Title: S.L. 1967-562
Category: Introduced Bill
Keywords: Bill ?

NORTH CAROLINA GENERAL ASSEMBLY
1967 SESSION

CHAPTER 562
HOUSE BILL 251

AN ACT TO AMEND THE UNIFORM COMMERCIAL CODE AS ENACTED IN THIS STATE AND TO AMEND OTHER RELATED STATUTES.

The General Assembly of North Carolina do enact:

Section 1.  Chapter 25 of the General Statutes of North Carolina, the Uniform Commercial Code, as the same appears in 1965 Replacement Volume ID of the General Statutes of North Carolina, is hereby amended as follows:
(1)	G.S. 25-1-201 (28) is amended by deleting the word "property" from the third line thereof.
(2)	A new Section is added, immediately following G.S. 25-1-208, to read as follows:
"§ 25-1-209.  Subordinated Obligations. An obligation may be issued as subordinated to payment of another obligation of the person obligated, or a creditor may subordinate his right to payment of an obligation by agreement with either the person obligated or another creditor of the person obligated. Such a subordination does not create a security interest as against either the common debtor or a subordinated creditor. This Section shall be construed as declaring the law as it existed prior to the enactment of this Section and not as modifying it."
(3)	G.S. 25-2-207(2) is amended by striking out the words "or different" in the first line thereof.
(4)	G.S. 25-2-702(3) is amended by striking out the words, "or lien creditor" in the second line thereof.
(5)	G.S. 25-2-716(1) is amended by adding the words, "or in other proper circumstances" to the end of the sentence constituting that subsection.
(6)	G.S. 25-2-723(2) is amended by inserting the words "in commercial judgment or" after the word "which" and before the word "under" in the third line thereof.
(7)	G.S. 25-2-725(1) is amended by adding the following sentence at the end thereof: "By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it."
(8)	G.S. 25-3-501(3) is amended by deleting from the first sentence the words "and territories of the United States and the District of Columbia" and inserting in lieu thereof the words ", territories, dependencies and possessions of the United States, the District of Columbia and the Commonwealth of Puerto Rico."
(9)	G.S. 25-3-802(1) (b) is amended by adding to the end of the last sentence thereof the words, "to the extent of his discharge on the instrument", so that the sentence reads, "If the instrument is dishonored, action may be maintained on either the instrument or the obligation; discharge of the underlying obligor on the instrument also discharges him on the obligation to the extent of his discharge on the instrument."
(10)	G.S. 25-4-106 is amended by deleting therefrom the words "maintaining its own deposit ledgers".
(11)	G.S. 25-4-204 is amended by deleting from the Section caption thereof the last word, "bank".
(12)	G.S. 25-4-405 is amended by striking the words "or (of)" from line 4 of subsection (1) and inserting in lieu thereof the word "of" and by adding a new subsection as follows:
"(3)	A transaction, although subject to this Article, is also subject to § 105-24, and § 41‑2.1, and in case of conflict between the provisions of this Section and either of those Sections, the provisions of those Sections control."
(13)	G.S. 25-6-106, G.S. 25-6-107(2) (e), G.S. 25-6-108(3) (c), and G.S. 25-6-109(2) are repealed.
(14)	G.S. 25-7-209(3) is amended by adding a second paragraph so that subsection (3) will read as follows:
"(3)	(a)	A warehouseman's lien for charges and expenses under subsection (1) or a security interest under subsection (2) is also effective against any person who so entrusted the bailor with possession of the goods that a pledge of them by him to a good faith purchaser for value would have been valid but is not effective against a person as to whom the document confers no right in the goods covered by it under Section 7-503.
(b)	A warehouseman's lien on household goods for charges and expenses in relation to the goods under subsection (1) is also effective against all persons if the depositor was the legal possessor of the goods at the time of deposit. "Household goods" means furniture, furnishings and personal effects used by the depositor in a dwelling."
(c)	Where the holder of a security interest with respect to the property stored, or any part thereof, has instituted appropriate legal proceedings for the recovery of possession of property, such holder shall be entitled to possession under the writ or other process upon payment of a fair fractional portion of the total storage charges reasonably allocable to the storage of the property described in the writ or other process.
