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3439.03.
Value is given for a transfer or an
obligation if, in exchange for the transfer or obligation,
property is transferred or an antecedent debt is secured or
satisfied, but value does not include an unperformed promise
made otherwise than in the ordinary course of the promisor's
business to furnish support to the debtor or another person.
3439.04.
(a) A transfer made or obligation
incurred by a debtor is fraudulent as to a creditor, whether
the creditor's claim arose before or after the transfer was
made or the obligation was incurred, if the debtor made the
transfer or incurred the obligation as follows:
(1) With actual intent to hinder, delay,
or defraud any creditor of the debtor.
(2) Without receiving a reasonably
equivalent value in exchange for the transfer or obligation,
and the debtor either:
(A) Was engaged or was about to engage
in a business or a transaction for which the remaining
assets of the debtor were unreasonably small in relation to
the business or transaction.
(B) Intended to incur, or believed or
reasonably should have believed that he or she would incur,
debts beyond his or her ability to pay as they became due.
(b) In determining actual intent under
paragraph (1) of subdivision (a), consideration may be
given, among other factors, to any or all of the following:
(1) Whether the transfer or obligation
was to an insider.
(2) Whether the debtor retained
possession or control of the property transferred after the
transfer.
(3) Whether the transfer or obligation
was disclosed or concealed.
(4) Whether before the transfer was made
or obligation was incurred, the debtor had been sued or
threatened with suit.
(5) Whether the transfer was of
substantially all the debtor's assets.
(6) Whether the debtor absconded.
(7) Whether the debtor removed or
concealed assets.
(8) Whether the value of the
consideration received by the debtor was reasonably
equivalent to the value of the asset transferred or the
amount of the obligation incurred.
(9) Whether the debtor was insolvent or
became insolvent shortly after the transfer was made or the
obligation was incurred.
(10) Whether the transfer occurred
shortly before or shortly after a substantial debt was
incurred.
(11) Whether the debtor transferred the
essential assets of the business to a lienholder who
transferred the assets to an insider of the debtor.
(c) The amendment to this section made
during the 2004 portion of the 2003-04 Regular Session of
the Legislature, set forth in subdivision (b), does not
constitute a change in, but is declaratory of, existing law,
and is not intended to affect any judicial decisions that
have interpreted this chapter.
3439.05.
A transfer made or obligation incurred
by a debtor is fraudulent as to a creditor whose claim arose
before the transfer was made or the obligation was incurred
if the debtor made the transfer or incurred the obligation
without receiving a reasonably equivalent value in exchange
for the transfer or obligation and the debtor was insolvent
at that time or the debtor became insolvent as a result of
the transfer or obligation.
3439.06.
For the purposes of this chapter:
(a) A transfer is made:
(1) With respect to an asset that is
real property other than a fixture, but including the
interest of a seller or purchaser under a contract for the
sale of the asset, when the transfer is so far perfected
that a good faith purchaser of the asset from the debtor
against whom applicable law permits the transfer to be
perfected cannot acquire an interest in the asset that is
superior to the interest of the transferee; and
(2) With respect to an asset that is not
real property or that is a fixture, when the transfer is so
far perfected that a creditor on a simple contract cannot
acquire a judicial lien otherwise than under this chapter
that is superior to the interest of the transferee.
(b) If applicable law permits the
transfer to be perfected as provided in subdivision (a) and
the transfer is not so perfected before the commencement of
an action for relief under this chapter, the transfer is
deemed made immediately before the commencement of the
action.
(c) If applicable law does not permit
the transfer to be perfected as provided in subdivision (a),
the transfer is made when it becomes effective between the
debtor and the transferee.
(d) A transfer is not made until the
debtor has acquired rights in the asset transferred.
(e) An obligation is incurred:
(1) If oral, when it becomes effective
between the parties; or
(2) If evidenced by a writing, when the
writing executed by the obligor is delivered to or for the
benefit of the obligee.
3439.07.
(a) In an action for relief against a
transfer or obligation under this chapter, a creditor,
subject to the limitations in Section 3439.08, may obtain:
(1) Avoidance of the transfer or
obligation to the extent necessary to satisfy the creditor's
claim.
(2) An attachment or other provisional
remedy against the asset transferred or its proceeds in
accordance with the procedures described in Title 6.5
(commencing with Section 481.010) of Part 2 of the Code of
Civil Procedure.
