O'give Me a Home: Determining the Location of the Debtor's Chief Executive Office under Section 9-103 of the UCC (1999)

Introduction A great deal of the litigation under Article 9 of the Uniform Commercial Code (UCC) concerns choice of law issues, and in particular, the location of the debtor's executive under section 9-103.1 In the context of multistate transactions, section 9-103 lays out the rules for perfection of security interests and also explains the effects of perfection and nonperfection.2 For accounts, general intangibles, and mobile goods given as collateral in multistate transactions, section 9-103(3)(b) dictates that the law of the debtor's jurisdiction governs perfection and its effect.3 Section 9-103(d) explains that the debtor is deemed located at his place of business if he has one, at his chief executive office if he has multiple places of business, or otherwise at his residence.4 In the latter case, the UCC does not define what a chief executive office is, nor does it explain how to determine where such an office is located for a given business. Consequently, various courts have struggled with this lack of guidance from the UCC, formulating different tests for applying the chief executive office rule.5 This Note has two central purposes concerning these problems with section 9-103. First, it attempts to provide an in-depth analysis of the tests courts have developed-not just a description, but an exploration of their true meaning and impact as applied. Second, this Note seeks to present why one test should be favored over the others. In Part I, the problem at issue is presented. Part II explains section 9-103 in greater detail. Part III analyzes the various tests the courts have applied to determine the location of a debtor's chief executive office, and Part IV presents arguments for which test should be uniformly applied. Lastly, Part V is a summary of the main points addressed. II. Applying Section 9-103(3) Although this Note focuses mainly on section 9-103(3), it is helpful to know the structure of section 9-103 as a whole in order to understand the relevance and impact of the issues presented. In general, section 9-103 explains the rules for perfecting security interests in collateral involved in multistate transactions. It does this by categorizing collateral into five categories and applying different rules to each category.6 Section 9-103(1) deals with instruments, documents, and ordinary goods; section 9-103(2) deals with goods subject to certificates of title; section 9-103(3) covers accounts, general intangibles, and mobile goods; section 9-103(4) deals with chattel paper; and section 9-103(5) covers minerals.7 With the exception of goods subject to certificates of title, the approach to determining which jurisdiction's laws govern perfection of a security interest is bifurcated. Depending on the section in which the collateral falls, the governing jurisdiction will be determined either by the location of the collateral or by the location of the debtor.8 As a general rule of thumb, tangible collateral is governed by the jurisdiction in which the collateral is located, and intangible collateral is governed by the jurisdiction in which the debtor is located.9 Since section 9-103 is organized around types of collateral, the logical first step in analyzing a multistate transaction for purposes of perfection is to classify the collateral into one of the categories listed in the section. As stated above, section 9-103(3) is concerned with accounts, general intangibles, and mobile goods. Accounts and general intangibles have fairly clear and succinct definitions under section 9-106, so they are easy to classify.10 Mobile goods are also easy to classify. Section 9-103(3)(a) gives specific examples of mobile goods, and the Official Comment to the section provides guidance, explaining that mobile goods are usually equipment, but can sometimes be inventory.ll The Comment also points out that the section pertains to goods normally used in more than one jurisdiction. …