Print Friendly HOUSE BILL NO. 540 – Uniform Commercial Code, revision
HOUSE BILL NO. 540
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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
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature Second Regular Session - 2002
IN 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-
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 (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
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
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
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
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
52 (19) "Consignee" means a merchant to which goods are delivered in a con-
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:
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;
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
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
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
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-
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-
54 (33) "Equipment" means goods other than inventory, farm products or con-
55 sumer goods.
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
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-
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
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
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-
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-
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
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-
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
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-
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-
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
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-
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
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.
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 and the debtor its 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
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
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-
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-
11 (7) A security interest of a collecting bank arising under section
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; and
23 (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-
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), a A continuation
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.
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:
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
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
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
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
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
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.
Name: Dale G. Higer, Commission on Uniform State Laws
Phone: 387 4288
STATEMENT OF PURPOSE/FISCAL NOTE H 540