The core issue here revolves around the perfection of a security interest in a deposit account under South Dakota’s UCC Article 9. South Dakota, like most states, follows the general rule that a security interest in a deposit account can only be perfected by the secured party taking control of the account. Control is defined in SDCL § 34A-9-104. For a deposit account, control is achieved when the secured party is the bank with which the deposit account is maintained, or when the secured party obtains the agreement of the bank with which the deposit account is maintained pursuant to which the bank agrees to comply with instructions directing the disposition of the funds in the deposit account without further consent by the secured party. In this scenario, the security agreement grants a security interest in the deposit account, but there is no mention of the secured party taking control. The filing of a financing statement is generally ineffective for perfecting a security interest in a deposit account, as explicitly stated in SDCL § 34A-9-312(b)(1). Therefore, without control, the security interest remains unperfected. An unperfected security interest is subordinate to a perfected security interest, and in the absence of perfection, the secured party’s rights are generally limited to those of an unsecured creditor against other creditors and purchasers.

In South Dakota, when a secured party files a UCC-3 continuation statement for a purchase-money security interest (PMSI) in inventory, the perfection remains effective. The critical period for perfection of a PMSI in inventory is maintained by filing a financing statement before or within the “enabling loan” period, which typically aligns with the debtor receiving possession of the inventory. A UCC-3 continuation statement is filed within six months prior to the expiration of the initial five-year perfection period, as per SDCL § 57A-9-515. The perfection of a PMSI in inventory has unique requirements, including the need for notice to other secured parties who have filed or are perfected against the same collateral, as outlined in SDCL § 57A-9-324. This notice must be given before the debtor receives possession of the inventory. The scenario describes a valid PMSI in inventory and a timely filed continuation statement. Therefore, the perfection remains effective. The question tests the understanding of the continuity of perfection for a PMSI in inventory in South Dakota, emphasizing the role of the continuation statement and the underlying requirements for PMSI perfection.

Under South Dakota Codified Law Chapter 38-17, the priority of liens on agricultural land is a critical consideration. When a lender perfects a security interest in crops grown on agricultural land, and there is a pre-existing agricultural lien held by a supplier for fertilizer used on those same crops, the priority between these two interests is determined by the timing of their respective perfection or attachment. Agricultural liens, as defined in SDCL 38-17-1, are specific to agricultural purposes and typically arise by statute. A security interest, governed by Article 9 of the Uniform Commercial Code as adopted in South Dakota, is perfected by filing a financing statement or possession. SDCL 38-17-3 states that an agricultural lien on the crops has priority over a security interest in the crops if the lien arises before the security interest is perfected. In this scenario, the agricultural lien for fertilizer arose and was presumably perfected (or attached and enforceable) before the bank perfected its security interest in the crops. Therefore, the agricultural lien takes precedence over the bank’s security interest. This principle ensures that suppliers who provide essential inputs for crop production have a prior claim to the crops they helped produce, fostering continued agricultural commerce within South Dakota.

The core issue revolves around determining the proper place for filing a financing statement to perfect a security interest in a commercial tort claim. Under South Dakota Codified Law § 57A-9-307(1), for goods, a secured party has an interest in the collateral. However, for certain types of collateral, like accounts and chattel paper, the location of the debtor determines perfection. Specifically, for a commercial tort claim, which is not an account or general intangible, South Dakota Codified Law § 57A-9-307(1) states that the location of the debtor is the location of the collateral. The “location of the debtor” for an organization that is not a registered organization is its chief executive office. Therefore, if the debtor is an organization with its chief executive office in Pierre, South Dakota, and the financing statement is filed in the office of the register of deeds in the county where the chief executive office is located, this constitutes proper filing for perfection. Filing with the Secretary of State is generally for general intangibles or accounts, and a commercial tort claim is not classified as either. The question posits a scenario where the debtor is an organization whose chief executive office is in Pierre, South Dakota, and the secured party files the financing statement in the office of the register of deeds in Hughes County, which is where Pierre is located. This aligns with the perfection requirements for a commercial tort claim as per South Dakota law.

The core issue in this scenario revolves around the perfection of a security interest in goods that are to become fixtures. Under South Dakota Codified Law (SDCL) § 38-9-334, a security interest in goods that are or are to become fixtures is perfected by a fixture filing. A fixture filing is a financing statement that covers fixtures and is filed in the office designated for the recording of real property transactions. Furthermore, SDCL § 38-9-501(a)(1) states that the proper place to file a financing statement in order to perfect a security interest in collateral, including goods that are to become fixtures, is in the office where a mortgage on the real property would be filed or recorded. The question states that AgriBank filed a financing statement with the South Dakota Secretary of State. While filing with the Secretary of State is generally the correct method for perfecting security interests in personal property, it is not the correct method for perfecting a security interest in fixtures. For fixtures, a fixture filing must be made in the office where a mortgage on the real property would be recorded. Therefore, AgriBank’s filing with the Secretary of State is ineffective to perfect its security interest against a subsequent purchaser of the real property, such as Prairie Farms. Prairie Farms, as a purchaser of the real property without knowledge of AgriBank’s unperfected security interest, takes the collateral free of that interest.

