Indicates Matter Stricken
Indicates New Matter
The Senate assembled at 10:00 A.M., the hour to which it stood adjourned and was called to order by the PRESIDENT.
A quorum being present the proceedings were opened with a devotion by the Chaplain as follows:
Beloved, St. Paul wrote to the Romans, Chapter 14 (vv. 11-12):
"For it is written,
'As I live, says the Lord, every
knee shall bow to me, and every
tongue shall give praise to God!'
So then, each of us will be accountable to God."
Let us pray.
O Thou, the God of Abraham, Isaac and Jacob, Who has sustained us and led us through many days:
Help us to pull together the loose ends of our business.
Guide the Executive and Judicial branches of our government that the legislative decisions and programs approved under the dome may find a worthy entrance into the life-stream of our common life.
As we plan to renovate this grand old building, and bring it to a new life for the new century, so help us to cleanse our corporate lives and, by Your help, bring forth new creations that will forge new visions and new goals for our State and Nation.
Let us pray again words that were prayed more than a century ago:
"Lest our feet stray from the places,
our God, where we met Thee;
Lest, our hearts drunk with the wine
of the world, we forget Thee;
Shadowed beneath Thy hand may we
forever stand,
True to our God, true to our
native land." (James W. Johnson, 1871)
Amen!
The PRESIDENT called for Petitions, Memorials, Presentments of Grand Juries and such like papers.
(R102) S. 368 -- Senator Land: AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 9-8-125 SO AS TO AUTHORIZE A MEMBER OF THE RETIREMENT SYSTEM FOR JUDGES AND SOLICITORS WHO IS AT LEAST SIXTY-FIVE YEARS OF AGE AND ELIGIBLE TO RECEIVE RETIREMENT BENEFITS FROM THE RETIREMENT SYSTEM FOR MEMBERS OF THE GENERAL ASSEMBLY BUT FOR THE MEMBER'S CURRENT EMPLOYMENT AS A JUDGE OR SOLICITOR TO ELECT TO RECEIVE THESE BENEFITS; AND TO AMEND THE 1976 CODE BY ADDING SECTION 9-9-55 SO AS TO ALLOW A MEMBER OF THE GENERAL ASSEMBLY SERVING ANY PART OF A YEAR TO ESTABLISH CREDIT FOR THE FULL YEAR UNDER THE RETIREMENT SYSTEM FOR MEMBERS OF THE GENERAL ASSEMBLY BY PAYING THE FULL ACTUARIAL COST OF THE SERVICE.
June 12, 1995
Mr. President and Members of the Senate:
I am hereby returning without my approval S. 368, R. 102, an Act:
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 9-8-125 SO AS TO AUTHORIZE A MEMBER OF THE RETIREMENT SYSTEM FOR JUDGES AND SOLICITORS WHO IS AT LEAST SIXTY-FIVE YEARS OF AGE AND ELIGIBLE TO RECEIVE RETIREMENT BENEFITS FROM THE RETIREMENT SYSTEM FOR MEMBERS OF THE GENERAL ASSEMBLY BUT FOR THE MEMBER'S CURRENT EMPLOYMENT AS A JUDGE OR SOLICITOR TO ELECT TO RECEIVE THESE BENEFITS; AND TO AMEND THE 1976 CODE BY ADDING SECTION 9-9-55 SO AS TO ALLOW A MEMBER OF THE GENERAL ASSEMBLY SERVING ANY PART OF A YEAR TO ESTABLISH CREDIT FOR THE FULL YEAR UNDER THE RETIREMENT SYSTEM FOR MEMBERS OF THE GENERAL ASSEMBLY BY PAYING THE FULL ACTUARIAL COST OF THE SERVICE.
I recognize and appreciate the continued service of individuals who are otherwise eligible for retirement. However, this legislation creates a special class of individuals who would be allowed to collect retirement benefits from a state retirement fund while at the same time being paid substantial state salaries. Other state employees who participate in state retirement systems are not offered this benefit. In addition, frequent changes in eligibility for retirement benefits undermine confidence in the state retirement systems.
For these reasons, I am returning S. 368, R. 102, without my signature.
Sincerely,
David M. Beasley
The veto of the Governor was taken up for immediate consideration.
Senator GIESE moved that the veto of the Governor be sustained.
The question was put: Shall the Act become law, the veto of the Governor to the contrary notwithstanding?
The "ayes" and "nays" were demanded and taken, resulting as follows:
AYES
TOTAL--0
NAYS
Alexander Boan Bryan Cork Courson Courtney Drummond Elliott Ford Giese Glover Hayes Holland Jackson Land Lander Leatherman Leventis Martin Matthews McConnell McGill Mescher Moore O'Dell Passailaigue Patterson Peeler Rankin Reese Rose Russell Saleeby Setzler Smith, G. Smith, J.V. Stilwell Thomas Waldrep Washington Williams Wilson
The necessary two-thirds vote not having been received, the veto of the Governor was sustained, and a message was sent to the House accordingly.
We wish the Journal to reflect that we abstained from consideration of and voting on S. 368.
Having voted on the prevailing side, Senator WILSON asked unanimous consent to make a motion to reconsider the vote whereby the Senate sustained the veto of the Governor on S. 368, R102.
The motion to reconsider was adopted.
(R102) S. 368 -- Senator Land: AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 9-8-125 SO AS TO AUTHORIZE A MEMBER OF THE RETIREMENT SYSTEM FOR JUDGES AND SOLICITORS WHO IS AT LEAST SIXTY-FIVE YEARS OF AGE AND ELIGIBLE TO RECEIVE RETIREMENT BENEFITS FROM THE RETIREMENT SYSTEM FOR MEMBERS OF THE GENERAL ASSEMBLY BUT FOR THE MEMBER'S CURRENT EMPLOYMENT AS A JUDGE OR SOLICITOR TO ELECT TO RECEIVE THESE BENEFITS; AND TO AMEND THE 1976 CODE BY ADDING SECTION 9-9-55 SO AS TO ALLOW A MEMBER OF THE GENERAL ASSEMBLY SERVING ANY PART OF A YEAR TO ESTABLISH CREDIT FOR THE FULL YEAR UNDER THE RETIREMENT SYSTEM FOR MEMBERS OF THE GENERAL ASSEMBLY BY PAYING THE FULL ACTUARIAL COST OF THE SERVICE.
The veto of the Governor was taken up for immediate consideration.
Senator WILSON moved that the veto of the Governor be overridden.
The question was put: Shall the Act become law, the veto of the Governor to the contrary notwithstanding?
The "ayes" and "nays" were demanded and taken, resulting as follows:
AYES
Alexander Boan Bryan Cork Courson Courtney Drummond Elliott Ford Giese Glover Hayes Holland Jackson Land Lander Leatherman Leventis Martin Matthews McConnell McGill Mescher Moore O'Dell Patterson Peeler Rankin Reese Rose Saleeby Setzler Smith, G. Smith, J.V. Stilwell Thomas Waldrep Washington Williams Wilson
NAYS
TOTAL--0
The necessary two-thirds vote having been received, the veto of the Governor was overridden, and a message was sent to the House accordingly.
We would like the Journal to reflect that we abstained from consideration of and voting on S. 368, R102.
(R117) S. 670 -- Senator Holland: AN ACT TO PROVIDE THAT EACH MEMBER OF THE KERSHAW COUNTY TRANSPORTATION COMMITTEE SHALL BE ALLOWED AND PAID FROM KERSHAW COUNTY "C" FUND REVENUES SEVENTY-FIVE DOLLARS FOR EACH MEETING AT WHICH HE IS IN ATTENDANCE, AND PROVIDE THAT THE COMMITTEE SHALL RECEIVE THE PAYMENT AUTHORIZED IN THIS ACT UPON ISSUANCE OF APPROVED VOUCHERS BY THE COMMITTEE'S CHAIRMAN, EXCEPT THAT THE CHAIRMAN MAY NOT APPROVE VOUCHERS IN ANY SINGLE FISCAL YEAR WHICH VOUCHERS AUTHORIZE PAYMENT FOR MORE THAN FIFTEEN MEETINGS PER FISCAL YEAR FOR EACH MEMBER OF THE COMMITTEE.
June 12, 1995
Mr. President and Members of the Senate:
I am hereby returning without my approval S. 670, R. 117, an Act:
TO PROVIDE THAT EACH MEMBER OF THE KERSHAW COUNTY TRANSPORTATION COMMITTEE SHALL BE ALLOWED AND PAID FROM KERSHAW COUNTY "C" FUND REVENUES SEVENTY-FIVE DOLLARS FOR EACH MEETING AT WHICH HE IS IN ATTENDANCE, AND PROVIDE THAT THE COMMITTEE SHALL RECEIVE THE PAYMENT AUTHORIZED IN THIS ACT UPON ISSUANCE OF APPROVED VOUCHERS BY THE COMMITTEE'S CHAIRMAN, EXCEPT THAT THE CHAIRMAN MAY NOT APPROVE VOUCHERS IN ANY SINGLE FISCAL YEAR WHICH VOUCHERS AUTHORIZE PAYMENT FOR MORE THAN FIFTEEN MEETINGS PER FISCAL YEAR FOR EACH MEMBER OF THE COMMITTEE.
This veto is based on my belief that the compensation of members of county transportation committees addressed by S. 670, R. 117 of 1995, should be dealt with by general legislation.
For the above reason, I am returning S. 670, R. 117, without my signature.
Sincerely,
David M. Beasley
The veto of the Governor was taken up for immediate consideration.
Senator HOLLAND moved that the veto of the Governor be overridden.
The question was put: Shall the Act become law, the veto of the Governor to the contrary notwithstanding?
