In discussing the court’s rejection of the trustee’s argument that Duke did not have a security interest in the CD and Article 9 did not control, Law Professor Ingrid Michelsen Hillinger writes:

     In fact, according to the court, Article 9 did control, and Duke had a valid security interest in the CD. Article 9 does not require parties to use any special form to create a security interest. A written document sufficiently evidencing the parties’ intent to create a security interest is enough. The lease document was sufficient in that regard. It gave the landlord an interest in the CD to secure Debtor’s performance under the lease. The lease described the CD and it also described the CD as security and collateral for Debtor’s performance. A security interest is “an interest in personal property or fixtures that secures payment or performance of an obligation.” The parties clearly intended to secure the tenant’s obligations. They had created a security interest in the CD.

Professor Hillinger states that the court also rejected the trustee’s second argument that the CD was an instrument under Article 9, not a deposit account:

The terms of the CD stated it was a deposit account. The forms evidencing the account stated it was a deposit account. The agreements prohibited the debtor from transferring or assigning the CD without the bank’s prior written consent. The debtor could only withdraw or transfer funds using special bank-approved forms. All the evidence indicated this CD was not of a type which the debtor could transfer in the ordinary course of business by simply endorsing or assigning it.

According to Professor Hillinger, the trustee’s refrain--that, even if the CD was a deposit account, Duke’s interest was unperfected because Duke did not have control of the CD--didn’t sway the court:

Unquestionably, Sky Bank, as the depositary bank, had control of the CD. U.C.C. § 9-104(a)(1) (creditor has control of deposit account if creditor is bank with which deposit account is maintained). Therefore, Sky Bank’s security interest in the CD was perfected. According to section 9-310(c), “if a secured party assigns a perfected security interest … a filing under this article is not required to continue the perfected status of the security interest against creditors of and transferees from the original debtor.” According to Official Comment 4, this rule applies to deposit accounts even though control is required to perfect a security interest in a deposit account as original collateral. Section 9-310(c) effectively allows an assignee to piggyback onto the original creditor’s perfection. Sky Bank, the assignor, was perfected. Therefore, Duke, Sky Bank’s assignee, was also perfected. An assignee does not have to re-perfect to continue its perfected status vis-à-vis creditors and buyers of the original debtor.

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