(3) Subject to applicable principles of
equity and in accordance with applicable rules of civil
procedure, the following:
(A) An injunction against further
disposition by the debtor or a transferee, or both, of the
asset transferred or its proceeds.
(B) Appointment of a receiver to take
charge of the asset transferred or its proceeds.
(C) Any other relief the circumstances
may require.
(b) If a creditor has commenced an
action on a claim against the debtor, the creditor may
attach the asset transferred or its proceeds if the remedy
of attachment is available in the action under applicable
law and the property is subject to attachment in the hands
of the transferee under applicable law.
(c) If a creditor has obtained a
judgment on a claim against the debtor, the creditor may
levy execution on the asset transferred or its proceeds.
(d) A creditor who is an assignee of a
general assignment for the benefit of creditors, as defined
in Section 493.010 of the Code of Civil Procedure, may
exercise any and all of the rights and remedies specified in
this section if they are available to any one or more
creditors of the assignor who are beneficiaries of the
assignment, and, in that event (1) only to the extent the
rights or remedies are so available and (2) only for the
benefit of those creditors whose rights are asserted by the
assignee.
3439.08.
(a) A transfer or an obligation is not
voidable under paragraph (1) of subdivision (a) of Section
3439.04, against a person who took in good faith and for a
reasonably equivalent value or against any subsequent
transferee or obligee.
(b) Except as otherwise provided in this
section, to the extent a transfer is voidable in an action
by a creditor under paragraph (1) of subdivision (a) of
Section 3439.07, the creditor may recover judgment for the
value of the asset transferred, as adjusted under
subdivision (c), or the amount necessary to satisfy the
creditor's claim, whichever is less. The judgment may be
entered against the following:
(1) The first transferee of the asset or
the person for whose benefit the transfer was made.
(2) Any subsequent transferee other than
a good faith transferee who took for value or from any
subsequent transferee.
(c) If the judgment under subdivision
(b) is based upon the value of the asset transferred, the
judgment shall be for an amount equal to the value of the
asset at the time of the transfer, subject to adjustment as
the equities may require.
(d) Notwithstanding voidability of a
transfer or an obligation under this chapter, a good faith
transferee or obligee is entitled, to the extent of the
value given the debtor for the transfer or obligation, to
the following:
(1) A lien on or a right to retain any
interest in the asset transferred.
(2) Enforcement of any obligation
incurred.
(3) A reduction in the amount of the
liability on the judgment.
(e) A transfer is not voidable under
paragraph (2) of subdivision (a) of Section 3439.04 or
Section 3439.05 if the transfer results from the following:
(1) Termination of a lease upon default
by the debtor when the termination is pursuant to the lease
and applicable law.
(2) Enforcement of a lien in a
noncollusive manner and in compliance with applicable law,
including Division 9 (commencing with Section 9101) of the
Commercial Code, other than a retention of collateral under
Sections 9620 and 9621 of the Commercial Code and other than
a voluntary transfer of the collateral by the debtor to the
lienor in satisfaction of all or part of the secured
obligation.
3439.09.
A cause of action with respect to a
fraudulent transfer or obligation under this chapter is
extinguished unless action is brought pursuant to
subdivision (a) of Section 3439.07 or levy made as provided
in subdivision (b) or (c) of Section 3439.07:
(a) Under paragraph (1) of subdivision
(a) of Section 3439.04, within four years after the transfer
was made or the obligation was incurred or, if later, within
one year after the transfer or obligation was or could
reasonably have been discovered by the claimant.
(b) Under paragraph (2) of subdivision
(a) of Section 3439.04 or Section 3439.05, within four years
after the transfer was made or the obligation was incurred.
(c) Notwithstanding any other provision
of law, a cause of action with respect to a fraudulent
transfer or obligation is extinguished if no action is
brought or levy made within seven years after the transfer
was made or the obligation was incurred.
3439.10.
Unless displaced by the provisions of
this chapter, the principles of law and equity, including
the law merchant and the law relating to principal and
agent, estoppel, laches, fraud, misrepresentation, duress,
coercion, mistake, insolvency, or other validating or
invalidating cause, supplement its provisions.
3439.11.
This chapter shall be applied and
construed to effectuate its general purpose to make uniform
the law with respect to the subject of this chapter among
states enacting it.
3439.12.