The "ayes" and "nays" were demanded and taken, resulting as follows:
AYES
Alexander Boan Bryan Cork Courson Courtney Drummond Elliott Ford Giese Glover Hayes Holland Jackson Land Lander Leatherman Leventis Martin Matthews McConnell McGill Mescher Moore O'Dell Passailaigue Patterson Peeler Rankin Reese Richter Rose Russell Saleeby Setzler Short Smith, G. Smith, J.V. Stilwell Thomas Waldrep Washington Williams Wilson
NAYS
TOTAL--0
The necessary two-thirds vote having been received, the veto of the Governor was overridden, and a message was sent to the House accordingly.
(R124) S. 814 -- Senator Holland: AN ACT TO REPEAL ACT 467 OF 1969, RELATING TO THE JURISDICTION OF THE POLICE DEPARTMENT OF THE TOWN OF JEFFERSON IN CHESTERFIELD COUNTY.
June 12, 1995
Mr. President and Members of the Senate:
I am hereby returning without my approval S. 814, R. 124, an Act:
TO REPEAL ACT 467 OF 1969, RELATING TO THE JURISDICTION OF THE POLICE DEPARTMENT OF THE TOWN OF JEFFERSON IN CHESTERFIELD COUNTY.
This veto is based on my belief that S. 814, R. 124 of 1995, is unconstitutional. It is clearly an act for a specific municipality, the Town of Jefferson. Article VIII, Section 10 of the South Carolina Constitution states that "[n]o laws for a specific municipality shall be enacted."
For the above reason, I am returning S. 814, R. 124, without my signature.
Sincerely,
David M. Beasley
The veto of the Governor was taken up for immediate consideration.
Senator WILSON moved that the veto of the Governor be overridden.
The question was put: Shall the Act become law, the veto of the Governor to the contrary notwithstanding?
The "ayes" and "nays" were demanded and taken, resulting as follows:
AYES
Alexander Boan Bryan Cork Courson Courtney Drummond Elliott Ford Giese Glover Hayes Holland Jackson Land Lander Leatherman Leventis Martin Matthews McConnell McGill Mescher Moore O'Dell Passailaigue Patterson Peeler Rankin Reese Richter Rose Russell Saleeby Setzler Short Smith, G. Smith, J.V. Stilwell Thomas Waldrep Washington Williams Wilson
NAYS
TOTAL--0
The necessary two-thirds vote having been received, the veto of the Governor was overridden, and a message was sent to the House accordingly.
October 3, 1994
State of South Carolina
Office of the Governor
P.O. Box 11369
Columbia, S.C. 29211
Mr. President and Members of the Senate:
We are transmitting herewith appointments for confirmation. These appointments are made with the advice and consent of the Senate and are, therefore, submitted for your consideration.
Myrtle Beach Air Force Base Redevelopment Authority, with terms to commence June 30, 1994, and to expire June 30, 1996:
Mr. Jackie Woodbury, 5282 Highway 9, Green Sea, S.C. 29545
Mr. Tony K. Cox, Callahan, Teal, Skelley, P.O. Box 3523, North Myrtle Beach, S.C. 29582
If you have any questions concerning these appointments, please contact me.
Sincerely,
Paul E. Creel
Chairman
Received as information.
October 3, 1994
State of South Carolina
Office of the Governor
P.O. Box 11369
Columbia, S.C. 29211
Mr. President and Members of the Senate:
We are transmitting herewith an appointment for confirmation. This appointment is made with the advice and consent of the Senate and is, therefore, submitted for your consideration.
Myrtle Beach Air Force Base Redevelopment Authority, with term to commence June 30, 1994, and to expire June 30, 1998:
Mr. George Graham, P.O. Box 915, Conway, S.C. 29526
If you have any questions concerning this appointment, please contact me.
Sincerely,
Paul E. Creel
Chairman
Received as information.
June 1, 1995
Mr. President and Members of the Senate:
I am transmitting herewith an appointment for confirmation. This appointment is made with the "advice and consent of the Senate," and is, therefore, submitted for your consideration.
Respectfully,
David M. Beasley
Reappointment, Horry County Magistrate, with term to commence April 30, 1995, and to expire April 30, 1999:
Honorable Harry D. McDowell, 3817 Walnut Street, Loris, S.C. 29569
Received as information.
June 9, 1995
Mr. President and Members of the Senate:
I am transmitting herewith appointments for confirmation. These appointments are made with the "advice and consent of the Senate," and are, therefore, submitted for your consideration.
Respectfully,
David M. Beasley
Reappointment, Sumter County Magistrate, with term to commence April 30, 1994, and to expire April 30, 1998:
Honorable George R. Gibson, P.O. Box 236, Mayesville, S.C. 29104
Reappointment, Spartanburg County Magistrate, with term to commence April 30, 1995, and to expire April 30, 1999:
Honorable Samuel Franklin Adams, 250 Hummingbird Lane, Chesnee, S.C. 29323
Initial Appointment, Spartanburg County Magistrate, with term to commence April 30, 1995, and to expire April 30, 1999:
Honorable Jimmy B. Henson, P.O. Box 416, Pacolet Mills, S.C. 29373 VICE Horace Mauldin Pearson
Received as information.
June 12, 1995
Mr. President and Members of the Senate:
I am transmitting herewith an appointment for confirmation. This appointment is made with the "advice and consent of the Senate," and is, therefore, submitted for your consideration.
Respectfully,
David M. Beasley
Initial Appointment, Greenville County Magistrate, with term to commence April 30, 1994, and to expire April 30, 1998, service to commence at 5:00 P.M., June 23, 1995:
Honorable Bobby L. Morgan, 118 Gaston Drive, Travelers Rest, S.C. 29690 VICE Charles R. Garrett (resigned)
Received as information.
On motion of Senator GIESE, at 10:20 A.M., Senator RYBERG was granted a leave of absence for today.
At 10:20 A.M., Senator PASSAILAIGUE requested a leave of absence beginning at 12:00 Noon for the balance of the week.
On motion of Senator MESCHER, at 10:25 A.M., Senator ROSE was granted leave for Monday, June 12, 1995, as well as today.
On motion of Senator PEELER, at 10:30 A.M., Senator GREGORY was granted a leave of absence for the balance of the week.
The following were introduced:
H. 4304 -- Reps. Haskins, Boan and D. Smith: A CONCURRENT RESOLUTION TO FIX 12:00 NOON ON TUESDAY, OCTOBER 24, 1995, AS THE TIME FOR ELECTING PERSONS TO FILL THE JUDICIAL OFFICES CREATED IN THE 1995-96 GENERAL APPROPRIATIONS ACT.
Amend Title To Conform.
Be it resolved by the House of Representatives, the Senate concurring:
That the House of Representatives and the Senate shall meet in joint assembly in the Hall of the House of Representatives on Tuesday, October 24, 1995, at 12:00 noon to elect persons to fill the judicial offices created in the 1995-96 General Appropriations Act if screening has been completed and a report issued by the Joint Legislative Screening Committee and to include gubernatorial vetoes.
On motion of Senator PATTERSON, with unanimous consent, the Resolution was referred to the Committee on Invitations.
There was no objection.
H. 4304 -- Reps. Haskins, Boan and D. Smith: A CONCURRENT RESOLUTION TO FIX 12:00 NOON ON TUESDAY, OCTOBER 24, 1995, AS THE TIME FOR ELECTING PERSONS TO FILL THE JUDICIAL OFFICES CREATED IN THE 1995-96 GENERAL APPROPRIATIONS ACT.
Senator MOORE asked unanimous consent to make a motion to recall the Resolution from the Committee on Invitations.
There was no objection.
On motion of Senator MOORE, with unanimous consent, the Resolution was referred to the Committee of Conference on H. 4239.
H. 4305 -- Reps. Tucker, D. Smith, Allison, Anderson, Askins, Bailey, Baxley, Boan, Breeland, G. Brown, H. Brown, J. Brown, T. Brown, Byrd, Cain, Canty, Carnell, Cato, Cave, Chamblee, Clyburn, Cobb-Hunter, Cooper, Cotty, Cromer, Dantzler, Davenport, Delleney, Easterday, Elliott, Fair, Felder, Fleming, Fulmer, Gamble, Govan, Hallman, Harrell, J. Harris, P. Harris, Harrison, Harvin, Haskins, Herdklotz, Hines, Hodges, Howard, Huff, Hutson, Inabinett, Jaskwhich, Jennings, Keegan, Kelley, Kennedy, Keyserling, Kinon, Kirsh, Klauber, Knotts, Koon, Lanford, Law, Limbaugh, Limehouse, Littlejohn, Lloyd, Marchbanks, Martin, Mason, McAbee, McCraw, McElveen, McKay, McMahand, McTeer, Meacham, Moody-Lawrence, Neal, Neilson, Phillips, Quinn, Rhoad, Rice, Richardson, Riser, Robinson, Rogers, Sandifer, Scott, Seithel, Sharpe, Sheheen, Shissias, Simrill, R. Smith, Spearman, Stille, Stoddard, Stuart, Thomas, Townsend, Tripp, Trotter, Vaughn, Waldrop, Walker, Wells, Whatley, L. Whipper, S. Whipper, White, Wilder, Wilkes, Wilkins, Williams, Witherspoon, Wofford, Worley, Wright, A. Young and J. Young: A CONCURRENT RESOLUTION TO COMMEND THE HONORABLE DONALD W. "DON" BEATTY OF SPARTANBURG FOR HIS EXEMPLARY SERVICE AS A MEMBER OF THE SOUTH CAROLINA HOUSE OF REPRESENTATIVES AND TO WISH HIM THE VERY BEST AS HE LEAVES LEGISLATIVE SERVICE TO BEGIN HIS SERVICE AS A JUDGE IN THE SEVENTH JUDICIAL CIRCUIT.
