Legislature(1993 - 1994)

03/19/1993 01:40 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  SENATOR TAYLOR introduced  SB 86  (FUND TRANSFERS UNDER  THE                 
  REVISIONS)  both  sponsored  by SENATOR  JAY  KERTTULA,  and                 
  announced they would be on teleconference.                                   
  SENATOR KERTTULA referred  the committee  to his aide,  BILL                 
  KELDER, to read  a statement,  and he promised  a packet  of                 
  information for the committee members.                                       
  SENATOR KERTTULA explained he was asked  to be a facilitator                 
  for the Supreme  Court to attach  the new amendments to  the                 
  Uniform Commercial  Code, have  them drafted  by Legislative                 
  Legal Counsel, and brought before  the legislature.  SENATOR                 
  KERTTULA reviewed the packet of  information and invited MR.                 
  KELDER to read his statement.                                                
  MR. KELDER explained SB 86 and  SB 112 were companion pieces                 
  of   legislation  that   would  amend  the   Alaska  Uniform                 
  Commercial Code.                                                             
  Number 072                                                                   
  MR. KELDER read from SENATOR KERTTULA'S statement:                           
  " The UCC is a comprehensive codification of commercial law;                 
  however, until  the promulgation of  Article 4A in  1989, it                 
  did  not   deal  with  funds  transfers  between  commercial                 
  entities.    As  business practice  has  come  to rely  more                 
  heavily   on  the   speed,   efficiency,  reliability,   and                 
  comparatively  low  cost  of  electronic  technology,  it is                 
  apparent that Alaska's commercial laws need to be brought up                 
  to date.  The new Article 4A embodied in SB 86 does this and                 
  has been adopted by 45 other states.                                         
       In   1989,  a  record   three  trillion   dollars  were                 
  transferred on a single day - more money than the 1989 gross                 
  product of the United States - and the 1989 average was  one                 
  trillion dollars a day.                                                      
       Presently, unless the parties to  a transaction use the                 
  same bank, a funds transfer  involves at least four entities                 
  ... numerous problems and questions can arise.                               
       This  bill provides  for  a significant  improvement in                 
  Alaska Law.   It will help keep  Alaska's Uniform Commercial                 
  Code  up  to  date,  thus  tending  to  assure  a  favorable                 
  commercial climate here - one that is in line  with the rest                 
  of the country."                                                             
  MR. KELDER presented a zero  fiscal note from the Department                 
  of  Law, and in  addition, he said  financial regulators are                 
  encouraging  individual  states  to   enact  the  provisions                 
  included  in  Sb 86.   He expressed the concern  that unless                 
  states adopt these  regulations and provisions, the  federal                 
  government will  enact a  national UCC  - and  do their  own                 
  MR. KELDER added the provisions in  SB 86 have been endorsed                 
  by the National Conference of Commissioners on Uniform State                 
  Laws, which helped draft the legislation.                                    
  To begin the discussion of SB 112, MR KELDER read:                           
       "Senate Bill  112 makes amendments to  Alaska's Uniform                 
  Commercial Code ... these changes are designed to  bring the                 
  code up to date with the rest of the country.                                
       The first change adds a new  Article 2A to the existing                 
  law.    While the  existing  law covers  commercial property                 
  leases there is  no language  relating to personal  property                 
  leasing.  Article 2A deals with what is called "true" leases                 
  and "finance" leases.   The  article provides the  statutory                 
  answers  to  a broad  range of  legal issues,  covering such                 
  matters  as  offer  and  acceptance,  warranties,  mistakes,                 
  failure to perform, risk of loss  and remedies.  The current                 
  absence of these rules promotes litigation.                                  
       Articles 3 of SB 112  reorganizes the existing material                 
  in the state code  to make it more clear and  to account for                 
  modern  technologies.    These  revisions  fix many  of  the                 
  problems that have  arisen over the  past 40 years with  the                 
  Uniform  Commercial code with  negotiable instruments.  Some                 
  of  the changes  in Article 3  and Article  1 of SB  112 are                 
  necessary to bring  these articles into compliance  with the                 
  new language in Article 4A as it appears in SB 86.                           
       One important change in Article 3 is  that the revision                 
  recognizes there are  two types of  instruments - notes  and                 
  drafts  -   which  usually   perform  different   functions;                 
  therefore, merit different treatment.                                        
       Benefits from enacting Article 3 of SB 112 include, but                 
  are not  limited to,  the following: certainty  of the  law,                 
  speed and reliability, lower costs,  reduced litigation, and                 
  stricter standards for fiduciaries.                                          
  Number 163                                                                   
       Finally,  SB  112 seeks  to  repeal  Article 6  of  the                 
  present Uniform Commercial  Code ... deals with  bulk sales.                 
  A bulk sale  is one in which a business sells all or a large                 
  part of its inventory to a single buyer outside the ordinary                 
  course of business.   In  addition, under Article  9 of  the                 
  existing  code,   protections   for   creditors   are   more                 
  significant than in the past.                                                
       Because  of these  factors, the National  Conference of                 
  Commissioners  on Uniform  State  Laws, and  a  group of  16                 
  Alaska Business Law Attorneys, have recommended that Article                 
  6 be repealed.                                                               
       This  bill received a zero  note from the Department of                 
  Law's Division of Legal Services."                                           
  SENATOR TAYLOR asked  for questions  on either SB  86 or  SB
  112,  and  SENATOR  LITTLE presented  a  problem,  which she                 
  thought might be addressable under the two bills.                            