The scenario involves a dispute over the priority of security interests in collateral that has been moved from one state to another. Under South Dakota Codified Law § 38A-9-316, perfection of a security interest in collateral that is covered by a certificate of title issued under a statute of another jurisdiction, and that has come into South Dakota, remains perfected for a period of four months after the collateral has become subject to South Dakota law. If the financing statement or other filing covering the collateral is not perfected in South Dakota within that four-month period, the security interest becomes unperfected. In this case, the security interest in the combine was perfected in North Dakota, which issues certificates of title for farm equipment. The combine was moved to South Dakota. The secured party in South Dakota filed a financing statement on August 1st. The four-month period for the North Dakota perfection to remain effective in South Dakota would have expired on July 31st. Since the South Dakota secured party filed their financing statement on August 1st, which is after the four-month grace period expired, their security interest is perfected and has priority over the previously perfected North Dakota security interest, which is now unperfected in South Dakota. Therefore, the South Dakota secured party’s interest is prior.

The scenario involves a purchase money security interest (PMSI) in inventory. Under South Dakota Codified Law (SDCL) § 38A-9-324(b), a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. First, the PMSI must be perfected when the debtor receives possession of the inventory. Second, the secured party must give an authenticated notification to any holder of a conflicting security interest that was perfected prior to the filing of the financing statement covering the inventory, and the notification must be received by the holder of the conflicting security interest within five years before the debtor receives possession of the inventory. In this case, AgriBank perfected its security interest in all of Farmer Giles’s existing and future farm equipment on January 15, 2023. On March 1, 2023, FarmCredit Services provided a loan to Farmer Giles specifically to purchase a new combine harvester, taking a security interest in that combine. FarmCredit Services filed its financing statement for the combine on March 10, 2023, and delivered the combine to Farmer Giles on March 15, 2023. AgriBank’s prior perfected security interest in “all farm equipment” conflicts with FarmCredit Services’ PMSI in the combine. For FarmCredit Services’ PMSI to have priority over AgriBank’s earlier perfected security interest, FarmCredit Services must have satisfied the notification requirement of SDCL § 38A-9-324(b). Since FarmCredit Services did not notify AgriBank of its intent to acquire a PMSI in the combine prior to the filing of its financing statement or within the five-year window before Farmer Giles received possession of the combine, its PMSI in the combine is subordinate to AgriBank’s perfected security interest in all farm equipment. Therefore, AgriBank has priority.

The scenario involves a purchase money security interest (PMSI) in inventory. Under South Dakota Codified Law § 34A-2-204, a security interest is a purchase money security interest if it is taken by a seller of collateral to secure rights to payment or performance of a secured obligation. In this case, AgriBank provided financing to Prairie Farms for the purchase of new harvesting equipment, which constitutes inventory for Prairie Farms. For a PMSI to have priority over a conflicting security interest in the same collateral, the secured party must have filed a financing statement before or within twenty days after the debtor receives possession of the collateral. South Dakota Codified Law § 34A-2-326 states that a buyer in ordinary course of business takes free of a security interest created by the seller even if the security interest is perfected and the buyer has knowledge of the terms. However, this protection typically applies to buyers of goods, not to other secured parties claiming an interest in the same collateral. Here, the conflict is between two secured parties: AgriBank with its PMSI and First National Bank with its earlier, general security interest in all of Prairie Farms’ assets. AgriBank’s PMSI, properly perfected by filing within the statutory period, will have priority over First National Bank’s prior, unperfected or generally perfected security interest in after-acquired inventory. The key is the timely perfection of the PMSI. Since AgriBank filed its financing statement on March 15th, which is within twenty days of Prairie Farms receiving possession of the equipment on March 1st, its PMSI is perfected on time. Therefore, AgriBank’s PMSI has priority over First National Bank’s security interest in the new harvesting equipment.