The Concurrent Resolution was adopted, ordered returned to the House.
H. 4306 -- Reps. Cromer, Inabinett, Allison, Anderson, Askins, Bailey, Baxley, Beatty, Boan, Breeland, G. Brown, H. Brown, J. Brown, T. Brown, Byrd, Cain, Canty, Carnell, Cato, Cave, Chamblee, Clyburn, Cobb-Hunter, Cooper, Cotty, Dantzler, Davenport, Delleney, Easterday, Elliott, Fair, Felder, Fleming, Fulmer, Gamble, Govan, Hallman, Harrell, J. Harris, P. Harris, Harrison, Harvin, Haskins, Herdklotz, Hines, Hodges, Howard, Huff, Hutson, Jaskwhich, Jennings, Keegan, Kelley, Kennedy, Keyserling, Kinon, Kirsh, Klauber, Knotts, Koon, Lanford, Law, Limbaugh, Limehouse, Littlejohn, Lloyd, Marchbanks, Martin, Mason, McAbee, McCraw, McElveen, McKay, McMahand, McTeer, Meacham, Moody-Lawrence, Neal, Neilson, Phillips, Quinn, Rhoad, Rice, Richardson, Riser, Robinson, Rogers, Sandifer, Scott, Seithel, Sharpe, Sheheen, Shissias, Simrill, D. Smith, R. Smith, Spearman, Stille, Stoddard, Stuart, Thomas, Townsend, Tripp, Trotter, Tucker, Vaughn, Waldrop, Walker, Wells, Whatley, L. Whipper, S. Whipper, White, Wilder, Wilkes, Wilkins, Williams, Witherspoon, Wofford, Worley, Wright, A. Young and J. Young: A CONCURRENT RESOLUTION TO EXPRESS THE DEEPEST APPRECIATION OF THE MEMBERS OF THE GENERAL ASSEMBLY TO ANNE D. FOSTER FOR HER DEDICATED SERVICE AND TIRELESS DEVOTION TO STATE SERVICE AND PARTICULARLY THE SOUTH CAROLINA HOUSE OF REPRESENTATIVES WHERE HER SMILING FACE AND TENDERHEARTED PERSONALITY HAVE GRACED ITS HALLS SINCE 1977.
The Concurrent Resolution was adopted, ordered returned to the House.
H. 4307 -- Rep. P. Harris: A CONCURRENT RESOLUTION TO EXPRESS THE DEEPEST SYMPATHY OF THE MEMBERS OF THE GENERAL ASSEMBLY TO THE FAMILY AND MANY FRIENDS OF DR. JAMES GORDON HALFORD, JR., OF ANDERSON WHO DIED WEDNESDAY, JUNE 7, 1995.
The Concurrent Resolution was adopted, ordered returned to the House.
Columbia, S.C., June 13, 1995
Mr. President and Senators:
The House respectfully informs your Honorable Body that it has adopted the report of the Committee of Conference on:
H. 3787 -- Reps. Richardson, Cotty, Rice, Cobb-Hunter, Keyserling, J. Brown, Worley, S. Whipper, Limehouse, Moody-Lawrence, Byrd, Shissias, Herdklotz, Lloyd, D. Smith, Wilkes, Mason and Thomas: A BILL TO AMEND SECTION 12-33-210, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO ALCOHOLIC BEVERAGE LICENSES FOR PURPOSES OF THE ALCOHOLIC BEVERAGE CONTROL ACT, SO AS TO PROVIDE FOR PRORATED LICENSES; TO REPEAL SECTION 12-33-220, RELATING TO AN OBSOLETE PROVISION ALLOWING PRORATION OF LICENSES, AND TO PROVIDE FOR REFUNDS IN CASES OF CERTAIN LICENSES ISSUED AFTER NOVEMBER, 1994.
Very respectfully,
Speaker of the House
Received as information.
H. 3787 -- Reps. Richardson, Cotty, Rice, Cobb-Hunter, Keyserling, J. Brown, Worley, S. Whipper, Limehouse, Moody-Lawrence, Byrd, Shissias, Herdklotz, Lloyd, D. Smith, Wilkes, Mason and Thomas: A BILL TO AMEND SECTION 12-33-210, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO ALCOHOLIC BEVERAGE LICENSES FOR PURPOSES OF THE ALCOHOLIC BEVERAGE CONTROL ACT, SO AS TO PROVIDE FOR PRORATED LICENSES; TO REPEAL SECTION 12-33-220, RELATING TO AN OBSOLETE PROVISION ALLOWING PRORATION OF LICENSES, AND TO PROVIDE FOR REFUNDS IN CASES OF CERTAIN LICENSES ISSUED AFTER NOVEMBER, 1994.
On motion of Senator CORK, with unanimous consent, the Report of the Committee of Conference was taken up for immediate consideration.
Senator CORK spoke on the report.
On motion of Senator CORK, the Report of the Committee of Conference to H. 3787 was adopted as follows:
The COMMITTEE OF CONFERENCE, to whom was referred:
H. 3787 -- Reps. Richardson, Cotty, Rice, Cobb-Hunter, Keyserling, J. Brown, Worley, S. Whipper, Limehouse, Moody-Lawrence, Byrd, Shissias, Herdklotz, Lloyd, D. Smith, Wilkes, Mason and Thomas: A BILL TO AMEND SECTION 12-33-210, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO ALCOHOLIC BEVERAGE LICENSES FOR PURPOSES OF THE ALCOHOLIC BEVERAGE CONTROL ACT, SO AS TO PROVIDE FOR PRORATED LICENSES; TO REPEAL SECTION 12-33-220, RELATING TO AN OBSOLETE PROVISION ALLOWING PRORATION OF LICENSES, AND TO PROVIDE FOR REFUNDS IN CASES OF CERTAIN LICENSES ISSUED AFTER NOVEMBER, 1994.
Beg leave to report that they have duly and carefully considered the same and recommend:
That the same do pass with the following amendments:
Amend the bill, as and if amended, by striking all after the enacting words and inserting therein the following:
/SECTION 1. Section 12-33-210 of the 1976 Code, as last amended by Act 501 of 1992, is further amended by adding at the end:
"A person who applies for a license after the first day of a license period shall pay license fees in accordance with the schedule provided in Section 61-5-80(B)."
SECTION 2. Section 61-1-105 of the 1976 Code is amended to read:
"Section 61-1-105. If a biennial licensee or permittee under this title closes the licensed or permitted business for loss of the business lease or due to fire or other natural disaster or dies within for any reason during the first year of the biennial license or permit year period, the licensee or permittee or his estate must be refunded the amount of the license or permit fee attributable to the second year of the biennial license or permit year period. No licensee or permittee is eligible for a refund under the provisions of this section if the license or permit has been canceled, relinquished, or revoked as a result of an enforcement action or a failure to adhere to the conditions of the license or permit."
SECTION 3. Section 61-3-710 of the 1976 Code, as last amended by Section 1583, Act 181 of 1993, is further amended to read:
"Section 61-3-710. (A) Licenses issued under this chapter expire biennially according to the county where the licensed location is situated. The expiration dates are the last day of:
(1) February in years which end in an:
(a) odd number for Allendale, Bamberg, Barnwell, Beaufort, and Berkeley counties;
(b) even number for Charleston, Clarendon, Colleton, Dorchester, Georgetown, Hampton, Jasper, and Williamsburg counties;
(2) May in years which end in an:
(a) odd number for Cherokee, Chester, Chesterfield, Darlington, Dillon, Fairfield, Florence, and Horry counties;
(b) even number for Lancaster, Marion, Marlboro, Union, and York counties;
(3) August in years which end in an:
(a) odd number for Calhoun, Kershaw, Lee, Orangeburg, and Sumter counties;
(b) even number for Richland County;
(4) November in years which end in an:
(a) odd number for Abbeville, Aiken, Anderson, Edgefield, Greenville, and Greenwood counties;
(b) even number for Laurens, Lexington, McCormick, Newberry, Oconee, Pickens, Saluda, and Spartanburg counties.
(B) (1) Licensees in Abbeville, Aiken, Anderson, Calhoun, Edgefield, Greenville, Greenwood, Kershaw, Lee, Orangeburg, and Sumter counties shall obtain a one-year license in 1992. Beginning in 1993 these licensees shall obtain a biennial license.
(2) Licensees in Charleston, Clarendon, Colleton, Dorchester, Georgetown, Hampton, Jasper, Lancaster, Marion, Marlboro, Union, Williamsburg, and York counties whose license expires in 1993 shall obtain a one-year license. Beginning in 1994 these licensees shall obtain a biennial license.
(3) Licensees located in counties not provided in item (1) or (2) whose license expires in 1992 or 1993 shall obtain a biennial license upon their first license renewal or registration after June 30, 1992.
(C) The department shall prorate license fees for license years 1992-94 according to the time the licenses are valid."
SECTION 4. Section 61-5-70 of the 1976 Code, as last amended by Section 1584, Act 181 of 1993, is further amended to read:
"Section 61-5-70. (A) Licenses issued under this article expire biennially according to the county where the licensed location is situated. The expiration dates are the last day of:
(1) February in years which end in an:
(a) odd number for Allendale, Bamberg, Barnwell, Beaufort, and Berkeley counties;
(b) even number for Charleston, Clarendon, Colleton, Dorchester, Georgetown, Hampton, Jasper, and Williamsburg counties;
(2) May in years which end in an:
(a) odd number for Cherokee, Chester, Chesterfield, Darlington, Dillon, Fairfield, Florence, and Horry counties;
(b) even number for Lancaster, Marion, Marlboro, Union, and York counties;
(3) August in years which end in an:
(a) odd number for Calhoun, Kershaw, Lee, Orangeburg, and Sumter counties;
(b) even number for Richland County;
(4) November in years which end in an:
(a) odd number for Abbeville, Aiken, Anderson, Edgefield, Greenville, and Greenwood counties;
(b) even number for Laurens, Lexington, McCormick, Newberry, Oconee, Pickens, Saluda, and Spartanburg counties.
