05/01/2004 04:14 PM Senate STA

                 HB 373-STATE TREASURY WARRANTS                                                                             
                                                                                                                                
CHAIR GARY  STEVENS announced  HB 373  to be  the final  order of                                                               
business. He then called a brief at ease from 5:00 to 5:05 p.m.                                                                 
                                                                                                                                
TAPE 04-31, SIDE A                                                                                                            
5:05 p.m.                                                                                                                     
                                                                                                                              
REPRESENTATIVE  MAX GRUENBERG,  as a  member of  the House  State                                                               
Affairs Committee,  explained that  HB 373 cures  a long-standing                                                               
problem  between  commercial  banks   and  the  State  of  Alaska                                                               
relating  to a  policy the  State  had of  dishonoring their  own                                                               
warrants without  any notification.  The issue was  litigated and                                                               
the Alaska Supreme  Court held that state  treasure warrants were                                                               
negotiable  instruments under  the  Uniform  Commercial Code  and                                                               
were therefore  subject to  the "holder  in due  course" defense.                                                               
Although the State amended its  business practices to comply with                                                               
the ruling, the statutes have never been amended.                                                                               
                                                                                                                                
CHAIR  GARY  STEVENS asked  him  to  define the  term  negotiable                                                               
instrument.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG said  negotiable instrument  means that                                                               
it's  a piece  of paper  that  says, "Pay  somebody some  thing."                                                               
According to the Uniform Commercial  Code, the instrument must be                                                               
honored  unless the  drawer  has gone  through  the specific  and                                                               
formal  process   indicating  that   the  instrument   should  be                                                               
dishonored. This  protects the banking community  and it protects                                                               
commerce, he said.                                                                                                              
                                                                                                                                
There were no questions.                                                                                                        
                                                                                                                                
SENATOR GRETCHEN  GUESS motioned  to report  HB 373  and attached                                                               
fiscal  notes  from  committee with  individual  recommendations.                                                               
There being no objection, it was so ordered.