0001| HOUSE BILL 37 | 0002| 42ND LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, | 0003| 1996 | 0004| INTRODUCED BY | 0005| RICHARD T. (DICK) KNOWLES | 0006| | 0007| | 0008| | 0009| | 0010| | 0011| AN ACT | 0012| RELATING TO COMMERCIAL TRANSACTIONS; REVISING ARTICLE 8 OF THE | 0013| UNIFORM COMMERCIAL CODE REGARDING INVESTMENT SECURITIES; MAKING | 0014| CONFORMING AMENDMENTS TO OTHER ARTICLES OF THE UNIFORM | 0015| COMMERCIAL CODE; AMENDING, REPEALING AND ENACTING SECTIONS OF | 0016| THE NMSA 1978. | 0017| | 0018| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0019| Section 1. Section 55-1-105 NMSA 1978 (being Laws 1961, | 0020| Chapter 96, Section 1-105, as amended) is amended to read: | 0021| "55-1-105. TERRITORIAL APPLICATION OF THE ACT--PARTIES' | 0022| POWER TO CHOOSE APPLICABLE LAW.-- | 0023| (1) Except as provided in this section, when a | 0024| transaction bears a reasonable relation to this state and also | 0025| to another state or nation, the parties may agree that the law | 0001| either of this state or such other state or nation shall govern | 0002| their rights and duties. Failing such agreement, the Uniform | 0003| Commercial Code applies to transactions bearing an appropriate | 0004| relation to this state. | 0005| (2) Where one of the following provisions of the | 0006| Uniform Commercial Code specifies the applicable law, that | 0007| provision governs and a contrary agreement is effective only to | 0008| the extent permitted by the law (including the conflict of laws | 0009| rules) so specified: | 0010| rights of creditors against sold goods. Section | 0011| 55-2-402 NMSA 1978; | 0012| applicability of the article on leases. Sections | 0013| 55-2A-105 and 55-2A-106 NMSA 1978; | 0014| applicability of the article on bank deposits and | 0015| collections. Section 55-4-102 NMSA 1978; | 0016| governing law in the article on fund transfers. | 0017| Section 55-4A-507 NMSA 1978; | 0018| applicability of the article on investment | 0019| securities. Section [55-8-106] 55-8-110 NMSA 1978; and | 0020| perfection provisions of the article on secured | 0021| transactions. Section 55-9-103 NMSA 1978." | 0022| Section 2. Section 55-1-206 NMSA 1978 (being Laws 1961, | 0023| Chapter 96, Section 1-206) is amended to read: | 0024| "55-1-206. STATUTE OF FRAUDS FOR KINDS OF PERSONAL | 0025| PROPERTY NOT OTHERWISE COVERED.-- | 0001| (1) Except in the cases described in Subsection (2) | 0002| of this section, a contract for the sale of personal property is | 0003| not enforceable by way of action or defense beyond five thousand | 0004| dollars ($5,000) in amount or value or remedy unless there is | 0005| some writing which indicates that a contract for sale has been | 0006| made between the parties at a defined or stated price, | 0007| reasonably identifies the subject matter and is signed by the | 0008| party against whom enforcement is sought or by his authorized | 0009| agent. | 0010| (2) Subsection (1) of this section does not apply to | 0011| contracts for the sale of goods (Section [2-201] 55-2-201 | 0012| NMSA 1978) nor of securities (Section [8-319] 55-8-313 NMSA | 0013| 1978) nor to security agreements (Section [9-203] 55-9-203 | 0014| NMSA 1978)." | 0015| Section 3. Section 55-4-104 NMSA 1978 (being Laws 1961, | 0016| Chapter 96, Section 4-104, as amended) is amended to read: | 0017| "55-4-104. DEFINITIONS AND INDEX OF DEFINITIONS.-- | 0018| (a) In this article, unless the context otherwise | 0019| requires: | 0020| (1) "account" means any deposit or credit | 0021| account with a bank including a demand, time, savings, passbook, | 0022| share draft or like account, other than an account evidenced by | 0023| a certificate of deposit; | 0024| (2) "afternoon" means the period of a day | 0025| between noon and midnight; | 0001| (3) "banking day" means the part of a day on | 0002| which a bank is open to the public for carrying on substantially | 0003| all of its banking functions; | 0004| (4) "clearing-house" means an association of | 0005| banks or other payors regularly clearing items; | 0006| (5) "customer" means a person having an account | 0007| with a bank or for whom a bank has agreed to collect items, | 0008| including a bank that maintains an account at another bank; | 0009| (6) "documentary draft" means a draft to be | 0010| presented for acceptance or payment if specified documents, | 0011| certificated securities (Section 55-8-102 NMSA 1978) or | 0012| instructions for uncertificated securities (Section [55-8-308] | 0013| 55-8-102 NMSA 1978), or other certificates, statements or the | 0014| like are to be received by the drawee or other payor before | 0015| acceptance or payment of the drafts; | 0016| (7) "draft" means a draft as defined in Section | 0017| 55-3-104 NMSA 1978 or an item, other than an instrument, that is | 0018| an order; | 0019| (8) "drawee" means a person ordered in a draft | 0020| to make payment; | 0021| (9) "item" means an instrument or a promise or | 0022| order to pay money handled by a bank for collection or payment. | 0023| The term does not include a payment order governed by Article 4A | 0024| or a credit or debit card slip; | 0025| (10) "midnight deadline" with respect to a bank | 0001| is midnight on its next banking day following the banking day on | 0002| which it receives the relevant item or notice or from which the | 0003| time for taking action commences to run, whichever is later; | 0004| (11) "settle" means to pay in cash, by | 0005| clearing-house settlement, in a charge or credit or by | 0006| remittance or otherwise as agreed. A settlement may be either | 0007| provisional or final; and | 0008| (12) "suspends payments" with respect to a bank | 0009| means that it has been closed by order of the supervisory | 0010| authorities, that a public officer has been appointed to take it | 0011| over or that it ceases or refuses to make payments in the | 0012| ordinary course of business. | 0013| (b) Other definitions applying to this article and | 0014| the sections in which they appear are: | 0015| "agreement for electronic presentment" Section 55-4-110 NMSA 1978; | 0016| "bank" Section 55-4-105 NMSA 1978; | 0017| "collecting bank" Section 55-4-105 NMSA 1978; | 0018| "depositary bank" Section 55-4-105 NMSA 1978; | 0019| "intermediary bank" Section 55-4-105 NMSA 1978; | 0020| "payor bank" Section 55-4-105 NMSA 1978; | 0021| "presenting bank" Section 55-4-105 NMSA 1978; and | 0022| "presentment notice" Section 55-4-110 NMSA 1978. | 0023| (c) The following definitions in other articles | 0024| apply to this article: | 0025| "acceptance" Section 55-3-409 NMSA 1978; | 0001| "alteration" Section 55-3-407 NMSA 1978; | 0002| "cashier's check" Section 55-3-104 NMSA 1978; | 0003| "certificate of deposit" Section 55-3-104 NMSA 1978; | 0004| "certified check" Section 55-3-409 NMSA 1978; | 0005| "check" Section 55-3-104 NMSA 1978; | 0006| "good faith" Section 55-3-103 NMSA 1978; | 0007| "holder in due course" Section 55-3-302 NMSA 1978; | 0008| "instrument" Section 55-3-104 NMSA 1978; | 0009| "notice of dishonor" Section 55-3-503 NMSA 1978; | 0010| "order" Section 55-3-103 NMSA 1978; | 0011| "ordinary care" Section 55-3-103 NMSA 1978; | 0012| "person entitled to enforce" Section 55-3-301 NMSA 1978; | 0013| "presentment" Section 55-3-501 NMSA 1978; | 0014| "promise" Section 55-3-103 NMSA 1978; | 0015| "prove" Section 55-3-103 NMSA 1978; | 0016| "teller's check" Section 55-3-104 NMSA 1978; and | 0017| "unauthorized signature" Section 55-3-403 NMSA 1978. | 0018| (d) In addition, Article 1 contains general | 0019| definitions and principles of construction and interpretation | 0020| applicable throughout this article." | 0021| Section 4. Section 55-5-114 NMSA 1978 (being Laws 1961, | 0022| Chapter 96, Section 5-114, as amended) is amended to read: | 0023| "55-5-114. ISSUER'S DUTY AND PRIVILEGE TO HONOR--RIGHT TO | 0024| REIMBURSEMENT.-- | 0025| (1) An issuer must honor a draft or demand for | 0001| payment which complies with the terms of the relevant credit | 0002| regardless of whether the goods or documents conform to the | 0003| underlying contract for sale or other contract between the | 0004| customer and the beneficiary. The issuer is not excused from | 0005| honor of such a draft or demand by reason of an additional | 0006| general term that all documents must be satisfactory to the | 0007| issuer, but an issuer may require that specified documents must | 0008| be satisfactory to it. | 0009| (2) Unless otherwise agreed when documents appear on | 0010| their face to comply with the terms of a credit but a required | 0011| document does not in fact conform to the warranties made on | 0012| negotiation or transfer of a document of title (Section 55-7-507 | 0013| NMSA 1978) or of a certificated security (Section [55-8-306] | 0014| 55-8-108 NMSA 1978) or is forged or fraudulent or there is | 0015| fraud in the transaction: | 0016| (a) the issuer must honor the draft or demand | 0017| for payment if honor is demanded by a negotiating bank or other | 0018| holder of the draft or demand which has taken the draft or | 0019| demand under the credit and under circumstances which would make | 0020| it a holder in due course (Section 55-3-302 NMSA 1978) and in an | 0021| appropriate case would make it a person to whom a document of | 0022| title has been duly negotiated (Section 55-7-502 NMSA 1978) or a | 0023| bona fide purchaser of a certificated security | 0024| (Section 55-8-302 NMSA 1978); and | 0025| (b) in all other cases as against its customer, | 0001| an issuer acting in good faith may honor the draft or demand for | 0002| payment despite notification from the customer of fraud, forgery | 0003| or other defect not apparent on the face of the documents, but a | 0004| court of appropriate jurisdiction may enjoin such honor. | 0005| (3) Unless otherwise agreed an issuer which has duly | 0006| honored a draft or demand for payment is entitled to immediate | 0007| reimbursement of any payment made under the credit and to be put | 0008| in effectively available funds not later than the day before | 0009| maturity of any acceptance made under the credit. | 0010| (4) When a credit provides for payment by the issuer | 0011| on receipt of notice that the required documents are in the | 0012| possession of a correspondent or other agent of the issuer: | 0013| (a) any payment made on receipt of such notice | 0014| is conditional; [and] | 0015| (b) the issuer may reject documents which do | 0016| not comply with the credit if it does so within three banking | 0017| days following its receipt of the documents; and | 0018| (c) in the event of such rejection, the issuer | 0019| is entitled by charge back or otherwise to return of the payment | 0020| made. | 0021| (5) In the case covered by Subsection (4) of this | 0022| section failure to reject documents within the time specified in | 0023| Subparagraph (b) of Subsection (4) of this section constitutes | 0024| acceptance of the documents and makes the payment final in favor | 0025| of the beneficiary." | 0001| Section 5. Section 55-8-101 NMSA 1978 (being Laws 1961, | 0002| Chapter 96, Section 8-101) is repealed and a new section of the | 0003| Uniform Commercial Code, Section 55-8-101 NMSA 1978, is enacted | 0004| to read: | 0005| "55-8-101. [NEW MATERIAL] SHORT TITLE.--Chapter 55, | 0006| Article 8 NMSA 1978 may be cited as the "Uniform Commercial | 0007| Code--Investment Securities"." | 0008| Section 6. Section 55-8-102 NMSA 1978 (being Laws 1961, | 0009| Chapter 96, Section 8-102, as amended) is repealed and a new | 0010| section of the Uniform Commercial Code, Section 55-8-102 NMSA | 0011| 1978, is enacted to read: | 0012| "55-8-102. [NEW MATERIAL] DEFINITIONS.-- | 0013| (a) In this Article: | 0014| (1) "adverse claim" means a claim that a | 0015| claimant has a property interest in a financial asset and that | 0016| it is a violation of the rights of the claimant for another | 0017| person to hold, transfer or deal with the financial asset; | 0018| (2) "bearer form", as applied to a certificated | 0019| security, means a form in which the security is payable to the | 0020| bearer of the security certificate according to its terms but | 0021| not by reason of an indorsement; | 0022| (3) "broker" means a person defined as a broker | 0023| or dealer under the federal securities laws, but without | 0024| excluding a bank acting in that capacity; | 0025| (4) "certificated security" means a security | 0001| that is represented by a certificate; | 0002| (5) "clearing corporation" means: | 0003| (i) a person that is registered as a | 0004| "clearing agency" under the federal securities laws; | 0005| (ii) a federal reserve bank; or | 0006| (iii) any other person that provides | 0007| clearance or settlement services with respect to financial | 0008| assets that would require it to register as a clearing agency | 0009| under the federal securities laws but for an exclusion or | 0010| exemption from the registration requirement, if its activities | 0011| as a clearing corporation, including promulgation of rules, are | 0012| subject to regulation by a federal or state governmental | 0013| authority; | 0014| (6) "communicate" means to: | 0015| (i) send a signed writing; or | 0016| (ii) transmit information by any | 0017| mechanism agreed upon by the persons transmitting and receiving | 0018| the information; | 0019| (7) "entitlement holder" means a person | 0020| identified in the records of a securities intermediary as the | 0021| person having a security entitlement against the securities | 0022| intermediary. If a person acquires a security entitlement by | 0023| virtue of Section 55-8-501(b)(2) or (3) NMSA 1978, that person | 0024| is the entitlement holder; | 0025| (8) "entitlement order" means a notification | 0001| communicated to a securities intermediary directing transfer or | 0002| redemption of a financial asset to which the entitlement holder | 0003| has a security entitlement; | 0004| (9) "financial asset", except as otherwise | 0005| provided in Section 55-8-103 NMSA 1978, means: | 0006| (i) a security; | 0007| (ii) an obligation of a person or a | 0008| share, participation or other interest in a person or in | 0009| property or an enterprise of a person, which is, or is of a | 0010| type, dealt in or traded on financial markets, or which is | 0011| recognized in any area in which it is issued or dealt in as a | 0012| medium for investment; or | 0013| (iii) any property that is held by a | 0014| securities intermediary for another person in a securities | 0015| account if the securities intermediary has expressly agreed with | 0016| the other person that the property is to be treated as a | 0017| financial asset under this article. As context requires, the | 0018| term means either the interest itself or the means by which a | 0019| person's claim to it is evidenced, including a certificated or | 0020| uncertificated security, a security certificate or a security | 0021| entitlement; | 0022| (10) "good faith", for purposes of the | 0023| obligation of good faith in the performance or enforcement of | 0024| contracts or duties within this article, means honesty in fact | 0025| and the observance of reasonable commercial standards of fair | 0001| dealing; | 0002| (11) "indorsement" means a signature that alone | 0003| or accompanied by other words is made on a security certificate | 0004| in registered form or on a separate document for the purpose of | 0005| assigning, transferring or redeeming the security or granting a | 0006| power to assign, transfer or redeem it; | 0007| (12) "instruction" means a notification | 0008| communicated to the issuer of an uncertificated security which | 0009| directs that the transfer of the security be registered or that | 0010| the security be redeemed; | 0011| (13) "registered form", as applied to a | 0012| certificated security, means a form in which: | 0013| (i) the security certificate specifies a | 0014| person entitled to the security; and | 0015| (ii) a transfer of the security may be | 0016| registered upon books maintained for that purpose by or on | 0017| behalf of the issuer or the security certificate so states; | 0018| (14) "securities intermediary" means: | 0019| (i) a clearing corporation; or | 0020| (ii) a person, including a bank or | 0021| broker, that in the ordinary course of its business maintains | 0022| securities accounts for others and is acting in that capacity; | 0023| (15) "security," except as otherwise provided | 0024| in Section 55-8-103 NMSA 1978, means an obligation of an issuer | 0025| or a share, participation or other interest in an issuer or in | 0001| property or an enterprise of an issuer: | 0002| (i) which is represented by a security | 0003| certificate in bearer or registered form or the transfer of | 0004| which may be registered upon books maintained for that purpose | 0005| by or on behalf of the issuer; | 0006| (ii) which is one of a class or series or | 0007| by its terms is divisible into a class or series of shares, | 0008| participations, interests or obligations; and | 0009| (iii) which: | 0010| (A) is, or is of a type, dealt in | 0011| or traded on securities exchanges or securities markets; or | 0012| (B) is a medium for investment and | 0013| by its terms expressly provides that it is a security governed | 0014| by this article. | 0015| (16) "security certificate" means a certificate | 0016| representing a security; | 0017| (17) "security entitlement" means the rights | 0018| and property interest of an entitlement holder with respect to a | 0019| financial asset specified in Part 5 of this article; and | 0020| (18) "uncertificated security" means a security | 0021| that is not represented by a certificate. | 0022| (b) Other definitions applying to this article and | 0023| the sections in which they appear are: | 0024| appropriate person Section 55-8-107 NMSA 1978; | 0025| control Section 55-8-106 NMSA 1978; | 0001| delivery Section 55-8-301 NMSA 1978; | 0002| investment company | 0003| security Section 55-8-103 NMSA 1978; | 0004| issuer Section 55-8-201 NMSA 1978; | 0005| overissue Section 55-8-210 NMSA 1978; | 0006| protected purchaser Section 55-8-303 NMSA 1978; and | 0007| securities account Section 55-8-501 NMSA 1978. | 0008| (c) In addition, Chapter 55, Article 1 NMSA 1978 | 0009| contains general definitions and principles of construction and | 0010| interpretation applicable throughout this article. | 0011| (d) The characterization of a person, business or | 0012| transaction for purposes of this Article does not determine the | 0013| characterization of the person, business or transaction for | 0014| purposes of any other law, regulation or rule." | 0015| Section 7. Section 55-8-103 NMSA 1978 (being Laws 1961, | 0016| Chapter 96, Section 8-103, as amended) is repealed and a new | 0017| section of the Uniform Commercial Code, Section 55-8-103 NMSA | 0018| 1978, is enacted to read: | 0019| "55-8-103. [NEW MATERIAL] RULES FOR DETERMINING WHETHER | 0020| CERTAIN OBLIGATIONS AND INTERESTS ARE SECURITIES OR FINANCIAL | 0021| ASSETS.-- | 0022| (a) A share or similar equity interest issued by a | 0023| corporation, business trust, joint stock company or similar | 0024| entity is a security. | 0025| (b) An "investment company security" is a security. | 0001| "Investment company security" means a share or similar equity | 0002| interest issued by an entity that is registered as an investment | 0003| company under the federal investment company laws, an interest | 0004| in a unit investment trust that is so registered or a face-amount certificate issued by a face-amount certificate company | 0005| that is so registered. Investment company security does not | 0006| include an insurance policy or endowment policy or annuity | 0007| contract issued by an insurance company. | 0008| (c) An interest in a partnership or limited | 0009| liability company is not a security unless it is dealt in or | 0010| traded on securities exchanges or in securities markets, its | 0011| terms expressly provide that it is a security governed by this | 0012| article or it is an investment company security. However, an | 0013| interest in a partnership or limited liability company is a | 0014| financial asset if it is held in a securities account. | 0015| (d) A writing that is a security certificate is | 0016| governed by this Article and not by Chapter 55, Article 3 NMSA | 0017| 1978, even though it also meets the requirements of that | 0018| article. However, a negotiable instrument governed by Chapter | 0019| 55, Article 3 NMSA 1978 is a financial asset if it is held in a | 0020| securities account. | 0021| (e) An option or similar obligation issued by a | 0022| clearing corporation to its participants is not a security. It | 0023| is a financial asset. | 0024| (f) A commodity contract, as defined in Section | 0025| 55-9-115 NMSA 1978, is not a security or a financial asset." | 0001| Section 8. Section 55-8-104 NMSA 1978 (being Laws 1961, | 0002| Chapter 96, Section 8-104, as amended) is repealed and a new | 0003| section of the Uniform Commercial Code, Section 55-8-104 NMSA | 0004| 1978, is enacted to read: | 0005| "55-8-104. [NEW MATERIAL] ACQUISITION OF SECURITY OR | 0006| FINANCIAL ASSET OR INTEREST THEREIN.