with the Notice and sending payments on the Accounts directly to [First State]. 

After our call, I sent . . . Carlson two emails . . . following-up our conversation confirming that [MP Nexlevel] 

would send [First State] all funds owed to Husker 

Underground on the Accounts.

The first email Hobelman referenced in her affidavit apologized for missing Carlson’s initial call and stated, “Please 

make the checks payable to First State . . . as requested in the 

letter.” The second email thanked Carlson for calling back, 

explaining, “As we discussed, please send funds owed to 

Husker Underground to First State . . . until the total of funds 
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FIRST STATE BANK NEB. v. MP NEXLEVEL

Cite as 307 Neb. 198

sent equals $1,033,242.30. The funds will be credited to Husker 

Underground’s loans at First State.”

As to MP Nexlevel’s communication with Husker 

Underground, Carlson asserted that Husker Underground disputed the claim that it assigned its rights to receive MP 

Nexlevel payments to First State. Husker Underground, instead, 

demanded MP Nexlevel continue to make the payments to it 

under terms of the subcontract agreement. Carlson claimed 

that Husker Underground never directed MP Nexlevel to make 

payments to First State, that MP Nexlevel was never provided 

an assignment of Husker Underground’s rights to payment 

under the subcontract, that MP Nexlevel was not notified of a 

judgment in favor of First State against Husker Underground, 

and that MP Nexlevel was not provided copies of the notes or 

agreement between First State and Husker Underground. As 

such, MP Nexlevel continued making its payments directly to 

Husker Underground. MP Nexlevel’s discovery responses show 

MP Nexlevel made payments totaling $412,302.59 to Husker 

Underground after receiving the May 2018 notice. There are no 

outstanding invoices of Husker Underground for MP Nexlevel 

to pay.

In August 2018, 6 days after bringing suit against Husker 

Underground, First State filed a complaint against MP Nexlevel 

and, thereafter, filed a motion for summary judgment. First 

State alleged that because Husker Underground was in default 

of the notes and agreement and First State had a security 

interest in Husker Underground’s accounts receivable, it had 

a right to enforce this security interest and foreclose upon 

the same pursuant to §§ 9-406(a) and 9-607(a). First State 

further alleged that once First State sent its May 2018 notice 

to MP Nexlevel, MP Nexlevel could discharge its obligations 

under the subcontract only by paying the invoiced amounts 

directly to First State. First State claimed that because MP 

Nexlevel continued paying the invoiced amounts to Husker 

Underground, MP Nexlevel breached its obligations under the 

subcontract, and that First State is entitled to payment of the 

delinquent amounts.
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FIRST STATE BANK NEB. v. MP NEXLEVEL

Cite as 307 Neb. 198

MP Nexlevel resisted First State’s motion and filed a crossmotion for summary judgment. MP Nexlevel argued First State 

lacked standing to enforce the subcontract agreement, because 

there was no contractual relationship between First State and 

MP Nexlevel. Although MP Nexlevel received the notices, 

MP Nexlevel argued it properly continued to pay Husker 

Underground, because Husker Underground contested First 

State’s assertions and there was insufficient documentation that 

Husker Underground’s rights to payment under the subcontract 

were assigned to First State.

The district court overruled First State’s motion for summary 

judgment and granted MP Nexlevel’s cross-motion, dismissing the case with prejudice. First, the court held that § 9-607 

does not give rise to a claim by a secured creditor against an 

account debtor where the debtor is not in default and has not 

otherwise agreed. As such, because the record demonstrated 

that Husker Underground denied being in default at the time of 

First State’s notices and First State did not obtain its judgment 

against Husker Underground until January 23, 2019, First State 

did not have a cognizable claim against MP Nexlevel under 

§ 9-607 for MP Nexlevel’s performance under the subcontract. 

