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H0540...........................................................by BUSINESS UNIFORM COMMERCIAL CODE - Amends existing law to revise Article 9 of the Uniform Commercial Code to clarify language and application to the chapter; and to provide for the effective date of certain financing statements. 02/01 House intro - 1st rdg - to printing 02/04 Rpt prt - to Bus 02/12 Rpt out - rec d/p - to 2nd rdg 02/13 2nd rdg - to 3rd rdg 02/15 3rd rdg - PASSED - 59-0-11 AYES -- Aikele, Barraclough, Barrett, Bell, Bieter, Black, Block, Boe, Bolz, Bradford, Callister, Campbell, Clark, Collins, Cuddy, Denney, Ellis, Ellsworth, Eskridge, Field(13), Field(20), Gagner, Hadley, Hammond, Harwood, Henbest, Higgins, Hornbeck, Jaquet, Jones, Kellogg, Kunz, Langford, Loertscher, Mader, Martinez, McKague, Meyer, Montgomery, Mortensen, Moyle, Pearce, Pischner, Pomeroy, Raybould, Ridinger, Roberts, Robison, Sali, Schaefer, Shepherd, Smith(33), Smylie, Stevenson, Stone, Tilman, Trail, Wheeler, Young NAYS -- None Absent and excused -- Bedke, Bruneel, Crow, Deal, Gould, Kendell, Lake, Sellman, Smith(23), Wood, Mr. Speaker Floor Sponsor - Gagner Title apvd - to Senate 02/18 Senate intro - 1st rdg - to Com/HuRes 03/12 Rpt out - rec d/p - to 2nd rdg 03/13 2nd rdg - to 3rd rdg 03/15 3rd rdg - PASSED - 34-0-1 AYES -- Andreason, Boatright, Branch Brandt, Bunderson, Burtenshaw, Cameron, Darrington, Davis, Deide, Dunklin, Frasure, Geddes, Goedde, Hill, Ingram, Ipsen, Keough, King-Barrutia, Little, Lodge, Marley, Noh, Richardson, Risch, Sandy, Schroeder, Sims, Sorensen, Stegner, Stennett, Thorne, Wheeler, Williams NAYS -- None Absent and excused -- Hawkins Floor Sponsor - Andreason Title apvd - to House To enrol - Rpt enrol - Sp signed 03/18 Pres signed - to Governor 03/19 Governor signed Session Law Chapter 107 Effective: 07/01/02
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-sixth Legislature Second Regular Session - 2002IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 540 BY BUSINESS COMMITTEE 1 AN ACT 2 RELATING TO THE UNIFORM COMMERCIAL CODE; AMENDING SECTION 28-9-102, IDAHO 3 CODE, TO FURTHER DEFINE "HEALTH CARE INSURANCE RECEIVABLE"; AMENDING SEC- 4 TION 28-9-304, IDAHO CODE, TO PROVIDE THAT AN AGREEMENT BETWEEN A BANK AND 5 ITS CUSTOMER GOVERNING A DEPOSIT ACCOUNT MAY EXPRESSLY PROVIDE THAT A PAR- 6 TICULAR JURISDICTION IS THE BANK'S JURISDICTION; AMENDING SECTION 7 28-9-309, IDAHO CODE, TO PROVIDE THAT SECURITY INTERESTS IN A SALE BY AN 8 INDIVIDUAL OF AN ACCOUNT THAT IS A RIGHT TO PAYMENT OF WINNERS IN A LOT- 9 TERY OR OTHER GAME OF CHANCE ARE PERFECTED WHEN THEY ATTACH; AMENDING SEC- 10 TION 28-9-515, IDAHO CODE, TO REVISE THE DURATION AND EFFECTIVENESS OF 11 CERTAIN FINANCING STATEMENTS; AMENDING SECTION 28-9-626, IDAHO CODE, TO 12 REMOVE LANGUAGE EXEMPTING CONSUMER TRANSACTIONS FROM RULES APPLICABLE TO 13 ACTIONS IN WHICH DEFICIENCY OR SURPLUS IS IN ISSUE; AMENDING SECTION 14 28-9-705, IDAHO CODE, TO PROVIDE FOR THE EFFECTIVENESS OF FINANCING STATE- 15 MENTS FILED AS FIXTURE, TIMBER OR MINERAL FILINGS; AND AMENDING SECTION 16 39-1450, IDAHO CODE, TO PROVIDE THAT THE SECTION EXPRESSLY GOVERNS THE 17 CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF SECURITY INTERESTS CRE- 18 ATED BY THE IDAHO HEALTH FACILITIES AUTHORITY AND TO MAKE A TECHNICAL COR- 19 RECTION. 20 Be It Enacted by the Legislature of the State of Idaho: 21 SECTION 1. That Section 28-9-102, Idaho Code, be, and the same is hereby 22 amended to read as follows: 23 28-9-102. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In this chapter: 24 (1) "Accession" means goods that are physically united with other goods 25 in such a manner that the identity of the original goods is not lost. 26 (2) "Account," except as used in "account for," means a right to payment 27 of a monetary obligation, whether or not earned by performance: (i) for 28 property that has been or is to be sold, leased, licensed, assigned, or 29 otherwise disposed of; (ii) for services rendered or to be rendered; (iii) 30 for a policy of insurance issued or to be issued; (iv) for a secondary 31 obligation incurred or to be incurred; (v) for energy provided or to be 32 provided; (vi) for the use or hire of a vessel under a charter or other 33 contract; (vii) arising out of the use of a credit or charge card or 34 information contained on or for use with the card; or (viii) as winnings 35 in a lottery or other game of chance operated or sponsored by a state, 36 governmental unit of a state, or a person licensed or authorized to oper- 37 ate the game by a state or governmental unit of a state. The term includes 38 health care insurance receivables. The term does not include: (i) rights 39 to payment evidenced by chattel paper or an instrument; (ii) commercial 40 tort claims; (iii) deposit accounts; (iv) investment property; (v) letter 41 of credit rights or letters of credit; or (vi) rights to payment for money 42 or funds advanced or sold, other than rights arising out of the use of a 43 credit or charge card or information contained on or for use with the 2 1 card. 2 (3) "Account debtor" means a person obligated on an account, chattel 3 paper, or general intangible. The term does not include persons obligated 4 to pay a negotiable instrument, even if the instrument constitutes part of 5 chattel paper. 6 (4) "Accounting," except as used in "accounting for," means a record: 7 (A) authenticated by a secured party; 8 (B) indicating the aggregate unpaid secured obligations as of a date 9 not more than thirty-five (35) days earlier or thirty-five (35) days 10 later than the date of the record; and 11 (C) identifying the components of the obligations in reasonable 12 detail. 13 (5) "Agricultural lien" means an interest, other than a security inter- 14 est, in farm products: 15 (A) which secures payment or performance of an obligation for: 16 (i) goods or services furnished in connection with a debtor's 17 farming operation; or 18 (ii) rent on real property leased by a debtor in connection 19 with its farming operation; 20 (B) which is created by statute in favor of a person that: 21 (i) in the ordinary course of its business furnished goods or 22 services to a debtor in connection with a debtor's farming oper- 23 ation; or 24 (ii) leased real property to a debtor in connection with the 25 debtor's farming operation; and 26 (C) whose effectiveness does not depend on the person's possession 27 of the personal property. 