(B) (1) Licensees in Abbeville, Aiken, Anderson, Calhoun, Edgefield, Greenville, Greenwood, Kershaw, Lee, Orangeburg, and Sumter counties shall obtain a one-year license in 1992. Beginning in 1993 these licensees shall obtain a biennial license.
(2) Licensees in Charleston, Clarendon, Colleton, Dorchester, Georgetown, Hampton, Jasper, Lancaster, Marion, Marlboro, Union, Williamsburg, and York counties whose license expires in 1993 shall obtain a one-year license. Beginning in 1994 these licensees shall obtain a biennial license.
(3) Licensees in counties not provided in item (1) or (2) whose license expires in 1992 or 1993 shall obtain a biennial license upon their first license renewal or registration after June 30, 1992.
(C) The department shall prorate license fees for license years 1992-94 according to the time the license is valid."
SECTION 5. Section 61-9-310 of the 1976 Code, as last amended by Section 1586, Act 181 of 1993, is further amended to read:
"Section 61-9-310. (A) Every person engaging in the business of selling beer, ale, porter, wine, or a beverage which has been declared to be nonalcoholic and nonintoxicating under Section 61-9-10 shall apply to the department for a permit to sell these beverages. Each applicant shall pay a filing fee of two hundred dollars which is not refundable. Retail dealers shall pay to the department four hundred dollars biennially for retail permits, and wholesale dealers shall pay to the department two thousand dollars biennially for wholesale permits. Separate permits are required for each separate place of business.
(B) All permits issued under this chapter expire biennially according to the county where the place of business is situated. The expiration dates are:
(1) the last day of February in years which end in an:
(a) odd number for Allendale, Bamberg, Barnwell, Beaufort, and Berkeley counties;
(b) even number for Charleston, Clarendon, Colleton, Dorchester, Georgetown, Hampton, Jasper, and Williamsburg counties;
(2) the last day of May in years which end in an:
(a) odd number for Cherokee, Chester, Chesterfield, Darlington, Dillon, Fairfield, Florence, and Horry counties;
(b) even number for Lancaster, Marion, Marlboro, Union, and York counties;
(3) the last day of August in years which end in an:
(a) odd number for Calhoun, Kershaw, Lee, Orangeburg, and Sumter counties;
(b) even number for Richland County;
(4) the last day of November in years which end in an:
(a) odd number for Abbeville, Aiken, Anderson, Edgefield, Greenville, and Greenwood counties;
(b) even number for Laurens, Lexington, McCormick, Newberry, Oconee, Pickens, Saluda, and Spartanburg counties.
(C) (1) Permittees in Abbeville, Aiken, Anderson, Calhoun, Edgefield, Greenville, Greenwood, Kershaw, Lee, Orangeburg, and Sumter shall obtain a one-year permit in 1992. Beginning in 1993 these permittees shall obtain a biennial permit.
(2) Permittees in Charleston, Clarendon, Colleton, Dorchester, Georgetown, Hampton, Jasper, Lancaster, Marion, Marlboro, Union, Williamsburg, and York counties whose permit expires in 1993 shall obtain a one-year permit. Beginning in 1994, these permittees shall obtain a biennial permit.
(3) Permittees in counties not provided in item (1) or (2) whose permit expires in 1992 or 1993 shall obtain a biennial permit upon their first permit renewal or registration after June 30, 1992.
(D) The department shall prorate permit fees for permit years 1992-94 according to the length of time the permit is valid.
(C) A person who initially applies for a permit after the first day of a permit period shall pay permit fees in accordance with the schedule provided in Section 61-5-80(B)."
SECTION 6. Section 12-33-220 of the 1976 Code is repealed.
SECTION 7. This act takes effect upon approval by the Governor; however, SECTION 2 applies to bi-annual licenses or permits issued after June 30, 1992./
Amend title to conform.
/s/Holly A. Cork /s/Paula H. Thomas W. Greg Ryberg Mark S. Kelley /s/Greg Smith /s/Scott H. Richardson On Part of the Senate. On Part of the House.
, and a message was sent to the House accordingly.
Columbia, S.C., June 13, 1995
Mr. President and Senators:
The House respectfully informs your Honorable Body that the report of the Committee of Conference having been adopted by both Houses, and this Bill having been read three times in each House, it was ordered that the title thereof be changed to that of an Act, and that it be enrolled for ratification:
H. 3787 -- Reps. Richardson, Cotty, Rice, Cobb-Hunter, Keyserling, J. Brown, Worley, S. Whipper, Limehouse, Moody-Lawrence, Byrd, Shissias, Herdklotz, Lloyd, D. Smith, Wilkes, Mason and Thomas: A BILL TO AMEND SECTION 12-33-210, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO ALCOHOLIC BEVERAGE LICENSES FOR PURPOSES OF THE ALCOHOLIC BEVERAGE CONTROL ACT, SO AS TO PROVIDE FOR PRORATED LICENSES; TO REPEAL SECTION 12-33-220, RELATING TO AN OBSOLETE PROVISION ALLOWING PRORATION OF LICENSES, AND TO PROVIDE FOR REFUNDS IN CASES OF CERTAIN LICENSES ISSUED AFTER NOVEMBER, 1994.
Very respectfully,
Speaker of the House
Received as information.
S. 101 -- Senators Leventis, Ryberg, Rose, Giese and Elliott: A BILL TO AMEND SECTION 22-3-550, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO A MAGISTRATE'S JURISDICTION OVER CERTAIN CRIMINAL OFFENSES AND A MAGISTRATE'S AUTHORITY TO IMPOSE SENTENCES, SO AS TO PROVIDE THAT THE PROHIBITION AGAINST A MAGISTRATE SENTENCING ANY PERSON TO CONSECUTIVE TERMS OF IMPRISONMENT TOTALING MORE THAN NINETY DAYS DOES NOT APPLY TO SENTENCES FOR CONVICTIONS RESULTING FROM A VIOLATION OF CHAPTER 11 OF TITLE 34 PERTAINING TO FRAUDULENT CHECKS OR A VIOLATION OF SECTION 16-13-10 RELATING TO FORGERY WHICH INVOLVES A CHECK.
On motion of Senator STILWELL, with unanimous consent, the Report of the Committee of Conference was taken up for immediate consideration.
Senator STILWELL spoke on the report.
On motion of Senator STILWELL, with unanimous consent, Free Conference Powers were granted.
Whereupon, the PRESIDENT appointed Senators STILWELL, HOLLAND and MOORE to the Committee of Free Conference on the part of the Senate and a message was sent to the House accordingly.
On motion of Senator STILWELL, the Report of the Committee of Free Conference to S. 101 was adopted as follows:
The COMMITTEE OF FREE CONFERENCE, to whom was referred:
S. 101 -- Senators Leventis, Ryberg, Rose, Giese and Elliott: A BILL TO AMEND SECTION 22-3-550, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO A MAGISTRATE'S JURISDICTION OVER CERTAIN CRIMINAL OFFENSES AND A MAGISTRATE'S AUTHORITY TO IMPOSE SENTENCES, SO AS TO PROVIDE THAT THE PROHIBITION AGAINST A MAGISTRATE SENTENCING ANY PERSON TO CONSECUTIVE TERMS OF IMPRISONMENT TOTALING MORE THAN NINETY DAYS DOES NOT APPLY TO SENTENCES FOR CONVICTIONS RESULTING FROM A VIOLATION OF CHAPTER 11 OF TITLE 34 PERTAINING TO FRAUDULENT CHECKS OR A VIOLATION OF SECTION 16-13-10 RELATING TO FORGERY WHICH INVOLVES A CHECK.
Beg leave to report that they have duly and carefully considered the same and recommend:
That the same do pass with the following amendments:
Amend the bill, as and if amended, by striking all after the enacting words and inserting therein the following:
SECTION 1. Section 22-3-550 of the 1976 Code, as last amended by Section 28, Part II, Act 570 of 1994, is further amended to read:
"Section 22-3-550. Magistrates have jurisdiction of all offenses which may be subject to the penalties of a fine or forfeiture not exceeding five hundred dollars, or imprisonment not exceeding thirty days, or both. and may impose any sentence within those limits, singly or in the alternative. In addition, a magistrate may order restitution he considers appropriate.
However, a magistrate shall not have the power to sentence any person to consecutive terms of imprisonment totaling more than ninety days except for convictions resulting from violations of Chapter 11 of Title 34, pertaining to fraudulent checks, or violations of Section 16-13-110(B)(1), relating to shoplifting. Further, a magistrate must specify an amount of restitution in damages at the time of sentencing as an alternative to any imprisonment of more than ninety days which is lawfully imposed. The provisions of this paragraph do not effect affect the transfer of criminal matters from the general sessions court made pursuant to Section 22-3-545."
SECTION 2. Section 16-25-60 of the 1976 Code, as last amended by Act 519 of 1994, is further amended to read:
"Section 16-25-60. (A) Unless the complaint is voluntarily dismissed or the charge is dropped prior to the scheduled trial date, a person charged with a violation provided in this chapter shall appear before a judge for disposition of the case.
