23. Add the following additional sentence to subsection 9-403(2): "A filed financing statement, which states that the obligation secured is payable on demand, is effective for five years from the date of filing." Comment of the editorial board: "This amendment adopted in Connecticut, Massachusetts, New Hampshire, New Jersey, and New York makes no change from the intended result, but clarifies a point as to which there is sufficient ambiguity to make the amendment desirable." The source of this proposal is Massachusetts. 24. Add the following to subsection 10-104(2), which subsection has been recommended in this Committee's report (p. 606 of November 1962 Journal): ", and if in any respect there is any inconsistency between that Act and the article of this Act on investment securities (art. 8) the provisions of the former Act shall control", Comment of the editorial board "Doubts have been expressed whether article 8 provides as complete protection on transfers of securities by fiduciaries as the Uniform Act for the Simplification of Fiduciary Security Transfers. The editorial board entirely favors the policy of simplifying fiduciary security transfers and believes that article 8 soundly implements this policy. However, since the shorter Simplification Act has been so widely enacted and has been working satisfactorily, the editorial board recommends that it be retained." This change means that the District of Columbia Uniform Act for Simplification of Fiduciary Security Transfers (subch. II of ch. 23 of title 28 of the D.C. Code) would prevail over article 8 of the UCC. II Resolved, That the Uniform Commercial Code as enacted for the District of Columbia be incorporated in the D.C. Code as a separate chapter or a separate title, denominated "Uniform Commercial Code", with a list of the UCC articles under the chapter or title heading and a list of sections under each article heading, and without any change whatsoever in the UCC article, section, and subsection numbers; and that this system be followed in any revision of the D.C. Code. Comment For the sake of ease of reference and speed in research it is all important that the UCC be taken into the D.C. Code as an entity, and that the same system of numbering be retained with no exceptions. Any renumbering or rearrangement of the UCC provisions would greatly hamper the use, in interpreting the District of Columbia UCC, of State annotations and of texts and articles pertaining to the UCC. CONCLUSION All recommended changes described above, which are approved by the Board of Directors, will be included in the proposed legislation now in the process of preparation. The Uniform Commercial Code has been enacted in 18 States, in 14 of which it is now or will be by January 1, 1963, effective. It is hoped that the District of Columbia will soon be permitted to turn the clock forward and join the growing list of jurisdictions which have decided to make a unified and democratic effort to have their commercial and business life governed basically by the same progressive written law. GEORGE E. MONK, Chairman. Mr. HUDDLESTON. The first witness on H.R. 5338, to enact the Uniform Commercial Code for the District of Columbia, will be from the Bar Association of the District of Columbia. We have Mr. George Monk and Mr. Howard Anderson. Will you come around, Mr. Monk and Mr. Anderson? STATEMENT OF GEORGE MONK AND HOWARD ANDERSON, BAR ASSOCIATION OF THE DISTRICT OF COLUMBIA Mr. MONK. Mr. Chairman, my name is George E. Monk. I am chairman of the Uniform Commercial Code Committee, Bar Association, District of Columbia. I am authorized to say that this bill was prepared under the supervision of the bar association and that it heartily endorses it. I would like at this time to put into the record a list of suggested changes. Most of them are typographical errors. The list also contains several changes which have been recommended by the Corporation Counsel's Office and by the Recorder of Deeds. Mr. HUDDLESTON. Do you have copies of that? Mr. MONK. I have three copies, here, sir. Mr. HUDDLESTON. Without objection, that will be incorporated in the record. (The list referred to follows:) SUGGESTED CHANGES IN H.R. 5338 (1) On page 133, line 19, change "part" to "party". (2) On page 133, line 20, change "holders" to "holder". (3) On page 283, line 14, delete the second "e" in "Delievery". (4) On page 299, the last three lines at the bottom of the page, now numbered 14, 15, and 16, should be inserted after line 10, so that they become lines 11, 12, and 13; and the title "ARTICLE 9" etc. should immediately follow line 13 as lines 14, 15, and 16. (5) On page 309, insert the following between existing lines 14 and 15 as an additional line: "Filing Office". Section 28:9-401(1). (6) On page 343, line 11, add the following additional sentence: In this article, "filing officer" means said Recorder. (7) On pages 350 and 351, delete from the work "mark" in line 22 on page 350 to the end of the sentence in line 1 on page 351, and insert in lieu thereof the following: "attach the statement of release to the instrument to which it relates and shall enter on the released instrument and on the index record thereof the word "released", the