-- | 0007| (a) A person acquires a security or an interest | 0008| therein, under this article, if: | 0009| (1) the person is a purchaser to whom a | 0010| security is delivered pursuant to Section 55-8-301 NMSA 1978; or | 0011| (2) the person acquires a security entitlement | 0012| to the security pursuant to Section 55-8-501 NMSA 1978. | 0013| (b) A person acquires a financial asset, other than | 0014| a security, or an interest therein, under this article, if the | 0015| person acquires a security entitlement to the financial asset. | 0016| (c) A person who acquires a security entitlement to | 0017| a security or other financial asset has the rights specified in | 0018| Part 5 of this article, but is a purchaser of any security, | 0019| security entitlement or other financial asset held by the | 0020| securities intermediary only to the extent provided in Section | 0021| 55-8-503 NMSA 1978. | 0022| (d) Unless the context shows that a different | 0023| meaning is intended, a person who is required by other law, | 0024| regulation, rule or agreement to transfer, deliver, present, | 0025| surrender, exchange or otherwise put in the possession of | 0001| another person a security or financial asset satisfies that | 0002| requirement by causing the other person to acquire an interest | 0003| in the security or financial asset pursuant to Subsection (a) or | 0004| (b)." | 0005| Section 9. Section 55-8-105 NMSA 1978 (being Laws 1961, | 0006| Chapter 96, Section 8-105, as amended) is repealed and a new | 0007| section of the Uniform Commercial Code, Section 55-8-105 NMSA | 0008| 1978, is enacted to read: | 0009| "55-8-105. [NEW MATERIAL] NOTICE OF ADVERSE CLAIM.-- | 0010| (a) A person has notice of an adverse claim if: | 0011| (1) the person knows of the adverse claim; | 0012| (2) the person is aware of facts sufficient to | 0013| indicate that there is a significant probability that the | 0014| adverse claim exists and deliberately avoids information that | 0015| would establish the existence of the adverse claim; or | 0016| (3) the person has a duty, imposed by statute | 0017| or regulation, to investigate whether an adverse claim exists | 0018| and the investigation so required would establish the existence | 0019| of the adverse claim. | 0020| (b) Having knowledge that a financial asset or | 0021| interest therein is or has been transferred by a representative | 0022| imposes no duty of inquiry into the rightfulness of a | 0023| transaction and is not notice of an adverse claim. However, a | 0024| person who knows that a representative has transferred a | 0025| financial asset or interest therein in a transaction that is, or | 0001| whose proceeds are being used, for the individual benefit of the | 0002| representative or otherwise in breach of duty has notice of an | 0003| adverse claim. | 0004| (c) An act or event that creates a right to | 0005| immediate performance of the principal obligation represented by | 0006| a security certificate or sets a date on or after which the | 0007| certificate is to be presented or surrendered for redemption or | 0008| exchange does not itself constitute notice of an adverse claim | 0009| except in the case of a transfer more than: | 0010| (1) one year after a date set for presentment | 0011| or surrender for redemption or exchange; or | 0012| (2) six months after a date set for payment of | 0013| money against presentation or surrender of the certificate, if | 0014| money was available for payment on that date. | 0015| (d) A purchaser of a certificated security has | 0016| notice of an adverse claim if the security certificate: | 0017| (1) whether in bearer or registered form, has | 0018| been indorsed "for collection" or "for surrender" or for some | 0019| other purpose not involving transfer; or | 0020| (2) is in bearer form and has on it an | 0021| unambiguous statement that it is the property of a person other | 0022| than the transferor, but the mere writing of a name on the | 0023| certificate is not such a statement. | 0024| (e) Filing of a financing statement under Article 9 | 0025| is not notice of an adverse claim to a financial asset." | 0001| Section 10. Section 55-8-106 NMSA 1978 (being Laws 1961, | 0002| Chapter 96, Section 8-106, as amended) is repealed and a new | 0003| section of the Uniform Commercial Code, Section 55-8-106 NMSA | 0004| 1978, is enacted to read: | 0005| "55-8-106. [NEW MATERIAL] CONTROL.-- | 0006| (a) A purchaser has "control" of a certificated | 0007| security in bearer form if the certificated security is | 0008| delivered to the purchaser. | 0009| (b) A purchaser has "control" of a certificated | 0010| security in registered form if the certificated security is | 0011| delivered to the purchaser and: | 0012| (1) the certificate is indorsed to the | 0013| purchaser or in blank by an effective indorsement; or | 0014| (2) the certificate is registered in the name | 0015| of the purchaser, upon original issue or registration of | 0016| transfer by the issuer. | 0017| (c) A purchaser has "control" of an uncertificated | 0018| security if: | 0019| (1) the uncertificated security is delivered to | 0020| the purchaser; or | 0021| (2) the issuer has agreed that it will comply | 0022| with instructions originated by the purchaser without further | 0023| consent by the registered owner. | 0024| (d) A purchaser has "control" of a security | 0025| entitlement if: | 0001| (1) the purchaser becomes the entitlement | 0002| holder; or | 0003| (2) the securities intermediary has agreed that | 0004| it will comply with entitlement orders originated by the | 0005| purchaser without further consent by the entitlement holder. | 0006| (e) If an interest in a security entitlement is | 0007| granted by the entitlement holder to the entitlement holder's | 0008| own securities intermediary, the securities intermediary has | 0009| control. | 0010| (f) A purchaser who has satisfied the requirements | 0011| of Subsection (c)(2) or (d)(2) has control even if the | 0012| registered owner in the case of Subsection (c)(2) or the | 0013| entitlement holder in the case of Subsection (d)(2) retains the | 0014| right to make substitutions for the uncertificated security or | 0015| security entitlement, to originate instructions or entitlement | 0016| orders to the issuer or securities intermediary, or otherwise to | 0017| deal with the uncertificated security or security entitlement. | 0018| (g) An issuer or a securities intermediary may not | 0019| enter into an agreement of the kind described in Subsection | 0020| (c)(2) or (d)(2) without the consent of the registered owner or | 0021| entitlement holder, but an issuer or a securities intermediary | 0022| is not required to enter into such an agreement even though the | 0023| registered owner or entitlement holder so directs. An issuer or | 0024| securities intermediary that has entered into such an agreement | 0025| is not required to confirm the existence of the agreement to | 0001| another party unless requested to do so by the registered owner | 0002| or entitlement holder." | 0003| Section 11. Section 55-8-107 NMSA 1978 (being Laws 1967, | 0004| Chapter 186, Section 2, as amended) is repealed and a new | 0005| section of the Uniform Commercial Code, Section 55-8-107 NMSA | 0006| 1978, is enacted to read: | 0007| "55-8-107. [NEW MATERIAL] WHETHER INDORSEMENT, | 0008| INSTRUCTION OR ENTITLEMENT ORDER IS EFFECTIVE.-- | 0009| (a) "Appropriate person" means: | 0010| (1) with respect to an indorsement, the person | 0011| specified by a security certificate or by an effective special | 0012| indorsement to be entitled to the security; | 0013| (2) with respect to an instruction, the | 0014| registered owner of an uncertificated security; | 0015| (3) with respect to an entitlement order, the | 0016| entitlement holder; | 0017| (4) if the person designated in Paragraph (1), | 0018| (2) or (3) is deceased, the designated person's successor taking | 0019| under other law or the designated person's personal | 0020| representative acting for the estate of the decedent; or | 0021| (5) if the person designated in Paragraph (1), | 0022| (2) or (3) lacks capacity, the designated person's guardian, | 0023| conservator or other similar representative who has power under | 0024| other law to transfer the security or financial asset. | 0025| (b) An indorsement, instruction or entitlement order | 0001| is effective if: | 0002| (1) it is made by the appropriate person; | 0003| (2) it is made by a person who has power under | 0004| the law of agency to transfer the security or financial asset on | 0005| behalf of the appropriate person, including, in the case of an | 0006| instruction or entitlement order, a person who has control under | 0007| Section 55-8-106(c)(2) or (d)(2) NMSA 1978; or | 0008| (3) the appropriate person has ratified it or | 0009| is otherwise precluded from asserting its ineffectiveness. | 0010| (c) An indorsement, instruction or entitlement order | 0011| made by a representative is effective even if: | 0012| (1) the representative has failed to comply | 0013| with a controlling instrument or with the law of the state | 0014| having jurisdiction of the representative relationship, | 0015| including any law requiring the representative to obtain court | 0016| approval of the transaction; or | 0017| (2) the representative's action in making the | 0018| indorsement, instruction or entitlement order or using the | 0019| proceeds of the transaction is otherwise a breach of duty. | 0020| (d) If a security is registered in the name of or | 0021| specially indorsed to a person described as a representative, or | 0022| if a securities account is maintained in the name of a person | 0023| described as a representative, an indorsement, instruction or | 0024| entitlement order made by the person is effective even though | 0025| the person is no longer serving in the described capacity. | 0001| (e) Effectiveness of an indorsement, instruction or | 0002| entitlement order is determined as of the date the indorsement, | 0003| instruction or entitlement order is made, and an indorsement, | 0004| instruction or entitlement order does not become ineffective by | 0005| reason of any later change of circumstances." | 0006| Section 12. Section 55-8-108 NMSA 1978 (being Laws 1987, | 0007| Chapter 248, Section 9) is repealed and a new section of the | 0008| Uniform Commercial Code, Section 55-8-108 NMSA 1978, is enacted | 0009| to read: | 0010| "55-8-108. [NEW MATERIAL] WARRANTIES IN DIRECT | 0011| HOLDING.-- | 0012| (a) A person who transfers a certificated security | 0013| to a purchaser for value warrants to the purchaser and an | 0014| indorser, if the transfer is by indorsement, warrants to any | 0015| subsequent purchaser that: | 0016| (1) the certificate is genuine and has not been | 0017| materially altered; | 0018| (2) the transferor or indorser does not know of | 0019| any fact that might impair the validity of the security; | 0020| (3) there is no adverse claim to the security; | 0021| (4) the transfer does not violate any | 0022| restriction on transfer; | 0023| (5) if the transfer is by indorsement, the | 0024| indorsement is made by an appropriate person or if the | 0025| indorsement is by an agent, the agent has actual authority to | 0001| act on behalf of the appropriate person; and | 0002| (6) the transfer is otherwise effective and | 0003| rightful. | 0004| (b) A person who originates an instruction for | 0005| registration of transfer of an uncertificated security to a | 0006| purchaser for value warrants to the purchaser that: | 0007| (1) the instruction is made by an appropriate | 0008| person, or, if the instruction is by an agent, the agent has | 0009| actual authority to act on behalf of the appropriate person; | 0010| (2) the security is valid; | 0011| (3) there is no adverse claim to the security; | 0012| and | 0013| (4) at the time the instruction is presented to | 0014| the issuer: | 0015| (i) the purchaser will be entitled to the | 0016| registration of transfer; | 0017| (ii) the transfer will be registered by | 0018| the issuer free from all liens, security interests, restrictions | 0019| and claims other than those specified in the instruction; | 0020| (iii) the transfer will not violate any | 0021| restriction on transfer; and | 0022| (iv) the requested transfer will | 0023| otherwise be effective and rightful. | 0024| (c) A person who transfers an uncertificated | 0025| security to a purchaser for value and does not originate an | 0001| instruction in connection with the transfer warrants that: | 0002| (1) the uncertificated security is valid; | 0003| (2) there is no adverse claim to the security; | 0004| (3) the transfer does not violate any | 0005| restriction on transfer; and | 0006| (4) the transfer is otherwise effective and | 0007| rightful. | 0008| (d) A person who indorses a security certificate | 0009| warrants to the issuer that: | 0010| (1) there is no adverse claim to the security; | 0011| and | 0012| (2) the indorsement is effective. | 0013| (e) A person who originates an instruction for | 0014| registration of transfer of an uncertificated security warrants | 0015| to the issuer that: | 0016| (1) the instruction is effective; and | 0017| (2) at the time the instruction is presented to | 0018| the issuer the purchaser will be entitled to the registration of | 0019| transfer. | 0020| (f) A person who presents a certificated security | 0021| for registration of transfer or for payment or exchange warrants | 0022| to the issuer that the person is entitled to the registration, | 0023| payment or exchange, but a purchaser for value and without | 0024| notice of adverse claims to whom transfer is registered warrants | 0025| only that the person has no knowledge of any unauthorized | 0001| signature in a necessary indorsement. | 0002| (g) If a person acts as agent of another in | 0003| delivering a certificated security to a purchaser, the identity | 0004| of the principal was known to the person to whom the certificate | 0005| was delivered and the certificate delivered by the agent was | 0006| received by the agent from the principal or received by the | 0007| agent from another person at the direction of the principal, the | 0008| person delivering the security certificate warrants only that | 0009| the delivering person has authority to act for the principal and | 0010| does not know of any adverse claim to the certificated security. | 0011| (h) A secured party who redelivers a security | 0012| certificate received, or after payment and on order of the | 0013| debtor delivers the security certificate to another person, | 0014| makes only the warranties of an agent under Subsection (g). | 0015| (i) Except as otherwise provided in Subsection (g), | 0016| a broker acting for a customer makes to the issuer and a | 0017| purchaser the warranties provided in Subsections (a) through | 0018| (f). A broker that delivers a security certificate to its | 0019| customer, or causes its customer to be registered as the owner | 0020| of an uncertificated security, makes to the customer the | 0021| warranties provided in Subsection (a) or (b) and has the rights | 0022| and privileges of a purchaser under this section. The | 0023| warranties of and in favor of the broker acting as an agent are | 0024| in addition to applicable warranties given by and in favor of | 0025| the customer." | 0001| Section 13. A new section of the Uniform Commercial Code, | 0002| Section 55-8-109 NMSA 1978, is enacted to read: | 0003| "55-8-109. [NEW MATERIAL] WARRANTIES IN INDIRECT | 0004| HOLDING.-- | 0005| (a) A person who originates an entitlement order to | 0006| a securities intermediary warrants to the securities | 0007| intermediary that: | 0008| (1) the entitlement order is made by an | 0009| appropriate person, or if the entitlement order is by an agent, | 0010| the agent has actual authority to act on behalf of the | 0011| appropriate person; and | 0012| (2) there is no adverse claim to the security | 0013| entitlement. | 0014| (b) A person who delivers a security certificate to | 0015| a securities intermediary for credit to a securities account or | 0016| originates an instruction with respect to an uncertificated | 0017| security directing that the uncertificated security be credited | 0018| to a securities account makes to the securities intermediary the | 0019| warranties specified in Section 8-108(a) or (b). | 0020| (c) If a securities intermediary delivers a security | 0021| certificate to its entitlement holder or causes its entitlement | 0022| holder to be registered as the owner of an uncertificated | 0023| security, the securities intermediary makes to the entitlement | 0024| holder the warranties specified in Section 55-8-108(a) or (b) | 0025| NMSA 1978." | 0001| Section 14. A new section of the Uniform Commercial Code, | 0002| Section 55-8-110 NMSA 1978, is enacted to read: | 0003| "55-8-110. [NEW MATERIAL] APPLICABILITY--CHOICE OF | 0004| LAW.-- | 0005| (a) The local law of the issuer's jurisdiction, as | 0006| specified in Subsection (d), governs: | 0007| (1) the validity of a security; | 0008| (2) the rights and duties of the issuer with | 0009| respect to registration of transfer; | 0010| (3) the effectiveness of registration of | 0011| transfer by the issuer; | 0012| (4) whether the issuer owes any duties to an | 0013| adverse claimant to a security; and | 0014| (5) whether an adverse claim can be asserted | 0015| against a person to whom transfer of a certificated or | 0016| uncertificated security is registered or a person who obtains | 0017| control of an uncertificated security. | 0018| (b) The local law of the securities intermediary's | 0019| jurisdiction, as specified in Subsection (e), governs: | 0020| (1) acquisition of a security entitlement from | 0021| the securities intermediary; | 0022| (2) the rights and duties of the securities | 0023| intermediary and entitlement holder arising out of a security | 0024| entitlement; | 0025| (3) whether the securities intermediary owes | 0001| any duties to an adverse claimant to a security entitlement; and | 0002| (4) whether an adverse claim can be asserted | 0003| against a person who acquires a security entitlement from the | 0004| securities intermediary or a person who purchases a security | 0005| entitlement or interest therein from an entitlement holder. | 0006| (c) The local law of the jurisdiction in which a | 0007| security certificate is located at the time of delivery governs | 0008| whether an adverse claim can be asserted against a person to | 0009| whom the security certificate is delivered. | 0010| (d) "Issuer's jurisdiction" means the jurisdiction | 0011| under which the issuer of the security is organized or, if | 0012| permitted by the law of that jurisdiction, the law of another | 0013| jurisdiction specified by the issuer. An issuer organized under | 0014| the law of this State may specify the law of another | 0015| jurisdiction as the law governing the matters specified in | 0016| Subsection (a)(2) through (5). | 0017| (e) The following rules determine a "securities | 0018| intermediary's jurisdiction" for purposes of this section: | 0019| (1) if an agreement between the securities | 0020| intermediary and its entitlement holder specifies that it is | 0021| governed by the law of a particular jurisdiction, that | 0022| jurisdiction is the securities intermediary's jurisdiction; | 0023| (2) if an agreement between the securities | 0024| intermediary and its entitlement holder does not specify the | 0025| governing law as provided in Paragraph (1), but expressly | 0001| specifies that the securities account is maintained at an office | 0002| in a particular jurisdiction, that jurisdiction is the | 0003| securities intermediary's jurisdiction; | 0004| (3) if an agreement between the securities | 0005| intermediary and its entitlement holder does not specify a | 0006| jurisdiction as provided in Paragraph (1) or (2), the securities | 0007| intermediary's jurisdiction is the jurisdiction in which is | 0008| located the office identified in an account statement as the | 0009| office serving the entitlement holder's account; or | 0010| (4) if an agreement between the securities | 0011| intermediary and its entitlement holder does not specify a | 0012| jurisdiction as provided in Paragraph (1) or (2) and an account | 0013| statement does not identify an office serving the entitlement | 0014| holder's account as provided in Paragraph (3), the securities | 0015| intermediary's jurisdiction is the jurisdiction in which is | 0016| located the chief executive office of the securities | 0017| intermediary. | 0018| (f) A securities intermediary's jurisdiction is not | 0019| determined by the physical location of certificates representing | 0020| financial assets or by the jurisdiction in which is organized | 0021| the issuer of the financial asset with respect to which an | 0022| entitlement holder has a security entitlement or by the location | 0023| of facilities for data processing or other record keeping | 0024| concerning the account." | 0025| Section 15. A new section of the Uniform Commercial Code, | 0001| Section 55-8-111 NMSA 1978, is enacted to read: | 0002| "55-8-111. [NEW MATERIAL] CLEARING CORPORATION RULES.