Additionally, the court determined that § 9-406(a) required 

receipt of notification of assignment in order to obligate the 

account debtor to pay the assignee and that an assignment is 

not the same as a secured interest. Because First State failed to 

adduce any evidence establishing Husker Underground made 

an assignment to First State, First State did not have authority under § 9-406(a) to demand MP Nexlevel to make the 

subcontract payments directly to it. As such, the court found 

First State lacked standing to pursue its claims for breach of 

the subcontract.

ASSIGNMENTS OF ERROR

First State assigns, restated, that the district court erred 

by (1) failing to find genuine issues of material fact existed, 

(2) finding Husker Underground was not in default at the 

time MP Nexlevel received the notices, (3) failing to find 
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FIRST STATE BANK NEB. v. MP NEXLEVEL

Cite as 307 Neb. 198

MP Nexlevel’s motion was deficient by not filing an annotated 

statement of disputed facts, (4) admitting Carlson’s affidavit, 

(5) holding an “assignment” under § 9-406 does not include a 

“security interest,” and (6) granting MP Nexlevel’s motion for 

summary judgment.

STANDARD OF REVIEW

[1] An appellate court will affirm a lower court’s grant of 

summary judgment if the pleadings and admitted evidence 

show that there is no genuine issue as to any material facts 

or as to the ultimate inferences that may be drawn from those 

facts and that the moving party is entitled to judgment as a 

matter of law. 1

[2] In reviewing a summary judgment, an appellate court 

views the evidence in the light most favorable to the party 

against whom the judgment was granted and gives that 

party the benefit of all reasonable inferences deducible from 

the evidence. 2

[3] Statutory interpretation presents a question of law, for 

which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the 

court below. 3

ANALYSIS

Evidence and Finding of Husker 

Underground’s Default

As an initial matter, several of First State’s assignments claim 

MP Nexlevel presented evidence that Husker Underground was 

not in default at the time of First State’s notices. First State 

claims this evidence and the court’s finding that default had 

not occurred contradicted First State’s allegations and evidence 

of Husker Underground’s earlier default. On this basis, First 

1 JB & Assocs. v. Nebraska Cancer Coalition, 303 Neb. 855, 932 N.W.2d 71 

(2019).

2 Id.

3 Id.
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FIRST STATE BANK NEB. v. MP NEXLEVEL

Cite as 307 Neb. 198

State contends that it was reversible error for MP Nexlevel to 

fail to file an annotated statement of disputed facts. Further, 

First State contends that the court erred in admitting Carlson’s 

affidavit, finding Husker Underground was not in default at the 

time of the notice, and finding there were no genuine issues of 

material fact.

First State misstates MP Nexlevel’s allegations and the 

court’s findings. Contrary to First State’s contention, MP 

Nexlevel did not contest that Husker Underground was in 

default of its loan obligations at the time of the notices. 

Instead, MP Nexlevel explained that at the time of the notices, 

Husker Underground disputed First State’s claim that it was in 

default. MP Nexlevel, and Carlson’s affidavit, made no allegation that the default had not actually occurred.

Additionally, the court made no findings that Husker 

Underground was not in default at the time of the notices. 

To the contrary, the court specifically found that “Husker 

Underground defaulted on its obligations owed to [First State] 

under the Businessmanager[] Agreement and Notes by failing to make payments to [First State] when due and failing to 

pay the May Note in full upon maturity.” The court’s basis for 

granting MP Nexlevel’s motion for summary judgment was 

that the default was disputed at the time of the notices and not 

on the basis that the default did not occur.

Accordingly, First State’s assignments premised on this 

proposition are without merit, and we turn to First State’s 

assignments regarding its authority to seek and enforce payment of Husker Underground’s account against MP Nexlevel 

after Husker Underground failed in its loan obligations to 

First State.

Article 9 of UCC

Husker Underground’s agreements with First State imposed 

various financial obligations which Husker Underground 

secured by granting First State a security interest in virtually 

all of its assets, including its accounts and accounts receivable. These accounts included an agreement between Husker 
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FIRST STATE BANK NEB. v. MP NEXLEVEL

Cite as 307 Neb. 198

Underground and MP Nexlevel where Husker Underground 

would provide certain services in exchange for payment from 

MP Nexlevel. As discussed above, it is undisputed that Husker 

Underground failed to meet its obligations to First State. This 

case arises from First State’s attempt to enforce the security 

agreement after Husker Underground’s failure to meet its obligations and hinges on whether First State could demand MP 

Nexlevel comply with the terms of the security agreements 

when Husker Underground had disputed it was in default.

