Legislature(2009 - 2010)BELTZ 211
04/17/2009 01:30 PM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HB101 | |
| HB129 | |
| HB201 | |
| HB102 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 101 | TELECONFERENCED | |
| + | HB 102 | TELECONFERENCED | |
| + | HB 129 | TELECONFERENCED | |
| + | HB 201 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 102-UNIFORM COMMERCIAL CODE
2:28:18 PM
CHAIR FRENCH announced the consideration of HB 102. [Before the
committee was CSHB 102(JUD).]
REPRESENTATIVE GRUENBERG, sponsor of HB 102, introduced Ms.
Thurbon and explained she is appearing today as the commissioner
on state laws and she will answer the questions. HB 102 is at
the request of the members of the Alaska Commission on Uniform
State Laws and it updates Articles 1 and 7 of the Uniform
Commercial Code (UCC). Article 1 provides definitions and
general provisions for the UCC. Article 7 pertains to warehouse
receipts, bills of lading, and other documents of title. The
bill makes a number of technical changes to these Articles to
bring Alaska into alignment with over 30 states. He explained
that the uniform laws are drafted and revised by the
commissioners who are several hundred people from around the
country and include law professors, top attorneys, judges, and
members of the attorneys general staff. These commercial codes
are updated every few years to make sure that they keep up with
technology.
2:31:25 PM
REPRESENTATIVE GRUENBERG said there is a provision in Article 1
that requires in all UCC dealings there be a duty of good faith
and fair dealing. There are a number of Alaska Supreme Court
cases that require that in the execution and performance of
contracts.
CHAIR FRENCH added that it applies to any commercial contract.
REPRESENTATIVE GRUENBERG said yes; that is codified in Section
1.
Title 34.35 Liens, has an old statute that deals with
warehousing and talks about storing oats, grains, and cattle.
That statute is being updated and cross referenced to UCC
Article 7.
2:33:02 PM
SENATOR WIELECHOWSKI thanked Representative Gruenberg his work
on the UCC. It's a lot of work and requires attention to detail.
"I know that's something you certainly have a reputation for and
I appreciate you doing this," he said.
REPRESENTATIVE GRUENBERG introduced his staff and said he isn't
aware of any opposition to the bill. It's been vetted through
the bar association business law section, specifically the folks
who represent warehousemen.
CHAIR FRENCH said he's pleased to see the good faith provision
in Section 1; it's good to make it explicit. He noted that the
phrase "covenant of good faith and fair dealing" has been recast
to say "have a duty to act fairly and in good faith" and asked
if those are equivalent.
REPRESENTATIVE GRUENBERG responded, "Absolutely." He added that
he and legislative attorney Theresa Bannister crafted that
phrase.
2:35:21 PM
TERRY THURBON, State Delegate, Uniform Law Commission, said
updating the UCC has been a legislative priority this year to
get up to speed with what other states have done. For example,
the warehouse provisions are amendments that have been available
since 2003. The general provisions in Article 1 have been
available since 2001. Respectively, Article 1 provisions have
been adopted in 35 states and three states other than Alaska
have introductions this year. 32 states have already adopted the
warehousing provisions and three states other than Alaska have
amendments to adopt this year. "We're getting toward truly
having uniformity with these updates," she said. All 50 states
have some version of various titles of the UCC.
MS. THURBON offered that the bill is quite long, but it's quite
simple in the sense that the substantive changes are relatively
few. Much of the 60 pages update terminology and make conforming
changes to fit with the few substantive changes.
The UCC provisions start in Section 8 and she will only speak to
those UCC provisions. Apart from the modernization of the
warehousing provisions in Article 7 that Representative
Gruenberg described, there are a handful of changes in Article
1, which are the UCC general provisions.
2:37:57 PM
MS. THURBON said the committee that was charged with updating
the general provisions found a handful of problems that weren't
discovered until people tried to live with the general
provisions. In part that's because the other Articles of the UCC
that deal with secure transactions, leases, and sales have
evolved over time while the general provisions have not been
updated. When the committee looked at updating the general
provisions it found five or six places that needed substantive
changes. One was as simple as clarifying the scope of the
applicability of these general provisions to make it clear that
they only apply to UCC covered transactions. Previously there
was a frauds provision in statute, which deals with when you
have to have an agreement in writing in order for it to be
enforceable. Previously the provision seemed to reach beyond the
UCC covered transactions to be a general statute of frauds.
That's been cleaned up. That's the kind of thing that this
revision does. It also made a better selection on the choice of
laws. Previously, the only choice of laws that folks could make
for which law applies to govern their transactions was that the
law had to have some connection to the parties. With a couple of
protective exceptions to protect consumers and some other public
policy oriented protections, these updates allow sophisticated
folks who want to enter into a commercial transaction to
designate any law as the governing law.
As Representative Gruenberg mentioned, the good faith provision
in the UCC was updated to define good faith as honesty in fact
and the observance of reasonable commercial standards of fair
dealings. It tracks a bit better with what was done with the
good faith concept and some of the other provisions of the UCC.
2:40:38 PM
The changes to the warehousing provisions allow for the use of
electronic documents of title and evidence of ownership in the
transfer of title. This is widely supported by the warehousing
and transportation sectors that are already using electronic
documents of title. The laws in some states simply haven't yet
caught up with that.