(B) When a person is convicted of a violation of Section 16-25-20 or 16-25-50, the court may suspend the imposition or execution of all or part of the sentence conditioned upon the participation of the offender completing, to the satisfaction of the court, in a program designed to treat battering spouses where available or in other appropriate psychiatric or therapeutic treatment or counseling.
(C) When a person is convicted of a violation of Section 16-25-40 or 16-25-65, the court may suspend execution of all or part of the sentence and place the offender on probation, conditioned upon:
(1) the participation of the offender completing, to the satisfaction of the court, in a program designed to treat battering spouses where available or in other appropriate psychiatric or therapeutic treatment or counseling;
(2) fulfillment of all the obligations arising under court order pursuant to Section 20-4-60 and this section;
(3) other reasonable terms and conditions of probation as the court may determine necessary to ensure the protection of the victim.
(D) In determining whether or not to suspend the imposition or execution of all or part of a sentence as provided in this section, the court must consider the nature and severity of the offense, the number of times the offender has repeated the offense, and the best interests and safety of the victim. A court may require an offender to pay for participation in a program or treatment or counseling as an appropriate term or condition for suspending the imposition or execution of all or part of a sentence."
SECTION 3. Section 20-4-70 of the 1976 Code is amended to read:
"Section 20-4-70. (A) Any An order of protection issued under subsection (a) of Section 20-4-60 shall must be for a fixed time not to exceed six months, but one year unless the parties have reconciled as evidenced by an order of dismissal and may be extended or terminated by order of the court upon motion by the petitioner, either party showing good cause, with notice to the respondent other party. A respondent shall have has the right to a hearing on the extension of an order issued pursuant to this section within thirty days of the date upon which the order will expire.
(B) Any Provisions included in an order of protection granting relief pursuant to Section 20-4-60(c) shall dissolve without motion sixty days must be enforced until further order of the court following the issuance of such the order unless, prior to before the expiration of such the period, the court has scheduled a hearing pursuant to the filing of an action for divorce or separate support and maintenance to determine the temporary rights and obligations of the parties with respect to support of a spouse or children, custody and visitation, or the distribution of personal property. If such the hearing has been scheduled, relief granted under Section 20-4-60(c) shall remain remains in effect beyond the sixty day period only until an order pursuant to the hearing is issued by the court.
(C) The Family Court may modify the terms of any order issued under this section.
(D) Any An order of protection issued by a magistrate shall expire expires as provided under the terms of the order or upon the issuance of a subsequent order by the Family Court, whichever occurs first."
SECTION 4. Section 34-11-70 of the 1976 Code is amended to read:
"Section 34-11-70. (a) When a check, a draft, or other written order is not paid by the drawee because the maker or drawer did not have an account with or sufficient funds on deposit with the bank or the person upon which it was drawn when presented or the draft, check, or other written order has an incorrect or insufficient signature on it, and the maker or drawer does not pay the amount due on it, together with a service charge of twenty twenty-five dollars, within ten days after written notice has been sent by certified mail to the address printed on the check or given at the time it is tendered or provided on a check-cashing identification card stating that payment was refused upon the instrument, then it constitutes prima facie evidence of fraudulent intent against the maker. Service charges collected pursuant to this section must be paid to the payee of the instrument.
(1) For purposes of subsection (a), notice must be given by mailing the notice with postage prepaid addressed to the person at the address as printed or written on the instrument. The giving of notice by mail is complete upon the expiration of ten days after the deposit of the notice in the mail. A certificate by the payee that the notice has been sent as required by this section is presumptive proof that the requirements as to notice have been met, regardless of the fact that the notice actually might not have been received by the addressee. The form of notice must be substantially as follows:
You are notified that a check or instrument, numbered ____, issued by you on ____ (date), drawn upon ____ (name of bank), and payable to ____, has been dishonored. Pursuant to South Carolina law, you have ten days from the date this notice was mailed to tender payment of the full amount of the check or instrument plus a service charge of twenty twenty-five dollars, the total amount due being __ dollars and ___ cents. Unless this amount is paid in full within the specified time above, the holder of the check or instrument may turn over the dishonored check or instrument and all other available information relating to this incident to the solicitor or other appropriate officer for criminal prosecution.
(2) When a person instituting prosecution gives notice in substantially similar form provided in item (1) to the person and the bank upon which the instrument was drawn and waits ten days from the date notice is mailed before instituting the criminal proceedings, there arises a presumption that the prosecution was instituted for reasonable and probable cause, and the person instituting prosecution is immune from civil liability for the giving of the notice.
(3) A service charge of not more than twenty twenty-five dollars is payable by the drawer of a draft, a check, or other written order to the payee of the instrument when the draft, check, or other written order is presented for payment in whole or in part of a then existing debt, including, but not limited to, consumer credit transactions, and is dishonored. This service charge is solely to compensate the payee of the instrument for incurred expenses in processing the dishonored instrument and is not related to a presumption of fraud so that it is not necessary to issue the notice to the person at the address as printed on the instrument set forth in items (1) and (2).
(b) Any court, including magistrate's, may dismiss a case under the provisions of this chapter for want of prosecution. When any prosecutions are initiated under this chapter, the party applying for the warrant is held liable for all reasonable administrative costs accruing not to exceed twenty dollars if the case is dismissed for want of prosecution. Unless waived by the court, the party applying for the warrant shall notify, orally or otherwise, the court not less than twenty-four hours before the date and time set for trial that full restitution has been made in connection with the warrant, and the notification relieves that party of the responsibility of prosecution.
(c) Any court, including magistrate's, may dismiss any prosecution initiated pursuant to the provisions of this chapter on satisfactory proof of restitution and payment by the defendant of all administrative costs accruing not to exceed twenty dollars submitted before the date set for trial after the issuance of a warrant.
(d) For purposes of this chapter, subsequent persons receiving a check, draft, or other written order by endorsement from the original payee or a successor endorsee have the same rights that the original payee has against the maker of the instrument, if the maker of the instrument has the same defenses against subsequent persons as he may have had against the original payee. However, the remedies available under this chapter may be exercised only by one party in interest."
SECTION 5. Section 56-5-765 of the 1976 Code, as added by Act 439 of 1994, is amended to read:
"Section 56-5-765. (A) When a motor vehicle or motorcycle of a law enforcement agency, except a motor vehicle or motorcycle operated by the South Carolina Department of Public Safety, is involved in a traffic collision that results in an injury or a death, or involves a privately-owned motor vehicle or motorcycle, regardless of whether another motor vehicle or motorcycle is involved, the State Highway Patrol shall investigate the collision and file a report with findings on whether the agency motor vehicle or motorcycle was operated properly within the guidelines of appropriate statutes and regulations.
(B) When a motor vehicle or motorcycle of the Department of Public Safety is involved in a traffic collision that results in an injury or a death, or involves a privately-owned motor vehicle or motorcycle, regardless of whether another motor vehicle or motorcycle is involved, the sheriff of the county in which the collision occurred shall investigate the collision, regardless of whether the collision occurred within an incorporated jurisdiction, and file a report with findings on whether the department's motor vehicle or motorcycle was operated properly within the guidelines of appropriate statutes and regulations.
(C) A law enforcement department or agency may not investigate collisions in which a motor vehicle or an employee of that department or agency is involved that results in an injury or a death, or involves a privately-owned motor vehicle or motorcycle, regardless of whether another motor vehicle or motorcycle is involved."
SECTION 6. The 1976 Code is amended by adding:
"Section 56-5-2780. (A) A driver of a vehicle violating Section 56-5-2770(a) or (e) is guilty of a misdemeanor and, upon conviction, entry of a plea of guilty or nolo contendere, or forfeiture of bail for a first offense must be fined not less than one thousand five hundred dollars or imprisoned not more than thirty days. In lieu of imprisonment, the court may require that the individual complete an appropriate term of community service of not fewer than ten days upon terms and conditions the court considers proper. Upon conviction, entry of a plea of guilty or nolo contendere, or forfeiture of bail for a second or subsequent violation of Section 56-5-2770(a) or (e), a person is guilty of a misdemeanor and must be fined not less than two thousand dollars or more than five thousand dollars or imprisoned for not fewer than thirty days and not more than sixty days.
(B) If a driver of a vehicle violates Section 56-5-2770(a) or (e), and the violation proximately causes great bodily injury or death to a pedestrian, the person is guilty of a felony and, upon conviction, entry of a plea of guilty or nolo contendere, or forfeiture of bond, the person must be:
(1) fined not less than five thousand dollars or more than ten thousand dollars and imprisoned for not less than sixty days or more than one year when great bodily injury results;
(2) fined not less than ten thousand dollars or more than twenty-five thousand dollars and imprisoned for not less than one year or more than five years when death results.
As used in this subsection, 'great bodily injury' means bodily injury which creates a substantial risk of death or which causes serious, permanent disfigurement or protracted loss or impairment of the function of any bodily member or organ.
The department shall suspend the driver's license of a person who is convicted or who receives a sentence upon a plea of guilty or nolo contendere pursuant to this subsection for the term of imprisonment plus one year."
SECTION 7. Section 56-5-2775 of the 1976 Code, as last amended by Act 399 of 1992, is further amended to read:
"Section 56-5-2775. The driver of a vehicle violating the provisions of Sections 56-5-2735 and 56-5-2770(a) or (e) is guilty of a misdemeanor and, upon conviction, must be punished by a fine of fined not less than one hundred dollars nor or more than two hundred dollars or imprisonment imprisoned for not more than thirty days."
SECTION 8. This act takes effect upon approval by the Governor.
Amend title to conform.
/s/Donald H. Holland /s/Douglas Jennings, Jr. /s/Thomas L. Moore /s/Gilda Y. Cobb-Hunter /s/H. Samuel Stilwell /s/Ronald N. Fleming On Part of the Senate. On Part of the House.