--A rule adopted by a clearing corporation governing rights and | 0003| obligations among the clearing corporation and its participants | 0004| in the clearing corporation is effective even if the rule | 0005| conflicts with this [Act] and affects another party who does not | 0006| consent to the rule." | 0007| Section 16. A new section of the Uniform Commercial Code, | 0008| Section 55-8-112 NMSA 1978, is enacted to read: | 0009| "55-8-112. [NEW MATERIAL] CREDITOR'S LEGAL PROCESS.-- | 0010| (a) The interest of a debtor in a certificated | 0011| security may be reached by a creditor only by actual seizure of | 0012| the security certificate by the officer making the attachment or | 0013| levy, except as otherwise provided in Subsection (d). However, | 0014| a certificated security for which the certificate has been | 0015| surrendered to the issuer may be reached by a creditor by legal | 0016| process upon the issuer. | 0017| (b) The interest of a debtor in an uncertificated | 0018| security may be reached by a creditor only by legal process upon | 0019| the issuer at its chief executive office in the United States, | 0020| except as otherwise provided in Subsection (d). | 0021| (c) The interest of a debtor in a security | 0022| entitlement may be reached by a creditor only by legal process | 0023| upon the securities intermediary with whom the debtor's | 0024| securities account is maintained, except as otherwise provided | 0025| in Subsection (d). | 0001| (d) The interest of a debtor in a certificated | 0002| security for which the certificate is in the possession of a | 0003| secured party or in an uncertificated security registered in the | 0004| name of a secured party or a security entitlement maintained in | 0005| the name of a secured party may be reached by a creditor by | 0006| legal process upon the secured party. | 0007| (e) A creditor whose debtor is the owner of a | 0008| certificated security, uncertificated security or security | 0009| entitlement is entitled to aid from a court of competent | 0010| jurisdiction, by injunction or otherwise, in reaching the | 0011| certificated security, uncertificated security or security | 0012| entitlement or in satisfying the claim by means allowed at law | 0013| or in equity in regard to property that cannot readily be | 0014| reached by other legal process." | 0015| Section 17. A new section of the Uniform Commercial Code, | 0016| Section 55-8-113 NMSA 1978, is enacted to read: | 0017| "55-8-113. [NEW MATERIAL] STATUTE OF FRAUDS | 0018| INAPPLICABLE.--A contract or modification of a contract for the | 0019| sale or purchase of a security is enforceable whether or not | 0020| there is a writing signed or record authenticated by a party | 0021| against whom enforcement is sought, even if the contract or | 0022| modification is not capable of performance within one year of | 0023| its making." | 0024| Section 18. A new section of the Uniform Commercial Code, | 0025| Section 55-8-114 NMSA 1978, is enacted to read: | 0001| "55-8-114. [NEW MATERIAL] EVIDENTIARY RULES CONCERNING | 0002| CERTIFICATED SECURITIES.--The following rules apply in an action | 0003| on a certificated security against the issuer: | 0004| (1) unless specifically denied in the pleadings, | 0005| each signature on a security certificate or in a necessary | 0006| indorsement is admitted; | 0007| (2) if the effectiveness of a signature is put in | 0008| issue, the burden of establishing effectiveness is on the party | 0009| claiming under the signature, but the signature is presumed to | 0010| be genuine or authorized; | 0011| (3) if signatures on a security certificate are | 0012| admitted or established, production of the certificate entitles | 0013| a holder to recover on it unless the defendant establishes a | 0014| defense or a defect going to the validity of the security; or | 0015| (4) if it is shown that a defense or defect exists, | 0016| the plaintiff has the burden of establishing that the plaintiff | 0017| or some person under whom the plaintiff claims is a person | 0018| against whom the defense or defect cannot be asserted." | 0019| Section 19. A new section of the Uniform Commercial Code, | 0020| Section 55-8-115 NMSA 1978, is enacted to read: | 0021| "55-8-115. [NEW MATERIAL] SECURITIES INTERMEDIARY AND | 0022| OTHERS NOT LIABLE TO ADVERSE CLAIMANT.--A securities | 0023| intermediary that has transferred a financial asset pursuant to | 0024| an effective entitlement order, or a broker or other agent or | 0025| bailee that has dealt with a financial asset at the direction of | 0001| its customer or principal, is not liable to a person having an | 0002| adverse claim to the financial asset, unless the securities | 0003| intermediary or broker or other agent or bailee: | 0004| (1) took the action after it had been served with an | 0005| injunction, restraining order or other legal process enjoining | 0006| it from doing so, issued by a court of competent jurisdiction | 0007| and had a reasonable opportunity to act on the injunction, | 0008| restraining order or other legal process; | 0009| (2) acted in collusion with the wrongdoer in | 0010| violating the rights of the adverse claimant; or | 0011| (3) in the case of a security certificate that has | 0012| been stolen, acted with notice of the adverse claim." | 0013| Section 20. A new section of the Uniform Commercial Code, | 0014| Section 55-8-116 NMSA 1978, is enacted to read: | 0015| "55-8-116. [NEW MATERIAL] SECURITIES INTERMEDIARY AS | 0016| PURCHASER FOR VALUE.--A securities intermediary that receives a | 0017| financial asset and establishes a security entitlement to the | 0018| financial asset in favor of an entitlement holder is a purchaser | 0019| for value of the financial asset. A securities intermediary | 0020| that acquires a security entitlement to a financial asset from | 0021| another securities intermediary acquires the security | 0022| entitlement for value if the securities intermediary acquiring | 0023| the security entitlement establishes a security entitlement to | 0024| the financial asset in favor of an entitlement holder." | 0025| Section 21. Section 55-8-201 NMSA 1978 (being Laws 1961, | 0001| Chapter 96, Section 8-201, as amended) is repealed and a new | 0002| section of the Uniform Commercial Code, Section 55-8-201 NMSA | 0003| 1978, is enacted to read: | 0004| "55-8-201. [NEW MATERIAL] ISSUER.-- | 0005| (a) With respect to an obligation on or a defense to | 0006| a security, an "issuer" includes a person that: | 0007| (1) places or authorizes the placing of its | 0008| name on a security certificate, other than as authenticating | 0009| trustee, registrar, transfer agent or the like, to evidence a | 0010| share, participation or other interest in its property or in an | 0011| enterprise or to evidence its duty to perform an obligation | 0012| represented by the certificate; | 0013| (2) creates a share, participation or other | 0014| interest in its property or in an enterprise, or undertakes an | 0015| obligation, that is an uncertificated security; | 0016| (3) directly or indirectly creates a fractional | 0017| interest in its rights or property, if the fractional interest | 0018| is represented by a security certificate; or | 0019| (4) becomes responsible for, or in place of, | 0020| another person described as an issuer in this section. | 0021| (b) With respect to an obligation on or defense to a | 0022| security, a guarantor is an issuer to the extent of its | 0023| guaranty, whether or not its obligation is noted on a security | 0024| certificate. | 0025| (c) With respect to a registration of a transfer, | 0001| issuer means a person on whose behalf transfer books are | 0002| maintained." | 0003| Section 22. Section 55-8-202 NMSA 1978 (being Laws 1961, | 0004| Chapter 96, Section 8-202, as amended) is repealed and a new | 0005| section of the Uniform Commercial Code, Section 55-8-202 NMSA | 0006| 1978, is enacted to read: | 0007| "55-8-202. [NEW MATERIAL] ISSUER'S RESPONSIBILITY AND | 0008| DEFENSES--NOTICE OF DEFECT OR DEFENSE.-- | 0009| (a) Even against a purchaser for value and without | 0010| notice, the terms of a certificated security include terms | 0011| stated on the certificate and terms made part of the security by | 0012| reference on the certificate to another instrument, indenture or | 0013| document or to a constitution, statute, ordinance, rule, | 0014| regulation, order or the like, to the extent the terms referred | 0015| to do not conflict with terms stated on the certificate. A | 0016| reference under this subsection does not of itself charge a | 0017| purchaser for value with notice of a defect going to the | 0018| validity of the security, even if the certificate expressly | 0019| states that a person accepting it admits notice. The terms of | 0020| an uncertificated security include those stated in any | 0021| instrument, indenture or document or in a constitution, statute, | 0022| ordinance, rule, regulation, order or the like, pursuant to | 0023| which the security is issued. | 0024| (b) The following rules apply if an issuer asserts | 0025| that a security is not valid: | 0001| (1) a security other than one issued by a | 0002| government or governmental subdivision, agency or | 0003| instrumentality, even though issued with a defect going to its | 0004| validity, is valid in the hands of a purchaser for value and | 0005| without notice of the particular defect unless the defect | 0006| involves a violation of a constitutional provision. In that | 0007| case, the security is valid in the hands of a purchaser for | 0008| value and without notice of the defect, other than one who takes | 0009| by original issue; and | 0010| (2) Paragraph (1) applies to an issuer that is | 0011| a government or governmental subdivision, agency or | 0012| instrumentality only if there has been substantial compliance | 0013| with the legal requirements governing the issue or the issuer | 0014| has received a substantial consideration for the issue as a | 0015| whole or for the particular security and a stated purpose of the | 0016| issue is one for which the issuer has power to borrow money or | 0017| issue the security. | 0018| (c) Except as otherwise provided in Section | 0019| 55-8-205 NMSA 1978, lack of genuineness of a certificated | 0020| security is a complete defense, even against a purchaser for | 0021| value and without notice. | 0022| (d) All other defenses of the issuer of a security, | 0023| including nondelivery and conditional delivery of a certificated | 0024| security, are ineffective against a purchaser for value who has | 0025| taken the certificated security without notice of the particular | 0001| defense. | 0002| (e) This section does not affect the right of a | 0003| party to cancel a contract for a security "when, as and if | 0004| issued" or "when distributed" in the event of a material change | 0005| in the character of the security that is the subject of the | 0006| contract or in the plan or arrangement pursuant to which the | 0007| security is to be issued or distributed. | 0008| (f) If a security is held by a securities | 0009| intermediary against whom an entitlement holder has a security | 0010| entitlement with respect to the security, the issuer may not | 0011| assert any defense that the issuer could not assert if the | 0012| entitlement holder held the security directly." | 0013| Section 23. Section 55-8-203 NMSA 1978 (being Laws 1961, | 0014| Chapter 96, Section 8-203, as amended) is repealed and a new | 0015| section of the Uniform Commercial Code, Section 55-8-203 NMSA | 0016| 1978, is enacted to read: | 0017| "55-8-203. [NEW MATERIAL] STALENESS AS NOTICE OF DEFECT | 0018| OR DEFENSE.--After an act or event, other than a call that has | 0019| been revoked, creating a right to immediate performance of the | 0020| principal obligation represented by a certificated security or | 0021| setting a date on or after which the security is to be presented | 0022| or surrendered for redemption or exchange, a purchaser is | 0023| charged with notice of any defect in its issue or defense of the | 0024| issuer, if the act or event: | 0025| (1) requires the payment of money, the delivery of a | 0001| certificated security, the registration of transfer of an | 0002| uncertificated security, or any of them, on presentation or | 0003| surrender of the security certificate, the money or security is | 0004| available on the date set for payment or exchange, and the | 0005| purchaser takes the security more than one year after that date; | 0006| or | 0007| (2) is not covered by paragraph (1) and the | 0008| purchaser takes the security more than two years after the date | 0009| set for surrender or presentation or the date on which | 0010| performance became due." | 0011| Section 24. Section 55-8-204 NMSA 1978 (being Laws 1961, | 0012| Chapter 96, Section 8-204, as amended) is repealed and a new | 0013| section of the Uniform Commercial Code, Section 55-8-204 NMSA | 0014| 1978, is enacted to read: | 0015| "55-8-204. [NEW MATERIAL] EFFECT OF ISSUER'S | 0016| RESTRICTION ON TRANSFER.--A restriction on transfer of a | 0017| security imposed by the issuer, even if otherwise lawful, is | 0018| ineffective against a person without knowledge of the | 0019| restriction unless: | 0020| (1) the security is certificated and the restriction | 0021| is noted conspicuously on the security certificate; or | 0022| (2) the security is uncertificated and the | 0023| registered owner has been notified of the restriction." | 0024| Section 25. Section 55-8-205 NMSA 1978 (being Laws 1961, | 0025| Chapter 96, Section 8-205, as amended) is repealed and a new | 0001| section of the Uniform Commercial Code, Section 55-8-205 NMSA | 0002| 1978, is enacted to read: | 0003| "55-8-205. [NEW MATERIAL] EFFECT OF UNAUTHORIZED | 0004| SIGNATURE ON SECURITY CERTIFICATE.--An unauthorized signature | 0005| placed on a security certificate before or in the course of | 0006| issue is ineffective, but the signature is effective in favor of | 0007| a purchaser for value of the certificated security if the | 0008| purchaser is without notice of the lack of authority and the | 0009| signing has been done by: | 0010| (1) an authenticating trustee, registrar, transfer | 0011| agent or other person entrusted by the issuer with the signing | 0012| of the security certificate or of similar security certificates | 0013| or the immediate preparation for signing of any of them; or | 0014| (2) an employee of the issuer or of any of the | 0015| persons listed in paragraph (1), entrusted with responsible | 0016| handling of the security certificate." | 0017| Section 26. Section 55-8-206 NMSA 1978 (being Laws 1961, | 0018| Chapter 96, Section 8-206, as amended) is repealed and a new | 0019| section of the Uniform Commercial Code, Section 55-8-206 NMSA | 0020| 1978, is enacted to read: | 0021| "55-8-206. [NEW MATERIAL] COMPLETION OR ALTERATION OF | 0022| SECURITY CERTIFICATE.-- | 0023| (a) If a security certificate contains the | 0024| signatures necessary to its issue or transfer but is incomplete | 0025| in any other respect: | 0001| (1) any person may complete it by filling in | 0002| the blanks as authorized; and | 0003| (2) even if the blanks are incorrectly filled | 0004| in, the security certificate as completed is enforceable by a | 0005| purchaser who took it for value and without notice of the | 0006| incorrectness. | 0007| (b) A complete security certificate that has been | 0008| improperly altered, even if fraudulently, remains enforceable, | 0009| but only according to its original terms." | 0010| Section 27. Section 55-8-207 (being Laws 1961, Chapter 96, | 0011| Section 8-207, as amended) is repealed and a new section of the | 0012| Uniform Commercial Code, Section 55-8-207 NMSA 1978, is enacted | 0013| to read: | 0014| "55-8-207. [NEW MATERIAL] RIGHTS AND DUTIES OF ISSUER | 0015| WITH RESPECT TO REGISTERED OWNERS.-- | 0016| (a) Before due presentment for registration of | 0017| transfer of a certificated security in registered form or of an | 0018| instruction requesting registration of transfer of an | 0019| uncertificated security, the issuer or indenture trustee may | 0020| treat the registered owner as the person exclusively entitled to | 0021| vote, receive notifications and otherwise exercise all the | 0022| rights and powers of an owner. | 0023| (b) Chapter 55, Article 8 NMSA 1978 does not affect | 0024| the liability of the registered owner of a security for a call, | 0025| assessment or the like." | 0001| Section 28. Section 55-8-208 NMSA 1978 (being Laws 1961, | 0002| Chapter 96, Section 8-208, as amended) is repealed and a new | 0003| section of the Uniform Commercial Code, Section 55-8-208 NMSA | 0004| 1978, is enacted to read: | 0005| "55-8-208. [NEW MATERIAL] EFFECT OF SIGNATURE OF | 0006| AUTHENTICATING TRUSTEE, REGISTRAR OR TRANSFER AGENT.-- | 0007| (a) A person signing a security certificate as | 0008| authenticating trustee, registrar, transfer agent or the like | 0009| warrants to a purchaser for value of the certificated security, | 0010| if the purchaser is without notice of a particular defect, that: | 0011| (1) the certificate is genuine; | 0012| (2) the person's own participation in the issue | 0013| of the security is within the person's capacity and within the | 0014| scope of the authority received by the person from the issuer; | 0015| and | 0016| (3) the person has reasonable grounds to | 0017| believe that the certificated security is in the form and within | 0018| the amount the issuer is authorized to issue. | 0019| (b) Unless otherwise agreed, a person signing under | 0020| subsection (a) does not assume responsibility for the validity | 0021| of the security in other respects." | 0022| Section 29. A new section of the Uniform Commercial Code, | 0023| Section 55-8-209 NMSA 1978, is enacted to read: | 0024| "55-8-209. [NEW MATERIAL] ISSUER'S LIEN.--A lien in | 0025| favor of an issuer upon a certificated security is valid against | 0001| a purchaser only if the right of the issuer to the lien is noted | 0002| conspicuously on the security certificate." | 0003| Section 30. A new section of the Uniform Commercial Code, | 0004| Section 55-8-210 NMSA 1978, is enacted to read: | 0005| "55-8-210. [NEW MATERIAL] OVERISSUE.