28 (6) "As-extracted collateral" means: 29 (A) oil, gas, or other minerals that are subject to a security 30 interest that: 31 (i) is created by a debtor having an interest in the minerals 32 before extraction; and 33 (ii) attaches to the minerals as extracted; or 34 (B) accounts arising out of the sale at the wellhead or minehead of 35 oil, gas, or other minerals in which the debtor had an interest 36 before extraction. 37 (7) "Authenticate" means: 38 (A) to sign; or 39 (B) to execute or otherwise adopt a symbol, or encrypt or similarly 40 process a record in whole or in part, with the present intent of the 41 authenticating person to identify the person and adopt or accept a 42 record. 43 (8) "Bank" means an organization that is engaged in the business of bank- 44 ing. The term includes savings banks, savings and loan associations, 45 credit unions and trust companies. 46 (9) "Cash proceeds" means proceeds that are money, checks, deposit 47 accounts, or the like. 48 (10) "Certificate of title" means a certificate of title with respect to 49 which a statute provides for the security interest in question to be indi- 50 cated on the certificate as a condition or result of the security 51 interest's obtaining priority over the rights of a lien creditor with 52 respect to the collateral. 53 (11) "Chattel paper" means a record or records that evidence both a mone- 54 tary obligation and a security interest in specific goods, a security 55 interest in specific goods and software used in the goods, a security 3 1 interest in specific goods and license of software used in the goods, a 2 lease of specific goods, or a lease of specific goods and license of soft- 3 ware used in the goods. In this paragraph, "monetary obligation" means a 4 monetary obligation secured by the goods or owed under a lease of the 5 goods and includes a monetary obligation with respect to software used in 6 the goods. The term does not include: (i) charters or other contracts 7 involving the use or hire of a vessel; or (ii) records that evidence a 8 right to payment arising out of the use of a credit or charge card or 9 information contained on or for use with the card. If a transaction is 10 evidenced by records that include an instrument or series of instruments, 11 the group of records taken together constitutes chattel paper. 12 (12) "Collateral" means the property subject to a security interest or 13 agricultural lien. The term includes: 14 (A) proceeds to which a security interest attaches; 15 (B) accounts, chattel paper, payment intangibles, and promissory 16 notes that have been sold; and 17 (C) goods that are the subject of a consignment. 18 (13) "Commercial tort claim" means a claim arising in tort with respect to 19 which: 20 (A) the claimant is an organization; or 21 (B) the claimant is an individual and the claim: 22 (i) arose in the course of the claimant's business or profes- 23 sion; and 24 (ii) does not include damages arising out of personal injury to 25 or the death of an individual. 26 (14) "Commodity account" means an account maintained by a commodity inter- 27 mediary in which a commodity contract is carried for a commodity customer. 28 (15) "Commodity contract" means a commodity futures contract, an option on 29 a commodity futures contract, a commodity option, or another contract if 30 the contract or option is: 31 (A) traded on or subject to the rules of a board of trade that has 32 been designated as a contract market for such a contract pursuant to 33 federal commodities laws; or 34 (B) traded on a foreign commodity board of trade, exchange, or mar- 35 ket, and is carried on the books of a commodity intermediary for a 36 commodity customer. 37 (16) "Commodity customer" means a person for which a commodity intermedi- 38 ary carries a commodity contract on its books. 39 (17) "Commodity intermediary" means a person that: 40 (A) is registered as a futures commission merchant under federal 41 commodities law; or 42 (B) in the ordinary course of its business provides clearance or 43 settlement services for a board of trade that has been designated as 44 a contract market pursuant to federal commodities law. 45 (18) "Communicate" means: 46 (A) to send a written or other tangible record; 47 (B) to transmit a record by any means agreed upon by the persons 48 sending and receiving the record; or 49 (C) in the case of transmission of a record to or by a filing 50 office, to transmit a record by any means prescribed by filing office 51 rule. 52 (19) "Consignee" means a merchant to which goods are delivered in a con- 53 signment. 54 (20) "Consignment" means a transaction, regardless of its form, in which a 55 person delivers goods to a merchant for the purpose of sale and: 4 1 (A) the merchant: 2 (i) deals in goods of that kind under a name other than the 3 name of the person making delivery; 4 (ii) is not an auctioneer; and 5 (iii) is not generally known by its creditors to be substan- 6 tially engaged in selling the goods of others; 7 (B) with respect to each delivery, the aggregate value of the goods 8 is one thousand dollars ($1,000) or more at the time of delivery; 9 (C) the goods are not consumer goods immediately before delivery; 10 and 11 (D) the transaction does not create a security interest that secures 12 an obligation. 13 (21) "Consignor" means a person that delivers goods to a consignee in a 14 consignment. 15 (22) "Consumer debtor" means a debtor in a consumer transaction. 16 (23) "Consumer goods" means goods that are used or bought for use primar- 17 ily for personal, family or household purposes. 18 (24) "Consumer goods transaction" means a consumer transaction in which: 19 (A) an individual incurs an obligation primarily for personal, fam- 20 ily or household purposes; and 21 (B) a security interest in consumer goods secures the obligation. 22 (25) "Consumer obligor" means an obligor who is an individual and who 23 incurred the obligation as part of a transaction entered into primarily 24 for personal, family or household purposes. 