[4,5] Article 9 of the UCC, as adopted by Nebraska, provides a comprehensive scheme for the regulation of security interests. 4 Article 9, in part, applies to both a sale of 

certain payment rights—accounts, chattel paper, intangibles, 

and promissory notes—and the grant of an interest in specified payment rights to secure an obligation. 5 Under article 9, 

a “secured party” includes, among others, either a person in 

whose favor a security interest is created or provided for under 

a security agreement or a person to which payment rights have 

been sold; a “debtor” includes a person having an interest in 

the collateral other than a security interest or other lien and a 

seller of payment rights; and an “account debtor” is a person 

obligated on an account, chattel paper, or general intangible 

subject to the payment rights sold or granted. 6

[6] In the case of a debtor granting a party payment rights 

to secure an obligation, part 6 of article 9 provides enforcement rights of the secured party in the event of a default by the 

debtor, as well as certain limitations on the exercise of those 

rights for the protection of the defaulting debtors, other creditors, and other affected persons. 7 Section 9-607(a) states, in 

relevant part:

4 See Neb. U.C.C. § 9-101, comment 1 (Reissue 2001 & Cum. Supp. 2018).

5 Neb. U.C.C. § 9-109 (Reissue 2001).

6 Neb. U.C.C. § 9-102(3), (28), (73) (Reissue 2001 & Cum. Supp. 2018).

7 See Neb. U.C.C. § 9-601, comment 2 (Reissue 2001 & Cum. Supp. 2018).
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FIRST STATE BANK NEB. v. MP NEXLEVEL

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If so agreed, and in any event after default, a secured 

party:

(1) may notify an account debtor or other person 

obligated on collateral to make payment or otherwise 

render performance to or for the benefit of the secured 

party; [and]

. . . .

(3) may enforce the obligations of an account debtor 

or other person obligated on collateral and exercise the 

rights of the debtor with respect to the obligation of the 

account debtor or other person obligated on collateral to 

make payment or otherwise render performance to the 

debtor, and with respect to any property that secures the 

obligations of the account debtor or other person obligated on the collateral.

Section 9-607 addresses a secured party’s rights in relation 

to the debtor to collect a specified payment right. However, 

this section “does not determine whether an account debtor 

. . . owes a duty to a secured party.” 8

[7] Part 4 of article 9 primarily addresses the rights and 

duties of account debtors and other persons obligated on collateral who are not, themselves, parties to a secured transaction. 9

As part of these duties, § 9-406(a) provides:

. . . [A]n account debtor on an account, chattel paper, 

or a payment intangible may discharge its obligation by 

paying the assignor until, but not after, the account debtor 

receives a notification, authenticated by the assignor 

or the assignee, that the amount due or to become due 

has been assigned and that payment is to be made 

to the assignee. After receipt of the notification, the 

account debtor may discharge its obligation by paying 

the assignee and may not discharge the obligation by 

paying the assignor.

8 § 9-607(e).

9 See Neb. U.C.C. § 9-401, comment 2 (Reissue 2001).
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FIRST STATE BANK NEB. v. MP NEXLEVEL

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In other words, prior to receiving notice otherwise, 

account debtors may discharge their obligations by paying 

the “assignor.” However, once an account debtor receives 

notification of a transfer authenticated from the “assignor” or 

the “assignee” and receives instruction to pay the “assignee,” 

§ 9-406(a) mandates that an account debtor must comply and 

may only discharge their account obligations by paying the 

“assignee.”

Assignment Under § 9-406(a)

The district court interpreted the use of “assignor” and 

“assignee” in § 9-406(a) to impose no duty upon an account 

debtor in those instances where there has been a granting of a 

security interest. We disagree.

