9502. (First of two; Operative until January 1, 1999) Collection rights of secured party

(1) When so agreed and in any event on default the secured party is entitled to notify an account debtor or the obligor on an instrument to make payment to him or her whether or not the assignor was theretofore making collections on the collateral, and also to take control of any proceeds to which he or she is entitled under Section 9306.

(2) (a) A secured party who by agreement is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor and who undertakes to collect from the account debtors or obligors must proceed in a commercially reasonable manner and may deduct his or her reasonable expenses of realization from the collections.

(b) If the security agreement secures an indebtedness, the secured party must account to the debtor for any surplus.

(c) If the security agreement secures an indebtedness, the debtor is liable for any deficiency unless otherwise agreed, but only (i) if the secured party in collection pursuant to this section has proceeded in a commercially reasonable manner, or (ii) as provided in paragraph (d).

(d) If the secured party in collecting pursuant to this section has not proceeded in a commercially reasonable manner, the debtor is liable, subject to paragraph (e), for any deficiency only if the balance of the indebtedness immediately before the collection exceeds the amount that the secured party establishes would have been realized had the secured party in collecting pursuant to this section proceeded in a commercially reasonable manner, and the liability is limited to the excess.

(e) Notwithstanding paragraph (d), if the secured party in collecting pursuant to this section has not proceeded in a commercially reasonable manner, and if the transaction was entered into by the debtor primarily for personal, family, or household purposes or if the amount of the indebtedness immediately before the collection was one hundred thousand dollars ($ 100,000) or less, then the debtor is not liable for any deficiency.

(f) Upon entry of a final judgment that the debtor is not liable for a deficiency by reason of either paragraph (d) or paragraph (e), the secured party may neither obtain a deficiency judgment nor retain a security interest in any other collateral of the debtor that secured the indebtedness for which the debtor is no longer liable.

(g) To the extent, subsequent to a collection that does not satisfy the conditions set forth in clause (i) of paragraph (c), or subsequent to a disposition that does not satisfy any one or more of the conditions set forth in clause (i) of paragraph (b) of subdivision (2) of Section 9504, the secured party collects pursuant to this section on other collateral securing the same indebtedness, the debtor may, to the extent he or she is no longer liable for a deficiency judgment by reason of paragraph (d) or paragraph (e), or by reason of paragraph (c) or paragraph (d) of subdivision (2) of Section 9504, recover the proceeds realized from those subsequent collections, as well as any damages to which the debtor may be entitled if the subsequent collection is itself noncomplying or otherwise wrongful. Except for secured transactions entered by the debtor primarily for personal, family, or household purposes, neither the subsequent collections nor the exercise of any other remedy by the secured party subsequent to a noncomplying collection or disposition shall be deemed tortious or otherwise wrongful based, in whole or in part, on the fact that it occurred subsequent to a noncomplying collection or disposition.

(h) If the underlying transaction was a sale of accounts or chattel paper, the debtor is entitled to any surplus or is liable for any deficiency only if the security agreement so provides. The provisions of subdivision (b) of Section 701.040 of the Code of Civil Procedure relating to the payment of proceeds apply only if the security agreement provides that the debtor is entitled to any surplus.

(i) Nothing herein shall deprive the debtor of any right to recover damages from the secured party under subdivision (1) of Section 9507 or to offset any such damages against any claim by the secured party for a deficiency, or of any right or remedy to which the debtor may be entitled under any other law. However, except in the case of any secured party that has willfully failed to proceed in a commercially reasonable manner in collection pursuant to this section, or in the case of a debtor who entered the secured transaction primarily for personal, family, or household purposes, any damages recoverable by the debtor shall be reduced by the amount of any deficiency that would have resulted had the secured party in collecting pursuant to this section proceeded in conformity with the condition set forth in clause (i) of paragraph (c) regardless whether or not the debtor is liable for the deficiency under paragraph (c) or (d).

(3) This section shall be repealed on January 1, 1999.