-- | 0006| (a) In this section, "overissue" means the issue of | 0007| securities in excess of the amount the issuer has corporate | 0008| power to issue, but an overissue does not occur if appropriate | 0009| action has cured the overissue. | 0010| (b) Except as otherwise provided in Subsections (c) | 0011| and (d), the provisions of Chapter 55, Article 8 NMSA 1978 which | 0012| validate a security or compel its issue or reissue do not apply | 0013| to the extent that validation, issue or reissue would result in | 0014| overissue. | 0015| (c) If an identical security not constituting an | 0016| overissue is reasonably available for purchase, a person | 0017| entitled to issue or validation may compel the issuer to | 0018| purchase the security and deliver it if certificated, or | 0019| register its transfer if uncertificated, against surrender of | 0020| any security certificate the person holds. | 0021| (d) If a security is not reasonably available for | 0022| purchase, a person entitled to issue or validation may recover | 0023| from the issuer the price the person or the last purchaser for | 0024| value paid for it with interest from the date of the person's | 0025| demand." | 0001| Section 31. Section 55-8-301 NMSA 1978 (being Laws 1961, | 0002| Chapter 96, Section 8-301, as amended) is repealed and a new | 0003| section of the Uniform Commercial Code, Section 55-8-301 NMSA | 0004| 1978, is enacted to read: | 0005| "55-8-301. [NEW MATERIAL] DELIVERY.-- | 0006| (a) Delivery of a certificated security to a | 0007| purchaser occurs when: | 0008| (1) the purchaser acquires possession of the | 0009| security certificate; | 0010| (2) another person, other than a securities | 0011| intermediary, either acquires possession of the security | 0012| certificate on behalf of the purchaser or, having previously | 0013| acquired possession of the certificate, acknowledges that it | 0014| holds for the purchaser; or | 0015| (3) a securities intermediary acting on behalf | 0016| of the purchaser acquires possession of the security | 0017| certificate, only if the certificate is in registered form and | 0018| has been specially indorsed to the purchaser by an effective | 0019| indorsement. | 0020| (b) Delivery of an uncertificated security to a | 0021| purchaser occurs when: | 0022| (1) the issuer registers the purchaser as the | 0023| registered owner, upon original issue or registration of | 0024| transfer; or | 0025| (2) another person, other than a securities | 0001| intermediary, either becomes the registered owner of the | 0002| uncertificated security on behalf of the purchaser or, having | 0003| previously become the registered owner, acknowledges that it | 0004| holds for the purchaser." | 0005| Section 32. Section 55-8-302 NMSA 1978 (being Laws 1961, | 0006| Chapter 96, Section 8-302, as amended) is repealed and a new | 0007| section of the Uniform Commercial Code, Section 55-8-302 NMSA | 0008| 1978, is enacted to read: | 0009| "55-8-302. [NEW MATERIAL] RIGHTS OF PURCHASER.-- | 0010| (a) Except as otherwise provided in Subsections (b) | 0011| and (c), upon delivery of a certificated or uncertificated | 0012| security to a purchaser, the purchaser acquires all rights in | 0013| the security that the transferor had or had power to transfer. | 0014| (b) A purchaser of a limited interest acquires | 0015| rights only to the extent of the interest purchased. | 0016| (c) A purchaser of a certificated security who as a | 0017| previous holder had notice of an adverse claim does not improve | 0018| its position by taking from a protected purchaser." | 0019| Section 33. Section 55-8-303 NMSA 1978 (being Laws 1961, | 0020| Chapter 96, Section 8-303, as amended) is repealed and a new | 0021| section of the Uniform Commercial Code, Section 55-8-303 NMSA | 0022| 1978, is enacted to read: | 0023| "55-8-303. [NEW MATERIAL] PROTECTED PURCHASER.-- | 0024| (a) "Protected purchaser" means a purchaser of a | 0025| certificated or uncertificated security, or of an interest | 0001| therein, who: | 0002| (1) gives value; | 0003| (2) does not have notice of any adverse claim | 0004| to the security; and | 0005| (3) obtains control of the certificated or | 0006| uncertificated security. | 0007| (b) In addition to acquiring the rights of a | 0008| purchaser, a protected purchaser also acquires its interest in | 0009| the security free of any adverse claim." | 0010| Section 34. Section 55-8-304 NMSA 1978 (being Laws 1961, | 0011| Chapter 96, Section 8-304, as amended) is repealed and a new | 0012| section of the Uniform Commercial Code, Section 55-8-304 NMSA | 0013| 1978, is enacted to read: | 0014| "55-8-304. [NEW MATERIAL] INDORSEMENT.-- | 0015| (a) An indorsement may be in blank or special. An | 0016| indorsement in blank includes an indorsement to bearer. A | 0017| special indorsement specifies to whom a security is to be | 0018| transferred or who has power to transfer it. A holder may | 0019| convert a blank indorsement to a special indorsement. | 0020| (b) An indorsement purporting to be only of part of | 0021| a security certificate representing units intended by the issuer | 0022| to be separately transferable is effective to the extent of the | 0023| indorsement. | 0024| (c) An indorsement, whether special or in blank, | 0025| does not constitute a transfer until delivery of the certificate | 0001| on which it appears or, if the indorsement is on a separate | 0002| document, until delivery of both the document and the | 0003| certificate. | 0004| (d) If a security certificate in registered form has | 0005| been delivered to a purchaser without a necessary indorsement, | 0006| the purchaser may become a protected purchaser only when the | 0007| indorsement is supplied. However, against a transferor, a | 0008| transfer is complete upon delivery and the purchaser has a | 0009| specifically enforceable right to have any necessary indorsement | 0010| supplied. | 0011| (e) An indorsement of a security certificate in | 0012| bearer form may give notice of an adverse claim to the | 0013| certificate, but it does not otherwise affect a right to | 0014| registration that the holder possesses. | 0015| (f) Unless otherwise agreed, a person making an | 0016| indorsement assumes only the obligations provided in Section 55-8-108 NMSA 1978 and not an obligation that the security will be | 0017| honored by the issuer." | 0018| Section 35. Section 55-8-305 NMSA 1978 (being Laws 1961, | 0019| Chapter 96, Section 8-305, as amended) is repealed and a new | 0020| section of the Uniform Commercial Code, Section 55-8-305 NMSA | 0021| 1978, is enacted to read: | 0022| "55-8-305. [NEW MATERIAL] INSTRUCTION.-- | 0023| (a) If an instruction has been originated by an | 0024| appropriate person but is incomplete in any other respect, any | 0025| person may complete it as authorized and the issuer may rely on | 0001| it as completed, even though it has been completed incorrectly. | 0002| (b) Unless otherwise agreed, a person initiating an | 0003| instruction assumes only the obligations imposed by Section 55-8-108 NMSA 1978 and not an obligation that the security will be | 0004| honored by the issuer." | 0005| Section 36. Section 55-8-306 NMSA 1978 (being Laws 1961, | 0006| Chapter 96, Section 8-306, as amended) is repealed and a new | 0007| section of the Uniform Commercial Code, Section 55-8-306 NMSA | 0008| 1978, is enacted to read: | 0009| "55-8-306. [NEW MATERIAL] EFFECT OF GUARANTEEING | 0010| SIGNATURE, INDORSEMENT OR INSTRUCTION.-- | 0011| (a) A person who guarantees a signature of an | 0012| indorser of a security certificate warrants that at the time of | 0013| signing: | 0014| (1) the signature was genuine; | 0015| (2) the signer was an appropriate person to | 0016| indorse or, if the signature is by an agent, the agent had | 0017| actual authority to act on behalf of the appropriate person; and | 0018| (3) the signer had legal capacity to sign. | 0019| (b) A person who guarantees a signature of the | 0020| originator of an instruction warrants that at the time of | 0021| signing: | 0022| (1) the signature was genuine; | 0023| (2) the signer was an appropriate person to | 0024| originate the instruction or, if the signature is by an agent, | 0025| the agent had actual authority to act on behalf of the | 0001| appropriate person, if the person specified in the instruction | 0002| as the registered owner was, in fact, the registered owner, as | 0003| to which fact the signature guarantor does not make a warranty; | 0004| and | 0005| (3) the signer had legal capacity to sign. | 0006| (c) A person who specially guarantees the signature | 0007| of an originator of an instruction makes the warranties of a | 0008| signature guarantor under Subsection (b) and also warrants that | 0009| at the time the instruction is presented to the issuer: | 0010| (1) the person specified in the instruction as | 0011| the registered owner of the uncertificated security will be the | 0012| registered owner; and | 0013| (2) the transfer of the uncertificated security | 0014| requested in the instruction will be registered by the issuer | 0015| free from all liens, security interests, restrictions and claims | 0016| other than those specified in the instruction. | 0017| (d) A guarantor under Subsections (a) and (b) or a | 0018| special guarantor under Subsection (c) does not otherwise | 0019| warrant the rightfulness of the transfer. | 0020| (e) A person who guarantees an indorsement of a | 0021| security certificate makes the warranties of a signature | 0022| guarantor under Subsection (a) and also warrants the | 0023| rightfulness of the transfer in all respects. | 0024| (f) A person who guarantees an instruction | 0025| requesting the transfer of an uncertificated security makes the | 0001| warranties of a special signature guarantor under Subsection (c) | 0002| and also warrants the rightfulness of the transfer in all | 0003| respects. | 0004| (g) An issuer may not require a special guaranty of | 0005| signature, a guaranty of indorsement or a guaranty of | 0006| instruction as a condition to registration of transfer. | 0007| (h) The warranties under this section are made to a | 0008| person taking or dealing with the security in reliance on the | 0009| guaranty, and the guarantor is liable to the person for loss | 0010| resulting from their breach. An indorser or originator of an | 0011| instruction whose signature, indorsement or instruction has been | 0012| guaranteed is liable to a guarantor for any loss suffered by the | 0013| guarantor as a result of breach of the warranties of the | 0014| guarantor." | 0015| Section 37. Section 55-8-307 NMSA 1978 (being Laws 1961, | 0016| Chapter 96, Section 8-307, as amended) is repealed and a new | 0017| section of the Uniform Commercial Code, Section 55-8-307 NMSA | 0018| 1978, is enacted to read: | 0019| "55-8-307. [NEW MATERIAL] PURCHASER'S RIGHT TO | 0020| REQUISITES FOR REGISTRATION OF TRANSFER.--Unless otherwise | 0021| agreed, the transferor of a security on due demand shall supply | 0022| the purchaser with proof of authority to transfer or with any | 0023| other requisite necessary to obtain registration of the transfer | 0024| of the security, but if the transfer is not for value, a | 0025| transferor need not comply unless the purchaser pays the | 0001| necessary expenses. If the transferor fails within a reasonable | 0002| time to comply with the demand, the purchaser may reject or | 0003| rescind the transfer." | 0004| Section 38. Section 55-8-401 NMSA 1978 (being Laws 1961, | 0005| Chapter 96, Section 8-401, as amended) is repealed and a new | 0006| section of the Uniform Commercial Code, Section 55-8-401 NMSA | 0007| 1978, is enacted to read: | 0008| "55-8-401. [NEW MATERIAL] DUTY OF ISSUER TO REGISTER | 0009| TRANSFER.-- | 0010| (a) If a certificated security in registered form is | 0011| presented to an issuer with a request to register transfer or an | 0012| instruction is presented to an issuer with a request to register | 0013| transfer of an uncertificated security, the issuer shall | 0014| register the transfer as requested if: | 0015| (1) under the terms of the security the person | 0016| seeking registration of transfer is eligible to have the | 0017| security registered in its name; | 0018| (2) the indorsement or instruction is made by | 0019| the appropriate person or by an agent who has actual authority | 0020| to act on behalf of the appropriate person; | 0021| (3) reasonable assurance is given that the | 0022| indorsement or instruction is genuine and authorized (Section | 0023| 55-8-402 NMSA 1978); | 0024| (4) any applicable law relating to the | 0025| collection of taxes has been complied with; | 0001| (5) the transfer does not violate any | 0002| restriction on transfer imposed by the issuer in accordance with | 0003| Section 55-8-204 NMSA 1978; | 0004| (6) a demand that the issuer not register | 0005| transfer has not become effective under Section 55-8-403 NMSA | 0006| 1978, or the issuer has complied with Section 55-8-403(b) NMSA | 0007| 1978 but no legal process or indemnity bond is obtained as | 0008| provided in Section 55-8-403(d) NMSA 1978; and | 0009| (7) the transfer is in fact rightful or is to a | 0010| protected purchaser. | 0011| (b) If an issuer is under a duty to register a | 0012| transfer of a security, the issuer is liable to a person | 0013| presenting a certificated security or an instruction for | 0014| registration or to the person's principal for loss resulting | 0015| from unreasonable delay in registration or failure or refusal to | 0016| register the transfer." | 0017| Section 39. Section 55-8-402 NMSA 1978 (being Laws 1961, | 0018| Chapter 96, Section 8-402, as amended) is repealed and a new | 0019| section of the Uniform Commercial Code, Section 55-8-402 NMSA | 0020| 1978, is enacted to read: | 0021| "55-8-402. [NEW MATERIAL] ASSURANCE THAT INDORSEMENT OR | 0022| INSTRUCTION IS EFFECTIVE.-- | 0023| (a) An issuer may require the following assurance | 0024| that each necessary indorsement or each instruction is genuine | 0025| and authorized: | 0001| (1) in all cases, a guaranty of the signature | 0002| of the person making an indorsement or originating an | 0003| instruction including, in the case of an instruction, reasonable | 0004| assurance of identity; | 0005| (2) if the indorsement is made or the | 0006| instruction is originated by an agent, appropriate assurance of | 0007| actual authority to sign; | 0008| (3) if the indorsement is made or the | 0009| instruction is originated by a fiduciary pursuant to Section | 0010| 55-8-107(a)(4) or (a)(5) NMSA 1978, appropriate evidence of | 0011| appointment or incumbency; | 0012| (4) if there is more than one fiduciary, | 0013| reasonable assurance that all who are required to sign have done | 0014| so; and | 0015| (5) if the indorsement is made or the | 0016| instruction is originated by a person not covered by another | 0017| provision of this subsection, assurance appropriate to the case | 0018| corresponding as nearly as may be to the provisions of this | 0019| subsection. | 0020| (b) An issuer may elect to require reasonable | 0021| assurance beyond that specified in this section. | 0022| (c) In this section: | 0023| (1) "guaranty of the signature" means a | 0024| guaranty signed by or on behalf of a person reasonably believed | 0025| by the issuer to be responsible. An issuer may adopt standards | 0001| with respect to responsibility if they are not manifestly | 0002| unreasonable; and | 0003| (2) "appropriate evidence of appointment or | 0004| incumbency" means: | 0005| (i) in the case of a fiduciary appointed | 0006| or qualified by a court, a certificate issued by or under the | 0007| direction or supervision of the court or an officer thereof and | 0008| dated within 60 days before the date of presentation for | 0009| transfer; or | 0010| (ii) in any other case, a copy of a | 0011| document showing the appointment or a certificate issued by or | 0012| on behalf of a person reasonably believed by an issuer to be | 0013| responsible or, in the absence of that document or certificate, | 0014| other evidence the issuer reasonably considered appropriate." | 0015| Section 40. Section 55-8-403 NMSA 1978 (being Laws 1961, | 0016| Chapter 96, Section 8-403, as amended) is repealed and a new | 0017| section of the Uniform Commercial Code, Section 55-8-403 NMSA | 0018| 1978, is enacted to read: | 0019| "55-8-403. [NEW MATERIAL] DEMAND THAT ISSUER NOT | 0020| REGISTER TRANSFER.-- | 0021| (a) A person who is an appropriate person to make an | 0022| indorsement or originate an instruction may demand that the | 0023| issuer not register transfer of a security by communicating to | 0024| the issuer a notification that identifies the registered owner | 0025| and the issue of which the security is a part and provides an | 0001| address for communications directed to the person making the | 0002| demand. The demand is effective only if it is received by the | 0003| issuer at a time and in a manner affording the issuer reasonable | 0004| opportunity to act on it. | 0005| (b) If a certificated security in registered form is | 0006| presented to an issuer with a request to register transfer or an | 0007| instruction is presented to an issuer with a request to register | 0008| transfer of an uncertificated security after a demand that the | 0009| issuer not register transfer has become effective, the issuer | 0010| shall promptly communicate to (i) the person who initiated the | 0011| demand at the address provided in the demand and (ii) the person | 0012| who presented the security for registration of transfer or | 0013| initiated the instruction requesting registration of transfer a | 0014| notification stating that: | 0015| (1) the certificated security has been | 0016| presented for registration of transfer or instruction for | 0017| registration of transfer of uncertificated security has been | 0018| received; | 0019| (2) a demand that the issuer not register | 0020| transfer had previously been received; and | 0021| (3) the issuer will withhold registration of | 0022| transfer for a period of time stated in the notification in | 0023| order to provide the person who initiated the demand an | 0024| opportunity to obtain legal process or an indemnity bond. | 0025| (c) The period described in Subsection (b)(3) may | 0001| not exceed 30 days after the date of communication of the | 0002| notification. A shorter period may be specified by the issuer | 0003| if it is not manifestly unreasonable. | 0004| (d) An issuer is not liable to a person who | 0005| initiated a demand that the issuer not register transfer for any | 0006| loss the person suffers as a result of registration of a | 0007| transfer pursuant to an effective indorsement or instruction if | 0008| the person who initiated the demand does not, within the time | 0009| stated in the issuer's communication, either: | 0010| (1) obtain an appropriate restraining order, | 0011| injunction or other process from a court of competent | 0012| jurisdiction enjoining the issuer from registering the transfer; | 0013| or | 0014| (2) file with the issuer an indemnity bond, | 0015| sufficient in the issuer's judgment to protect the issuer and | 0016| any transfer agent, registrar or other agent of the issuer | 0017| involved from any loss it or they may suffer by refusing to | 0018| register the transfer. | 0019| (e) This section does not relieve an issuer from | 0020| liability for registering transfer pursuant to an indorsement or | 0021| instruction that was not effective." | 0022| Section 41. Section 55-8-404 NMSA 1978 (being Laws 1961, | 0023| Chapter 96, Section 8-404, as amended) is repealed and a new | 0024| section of the Uniform Commercial Code, Section 55-8-404 NMSA | 0025| 1978, is enacted to read: | 0001| "55-8-404. [NEW MATERIAL] WRONGFUL REGISTRATION.