25 (26) "Consumer transaction" means a transaction in which: (i) an individ- 26 ual incurs an obligation primarily for personal, family or household pur- 27 poses; (ii) a security interest secures the obligation; and (iii) the col- 28 lateral is held or acquired primarily for personal, family or household 29 purposes. The term includes consumer goods transactions. 30 (27) "Continuation statement" means an amendment of a financing statement 31 which: 32 (A) identifies, by its file number, the initial financing statement 33 to which it relates; and 34 (B) indicates that it is a continuation statement for, or that it is 35 filed to continue the effectiveness of, the identified financing 36 statement. 37 (28) "Debtor" means: 38 (A) a person having an interest, other than a security interest or 39 other lien, in the collateral, whether or not the person is an obli- 40 gor; 41 (B) a seller of accounts, chattel paper, payment intangibles or 42 promissory notes; or 43 (C) a consignee. 44 (29) "Deposit account" means a demand, time, savings, passbook, or similar 45 account maintained with a bank. The term does not include investment 46 property or accounts evidenced by an instrument. 47 (30) "Document" means a document of title or a receipt of the type 48 described in section 28-7-201(2). 49 (31) "Electronic chattel paper" means chattel paper evidenced by a record 50 or records consisting of information stored in an electronic medium. 51 (32) "Encumbrance" means a right, other than an ownership interest, in 52 real property. The term includes mortgages and other liens on real prop- 53 erty. 54 (33) "Equipment" means goods other than inventory, farm products or con- 55 sumer goods. 5 1 (34) "Farm products" means goods, other than standing timber, with respect 2 to which the debtor is engaged in a farming operation and which are: 3 (A) crops grown, growing, or to be grown, including: 4 (i) crops produced on trees, vines and bushes; and 5 (ii) aquatic goods produced in aquacultural operations; 6 (B) livestock, born or unborn, including aquatic goods produced in 7 aquacultural operations; 8 (C) supplies used or produced in a farming operation; or 9 (D) products of crops or livestock in their unmanufactured states. 10 (35) "Farming operation" means raising, cultivating, propagating, fatten- 11 ing, grazing, or any other farming, livestock, or aquacultural operation. 12 (36) "File number" means the number assigned to an initial financing 13 statement pursuant to section 28-9-519(a). 14 (37) "Filing office" means an office designated in section 28-9-501 as the 15 place to file a financing statement. 16 (38) "Filing office rule" means a rule adopted pursuant to section 17 28-9-526. 18 (39) "Financing statement" means a record or records composed of an ini- 19 tial financing statement and any filed record relating to the initial 20 financing statement. 21 (40) "Fixture filing" means the filing of a financing statement covering 22 goods that are or are to become fixtures and satisfying section 23 28-9-502(a) and (b). The term includes the filing of a financing statement 24 covering goods of a transmitting utility which are or are to become fix- 25 tures. 26 (41) "Fixtures" means goods that have become so related to particular real 27 property that an interest in them arises under real property law. 28 (42) "General intangible" means any personal property, including things in 29 action, other than accounts, chattel paper, commercial tort claims, 30 deposit accounts, documents, goods, instruments, investment property, let- 31 ter of credit rights, letters of credit, money, and oil, gas, or other 32 minerals before extraction. The term includes payment intangibles and 33 software. 34 (43) "Good faith" means honesty in fact and the observance of reasonable 35 commercial standards of fair dealing. 36 (44) "Goods" means all things that are movable when a security interest 37 attaches. The term includes: (i) fixtures; (ii) standing timber that is to 38 be cut and removed under a conveyance or contract for sale; (iii) the 39 unborn young of animals; (iv) crops grown, growing, or to be grown, even 40 if the crops are produced on trees, vines or bushes; and (v) manufactured 41 homes. The term also includes a computer program embedded in goods and any 42 supporting information provided in connection with a transaction relating 43 to the program if: (i) the program is associated with the goods in such a 44 manner that it customarily is considered part of the goods; or (ii) by 45 becoming the owner of the goods, a person acquires a right to use the pro- 46 gram in connection with the goods. The term does not include a computer 47 program embedded in goods that consist solely of the medium in which the 48 program is embedded. The term also does not include accounts, chattel 49 paper, commercial tort claims, deposit accounts, documents, general intan- 50 gibles, instruments, investment property, letter of credit rights, letters 51 of credit, money, or oil, gas, or other minerals before extraction. 52 (45) "Governmental unit" means a subdivision, agency, department, county, 53 parish, municipality, or other unit of the government of the United 54 States, a state, or a foreign country. The term includes an organization 55 having a separate corporate existence if the organization is eligible to 6 1 issue debt on which interest is exempt from income taxation under the laws 2 of the United States. 3 (46) "Health care insurance receivable" means an interest in or claim 4 under a policy of insurance which is a right to payment of a monetary 5 obligation for health care goods or services provided or to be provided. 6 (47) "Instrument" means a negotiable instrument or any other writing that 7 evidences a right to the payment of a monetary obligation, is not itself a 8 security agreement or lease, and is of a type that in the ordinary course 9 of business is transferred by delivery with any necessary indorsement or 10 assignment. The term does not include: (i) investment property; (ii) let- 11 ters of credit; or (iii) writings that evidence a right to payment arising 12 out of the use of a credit or charge card or information contained on or 13 for use with the card. 14 (48) "Inventory" means goods, other than farm products, which: 15 (A) are leased by a person as lessor; 16 (B) are held by a person for sale or lease or to be furnished under 17 a contract of service; 18 (C) are furnished by a person under a contract of service; or 19 (D) consist of raw materials, work in process, or materials used or 20 consumed in a business. 