[8-10] In construing a statute, statutory language is to be 

given its plain and ordinary meaning, and an appellate court 

will not resort to interpretation to ascertain the meaning of 

statutory words which are plain, direct, and unambiguous. 10

Components of a series or collection of statutes pertaining to 

a certain subject matter are in pari materia and should be conjunctively considered and construed to determine the intent of 

the Legislature, so that different provisions are consistent, harmonious, and sensible. 11 While official comments to the UCC, 

as adopted by Nebraska, are not binding, they are persuasive in 

matters of statutory interpretation. 12

[11] Unless there is a good reason for the definition of 

“assignment” to apply more narrowly in a given context, 

“assignment” under article 9 includes both an outright transfer 

of ownership and a contingent transfer for security. 13 Comment 

10 State v. Galvan, 305 Neb. 513, 941 N.W.2d 183 (2020).

11 Id.

12 Blue Valley Co-op v. National Farmers Org., 257 Neb. 751, 600 N.W.2d 

786 (1999), disapproved on other grounds, Weyh v. Gottsch, 303 Neb. 

280, 929 N.W.2d 40 (2019). See, also, Fjellin ex rel. Leonard Van Liew v. 

Penning, 41 F. Supp. 3d 775 (D. Neb. 2014).

13 See §§ 9-102, comment 26, and 9-109.
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26 of § 9-102 explains that article 9 uses “assignment” in 

numerous provisions but that it and its derivatives are not 

defined by the UCC. Comment 26 of § 9-102 states that “[t]his 

article generally follows common usage by using the terms 

‘assignment’ and ‘assign’ to refer to transfers of rights to payment, claims, and liens and other security interests” and that 

“[d]epending on the context, [‘assignment’] may refer to the 

assignment or transfer of an outright ownership interest or to 

the assignment or transfer of a limited interest, such as a security interest.” We find no convincing justification for limiting 

the use of “assignment” in the context of § 9-406(a) when there 

is a presently exercisable security interest.

Indeed, comment 5 of § 9-406 indicates that the drafters intended “assignment” to include contingent transfers for 

security. In discussing certain types of assignments, comment 

5 identifies “assignment of an account (whether outright or to 

secure an obligation)” and “assignments of rights to payment 

as security and other assignments of rights to payment such as 

accounts and chattel paper.” 14 Comment 5 additionally includes 

an example hypothetical involving a security interest which 

applies § 9-406.

Other sections of article 9 support a reading of “assignments” to include both outright transfers of ownership and 

contingent transfers for security. For instance, Neb. U.C.C. 

§ 9-209 (Reissue 2001) imposes a duty on an account debtor 

to free up collateral when there is no longer any outstanding “secured obligation” or commitment to give value in the 

future. In establishing that a “secured party” has a duty upon 

demand from the “debtor” to release the account debtor from 

any further obligation to the secured party, § 9-209 identifies 

the account debtor as one that “has received notification of 

an assignment to the secured party as assignee under section 

9-406(a).” 15 Section 9-209(c) specifies that this section does 

14 § 9-406, comment 5 (emphasis supplied).

15 § 9-209(b) (emphasis supplied).
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not apply to assignments from the sale of accounts, chattel 

paper, or payment intangibles. Accordingly, by the language of 

§ 9-209, that section supports the conclusion that “assignment” 

under § 9-406 includes those transfers which provide interests 

in specified payment rights to secure obligations.