In South Dakota, when a secured party has a perfected security interest in collateral and that collateral is sold or disposed of in a transaction not authorized by the secured party, the security interest generally continues in the collateral unless the secured party authorized the disposition free of the security interest. This principle is codified in South Dakota Codified Law § 37A-9-315(a)(1). The buyer in the ordinary course of business (BIOC) exception, found in § 37A-9-320, protects a BIOC who buys goods in the ordinary course of business from a person in the business of selling goods of that kind, but this protection is against the security interest of the seller, not necessarily against the security interest of a prior secured party if the sale was unauthorized. In this scenario, the sale of the combine by Farmer McGregor to Rancher O’Malley was not authorized by the Bank of Sioux Falls. Therefore, the Bank’s perfected security interest in the combine continues in the collateral even after the sale to Rancher O’Malley. Rancher O’Malley, not being a buyer in the ordinary course of business from a seller in the business of selling combines (Farmer McGregor is a farmer, not a dealer), does not take the combine free of the Bank’s security interest. The Bank can repossess the combine from Rancher O’Malley to satisfy the debt.

In South Dakota, a purchase money security interest (PMSI) in inventory generally requires both attachment and perfection to have priority over other secured parties. Perfection of a PMSI in inventory is achieved by filing a financing statement before or within a specified period after the debtor receives possession of the inventory, and by giving any required notification to other secured parties. Under South Dakota Codified Law § 37A-9-324(b), a PMSI in inventory has priority over a conflicting security interest in the same inventory if certain conditions are met. These conditions include that the PMSI creditor must have perfected its security interest in the inventory, and the PMSI creditor must have given notification to any other secured party who had filed a financing statement covering the inventory or was known by the PMSI creditor to have a security interest in the inventory. The notification must state that the PMSI creditor expects to acquire a PMSI in inventory of the debtor, and must be sent within a specified timeframe before the debtor receives possession of the inventory. This notification requirement is crucial for establishing priority against prior perfected security interests. If the PMSI creditor fails to provide the required notification to a prior secured party who has filed a financing statement covering the same inventory, the PMSI will not have priority over that prior secured party’s interest in the inventory. Therefore, in this scenario, because the notification was sent after the debtor received possession of the inventory, the PMSI creditor’s interest in the inventory will not have priority over the previously perfected security interest held by First National Bank of Sioux Falls. The correct course of action for the PMSI creditor would have been to send the notification before or concurrently with the debtor receiving possession of the inventory.

In South Dakota, when a secured party seeks to repossess collateral after a debtor’s default, the secured party must proceed in a commercially reasonable manner. This principle is a cornerstone of Article 9 of the Uniform Commercial Code, as adopted in South Dakota. Commercial reasonableness applies to every aspect of the repossession and disposition of collateral, including the method, manner, time, place, and other terms. For example, if the collateral is farm equipment located on a remote farm in South Dakota, a commercially reasonable disposition might involve advertising the equipment in relevant agricultural publications and holding an auction on-site or at a nearby agricultural hub, rather than attempting to sell it through a general online marketplace without specific targeting. The statute does not mandate a specific method but requires that the chosen method is one that reasonable commercial practices would employ to realize the maximum possible value from the collateral. Failure to conduct the repossession or disposition in a commercially reasonable manner can have significant consequences for the secured party, potentially leading to a deficiency judgment being reduced or barred, and the debtor may be entitled to damages. The secured party’s actions are judged against a standard of what is reasonable in the relevant commercial context.

The core issue here is the priority of security interests when a debtor defaults on a loan secured by inventory and equipment. In South Dakota, as governed by UCC Article 9, a purchase-money security interest (PMSI) in inventory generally takes priority over a conflicting security interest in the same inventory, provided certain conditions are met. For a PMSI in inventory to have priority, the secured party must have perfected its interest before the debtor receives possession of the inventory. Furthermore, the secured party must have given new value to the debtor in order for the debtor to acquire rights in the inventory. Additionally, the secured party must have sent an authenticated notification to any other secured party whose security interest was perfected and covered the same inventory. This notification must state that the secured party expects to acquire a PMSI in inventory of the debtor and describe the inventory. This notification is effective for five years. In this scenario, AgriBank filed its financing statement on January 15th, establishing its security interest in all of Farmer Giles’s current and future farm equipment and inventory. On February 1st, Farm Credit Services provided a loan to Farmer Giles specifically for the purchase of new harvesting equipment and seed inventory, taking a PMSI in these specific goods. Farm Credit Services perfected its PMSI by filing a financing statement on February 5th. Crucially, Farm Credit Services did not send any authenticated notification to AgriBank before filing its financing statement or before Farmer Giles received possession of the inventory. Therefore, AgriBank’s earlier filed, general security interest in all inventory has priority over Farm Credit Services’ PMSI in the seed inventory because Farm Credit Services failed to provide the required notification to AgriBank. The harvesting equipment, however, is considered “equipment” not “inventory” under UCC 9-102(a)(48). A PMSI in equipment requires filing before or within twenty days after the debtor receives possession of the collateral. Farm Credit Services filed on February 5th, and Farmer Giles received the equipment on February 10th. This filing is timely. AgriBank’s earlier filing covers “farm equipment.” Therefore, AgriBank’s earlier perfected security interest in the harvesting equipment has priority over Farm Credit Services’ PMSI in the harvesting equipment because the notification requirement for PMSI in inventory does not apply to PMSI in equipment, and AgriBank’s prior filing establishes its priority. The question asks about the priority regarding the seed inventory.

