2023 New Mexico Statutes › Chapter 55 - Uniform Commercial Code › Article 9 - Secured Transactions › Part 6 - DEFAULT › Subpart 1 - DEFAULT AND ENFORCEMENT OFSECURITY INTEREST › Section 55-9-601 - Rights after default; judicial enforcement; consignor or buyer of accounts, chattel paper, payment intangibles or promissory notes.

(a) After default, a secured party has the rights provided in Sections 55-9-601 through 55-9-628 NMSA 1978 and, except as otherwise provided in Section 55-9-602 NMSA 1978, those provided by agreement of the parties. A secured party:
(1) may reduce a claim to judgment, foreclose or otherwise enforce the claim, security interest or agricultural lien by any available judicial procedure; and
(2) if the collateral is documents, may proceed either as to the documents or as to the goods they cover.
(b) A secured party in possession of collateral or control of collateral under Section 55-7-106, 55-9-104, 55-9-105, 55-9-106 or 55-9-107 NMSA 1978 has the rights and duties provided in Section 55-9-207 NMSA 1978.
(c) The rights under Subsections (a) and (b) of this section are cumulative and may be exercised simultaneously.
(d) Except as otherwise provided in Subsection (g) of this section and Section 55-9-605 NMSA 1978, after default, a debtor and an obligor have the rights provided in Sections 55-9-601 through 55-9-628 NMSA 1978 and by agreement of the parties.
(e) If a secured party has reduced its claim to judgment, the lien of any levy that may be made upon the collateral by virtue of an execution based upon the judgment relates back to the earliest of:
(1) the date of perfection of the security interest or agricultural lien in the collateral;
(2) the date of filing a financing statement covering the collateral; or
(3) any date specified in a statute under which the agricultural lien was created.
(f) A sale pursuant to an execution is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this section. A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of Chapter 55, Article 9 NMSA 1978.
(g) Except as otherwise provided in Subsection (c) of Section 55-9-607 NMSA 1978, this part imposes no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles or promissory notes.
History:
1978 Comp., § 55-9-601, enacted by Laws 2001, ch. 139, § 98; 2005, ch. 144, § 109.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
1. Source. Former section 9-501(1), (2), (5).
2. Enforcement: In General. The rights of a secured party to enforce its security interest in collateral after the debtor's default are an important feature of a secured transaction. (Note that the term "rights," as defined in section 1-201, includes "remedies.") This part provides those rights as well as certain limitations on their exercise for the protection of the defaulting debtor, other creditors, and other affected persons. However, subsections (a) and (d) make clear that the rights provided in this part do not exclude other rights provided by agreement.
3. When Remedies Arise. Under subsection (a) the secured party's rights arise "(a)fter default." As did former section 9-501, this article leaves to the agreement of the parties the circumstances giving rise to a default. This article does not determine whether a secured party's post-default conduct can constitute a waiver of default in the face of an agreement stating that such conduct shall not constitute a waiver. Rather, it continues to leave to the parties' agreement, as supplemented by law other than this article, the determination whether a default has occurred or has been waived.
See
section 1-103.
4. Possession of Collateral; Section 9-207. After a secured party takes possession of collateral following a default, there is no longer any distinction between a security interest that before default was nonpossessory and a security interest that was possessory before default, as under a common-law pledge. This part generally does not distinguish between the rights of a secured party with a nonpossessory security interest and those of a secured party with a possessory security interest. However, section 9-207 addresses rights and duties with respect to collateral in a secured party's possession. Under subsection (b) of this section, section 9-207 applies not only to possession before default but also to possession after default. Subsection (b) also has been conformed to section 9-207, which, unlike former section 9-207, applies to secured parties having control of collateral.
5. Cumulative Remedies. Former section 9-501(1) provided that the secured party's remedies were cumulative, but it did not explicitly provide whether the remedies could be exercised simultaneously. Subsection (c) permits the simultaneous exercise of remedies if the secured party acts in good faith. The liability scheme of subpart 2 affords redress to an aggrieved debtor or obligor. Moreover, permitting the simultaneous exercise of remedies under subsection (c) does not override any non-UCC law, including the law of tort and statutes regulating collection of debts, under which the simultaneous exercise of remedies in a particular case constitutes abusive behavior or harassment giving rise to liability.
6. Judicial Enforcement. Under subsection (a) a secured party may reduce its claim to judgment or foreclose its interest by any available procedure outside this article under applicable law. Subsection (e) generally follows former section 9-501(5). It makes clear that any judicial lien that the secured party may acquire against the collateral effectively is a continuation of the original security interest (if perfected) and not the acquisition of a new interest or a transfer of property on account of a preexisting obligation. Under former section 9-501(5), the judicial lien was stated to relate back to the date of perfection of the security interest. Subsection (e), however, provides that the lien relates back to the earlier of the date of filing or the date of perfection. This provides a secured party who enforces a security interest by judicial process with the benefit of the "first-to-file-or-perfect" priority rule of section 9-322(a)(1).
