dissenting:
The majority recognizes the sole issue on appeal to be whether the transfer of the proceeds in question occurred in Finley’s ordinary course of business, so as to extinguish Orix’s security interest in those proceeds pursuant to Comment 2(c)1 to the Uniform Commercial Code of Virginia,2 § 8.9-306 (Mi-*1270ehie 1991). Because I believe that we need not reach Comment 2(c) to resolve this case, I respectfully dissent.
Applying the proper standard in the context of summary judgment motions, the district court found that the facts, viewed in the light most favorable to Orix, revealed the following:
(1) Orix had a purchase money security interest in the Crane that was properly filed; (2) whatever interest Sovran had in the Crane was subordinated to Orix’s security interest; (3) the appropriate portion of the Signet wire transfer represented proceeds of the sale of the Crane; (4) Orix’s security interest in these proceeds was superior to Sovran’s[;] and (5) Sovran knew the wire transfer included proceeds in which Orix had a superior security interest.
See Orix Credit Alliance, Inc. v. Sovran Bank, No. MJG-91-2936, slip op. at 5, 1992 WL 541256 (D.Md. Oct. 16, 1992). Despite these conclusions of law and fact, the district court determined — and the majority agrees — that Comment 2(c) to section 8.9-306 provides an exception to the traditional priority scheme outlined in Article 9. This exception, the majority holds, entitles Sovran to a superior claim to the Crane proceeds.
In accepting the inferences drawn by the district court and limiting its analysis to Comment 2(c), the majority overlooks the district court’s impermissible resolution of disputed material facts and erroneous application of Article 9. Rather than reach out to embrace the official commentary to section 8.9-306 as an exception to the major premises of the Code itself, imbuing the commentary with the authority of law without supporting precedent from the State of Virginia or this circuit, I would resolve this appeal by addressing the following three issues prematurely conceded in Orix’s favor by the district court: (1) whether any interest Sovran might have in the Crane was subordinated to Orix’s security interest in the Crane; (2) whether Orix had a properly perfected purchase money security interest in the Crane; and (3) whether Orix’s security interest in the Crane and its proceeds was superior to Sovran’s.
I
I address the enforceability of the subordination agreement between Orix and Sovran first because, if it serves effectively to bind the parties in a contractual system of priorities outside the scope of Article 9, the need for further analysis ceases and the rights to the Crane proceeds emanate solely from within the four corners of the subordination agreement.
The Uniform Commercial Code generally, and Article 9 specifically, allow parties to modify by contract their duties and rights as outlined in the Code. See, e.g., Va.Code Ann. § 8.1-102(3) (Michie 1991) (“The effect of provisions of this act may be varied by agreement. ...”); id. § 8.9-316 (“Nothing in this title prevents subordination by agreement by any person entitled to priority.”) The Code has defined “agreement” as
the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in §§ 8.1-205 and 8.2-208. Whether an agreement has legal consequences is determined by the provisions of this act, if applicable; otherwise by the law of contracts....
Id. § 8.1-201(3) (Michie Supp.1993). These provisions of the Code suggest that a subordination agreement may serve to alter the priority relationship between Orix and Sov-ran under Article 9; the agreement, however, only supplants Article 9 to the extent that Virginia’s rules governing contract interpretation permit the necessary construction.
The subordination agreement in this case states:
We have acquired one or more security interest [sic] in the goods described below: One (1) American Model 5300 Crawler Crane S/N 9007AC3516 W/third drum, 9 ton jib
*1271We would appreciate it greatly if you would acknowledge that our interest in the goods described above is, and will be, prior to any interest of your company in such goods. Please confirm by signing in the place provided below and returning the original of this letter to us.