The core issue here is the priority of security interests when collateral is transferred. In South Dakota, as under Article 9 of the Uniform Commercial Code, a buyer in the ordinary course of business (BIOC) generally takes free of a security interest created by their seller, even if the security interest is perfected. This is a fundamental protection for ordinary course purchasers to ensure the smooth flow of commerce. In this scenario, “Prairie Livestock” is a dealer in livestock, and “Dakota Cattle Co.” is a financing company that has a perfected security interest in all of Prairie Livestock’s inventory, including cattle. When “Ranchers’ Emporium,” a feedlot operator, purchases cattle from Prairie Livestock, it is acting as a buyer in the ordinary course of business because it is purchasing goods from a person in the business of selling goods of that kind, in good faith and without knowledge that the sale violates the security agreement. Therefore, Ranchers’ Emporium takes the cattle free of Dakota Cattle Co.’s security interest. The perfection of Dakota Cattle Co.’s security interest is irrelevant to the BIOC defense. The fact that the security interest was perfected by filing in South Dakota does not alter the rights of a BIOC against the secured party when the collateral is sold by the debtor.

The core issue in this scenario is determining the priority of competing security interests in collateral that has been moved from one state to another. South Dakota, like other states, has adopted Article 9 of the Uniform Commercial Code. The UCC generally provides that the law of the jurisdiction where the debtor is located governs perfection and priority of security interests. For goods covered by a certificate of title, such as a vehicle, the UCC specifies that perfection and priority are governed by the law of the jurisdiction where the certificate of title is issued. In this case, the vehicle was originally titled in Wyoming. When the debtor moved the vehicle to South Dakota, the perfection of the security interest was initially governed by Wyoming law. However, UCC § 9-307(b) addresses situations where goods covered by a certificate of title are relocated. It states that if the certificate of title is issued by a jurisdiction that is not the jurisdiction where the goods are located, the law of the jurisdiction that issued the certificate of title continues to govern perfection and priority until the goods become covered by a certificate of title issued by the other jurisdiction. Subsequently, UCC § 9-316(a)(2) dictates that if a security interest in goods covered by a certificate of title has been perfected in accordance with the law of the jurisdiction that issued the certificate, and the goods are moved to a new jurisdiction, the security interest remains perfected if it is perfected in the new jurisdiction within a specified period (generally four months) after the goods become covered by the certificate of title of the new jurisdiction, or if the security interest is perfected in the new jurisdiction before the expiration of the old perfection. Crucially, UCC § 9-316(d) states that if a security interest is perfected in accordance with the law of the jurisdiction that issued the certificate of title, and the goods are moved to another jurisdiction, the security interest remains perfected until the expiration of the period for which the security interest was perfected in the jurisdiction that issued the certificate of title, or until the goods become covered by a certificate of title issued by the other jurisdiction, whichever occurs first. Since the security interest was properly perfected in Wyoming, and the vehicle was not immediately retitled in South Dakota, the Wyoming perfection continued to be effective in South Dakota for a period. However, the question implies that a new South Dakota certificate of title was issued, which would then trigger the application of South Dakota law for perfection. Under UCC § 9-316(e), if a security interest is perfected in accordance with the law of the jurisdiction that issued the certificate of title, and the goods are moved to another jurisdiction and become covered by a certificate of title issued by the other jurisdiction, the security interest remains perfected until the expiration of the period for which the security interest was perfected in the jurisdiction that issued the certificate of title, or until the security interest is perfected in the new jurisdiction, whichever occurs first. If the new certificate of title in South Dakota does not disclose the Wyoming security interest, the security interest is generally considered unperfected against a buyer that gives value and receives delivery of the collateral without knowledge of the security interest. Therefore, if a new South Dakota title was issued without noting the Wyoming lien, and the subsequent lender perfected its interest in South Dakota, the South Dakota lender would have priority over the unperfected Wyoming security interest. The scenario implies that the South Dakota lender *did* perfect its interest. The critical point is the effect of the new South Dakota title on the pre-existing Wyoming perfection. UCC § 9-316(f) states that if a security interest is perfected in accordance with the law of the jurisdiction that issued the certificate of title, and the goods are moved to another jurisdiction and become covered by a certificate of title issued by the other jurisdiction, the security interest remains perfected if it is perfected in the new jurisdiction within a specified period after the goods become covered by the certificate of title of the new jurisdiction. If the new South Dakota certificate of title was issued, and the Wyoming lien was not noted on it, the Wyoming security interest would likely be unperfected as to a subsequent good-faith purchaser or a perfected security interest in South Dakota. The South Dakota lender, having properly filed and obtained a new title, would have priority.