date of filing of the statement of release, and a facsimile of his signature." (8) On page 351, line 23, delete "$0.50 per page", and insert in lieu thereof the following: "$3.00 for the first two pages or less and $1.00 for each additional page plus $0.50 for certification." (9) On page 371, line 7, insert the following immediately after "to": "sections 546-A and 546-B, as amended, of the code of law for the District of Columbia approved March 3, 1901 (chapter 854, 31 Stat. 1275), as so renumbered by the Act approved June 5, 1952, chapter 370, sec. 1, 66 Stat. 126 (D.C. Code, 1961 ed., secs. 42-101 and 42-103) or pursuant to". Mr. MONK. I was handed, just before this hearing started, a list of typographical errors which have been found by the members of our committee. At this time I would like to put these into the record, as follows: Page 235, line 11. Page 249, line 12. Page 259, line 9. Page 283, line 14. The word "on" should be changed to "no". The word "notification" is misspelled. Page 299, Index for 28:9-113: Note: Should be "article" instead of "articles". Page 307, line 9. The word "obliged" should be changed to "obligated". Page 308, line 4. Page 308, line 18. Page 331, line 13. Page 338, line 4. cumbrancer". Page 347, line 9. Page 357, line 13. trict". The word "dealing" is misspelled. The word "fixture" should be "fixtures". The word "encumbrance" should be "en The word "security" should be "secured". Page 359, line 12. The words "This State" should be "District". I am also chairman of the Law and Legislation Committee of the Metropolitan Washington Board of Trade. I have a letter addressed to you from President Phillips of the board of trade. It says, "The Metropolitan Washington Board of Trade recommends favorable action on H.R. 5338 * * * "" Mr. HUDDLESTON. Without objection, that letter will be incorporated in the record. (The letter referred to follows:) THE METROPOLITAN WASHINGTON BOARD OF TRADE, Hon. GEORGE HUDDLESTON, Jr., Chairman, Subcommittee No. 5, Committee on the District of Columbia, DEAR MR. HUDDLESTON: The_Metropolitan Washington Board of Trade recommends favorable action on H.R. 5338, the proposed District of Columbia Uniform Commercial Code. This measure has been carefully studied by appropriate board of trade committees since 1958. The District of Columbia Bar Association's report has been reviewed by our committees on manufacturing and distribution, manufacturers representatives, insurance, world trade, and law and legislation. Upon the recommendation of all these groups the board of directors unanimously endorses the bar association report favoring adoption of the code. The chairman of our law and legislation committee, Mr. George E. Monk, who is also chairman of the bar association's committee, is authorized and prepared to express our views respecting the language of H.R. 5338 at these hearings. Sincerely, CHARLES E. PHILLIPS, President. Mr. HUDDLESTON. Have you a prepared statement? Mr. MONK. No, I do not. I have just a few remarks to make. Really, the two reports which our committee has made constitute our prepared statement. Mr. HUDDLESTON. As I mentioned at the beginning of these hearings, the full committee will meet at 11:15 this morning. So, I would appreciate it if you would confine your remarks to the bare essentials. Mr. MONK. Really, everything is in the record. I think everyone knows that the uniform commercial code is a statute designed to cover and integrate into one body of law the whole field of commercial law and in a consistent manner. It really brings commercial law up to date without making any abrupt changes in the law. One of the desirable features of it is that it has been enacted, I believe someone said, in 23 States up to now, and it is before the legislatures of possibly 10 others at the present time and may be enacted by a number of them before very long. The element of uniformity cannot be stressed too much because these days, many of the transactions which attorneys and businessmen get into are multistate transactions where the matter of conflict of laws is an important element, and with a statute which is the same or practically the same in every State, it is much easier for businessmen and for lawyers to handle their various transactions. Not only that, in the District of Columbia we have relatively few judicial decisions on commercial points of these various commercial laws, and we have to rely to a large extent for our judicial law upon the decisions which are handed down in other jurisdictions. With this uniform commercial law, which has practically the same language in every State in which it is adopted, subject to variations which States do put in, it is possible for these judicial decisions in other States to mean a great deal more than they do at present. The proposed act for the District of Columbia follows the official text, with possibly 10 minor changes which are designed to meet local conditions. That is it, in brief. Sections 2 to 14 of the act deal with the changes made in existing District of Columbia law to fit the uniform commercial code into our body of law here. For example, in other portions of the code they refer to mortgages, conditional sales, and