The agreement, dated July 16, 1990, was signed by Elspeth McClelland, First Vice President of Sovran and the account officer handling the Finley-Sovran relationship. For the purposes of this case, the crucial issue is whether the subordination agreement alters Orix’s and Sovran’s priority as to the Crane and its proceeds or as to the Crane alone. If, on the one hand, the agreement encompasses the Crane and its proceeds, Orix has a claim to the proceeds at issue superior to Sovran’s.3 On the other hand, if the subordination agreement covers only the Crane, then it alters Orix’s and Sovran’s *1272relative priorities only as to the Crane. Article 9 then would establish their priority as to the proceeds.4
The subordination agreement itself is silent as to proceeds, and this silence suggests more than one possible interpretation.5 When faced with a contract interpretation problem, Virginia courts have outlined three possible courses of action. In the first instance, in which the contract is clear and unambiguous on its face, the court assumes the duty to construe its meaning. Greater Richmond Civic Recreation, Inc. v. A.H. Ewing’s Sons, Inc., 200 Va. 593, 596, 106 S.E.2d 595, 597 (1959). In the second situation, in which extraneous testimony that is properly admitted makes a contract clear and unambiguous, the court again assumes the duty to construe its meaning. Main-Atlantic Corp. v. Francis I. duPont & Co., 213 Va. 180, 184, 191 S.E.2d 211, 215 (1972); see also Burns v. Eby & Walker, Inc., 226 Va. 218, 221-22, 308 S.E.2d 114, 116 (1983) (“If the contract is not clear and unambiguous on its face but extraneous evidences makes it so, the court also has the duty to construe it.”). Under the final scenario, in which the contract is ambiguous and resort to parol evidence becomes necessary, “the meaning of the contract upon the evidence should be submitted to the jury if reasonable [persons] might draw different conclusions therefrom.” Greater Richmond, 200 Va. at 596, 106 S.E.2d at 597. “[T]hen the construction of the contract is for the jury under proper instructions from the court, even though the evidence be not conflicting.” Geoghegan Sons & Co. v. Arbuckle Bros., 139 Va. 92, 100-01, 123 S.E. 387, 389 (1924).
This case falls into the third category. The summary judgment record contains nothing that would make the subordination agreement clear and unambiguous on the point of proceeds.6 Therefore, I believe that the construction of the subordination agreement as to proceeds is an issue properly relegated to the factfinder.
The district court’s hasty application of Comment 2(c) on Sovran’s motion for summary judgment in lieu of interpreting the subordination agreement undercuts one of the principal policies of the Uniform Commercial Code — “to permit the continued expansion of commercial practices through custom, usage and agreement of the parties.” Va.Code Ann. § 8.1-102(2)(b) (Michie 1991). In addition, as outlined previously, the outcome of this case lies in the interpretation of the subordination agreement and not in the rote application of Comment 2(c) without further regard to the specific circumstances at hand.
For the foregoing reasons, I would reverse the district court’s decision to grant Sovran’s motion for summary judgment and remand the case for factfinding as to and proper construction of the subordination agreement. While ordinarily I would go only this far, because I dissent, I feel obliged to explain why the “ordinary course” exception of Comment 2(c) would not apply at all to the circumstances arising in this case.
II
If the factfinder were to conclude that the subordination agreement applies only to the Crane itself, Orix’s and Sovran’s priority positions as determined under Article 9 as to the Crane proceeds would remain unaltered. Section 8.9-312 of the Uniform Commercial Code then would supply the means by which their relative priorities would be determined. *1273Section 8.9-312(5)7 establishes the general rule that the first to file or perfect a security interest maintains the superior claim among conflicting security interests. Va.Code Ann. § 8.9-312(5) (Michie 1991). The remaining subsections of section 8.9-312 outline exceptions to that general rule, one of which governs the purchase money security interest (“PMSI”) in inventory. Id. § 8.9-312(3).
The Code provides:
(3) A perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory and also has priority in identifiable cash proceeds received on or before the delivery of the inventory to a buyer if
(a) the purchase money security [interest]8 is perfected at the time the debtor receives possession of the inventory; and
(b) the purchase money secured party gives notification in writing to the holder of the conflicting security interest if the holder had filed a financing statement covering the same types of inventory (i) before the date of the filing made by the purchase money secured party, or (ii) before the beginning of the twenty-one-day period where the purchase money security interest is temporarily perfected without filing or possession as provided in subsection (5) of § 8.9-304; and
(c) the holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory; and
(d)the notification states that the person giving the notice has or expects to acquire a purchase money security interest in inventory of the debtor, describing such inventory by item or type.
Id.
Orix has failed to establish a PMSI in the Crane on two grounds. First, Orix’s alleged PMSI was not perfected at the time Finley received possession of the Crane. Finley entered into a lease agreement with Tidewater Construction Corporation (“Tidewater”) under which Finley agreed to purchase one American Model 5300 Crawler Crane and deliver it to Tidewater under a twelve-month lease. Orix agreed to finance Finley’s purchase of the Crane. The uncontroverted deposition testimony of William R. Godwin, secretary-treasurer and chief financial officer of Finley, indicates that the Crane was delivered to Tidewater on July 19, 1990. The summary judgment record also reflects that Orix filed financing statements signifying its security interest in the Crane at the appropriate state and county offices on July 20, 1990 and July 23, 1990 respectively.