Utilizing the current language of article 9, the U.S. District 

Court for the District of Arizona analyzed Arizona’s version of 

§ 9-406(a). 16 The court noted holdings by previous courts that 

notification of a security interest in the amount due is the same 

as notification that the amount due has been assigned and concluded that under Arizona’s statute, there is “‘no meaningful 

difference between a security interest and an assignment.’” 17

Similarly, Colorado’s Arapahoe County District Court in 

Garber v. TouchStar Software Corp 18 found that the UCC 

makes “‘no distinction between a party with a security interest in a debtor’s accounts receivable and a party who is an 

assignee of a debtor’s accounts receivable.’” Several additional 

courts have also analyzed security agreements as assignments 

under the current article 9 version. 19

In applying previous versions of article 9, other jurisdictions 

have determined there is no meaningful difference between an 

“assignment” and a “security interest” under the UCC. The 

Eighth Circuit in In re Apex Oil Co. 20 held that “notice of a 

security interest constitutes notice of an assignment for purposes of security under Article 9,” explaining that “[w]e see 

no meaningful difference between a security interest and an 

16 ARA Inc. v. City of Glendale, 360 F. Supp. 3d 957 (D. Ariz. 2019).

17 Id. at 967.

18 Garber v. TouchStar Software Corp, No. 2009 CV1189, 2011 WL 

12526062 at *4 (Colo. Dist. Nov. 10, 2011).

19 See, Lake City Bank v. R.T. Milord Co., No. 18 C 7159, 2019 WL 1897068 

(N.D. Ill. Apr. 29, 2019); Magnolia Financial Group v. Antos, 310 F. Supp. 

3d 764 (E.D. La. 2018); ImagePoint, Inc. v. JPMorgan Chase Bank, Nat., 

27 F. Supp. 3d 494 (S.D.N.Y. 2014); Swift Energy Operating v. PlemcoSouth, 157 So. 3d 1154 (La. App. 2015).

20 In re Apex Oil Co., 975 F.2d 1365, 1369, 1370 (8th Cir. 1992).
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assignment for purposes of security[ and i]n fact, they appear 

to be the same thing under Article 9.” Similarly, the Supreme 

Court of Maine held that “[e]ven though Article 9 usually 

refers to a creditor with a security interest as a ‘secured party,’ 

a secured party with a security interest in accounts is the 

‘assignee’ under [Maine’s secured transactions statute].” 21 The 

U.S. Bankruptcy Court for the Eastern District of Tennessee 

also held that “‘assignee’ under [the Tennessee UCC] includes 

a secured party with a security interest in accounts or general intangibles.” 22

MP Nexlevel cites IIG Capital LLC v. Archipelago, L.L.C. 23

for the proposition that the use of the assignment derivatives in 

§ 9-406 apply only to transfers of ownership and not contingent 

transfers for security. Specifically, MP Nexlevel quotes:

Plaintiff also argues that a secured party with a security interest is the equivalent of an assignee for purposes of UCC 9-406. However, the cases plaintiff cites 

for this proposition do not support it. The cited cases 

deal with a distinct section of the UCC (former UCC 

9-318 [1]), which provided that unless otherwise agreed, 

the rights of an assignee are subject to the terms of 

the original contract between the account debtor and 

assignor, including any defenses authorized therein . . . . 

While these cases treat assignees and holders of security 

interests similarly for purposes of holding them subject 

to defenses available to the original account debtors, 

they provide no authority to treat plaintiff’s security 

interest as an assignment for collection purposes under 

UCC 9-406. 24

21 Maine Farmers Exch. v. Farm Credit of Maine, 789 A.2d 85, 88 n.7 (Me. 

2002).

22 In re Otha C. Jean & Associates, Inc., 152 B.R. 219, 223 (E.D. Tenn. 

1993).

23 IIG Capital LLC v. Archipelago, L.L.C., 36 A.D.3d 401, 829 N.Y.S.2d 10 

(2007).

24 Id. at 404, 829 N.Y.S.2d at 3.
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In IIG Capital LLC, the secured party’s interest was contingent upon an event of default but none was alleged. 25 The 

court dismissed the secured party’s claim, stating that “plaintiff’s right to collect on the collateral is expressly conditioned 

on an event of default, and no such default is alleged in the 

complaint.” 26 Its statement evaluating whether a security interest was an assignment was dicta.