(15)	G.S. 25-9-105(1) (b) is amended by changing the period at the end of the first sentence to a semicolon and by adding immediately thereafter the following: "a charter or other contract involving the use or hire of a vessel is not chattel paper."
(16)	G.S. 25-9-103(2) is amended by deleting the word "and" in the last sentence thereof after the word "airplane," and before the word "chief", and inserting in lieu thereof the word "the".
(17)	G.S. 25-9-106 is amended by adding at the end thereof the following sentence: "All rights earned or unearned under a charter or other contract involving the use or hire of a vessel and all rights incident to the charter or contract are contract rights and neither accounts nor general intangibles."
(18)	G.S. 25-9-203(2) is amended by rewriting the first sentence thereof to read, "A transaction, although subject to this Article, is also subject to the North Carolina Consumer Finance Act (being G.S. 53-164 through G.S. 53-191), G.S. 24-1 and G.S. 24-2, and G.S. 91-1 through G.S. 91-8, and in case of conflict between the provisions of this Article and any such statute, the provisions of such statute control."
(19)	G.S. 25-9-204(4) (a) is amended by deleting the words "one year" in line 1 thereof after the word "than" and before the word "after", and inserting in lieu thereof the words "five years".
(20)	G.S. 25-9-302(1) is amended by rewriting subdivisions (c) and(d) thereof to read as follows:
"(c)	a purchase money security interest in farm equipment having a purchase price not in excess of twenty-five hundred dollars ($2500.00); but filing is required for a fixture under Section 25-9-313 or for a motor vehicle required to be licensed; however, compliance with G.S. 20-58 et seq shall meet the filing requirements for such motor vehicles." 
"(d)	a purchase money security interest in consumer goods; but filing is required for a fixture under Section 25-9-313 or for a motor vehicle required to be licensed; however, compliance with G.S. 20-58 et seq shall meet the filing requirements for such motor vehicles."
(21)	G.S. 25-9-302 is amended by inserting, in subsection 5, the words "or by any electric or telephone membership corporation domesticated or incorporated in North Carolina," after the words and figures "G.S. 62-3(23)" and before the word "but" in the third line thereof; and by adding a new subsection to said Section, to be known as subsection (6) and to read as follows:
"(6)	The filing provisions of this Article do not apply to any security interest created in connection with the issuance of any bond, note or other evidence of indebtedness for borrowed money by this State or any political subdivision or agency thereof."
(22)	G.S. 25-9-306(4) (c) is amended by deleting the word "indentifiable" in line 1 thereof after the word "in" and before the word "cash", and inserting in lieu thereof the word "identifiable".
(23)	G.S. 25-9-313(4) is amended by striking out the last paragraph thereof, which paragraph begins with the words "Any provision" and ends with the words "this State".
(24)	G.S. 25-9-403(4) is amended by striking out the third sentence thereof, which reads, "If the instrument covers goods which are, or are to become fixtures, he shall file or record the same in accordance with the requirements which he is required to observe with respect to the filing or recording of mortgages of real estate under the laws of this State."
(25)	G.S. 25-9-404 is amended by striking out subsection (4).
(26)	G.S. 25-9-407(2) is rewritten to read as follows:
"(2)	Upon request of any person, the filing officer shall issue his certificate for which he shall not be liable showing whether there is on file on the date and hour stated therein, any presently effective financing statement naming a particular debtor and any statement of assignment thereof and if there is, giving the date and hour of filing of each such statement and the names and addresses of each secured party therein. The uniform fee for such a certificate shall be two dollars ($2.00) plus one dollar ($1.00) for each financing statement and for each statement of assignment reported therein. Upon request the filing officer shall furnish a copy of any filed financing statement or statement of assignment for a uniform fee of one dollar ($1.00) per page."
(27)	G.S. 25-9-408 is repealed.
Sec. 2.  Chapter 45 of the General Statutes, as the same appears in 1966 Replacement Volume 2A is hereby amended as follows:
(1)	The following Sections of Chapter 45 of the General Statutes are repealed: 45-1, 45-2, 45-3, 45-3.1, 45-21.5, 45-21.6, 45-21.13, 45-21.16(4), 45-21.18, 45-21.19, 45-21.25, and 45-21.30(b).