Orix’s security interest in the Crane became perfected when the interest had aat-tached and all of the applicable steps required for perfection had been taken. Va. Code Ann. § 8.9-303(1) (Michie 1991). One of the steps required for perfection is the filing of appropriate financing statements. See id. § 8.9-302. Orix’s filings were not complete until July 23, 1990, after Tidewater received the Crane.9 By postdating posses*1274sion of the collateral, the filings fail to satisfy section 8.9-312(3)(a)’s requirement that the PMSI be perfected at the time the debtor receives possession of the inventory.
Orix cannot invoke the priorities of section 8.9-312(3) for a second reason. Orix could not have received the proceeds in question on or before the delivery of the inventory to the buyer. Tidewater, the lessee of the Crane, agreed with Finley to purchase the Crane at the termination of its twelve-month lease. The transaction was structured as a sale to Signet Leasing and Finance Corporation and a leaseback to Tidewater, but the Crane never left Tidewater’s possession. Orix suggests that, because Signet actually bought the Crane and itself never had possession of it, the requirement that the proceeds precede possession of the Crane is satisfied. This contention artificially limits possession to one who physically has the Crane. Possession may be actual or constructive;10 in this case, although Tidewater had actual possession of the Crane, Signet had constructive possession of it upon entering into the sale-leaseback agreement with Finley effectively on August 30,1991, twenty-one days before Finley received the wire-transfer containing the Crane proceeds. Therefore, even if Finley had directed the proceeds to Orix the day it received them from Signet, the transfer would be too late to qualify under section 8.9-312(3)’s exception.
Absent benefit of the superior position accorded by section 8.9-312(3), Orix must enter into a first-in-time, first-in-right battle with Sovran over the proceeds under the general rule of section 8.9-312(5). Orix loses this contest because Sovran’s security interest dates back to December 29, 1989, when it entered into a revolving loan arrangement with Finley secured by present and after-acquired inventory and its proceeds.
Ill
Unlike the majority, I believe this case can and should be resolved without reaching the “ordinary course” exception of Comment 2(c). When we could reach a logical and reasoned outcome by applying the provisions of a state’s version of the Uniform Commercial Code, we ought to do so rather than needlessly inflate the official commentary to the dignity of law. Although my analysis might lead ultimately to the result reached by the majority, I must respectfully dissent in favor of allowing the factfinder to construe the subordination agreement. For this reason, I would reverse the district court’s decision.
. Comment 2(c) provides:
Where cash proceeds are covered into the debtor's checking account and paid out in the operation of the debtor’s business, recipients of the funds of course take free of any claim which the secured party may have in them as proceeds. What has been said relates to payments and transfers in ordinary course. The law of fraudulent conveyances would no doubt in appropriate cases support recovery of proceeds by a secured party from a transferee out of ordinary course or otherwise in collusion with the debtor to defraud the secured party.
Va.Code Ann. § 8.9-306 official comment 2(c).
. The law governing this diversity action is that of the State of Virginia. Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938). Virginia has adopted the Uniform Commercial Code. See Va.Code Ann. §§ 8.1-101 to *12708.9-507 (Michie 1991 & Supp.1993). Hereinafter, references to the Uniform Commercial Code ("the Code”) will be to the version found in the Code of Virginia. "Article 9” refers to those provisions of the Code which deal with secured transactions.
. The majority would contend that such a construction of the subordination agreement is irrelevant; the "ordinary course” exception of Comment 2(c) would operate in any event to restore Sovran’s priority position. I disagree with this construction of Comment 2(c). Although the comment suggests a means by which persons may alter the priority scheme generally established by Article 9, it should not provide one party an opportunity by which to renege on its contractual obligations to another party.
Comment 2(c) contemplates protection for one who receives, in the ordinary course of business, payment in the form of proceeds collected by the debtor on the disposition of inventory collateral. The comment does not define "ordinary course" or give an example of its application. Only by reviewing analogous provisions of the Code is the meaning of Comment 2(c) informed.
Section 8.9-307(1) of Virginia’s Uniform Commercial Code provides that a buyer in ordinary course of business (subsection (9) of § 8.1201) 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.
Va.Code Ann. § 8.9-307(1) (Michie 1991). Section 8.1-201(9) defines "buyer in ordinary course of business” as;
a person who in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind....
Id. § 8.1-201(9) (Michie Supp.1993).
Reading sections 8.9-307(1) and 8.1-201(9) together results in a buyer taking free of an existing security interest only if he merely knows that there is a security interest that covers the goods. If the buyer knows that a security interest covers the goods and, in addition, that the sale is in violation of some term in the security agreement not waived by the word or conduct of the secured party, she takes the goods subject to the security interest. See id. § 8.9-307 official comment 2.
