Article 57 Where a guarantor purchases or leases new movable property by way of financial lease after establishing a floating charge on movable property and registering the mortgage, and the following rights holders enter into a guarantee contract for the realization of the guarantee price, creditor's right or rent, and register within 10 days after the delivery of the movable property, and claim that their rights have priority over the floating charge established earlier, the people's court shall support it:
(1) a seller that creates a mortgage or retention of title on the movable property;
(ii) a creditor who creates a mortgage on the movable property to finance the payment of the price;
(3) The lessor who leases the movable property by way of financial lease.
Where the buyer obtains movable property but fails to pay the full price, or the lessee takes possession of the leased property in the form of a financial lease but fails to pay all the rent, and then creates a security interest in the subject matter for another person, and the rights listed in the preceding paragraph conclude a security contract to guarantee the realization of the price claim or rent, and complete the registration process within 10 days after the delivery of the movable property, and assert that its rights have priority over the security interest created by the buyer for others.
Where there are multiple rights of priority for the same movable property, the people's court shall determine the order of repayment in accordance with the time of registration.
【Purpose of the Article】
This article deals with the application of the super-priority of the price provided for in Article 416 of the Civil Code.
【Overview of Provisions】
By examining the extraterritorial development of super-priority of the price and the legislature's explanation of this system, this article distinguishes the application of this system in practice into two situations: first, when the debtor acquires a new movable property after creating a floating charge on the movable property, it creates a mortgage on the movable property for the purpose of guaranteeing the payment of the price; Second, in the sale of movable property, the buyer creates a security interest in the movable property for another person immediately after acquiring it through a sale on credit, and the seller creates a mortgage on the movable property for the purpose of guaranteeing the payment of the price. The former situation is mainly to solve the problem of the refinancing ability of small and medium-sized enterprises after the existing and future movable assets are subject to a floating charge, because if the floating charge on movable property is set before and has been registered, the movable property newly purchased by the mortgagor will automatically become the object of the floating charge, even if the buyer creates a mortgage on the newly purchased movable property for the realization of the claim for the security price, since the mortgage is registered later, according to the provisions of article 414 of the Civil Code on the order of repayment of the security interest, The security of the seller's transaction cannot be effectively guaranteed, which affects the seller's enthusiasm for trading with the mortgagor. The purpose of the super-priority of the price is to break the repayment order of articles 414 and 415 of the Civil Code, and to give the effect of the later mortgage to have priority over the floating charge created earlier, thereby enhancing the mortgagor's refinancing ability and being justified. In the latter case, the legitimacy of the priority of the price has been questioned by some scholars, because this situation is only aimed at the movable property that the buyer has not purchased on credit, that is, it has created a security interest in the movable property for a third party, resulting in the seller's price may not be realized, although this is conducive to ensuring the seller's transaction security, it may threaten the transaction security of the third party who has created a security interest in the subject matter. From a literal point of view, Article 416 of the Civil Code should cover such circumstances, and from the perspective of respecting the original legislative intent as much as possible, this article also recognizes the priority of the price in such circumstances, and the resulting problems of third-party transaction security can be overcome by the third party through due diligence and other means. In addition, considering that in practice, in addition to creating a mortgage on the subject matter, there are also methods such as retention of ownership and financial leasing to secure the payment of the price, this article stipulates that the subjects who can claim the priority of the price in the above two circumstances are the following three types of parties: first, the seller who creates a mortgage or retains title on the movable property; second, the creditor who creates a mortgage on the movable property to finance the payment of the price; The third is the lessor who leases the movable property in the form of financial lease.
【Controversial Views】
Article 416 of the Civil Code stipulates that: "If the principal claim secured by a chattel mortgage is the price of the mortgage, and the mortgage is registered within 10 days after the delivery of the subject matter, the mortgagee shall have priority over the other security holders of the buyer of the mortgage, except for the lienholder." This provision is theoretically known as the super-priority of the price. There are different opinions on the scope of application of the super-priority of the price: one opinion is that the super-priority of the price is mainly designed to solve the problem of the mortgagor's need to refinance the newly purchased movable property after the creation of the floating charge on movable property, so it is only applicable to the situation where the mortgagor provides security for the payment of the price with the newly purchased movable property after the creation of the floating charge on movable property; Another view is that the super-priority of the price applies not only to the aforesaid circumstances, but also to other security interests in the subject matter that the mortgagor pays for the security price after the creation of a general chattel mortgage.