The core issue in this scenario revolves around the perfection of a security interest in accounts. Under South Dakota’s Article 9 of the UCC, specifically SDCL § 34A-9-309(2), a security interest in a general intangible consisting of a right to payment (which includes accounts) can be perfected by control. However, the general rule for perfection of security interests in accounts is by filing a financing statement under SDCL § 34A-9-310(1). When a security agreement grants a security interest in accounts, and the debtor subsequently transfers those accounts to a buyer of accounts, the transfer is a sale of accounts, which is also governed by Article 9 as a “transaction in goods” or a “sale of accounts.” A buyer of accounts is generally deemed to have acquired rights in the collateral when the debtor has rights in the collateral. For a buyer of accounts, the sale is automatically perfected under SDCL § 34A-9-309(2) if the sale is not a “significant part” of the debtor’s outstanding accounts. This exception is often referred to as the “casual or isolated sale” exception, although the UCC language focuses on whether the sale constitutes a “significant part.” If the sale of accounts is a significant part of the debtor’s outstanding accounts, then the buyer of accounts must file a financing statement to perfect its interest. In this case, the sale of accounts to Prairie Holdings represents a significant portion of the debtor’s accounts, meaning the default perfection method for a buyer of accounts (filing) applies. Since Prairie Holdings did not file a financing statement, its security interest is unperfected against a subsequent perfected secured party. Dakota Bank, by filing its financing statement covering all of debtor’s accounts, has perfected its security interest. Therefore, Dakota Bank’s perfected security interest has priority over Prairie Holdings’ unperfected security interest in the accounts.

The core issue in this scenario revolves around the perfection of a security interest in accounts. Under South Dakota Codified Law (SDCL) § 34A-9-309(2), a security interest in accounts is automatically perfected upon attachment. This means that no filing of a financing statement is required to establish the secured party’s rights against third parties, including the debtor’s bankruptcy trustee. The security agreement between Prairie Livestock and AgriBank, which granted AgriBank a security interest in Prairie Livestock’s accounts, attached when value was given, the debtor had rights in the collateral, and there was an agreement describing the collateral. Since AgriBank’s security interest in the accounts was automatically perfected, it had priority over any unperfected security interest. The bankruptcy trustee, acting on behalf of unsecured creditors, would be considered to have an unperfected security interest in the accounts. Therefore, AgriBank’s automatically perfected security interest in the accounts takes precedence.

The core issue in this scenario revolves around the perfection of a security interest in a vehicle that is titled in South Dakota. Under South Dakota Codified Law (SDCL) 32-3-3, a security interest in a vehicle subject to titling requirements is generally perfected by notation on the certificate of title. When a lender files a financing statement under Article 9 of the UCC, but the collateral is a vehicle subject to a certificate of title statute, the UCC’s perfection rules are superseded by the certificate of title provisions. SDCL 57A-9-311(a) explicitly states that the filing of a financing statement otherwise required or permitted by Article 9 is not effective to perfect a security interest in collateral, including motor vehicles, if a certificate of title statute of South Dakota requires indication on a certificate of title to perfect the interest. Therefore, to achieve perfection and establish priority against subsequent creditors or purchasers, the lender must ensure the security interest is noted on the South Dakota certificate of title, as per SDCL 32-3-3. The filing of a UCC-1 financing statement alone is insufficient for perfection in this context.

In South Dakota, when a secured party has a perfected security interest in collateral and that collateral is sold in the ordinary course of business to a buyer who is not aware that the sale is in violation of the security agreement, that buyer takes the collateral free of the security interest. This is a fundamental principle of Article 9 of the Uniform Commercial Code, adopted in South Dakota. The buyer’s good faith and lack of knowledge are crucial elements. The security interest is generally preserved against subsequent purchasers of the collateral from the buyer. The secured party’s recourse would typically be against the debtor for breach of the security agreement, not against the buyer who acquired the goods in the ordinary course of business. The perfection of the security interest, while important for priority among creditors, does not prevent a buyer in the ordinary course from taking free of that interest under these specific circumstances. The Uniform Commercial Code, as enacted in South Dakota, prioritizes the smooth flow of commerce by protecting such buyers.