This chapter, and the other changes in
the law made by Chapter 383 of the Statutes of 1986, apply
only to transfers made or obligations incurred on or after
January 1, 1987; and, as to transfers made or obligations
incurred prior to that date, the law in effect at the time
the transfer was made or the obligation was incurred shall
apply. The provisions of this chapter, insofar as they are
substantially the same as the provisions of Chapter 1
(commencing with Section 3439) of Title 2 of Part 2 of
Division 4, which was repealed by Chapter 383 of the
Statutes of 1986, shall be construed as restatements and
continuations, and not as new enactments.
CIVIL CODE SECTION 3440-3440.9
Conveyance of Personal Property Without Delivery
3440.
(a) Except as otherwise provided in this
chapter, every transfer of personal property made by a
person having at the time the possession of the property,
and not accompanied by an immediate delivery followed by an
actual and continued change of possession of the property,
is void as against the transferor's creditors (secured or
unsecured) at the time of the transfer and those who become
creditors while the transferor remains in possession and the
successors in interest of those creditors, and as against
buyers from the transferor for value in good faith
subsequent to the transfer.
(b) As used in this chapter, "creditor"
means a person who has a claim, as defined in Section
3439.01, and includes an assignee of a general assignment
for the benefit of creditors, as defined in Section 493.010
of the Code of Civil Procedure, of a debtor. "Creditor" also
includes any person to whom the transferor's estate devolves
in trust for the benefit of persons other than the
transferor. Any such assignee or trustee may exercise any
and all the rights and remedies specified in this chapter,
if they are available to any one or more creditors of the
assignor or transferor who are beneficiaries of the
assignment or trust, and, in that event (1) only to the
extent the rights or remedies are so available and (2) only
for the benefit of those creditors whose rights are asserted
by the assignee or trustee.
3440.1.
This chapter does not apply to any of
the following:
(a) Things in action.
(b) Ships or cargoes if either are at
sea or in a foreign port.
(c) The sale of accounts, chattel paper,
payment intangibles, or promissory notes governed by the
Uniform Commercial Code, security interests, and contracts
of bottomry or respondentia.
(d) Wines or brandies in the wineries,
distilleries, or wine cellars of the makers or owners of the
wines or brandies, or other persons having possession, care,
and control of the wines or brandies, and the pipes, casks,
and tanks in which the wines or brandies are contained, if
the transfers are made in writing and executed and
acknowledged, and if the transfers are recorded in the book
of official records in the office of the county recorder of
the county in which the wines, brandies, pipes, casks, and
tanks are situated.
(e) A transfer or assignment made for
the benefit of creditors generally or by any assignee acting
under an assignment for the benefit of creditors generally.
(f) Property exempt from enforcement of
a money judgment.
(g) Standing timber.
(h) Subject to the limitations in
Section 3440.3, a transfer of personal property if all of
the following conditions are satisfied:
(1) Prior to the date of the intended
transfer, the transferor or the transferee files a financing
statement, with respect to the property transferred, signed
by the transferor. The financing statement shall be filed in
the office of the Secretary of State in accordance with
Chapter 5 (commencing with Section 9501) of Division 9 of
the Commercial Code, but may use the terms "transferor" in
lieu of "debtor" and "transferee" in lieu of "secured
party." The provisions of Chapter 5 (commencing with Section
9501) of Division 9 of the Commercial Code shall apply as
appropriate to the financing statement.
(2) The transferor or the transferee
publishes a notice of the intended transfer one time in a
newspaper of general circulation published in the judicial
district in which the personal property is located, if there
is one, and if there is none in the judicial district, then
in a newspaper of general circulation in the county
embracing the judicial district. The publication shall be
completed not less than 10 days before the date the transfer
occurs. The notice shall contain the name and address of the
transferor and transferee and a general statement of the
character of the personal property intended to be
transferred, and shall indicate the place where the personal
property is located and a date on or after which the
transfer is to be made.
(i) Personal
property not located within this state at the time of the
transfer or attachment of the lien if the provisions of this
subdivision are not used for the purpose of evading this
chapter.
(j) A transfer of property that (1) is
subject to a statute or treaty of the United States or a
statute of this state that provides for the registration of
transfers of title or issuance of certificates of title and
(2) is so far perfected under that statute or treaty that a
bona fide purchaser cannot acquire an interest in the
property transferred that is superior to the interest of the
transferee.