[12] Also, the security interest in IIG Capital LLC is distinguishable from the one in our review. Contrary to the security 

interest held by First State, the security interest in IIG Capital 

LLC was not alleged to be presently exercisable at the time 

of the notice, because it was contingent on the occurrence 

of an event that had not been alleged. 27 As stated above, 

the determination of whether a sale or grant of an interest 

amounts to an assignment as used in a given statute depends 

upon the context of the statute and the interest given. 28 Here, 

First State’s security interest was presently exercisable due to 

Husker Underground’s breach. Such context is distinct from a 

presently nonexercisable security interest which is contingent 

on the occurrence of a given event and which contingent event 

is not alleged to have occurred.

[13] In consideration of all of the above, we hold that 

“assignment” and its derivatives under § 9-406(a) apply to 

presently exercisable security interests.

Sufficiency of § 9-406(a) Notice

We next address whether First State’s notification and 

authentication was sufficient to impose the § 9-406(a) duty 

upon MP Nexlevel to discharge its obligations on its Husker 

Underground agreement by paying First State.

25 See id.

26 Id.

27 See id.

28 See § 9-102, comment 26.
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[14-16] Whether a notice is sufficient depends upon the 

facts of each case. 29 In order to be sufficient, the notice has to 

reasonably identify the rights assigned and demand payment to 

the assignee. 30 A reasonable identification need not identify the 

right to payment with specificity, and “magic words” are not 

required for a notice to be effective. 31

Here, First State provided sufficient notice of its currently 

exercisable security interest in Husker Underground’s account 

with MP Nexlevel. In its notices, First State identified itself, 

disclosed its agreements with Husker Underground which 

showed that Husker Underground had granted it a security 

interest in its accounts, and alleged Husker Underground had 

breached its loan obligations under those agreements. The 

notices directed MP Nexlevel to pay all amounts owed on 

Husker Underground’s accounts directly to First State and 

warned that failure to do so could result in adverse consequences for MP Nexlevel. First State authenticated the security 

interest by attaching a copy of a UCC financing statement 

identifying the security interest.

The allegation that Husker Underground contested its breach 

at the time of First State’s notices does not change the facts 

that Husker Underground had breached its obligations to 

First State, that First State notified MP Nexlevel of Husker 

Underground’s breach and of its security interest, that First 

State provided documentation of that security interest, and that 

First State directed MP Nexlevel to pay all amounts owed on 

Husker Underground’s accounts to First State, directly warning 

that failure to do so could result in adverse consequences for 

MP Nexlevel.

If MP Nexlevel was uncertain whether the breach occurred 

due to Husker Underground’s representations, § 9-406(c) provides a means for MP Nexlevel to obtain additional proof 

29 See ARA Inc., supra note 16.

30 § 9-406(a) and (b)(1).

31 See § 9-406, comment 3. See, also, ARA Inc., supra note 16.
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of First State’s present authority to collect on the collateral. 

Section 9-406(c) states: “[I]f requested by the account debtor, 

an assignee shall seasonably furnish reasonable proof that the 

assignment has been made,” and “[u]nless the assignee complies, the account debtor may discharge its obligation by paying 

the assignor, even if the account debtor has received a notification under [§ 9-406(a)].” As discussed above, an “assignment” 

and its derivatives under § 9-406 include presently exercisable 

security interests. Accordingly, if MP Nexlevel had reason 

to doubt that First State held a presently exercisable security 

interest to MP Nexlevel’s accounts with Husker Underground, 

§ 9-406(c) allows MP Nexlevel to request additional “reasonable proof” of such assignment, which First State would be 

required to “seasonably furnish.”

We find First State’s notices were sufficient to reasonably identify that First State had a presently exercisable 

security interest on Husker Underground’s account with MP 

Nexlevel, provide authentication of that security interest, and 

demand MP Nexlevel perform its obligations on its agreement 

with Husker Underground by paying First State. As such, 

§ 9-406(a) required that MP Nexlevel could discharge its obligations only by paying First State and not by paying Husker 

Underground. This is contrary to MP Nexlevel’s assertion 

that it was entitled to the defense of discharge in that it fully 

performed and paid Husker Underground the obligated money 

because, as described in § 9-406(a), after receiving the notice, 

MP Nexlevel could discharge its obligation only by paying 

First State. Because MP Nexlevel continued paying Husker 

Underground and failed to pay First State, it breached its contractual obligations.