CHAIR FRENCH noted that this is somewhat similar to the
revisor's bill that the committee recently heard. The bill is
enormous and full of technical language and at some level you
just have to trust the experts who have vetted it. That being
said, he related that he likes to conduct an acid test. He
explained that he turns to a random page in the bill and asks a
pointed question or two. If that area stands up to scrutiny, he
gets the feeling that a few segments of the bill have been
closely examined. I trust you, Representative Gruenberg, and the
experts who brought the bill but we do have our duties of due
diligence, he said.
2:42:04 PM
CHAIR FRENCH directed attention to page 28, line 19, Section 33,
pertaining to liability for nonreceipt or misdescription. He
noted that "or" replaces "of" at the beginning of line 19 and
asked if she agrees that that's the right substitution.
MS. THURBON said she sees his concern.
REPRESENTATIVE GRUENBERG remarked, "That's weird."
CHAIR FRENCH suggested that it's a series of marks or labels.
REPRESENTATIVE GRUENBERG offered that Ms. Bannister may have a
technical answer.
MS. THURBON said she can make sense of the sentence with the
substitution. Without looking at the drafting comments that the
conference put together she can imagine that they were perhaps
trying to characterize kind quantity or condition as something
that would be a description in and of itself on the packaging,
or on the document of title. It may be an intentional correction
whereas "of" may have been viewed as having been a typographical
error that was initially introduced.
2:45:19 PM
CHAIR FRENCH reviewed the descriptions and stated agreement.
CHAIR FRENCH directed attention to page 51, line 8, and said he
objects to striking the word "the" before the phrase "ordinary
course of business".
REPRESENTATIVE GRUENBERG said he agrees; the same change has
been made several times on the page. He related that when he
brought that up, he was told that the Uniform Act was drafted to
eliminate the word "the".
SENATOR WIELECHOWSKI directed attention to page 2, and noted
that the term "livestock" has been changed to "animals" and it's
quite a policy change to subject pets to lien. He asked if that
was a conscious change.
REPRESENTATIVE GRUENBERG responded it was his thought is that it
should apply to any animals. In urban areas in particular,
people have pets rather than livestock.
2:47:47 PM
CHAIR FRENCH asked if a lien on a dog really is on the dog or
the owner's checking account.
REPRESENTATIVE GRUENBERG responded that it would be a possessory
lien.
CHAIR FRENCH observed that in that case, the most the kennel
would get is possession of the dog.
REPRESENTATIVE GRUENBERG responded that the kennel could sell
the animal. Page 3, line 11, is existing statute and it states
that the owner of the property shall pay the value of the
property plus 50 percent. Later in the UCC it talks about
getting damages, which would be incidental and consequential.
That is cross referenced in Section 7; Article 7 of the UCC
makes it clear that these are cumulative. You're not limited to
one or the other as in the past, he said. "I didn't want there
to be any continuing question as to whether they both stood on
equal footing," he added.
CHAIR FRENCH closed public testimony and said he's satisfied
with the bill.
2:49:36 PM
SENATOR WIELECHOWSKI expressed concern with the change in
Section 4 regarding animals. It bothers me that someone could
take their dog to a kennel and then for whatever reason not
being able to pay their bill and the kennel would keep the
person's beloved dog, he said.
CHAIR FRENCH observed that the point is that the person could
take their dog home and later have a dispute in court over the
money issue.
SENATOR WIELECHOWSKI agreed. He related that his dogs are in a
kennel right now and he'd be furious if the kennel kept his dogs
if he couldn't pay what could be an exorbitant fee.
SENATOR WIELECHOWSKI moved a conceptual amendment to strike all
reference to "animal" in Section 4 and reinsert the references
to "livestock".
2:52:08 PM
CHAIR FRENCH asked the sponsor if he agrees that only Section 4
is affected.
REPRESENTATIVE GRUENBERG responded it appears to apply to
Section 4, lines 16 and 17, lines 27 and 28, lines 29 and 30. He
suggested that on lines 27 and 28 the reference could be limited
to "livestock" so the statute would no longer reference "horses,
cattle, hogs, sheep or other livestock." He added that he has no
objection to that.
2:53:31 PM
CHAIR FRENCH asked Senator Wielechowski to restate the
conceptual amendment.
SENATOR WIELECHOWSKI stated that the conceptual amendment is to
reference "livestock" as opposed to "animal care" [in Section
4]. On line 16, delete the phrase "animal care" and insert
"livestock; on line 27, delete the word "animals" and reinsert
the phrase "horses, cattle, hogs, sheep, or other livestock"; on
line 29, reinsert the word "upon" delete the word "animals" and
reinsert the word "livestock"; and on line 30, delete the word
"animals" and reinsert the word "livestock."
CHAIR FRENCH asked if there is objection.
REPRESENTATIVE GRUENBERG suggested on lines 28 and 29 to not
revert to the word "upon" and keep the word "on" since that is
more conventional use today. On lines 27 and 28, do not reinsert
the phrase, "horses, cattle, hogs, sheep or other" and use the
word "livestock" instead.
CHAIR FRENCH asked Senator Wielechowski if he agrees with the
suggestion.
SENATOR WIELECHOWSKI said he agrees and would restate the
amendment in the terms suggested by Representative Gruenberg.
CHAIR FRENCH found no objection and announced that Amendment 1
carries. Finding no further amendments or discussion, he
solicited a motion.
2:55:21 PM
SENATOR WIELECHOWSKI moved to report CS for HB 102, as amended,
from committee with individual recommendations and attached
fiscal note(s). There being no objection, SCS CSHB 102(JUD) was
reported from the Senate Judiciary Standing Committee.
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