  SENATOR LITTLE quoted  a constituent  as not being  notified                 
  when their  note for  the mortgage  of their  house was  not                 
  transferred from buyer to seller.                                            
  SENATOR TAYLOR called on ART PETERSON,  in his capacity as a                 
  Uniform Law Commissioner, to answer questions.                               
  MR. PETERSON explained  this bill did not  include an answer                 
  to SENATOR LITTLE'S  question, but he explained  the primary                 
  benefit of  the bill is its uniformity  with the rest of the                 
  nation.    He said  if  reasonable  notice  to borrowers  is                 
  needed, it would presently be outside the Uniform Commercial                 
  Number 223                                                                   
  SENATOR HALFORD  asked for  the difference  in the  original                 
  bill and the  Labor & Commerce  committee substitute for  SB
  MR. PETERSON began  by expressing support  for SB 86 and  SB
  112  as essential  to  keep Alaska  from  receding into  the                 
  backwater in the commercial area.   He indicated there  were                 
  about 5 or 6  very minor changes, and SENATOR  HALFORD asked                 
  to be informed.                                                              
       1. page 4,  lines 20  & 21  - the words  the code  were                 
       inserted  on page 20 and AS  45.12.207 inserted on line                 
       2. page 48, line 16 - change (d) to (e).                                
       3. page 86, lines 13 through 15 - A new sentence "These                 
       sections  may  not  be construed  to  defeat  the prime                 
       opposition   of  a   municipal   tax   lien  under   AS                 
  29.45.300(b)"  had  been added, and MR. PETERSON proposed it                 
  be deleted.                                                                  
  SENATOR  TAYLOR  moved to  delete on  page  86 line  13, the                 
  sentence beginning with "These sections ..."                                 
  SENATOR JACKO asked why the sentence didn't fit in the bill.                 
  SENATOR TAYLOR explained  the sentence  would place a  super                 
  tax lien on  assets, which  would make it  a superior  lien,                 
  over and  above those  liens held  by the  banks, and  which                 
  would be devastating as far as transactions sold outside the                 
  Number 290                                                                   
  MR. PETERSON described  how, by leaving  it in the bill,  it                 
  would affect other liens in statute, and he gave examples.                   
  He explained the  sentence in question is  a cross reference                 
  that emphasizes one lien  at the expense of all  others, and                 
  he encouraged the committee to remove it.                                    
  Upon hearing  no further  questions, SENATOR TAYLOR  renewed                 
  his  moved  to delete  the  sentence  on page  86,  lines 13                 
  through 18.  Without objections, so ordered.                                 
       4. page 106, lines 28 & 29 - the sentence at the end of                 
       subsection (c) -  "If the certificate of  title statute                 
  is   silent  on  the   issue  of   transfer,  this   section                 
  MR. PETERSON described  the ambiguity in the  first sentence                 
  in subsection  (c), and he  explained why this  sentence was                 
  added, after some research, to the committee substitute.                     
       5. page 112, line  16 - to  adjust an ambiguity in  the                 
       lettering of the subsections.                                           
  MR. PETERSON described the first  sentence in subsection (e)                 
  as  combining  a  disjunctive  element  with  a  conjunctive                 
  elements and explained  how the problem was  corrected after                 
  consultation with PROFESSOR MILLER.                                          
       6. page 112,  lines 25, 28,  & 29  - line 25  & 28  had                 
  typos     - line 29 - insert lessor or before "lessee."                      
  SENATOR  TAYLOR,  satisfied  there  were  no  more  changes,                 
  invited JOHN BEARD to testify from Anchorage.                                
  MR.  PETERSON  identified  MR.  BEARD   as  a  knowledgeable                 
  commercial  law  practitioner  sitting in  for  JERRY KURTZ,                 
  another Uniform Law Commissioner for Alaska.                                 
  MR. BEARD explained he  had practiced commercial law for  22                 
  years, which has been heavily impacted by the two bills.  He                 
  indicated his support for  SB 112 and SB 86 and  vouched for                 
  all  the reasons covered in SENATOR  KERTTULA'S remarks.  He                 
  explained how the bills would update  the way in which money                 
  is transferred, trends in leasing, and bank collections.                     
  Number 405                                                                   
  SENATOR TAYLOR, MR.  BEARD, and MR. PETERSON  discussed some                 
  of the points as covered in the bills.                                       
  SENATOR JACKO moved to pass CS FOR SENATE BILL NO. 112(JUD)                  
  (UNIFORM  COMMERCIAL  CODE  REVISIONS) from  committee  with                 
  individual recommendations.  Without objections, so ordered.                 
  SENATOR JACKO moved to pass CS FOR SENATE BILL NO. 112(JUD)                  
  committee   with   individual   recommendations.     Without                 
  objections, so ordered.                                                      

Document Name Date/Time Subjects