Default Under § 9-607(a)

In order to exercise its authority under § 9-607(a)(3) to 

enforce MP Nexlevel’s obligations, § 9-607(a) conditions this 

authority by stating that “[i]f so agreed, and in any event 

after default.” The district court seemingly interpreted this 

language as requiring that should a default be contested, the 
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default occurs when it is adjudicated or the parties agree. The 

district court based its holding on § 9-607(e)’s statement that 

“[t]his section does not determine whether an account debtor 

. . . owes a duty to a secured party” and its finding that requiring an account debtor to determine whether a breach actually 

occurred imposes an additional duty upon the account debtor to 

the secured party. 32

[17] As acknowledged above, § 9-607 does not impose a 

duty upon an account debtor. However, § 9-406(a) modifies 

an account debtor’s obligations under its agreement with the 

debtor if certain criteria are met and § 9-607(a)(3) permits the 

secured party to enforce the account debtor’s obligations. 33 A 

secured party’s exercise of its § 9-607(a)(3) authority against 

the account debtor is not the imposition of a duty upon the 

account debtor but the enforcement of existing duties.

[18,19] Additionally, § 9-607(a) limits its application only to 

“after default” and default is not contingent on an adjudication 

or agreement. Article 9 leaves to the agreement of the parties 

the circumstances giving rise to a default; default is whatever 

the security agreement says it is. 34

Here, the agreements between Husker Underground and 

First State all provide that default includes failure to make 

payments to First State when due. It is presently uncontested 

that Husker Underground had failed to make these payments 

when First State sent MP Nexlevel the notices. Although 

Husker Underground initially disputed its default and the 

matter had to be adjudicated, the date of default does not 

32 See ImagePoint, Inc., supra note 19.

33 See, e.g., Agri-Best Holdings v. Atlanta Cattle Exchange, 812 F. Supp. 

2d 898 (N.D. Ill. 2011); Reading Co-Op. Bank v. Suffolk Const. Co., 464 

Mass. 543, 984 N.E.2d 776 (2013); Greenfield Commercial Credit, L.L.C. 

v. Catlettsburg Refining, L.L.C., No. Civ. A. 03-3391, 2007 WL 97068 

(E.D. La. Jan. 9, 2007); Garber, supra note 18.

34 See § 9-607, comment 3. See, also, First Nat. Bank of Black Hills v. Beug, 

400 N.W.2d 893 (S.D. 1987).
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change simply because Husker Underground had previously 

challenged it.

If MP Nexlevel did not have sufficient information to determine whether the default occurred and First State was presently 

authorized to collect on the collateral, it could have requested 

additional proof from First State pursuant to § 9-406(c) as 

discussed above. And, if First State did not comply, § 9-406(a) 

would not have imposed an additional duty, MP Nexlevel 

would be able to continue discharging its obligations by paying Husker Underground, and § 9-607(a) would not grant First 

State the authority to bring an action to enforce an obligation to pay it directly. Because MP Nexlevel did not request 

such additional proof and the notice under § 9-406(a) was 

sufficient, MP Nexlevel had a duty under § 9-406(a) to pay 

First State directly to discharge its contractual obligations and 

§ 9-607(a)(3) provided First State the authority to step into 

Husker Underground’s place and enforce MP Nexlevel’s obligations as adjusted by operation of § 9-406(a).

We conclude that the district court erred in its requirement 

that should a debtor contest that a default occurred at the time 

of the § 9-406(a) notice, the default under § 9-607(a) to allow 

the secured party to enforce an account debtor’s obligation to 

pay it directly does not occur until the default is adjudicated 

or the parties otherwise agree. Instead, the default occurs when 

determined by the security agreement—in this case, when 

Husker Underground failed to make timely payments. If the 

debtor contests the default, the account debtor is authorized to 

exercise its authority under § 9-406(e) to acquire more proof 

of the secured party’s presently exercisable security interest. 