7. Agricultural Liens. Part 6 provides parallel treatment for the enforcement of agricultural liens and security interests. Because agricultural liens are statutory rather than consensual, this article does draw a few distinctions between these liens and security interests. Under subsection (e), the statute creating an agricultural lien would govern whether and the date to which an execution lien relates back. Section 9-606 explains when a "default" occurs in the agricultural lien context.
8. Execution Sales. Subsection (f) also follows former section 9-501(5). It makes clear that an execution sale is an appropriate method of foreclosure contemplated by this part. However, the sale is governed by other law and not by this article, and the limitations under section 9-610 on the right of a secured party to purchase collateral do not apply.
9. Sales of Receivables; Consignments. Subsection (g) provides that, except as provided in section 9-607(c), the duties imposed on secured parties do not apply to buyers of accounts, chattel paper, payment intangibles, or promissory notes. Although denominated "secured parties," these buyers own the entire interest in the property sold and so may enforce their rights without regard to the seller ("debtor") or the seller's creditors. Likewise, a true consignor may enforce its ownership interest under other law without regard to the duties that this part imposes on secured parties. Note, however, that section 9-615 governs cases in which a consignee's secured party (other than a consignor) is enforcing a security interest that is senior to the security interest (i.e., ownership interest) of a true consignor.
ANNOTATIONS
Effective dates.
— Laws 2001, ch. 139, § 155 makes the act effective July 1, 2001.
The 2005 amendment,
effective January 1, 2006, adds the statutory reference to Section 55-9-106 NMSA 1978 in Subsection (b).
Decisions under former Section 55-9-501 NMSA 1978.
— In light of the similarity of this section and former Section 55-9-501 NMSA 1978, annotations decided under former Section 55-9-501 NMSA 1978 have been included in the annotations in this section.
Doctrine of election of remedies abolished.
— The purpose of Subsections (1) and (5) (now Subsections (a), (c), and (e)) of this section is to abolish the doctrine of election of remedies.
Ruidoso State Bank v. Garcia
, 1978-NMSC-092, 92 N.M. 288, 587 P.2d 435 (decided under former law).
A secured creditor is not required to elect a remedy,
but can take any permitted action or combination of actions.
Western Bank v. Matherly
, 1987-NMSC-052, 106 N.M. 31, 738 P.2d 903 (decided under former law).
Secured party may satisfy debt outside of code.
— A secured party may reduce his claim to judgment and execute upon the collateral, or otherwise satisfy the debt by resorting to state law other than the Commercial Code.
Riblet Tramway Co. v. Monte Verde Corp.
, 453 F.2d 313 (10th Cir. 1972) (decided under former law).
Secured party's rights upon default.
— Upon default, a secured party is entitled to take possession of the collateral for the purpose of preserving it and in addition may sue on the note for money judgment.
Kimura v. Wauford
, 1986-NMSC-016, 104 N.M. 3, 715 P.2d 451 (decided under former law).
Secured party suing on defaulted note may sue and reduce debt to judgment.
In that case, the debt would be merged into the judgment. However, the debt would be carried forward so that the secured party's rights under the security agreement would not be destroyed. The security agreements would not be merged into the judgment.
Ruidoso State Bank v. Garcia
, 1978-NMSC-092, 92 N.M. 288, 587 P.2d 435 (decided under former law).
Rights of one claiming interest through vendee.
— If there are no intervening equities whereby the vendor may be estopped to enforce a forfeiture against one claiming through a conditional vendee of personal property, a vendee can create no greater interest in personal property than is possessed by the vendee, and one claiming a UCC security interest through the vendee takes his interest in the property subject to all claims of title enforceable against the vendee, including forfeiture upon default.
Western Bank v. Matherly
, 1987-NMSC-052, 106 N.M. 31, 738 P.2d 903 (decided under former law).
Recovery of judgment for debt does not prevent later proceedings.
— The recovery of a judgment for a debt, except to the extent that it has been satisfied, does not prevent later proceedings to enforce a mortgage or other lien given to secure its payment.
Ruidoso State Bank v. Garcia
, 1978-NMSC-092, 92 N.M. 288, 587 P.2d 435 (decided under former law).
Law reviews.
— For article, "Essential Attributes of Commercial Paper - Part I," see 1 N.M. L. Rev. 479 (1971).
Am. Jur. 2d, A.L.R. and C.J.S. references.
— 68 Am. Jur. 2d Secured Transactions § 556 et seq.
Note for price as waiver of reservation of title under conditional sale, 55 A.L.R. 1160.
Demand for payment or for possession as condition of seller's right to retake property or otherwise enforce forfeiture after waiver of strict performance, 59 A.L.R. 134.
Novation of contract as affecting applicability of protective provisions of Uniform Conditional Sales Act or similar statute, 83 A.L.R. 998.
Waiver by conditional purchaser of rights or provisions as to repossession, redemption or resale, 99 A.L.R. 1298.
Action for price as waiver by conditional vendor of right to reclaim property, 113 A.L.R. 653.
Purchase by pledgee of subject of pledge, 37 A.L.R.2d 1381.
79 C.J.S. Secured Transactions § 144 et seq.