Under South Dakota Codified Law § 38-17-1, a security interest in a farmer’s crops, growing or to be grown, is perfected by filing a financing statement in the office of the register of deeds in the county where the crops are located. The financing statement must contain specific information as outlined in SDCL § 38-17-3, including the names of the debtor and secured party, and a description of the collateral. The question describes a scenario where a lender takes a security interest in crops located in Lyman County, South Dakota. The lender files the financing statement in Hughes County, which is not the county where the crops are located. Therefore, the filing is improper for perfection against a buyer of the crops who gives value and receives delivery without knowledge of the security interest, as per SDCL § 38-17-4. The buyer’s lack of knowledge is key here, as an improper filing generally does not provide notice to third parties. The perfection is only effective from the time of proper filing. Since the filing was in the wrong county, the security interest is unperfected against such a buyer.

The scenario involves a debtor, Prairie Winds Farm LLC, located in South Dakota, granting a security interest in its inventory of harvested corn to Creditor A, a bank also in South Dakota. Creditor A properly files a financing statement in South Dakota. Subsequently, Prairie Winds Farm LLC sells a portion of this corn to Buyer B, a grain elevator operating in Nebraska, which then stores the corn in its Nebraska facility. Buyer B pays for the corn but does not have actual knowledge of Creditor A’s security interest. The core issue is determining the priority of Creditor A’s security interest against Buyer B’s interest in the corn after its sale. Under South Dakota Codified Law (SDCL) Chapter 57A-9, specifically SDCL 57A-9-317, a buyer in ordinary course of business takes free of a security interest created by the seller even though the security interest is perfected and even though the buyer knows of the perfection, unless the buyer also knows that the sale is in violation of the security agreement. SDCL 57A-1-201(9) defines a buyer in ordinary course of business as a person that buys goods in good faith, without knowledge that the sale violates the rights of any person in the goods, and from a person in the business of selling goods of that kind. Here, Buyer B is a grain elevator in the business of buying grain, it paid for the corn, and there is no indication it knew the sale violated Creditor A’s security agreement. Therefore, Buyer B takes the corn free of Creditor A’s security interest.

In South Dakota, the perfection of a security interest in deposit accounts is governed by Article 9 of the Uniform Commercial Code. Unlike many other types of collateral, perfection in deposit accounts can only be achieved through control, as defined in SDCL § 57A-9-104. Control is established when the secured party is the bank in which the deposit account is maintained, or when the debtor has agreed in writing that the bank will comply with the secured party’s instructions concerning the balance in the deposit account, and the bank has not agreed to comply with the instructions of any other person. SDCL § 57A-9-104(a)(1) and (a)(2). Filing a financing statement is insufficient to perfect a security interest in a deposit account. SDCL § 57A-9-312(b)(1) explicitly states that filing is not effective for perfection in deposit accounts. Therefore, if a secured party only files a financing statement against a debtor’s deposit account held at a South Dakota bank, the security interest remains unperfected. This lack of perfection has significant implications in the event of the debtor’s bankruptcy or the claims of other creditors. An unperfected security interest is subordinate to the rights of a buyer of accounts, chattel paper, payment intangibles, or promissory notes that buys for value and receives delivery, unless the buyer has knowledge of the security interest. It is also subordinate to a lien creditor, which includes a trustee in bankruptcy. The question hinges on the exclusive method of perfection for deposit accounts under South Dakota law.

The core issue revolves around the perfection of a security interest in deposit accounts under South Dakota’s Article 9. South Dakota Codified Law § 34A-9-312(b) states that a security interest in a deposit account as original collateral can only be perfected by control. Control is defined in South Dakota Codified Law § 34A-9-104, which includes obtaining possession of the deposit account, the bank’s agreement to comply with the secured party’s instructions regarding the account, or the deposit account being uncertificated and the depositary institution agreeing to comply with instructions. In this scenario, AgFirst Bank’s security interest was perfected by taking control of the deposit account through an authenticated agreement with Dakota Grain LLC, where the bank agreed to comply with AgFirst Bank’s instructions. Dakota Grain LLC’s subsequent filing of a financing statement for the same deposit account is ineffective for perfection because filing is not a permissible method for perfecting a security interest in a deposit account as original collateral. Therefore, AgFirst Bank has the prior and perfected security interest.