(2)	G.S. 45-7, as the same appears in 1966 Replacement Volume 2A of the General Statutes, is hereby amended by rewriting the second line thereof to read: "sales of real property, under a power of sale contained in any mort-"
(3)	G.S. 45-8, as the same appears in 1966 Replacement Volume 2A of the General Statutes, is hereby amended by inserting the words "of real property" in the second line thereof, immediately after the word "trust" and before the word "wherein".
(4)	G.S. 45-10, as the same appears in 1966 Replacement Volume 2A of the General Statutes, is hereby amended by striking out of the fifth line thereof the words "or personal" immediately after the word "real" and immediately before the word "property".
(5)	G.S. 45-11, as the same appears in 1966 Replacement Volume 2A of the General Statutes, is hereby amended by striking out of the second line thereof the words "or personal" immediately after the word "real" and immediately before the word "property".
(6)	G.S. 45-21.1 is rewritten to read as follows:
"45-21.1.  Definition. As used in this Article, 'Sale' means only a sale of real property pursuant to an express power of sale contained in a mortgage or deed of trust."
(7)	G.S. 45-21.11, as the same appears in 1966 Replacement Volume 2A of the General Statutes, is hereby amended by rewriting the first and second lines thereof to read: "When a series of notes maturing at different times is secured by a mortgage or deed of trust and the exercise of the power of sale for the".
(8)	G.S. 45-21.12, as the same appears in 1966 Replacement Volume 2A of the General Statutes, is hereby amended by rewriting the third line thereof to read: "contained in any mortgage or deed of trust, or provided"; and by rewriting the sixth and seventh lines thereof to read:
"(6)	If a sale pursuant to a power of sale contained in a mortgage or deed of trust, or provided by statute, is commenced within".
(9)	G.S. 45-21.20(1), as the same appears in 1966 Replacement Volume 2A of the General Statutes, is hereby rewritten to read:
"(1)	The obligation secured by the mortgage or deed of trust, and".
(10)	G.S. 45-21.21 (b)(2) is rewritten to read:
"(2)	On the same day, attach to or enter on the original notice of sale or a copy thereof, posted at the courthouse door, as provided by G.S. 45-21.17, a notice of the postponement."
(11)	G.S. 45-21.31 (a) is amended by deleting from subdivisions (2) and (3) thereof, the phrase "if the property sold is real property" which immediately follows the citation of G.S. 105-408 in each of the two subdivisions.
(12)	G.S. 45-21.36 is amended by deleting the words "or personal property" from the beginning of the second line thereof.
(13)	G.S. 45-21.38 is amended by striking out the last paragraph thereof, which paragraph begins with the words, "Whenever a power of sale" and ends with the words "obligations of the buyer."
Sec. 3.  Chapter 25 of the General Statutes, as the same appears in 1965 Replacement Volume ID of the General Statutes of North Carolina, is hereby amended as follows:
(1)	A new Section is added to Part 2 of Article 9, to read as follows:
"§ 25-9-201.1.  Security Interests Granted in Household and Kitchen Furniture. (1) Except as provided in subsection (2) of this Section, all conveyances of household and kitchen furniture by a married person, made to secure the payment of money or other things of value, are void unless his or her spouse joins therein.
"(2)	A conveyance referred to in subsection (1) of this Section is valid without the joinder of the spouse if:
(a)	The conveyance is made to secure the payment of all or part of the purchase price of the property conveyed; or
(b)	The spouse not joining in the conveyance has been adjudged a lunatic or insane; or
(c)	The spouse who executes the conveyance is authorized to do so by a valid and lawful deed of separation previously executed by the husband and wife; or
(d)	The spouse who executes the conveyance is the spouse not at fault in one of the instances described in G.S. 31A-l(d)."
(2)	The following two Sections are added to the end of Part 5 of Article 9:
"§ 25-9-508.  Application of Statute of Limitations to Serial Notes. When a series of notes maturing at different times is secured by a security agreement and the exercise of the power of sale or foreclosure for the satisfaction of one or more of the notes is barred by the Statute of Limitations, that fact does not bar the exercise of the power of sale or foreclosure for the satisfaction of indebtedness represented by other notes of the series not so barred."
"§ 25-9-509.  Power of Sale Barred When Foreclosure Barred. (1) Except as provided in subsection (2), no person shall exercise any power of sale contained in any security agreement, or provided by statute, when an action to foreclose the lien contained in said security agreement is barred by the Statute of Limitations.