If the account debtor does not seek additional proof or if the 

secured party provides adequate proof, § 9-406(a) imposes a 

duty upon the account debtor to discharge its obligations by 

paying the secured party and the secured party can enforce 

those obligations under § 9-607(a)(3). The date of default 

relevant to § 9-607(a) remains as determined by the security agreement.
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Standing

[20,21] For completeness, MP Nexlevel claims that First 

State lacked standing to bring this action, because First State 

was not in privity of contract and §§ 9-406 and 9-607 do not 

provide private rights of action. However, First State did not 

bring claims for violations of §§ 9-406 and 9-607, but instead 

brought claims for breach of contract and account stated. First 

State’s reliance on §§ 9-406 and 9-607 was merely for the 

purpose of placing itself in the position to enforce Husker 

Underground’s agreement with MP Nexlevel as adjusted by 

operation of § 9-406(a) so as to require payment be sent to 

First State. Under § 9-607(a)(3), it is unnecessary for a secured 

party to first become the owner of the collateral pursuant to a 

disposition or acceptance. 35 A secured party may collect and 

enforce obligations included in collateral in its capacity as a 

secured party. 36

[22-24] Standing refers to whether a party had, at the commencement of the litigation, a personal stake in the outcome of 

the litigation that would warrant a court’s or tribunal’s exercising its jurisdiction and remedial powers on the party’s behalf. 37

Standing involves a real interest in the cause of action, meaning some legal or equitable right, title, or interest in the subject 

matter of the controversy. 38 To have standing, a litigant must 

assert the litigant’s own rights and interests, and cannot rest a 

claim on the legal rights or interests of third parties. 39

First State was authorized by its security agreements with 

Husker Underground and § 9-607(a)(3) to step into Husker 

Underground’s place to enforce MP Nexlevel’s contractual 

obligations. Further, § 9-406(a) imposes a duty upon MP 

35 See § 9-607, comment 6.

36 See id. See, also, Agri-Best Holdings, supra note 33.

37 Applied Underwriters v. S.E.B. Servs. of New York, 297 Neb. 246, 898 

N.W.2d 366 (2017).

38 Id.

39 Id.
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Nexlevel to discharge its obligation by paying First State and 

prevents MP Nexlevel from claiming it satisfied its contractual 

obligations by paying Husker Underground. As a result, First 

State had standing to bring its claims against MP Nexlevel.

CONCLUSION

The district court erred in granting MP Nexlevel summary 

judgment and dismissing First State’s complaint. First State 

was authorized by § 9-607(a)(1) to notify Husker Underground, 

as the account debtor obligated under the collateral, to make 

payment for its benefit due to Husker Underground’s default. 

Section 9-406(a) applies to presently exercisable security 

interests, and because First State’s notice and authentication 

were sufficient, § 9-406(a) imposed a duty on MP Nexlevel 

to discharge its obligations under its agreement with Husker 

Underground by paying directly to First State. When MP 

Nexlevel continued paying to Husker Underground and failed 

to pay directly to First State, MP Nexlevel breached its 

obligations and First State was authorized by § 9-607(a)(3) 

to step into Husker Underground’s place and enforce MP 

Nexlevel’s contractual obligations as adjusted by operation of 

§ 9-406(a). After having received notice of First State’s claim, 

MP Nexlevel could have protected itself from liability by the 

very simple expedient of either demanding further proof (if it 

doubted the truth of First State’s claims) or making the payments jointly to Husker Underground and First State. Because 

MP Nexlevel failed to do so, we must reverse the district 

court’s order granting summary judgment in favor of MP 

Nexlevel and dismissing First State’s complaint. We remand 

this matter to the district court for further proceedings consistent with this opinion.

Reversed and remanded for 

further proceedings.

Miller-Lerman and Stacy, JJ., not participating.