, and a message was sent to the House accordingly.
Columbia, S.C., June 13, 1995
Mr. President and Senators:
The House respectfully informs your Honorable Body that it has adopted the report of the Committee of Free Conference on the following Bill:
S. 101 -- Senators Leventis, Ryberg, Rose, Giese and Elliott: A BILL TO AMEND SECTION 22-3-550, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO A MAGISTRATE'S JURISDICTION OVER CERTAIN CRIMINAL OFFENSES AND A MAGISTRATE'S AUTHORITY TO IMPOSE SENTENCES, SO AS TO PROVIDE THAT THE PROHIBITION AGAINST A MAGISTRATE SENTENCING ANY PERSON TO CONSECUTIVE TERMS OF IMPRISONMENT TOTALING MORE THAN NINETY DAYS DOES NOT APPLY TO SENTENCES FOR CONVICTIONS RESULTING FROM A VIOLATION OF CHAPTER 11 OF TITLE 34 PERTAINING TO FRAUDULENT CHECKS OR A VIOLATION OF SECTION 16-13-10 RELATING TO FORGERY WHICH INVOLVES A CHECK.
Very respectfully,
Speaker of the House
Received as information.
Columbia, S.C., June 13, 1995
Mr. President and Senators:
The House respectfully informs your Honorable Body that the report of the Committee of Free Conference having been adopted by both Houses, and this Bill having been read three times in each House, it was ordered that the title thereof be changed to that of an Act, and that it be enrolled for ratification:
S. 101 -- Senators Leventis, Ryberg, Rose, Giese and Elliott: A BILL TO AMEND SECTION 22-3-550, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO A MAGISTRATE'S JURISDICTION OVER CERTAIN CRIMINAL OFFENSES AND A MAGISTRATE'S AUTHORITY TO IMPOSE SENTENCES, SO AS TO PROVIDE THAT THE PROHIBITION AGAINST A MAGISTRATE SENTENCING ANY PERSON TO CONSECUTIVE TERMS OF IMPRISONMENT TOTALING MORE THAN NINETY DAYS DOES NOT APPLY TO SENTENCES FOR CONVICTIONS RESULTING FROM A VIOLATION OF CHAPTER 11 OF TITLE 34 PERTAINING TO FRAUDULENT CHECKS OR A VIOLATION OF SECTION 16-13-10 RELATING TO FORGERY WHICH INVOLVES A CHECK.
Very respectfully,
Speaker of the House
Received as information.
S. 126 -- Senators Land and Washington: A BILL TO AMEND SECTION 9-8-110(2), CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PAYMENTS ON THE DEATH OF A MEMBER OR BENEFICIARY OF THE RETIREMENT SYSTEM FOR JUDGES AND SOLICITORS, SO AS TO DELETE THE PROVISION TERMINATING BENEFITS PAID TO THE SURVIVING SPOUSE OF A MEMBER ON HER REMARRIAGE.
On motion of Senator LAND, with unanimous consent, the Report of the Committee of Conference was taken up for immediate consideration.
Senator LAND spoke on the report.
On motion of Senator LAND, the Report of the Committee of Conference to S. 126 was adopted as follows:
The COMMITTEE OF CONFERENCE, to whom was referred:
S. 126 -- Senators Land and Washington: A BILL TO AMEND SECTION 9-8-110(2), CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PAYMENTS ON THE DEATH OF A MEMBER OR BENEFICIARY OF THE RETIREMENT SYSTEM FOR JUDGES AND SOLICITORS, SO AS TO DELETE THE PROVISION TERMINATING BENEFITS PAID TO THE SURVIVING SPOUSE OF A MEMBER ON HER REMARRIAGE.
Beg leave to report that they have duly and carefully considered the same and recommend:
That the same do pass with the following amendments:
Amend the bill, as and if amended, by striking all after the enacting words and inserting therein the following:
/SECTION 1. Section 9-1-1650 of the 1976 Code is amended by adding at the end:
"An active contributing member making the nomination provided under this section also may name contingent beneficiaries in the same manner that beneficiaries are named. A contingent beneficiary has no rights under this chapter unless all beneficiaries nominated by the member have predeceased the member and the member's death occurs while in service. In this instance, a contingent beneficiary is considered the member's beneficiary for purposes of this section and Section 9-1-1660, if applicable."
SECTION 2. Section 9-8-110(1) and (2) of the 1976 Code are amended to read:
"(1) Except as provided in subsections (2) and (3) of this section, upon the death of any member of the system, a lump sum amount shall must be paid to such the persons as he shall have the member nominated by written designation, filed with the board, otherwise to his estate. Such This amount shall must be equal to the amount of his the member's accumulated contributions. An active contributing member making the nomination provided under this section also may name secondary beneficiaries in the same manner that beneficiaries are named. A secondary beneficiary has no rights under this chapter unless all beneficiaries nominated by the member predecease the member and the member's death occurs while in service. In this instance, a secondary beneficiary is considered the member's beneficiary for purposes of this section.
(2) Unless a married member has designated a beneficiary other than his spouse in accordance with subsection (1), upon his death prior to retirement an allowance equal to one third of the allowance which would have been payable to him, assuming he was then eligible to retire and had retired on the date of his death, shall be paid to his surviving spouse until her death or remarriage. This allowance is payable in lieu of the lump sum amount payable in accordance with subsection (1). Upon the death of a retired member who has not designated a beneficiary other than a spouse an allowance equal to one third of the allowance which would have been payable to him, shall be paid to the surviving spouse until death or remarriage. For purposes of this subsection, 'retired member' shall include those former judges and solicitors who are beneficiaries pursuant to subsection (4) of Section 9-8-60."
SECTION 3. The 1976 Code is amended by adding:
"Section 9-9-55. Notwithstanding any other provision of law, any member of the General Assembly who served in the General Assembly any portion of a year may establish credit for the entire year by paying the full actuarial cost as determined by the Retirement System for members of the General Assembly."
SECTION 4. Section 9-9-100(1) of the 1976 Code is amended to read:
"(1) Upon the death of any a member of the system, a lump sum amount shall must be paid to such the person as he shall have the member nominated by written designation, filed with the board, otherwise to his the member's estate. Such This lump sum amount shall must be equal to the amount of his the member's accumulated contributions. An active contributing member making the nomination provided under this item also may name contingent beneficiaries in the same manner that beneficiaries are named. A contingent beneficiary has no rights under this chapter unless all beneficiaries nominated by the member have predeceased the member and the member's death occurs while in service. In this instance, a contingent beneficiary is considered the member's beneficiary for purposes of this item and item (3) of this section, if applicable."
SECTION 5. Section 9-11-110 of the 1976 Code is amended by adding at the end:
"(3) An active contributing member making the nomination provided under subsection (1) of this section also may name contingent beneficiaries in the same manner that beneficiaries are named. A contingent beneficiary has no rights under this chapter unless all beneficiaries nominated by the member have predeceased the member and the member's death occurs while in service. In this instance, a contingent beneficiary is considered the member's beneficiary for purposes of subsection (1) of this section and Section 9-11-130, if applicable."
SECTION 6. This act takes effect upon approval by the Governor./
Amend title to conform.
/s/Edward E. Saleeby /s/Marion P. Carnell /s/John C. Land, III /s/Patrick B. Harris /s/William C. Mescher /s/Claude V. Marchbanks On Part of the Senate. On Part of the House.
, and a message was sent to the House accordingly.
Columbia, S.C., June 13, 1995
Mr. President and Senators:
The House respectfully informs your Honorable Body that it has adopted the report of the Committee of Conference on the following Bill:
S. 126 -- Senators Land and Washington: A BILL TO AMEND SECTION 9-8-110(2), CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PAYMENTS ON THE DEATH OF A MEMBER OR BENEFICIARY OF THE RETIREMENT SYSTEM FOR JUDGES AND SOLICITORS, SO AS TO DELETE THE PROVISION TERMINATING BENEFITS PAID TO THE SURVIVING SPOUSE OF A MEMBER ON HER REMARRIAGE.
Very respectfully,
Speaker of the House
Received as information.
The Report of the Committee of Conference having been adopted by both Houses, ordered that the title be changed to that of an Act and the Act enrolled for Ratification.
A message was sent to the House accordingly.
At 11:50 A.M., on motion of Senator LAND, the Senate receded from business subject to the Call of the Chair.
At 12:15 P.M., the Senate resumed.
The following was introduced:
S. 911 -- Senators Holland, McConnell and Moore: A CONCURRENT RESOLUTION TO PROVIDE THAT WHEN THE RESPECTIVE HOUSES OF THE GENERAL ASSEMBLY ADJOURN ON OR BEFORE 5:00 P.M. ON JUNE 15, 1995, THEY SHALL STAND ADJOURNED TO MEET AT 10:00 A.M. ON JUNE 16, 19, 20, 21, 22, AND 23, 1995, FOR CONSIDERATION OF LOCAL UNCONTESTED MATTERS HAVING UNANIMOUS CONSENT OF THE MEMBERS OF THE AFFECTED DELEGATION AND FOR THE CONSIDERATION OF CONGRATULATORY OR SYMPATHY RESOLUTIONS, AND TO PROVIDE FOR THE RATIFICATION OF ACTS ON JUNE 16, 19, 20, 21, 22, OR 23 UPON CALL OF THE PRESIDENT OF THE SENATE AND SPEAKER OF THE HOUSE OF REPRESENTATIVES AND TO PROVIDE THAT WHEN THE GENERAL ASSEMBLY ADJOURNS NO LATER THAN 5:00 P.M. ON FRIDAY, JUNE 23, 1995, IT SHALL STAND ADJOURNED SINE DIE.