21 (49) "Investment property" means a security, whether certificated or 22 uncertificated, security entitlement, securities account, commodity con- 23 tract or commodity account. 24 (50) "Jurisdiction of organization," with respect to a registered organi- 25 zation, means the jurisdiction under whose law the organization is orga- 26 nized. 27 (51) "Letter of credit right" means a right to payment or performance 28 under a letter of credit, whether or not the beneficiary has demanded or 29 is at the time entitled to demand payment or performance. The term does 30 not include the right of a beneficiary to demand payment or performance 31 under a letter of credit. 32 (52) "Lien creditor" means: 33 (A) a creditor that has acquired a lien on the property involved by 34 attachment, levy, or the like; 35 (B) an assignee for benefit of creditors from the time of assign- 36 ment; 37 (C) a trustee in bankruptcy from the date of the filing of the peti- 38 tion; or 39 (D) a receiver in equity from the time of appointment. 40 (53) "Manufactured home" means a structure, transportable in one (1) or 41 more sections, which, in the traveling mode, is eight (8) body feet or 42 more in width or forty (40) body feet or more in length, or, when erected 43 on site, is three hundred twenty (320) or more square feet, and which is 44 built on a permanent chassis and designed to be used as a dwelling with or 45 without a permanent foundation when connected to the required utilities, 46 and includes the plumbing, heating, air conditioning, and electrical sys- 47 tems contained therein. The term includes any structure that meets all of 48 the requirements of this paragraph except the size requirements and with 49 respect to which the manufacturer voluntarily files a certification 50 required by the United States secretary of housing and urban development 51 and complies with the standards established under title 42 of the United 52 States Code. 53 (54) "Manufactured home transaction" means a secured transaction: 54 (A) that creates a purchase-money security interest in a manufac- 55 tured home, other than a manufactured home held as inventory; or 7 1 (B) in which a manufactured home, other than a manufactured home 2 held as inventory, is the primary collateral. 3 (55) "Mortgage" means a consensual interest in real property, including 4 fixtures, which secures payment or performance of an obligation. 5 (56) "New debtor" means a person that becomes bound as debtor under sec- 6 tion 28-9-203(d) by a security agreement previously entered into by 7 another person. 8 (57) "New value" means: (i) money; (ii) money's worth in property, ser- 9 vices or new credit; or (iii) release by a transferee of an interest in 10 property previously transferred to the transferee. The term does not 11 include an obligation substituted for another obligation. 12 (58) "Noncash proceeds" means proceeds other than cash proceeds. 13 (59) "Obligor" means a person that, with respect to an obligation secured 14 by a security interest in or an agricultural lien on the collateral: (i) 15 owes payment or other performance of the obligation; (ii) has provided 16 property other than the collateral to secure payment or other performance 17 of the obligation; or (iii) is otherwise accountable in whole or in part 18 for payment or other performance of the obligation. The term does not 19 include issuers or nominated persons under a letter of credit. 20 (60) "Original debtor," except as used in section 28-9-310(c), means a 21 person that, as debtor, entered into a security agreement to which a new 22 debtor has become bound under section 28-9-203(d). 23 (61) "Payment intangible" means a general intangible under which the 24 account debtor's principal obligation is a monetary obligation. 25 (62) "Person related to," with respect to an individual, means: 26 (A) the spouse of the individual; 27 (B) a brother, brother-in-law, sister, or sister-in-law of the indi- 28 vidual; 29 (C) an ancestor or lineal descendant of the individual or the 30 individual's spouse; or 31 (D) any other relative, by blood or marriage, of the individual or 32 the individual's spouse who shares the same home with the individual. 33 (63) "Person related to," with respect to an organization, means: 34 (A) a person directly or indirectly controlling, controlled by, or 35 under common control with the organization; 36 (B) an officer or director of, or a person performing similar func- 37 tions with respect to, the organization; 38 (C) an officer or director of, or a person performing similar func- 39 tions with respect to, a person described in subparagraph (A) of this 40 paragraph; 41 (D) the spouse of an individual described in subparagraph (A), (B) 42 or (C) of this paragraph; or 43 (E) an individual who is related by blood or marriage to an individ- 44 ual described in subparagraph (A), (B), (C) or (D) of this paragraph 45 and shares the same home with the individual. 46 (64) "Proceeds" means the following property: 47 (A) whatever is acquired upon the sale, lease, license, exchange or 48 other disposition of collateral; 49 (B) whatever is collected on, or distributed on account of, collat- 50 eral; 51 (C) rights arising out of collateral; 52 (D) to the extent of the value of collateral, claims arising out of 53 the loss, nonconformity, or interference with the use of, defects or 54 infringement of rights in, or damage to, the collateral; or 55 (E) to the extent of the value of collateral and to the extent pay- 8 1 able to the debtor or the secured party, insurance payable by reason 2 of the loss or nonconformity of, defects or infringement of rights 3 in, or damage to, the collateral. 4 (65) "Promissory note" means an instrument that evidences a promise to pay 5 a monetary obligation, does not evidence an order to pay, and does not 6 contain an acknowledgment by a bank that the bank has received for deposit 7 a sum of money or funds. 