For example, suppose that a bank officer finances an automobile dealer’s floor plan and takes a security interest in all cars in inventory. The officer then goes to that dealership and buys a car. She knows that the bank for which she works has a security interest in the cars; however, she buys her car free of the bank’s security interest in the ordinary course of business: Suppose the car dealership suffers a financial setback and loses its dealer franchise; the bank places the floor plan loan in default and orders the dealer, pursuant to their security agreement, to cancel any additional factory deliveries, hold all the cars currently on the lot, and look for another dealership to buy the excess inventory in bulk. Now if the bank officer, knowing the situation and status of the loan, goes to the dealer and attempts to get a good deal on one of the cars before it is moved out to another dealership, the officer loses the protection of being a buyer in the ordinary course of business and would take the car subject to the bank’s security interest. The officer’s purchase would involve knowingly gaining an advantage over the secured party. The Code’s preference for bona fide purchasers does not extend this far.
In this case, Sovran claims to be a recipient of proceeds, rather than the purchaser of goods, in the ordinary course of business. The principles embodied in sections 8.9-307(1) and 8.1-201(9) should apply nonetheless. Sovran entered into an agreement with Orix to relinquish any priority claim it might have in the Crane to Orix. The agreement moved Orix and Sovran outside the priorities established pursuant to their respective security agreements with Finley and etched contractually a scheme of priority whereby Orix would prevail as to any interest in the Crane. For Sovran subsequently to appropriate proceeds from Finley's sale of the Crane represents a taking of the proceeds with the knowledge that Orix’s security interest exists and that the taking of the proceeds subject to the security interest would be in direct violation of the subordination agreement. This type of appropriation should not be protected in the ordinary course of business. Cf. J.I. Case Credit Corp. v. First Nat'l Bank, 991 F.2d 1272, 1279 (7th Cir.1993) (”[U]n-der Comment 2(c), a payment is within the ordinary course if it was made in the operation of the debtor’s business and if the payee did not know and was not reckless about whether the payment violated a third party’s security interest.”). Therefore, if the subordination agreement were found to cover both the Crane and its proceeds, Sovran has unconditionally relinquished priority *1272to the proceeds in question and Orix is entitled to them.
. The outcome under this scenario is discussed infra pages 1272 to 1274.
. For example, under other provisions of the Code, neither a security agreement nor a financing statement needs to mention proceeds for its ' application to extend to proceeds. See Va.Code Ann. §§ 8.9-110, 8.9-203(3), 8.9-402(1) (Michie 1991).
.Elspeth McClelland testified at her deposition as to her interpretation of the subordination agreement, but this testimony alone does not remove unequivocally the existing ambiguities in the agreement's meaning:
Q. And this particular one, what did you think you were agreeing to when you signed this?
A. Basically what it says their interest in the goods described above is, and will be prior to any interest of your company, meaning Sovran Bank.
.Section 8.9-312(5) provides:
In all cases not governed by other rules stated in this section, including cases of purchase money security interests which do not qualify for the special priorities set forth in subsections (3) and (4) of this section, priority between conflicting security interests in the same collateral shall be determined according to the following rules:
(a) Conflicting security interests rank according to priority in time of filing or perfection. Priority dates from the time a filing is first made covering the collateral or the time the security interest is first perfected, whichever is earlier, provided that there is no period thereafter when there is neither filing nor perfection.
(b) So long as conflicting security interests are unperfected, the first to attach has priority.
Va.Code Ann. § 8.9-312(5) (Michie 1991).
. The National Conference of Commissioners on Uniform State Laws and the American Law Institute, when drafting the text of the Uniform Commercial Code, included the word "interest” in section 8.9-312(3)(a). I assume its omission by the Virginia General Assembly was mere oversight and not meant to change the substantive meaning of the subsection. Hereinafter, I refer to the subsection with the insertion of the omitted language.
. That Tidewater, Finley’s lessee, received possession of the Crane, and not Finley, has no impact on the application of section 8.9-312(3)(a). The Code recognizes that the debtor will not in all instances actually receive the goods subject to the security interest. See, e.g., Va.Code Ann. § 8.9-112 (Michie 1991) ("[W]hen a secured party knows that collateral is owed by a person who is not the debtor, the owner of the *1274collateral is entitled to [various rights]....”); id. § 8.9 — 203(l)(c) (“[A] security interest is not enforceable against the debtor or third parties with respect to the collateral and does not attach unless ... the debtor has rights in the collateral.”).
. Constructive possession occurs in situations in which one does not have physical custody or possession, but is in a position to exercise dominion or control over the property. Black's Law Dictionary 314 (6th ed. 1990).