[Understanding and Application]
1. The super priority of the price after the creation of the floating charge on movable property
Movable property floating charge is a system designed to solve the financing difficulties of small and medium-sized enterprises, because a large number of small and medium-sized enterprises do not have real estate that can provide security, but usually have movable assets such as products, semi-finished products, raw materials, etc. These movable assets may not be of high value individually, but if taken as a whole, they have the value of financing security. In order to give full play to the financing guarantee function of movable property without affecting the normal operation of the enterprise, article 181 of the Property Law stipulates that: "Upon the written agreement of the parties, enterprises, individual industrial and commercial households, agricultural producers and operators may mortgage existing and future production equipment, raw materials, semi-finished products and products, and the creditor shall have the right to be repaid in priority for the movable property at the time of realization of the mortgage right if the debtor fails to perform the due debts or the mortgage rights are realized as agreed by the parties." Article 396 of the Civil Code continues this provision.
According to the provisions of Article 396 of the Civil Code on floating charges on movable property, once the floating charge on movable property is created, the newly purchased movable property of the mortgagor will automatically become the object of the floating charge on movable property, and the creditor will have the priority right to be repaid for the movable property as long as the movable property is still owned by the mortgagor when the mortgage is realized. In this way, enterprises, individual industrial and commercial households, agricultural producers and operators will face the problem of refinancing difficulties after setting up a floating charge on existing and future movable property, because if the floating charge on movable property is established before and has been registered, the movable property newly purchased by the mortgagor will automatically become the object of the floating charge. Article 414 stipulates the order of repayment of security interests, and the seller's transaction security cannot be effectively guaranteed, thus affecting the seller's enthusiasm for transactions with the mortgagor. The super-priority of the price under Article 416 of the Civil Code aims to break the order of repayment under Article 414 of the Civil Code, and clearly stipulates that if the later mortgage meets the conditions stipulated in Article 416 of the Civil Code, its effect will take precedence over the floating charge created earlier, thereby enhancing the mortgagor's ability to refinance.
After the mortgagor has created a floating charge on movable property, is it legitimate for the seller to pay the security price in the newly acquired movable property that the mortgage right in the mortgagor has priority over the floating charge on the movable property created earlier? The answer is yes. By comparing the super-priority of the price and the lien, it will be found that there are certain similarities between the two: taking the lien of the contractor in the contract as an example, the reason why the law gives the lien a higher effect than the mortgage right and the pledge right is that it is the creditor's behavior that causes the value of the retained property to be restored or increased, and the creditor only has the priority right to be repaid for the retained property for the claims arising from the restoration or increase of the value of the retained property; Similarly, the reason why the law gives the seller a super-priority effect on the seller's right to claim for payment is also because the increase in the mortgagor's property is the result of the seller's sale of the subject matter to the mortgagor, and the seller has a priority right to be repaid for the movable property only for claims arising from the increase in the value of the secured property. If, in the event that the mortgagor fails to pay the full amount, the seller does not agree to sell the subject matter to the mortgagor, the mortgagor will naturally not be able to obtain the movable property, let alone the floating mortgagee of the movable property will be given priority in the repayment of the movable property. In other words, even if the seller is given super-priority of the price, it will not harm the interests of the floating mortgagee on the movable property, because if the law does not give the seller super-priority of the price, the seller will be reluctant to sell the subject matter to the mortgagor for fear that its claim will not be realized, and the mortgagor will not be able to acquire the movable property. Of course, although the super-priority of the price is similar to the right of lien, when there is both a super-priority and a lien on the same movable property, the lien has priority according to article 416 of the Civil Code.
It is worth noting that article 416 of the Civil Code stipulates that the super-priority authority of the price is set in the case where the seller creates a mortgage on the movable property for the payment of the security price, which has led to many people having obstacles to understanding this article, because in practice, the seller usually adopts a retention of title to pay for the security price, and only in a few cases does the buyer create a mortgage on the movable property being sold for the seller. In addition, it is common in practice for the seller to be reluctant to provide financing services when selling the goods, and requires full payment, in which case the buyer can only find another financing channel and provide security for the financier with the newly purchased movable property. In our view, when a mortgagor acquires a new movable property after the creation of a floating charge on movable property, whether it is a seller who creates a mortgage or retention of title on the movable property, or a creditor who creates a mortgage on the movable property to finance the payment of the price, it can claim to apply the provisions of Article 416 of the Civil Code and enjoy super priority in respect of the movable property.