8 (66) "Proposal" means a record authenticated by a secured party which 9 includes the terms on which the secured party is willing to accept collat- 10 eral in full or partial satisfaction of the obligation it secures pursuant 11 to sections 28-9-620, 28-9-621 and 28-9-622. 12 (67) "Public-finance transaction" means a secured transaction in connec- 13 tion with which: 14 (A) debt securities are issued; 15 (B) all or a portion of the securities issued have an initial stated 16 maturity of at least twenty (20) years; and 17 (C) the debtor, obligor, secured party, account debtor or other per- 18 son obligated on collateral, assignor or assignee of a secured obli- 19 gation, or assignor or assignee of a security interest is a state or 20 a governmental unit of a state. 21 (68) "Pursuant to commitment," with respect to an advance made or other 22 value given by a secured party, means pursuant to the secured party's 23 obligation, whether or not a subsequent event of default or other event 24 not within the secured party's control has relieved or may relieve the 25 secured party from its obligation. 26 (69) "Record," except as used in "for record," "of record," "record or 27 legal title," and "record owner," means information that is inscribed on a 28 tangible medium or which is stored in an electronic or other medium and is 29 retrievable in perceivable form. 30 (70) "Registered organization" means an organization organized solely 31 under the law of a single state or the United States and as to which the 32 state or the United States must maintain a public record showing the orga- 33 nization to have been organized. 34 (71) "Secondary obligor" means an obligor to the extent that: 35 (A) the obligor's obligation is secondary; or 36 (B) the obligor has a right of recourse with respect to an obliga- 37 tion secured by collateral against the debtor, another obligor, or 38 property of either. 39 (72) "Secured party" means: 40 (A) a person in whose favor a security interest is created or pro- 41 vided for under a security agreement, whether or not any obligation 42 to be secured is outstanding; 43 (B) a person that holds an agricultural lien; 44 (C) a consignor; 45 (D) a person to which accounts, chattel paper, payment intangibles 46 or promissory notes have been sold; 47 (E) a trustee, indenture trustee, agent, collateral agent, or other 48 representative in whose favor a security interest or agricultural 49 lien is created or provided for; or 50 (F) a person that holds a security interest arising under section 51 28-2-401, 28-2-505, 28-2-711(3), 28-4-210, 28-5-120 or 28-12-508(5). 52 (73) "Security agreement" means an agreement that creates or provides for 53 a security interest. 54 (74) "Send," in connection with a record or notification, means: 55 (A) to deposit in the mail, deliver for transmission, or transmit by 9 1 any other usual means of communication, with postage or cost of 2 transmission provided for, addressed to any address reasonable under 3 the circumstances; or 4 (B) to cause the record or notification to be received within the 5 time that it would have been received if properly sent under subpara- 6 graph (A) of this paragraph. 7 (75) "Software" means a computer program and any supporting information 8 provided in connection with a transaction relating to the program. The 9 term does not include a computer program that is included in the defini- 10 tion of goods. 11 (76) "State" means a state of the United States, the District of Columbia, 12 Puerto Rico, the United States Virgin Islands, or any territory or insular 13 possession subject to the jurisdiction of the United States. 14 (77) "Supporting obligation" means a letter of credit right or secondary 15 obligation that supports the payment or performance of an account, chattel 16 paper, a document, a general intangible, an instrument or investment prop- 17 erty. 18 (78) "Tangible chattel paper" means chattel paper evidenced by a record or 19 records consisting of information that is inscribed on a tangible medium. 20 (79) "Termination statement" means an amendment of a financing statement 21 which: 22 (A) identifies, by its file number, the initial financing statement 23 to which it relates; and 24 (B) indicates either that it is a termination statement or that the 25 identified financing statement is no longer effective. 26 (80) "Transmitting utility" means a person primarily engaged in the busi- 27 ness of: 28 (A) operating a railroad, subway, street railway, or trolley bus; 29 (B) transmitting communications electrically, electromagnetically or 30 by light; 31 (C) transmitting goods by pipeline or sewer; or 32 (D) transmitting or producing and transmitting electricity, steam, 33 gas or water. 34 (b) The following definitions in other chapters apply to this chapter: 35 "Applicant" section 28-5-102. 36 "Beneficiary" section 28-5-102. 37 "Broker" section 28-8-102. 38 "Certificated security" section 28-8-102. 39 "Check" section 28-3-104. 40 "Clearing corporation" section 28-8-102. 41 "Contract for sale" section 28-2-106. 42 "Customer" section 28-4-104. 43 "Entitlement holder" section 28-8-102. 44 "Financial asset" section 28-8-102. 45 "Holder in due course" section 28-3-302. 46 "Issuer" (with respect to a letter of credit 47 or letter of credit right) section 28-5-102. 48 "Issuer" (with respect to a security) section 28-8-201. 49 "Lease" section 28-12-103. 50 "Lease agreement" section 28-12-103. 51 "Lease contract" section 28-12-103. 52 "Leasehold interest" section 28-12-103. 53 "Lessee" section 28-12-103. 54 "Lessee in ordinary course of business" section 28-12-103. 55 "Lessor" section 28-12-103. 10 1 "Lessor's residual interest" section 28-12-103. 2 "Letter of credit" section 28-5-102. 3 "Merchant" section 28-2-104. 4 "Negotiable instrument" section 28-3-104. 5 "Nominated person" section 28-5-102. 6 "Note" section 28-3-104. 7 "Proceeds of a letter of credit" section 28-5-114. 8 "Prove" section 28-3-103. 9 "Sale" section 28-2-106. 10 "Securities account" section 28-8-501. 11 "Securities intermediary" section 28-8-102. 12 "Security" section 28-8-102. 13 "Security certificate" section 28-8-102. 14 "Security entitlement" section 28-8-102. 15 "Uncertificated security" section 28-8-102. 