-- | 0002| (a) Except as otherwise provided in Section | 0003| 55-8-406 NMSA 1978, an issuer is liable for wrongful | 0004| registration of transfer if the issuer has registered a transfer | 0005| of a security to a person not entitled to it and the transfer | 0006| was registered: | 0007| (1) pursuant to an ineffective indorsement or | 0008| instruction; | 0009| (2) after a demand that the issuer not register | 0010| transfer became effective under Section 55-8-403(a) NMSA 1978, | 0011| and the issuer did not comply with Section 55-8-403(b) NMSA | 0012| 1978; | 0013| (3) after the issuer had been served with an | 0014| injunction, restraining order or other legal process enjoining | 0015| it from registering the transfer, issued by a court of competent | 0016| jurisdiction, and the issuer had a reasonable opportunity to act | 0017| on the injunction, restraining order or other legal process; or | 0018| (4) by an issuer acting in collusion with the | 0019| wrongdoer. | 0020| (b) An issuer that is liable for wrongful | 0021| registration of transfer under subsection (a) on demand shall | 0022| provide the person entitled to the security with a like | 0023| certificated or uncertificated security and any payments or | 0024| distributions that the person did not receive as a result of the | 0025| wrongful registration. If an overissue would result, the | 0001| issuer's liability to provide the person with a like security is | 0002| governed by Section 55-8-210 NMSA 1978. | 0003| (c) Except as otherwise provided in Subsection (a) | 0004| or in a law relating to the collection of taxes, an issuer is | 0005| not liable to an owner or other person suffering loss as a | 0006| result of the registration of a transfer of a security if | 0007| registration was made pursuant to an effective indorsement or | 0008| instruction." | 0009| Section 42. Section 55-8-405 NMSA 1978 (being Laws 1961, | 0010| Chapter 96, Section 8-405, as amended) is repealed and a new | 0011| section of the Uniform Commercial Code, Section 55-8-405 NMSA | 0012| 1978, is enacted to read: | 0013| "55-8-405. [NEW MATERIAL] REPLACEMENT OF LOST, | 0014| DESTROYED OR WRONGFULLY TAKEN SECURITY CERTIFICATE.-- | 0015| (a) If an owner of a certificated security, whether | 0016| in registered or bearer form, claims that the certificate has | 0017| been lost, destroyed or wrongfully taken, the issuer shall issue | 0018| a new certificate if the owner: | 0019| (1) so requests before the issuer has notice | 0020| that the certificate has been acquired by a protected purchaser; | 0021| (2) files with the issuer a sufficient | 0022| indemnity bond; and | 0023| (3) satisfies other reasonable requirements | 0024| imposed by the issuer. | 0025| (b) If, after the issue of a new security | 0001| certificate, a protected purchaser of the original certificate | 0002| presents it for registration of transfer, the issuer shall | 0003| register the transfer unless an overissue would result. In that | 0004| case, the issuer's liability is governed by Section | 0005| 55-8-210 NMSA 1978. In addition to any rights on the indemnity | 0006| bond, an issuer may recover the new certificate from a person to | 0007| whom it was issued or any person taking under that person, | 0008| except a protected purchaser." | 0009| Section 43. Section 55-8-406 NMSA 1978 (being Laws 1961, | 0010| Chapter 96, Section 8-406, as amended) is repealed and a new | 0011| section of the Uniform Commercial Code, Section 55-8-406 NMSA | 0012| 1978, is enacted to read: | 0013| "55-8-406. [NEW MATERIAL] OBLIGATION TO NOTIFY ISSUER | 0014| OF LOST, DESTROYED OR WRONGFULLY TAKEN SECURITY | 0015| CERTIFICATE.--If a security certificate has been lost, | 0016| apparently destroyed or wrongfully taken, and the owner fails to | 0017| notify the issuer of that fact within a reasonable time after | 0018| the owner has notice of it and the issuer registers a transfer | 0019| of the security before receiving notification, the owner may not | 0020| assert against the issuer a claim for registering the transfer | 0021| under Section 55-8-404 NMSA 1978 or a claim to a new security | 0022| certificate under Section 55-8-405 NMSA 1978." | 0023| Section 44. Section 55-8-407 NMSA 1978 (being Laws 1987, | 0024| Chapter 248, Section 45) is repealed and a new section of the | 0025| Uniform Commercial Code, Section 55-8-407 NMSA 1978, is enacted | 0001| to read: | 0002| "55-8-407. [NEW MATERIAL] AUTHENTICATING TRUSTEE, | 0003| TRANSFER AGENT AND REGISTRAR.--A person acting as authenticating | 0004| trustee, transfer agent, registrar or other agent for an issuer | 0005| in the registration of a transfer of its securities, in the | 0006| issue of new security certificates or uncertificated securities | 0007| or in the cancellation of surrendered security certificates has | 0008| the same obligation to the holder or owner of a certificated or | 0009| uncertificated security with regard to the particular functions | 0010| performed as the issuer has in regard to those functions." | 0011| Section 45. A new section of the Uniform Commercial Code, | 0012| Section 55-8-501 NMSA 1978, is enacted to read: | 0013| "55-8-501. [NEW MATERIAL] SECURITIES ACCOUNT-- | 0014| ACQUISITION OF SECURITY ENTITLEMENT FROM SECURITIES | 0015| INTERMEDIARY.-- | 0016| (a) "Securities account" means an account to which a | 0017| financial asset is or may be credited in accordance with an | 0018| agreement under which the person maintaining the account | 0019| undertakes to treat the person for whom the account is | 0020| maintained as entitled to exercise the rights that comprise the | 0021| financial asset. | 0022| (b) Except as otherwise provided in Subsections (d) | 0023| and (e), a person acquires a security entitlement if a | 0024| securities intermediary: | 0025| (1) indicates by book entry that a financial | 0001| asset has been credited to the person's securities account; | 0002| (2) receives a financial asset from the person | 0003| or acquires a financial asset for the person and, in either | 0004| case, accepts it for credit to the person's securities account; | 0005| or | 0006| (3) becomes obligated under other law, | 0007| regulation or rule to credit a financial asset to the person's | 0008| securities account. | 0009| (c) If a condition of subsection (b) has been met, a | 0010| person has a security entitlement even though the securities | 0011| intermediary does not itself hold the financial asset. | 0012| (d) If a securities intermediary holds a financial | 0013| asset for another person and the financial asset is registered | 0014| in the name of payable to the order of, or specially indorsed to | 0015| the other person and has not been indorsed to the securities | 0016| intermediary or in blank, the other person is treated as holding | 0017| the financial asset directly rather than as having a security | 0018| entitlement with respect to the financial asset. | 0019| (e) Issuance of a security is not establishment of a | 0020| security entitlement." | 0021| Section 46. A new section of the Uniform Commercial Code, | 0022| Section 55-8-502 NMSA 1978, is enacted to read: | 0023| "55-8-502. [NEW MATERIAL] ASSERTION OF ADVERSE CLAIM | 0024| AGAINST ENTITLEMENT HOLDER.--An action based on an adverse claim | 0025| to a financial asset, whether framed in conversion, replevin, | 0001| constructive trust, equitable lien or other theory, may not be | 0002| asserted against a person who acquires a security entitlement | 0003| under Section 55-8-501 NMSA 1978 for value and without notice of | 0004| the adverse claim." | 0005| Section 47. A new section of the Uniform Commercial Code, | 0006| Section 55-8-503 NMSA 1978, is enacted to read: | 0007| "55-8-503. [NEW MATERIAL] PROPERTY INTEREST OF | 0008| ENTITLEMENT HOLDER IN FINANCIAL ASSET HELD BY SECURITIES | 0009| INTERMEDIARY.-- | 0010| (a) To the extent necessary for a securities | 0011| intermediary to satisfy all security entitlements with respect | 0012| to a particular financial asset, all interests in that financial | 0013| asset held by the securities intermediary are held by the | 0014| securities intermediary for the entitlement holders, are not | 0015| property of the securities intermediary and are not subject to | 0016| claims of creditors of the securities intermediary, except as | 0017| otherwise provided in Section 55-8-511 NMSA 1978. | 0018| (b) An entitlement holder's property interest with | 0019| respect to a particular financial asset under Subsection (a) is | 0020| a pro rata property interest in all interests in that financial | 0021| asset held by the securities intermediary, without regard to the | 0022| time the entitlement holder acquired the security entitlement or | 0023| the time the securities intermediary acquired the interest in | 0024| that financial asset. | 0025| (c) An entitlement holder's property interest with | 0001| respect to a particular financial asset under Subsection (a) may | 0002| be enforced against the securities intermediary only by exercise | 0003| of the entitlement holder's rights under Sections | 0004| 55-8-505 through 55-8-508 NMSA 1978. | 0005| (d) An entitlement holder's property interest with | 0006| respect to a particular financial asset under Subsection (a) may | 0007| be enforced against a purchaser of the financial asset or | 0008| interest therein only if: | 0009| (1) insolvency proceedings have been initiated | 0010| by or against the securities intermediary; | 0011| (2) the securities intermediary does not have | 0012| sufficient interests in the financial asset to satisfy the | 0013| security entitlements of all of its entitlement holders to that | 0014| financial asset; | 0015| (3) the securities intermediary violated its | 0016| obligations under Section 55-8-504 NMSA 1978 by transferring the | 0017| financial asset or interest therein to the purchaser; and | 0018| (4) the purchaser is not protected under | 0019| Subsection (e). The trustee or other liquidator, acting on | 0020| behalf of all entitlement holders having security entitlements | 0021| with respect to a particular financial asset, may recover the | 0022| financial asset or interest therein from the purchaser. If the | 0023| trustee or other liquidator elects not to pursue that right, an | 0024| entitlement holder whose security entitlement remains | 0025| unsatisfied has the right to recover its interest in the | 0001| financial asset from the purchaser. | 0002| (e) An action based on the entitlement holder's | 0003| property interest with respect to a particular financial asset | 0004| under Subsection (a), whether framed in conversion, replevin, | 0005| constructive trust, equitable lien or other theory, may not be | 0006| asserted against any purchaser of a financial asset or interest | 0007| therein who gives value, obtains control and does not act in | 0008| collusion with the securities intermediary in violating the | 0009| securities intermediary's obligations under Section | 0010| 55-8-504 NMSA 1978." | 0011| Section 48. A new section of the Uniform Commercial Code, | 0012| Section 55-8-504 NMSA 1978, is enacted to read: | 0013| "55-8-504. [NEW MATERIAL] DUTY OF SECURITIES | 0014| INTERMEDIARY TO MAINTAIN FINANCIAL ASSET.-- | 0015| (a) A securities intermediary shall promptly obtain | 0016| and thereafter maintain a financial asset in a quantity | 0017| corresponding to the aggregate of all security entitlements it | 0018| has established in favor of its entitlement holders with respect | 0019| to that financial asset. The securities intermediary may | 0020| maintain those financial assets directly or through one or more | 0021| other securities intermediaries. | 0022| (b) Except to the extent otherwise agreed by its | 0023| entitlement holder, a securities intermediary may not grant any | 0024| security interests in a financial asset it is obligated to | 0025| maintain pursuant to Subsection (a). | 0001| (c) A securities intermediary satisfies the duty in | 0002| Subsection (a) if: | 0003| (1) the securities intermediary acts with | 0004| respect to the duty as agreed upon by the entitlement holder and | 0005| the securities intermediary; or | 0006| (2) in the absence of agreement, the securities | 0007| intermediary exercises due care in accordance with reasonable | 0008| commercial standards to obtain and maintain the financial asset. | 0009| (d) This section does not apply to a clearing | 0010| corporation that is itself the obligor of an option or similar | 0011| obligation to which its entitlement holders have security | 0012| entitlements." | 0013| Section 49. A new section of the Uniform Commercial Code, | 0014| Section 55-8-505 NMSA 1978, is enacted to read: | 0015| "55-8-505. [NEW MATERIAL] DUTY OF SECURITIES | 0016| INTERMEDIARY WITH RESPECT TO PAYMENTS AND DISTRIBUTIONS.-- | 0017| (a) A securities intermediary shall take action to | 0018| obtain a payment or distribution made by the issuer of a | 0019| financial asset. A securities intermediary satisfies the duty | 0020| if: | 0021| (1) the securities intermediary acts with | 0022| respect to the duty as agreed upon by the entitlement holder and | 0023| the securities intermediary; or | 0024| (2) in the absence of agreement, the securities | 0025| intermediary exercises due care in accordance with reasonable | 0001| commercial standards to attempt to obtain the payment or | 0002| distribution. | 0003| (b) A securities intermediary is obligated to its | 0004| entitlement holder for a payment or distribution made by the | 0005| issuer of a financial asset if the payment or distribution is | 0006| received by the securities intermediary." | 0007| Section 50. A new section of the Uniform Commercial Code, | 0008| Section 55-8-506 NMSA 1978, is enacted to read: | 0009| "55-8-506. [NEW MATERIAL] DUTY OF SECURITIES | 0010| INTERMEDIARY TO EXERCISE RIGHTS AS DIRECTED BY ENTITLEMENT | 0011| HOLDER.--A securities intermediary shall exercise rights with | 0012| respect to a financial asset if directed to do so by an | 0013| entitlement holder. A securities intermediary satisfies the | 0014| duty if: | 0015| (1) the securities intermediary acts with | 0016| respect to the duty as agreed upon by the entitlement holder and | 0017| the securities intermediary; or | 0018| (2) in the absence of agreement, the securities | 0019| intermediary either places the entitlement holder in a position | 0020| to exercise the rights directly or exercises due care in | 0021| accordance with reasonable commercial standards to follow the | 0022| direction of the entitlement holder." | 0023| Section 51. A new section of the Uniform Commercial Code, | 0024| Section 55-8-507 NMSA 1978, is enacted to read: | 0025| "55-8-507. [NEW MATERIAL] DUTY OF SECURITIES | 0001| INTERMEDIARY TO COMPLY WITH ENTITLEMENT ORDER.-- | 0002| (a) A securities intermediary shall comply with an | 0003| entitlement order if the entitlement order is originated by the | 0004| appropriate person, the securities intermediary has had | 0005| reasonable opportunity to assure itself that the entitlement | 0006| order is genuine and authorized, and the securities intermediary | 0007| has had reasonable opportunity to comply with the entitlement | 0008| order. A securities intermediary satisfies the duty if: | 0009| (1) the securities intermediary acts with | 0010| respect to the duty as agreed upon by the entitlement holder and | 0011| the securities intermediary; or | 0012| (2) in the absence of agreement, the securities | 0013| intermediary exercises due care in accordance with reasonable | 0014| commercial standards to comply with the entitlement order. | 0015| (b) If a securities intermediary transfers a | 0016| financial asset pursuant to an ineffective entitlement order, | 0017| the securities intermediary shall reestablish a security | 0018| entitlement in favor of the person entitled to it and pay or | 0019| credit any payments or distributions that the person did not | 0020| receive as a result of the wrongful transfer. If the securities | 0021| intermediary does not reestablish a security entitlement, the | 0022| securities intermediary is liable to the entitlement holder for | 0023| damages." | 0024| Section 52. A new section of the Uniform Commercial Code, | 0025| Section 55-8-508 NMSA 1978, is enacted to read: | 0001| "55-8-508. [NEW MATERIAL] DUTY OF SECURITIES | 0002| INTERMEDIARY TO CHANGE ENTITLEMENT HOLDER'S POSITION TO OTHER | 0003| FORM OF SECURITY HOLDING.--A securities intermediary shall act | 0004| at the direction of an entitlement holder to change a security | 0005| entitlement into another available form of holding for which the | 0006| entitlement holder is eligible or to cause the financial asset | 0007| to be transferred to a securities account of the entitlement | 0008| holder with another securities intermediary. A securities | 0009| intermediary satisfies the duty if: | 0010| (1) the securities intermediary acts as agreed upon | 0011| by the entitlement holder and the securities intermediary; or | 0012| (2) in the absence of agreement, the securities | 0013| intermediary exercises due care in accordance with reasonable | 0014| commercial standards to follow the direction of the entitlement | 0015| holder." | 0016| Section 53. A new section of the Uniform Commercial Code, | 0017| Section 55-8-509 NMSA 1978, is enacted to read: | 0018| "55-8-509. [NEW MATERIAL] SPECIFICATION OF DUTIES OF | 0019| SECURITIES INTERMEDIARY BY OTHER STATUTE OR REGULATION--MANNER | 0020| OF PERFORMANCE OF DUTIES OF SECURITIES INTERMEDIARY AND EXERCISE | 0021| OF RIGHTS OF ENTITLEMENT HOLDER.-- | 0022| (a) If the substance of a duty imposed upon a | 0023| securities intermediary by Sections 55-8-504 through 55-8-508 | 0024| NMSA 1978 is the subject of other statute, regulation or rule, | 0025| compliance with that statute, regulation or rule satisfies the | 0001| duty. | 0002| (b) To the extent that specific standards for the | 0003| performance of the duties of a securities intermediary or the | 0004| exercise of the rights of an entitlement holder are not | 0005| specified by other statute, regulation or rule or by agreement | 0006| between the securities intermediary and entitlement holder, the | 0007| securities intermediary shall perform its duties and the | 0008| entitlement holder shall exercise its rights in a commercially | 0009| reasonable manner. | 0010| (c) The obligation of a securities intermediary to | 0011| perform the duties imposed by Sections 55-8-504 through | 0012| 55-8-508 NMSA 1978 is subject to: | 0013| (1) rights of the securities intermediary | 0014| arising out of a security interest under a security agreement | 0015| with the entitlement holder or otherwise; and | 0016| (2) rights of the securities intermediary under | 0017| other law, regulation, rule, or agreement to withhold | 0018| performance of its duties as a result of unfulfilled obligations | 0019| of the entitlement holder to the securities intermediary. | 0020| (d) Sections 55-8-504 through 55-8-508 NMSA 1978 do | 0021| not require a securities intermediary to take any action that is | 0022| prohibited by other statute, regulation, or rule." | 0023| Section 54. A new section of the Uniform Commercial Code, | 0024| Section 55-8-510 NMSA 1978, is enacted to read: | 0025| "55-8-510. [NEW MATERIAL] RIGHTS OF PURCHASER OF | 0001| SECURITY ENTITLEMENT FROM ENTITLEMENT HOLDER.-- | 0002| (a) An action based on an adverse claim to a | 0003| financial asset or security entitlement, whether framed in | 0004| conversion, replevin, constructive trust, equitable lien or | 0005| other theory, may not be asserted against a person who purchases | 0006| a security entitlement, or an interest therein, from an | 0007| entitlement holder if the purchaser gives value, does not have | 0008| notice of the adverse claim and obtains control. | 0009| (b) If an adverse claim could not have been asserted | 0010| against an entitlement holder under Section 55-8-502 NMSA 1978, | 0011| the adverse claim cannot be asserted against a person who | 0012| purchases a security entitlement, or an interest therein, from | 0013| the entitlement holder. | 0014| (c) In a case not covered by the priority rules in | 0015| Chapter 55, Article 9 NMSA 1978, a purchaser for value of a | 0016| security entitlement, or an interest therein, who obtains | 0017| control has priority over a purchaser of a security entitlement, | 0018| or an interest therein, who does not obtain control. Purchasers | 0019| who have control rank equally, except that a securities | 0020| intermediary as purchaser has priority over a conflicting | 0021| purchaser who has control unless otherwise agreed by the | 0022| securities intermediary." | 0023| Section 55. A new section of the Uniform Commercial Code, | 0024| Section 55-8-511 NMSA 1978, is enacted to read: | 0025| "55-8-511. [NEW MATERIAL] PRIORITY AMONG SECURITY | 0001| INTERESTS AND ENTITLEMENT HOLDERS.