(k) A transfer of personal property in
connection with a transaction in which the property is
immediately thereafter leased by the transferor from the
transferee provided the transferee purchased the property
for value and in good faith (subdivision (c) of Section
10308 of the Commercial Code).
(l) Transition property, as defined in
Section 840 of the Public Utilities Code, or recovery
property, as defined in Section 848 of the Public Utilities
Code.
(m) A transfer of property by any
governmental entity.
3440.2.
Subject to Section 3440.3, a transfer of
personal property shall not be void under Section 3440 as
against a creditor of the transferor or as against a buyer
from the transferor, if the creditor' s or buyer's claim or
right against the transferor arises after the date all of
the requirements of subdivision (h) of Section 3440.1 have
been met, other than the requirement that filing of the
financing statement and publication of the notice referred
to therein be completed prior to the transfer.
3440.3.
A transfer of personal property, as to
which the conditions set forth in subdivision (h) of Section
3440.1, Section 3440.2, or subdivision (b) of Section 3440.5
are satisfied, shall, nevertheless, be void under Section
3440 as against a person who has purchased the personal
property from the transferor and who is a "buyer in the
ordinary course of business," as defined in paragraph (9) of
subdivision (b) of Section 1201 of the Commercial Code.
3440.4.
This chapter does not affect the rights
of a buyer for value in good faith who purchases the
transferred personal property from the transferee or from a
successor in interest of the transferee, provided the
transferor is no longer in possession of the personal
property at the time of the purchase by that buyer.
3440.5.
(a) This chapter does not affect the
rights of a secured party who, for value and in good faith,
acquires a security interest in the transferred personal
property from the transferee, or from the transferee's
successor in interest, if the transferor is no longer in
possession of the personal property at the time the security
interest attaches.
(b) Additionally, except as provided in
Section 3440.3, this chapter does not affect the rights of a
secured party who acquires a security interest from the
transferee, or from the transferee's successor in interest,
in the personal property, if all of the following conditions
are satisfied:
(1) On or before the date the security
agreement is executed, the intended debtor or secured party
files a financing statement with respect to the property
transferred, signed by the intended debtor. The financing
statement shall be filed in the office of the Secretary of
State in accordance with Chapter 5 (commencing with Section
9501) of Division 9 of the Commercial Code, but shall use
the terms "transferor" in lieu of "debtor," "transferee" in
lieu of "secured party," and "secured party" in lieu of
"assignee of secured party." The provisions of Chapter 5
(commencing with Section 9501) of Division 9 of the
Commercial Code shall apply as appropriate to such a
statement. For the purpose of indexing, and in any
certification of search, the Secretary of State may refer to
any financing statement filed pursuant to this paragraph as
a financing statement under the Commercial Code and may
describe the transferor as a debtor and the transferee as a
secured party.
Compliance with this paragraph shall,
however, not perfect the security interest of the secured
party. Perfection of such a security interest shall be
governed by Division 9 (commencing with Section 9101) of the
Commercial Code.
(2) The intended debtor or secured party
publishes a notice of the transfer one time in a newspaper
of general circulation published in the judicial district in
which the personal property is located, if there is one, and
if there is none in the judicial district, then in a
newspaper of general circulation in the county embracing the
judicial district. The publication shall be completed not
less than 10 days before the date of execution by the
intended debtor of the intended security agreement. The
notice shall contain the names and addresses of the
transferor and transferee and of the intended debtor and
secured party, a general statement of the character of the
personal property transferred and intended to be subject to
the security interest, the location of the personal
property, and the date on or after which the security
agreement is to be executed by the intended debtor.
3440.6.
No action shall be brought or levy made
under this chapter more than one year after the earliest of
the following dates:
(a) The date the person bringing the
action or making the levy should have discovered the
transfer in the exercise of reasonable diligence.
(b) The date the person bringing the
action or making the levy obtained actual knowledge of the
transfer.
(c) The date the delivery of, and actual
and continued change of possession of, the property
transferred occurred.
(d) If the financing statement filed
pursuant to subdivision (h) of Section 3440.1 has not
lapsed, the date the filing and publication requirements of
subdivision (h) of Section 3440.1 were met, other than the
requirement that the filing of the financing statement and
publication of the notice referred to therein be completed
prior to the transfer.
3440.9.
Subdivision (2) of Section 2402 and
subdivision (a) of Section 10308 of the Commercial Code are
not restricted by the provisions of this chapter.
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