16 (c) Chapter 1, title 28, contains general definitions and principles of 17 construction and interpretation applicable throughout this chapter. 18 SECTION 2. That Section 28-9-304, Idaho Code, be, and the same is hereby 19 amended to read as follows: 20 28-9-304. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN 21 DEPOSIT ACCOUNTS. (a) The local law of a bank's jurisdiction governs perfec- 22 tion, the effect of perfection or nonperfection, and the priority of a secu- 23 rity interest in a deposit account maintained with that bank. 24 (b) The following rules determine a bank's jurisdiction for purposes of 25 this part: 26 (1) If an agreement between the bank andthe debtorits customer govern- 27 ing the deposit account expressly provides that a particular jurisdiction 28 is the bank's jurisdiction for purposes of this part, this chapter, or the 29 uniform commercial code, that jurisdiction is the bank's jurisdiction. 30 (2) If paragraph (1) of this subsection does not apply and an agreement 31 between the bank and its customer governing the deposit account expressly 32 provides that the agreement is governed by the law of a particular juris- 33 diction, that jurisdiction is the bank's jurisdiction. 34 (3) If neither paragraph (1) nor (2) of this subsection applies and an 35 agreement between the bank and its customer governing the deposit account 36 expressly provides that the deposit account is maintained at an office in 37 a particular jurisdiction, that jurisdiction is the bank's jurisdiction. 38 (4) If none of the preceding paragraphs apply, the bank's jurisdiction is 39 the jurisdiction in which the office identified in an account statement as 40 the office serving the customer's account is located. 41 (5) If none of the preceding paragraphs apply, the bank's jurisdiction is 42 the jurisdiction in which the chief executive office of the bank is 43 located. 44 SECTION 3. That Section 28-9-309, Idaho Code, be, and the same is hereby 45 amended to read as follows: 46 28-9-309. SECURITY INTEREST PERFECTED UPON ATTACHMENT. The following 47 security interests are perfected when they attach: 48 (1) A purchase-money security interest in consumer goods, except as 49 otherwise provided in section 28-9-311(b) with respect to consumer goods that 50 are subject to a statute or treaty described in section 28-9-311(a); 51 (2) An assignment of accounts or payment intangibles which does not by 11 1 itself or in conjunction with other assignments to the same assignee transfer 2 a significant part of the assignor's outstanding accounts or payment intangi- 3 bles; 4 (3) A sale of a payment intangible; 5 (4) A sale of a promissory note; 6 (5) A security interest created by the assignment of a health care insur- 7 ance receivable to the provider of the health care goods or services; 8 (6) A security interest arising under section 28-2-401, 28-2-505, 9 28-2-711(3) or 28-12-508(5), until the debtor obtains possession of the col- 10 lateral; 11 (7) A security interest of a collecting bank arising under section 12 28-4-210; 13 (8) A security interest of an issuer or nominated person arising under 14 section 28-5-120; 15 (9) A security interest arising in the delivery of a financial asset 16 under section 28-9-206(c); 17 (10) A security interest in investment property created by a broker or 18 securities intermediary; 19 (11) A security interest in a commodity contract or a commodity account 20 created by a commodity intermediary; 21 (12) An assignment for the benefit of all creditors of the transferor and 22 subsequent transfers by the assignee thereunder;and23 (13) A security interest created by an assignment of a beneficial interest 24 in a decedent's estate; and 25 (14) A sale by an individual of an account that is a right to payment of 26 winnings in a lottery or other game of chance. 27 SECTION 4. That Section 28-9-515, Idaho Code, be, and the same is hereby 28 amended to read as follows: 29 28-9-515. DURATION AND EFFECTIVENESS OF FINANCING STATEMENT -- EFFECT OF 30 LAPSED FINANCING STATEMENT. (a) Except as otherwise provided in section 31 28-9-705(g) and subsections (b), (e), (f) and (g) of this section, a filed 32 financing statement is effective for a period of five (5) years after the date 33 of filing. 34 (b) Except as otherwise provided in subsections (e), (f) and (g) of this 35 section, an initial financing statement filed in connection with a public 36 finance transaction or manufactured home transaction is effective for a period 37 of thirty (30) years after the date of filing if it indicates that it is filed 38 in connection with a public finance transaction or manufactured home transac- 39 tion. 40 (c) The effectiveness of a filed financing statement lapses on the expi- 41 ration of the period of its effectiveness unless before the lapse a continua- 42 tion statement is filed pursuant to subsection (d) of this section. Upon 43 lapse, a financing statement ceases to be effective and any security interest 44 or agricultural lien that was perfected by the financing statement becomes 45 unperfected, unless the security interest is perfected otherwise. If the secu- 46 rity interest or agricultural lien becomes unperfected upon lapse, it is 47 deemed never to have been perfected as against a purchaser of the collateral 48 for value. 49 (d) Except as otherwise provided in section 28-9-705(g), aAcontinuation 50 statement may be filed only within six (6) months before the expiration of the 51 five (5) year period specified in subsection (a) of this section or the 52 thirty (30) year period specified in subsection (b) of this section, whichever 53 is applicable. 12 1 (e) Except as otherwise provided in sections 28-9-510 and 28-9-705(g), 2 upon timely filing of a continuation statement, the effectiveness of the ini- 3 tial financing statement continues for a period of five (5) years commencing 4 on the day on which the financing statement would have become ineffective in 5 the absence of the filing. Upon the expiration of the five (5) year period, 6 the financing statement lapses in the same manner as provided in subsection 7 (c) of this section, unless, before the lapse, another continuation statement 8 is filed pursuant to subsection (d) of this section. Succeeding continuation 9 statements may be filed in the same manner to continue the effectiveness of 10 the initial financing statement. 