-- | 0002| (a) Except as otherwise provided in Subsections (b) | 0003| and (c), if a securities intermediary does not have sufficient | 0004| interests in a particular financial asset to satisfy both its | 0005| obligations to entitlement holders who have security | 0006| entitlements to that financial asset and its obligation to a | 0007| creditor of the securities intermediary who has a security | 0008| interest in that financial asset, the claims of entitlement | 0009| holders, other than the creditor, have priority over the claim | 0010| of the creditor. | 0011| (b) A claim of a creditor of a securities | 0012| intermediary who has a security interest in a financial asset | 0013| held by a securities intermediary has priority over claims of | 0014| the securities intermediary's entitlement holders who have | 0015| security entitlements with respect to that financial asset if | 0016| the creditor has control over the financial asset. | 0017| (c) If a clearing corporation does not have | 0018| sufficient financial assets to satisfy both its obligations to | 0019| entitlement holders who have security entitlements with respect | 0020| to a financial asset and its obligation to a creditor of the | 0021| clearing corporation who has a security interest in that | 0022| financial asset, the claim of the creditor has priority over the | 0023| claims of entitlement holders." | 0024| Section 56. Section 55-9-103 NMSA 1978 (being Laws 1961, | 0025| Chapter 96, Section 9-103, as amended) is amended to read: | 0001| "55-9-103. PERFECTION OF SECURITY INTERESTS IN MULTIPLE | 0002| STATE TRANSACTIONS.-- | 0003| (1) Documents, instruments and ordinary goods. | 0004| (a) This subsection applies to documents and | 0005| instruments and to goods other than those covered by a | 0006| certificate of title described in Subsection (2) of this | 0007| section, mobile goods described in Subsection (3) of this | 0008| section and minerals described in Subsection (5) of this | 0009| section. | 0010| (b) Except as otherwise provided in this | 0011| subsection, perfection and the effect of perfection or non-perfection of a security interest in collateral are governed by | 0012| the law of the jurisdiction where the collateral is when the | 0013| last event occurs on which is based the assertion that the | 0014| security interest is perfected or unperfected. | 0015| (c) If the parties to a transaction creating a | 0016| purchase money security interest in goods in one jurisdiction | 0017| understand at the time that the security interest attaches that | 0018| the goods will be kept in another jurisdiction, then the law of | 0019| the other jurisdiction governs the perfection and the effect of | 0020| perfection or non-perfection of the security interest from the | 0021| time it attaches until thirty days after the debtor receives | 0022| possession of the goods and thereafter if the goods are taken to | 0023| the other jurisdiction before the end of the thirty-day period. | 0024| (d) When collateral is brought into and kept in | 0025| this state while subject to a security interest perfected under | 0001| the law of the jurisdiction from which the collateral was | 0002| removed, the security interest remains perfected, but if action | 0003| is required by Sections 55-9-301 through 55-9-318 NMSA 1978 to | 0004| perfect the security interest: | 0005| (i) if the action is not taken before the | 0006| expiration of the period of perfection in the other jurisdiction | 0007| or the end of four months after the collateral is brought into | 0008| this state, whichever period first expires, the security | 0009| interest becomes unperfected at the end of that period and is | 0010| thereafter deemed to have been unperfected as against a person | 0011| who became a purchaser after removal; | 0012| (ii) if the action is taken before the | 0013| expiration of the period specified in Subparagraph (i) of this | 0014| paragraph, the security interest continues perfected thereafter; | 0015| or | 0016| (iii) for the purpose of priority over a | 0017| buyer of consumer goods (Subsection (2) of Section 55-9-307 NMSA | 0018| 1978), the period of the effectiveness of a filing in the | 0019| jurisdiction from which the collateral is removed is governed by | 0020| the rules with respect to perfection in Subparagraphs (i) and | 0021| (ii) of this paragraph. | 0022| (2) Certificate of title. | 0023| (a) This subsection applies to goods covered by | 0024| a certificate of title issued under a statute of this state or | 0025| of another jurisdiction under the law of which indication of a | 0001| security interest on the certificate is required as a condition | 0002| of perfection. | 0003| (b) Except as otherwise provided in this | 0004| subsection, perfection and the effect of perfection or non-perfection of the security interest are governed by the law | 0005| (including the conflict of laws rules) of the jurisdiction | 0006| issuing the certificate until four months after the goods are | 0007| removed from that jurisdiction and thereafter until the goods | 0008| are registered in another jurisdiction, but in any event not | 0009| beyond surrender of the certificate. After the expiration of | 0010| that period, the goods are not covered by the certificate of | 0011| title within the meaning of this section. | 0012| (c) Except with respect to the rights of a | 0013| buyer described in the next paragraph, a security interest, | 0014| perfected in another jurisdiction otherwise than by notation on | 0015| a certificate of title, in goods brought into this state and | 0016| thereafter covered by a certificate of title issued by this | 0017| state is subject to the rules stated in Paragraph (d) of | 0018| Subsection (1) of this section. | 0019| (d) If goods are brought into this state while | 0020| a security interest therein is perfected in any manner under the | 0021| law of the jurisdiction from which the goods are removed and a | 0022| certificate of title is issued by this state and the certificate | 0023| does not show that the goods are subject to the security | 0024| interest or that they may be subject to security interests not | 0025| shown on the certificate, the security interest is subordinate | 0001| to the rights of a buyer of the goods who is not in the business | 0002| of selling goods of that kind to the extent that he gives value | 0003| and receives delivery of the goods after issuance of the | 0004| certificate and without knowledge of the security interest. | 0005| (3) Accounts, general intangibles and mobile goods. | 0006| (a) This subsection applies to accounts (other | 0007| than an account described in Subsection (5) of this section on | 0008| minerals) and general intangibles (other than uncertificated | 0009| securities) and to goods which are mobile and which are of a | 0010| type normally used in more than one jurisdiction, such as motor | 0011| vehicles, trailers, rolling stock, airplanes, shipping | 0012| containers, road building and construction machinery and | 0013| commercial harvesting machinery and the like, if the goods are | 0014| equipment or are inventory leased or held for lease by the | 0015| debtor to others, and are not covered by a certificate of title | 0016| described in Subsection (2) of this section. | 0017| (b) The law (including the conflict of laws | 0018| rules) of the jurisdiction in which the debtor is located | 0019| governs the perfection and the effect of perfection or non-perfection of the security interest. | 0020| (c) If, however, the debtor is located in a | 0021| jurisdiction which is not a part of the United States and which | 0022| does not provide for perfection of the security interest by | 0023| filing or recording in that jurisdiction, the law of the | 0024| jurisdiction in the United States in which the debtor has its | 0025| major executive office in the United States governs the | 0001| perfection and the effect of perfection or non-perfection of the | 0002| security interest through filing. In the alternative, if the | 0003| debtor is located in a jurisdiction which is not a part of the | 0004| United States or Canada and the collateral is accounts or | 0005| general intangibles for money due or to become due, the security | 0006| interest may be perfected by notification to the accounts | 0007| debtor. As used in this paragraph, "United States" includes its | 0008| territories and possessions and the Commonwealth of Puerto Rico. | 0009| (d) A debtor shall be deemed located at his | 0010| place of business if he has one, at his chief executive office | 0011| if he has more than one place of business, otherwise at his | 0012| residence. If, however, the debtor is a foreign air carrier | 0013| under the Federal Aviation Act of 1958, as amended, it shall be | 0014| deemed located at the designated office of the agent upon whom | 0015| service of process may be made on behalf of the foreign air | 0016| carrier. | 0017| (e) A security interest perfected under the law | 0018| of the jurisdiction of the location of the debtor is perfected | 0019| until the expiration of four months after a change of the | 0020| debtor's location to another jurisdiction or until perfection | 0021| would have ceased by the law of the first jurisdiction, | 0022| whichever period first expires. Unless perfected in the new | 0023| jurisdiction before the end of that period, it becomes | 0024| unperfected thereafter and is deemed to have been unperfected as | 0025| against a person who became a purchaser after the change. | 0001| (4) Chattel paper. | 0002| The rules stated for goods in Subsection (1) of this | 0003| section apply to a possessory security interest in chattel | 0004| paper. The rules stated for accounts in Subsection (3) of this | 0005| section apply to a nonpossessory security interest in chattel | 0006| paper, but the security interest may not be perfected by noti- | 0007| fication to the account debtor. | 0008| (5) Minerals. | 0009| Perfection and the effect of perfection or non-perfection of a security interest which is created by a debtor | 0010| who has an interest in minerals or the like (including oil and | 0011| gas) before extraction and which attaches thereto as extracted | 0012| or which attaches to an account resulting from the sale thereof | 0013| at the wellhead or minehead are governed by the law (including | 0014| the conflict of laws rules) of the jurisdiction wherein the | 0015| wellhead or minehead is located. | 0016| (6) [Uncertificated securities] Investment | 0017| property. | 0018| [The law (including the conflict of laws rules) of | 0019| the jurisdiction of organization of the issuer governs the | 0020| perfection and the effect of perfection or nonperfection of a | 0021| security interest in uncertificated securities]" | 0022| (a) This subsection applies to investment | 0023| property. | 0024| (b) Except as otherwise provided in Paragraph | 0025| (f), during the time that a security certificate is located in a | 0001| jurisdiction, perfection of a security interest, the effect of | 0002| perfection or non-perfection and the priority of a security | 0003| interest in the certified security represented thereby are | 0004| governed by the local law of that jurisdiction. | 0005| (c) Except as otherwise provided in Paragraph | 0006| (f), perfection of a security interest, the effect of perfection | 0007| or non-perfection and the priority of a security interest in an | 0008| uncertificated security are governed by the local law of the | 0009| issuer's jurisdiction as specified in Section 8-110(d). | 0010| (d) Except as otherwise provided in Paragraph | 0011| (f), perfection of a security interest, the effect of perfection | 0012| or non-perfection and the priority of a security interest in a | 0013| security entitlement or securities account are governed by the | 0014| local law of the securities intermediary's jurisdiction as | 0015| specified in Section 8-110(e). | 0016| (e) Except as otherwise provided in Paragraph | 0017| (f), perfection of a security interest, the effect of perfection | 0018| or non-perfection and the priority of a security interest in a | 0019| commodity contract or commodity account are governed by the | 0020| local law of the commodity intermediary's jurisdiction. The | 0021| following rules determine a "commodity intermediary's | 0022| jurisdiction" for purposes of this paragraph: | 0023| (i) if an agreement between the commodity | 0024| intermediary and commodity customer specifies that it is | 0025| governed by the law of a particular jurisdiction, that | 0001| jurisdiction is the commodity intermediary's jurisdiction; | 0002| (ii) if an agreement between the | 0003| commodity intermediary and commodity customer does not specify | 0004| the governing law as provided in Subparagraph (i), but expressly | 0005| specifies that the commodity account is maintained at an office | 0006| in a particular jurisdiction, that jurisdiction is the commodity | 0007| intermediary's jurisdiction; | 0008| (iii) if an agreement between the | 0009| commodity intermediary and commodity customer does not specify a | 0010| jurisdiction as provided in Subparagraphs (i) or (ii), the | 0011| commodity intermediary's jurisdiction is the jurisdiction in | 0012| which is located the office identified in an account statement | 0013| as the office serving the commodity customer's account; and | 0014| (iv) if an agreement between the | 0015| commodity intermediary and commodity customer does not specify a | 0016| jurisdiction as provided in Subparagraphs (i) or (ii) and an | 0017| account statement does not identify an office serving the | 0018| commodity customer's account as provided in Subparagraph (iii), | 0019| the commodity intermediary's jurisdiction is the jurisdiction in | 0020| which is located the chief executive office of the commodity | 0021| intermediary. | 0022| (f) Perfection of a security interest by | 0023| filing, automatic perfection of a security interest in | 0024| investment property granted by a broker or securities | 0025| intermediary and automatic perfection of a security interest in | 0001| a commodity contract or commodity account granted by a commodity | 0002| intermediary are governed by the local law of the jurisdiction | 0003| in which the debtor is located." | 0004| Section 57. Section 55-9-105 NMSA 1978 (being Laws 1961, | 0005| Chapter 96, Section 9-105, as amended) is amended to read: | 0006| "55-9-105. DEFINITIONS AND INDEX OF DEFINITIONS.-- | 0007| (1) In Chapter 55, Article 9 NMSA 1978, unless the | 0008| context otherwise requires: | 0009| (a) "account debtor" means the person who is | 0010| obligated on an account, chattel paper or general intangible; | 0011| (b) "chattel paper" means a writing or writings | 0012| which evidence both a monetary obligation and a security | 0013| interest in or a lease of specific goods, but a charter or other | 0014| contract involving the use or hire of a vessel is not chattel | 0015| paper. When a transaction is evidenced both by such a security | 0016| agreement or a lease and by an instrument or a series of | 0017| instruments, the group of writings taken together constitutes | 0018| chattel paper; | 0019| (c) "collateral" means the property subject to | 0020| a security interest and includes accounts and chattel paper | 0021| which have been sold; | 0022| (d) "debtor" means the person who owes payment | 0023| or other performance of the obligation secured, whether or not | 0024| he owns or has rights in the collateral, and includes the seller | 0025| of accounts or chattel paper. Where the debtor and the owner of | 0001| the collateral are not the same person, the term "debtor" means | 0002| the owner of the collateral in any provision of the article | 0003| dealing with the collateral, the obligor in any provision | 0004| dealing with the obligation and may include both where the | 0005| context so requires; | 0006| (e) "deposit account" means a demand, time, | 0007| savings, passbook or like account maintained with a bank, | 0008| savings and loan association, credit union or like organization, | 0009| other than an account evidenced by a certificate of deposit; | 0010| (f) "document" means document of title as | 0011| defined in the general definitions of Article 1 (Section | 0012| 55-1-201 NMSA 1978) and a receipt of the kind described in | 0013| Subsection (2) of Section 55-7-201 NMSA 1978; | 0014| (g) "encumbrance" includes real estate | 0015| mortgages and other liens on real estate and all other rights in | 0016| real estate that are not ownership interests; | 0017| (h) "goods" includes all things which are | 0018| movable at the time the security interest attaches or which are | 0019| fixtures (Section 55-9-313 NMSA 1978), but does not include | 0020| money, documents, instruments, investment property, commodity | 0021| contracts, accounts, chattel paper, general intangibles or | 0022| minerals or the like (including oil and gas) before extraction. | 0023| "Goods" also includes standing timber which is to be cut and | 0024| removed under a conveyance or contract for sale, the unborn | 0025| young of animals and growing crops; | 0001| (i) "instrument" means a negotiable instrument | 0002| (defined in Section 55-3-104 NMSA 1978) [or a certificated | 0003| security (defined in Section 55-8-102 NMSA 1978)] or any other | 0004| writing which evidences a right to the payment of money and is | 0005| not itself a security agreement or lease and is of a type which | 0006| is in ordinary course of business transferred by delivery with | 0007| any necessary indorsement or assignment. The term does not | 0008| include investment property; | 0009| (j) "mortgage" means a consensual interest | 0010| created by a real estate mortgage, a trust deed on real estate | 0011| or the like; | 0012| (k) an advance is made "pursuant to commitment" | 0013| if the secured party has bound himself to make it, whether or | 0014| not a subsequent event of default or other event not within his | 0015| control has relieved or may relieve him from his obligation; | 0016| (l) "security agreement" means an agreement | 0017| which creates or provides for a security interest; | 0018| (m) "secured party" means a lender, seller or | 0019| other person in whose favor there is a security interest, | 0020| including a person to whom accounts or chattel paper have been | 0021| sold. When the holders of obligations issued under an indenture | 0022| of trust, equipment trust agreement or the like are represented | 0023| by a trustee or other person, the representative is the secured | 0024| party; and | 0025| (n) "transmitting utility" means any person | 0001| primarily engaged in the railroad, street railway or trolley bus | 0002| business, the electric or electronics communications | 0003| transmission business, the transmission of goods by pipeline or | 0004| the transmission or the production and transmission of | 0005| electricity, steam, gas or water or the provision of sewer | 0006| service. | 0007| (2) Other definitions applying to Chapter 55, | 0008| Article 9 NMSA 1978 and the sections in which they appear are: | 0009| "account". Section 55-9-106 NMSA 1978; | 0010| "attach". Section 55-9-203 NMSA 1978; | 0011| "commodity contract". Section 55-9-115 NMSA 1978; | 0012| "commodity customer". Section 55-9-115 NMSA 1978; | 0013| "commodity intermediary". Section 55-9-115 NMSA | 0014| 1978; | 0015| "construction mortgage". Subsection 1 of Section | 0016| 55-9-313 NMSA 1978; | 0017| "consumer goods". Subsection (1) of Section | 0018| 55-9-109 NMSA 1978; | 0019| "control". Section 55-9-115 NMSA 1978; | 0020| "equipment". Subsection (2) of Section 55-9-109 NMSA | 0021| 1978; | 0022| "farm products". Subsection (3) of Section 55-9-109 | 0023| NMSA 1978; | 0024| "fixture". Section 55-9-313 NMSA 1978; | 0025| "fixture filing". Section 55-9-313 NMSA 1978; | 0001| "general intangibles". Section 55-9-106 NMSA 1978; | 0002| "inventory". Subsection (4) of Section 55-9-109 NMSA | 0003| 1978; | 0004| "investment property". Section 55-9-115 NMSA 1978; | 0005| "lien creditor". Subsection (3) of Section 55-9-301 | 0006| NMSA 1978; | 0007| "proceeds". Subsection (1) of Section 55-9-306 NMSA | 0008| 1978; | 0009| "purchase money security interest". Section | 0010| 55-9-107 NMSA 1978; and | 0011| "United States". Section 55-9-103 NMSA 1978. | 0012| (3) The following definitions in other articles | 0013| apply to Chapter 55, Article 9 NMSA 1978: | 0014| "broker". Section 55-8-102 NMSA 1978; | 0015| "certificated security". Section 55-8-102 NMSA | 0016| 1978; | 0017| "check". Section 55-3-104 NMSA 1978; | 0018| "clearing corporation". Section 55-8-102 NMSA | 0019| 1978; "contract for sale". Section 55-2-106 NMSA | 0020| 1978; | 0021| "control". Section 55-8-106 NMSA 1978; | 0022| "delivery". Section 55-8-301 NMSA 1978; | 0023| "entitlement holder". Section 55-8-102 NMSA 1978; | 0024| "financial asset". Section 55-8-102 NMSA 1978; | 0025| "holder in due course". Section 55-3-302 NMSA 1978; | 0001| "note". Section 55-3-104 NMSA 1978; | 0002| "sale". Section 55-2-106 NMSA 1978; [and] | 0003| "securities intermediary". Section 55-8-102 NMSA | 0004| 1978; | 0005| "security". Section 55-8-102 NMSA 1978; | 0006| "security certificate". Section 55-8-102 NMSA 1978; | 0007| and | 0008| "security entitlement". Section 55-8-102 NMSA 1978. | 0009| (4) In addition, Chapter 55, Article 1 NMSA 1978 | 0010| contains general definitions and principles of construction and | 0011| interpretation applicable throughout Chapter 55, Article 9 NMSA | 0012| 1978." | 0013| Section 58. Section 55-9-106 NMSA 1978 (being Laws 1961, | 0014| Chapter 96, Section 9-106, as amended) is amended to read: | 0015| "55-9-106. DEFINITIONS--"ACCOUNT"--"GENERAL | 0016| INTANGIBLES".