The scenario involves a secured party, Prairie Livestock Financing, which has a perfected security interest in a herd of cattle owned by a debtor, Dakota Ranching LLC. The debtor subsequently sells some of these cattle to a buyer in the ordinary course of business, specifically to a feedlot in Nebraska, Plains Feeders Inc. Under South Dakota Codified Law (SDCL) Section 21-5-10, a buyer in the ordinary course of business takes free of a security interest created by the seller even though the security interest is perfected and even though the buyer knows of its existence, unless the buyer also knows that the sale is in violation of the security agreement. This provision is a fundamental aspect of Article 9 of the Uniform Commercial Code (UCC), which governs secured transactions. The key here is whether Plains Feeders Inc. had knowledge that the sale was in violation of the security agreement between Prairie Livestock Financing and Dakota Ranching LLC. The facts provided do not indicate any such knowledge on the part of Plains Feeders Inc. Therefore, the sale of the cattle to Plains Feeders Inc. in the ordinary course of business would generally cut off Prairie Livestock Financing’s security interest in those specific cattle. The security interest would likely remain attached to any remaining collateral still in the possession of Dakota Ranching LLC.

In South Dakota, when a secured party has a perfected security interest in collateral and that collateral is sold in the ordinary course of business to a buyer not in the ordinary course of business, the buyer takes the collateral subject to the perfected security interest. This is governed by South Dakota Codified Law (SDCL) Section 21-50-11, which mirrors UCC § 9-320. The exception for buyers in the ordinary course of business under SDCL Section 21-50-10 (UCC § 9-320(a)) applies only to buyers of goods who purchase in the ordinary course of business from a person in the business of selling goods of that kind. A buyer from a farmer selling their personal equipment, even if perfected, does not fall under this exception if the farmer is not in the business of selling such equipment. Therefore, the perfected security interest continues in the equipment.

The core issue in this scenario revolves around the perfection of a security interest in collateral that is subject to a purchase-money security interest (PMSI) and the priority rules that govern such situations under South Dakota’s Article 9. Specifically, when a buyer of inventory uses loan proceeds from a lender (Bank B) to purchase that inventory from a seller (Supplier A), and Supplier A also has a PMSI in that same inventory, the priority between Bank B and Supplier A depends on the perfection of their respective security interests. Supplier A, by selling the inventory and retaining a security interest, has a PMSI. To maintain priority over subsequent interests, Supplier A must have perfected its security interest. For inventory, perfection typically requires filing a financing statement and, for a PMSI, providing notice to any previously perfected secured parties. Bank B, by providing financing for the purchase of inventory, also has a PMSI. To perfect its PMSI in inventory, Bank B must file a financing statement. Crucially, for a PMSI in inventory to have priority over a prior perfected security interest, the PMSI holder must file its financing statement *before* the debtor receives possession of the inventory, and the PMSI holder must give authenticated notice to any prior secured party. In this case, Bank B files its financing statement on October 1st, and the debtor receives possession of the inventory on October 3rd. This timing allows Bank B to perfect its PMSI. Supplier A, however, does not file a financing statement until October 5th. Under South Dakota Codified Law § 37A-9-324(b), a PMSI in inventory has priority over a conflicting security interest in the same inventory if the PMSI holder meets certain conditions. One of these conditions is that the PMSI holder must give notice to any prior secured party. However, the question states that Supplier A is the seller of the inventory, and the scenario implies that Bank B is providing the financing for the purchase. The critical factor for priority between two PMSI holders in inventory is generally the timing of perfection. South Dakota Codified Law § 37A-9-324(a) addresses PMSI priority. For inventory, a PMSI has priority over a conflicting security interest in the inventory if the PMSI is perfected when the debtor receives possession of the inventory and the PMSI holder gives an authenticated notification to any other secured party who has filed a financing statement covering the inventory or is entitled to priority. However, the more pertinent rule here is the general priority rule for conflicting security interests in the same collateral under South Dakota Codified Law § 37A-9-322(a)(1), which states that the first to file or perfect has priority. Since Bank B filed its financing statement on October 1st, and the debtor received possession of the inventory on October 3rd, Bank B’s security interest is perfected before or at the time the debtor receives possession. Supplier A’s filing on October 5th is after Bank B’s filing and after the debtor received possession. Therefore, Bank B has priority. The correct answer is Bank B.

The core issue revolves around the perfection of a security interest in collateral that is already subject to another perfected security interest, specifically when the collateral is inventory. Under South Dakota Codified Law § 34A-9-324(a), a perfected security interest in inventory has priority over a conflicting security interest in the same inventory if the security interest is perfected when the debtor receives possession of the inventory. Furthermore, for the priority to be maintained, the secured party must have given new value and filed a financing statement covering the inventory before the debtor receives possession. In this scenario, AgriBank perfected its security interest in all of Farmer McGregor’s existing and future inventory on January 15th. Subsequently, on March 10th, AgriBank provided new value, a loan, to Farmer McGregor specifically for the purchase of new seed inventory. This new value was provided after the initial perfection. When Farmer McGregor received possession of the new seed inventory on March 20th, AgriBank’s security interest, which was perfected and for which new value was given prior to possession, maintained its priority over any other potential security interest in that specific seed inventory. Therefore, AgriBank’s security interest in the seed inventory is perfected and has priority.