11 (f) If a debtor is a transmitting utility and a filed financing statement 12 so indicates, the financing statement is effective until a termination state- 13 ment is filed. 14 (g) A record of a mortgage that is effective as a financing statement 15 filed as a fixture filing under section 28-9-502(c) remains effective as a 16 financing statement filed as a fixture filing until the mortgage is released 17 or satisfied of record or its effectiveness otherwise terminates as to the 18 real property. 19 SECTION 5. That Section 28-9-626, Idaho Code, be, and the same is hereby 20 amended to read as follows: 21 28-9-626. ACTION IN WHICH DEFICIENCY OR SURPLUS IS IN ISSUE. In an action 22 arising from a transaction, other than a consumer transaction,in which the 23 amount of a deficiency or surplus is in issue, the following rules apply: 24 (a) A secured party need not prove compliance with the provisions of this 25 part relating to collection, enforcement, disposition or acceptance unless the 26 debtor or a secondary obligor places the secured party's compliance in issue. 27 (b) If the secured party's compliance is placed in issue, the secured 28 party has the burden of establishing that the collection, enforcement, dispo- 29 sition or acceptance was conducted in accordance with this part. 30 (c) Except as otherwise provided in section 28-9-628, if a secured party 31 fails to prove that the collection, enforcement, disposition or acceptance was 32 conducted in accordance with the provisions of this part relating to collec- 33 tion, enforcement, disposition or acceptance, the liability of a debtor or a 34 secondary obligor for a deficiency is limited to an amount by which the sum of 35 the secured obligation, expenses and attorney's fees exceeds the greater of: 36 (1) The proceeds of the collection, enforcement, disposition or accep- 37 tance; or 38 (2) The amount of proceeds that would have been realized had the noncom- 39 plying secured party proceeded in accordance with the provisions of this 40 part relating to collection, enforcement, disposition or acceptance. 41 (d) For purposes of subsection (c)(2) of this section, the amount of pro- 42 ceeds that would have been realized is equal to the sum of the secured obliga- 43 tion, expenses and attorney's fees unless the secured party proves that the 44 amount is less than that sum. 45 (e) If a deficiency or surplus is calculated under section 28-9-615(f), 46 the debtor or obligor has the burden of establishing that the amount of pro- 47 ceeds of the disposition is significantly below the range of prices that a 48 complying disposition to a person other than the secured party, a person 49 related to the secured party, or a secondary obligor would have brought. 50 SECTION 6. That Section 28-9-705, Idaho Code, be, and the same is hereby 51 amended to read as follows: 13 1 28-9-705. EFFECTIVENESS OF ACTION TAKEN BEFORE EFFECTIVE DATE. (a) If 2 action, other than the filing of a financing statement, is taken before this 3 act takes effect and the action would have resulted in priority of a security 4 interest over the rights of a person that becomes a lien creditor had the 5 security interest become enforceable before this act takes effect, the action 6 is effective to perfect a security interest that attaches under this act 7 within one (1) year after this act takes effect. An attached security interest 8 becomes unperfected one (1) year after this act takes effect unless the secu- 9 rity interest becomes a perfected security interest under this act before the 10 expiration of that period. 11 (b) The filing of a financing statement before this act takes effect is 12 effective to perfect a security interest to the extent the filing would sat- 13 isfy the applicable requirements for perfection under this act. 14 (c) This act does not render ineffective an effective financing statement 15 that, before this act takes effect, is filed and satisfies the applicable 16 requirements for perfection under the law of the jurisdiction governing per- 17 fection as provided in former section 28-9-103. However, except as otherwise 18 provided in subsections (d) and (e) of this section and section 28-9-706, the 19 financing statement ceases to be effective at the earlier of: 20 (1) The time the financing statement would have ceased to be effective 21 under the law of the jurisdiction in which it is filed; or 22 (2) June 30, 2006. 23 (d) The filing of a continuation statement after this act takes effect 24 does not continue the effectiveness of the financing statement filed before 25 this act takes effect. However, upon the timely filing of a continuation 26 statement after this act takes effect and in accordance with the law of the 27 jurisdiction governing perfection as provided in part 3, the effectiveness of 28 a financing statement filed in the same office in that jurisdiction before 29 this act takes effect continues for the period provided by the law of that 30 jurisdiction. 31 (e) Subsection (c)(2) of this section applies to a financing statement 32 that, before this act takes effect, is filed against a transmitting utility 33 and satisfies the applicable requirements for perfection under the law of the 34 jurisdiction governing perfection as provided in former section 28-9-103 only 35 to the extent that part 3 provides that the law of a jurisdiction other than 36 jurisdiction in which the financing statement is filed governs perfection of a 37 security interest in collateral covered by the financing statement. 38 (f) A financing statement that includes a financing statement filed 39 before this act takes effect and a continuation statement filed after this act 40 takes effect is effective only to the extent that it satisfies the require- 41 ments of part 5 for an initial financing statement. 42 (g) A financing statement filed as a fixture, timber or mineral filing 43 before July 1, 2001 (except for a record of mortgage which is effective as a 44 financing statement filed as a fixture filing) shall cease to be effective 45 after June 30, 2006. The effectiveness of such a financing statement may be 46 continued by filing a continuation statement between January 1, 2006, and June 47 30, 2006, inclusive. The new five (5) year effective period for such a financ- 48 ing statement, as provided in section 28-9-515, shall commence on the date of 49 filing such continuation statement. 