"(2)	If a sale pursuant to a power of sale contained in a security agreement, or provided by statute, is commenced within the time allowed by the Statute of Limitations to foreclose the lien of such security agreement, the sale may be completed, although such completion is effected after the time when commencement of an action to foreclose would be barred by the Statute. For the purpose of this Section, a sale is commenced when the notice of public sale is first posted or published as provided in this Article."
(3)	The following two Sections are added to Part 5 of Article 9, immediately following § 25-9-504:
"§ 25-9-504.1.  Payment of Surplus to Clerk. (1) Any surplus remaining after the application of the proceeds of the sale or other disposition as set out in § 25-9-504 (1) and (2) shall be paid to the person or persons entitled thereto, if the party who made the sale knows who is entitled thereto. Otherwise, the surplus shall be paid to the Clerk of the Superior Court of the county where the sale or other disposition was held, if the disposition took place in this State. If the sale or other disposition took place outside this State, then the secured party or person making the sale or other disposition shall pay said surplus money to the Clerk of Superior Court of any county in this State in which the secured party or other party conducting the said sale or disposition does business. Said payment discharges the secured party from liability to the extent of the amount so paid. Said Clerk of Superior Court shall accept such surplus from said secured party and shall execute a receipt therefor.
"(2)	Said Clerk of Superior Court is liable on his official bond for the safekeeping of money so received until it is paid to the party or parties entitled thereto, or until it is paid out under the order of a court of competent jurisdiction."
"§ 25-9-504.2.  Special Proceedings to Determine Ownership of Surplus. (1) A special proceeding may be instituted before the Clerk of Superior Court by any person claiming any portion of the surplus paid into the clerk's office under § 25-9-504.1, to determine who is entitled thereto.
"(2)	All other persons who have filed with the clerk notice of their claim to the aforesaid surplus or any part thereof, or who, as far as the petitioner (s) know, asserts any claim to said surplus or any part thereof, shall be made defendants in the proceeding.
"(3)	If any answer is filed raising issues of fact as to the ownership of the surplus (money), the proceeding shall be transferred to the civil issue docket of the district or Superior Court for trial.
"(4)	The court may, in its discretion, allow a reasonable attorneys fee for any attorney appearing in behalf of the party or parties who prevail to be paid out of the funds in controversy, and shall tax all costs against the losing party or parties who have asserted a claim to the fund by petition or answer."
(4)	A new Part is added to Article 9, to read as follows:
PART 6
PUBLIC SALE PROCEDURES
"§ 25-9-601.  Disposition of Collateral by Public Sale. Disposition of collateral by public proceedings as permitted by § 25-9-504 may be made in accordance with the provisions of this Part. The provisions of this Part are not mandatory for disposition by public proceedings, but any disposition of the collateral by public sale wherein the secured party has substantially complied with the procedures provided in this Part shall conclusively be deemed to be commercially reasonable in all aspects."
"§ 25-9-602.  Contents of Notice of Sale.  The notice of sale shall substantially:
(a)	Refer to the security agreement pursuant to which the sale is held;
(b)	Designate the date, hour and place of sale consistent with the provisions of the security agreement and the provisions found m Part 6 of Article 9 of Chapter 25 of the General Statutes;
(c)	Describe personal property to be sold substantially as it is described in the security agreement pursuant to which the power of sale is being exercised, and may add such further description as will acquaint bidders with the nature of the property;
(d)	State the terms of the sale provided by the security agreement pursuant to which the sale is held, including the amount of the cash deposit if any, to be made by the highest bidder at the sale;
(e)	Include any other provisions required by the security agreement to be included therein; and .
(f)	State that the property will be sold subject to taxes and special assessments if it is to be so sold."
"§ 25-9-603.  Posting and Mailing Notice of Sale. (1) In each public sale conducted hereunder, the notice of sale shall be posted on a bulletin board provided for the posting of such legal notices, in the courthouse, in the county in which the sale is to be held, for at least five days immediately preceeding the sale.