In addition, Article 416 of the Civil Code only stipulates the super priority of the price, but in practice, there may also be situations where the mortgagor leases the new movable property through financial leasing after the floating charge of movable property is created. In such a case, should the lessor's ownership of the leased property secured by the realization of the rental claim also have priority over the previously created floating charge on movable property? In our view, the ownership rights enjoyed by the lessor in a financial lease and the ownership rights enjoyed by the seller in a retention-of-title sale are not only of the same nature but also have similar effects, and Article 416 of the Civil Code should be applied by analogy to the lessor leasing the movable property by way of financial lease.
2. The general super-priority of the price after the creation of the chattel mortgage
If the buyer buys the movable property on credit but has not yet "warmed up", that is, creates a security interest in the movable property for a third party and registers it, it may result in the seller's right to claim the price from being realized. If the seller agrees with the buyer to create a mortgage on the movable property as collateral for the payment of the security price, and registers it within 10 days after the delivery of the subject matter, can the seller claim that the mortgage right it enjoys has priority over the security interest that was created earlier? According to one opinion, it is not legitimate to give the seller a mortgage right for payment of the price in such a situation as priority over a previously created security interest, mainly for the following reasons: first, when the seller sells the subject matter, it has every opportunity to secure the payment of the price by retaining title, creating a mortgage on the movable property, etc., without having to wait until the buyer has created a security interest in behalf of a third party before agreeing with the buyer to create a mortgage on the subject matter and register the mortgage; Second, in the above circumstances, if the seller's mortgage right is considered to have priority over the previously created security interest, it may endanger the transaction security of the third party that has previously obtained the security interest, because when the third party accepts the movable property as collateral, there is no registered mortgage on the movable property, and the sudden emergence of a more powerful right will naturally damage the security of the transaction.
We believe that, at least from a literal point of view, Article 416 of the Civil Code should cover such situations, so the Interpretation of the Guarantee System of the Civil Code also recognizes the super priority of the price in such circumstances from the perspective of respecting the original legislative intent as much as possible, and the resulting problem of third-party transaction security can be overcome by the third party through due diligence and other means. In other words, when a third party accepts movable property as collateral from others, it must examine whether the subject matter is a new subject matter purchased by the mortgagor within 10 days.
In addition, in practice, in addition to creating a mortgage on the subject matter, there are also forms of retention of ownership, financial leasing, etc., and the subject matter used to create security may not be the purchased movable property, but the movable property leased by way of financial lease, so the secured claim may not be the price, but the rent. For this reason, similar to the super-priority of the price after the creation of a floating charge on movable property, the Interpretation of the Security System of the Civil Code extends Article 416 of the Civil Code to the situation of leasing movable property by way of financial lease, and stipulates that the subjects who can claim the super-priority of the price are the following three types of parties: (1) the seller who creates a mortgage or retains ownership of the movable property; second, the creditor who creates a mortgage on the movable property to finance the payment of the price; The third is the lessor who leases the movable property in the form of financial lease.
[Practical issues]
In practice, the problem of multiple super-priority rights may also coexist. For example, if the seller retains ownership of the subject matter, and the buyer obtains the funds used to pay the first price by borrowing from a third party and using the movable property as collateral, there is a situation where the seller's super-priority of the price and the super-priority of the third party's price coexist. Another example is that in a financial lease, the funds used by the lessee to pay rent to the lessor are borrowed from two or more banks and secured by the leased property, and there is a situation where the lessor's rent super-priority and the other two rent super-priorities coexist.
In the case of multiple prices or rent super-priorities, how to determine the order of repayment of each priority holder? In this regard, there are different legislative forms: some countries or regions adopt the order of repayment according to the order of registration time, that is, the first to register has priority over the later registration; Some countries or regions adopt the principle of equality, that is, regardless of the order of registration, they are equally repaid according to the proportion of creditor's rights. In order to urge the parties to register in a timely manner, the Interpretation of the Guarantee System of the Civil Code adopts the first option.