50 SECTION 7. That Section 39-1450, Idaho Code, be, and the same is hereby 51 amended to read as follows: 52 39-1450. SECURITY FOR BONDS AND NOTES. The principal of and interest on 53 any bonds or notes issued by the authority may be secured by a pledge of, or 14 1 security interest in, the revenues, rentals and receipts out of which the same 2 may be made payable or from other moneys available therefor and not otherwise 3 pledged or used as security and may be secured by a trust indenture or mort- 4 gage or deed of trust (including assignment of leases or other contract rights 5 of the authority thereunder) covering all or any part of the facilities from 6 which the revenues, rentals or receipts so pledged or used as security may be 7 derived, including any enlargements of and additions to any such facilities 8 thereafter made. The resolution under which the bonds are authorized to be 9 issued and any such trust indenture, mortgage or deed of trust may contain any 10 agreements and provisions which shall be a part of the contract with the hold- 11 ers of the bonds or notes to be authorized as to: 12 (a) Pledging or providing a security interest in all or any part of the 13 revenues of a facility or any revenue-producing contract or contracts made by 14 the authority with any individual, partnership, corporation or association or 15 other body, public or private, to secure the payment of the bonds or notes or 16 of any particular issue of bonds, subject to such agreements with noteholders 17 or bondholders as may then exist; 18 (b) Respecting the maintenance of the properties covered thereby; 19 (c) The fixing and collection of rents, fees, and other charges to be 20 charged, and the amounts to be raised in each year thereby, and the use and 21 disposition of the revenues; 22 (d) The setting aside, creation and maintenance of special and reserve 23 funds and sinking funds and the use and disposition of the revenues; 24 (e) Limitations on the right of the authority or its agent to restrict 25 and regulate the use of facilities; 26 (f) Limitations on the purpose to which the proceeds of sale of any issue 27 of bonds or notes then or thereafter to be issued may be applied and pledging 28 or providing a security interest in such proceeds to secure the payment of the 29 bonds or notes or any issue of the bonds or notes; 30 (g) Limitations on the issuance of additional bonds, the terms upon which 31 additional bonds may be issued and secured and the refunding of outstanding 32 bonds; 33 (h) The procedure, if any, by which the terms of any contract with bond- 34 holders or noteholders may be amended or abrogated, the amount of bonds or 35 notes the holders of which must consent thereto, and the manner in which such 36 consent may be given; 37 (i) Limitations on the amount of moneys derived from a facility to be 38 expended for operating, administrative or other expenses of the authority; 39 (j) Defining the acts or omissions to act which shall constitute a 40 default in the duties of the authority to holders of its obligations and pro- 41 viding the rights and remedies of such holders in the event of a default; 42 (k) The mortgaging of a facility and the site thereof for the purpose of 43 securing the bondholders or noteholders; and 44 (l) Such other additional covenants, agreements, and provisions as are 45 judged advisable or necessary by the authority for the security of the holders 46 of such bonds or notes. 47 Any pledge made by the authority shall be valid and binding from the time 48 when the pledge is made; the revenues, moneys, or property so pledged and 49 thereafter received by the authority shall immediately be subject to the lien 50 of such pledge without any physical delivery thereof or further act, and the 51 lien of such pledge shall be valid and binding as against all parties having 52 claims of any kind in tort, contract or otherwise against the authority, irre- 53 spective of whether such parties have notice thereof. Neither the resolution 54 nor any other instrument by which a pledge is created need be recorded. Each 55 pledge, agreement, lease, indenture, mortgage and deed of trust made for the 15 1 benefit or security of any of the bonds of the authority shall continue effec- 2 tive until the principal of and interest on the bonds for the benefit of which 3 the same were made shall have been fully paid or provision for such payment 4 duly made. In the event of default in such payment or in any agreements of the 5 authority made as a part of the contract under which the bonds were issued, 6 whether contained in the resolutions authorizing the bonds or in any trust 7 indenture, mortgage or deed of trust executed as security therefor, said pay- 8 ment or agreement may be enforced by suit, mandamus, the appointment of a 9 receiver in equity or by foreclosure of any mortgage and deed of trust, or any 10 one (1) or more of said remedies. 11 In addition to the foregoing, bonds of the authority may be secured by a 12 pooling of leases whereby the authority may assign its rights, as lessor, and 13 pledge rents under two (2) or more leases of the facilities with two (2) or 14 more participating health institutions, as lessees respectively, upon such 15 terms as may be provided for in the resolutions of the authority or as may be 16 provided for in a trust indenture authorized by the authority. 17 (m) Notwithstanding any other provision of chapter 9, title 28, Idaho 18 Code, to the contrary, this section expressly governs the creation, perfec- 19 tion, priority and enforcement of a security interest created by the Idaho 20 health facilities authority.
STATEMENT OF PURPOSE RS 11764 This legislation amends and clarifies certain sections of Article 9 to the Uniform Commercial Code which was totally revised and adopted by the Legislature in 2001 and makes a technical correction to a related provision of Idaho Code. FISCAL IMPACT None Contact Name: Dale G. Higer, Commission on Uniform State Laws Phone: 387 4288 STATEMENT OF PURPOSE/FISCAL NOTE H 540