MARVIN MANDEL, Governor

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secured party, and if the goods are returned to or are
repossessed by the seller or the secured party, the
following rules determine priorities:

fa) If the goods were collateral at the time
of sale for an indebtedness of the seller which is still
unpaid, the original security interest attaches again to
the goods and continues as a perfected security interest
if it was perfected at the time when the goods were sold.
If the security interest was originally perfected by a
filing which is still effective, nothing further is
required to continue the perfected status; in any other
case, the secured party must take possession of the
returned or repossessed goods or must file.

(b)   An unpaid transferee of the chattel paper
has a security interest in the goods against the
transferor. Such security interest is prior to a
security interest asserted under paragraph (a) to the
extent that the transferee of the chattel paper was
entitled to priority under § 9—308.

(c)   An unpaid transferee of the account has a
security interest in the goods against the transferor.
Such security is subordinate to a security interest
asserted under paragraph (a).

(d)     A security interest of an unpaid
transferee asserted under paragraph (b) or (c) must be
perfected for protection against creditors of the
transferor and purchasers of the returned or repossessed
goods.

9—307. Protection of buyers of goods.

(1)     A buyer in ordinary course of business
(subsection (9) of § 1—201) other than a person buying
farm products from a person engaged in farming operations
takes free of a security interest created by his seller
even though the security interest is perfected and even
though the buyer knows of its existence.

(2)    In the case of consumer goods having an
original purchase price not in excess of $500 and in the
case of farm equipment having an original purchase price
not in excess of $500 (other than fixtures, see § 9—313),
a buyer takes free of a security interest even though
perfected if he buys without knowledge of the security
interest, for value and for his own personal, family or
household purposes or his own farming operations unless
prior to the purchase the secured party has filed a
financing statement covering such goods.

9—308. Purchase of chattel paper and non—negotiable