"(2)	In addition to the posting of notice required by subsection (1), the secured party or other party holding such public sale shall, at least five days before the date of sale, mail by registered or certified mail a copy of the notice of sale to each debtor obligated under the security agreement:
(a)	At the actual address of the debtors, if known to the secured party, or
(b)	At the address, if any, furnished the secured party, in writing, by the debtors, or otherwise at the last known address.
"(3)	In addition to mailing a copy of the notice of sale to each debtor, the secured party or other party holding such sale shall, except in the case of consumer goods, also mail a copy of said notice by registered or certified mail to any other secured party and any other party who has filed with him a written request for such notice, at the address set forth in said Request for Notice."
"§ 25-9-604.  Exception as to Perishable Property.  If, in the opinion of a secured party about to conduct a public sale of personal property hereunder, the property is perishable because subject to rapid deterioration or threatens to decline speedily in value, he may report such fact, together with a description of the property to the Clerk of the Superior Court of the county in which the property is to be sold, and apply for authority to sell the property at an earlier date than is provided in this Article. Upon the clerk's determination that the property is such perishable or speedily depreciating property, he shall order a sale thereof to be held at such time and place and upon such notice, if any, as he deems advisable."
"§ 25-9-605.  Postponement of Public Sale. (1) Any person exercising a power of sale or conducting a public sale hereunder may postpone the sale to a day certain not later than six days, exclusive of Sunday, after the original date for the sale:
(a)	When there are no bidders, or
(b)	When, in his judgment, the number of prospective bidders at the sale is substantially decreased by inclement weather or by any casualty, or
(c)	When there are so many other sales advertised to be held at the same time and place as to make it inexpedient and impracticable in his judgment, to hold the sale on that day, or
(d)	When he is unable to hold the sale because of illness or for other good reason, or
(e)	When other good cause exists.
"(2)	Upon postponement of a public sale, the person exercising the power of sale shall personally, or through his agent or attorney:
(a)	At the time and place advertised for the sale, publicly announce the postponement thereof, and
(b)	On the same day, attach to or enter on the original notice of sale or a copy thereof, posted on the bulletin board provided therefor, as provided by G.S. 25-9-603, a notice of the postponement.
"(3)	The posted notice of postponement shall:
(a)	State that the public sale is postponed,
(b)	State the hour and date to which the public sale is postponed,
(c)	Substantially state the reason for the postponement, and
(d)	Be signed by the person authorized to hold the public sale, or by his agent or attorney.
"(4)	If a public sale is not held at the time fixed therefor and is not postponed as provided by this Section, or if a postponed sale is not held at the time fixed therefor, the person authorized to hold the public sale may readvertise the property in the same manner as he was required to advertise the sale which was not held, and may hold a public sale at such later date as is fixed in the new notice of sale."
"§ 25-9-606.  Procedure upon Dissolution of Order Restraining or Enjoining Sale. (1) When, before the date fixed for a sale, a judge dissolves an order restraining or enjoining the sale, he may, if the required notice of sale has been given, as provided in G.S. 25-9-603, provide by order that the public sale shall be held without additional notice at the time and place originally fixed therefor; or he may, in his discretion, make an order with respect thereto as provided in subsection (2).
"(2)	When, after the date fixed for a public sale, a judge dissolves an order restraining or enjoining said sale, he shall, by order, fix the time and place for the sale to be held upon notice to be given and in such manner and for such length of time as he deems advisable."
"§ 25-9-607.  Disposition of Proceeds of Sale. The proceeds of any sale or other disposition of the collateral shall be applied by the person making the sale in the manner prescribed by § 25-9-504(1) and (2), § 25-9-504.1 and § 25-9-504.2."
(5)	G.S. 25-10-105 is hereby repealed.
Sec. 4.  Chapter 6 of the General Statutes is hereby amended by inserting therein the following Section.
"§ 6.21.2.  Attorneys' Fees in Notes, Etc., in Addition to Interest. Obligations to pay attorneys' fees upon any note, conditional sale contract or other evidence of indebtedness, in addition to the legal rate of interest or finance charges specified therein, shall be valid and enforceable, and collectible as part of such debt, if such note, contract or other evidence of indebtedness be collected by or through an attorney at law after maturity, subject to the following provisions:
(1)	If such note, conditional sale contract or other evidence of indebtedness provides for attorneys' fees in some specific percentage of the 'outstanding balance' as herein defined, such provision and obligation shall be valid and enforceable up to but not in excess of fifteen per cent (15%) of said 'outstanding balance' owing on said note, contract or other evidence of indebtedness.