--"Account" means any right to payment for goods | 0017| sold or leased or for services rendered which is not evidenced | 0018| by an instrument or chattel paper, whether or not it has been | 0019| earned by performance. "General intangibles" means any personal | 0020| property (including things in action) other than goods, | 0021| accounts, chattel paper, documents, instruments, investment | 0022| property and money. All rights to payment earned or unearned | 0023| under a charter or other contract involving the use or hire of a | 0024| vessel and all rights incident to the charter or contract are | 0025| accounts." | 0001| Section 59. A new section of the Uniform Commercial Code, | 0002| Section 55-9-115 NMSA 1978, is enacted to read: | 0003| "55-9-115. [NEW MATERIAL] INVESTMENT PROPERTY.-- | 0004| (1) In this Article: | 0005| (a) "commodity account" means an account | 0006| maintained by a commodity intermediary in which a commodity | 0007| contract is carried for a commodity customer; | 0008| (b) "commodity contract" means a commodity | 0009| futures contract, an option on a commodity futures contract, a | 0010| commodity option or other contract that, in each case, is: | 0011| (i) traded on or subject to the rules of | 0012| a board of trade that has been designated as a contract market | 0013| for such a contract pursuant to the federal commodities laws; or | 0014| (ii) traded on a foreign commodity board | 0015| of trade, exchange or market and is carried on the books of a | 0016| commodity intermediary for a commodity customer; | 0017| (c) "commodity customer" means a person for | 0018| whom a commodity intermediary carries a commodity contract on | 0019| its books; | 0020| (d) "commodity intermediary" means: | 0021| (i) a person who is registered as a | 0022| futures commission merchant under the federal commodities laws; | 0023| or | 0024| (ii) a person who in the ordinary course | 0025| of its business provides clearance or settlement services for a | 0001| board of trade that has been designated as a contract market | 0002| pursuant to the federal commodities laws; | 0003| (e) "control" with respect to a certificated | 0004| security, uncertificated security or security entitlement has | 0005| the meaning specified in Section 8-106. A secured party has | 0006| control over a commodity contract if by agreement among the | 0007| commodity customer, the commodity intermediary, and the secured | 0008| party, the commodity intermediary, has agreed that it will apply | 0009| any value distributed on account of the commodity contract as | 0010| directed by the secured party without further consent by the | 0011| commodity customer. If a commodity customer grants a security | 0012| interest in a commodity contract to its own commodity | 0013| intermediary, the commodity intermediary as secured party has | 0014| control. A secured party has control over a securities account | 0015| or commodity account if the secured party has control over all | 0016| security entitlements or commodity contracts carried in the | 0017| securities account or commodity account; and | 0018| (f) "investment property" means: | 0019| (i) a security, whether certificated or | 0020| uncertificated; | 0021| (ii) a security entitlement; | 0022| (iii) a securities account; | 0023| (iv) a commodity contract; or | 0024| (v) a commodity account. | 0025| (2) Attachment or perfection of a security interest | 0001| in a securities account is also attachment or perfection of a | 0002| security interest in all security entitlements carried in the | 0003| securities account. Attachment or perfection of a security | 0004| interest in a commodity account is also attachment or perfection | 0005| of a security interest in all commodity contracts carried in the | 0006| commodity account. | 0007| (3) A description of collateral in a security | 0008| agreement or financing statement is sufficient to create or | 0009| perfect a security interest in a certificated security, | 0010| uncertificated security, security entitlement, securities | 0011| account, commodity contract or commodity account whether it | 0012| describes the collateral by those terms or as investment | 0013| property or by description of the underlying security, financial | 0014| asset or commodity contract. A description of investment | 0015| property collateral in a security agreement or financing | 0016| statement is sufficient if it identifies the collateral by | 0017| specific listing, by category, by quantity, by a computational | 0018| or allocational formula or procedure or by any other method, if | 0019| the identity of the collateral is objectively determinable. | 0020| (4) Perfection of a security interest in investment | 0021| property is governed by the following rules: | 0022| (a) a security interest in investment property | 0023| may be perfected by control; | 0024| (b) except as otherwise provided in Paragraphs | 0025| (c) and (d), a security interest in investment property may be | 0001| perfected by filing; | 0002| (c) if the debtor is a broker or securities | 0003| intermediary a security interest in investment property is | 0004| perfected when it attaches. The filing of a financing statement | 0005| with respect to a security interest in investment property | 0006| granted by a broker or securities intermediary has no effect for | 0007| purposes of perfection or priority with respect to that security | 0008| interest; and | 0009| (d) if a debtor is a commodity intermediary, a | 0010| security interest in a commodity contract or a commodity account | 0011| is perfected when it attaches. The filing of a financing | 0012| statement with respect to a security interest in a commodity | 0013| contract or a commodity account granted by a commodity | 0014| intermediary has no effect for purposes of perfection or | 0015| priority with respect to that security interest. | 0016| (5) Priority between conflicting security interests | 0017| in the same investment property is governed by the following | 0018| rules: | 0019| (a) a security interest of a secured party who | 0020| has control over investment property has priority over a | 0021| security interest of a secured party who does not have control | 0022| over the investment property; | 0023| (b) except as otherwise provided in Paragraphs | 0024| (c) and (d), conflicting security interests of secured parties, | 0025| each of whom has control, rank equally; | 0001| (c) except as otherwise agreed by the | 0002| securities intermediary, a security interest in a security | 0003| entitlement or a securities account granted to the debtor's own | 0004| securities intermediary has priority over any security interest | 0005| granted by the debtor to another secured party; | 0006| (d) except as otherwise agreed by the commodity | 0007| intermediary, a security interest in a commodity contract or a | 0008| commodity account granted to the debtor's own commodity | 0009| intermediary has priority over any security interest granted by | 0010| the debtor to another secured party; | 0011| (e) conflicting security interests granted by a | 0012| broker, a securities intermediary or a commodity intermediary | 0013| which are perfected without control rank equally; and | 0014| (f) in all other cases, priority between | 0015| conflicting security interests in investment property is | 0016| governed by Section 9-312(5), (6) and (7). Section 9-312(4) | 0017| does not apply to investment property. | 0018| (6) If a security certificate in registered form is | 0019| delivered to a secured party pursuant to agreement, a written | 0020| security agreement is not required for attachment or | 0021| enforceability of the security interest, delivery suffices for | 0022| perfection of the security interest and the security interest | 0023| has priority over a conflicting security interest perfected by | 0024| means other than control, even if a necessary indorsement is | 0025| lacking." | 0001| Section 60. A new section of the Uniform Commercial Code, | 0002| Section 55-9-116 NMSA 1978, is enacted to read: | 0003| "55-9-116. [NEW MATERIAL] SECURITY INTEREST ARISING IN | 0004| PURCHASE OR DELIVERY OF FINANCIAL ASSET.-- | 0005| (1) If a person buys a financial asset through a | 0006| securities intermediary in a transaction in which the buyer is | 0007| obligated to pay the purchase price to the securities | 0008| intermediary at the time of the purchase, and the securities | 0009| intermediary credits the financial asset to the buyer's | 0010| securities account before the buyer pays the securities | 0011| intermediary, the securities intermediary has a security | 0012| interest in the buyer's security entitlement securing the | 0013| buyer's obligation to pay. A security agreement is not required | 0014| for attachment or enforceability of the security interest, and | 0015| the security interest is automatically perfected. | 0016| (2) If a certificated security or other financial | 0017| asset represented by a writing which in the ordinary course of | 0018| business is transferred by delivery with any necessary | 0019| indorsement or assignment is delivered pursuant to an agreement | 0020| between persons in the business of dealing with such securities | 0021| or financial assets and the agreement calls for delivery versus | 0022| payment, the person delivering the certificate or other | 0023| financial asset has a security interest in the certificated | 0024| security or other financial asset securing the seller's right to | 0025| receive payment. A security agreement is not required for | 0001| attachment or enforceability of the security interest, and the | 0002| security interest is automatically perfected." | 0003| Section 61. Section 55-9-203 NMSA 1978 (being Laws 1961, | 0004| Chapter 96, Section 9-203, as amended) is amended to read: | 0005| "55-9-203. ATTACHMENT AND ENFORCEABILITY OF SECURITY | 0006| INTEREST--PROCEEDS--FORMAL REQUISITES.-- | 0007| (1) Subject to the provisions of Section 55-4-210 | 0008| NMSA 1978 on the security interest of a collecting bank, | 0009| [Section 55-8-321 NMSA 1978 on security interests in | 0010| securities] Sections 55-9-115 and 55-9-116 NMSA 1978 on | 0011| security interests in investment property and Section 55-9-113 | 0012| NMSA 1978 on a security interest arising under the article on | 0013| sales (Article 2) or the article on leases (Article 2A), a | 0014| security interest is not enforceable against the debtor or third | 0015| parties with respect to the collateral and does not attach | 0016| unless: | 0017| (a) the collateral is in the possession of the | 0018| secured party pursuant to agreement, the collateral is | 0019| investment property and the secured party has control pursuant | 0020| to agreement, or the debtor has signed a security agreement | 0021| that contains a description of the collateral and in addition, | 0022| when the security interest covers crops growing or to be grown | 0023| or timber to be cut, a description of the land concerned; | 0024| (b) value has been given; and | 0025| (c) the debtor has rights in the collateral. | 0001| (2) A security interest attaches when it becomes | 0002| enforceable against the debtor with respect to the collateral. | 0003| Attachment occurs as soon as all of the events specified in | 0004| Subsection (1) of this section have taken place unless explicit | 0005| agreement postpones the time of attaching. | 0006| (3) Unless otherwise agreed, a security agreement | 0007| gives the secured party the rights to proceeds provided by | 0008| Section 55-9-306 NMSA 1978. | 0009| (4) A transaction, although subject to Chapter 55, | 0010| Article 9 NMSA 1978, is also subject to the Oil and Gas Products | 0011| Lien Act; Sections 56-1-1 through 56-1-15 NMSA 1978 (pertaining | 0012| to retail installment sales); Sections [56-8-15 through 56-8-20] 56-12-1 through 56-12-16 NMSA 1978 (pertaining to credit | 0013| extended by pawnbrokers [traders and others]); the New Mexico | 0014| Bank Installment Loan Act of 1959; the New Mexico Small Loan Act | 0015| of 1955; and the Motor Vehicle Sales Finance Act. In the case | 0016| of conflict between the provisions of Chapter 55, Article 9 NMSA | 0017| 1978 and any such statute, the provisions of such statute | 0018| control. Failure to comply with any applicable statute has only | 0019| the effect which is specified therein." | 0020| Section 62. Section 55-9-301 NMSA 1978 (being Laws 1961, | 0021| Chapter 96, Section 9-301, as amended) is amended to read: | 0022| "55-9-301. PERSONS WHO TAKE PRIORITY OVER UNPERFECTED | 0023| SECURITY INTERESTS--RIGHT OF "LIEN CREDITOR".-- | 0024| (1) Except as otherwise provided in Subsection (2) | 0025| of this section, an unperfected security interest is subordinate | 0001| to the rights of: | 0002| (a) persons entitled to priority under Section | 0003| 55-9-312 NMSA 1978; | 0004| (b) a person who becomes a lien creditor before | 0005| the security interest is perfected; | 0006| (c) in the case of goods, instruments, | 0007| documents and chattel paper, a person who is not a secured party | 0008| and who is a transferee in bulk or other buyer not in ordinary | 0009| course of business or is a buyer of farm products in ordinary | 0010| course of business, to the extent that he gives value and | 0011| receives delivery of the collateral without knowledge of the | 0012| security interest and before it is perfected; and | 0013| (d) in the case of accounts, [and] general | 0014| intangibles and investment property, a person who is not a | 0015| secured party and who is a transferee to the extent that he | 0016| gives value without knowledge of the security interest and | 0017| before it is perfected. | 0018| (2) If the secured party files with respect to a | 0019| purchase money security interest before or within twenty days | 0020| after the debtor receives possession of the collateral, he takes | 0021| priority over the rights of a transferee in bulk or of a lien | 0022| creditor which arise between the time the security interest | 0023| attaches and the time of filing. | 0024| (3) A "lien creditor" means a creditor who has | 0025| acquired a lien on the property involved by attachment, levy or | 0001| the like and includes an assignee for benefit of creditors from | 0002| the time of assignment and a trustee in bankruptcy from the date | 0003| of the filing of the petition or a receiver in equity from the | 0004| time of appointment. | 0005| (4) A person who becomes a lien creditor while a | 0006| security interest is perfected takes subject to the security | 0007| interest only to the extent that it secures advances made before | 0008| he becomes a lien creditor or within forty-five days thereafter | 0009| or made without knowledge of the lien or pursuant to a | 0010| commitment entered into without knowledge of the lien." | 0011| Section 63. Section 55-9-302 NMSA 1978 (being Laws 1961, | 0012| Chapter 96, Section 9-302, as amended) is amended to read: | 0013| "55-9-302. WHEN FILING IS REQUIRED TO PERFECT SECURITY | 0014| INTEREST--SECURITY INTERESTS TO WHICH FILING PROVISIONS OF THIS | 0015| ARTICLE DO NOT APPLY.-- | 0016| (1) A financing statement must be filed to perfect | 0017| all security interests except the following: | 0018| (a) a security interest in collateral in | 0019| possession of the secured party under Section 55-9-305 NMSA | 0020| 1978; | 0021| (b) a security interest temporarily perfected | 0022| in instruments, certificated securities or documents without | 0023| delivery under Section 55-9-304 NMSA 1978 or in proceeds for a | 0024| ten-day period under Section 55-9-306 NMSA 1978; | 0025| (c) a security interest created by an | 0001| assignment of a beneficial interest in a trust or a decedent's | 0002| estate; | 0003| (d) a purchase money security interest in | 0004| consumer goods; but filing is required for a motor vehicle | 0005| required to be registered; and fixture filing is required for | 0006| priority over conflicting interests in fixtures to the extent | 0007| provided in Section 55-9-313 NMSA 1978; | 0008| (e) an assignment of accounts that does not | 0009| alone or in conjunction with other assignments to the same | 0010| assignee transfer a significant part of the outstanding accounts | 0011| of the assignor; | 0012| (f) a security interest of a collecting bank | 0013| (Section 55-4-210 NMSA 1978) [or in securities (Section | 0014| 55-8-321 NMSA 1978)] or arising under the article on sales | 0015| (Article 2) or the article on leases (Article 2A) (see Section | 0016| 55-9-113 NMSA 1978) or covered in Subsection (3) of this | 0017| section; [or] | 0018| (g) an assignment for the benefit of all the | 0019| creditors of the transferor and subsequent transfers by the | 0020| assignee thereunder; or | 0021| (h) a security interest in personal property | 0022| which is perfected without filing under Section 55-9-515 | 0023| or 55-9-116 NMSA 1978. | 0024| (2) If a secured party assigns a perfected security | 0025| interest, no filing under this article is required in order to | 0001| continue the perfected status of the security interest against | 0002| creditors of and transferees from the original debtor. | 0003| (3) The filing of a financing statement otherwise | 0004| required by Chapter 55, Article 9 NMSA 1978 is not necessary or | 0005| effective to perfect a security interest in property subject to: | 0006| (a) a statute or treaty of the United States | 0007| that provides for a national or international registration or a | 0008| national or international certificate of title or that specifies | 0009| a place of filing different from that specified in this article | 0010| for filing of the security interest; [or] | 0011| (b) the following statutes of this state: | 0012| Sections 66-3-201 through 66-3-204 of the Motor Vehicle Code and | 0013| any other certificate of title statute covering automobiles, | 0014| trailers, mobile homes, boats, farm tractors or the like; but | 0015| during any period in which collateral is inventory held for sale | 0016| by a person who is in the business of selling goods of that | 0017| kind, the filing provisions of Chapter 55, Article 9 NMSA 1978 | 0018| apply to a security interest in that collateral created by him | 0019| as debtor; or | 0020| (c) a certificate of title statute of another | 0021| jurisdiction under the law of which indication of a security | 0022| interest on the certificate is required as a condition of | 0023| perfection (Subsection (2) of Section 55-9-103 NMSA 1978). | 0024| (4) Compliance with a statute or treaty described in | 0025| Subsection (3) of this section is equivalent to the filing of a | 0001| financing statement under Chapter 55, Article 9 NMSA 1978, and a | 0002| security interest in property subject to the statute or treaty | 0003| can be perfected only by compliance therewith except as provided | 0004| in Section 55-9-103 NMSA 1978 on multiple state transactions. | 0005| Duration and renewal of perfection of a security interest | 0006| perfected by compliance with the statute or treaty are governed | 0007| by the provisions of the statute or treaty; in other respects | 0008| the security interest is subject to Chapter 55, Article 9 NMSA | 0009| 1978." | 0010| Section 64. Section 55-9-304 NMSA 1978 (being Laws 1961, | 0011| Chapter 96, Section 9-304, as amended) is amended to read: | 0012| "55-9-304. PERFECTION OF SECURITY INTEREST IN INSTRUMENTS, | 0013| DOCUMENTS AND GOODS COVERED BY DOCUMENTS--PERFECTION BY | 0014| PERMISSIVE FILING--TEMPORARY PERFECTION WITHOUT FILING OR | 0015| TRANSFER OF POSSESSION.