so forth. We have changed the phraseology to include the security agreement and security interests. That is the terminology of the uniform commercial code. Mr. HUDDLESTON. I believe you stated that 23 States have already enacted the uniform commercial code, and that it is pending at the present time in 10 additional States. Mr. MONK. Yes. I know definitely that 19 States have done it. I heard someone say this morning that 23 States had enacted it. I know four States in which, according to my latest information, the legislatures have adopted it but the Governors have not signed. I am not sure which of those Governors have signed. I am sure some of them have. Mr. HUDDLESTON. The information we have is that 19 States have enacted it as of March 13, and the legislatures of 4 States have passed it but it has not been signed by the Governor. Mr. MONK. Section 15 of the bill is the repealer section. We have to repeal a number of the statutes now in existence in the District of Columbia because they are superseded by the uniform commercial code. Section 16 states the effective date, which is January 1, 1965. We feel that a period of at least a year between the enactment date and the effective date is very desirable, in order to permit local lawyers, the Recorder of Deeds Office, and others who are interested in the various sections of the code, to become adjusted to it. It is not unusual for States, in adopting the bill, to have a period of a year or so. I think New York had a period of almost 2 years. Mr. HUDDLESTON. This provides for an effective date of January 1, 1965. Mr. MONK. That is right. Mr. HUDDLESTON. Have you any questions, Mr. Cohelan? Mr. COHELAN. Yes. I am asking these questions merely to help define the problem in my own mind. Is there any opposition to the proposed uniform commercial code? Mr. MONK. I have not had any adverse comment as far as the substantive features of the bill are concerned, and I have had very few even on the matter of style. Some people feel they could draft better, but that is all. The bar association report was circulated among its 3,500 members, and I did not receive one adverse comment from any of those members. Mr. COHELAN. How about the American Municipal Association or the League of California Cities or leagues of cities, organizations like that, which have to do with public administration? Mr. MONK. I just cannot answer that question, except the code has been adopted now by the legislatures of 23 States, and I suppose if they did have opposition, it would have been reflected in that respect. Mr. COHELAN. Then it is your testimony that you know of no group that is actively opposed to this program? Mr. MONK. I know of no group that is actively opposed to it; that is correct. Mr. COHELAN. Have you any information about the status of the uniform code arrangement in the State of California, which is the State I represent? Mr. MONK. I think it is in the legislature there. Mr. COHELAN. You say it is pending in the legislature. Do you know what its prospects are? Mr. MONK. I haven't the slightest idea. Mr. COHELAN. How about the large jurisdictions like New York, Massachusetts, Pennsylvania, California, and so on? I see Massachusetts has passed it, and Pennsylvania and New York have, too. Mr. MONK. Of course, Pennsylvania was the first State to pass it. Pennsylvania passed it in 1954, so it has had almost a 10-year trial in Pennsylvania. Everyone that I have come in contact with from Pennsylvania is very much delighted with it. I am sure some people are not happy with it, but I have not found any from Pennsylvania. Mr. COHELAN. I wonder, sir, if you could give me a little detail in regard to article III. The outline I have in front of me says this article replaces the uniform Negotiable Instruments Act. Then you go on to discuss it. It says that numerous conflicting judicial interpretations which have developed concerning provisions of NIL over the last 65 years have been eliminated, and so on. What are the differences? How does this differ in respect to this particular matter from what exists today? Mr. MONK. I would say the main difference is bringing the NIL up to date. The NIL is approximately 60 years old. During the course of its stay in this country it has served commerce and the businessman very well. As I recall, there are at least 65 provisions. of it which are the subject of judicial conflict. This code eliminates those. It brings the language of it up to date. I cannot list the specific ways in which it changes. They have been the subject of many law review articles and many comments. I can say it does not make abrupt changes in the law. It is more a matter of development, rather than any radical change in what the NIL effects. Mr. COHELAN. Can you help me in this way? What were the conflicts in legal opinions that are resolved by this action? Mr. MONK. I just cannot list them. I have seen 65 of them. I have read them, but I just cannot list them. I could get that for you. Mr. COHELAN. That is not necessary. That is all I have, Mr. Chairman. Thank you very much. Mr. HUDDLESTON. Mr. Nelsen. Mr. NELSEN. I have no questions. Mr. HUDDLESTON. Mr. Schwengel. Mr. SCHWENGEL. I have no questions. |