(2)	If such note, conditional sale contract or other evidence of indebtedness provides for the payment of reasonable attorneys' fees by the debtor, without specifying any specific percentage, such provision shall be construed to mean fifteen per cent (15%) of the 'outstanding balance' owing on said note, contract or other evidence of indebtedness.
(3)	As to notes and other writing (s) evidencing an indebtedness arising out of a loan of money to the debtor, the 'outstanding balance' shall mean the principal and interest owing at the time suit is instituted to enforce any security agreement securing payment of the debt and/or to collect said debt.
(4)	As to conditional sale contracts and other such security agreements which evidence both a monetary obligation and a security interest in or a lease of specific goods, the 'outstanding balance' shall mean the 'time price balance' owing as of the time suit is instituted by the secured party to enforce the said security agreement and/or to collect said debt.
(5)	The holder of an unsecured note or other writing(s) evidencing an unsecured debt, and/or the holder of a note and chattel mortgage or other security agreement and /or the holder of a conditional sale contract or any other such security agreement which evidences both a monetary obligation and a security interest in or a lease of specific goods, or his attorney at law, shall, after maturity of the obligation by default or otherwise, notify the maker, debtor, account debtor, endorser or party sought to be held on said obligation that the provisions relative to payment of attorneys' fees in addition to the 'outstanding balance' shall be enforced and that such maker, debtor, account debtor, endorser or party sought to be held on said obligation has five days from the mailing of such notice to pay the 'outstanding balance' without the attorneys' fees. If such party shall pay the 'outstanding balance' in full before the expiration of such time, then the obligation to pay the attorneys' fees shall be void, and no court shall enforce such provisions."
"Notwithstanding the foregoing, however, if debtor has defaulted or violated the terms of the security agreement and has refused, on demand, to surrender possession of the collateral to the secured party as authorized by § 25-9-503, with the result that said secured party is required to institute an ancillary claim and delivery proceeding to secure possession of said collateral; no such written notice shall be required before enforcement of the provisions relative to payment of attorneys' fees in addition to the 'outstanding balance'."
Sec. 5.  The General Statutes are hereby amended as follows:
(1)	G.S. 25-10-107 is repealed.
(2)	G.S. 47-20 is amended by striking out the phrase at the end thereof which reads ", unless subject to the filing requirements of Article 9 of the Uniform Commercial Code (Chapter 25 of the General Statutes) and duly filed pursuant thereto", and inserting in lieu thereof the following: "; provided however that any transaction subject to the provisions of the Uniform Commercial Code (Chapter 25 of the General Statutes) is controlled by the provisions of that Act and not by this Section."
Sec. 6.  G.S. 44-28 and 44-29, relating to Warehouse Storage Liens, are hereby repealed.
Sec. 7.  G.S. 44-38.1, relating to liens on personal property created in another state, is hereby repealed.
Sec. 8.  G.S. 20-77 (d) is hereby amended by striking out the present provisions thereof and inserting in lieu thereof the following: "(d) An operator of a place of business for garaging, repairing, parking or storing vehicles for the public, in which a vehicle remains unclaimed for 30 days, shall within five days after the expiration of that period, report the vehicle as unclaimed to the Department.
"A vehicle left by any person whose name and address are known to, or are furnished from a reliable method of identification to, the operator or his employee is not considered unclaimed. A person who fails to report a vehicle as unclaimed in accordance with this Section forfeits all liens for storage, and, in addition thereto, the failure to make the report required by this Section shall constitute a misdemeanor punishable by a fine not to exceed fifty dollars ($50.00) or 30 days imprisonment, or both, in the discretion of the court."
Sec. 9.  All laws and clauses of laws in conflict with this Act are hereby repealed.
Sec. 10.  This Act shall become effective at midnight on June 30, 1967. This Act becomes effective on the same date as the Uniform Commercial Code, and the fact that the provisions of this Act were enacted at a later date than the Uniform Commercial Code shall not be considered in construing the provisions contained herein or any provisions of the Uniform Commercial Code.
In the General Assembly read three times and ratified, this the 23rd day of May, 1967.