Be it resolved by the Senate, the House of Representatives concurring:
That the mandatory SINE DIE adjournment date for the General Assembly prescribed in Section 2-1-180 of the 1976 Code is extended, as authorized by that code section, to permit the General Assembly to continue in session under the terms and conditions set forth below. When the respective houses adjourn on or before 5:00 p.m. on Thursday, June 15, 1995, each house shall stand adjourned to meet thereafter under the following terms and conditions:
(1) When the respective houses of the General Assembly adjourn on Thursday, June 15, 1995, not later than 5:00 p.m., they shall stand adjourned to meet at 10:00 a.m. on June 16, 19, 20, 21, 22, and 23, 1995, for consideration of local and uncontested matters which have the unanimous consent of the members of the delegation affected by the legislation and for consideration of resolutions expressing sympathy or congratulations, provided that the President of the Senate and the Speaker of the House are authorized to meet on June 16, 19, 20, 21, 22, or 23 for the ratification of acts which have been enrolled.
(2) When each house adjourns on Friday, June 23, 1995, not later than 5:00 P.M., it shall stand adjourned SINE DIE.
Senator McCONNELL spoke on the Resolution.
The Concurrent Resolution was adopted, ordered sent to the House.
Columbia, S.C., June 13, 1995
Mr. President and Senators:
The House respectfully informs your Honorable Body that it has adopted the report of the Committee of Conference on the following Bill:
Very respectfully,
Speaker of the House
Received as information.
On motion of Senator DRUMMOND, with unanimous consent, the Report of the Committee of Conference was taken up for immediate consideration.
Senator DRUMMOND spoke on the report.
On motion of Senator DRUMMOND, with unanimous consent, Free Conference Powers were granted.
Whereupon, the PRESIDENT appointed Senators DRUMMOND, J. VERNE SMITH and PEELER to the Committee of Free Conference on the part of the Senate and a message was sent to the House accordingly.
Senator DRUMMOND moved that the Report of the Committee of Free Conference be adopted.
Senator LEVENTIS spoke on the motion.
At 12:35 P.M., Senator MARTIN assumed the Chair.
Senator LEVENTIS continued speaking on the motion.
Senator LEVENTIS moved that it be the Sense of the Senate that it be the position of the Senate Conferees on H. 3362 that the Senate insist that the House vote directly on any provisions affecting Barnwell.
Senator WILLIAMS moved to table.
The "ayes" and "nays" were demanded and taken, resulting as follows:
AYES
Alexander Boan Bryan Courtney Drummond Holland Jackson Land Leatherman Martin McConnell McGill Mescher Moore O'Dell Patterson Reese Setzler Smith, J.V. Thomas Williams
NAYS
Cork Courson Elliott Giese Hayes Leventis Peeler Rankin Richter Saleeby Short Smith, G. Stilwell Waldrep Wilson
The Sense of the Senate motion was laid on the table.
I voted to table because one House of the General Assembly cannot tell another House what to do internally. The Senate would reject any attempt by the House to tell it what to do internally. This issue of Barnwell should properly be raised when the Bill is before us for amending.
Senator LEVENTIS moved that it be the Sense of the Senate that the Senate Conferees on H. 3362 seek an amendment to the Bill which would limit the extension of Barnwell to one year from its planned closure date.
Senator WILLIAMS moved to table.
A roll call vote was requested.
Senator SETZLER made a Parliamentary Inquiry as to whether or not Senator LEVENTIS had spoken twice on debate of this Bill.
The ACTING PRESIDENT stated that the Senator was speaking on the Sense of the Senate motion.
Senator McCONNELL raised a Point of Order that the Sense of the Senate motion was out of order inasmuch as the question before the body was the adoption or rejection of the Report of the Committee of Free Conference.
The ACTING PRESIDENT sustained the Point of Order and stated that the Senate having granted Free Conference Powers and the Free Conference Report having been placed on the desk and taken up for consideration without objection, the question then was the adoption of the Report of the Committee of Free Conference and the motion for a Sense of the Senate would require unanimous consent.
Senator LEVENTIS spoke on the motion and moved for a roll call vote.
Senator LEVENTIS made a Parliamentary Inquiry as to whether the two-thirds vote would apply to the adoption of the entire report?
Senator MOORE spoke on the inquiry.
The ACTING PRESIDENT stated that under the provisions of Rule 51, the adoption of the Report of the Committee of Free Conference would require a two-thirds vote of the total membership of the Senate.
At 1:20 P.M., Senator SETZLER asked unanimous consent to make a motion to invite the House of Representatives to attend the Senate Chamber for the purpose of ratifying acts at 3:00 P.M.
There was no objection and a message was sent to the House accordingly.
Senator LAND spoke on the motion to adopt the Report of the Committee of Free Conference.
Senator CORK spoke on the motion.
Senator COURSON spoke on the motion.
Senator RICHTER spoke on the motion.
The pending question was the adoption of the Report of the Committee of Free Conference.
The "ayes" and "nays" were demanded and taken, resulting as follows:
AYES
Alexander Boan Bryan Cork Courson Courtney Drummond Elliott Ford Giese Glover* Gregory* Hayes Holland Jackson Land Lander Leatherman Martin Matthews McConnell McGill Mescher Moore O'Dell Passailaigue* Patterson Peeler Rankin Reese Richter Rose* Russell* Ryberg* Saleeby Setzler Short Smith, G. Smith, J.V. Stilwell Thomas Waldrep Washington Williams Wilson
NAYS
Leventis
*These Senators were not present in the Chamber at the time the vote was taken and the votes were recorded by leave of the Senate, with unanimous consent.
The Report of the Committee of Free Conference to H. 3362 was adopted and incorporated by reference in Document (DKA\4058HTC.95), and a message was sent to the House accordingly.
The Report of the Committee of Free Conference having been adopted by both Houses, ordered that the title be changed to that of an Act and the Act enrolled for Ratification.
A message was sent to the House accordingly.
I voted against this conference report because it includes provisions dealing with low-level radioactive waste and the Barnwell dump which are clearly not constitutional and are not the best options for the people of this State.
Although we did support the Conference Report on the 1995-96 Appropriation Bill, we are opposed to its inclusion of provisions extending the life of the Barnwell nuclear waste facility and withdrawing South Carolina's membership in the Southeastern Compact.
Unlike the House, the Senate did consider these issues specifically during budget debate earlier this year. Roll call votes were taken and the Senate majority was determined. We reluctantly voted in favor of this budget despite its inclusion of Barnwell, because a vote to the contrary would not have changed the Sense of the Senate, nor would it have affected the outcome of the budget.
All over this country trains transporting nuclear waste are leaving stations. They are all headed for Barnwell. Their arrivals create enormous profits for one company, a false sense of easy revenue in the minds of short-sighted South Carolina citizens and political leaders, imperil the well being of future generations of our people and perpetuate our State in the roll of laughing stock of the nation.
It is our view that we must take the principled position that we will no longer serve as the nation's dumping ground.
Sadly, adroit politicians have succeeded in making the survival and progress of our state education system and property tax relief for our people seem tied to the continued operation of the Barnwell site. They are not.
The other states in our country operate their schools, including building and expansion, without soiling their lands with the pernicious waste to which we have addicted ourselves.
We are against extending the life of the nuclear waste site of Barnwell. We are for funding education and the other critical needs of our people. We are for property tax relief.
We vote in favor of this year's budget as hostages. We believe we can meet the needs of our citizens without extending the life of the Barnwell facility.
On motion of Senator ALEXANDER, at 1:35 P.M., Senator RUSSELL was granted a leave of absence for the remainder of the day.
At 1:40 P.M., on motion of Senator DRUMMOND, the Senate receded from business until 3:00 P.M.
The Senate reassembled at 3:00 P.M. and was called to order by the PRESIDENT.
Columbia, S.C., June 12, 1995
Mr. President and Senators:
The House respectfully informs your Honorable Body that it has adopted the report of the Committee of Conference on:
H. 3647 -- Ways and Means Committee: A BILL TO SUSPEND THE LIMITATION ON GENERAL FUND APPROPRIATIONS PROVIDED PURSUANT TO SECTION 11-11-140, CODE OF LAWS OF SOUTH CAROLINA, 1976, BEGINNING WITH APPROPRIATIONS FOR FISCAL YEAR 1995-96, TO PROVIDE FOR THE USE OF THE ADDITIONAL REVENUE FOR PROPERTY TAX RELIEF AND FOR THE CONTINUED SUSPENSION OF THE LIMITATION UNTIL SUFFICIENT RECURRING REVENUES ARE AVAILABLE FOR THE STATE PROPERTY TAX RELIEF FUND TO REPLACE OPERATING PROPERTY TAX REVENUES ON OWNER-OCCUPIED RESIDENTIAL PROPERTY, AND TO PROVIDE FOR THE REINSTATEMENT OF THE LIMITATION WHEN THESE RECURRING REVENUES ARE AVAILABLE.
Very respectfully,
Speaker of the House
Received as information.
H. 3647 -- Ways and Means Committee: A BILL TO SUSPEND THE LIMITATION ON GENERAL FUND APPROPRIATIONS PROVIDED PURSUANT TO SECTION 11-11-140, CODE OF LAWS OF SOUTH CAROLINA, 1976, BEGINNING WITH APPROPRIATIONS FOR FISCAL YEAR 1995-96, TO PROVIDE FOR THE USE OF THE ADDITIONAL REVENUE FOR PROPERTY TAX RELIEF AND FOR THE CONTINUED SUSPENSION OF THE LIMITATION UNTIL SUFFICIENT RECURRING REVENUES ARE AVAILABLE FOR THE STATE PROPERTY TAX RELIEF FUND TO REPLACE OPERATING PROPERTY TAX REVENUES ON OWNER-OCCUPIED RESIDENTIAL PROPERTY, AND TO PROVIDE FOR THE REINSTATEMENT OF THE LIMITATION WHEN THESE RECURRING REVENUES ARE AVAILABLE.