-- | 0016| (1) A security interest in chattel paper or | 0017| negotiable documents may be perfected by filing. A security | 0018| interest in money or instruments (other than [certificated | 0019| securities or] instruments which constitute part of chattel | 0020| paper) can be perfected only by the secured party's taking | 0021| possession, except as provided in Subsections (4) and (5) of | 0022| this section and Subsections (2) and (3) of Section 55-9-306 | 0023| NMSA 1978 on proceeds. | 0024| (2) During the period that goods are in the | 0025| possession of the issuer of a negotiable document therefor, a | 0001| security interest in the goods is perfected by perfecting a | 0002| security interest in the document, and any security interest in | 0003| the goods otherwise perfected during such period is subject | 0004| thereto. | 0005| (3) A security interest in goods in the possession | 0006| of a bailee other than one who has issued a negotiable document | 0007| therefor is perfected by issuance of a document in the name of | 0008| the secured party or by the bailee's receipt of notification of | 0009| the secured party's interest or by filing as to the goods. | 0010| (4) A security interest in instruments [(other than | 0011| certificated securities)], certificated securities or | 0012| negotiable documents is perfected without filing or the taking | 0013| of possession for a period of twenty-one days from the time it | 0014| attaches to the extent that it arises for new value given under | 0015| a written security agreement. | 0016| (5) A security interest remains perfected for a | 0017| period of twenty-one days without filing where a secured party | 0018| having a perfected security interest in an instrument [(other | 0019| than a certificated security)], a certificated security, a | 0020| negotiable document or goods in possession of a bailee other | 0021| than one who has issued a negotiable document therefor: | 0022| (a) makes available to the debtor the goods or | 0023| documents representing the goods for the purpose of ultimate | 0024| sale or exchange or for the purpose of loading, unloading, | 0025| storing, shipping, transhipping, manufacturing, processing or | 0001| otherwise dealing with them in a manner preliminary to their | 0002| sale or exchange, but priority between conflicting security | 0003| interests in the goods is subject to Subsection (3) of Section | 0004| 55-9-312 NMSA 1978; or | 0005| (b) delivers the instrument or certificated | 0006| security to the debtor for the purpose of ultimate sale or | 0007| exchange or of presentation, collection, renewal or registration | 0008| of transfer. | 0009| (6) After the twenty-one-day period in Subsections | 0010| (4) and (5) of this section, perfection depends upon compliance | 0011| with applicable provisions of Chapter 55, Article 9 NMSA 1978." | 0012| Section 65. Section 55-9-305 NMSA 1978 (being Laws 1961, | 0013| Chapter 96, Section 9-305, as amended) is amended to read: | 0014| "55-9-305. WHEN POSSESSION BY SECURED PARTY PERFECTS | 0015| SECURITY INTEREST WITHOUT FILING.--A security interest in | 0016| letters of credit and advices of credit (Paragraph (a) of | 0017| Subsection 2 of Section 55-5-116 NMSA 1978), goods, instruments | 0018| [(other than certificated securities)], money, negotiable | 0019| documents or chattel paper may be perfected by the secured | 0020| party's taking possession of the collateral. If such collateral | 0021| other than goods covered by a negotiable document is held by a | 0022| bailee, the secured party is deemed to have possession from the | 0023| time the bailee receives notification of the secured party's | 0024| interest. A security interest is perfected by possession from | 0025| the time possession is taken without relation back and continues | 0001| only so long as possession is retained, unless otherwise | 0002| specified in Chapter 55, Article 9 NMSA 1978. The security | 0003| interest may be otherwise perfected as provided in that article | 0004| before or after the period of possession by the secured party." | 0005| Section 66. Section 55-9-306 NMSA 1978 (being Laws 1961, | 0006| Chapter 96, Section 9-306, as amended) is amended to read: | 0007| "55-9-306. "PROCEEDS"--SECURED PARTY'S RIGHTS ON | 0008| DISPOSITION OF COLLATERAL.-- | 0009| (1) "Proceeds" includes whatever is received upon | 0010| the sale, exchange, collection or other disposition of | 0011| collateral or proceeds. Insurance payable by reason of loss or | 0012| damage to the collateral is proceeds, except to the extent that | 0013| it is payable to a person other than a party to the security | 0014| agreement. Any payments or distributions made with respect to | 0015| investment property collateral are proceeds. Money, checks, | 0016| deposit accounts and the like are "cash proceeds". All other | 0017| proceeds are "non-cash proceeds". | 0018| (2) Except where [this article] Chapter 55, | 0019| Article 9 NMSA 1978 otherwise provides, a security interest | 0020| continues in collateral notwithstanding sale, exchange or other | 0021| disposition thereof unless the disposition was authorized by the | 0022| secured party in the security agreement or otherwise and also | 0023| continues in any identifiable proceeds, including collections, | 0024| received by the debtor. | 0025| (3) The security interest in proceeds is a | 0001| continuously perfected security interest if the interest in the | 0002| original collateral was perfected, but it ceases to be a | 0003| perfected security interest and becomes unperfected ten days | 0004| after receipt of the proceeds by the debtor unless: | 0005| (a) a filed financing statement covers the | 0006| original collateral and the proceeds are collateral in which a | 0007| security interest may be perfected by filing in the office or | 0008| offices where the financing statement has been filed and, if the | 0009| proceeds are acquired with cash proceeds, the description of | 0010| collateral in the financing statement indicates the types of | 0011| property constituting the proceeds; [or] | 0012| (b) a filed financing statement covers the | 0013| original collateral and the proceeds are identifiable cash | 0014| proceeds; [or] | 0015| (c) the original collateral was investment | 0016| property and the proceeds are identifiable cash proceeds; or | 0017| [(c)] (d) the security interest in the | 0018| proceeds is perfected before the expiration of the ten-day | 0019| period. | 0020| Except as provided in this section, a security interest in | 0021| proceeds can be perfected only by the methods or under the | 0022| circumstances permitted in [this article] Chapter 55, Article | 0023| 9 NMSA 1978 for original collateral of the same type. | 0024| (4) In the event of insolvency proceedings | 0025| instituted by or against a debtor, a secured party with a | 0001| perfected security interest in proceeds has a perfected security | 0002| interest only in the following proceeds: | 0003| (a) in identifiable non-cash proceeds and in | 0004| separate deposit accounts containing only proceeds; | 0005| (b) in identifiable cash proceeds in the form | 0006| of money which is neither commingled with other money nor | 0007| deposited in a deposit account prior to the insolvency | 0008| proceedings; | 0009| (c) in identifiable cash proceeds in the form | 0010| of checks and the like which are not deposited in a deposit | 0011| account prior to the insolvency proceedings; and | 0012| (d) in all cash and deposit accounts of the | 0013| debtor in which proceeds have been commingled with other funds, | 0014| but the perfected security interest under this Paragraph (d) is: | 0015| (i) subject to any right of set-off; and | 0016| (ii) limited to an amount not greater | 0017| than the amount of any cash proceeds received by the debtor | 0018| within ten days before the institution of the insolvency | 0019| proceedings less the sum of (I) the payments to the secured | 0020| party on account of cash proceeds received by the debtor during | 0021| such period and (II) the cash proceeds received by the debtor | 0022| during such period to which the secured party is entitled under | 0023| Paragraphs (a) through (c) of this Subsection [(4)]. | 0024| (5) If a sale of goods results in an account or | 0025| chattel paper which is transferred by the seller to a secured | 0001| party, and if the goods are returned to or are repossessed by | 0002| the seller or the secured party, the following rules determine | 0003| priorities: | 0004| (a) if the goods were collateral at the time of | 0005| sale, for an indebtedness of the seller which is still unpaid, | 0006| the original security interest attaches again to the goods and | 0007| continues as a perfected security interest if it was perfected | 0008| at the time when the goods were sold. If the security interest | 0009| was originally perfected by a filing which is still effective, | 0010| nothing further is required to continue the perfected status; in | 0011| any other case, the secured party must take possession of the | 0012| returned or repossessed goods or must file; | 0013| (b) an unpaid transferee of the chattel paper | 0014| has a security interest in the goods against the transferor. | 0015| Such security interest is prior to a security interest asserted | 0016| under Paragraph (a) of this subsection to the extent that the | 0017| transferee of the chattel paper was entitled to priority under | 0018| Section [9-308] 55-9-308 NMSA 1978; | 0019| (c) an unpaid transferee of the account has a | 0020| security interest in the goods against the transferor. Such | 0021| security interest is subordinate to a security interest asserted | 0022| under Paragraph (a) of this subsection; and | 0023| (d) a security interest of an unpaid transferee | 0024| asserted under Paragraph (b) or (c) of this subsection must be | 0025| perfected for protection against creditors of the transferor and | 0001| purchasers of the returned or repossessed goods." | 0002| Section 67. Section 55-9-309 NMSA 1978 (being Laws 1961, | 0003| Chapter 96, Section 9-309, as amended) is amended to read: | 0004| "55-9-309. PROTECTION OF PURCHASERS OF INSTRUMENTS AND | 0005| DOCUMENTS AND SECURITIES.--Nothing in this article limits the | 0006| rights of a holder in due course of a negotiable instrument | 0007| (Section 55-3-302 NMSA 1978) or a holder to whom a negotiable | 0008| document of title has been duly negotiated (Section 55-7-501 | 0009| NMSA 1978) or a [bona fide] protected purchaser of a se- | 0010| curity (Section [55-8-302] 55-8-303 NMSA 1978) and such | 0011| holders or purchasers take priority over an earlier security | 0012| interest even though perfected. Filing under this article does | 0013| not constitute notice of the security interest to such holders | 0014| or purchasers." | 0015| Section 68. Section 55-9-312 NMSA 1978 (being Laws 1961, | 0016| Chapter 96, Section 9-312, as amended) is amended to read: | 0017| "55-9-312. PRIORITIES AMONG CONFLICTING SECURITY INTERESTS | 0018| IN THE SAME COLLATERAL.-- | 0019| (1) The rules of priority stated in other sections | 0020| of this part and in the following sections shall govern when | 0021| applicable: Section 55-4-210 NMSA 1978 with respect to the | 0022| security interests of collecting banks in items being collected, | 0023| accompanying documents and proceeds; Section | 0024| 55-9-103 NMSA 1978 on security interests related to other | 0025| jurisdictions; [and] Section 55-9-114 NMSA 1978 on | 0001| consignments; and Section 55-9-115 on security interests in | 0002| investment property. | 0003| (2) A perfected security interest in crops, for new | 0004| value given to enable the debtor to produce the crops during the | 0005| production season and given not more than three months before | 0006| the crops become growing crops by planting or otherwise, takes | 0007| priority over an earlier perfected security interest to the | 0008| extent that such earlier interest secures obligations due more | 0009| than six months before the crops become growing crops by | 0010| planting or otherwise, even though the person giving new value | 0011| had knowledge of the earlier security interest. | 0012| (3) A perfected purchase money security interest in | 0013| inventory has priority over a conflicting security interest in | 0014| the same inventory and also has priority in identifiable cash | 0015| proceeds received on or before the delivery of the inventory to | 0016| a buyer if: | 0017| (a) the purchase money security interest is | 0018| perfected at the time the debtor receives possession of the | 0019| inventory; | 0020| (b) the purchase money secured party gives | 0021| notification in writing to the holder of the conflicting | 0022| security interest if the holder had filed a financing statement | 0023| covering the same types of inventory (i) before the date of the | 0024| filing made by the purchase money secured party, or (ii) before | 0025| the beginning of the twenty-one-day period where the purchase | 0001| money security interest is temporarily perfected without filing | 0002| or possession (Subsection (5) of Section 55-9-304 NMSA 1978); | 0003| (c) the holder of the conflicting security | 0004| interest receives the notification within five years before the | 0005| debtor receives possession of the inventory; and | 0006| (d) the notification states that the person | 0007| giving the notice has or expects to acquire a purchase money | 0008| security interest in inventory of the debtor, describing such | 0009| inventory by item or type. | 0010| (4) A purchase money security interest in collateral | 0011| other than inventory has priority over a conflicting security | 0012| interest in the same collateral or its proceeds if the purchase | 0013| money security interest is perfected at the time the debtor | 0014| receives possession of the collateral or within twenty days | 0015| thereafter. | 0016| (5) In all cases not governed by other rules stated | 0017| in this section (including cases of purchase money security | 0018| interests that do not qualify for the special priorities set | 0019| forth in Subsections (3) and (4) of this section), priority | 0020| between conflicting security interests in the same collateral | 0021| shall be determined according to the following rules: | 0022| (a) conflicting security interests rank | 0023| according to priority in time of filing or perfection. Priority | 0024| dates from the time a filing is first made covering the | 0025| collateral or the time the security interest is first perfected, | 0001| whichever is earlier, provided that there is no period | 0002| thereafter when there is neither filing nor perfection; and | 0003| (b) so long as conflicting security interests | 0004| are unperfected, the first to attach has priority. | 0005| (6) For the purposes of Subsection (5) of this | 0006| section, a date of filing or perfection as to collateral is also | 0007| a date of filing or perfection as to proceeds. | 0008| (7) If future advances are made while a security | 0009| interest is perfected by filing, by the taking of possession or | 0010| under Section [55-8-321 on securities] 55-9-115 or 55-9-116 | 0011| NMSA 1978 on security interests in personal property, the | 0012| security interest has the same priority for the purposes of | 0013| Subsection (5) of this section with respect to the future | 0014| advances as it does with respect to the first advance. If a | 0015| commitment is made before or while the security interest is so | 0016| perfected, the security interest has the same priority with | 0017| respect to advances made pursuant thereto. In other cases a | 0018| perfected security interest has priority from the date the | 0019| advance is made." | 0020| Section 69. SAVING CLAUSE.-- | 0021| (a) Chapter 55, Article 8 NMSA 1978 does not affect | 0022| an action or proceeding commenced before that Article takes | 0023| effect. | 0024| (b) If a security interest in a security is | 0025| perfected at the date Chapter 55, Article 8 NMSA 1978 takes | 0001| effect and the action by which the security interest was | 0002| perfected would suffice to perfect a security interest under | 0003| that article, no further action is required to continue | 0004| perfection. If a security interest in a security is perfected | 0005| at the date Chapter 55, Article 8 NMSA 1978 takes effect but the | 0006| action by which the security interest was perfected would not | 0007| suffice to perfect a security interest under that article, the | 0008| security interest remains perfected for a period of four months | 0009| after the effective date and continues perfected thereafter if | 0010| appropriate action to perfect under Chapter 55, Article 8 NMSA | 0011| 1978 is taken within that period. If a security interest is | 0012| perfected at the date Chapter 55, Article 8 NMSA 1978 takes | 0013| effect and the security interest can be perfected by filing | 0014| under that article, a financing statement signed by the secured | 0015| party instead of the debtor may be filed within that period to | 0016| continue perfection or thereafter to perfect. | 0017| Section 70. REPEAL.--Sections 55-8-308 through 55-8-321 | 0018| and Section 55-8-408 NMSA 1978 (being Laws 1961, Chapter 96, | 0019| Sections 8-308 through 8-319, Laws 1967, Chapter 186, Section 3, | 0020| Laws 1987, Chapter 248, Sections 38 and 46, as amended) are | 0021| repealed. | 0022| - 109 - State of New Mexico | 0023| House of Representatives | 0024| | 0025| FORTY-SECOND LEGISLATURE | 0001| SECOND SESSION, 1996 | 0002| | 0003| | 0004| January 24, 1996 | 0005| | 0006| | 0007| Mr. Speaker: | 0008| | 0009| Your JUDICIARY COMMITTEE, to whom has been referred | 0010| | 0011| HOUSE BILL 37 | 0012| | 0013| has had it under consideration and reports same with | 0014| recommendation that it DO PASS, amended as follows: | 0015| | 0016| 1. On page 80, line 5, after the period insert: | 0017| | 0018| "The rules in Paragraphs (c), (d) and (e) of Subsection (3) | 0019| of this section apply to security interests to which this | 0020| paragraph applies.". | 0021| | 0022| Respectfully submitted, | 0023| | 0024| | 0025| | 0001| | 0002| | 0003| Cisco McSorley, Chairman | 0004| | 0005| | 0006| Adopted Not Adopted | 0007| | 0008| (Chief Clerk) (Chief Clerk) | 0009| | 0010| Date | 0011| | 0012| The roll call vote was 7 For 0 Against | 0013| Yes: 7 | 0014| Excused: Alwin, Baca, Christensen, Larranaga, Luna, Sanchez, | 0015| R.G. | 0016| Absent: None | 0017| | 0018| | 0019| .110078.1 | 0020| H0037JC1 | 0021| | 0022| FORTY-SECOND LEGISLATURE | 0023| SECOND SESSION, 1996 | 0024| | 0025| | 0001| February 12, 1996 | 0002| | 0003| Mr. President: | 0004| | 0005| Your JUDICIARY COMMITTEE, to whom has been referred | 0006| | 0007| HOUSE BILL 37, as amended | 0008| | 0009| has had it under consideration and reports same with | 0010| recommendation that it DO PASS, and thence referred to the | 0011| CORPORATIONS AND TRANSPORTATION COMMITTEE. | 0012| | 0013| Respectfully submitted, | 0014| | 0015| | 0016| | 0017| __________________________________ | 0018| Janice D. Paster, Chairman | 0019| | 0020| | 0021| | 0022| Adopted_______________________ Not Adopted_______________________ | 0023| (Chief Clerk) (Chief Clerk) | 0024| | 0025| | 0001| Date ________________________ | 0002| | 0003| | 0004| The roll call vote was 5 For 0 Against | 0005| Yes: 5 | 0006| No: 0 | 0007| Excused: None | 0008| Absent: Carraro, Cisneros, Tsosie, Vernon | 0009| | 0010| | 0011| H0037JU1 | 0012| | 0013| |