The scenario involves a purchase money security interest (PMSI) in equipment. Under South Dakota Codified Law § 38A-9-317(a)(1), a security interest is subordinate to the rights of a buyer of goods, but only if the buyer gives value and receives delivery of the collateral without knowledge of the security interest. However, SDCL § 38A-9-317(e) specifies an exception for PMSIs. A PMSI in collateral, other than inventory, has priority over a conflicting security interest in the same collateral if the PMSI is perfected when the debtor receives possession of the collateral or within twenty days thereafter. In this case, Dakota Equipment Finance perfected its PMSI on October 15th, which is within the twenty-day grace period after the debtor, Prairie Farms, received the combine harvester on October 1st. Therefore, Dakota Equipment Finance’s PMSI has priority over the earlier-filed, non-PMSI security interest held by First National Bank of Sioux Falls, even though First National Bank filed its financing statement first. The key is the perfection of the PMSI within the statutory window.

The scenario involves a dispute over the priority of security interests in collateral. Dakota Farm Credit holds a purchase-money security interest (PMSI) in a tractor, perfected by filing a financing statement on January 15, 2023. Black Hills Bank holds a prior perfected security interest in all of Farmer McGregor’s farm equipment, including after-acquired property, with a financing statement filed on November 10, 2022. Under South Dakota Codified Law (SDCL) § 38-9-324, a PMSI in equipment generally has priority over a conflicting security interest in the same equipment if the PMSI is perfected when the debtor receives possession of the collateral or within twenty days thereafter. However, SDCL § 38-9-324(a) also requires that the PMSI holder give an authenticated notification to any secured party whose financing statement covers the collateral and who has filed before the date of filing of the PMSI’s financing statement. This notification must be sent within six months before the debtor receives possession of the collateral. In this case, Dakota Farm Credit’s PMSI was perfected on January 15, 2023. Black Hills Bank’s financing statement was filed on November 10, 2022, which is before Dakota Farm Credit’s filing. The facts do not state that Dakota Farm Credit sent the required notification to Black Hills Bank before the tractor was delivered to Farmer McGregor. Therefore, Dakota Farm Credit’s PMSI, despite being a purchase-money security interest, does not have priority over Black Hills Bank’s earlier perfected security interest because the statutory notification requirement was not met. The priority generally follows the order of filing or perfection under SDCL § 38-9-322, which favors Black Hills Bank.

Under South Dakota Codified Law (SDCL) Chapter 38-17, which governs agricultural liens, a crop production lender who has perfected a lien on a debtor’s crops has priority over a prior perfected security interest in those same crops. This is because agricultural liens are specifically designed to protect those who finance crop production. SDCL 38-17-1.1 states that a perfected agricultural lien on crops has priority over a security interest in crops, even if the security interest was perfected first. The rationale is to encourage agricultural lending by ensuring that those who provide the necessary inputs for farming are protected. Therefore, if Farmer McGregor in South Dakota granted a security interest in his entire farm output to First National Bank, and subsequently obtained financing for his corn crop from Agri-Financers Inc., which then perfected an agricultural lien on the corn crop, Agri-Financers Inc.’s lien would take precedence over First National Bank’s security interest concerning the corn crop. This priority is a statutory carve-out from the general priority rules of Article 9 of the UCC, which typically prioritize the first to file or perfect.

In South Dakota, when a secured party intends to perfect a security interest in collateral that is inventory, the secured party must file a financing statement. This filing perfects the security interest in the inventory itself and also in any identifiable proceeds of that inventory. The perfection by filing is effective against subsequent purchasers of the inventory and other creditors. Specifically, under South Dakota Codified Law § 37A-9-310(a), filing is generally required to perfect a security interest other than those for which a security interest is automatically perfected under § 37A-9-309 or for which a security interest can be perfected only by possession under § 37A-9-313. Inventory, not falling into those exceptions, requires filing. Furthermore, § 37A-9-315(a)(1) states that a security interest in collateral is also perfected in any identifiable proceeds of the collateral. Therefore, filing a financing statement to perfect the security interest in the inventory also perfects the security interest in the proceeds derived from the sale of that inventory. The key is the initial perfection of the security interest in the inventory itself.