On motion of Senator J. VERNE SMITH, with unanimous consent, the Report of the Committee of Conference was taken up for immediate consideration.
Senator J. VERNE SMITH spoke on the report.
On motion of Senator J. VERNE SMITH, the Report of the Committee of Conference to H. 3647 was adopted as follows:
The COMMITTEE OF CONFERENCE, to whom was referred:
H. 3647 -- Ways and Means Committee: A BILL TO SUSPEND THE LIMITATION ON GENERAL FUND APPROPRIATIONS PROVIDED PURSUANT TO SECTION 11-11-140, CODE OF LAWS OF SOUTH CAROLINA, 1976, BEGINNING WITH APPROPRIATIONS FOR FISCAL YEAR 1995-96, TO PROVIDE FOR THE USE OF THE ADDITIONAL REVENUE FOR PROPERTY TAX RELIEF AND FOR THE CONTINUED SUSPENSION OF THE LIMITATION UNTIL SUFFICIENT RECURRING REVENUES ARE AVAILABLE FOR THE STATE PROPERTY TAX RELIEF FUND TO REPLACE OPERATING PROPERTY TAX REVENUES ON OWNER-OCCUPIED RESIDENTIAL PROPERTY, AND TO PROVIDE FOR THE REINSTATEMENT OF THE LIMITATION WHEN THESE RECURRING REVENUES ARE AVAILABLE.
Beg leave to report that they have duly and carefully considered the same and recommend:
That the same do pass with the following amendments:
Amend the bill, as and if amended, by striking all after the enacting words and inserting:
/SECTION 1. Section 11-11-140 of the 1976 Code, as last amended by Section 7, Part II, Act 497 of 1994, is further amended by adding at the end:
"(F) Notwithstanding the provisions of subsection (D), appropriations from surplus may not be expended before the Comptroller General's closing of the books on the fiscal year in which the surplus occurred. The surplus in this subsection, that is the calculated set-aside as defined in this section, after reduction by way of transfer to the general fund of such amount as necessary to offset any recognized budget shortfall for the fiscal year in which the set-aside surplus occurred, is appropriated for deposit in the State Property Tax Relief Fund. After the first year that the State Property Tax Relief Fund is fully funded, the procedure in subsection (D) must be applied."
SECTION 2. This act takes effect upon approval by the Governor./
Amend title to read:
/TO AMEND SECTION 11-11-140, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE LIMITATION ON GENERAL FUND APPROPRIATIONS IN THE ANNUAL GENERAL APPROPRIATIONS ACT, SO AS TO PROHIBIT APPROPRIATIONS OF SURPLUS REVENUES BEFORE THE CLOSING OF THE STATE'S BOOKS FOR A FISCAL YEAR AND TO PROVIDE THAT THE AMOUNT UNAVAILABLE FOR APPROPRIATION IN THE ANNUAL GENERAL APPROPRIATIONS ACT PURSUANT TO THE LIMITATION, AFTER TRANSFER TO THE GENERAL FUND OF AMOUNTS NECESSARY TO OFFSET A RECOGNIZED BUDGET SHORTFALL FOR THE YEAR FOR WHICH THE LIMITATION APPLIED, IS APPROPRIATED TO THE PROPERTY TAX RELIEF FUND./
/s/Senator John Drummond /s/Rep. Henry E. Brown, Jr. /s/Senator J. Verne Smith /s/Rep. John G. Felder /s/Senator Harvey S. Peeler /s/Rep. Robert W. Harrell, Jr. On Part of the Senate. On Part of the House.
, and a message was sent to the House accordingly.
The Report of the Committee of Conference having been adopted by both Houses, ordered that the title be changed to that of an Act and the Act enrolled for Ratification.
A message was sent to the House accordingly.
It is the understanding of the conferees on H. 3647 that the intent of Section 11-11-140(F) of the 1976 Code is as follows:
"(F) Notwithstanding the provisions of subsection (D), appropriations from surplus may not be expended before the Comptroller General's closing of the books on the fiscal year in which the surplus occurred. The surplus in this subsection, that is the calculated set-aside as defined in this section, after reduction by way of transfer to the general fund of such amount as necessary to offset any recognized budget shortfall for the fiscal year in which the set-aside surplus occurred, is appropriated for deposit in the State Property Tax Relief Fund. After the first year that the State Property Tax Relief Fund up to one hundred ninety-five million dollars is fully funded, the procedure in subsection (D) must be applied."
/s/Senator John Drummond /s/Rep. Henry E. Brown, Jr. /s/Senator J. Verne Smith /s/Rep. John G. Felder /s/Senator Harvey S. Peeler /s/Rep. Robert W. Harrell, Jr. On Part of the Senate. On Part of the House.
At 3:35 P.M., on motion of Senator HOLLAND, the Senate receded from business subject to the Call of the Chair.
At 4:45 P.M., the Senate resumed.
Pursuant to an invitation the Honorable Speaker and House of Representatives appeared in the Senate Chamber on June 13, 1995, at 3:00 P.M. and the following Acts and Joint Resolutions were ratified:
(R210) S. 365 -- Senators Setzler, Stilwell, Cork, Moore, Lander, Courson and Leventis: AN ACT TO AMEND SECTION 59-103-10, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE STATE COMMISSION ON HIGHER EDUCATION, SO AS TO REVISE THE MEMBERSHIP OF THE COMMISSION AND THE MANNER IN WHICH THE CHAIRMAN IS SELECTED; TO ADD SECTION 59-103-45 SO AS TO PROVIDE THAT THE COMMISSION ON HIGHER EDUCATION SHALL ESTABLISH PROCEDURES FOR THE TRANSFERABILITY OF COURSES AT THE UNDERGRADUATE LEVEL BETWEEN TWO-YEAR AND FOUR-YEAR INSTITUTIONS OR SCHOOLS, COORDINATE WITH THE STATE BOARD OF EDUCATION IN THE APPROVAL OF CERTAIN SECONDARY EDUCATION COURSES, AND REVIEW MINIMUM UNDERGRADUATE ADMISSION STANDARDS FOR IN-STATE AND OUT-OF-STATE STUDENTS; TO AMEND SECTION 59-103-60, RELATING TO RECOMMENDATIONS OF THE COMMISSION ON HIGHER EDUCATION TO THE BUDGET AND CONTROL BOARD AND THE GENERAL ASSEMBLY, SO AS TO INCLUDE THE GOVERNOR'S OFFICE AS A RECIPIENT OF SUCH RECOMMENDATIONS AND DELETE THE BUDGET AND CONTROL BOARD AND PROVIDE THAT THE HOUSE WAYS AND MEANS COMMITTEE AND THE SENATE FINANCE COMMITTEE AS WELL AS THE BUDGET AND CONTROL BOARD MAY REFER TO THE COMMISSION CERTAIN REQUESTS OF INSTITUTIONS OF HIGHER LEARNING; AND TO AMEND SECTION 59-103-90, RELATING TO THE PROFESSIONAL STAFF OF THE COMMISSION, SO AS TO PROVIDE THAT THE EXECUTIVE DIRECTOR SHALL BE APPOINTED BY THE COMMISSION TO MANAGE AND CARRY OUT SPECIFIED DUTIES, SHALL HAVE NO GRIEVANCE RIGHTS, AND MAY BE DISMISSED WITHOUT CAUSE, AND TO PROVIDE THAT THE OTHER PROFESSIONAL STAFF COMPLEMENT OF THE COMMISSION SHALL BE ESTABLISHED BY THE EXECUTIVE DIRECTOR RATHER THAN THE COMMISSION; AND TO CREATE A JOINT LEGISLATIVE COMMITTEE TO STUDY THE GOVERNANCE, OPERATION, AND INSTITUTIONAL STRUCTURE OF HIGHER EDUCATION IN SOUTH CAROLINA, AND SHALL ISSUE ITS REPORT BY FEBRUARY 1, 1996, WHICH SHALL SERVE AS THE DECENNIAL REPORT OF THE COMMISSION ON HIGHER EDUCATION.
(R211) H. 3362 -- Ways and Means Committee: AN ACT TO MAKE APPROPRIATIONS TO MEET THE ORDINARY EXPENSES OF THE STATE GOVERNMENT FOR THE FISCAL YEAR BEGINNING, JULY 1, 1995, AND FOR OTHER PURPOSES; TO REGULATE THE EXPENDITURE OF SUCH FUNDS; TO FURTHER PROVIDE FOR THE OPERATION OF THE STATE GOVERNMENT DURING THE FISCAL YEAR; TO APPROPRIATE FUNDS ALLOTTED TO THE STATE GOVERNMENT UNDER THE PUBLIC WORKS EMPLOYMENT ACT OF 1976 (FEDERAL); TO AMEND SECTION 44-2-20, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEFINITIONS FOR PURPOSES OF THE SUPERB PROGRAM, SO AS TO ADD DEFINITIONS; TO AMEND SECTION 44-2-40, AS AMENDED, RELATING TO THE SUPERB ACCOUNT AND SUPERB RESPONSIBILITY FUND, SO AS TO TRANSFER ADMINISTRATION OF THE SUPERB RESPONSIBILITY FUND FROM THE STATE BUDGET AND CONTROL BOARD TO THE DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL, TO FURTHER CLARIFY PURPOSES FOR WHICH FUNDS MAY BE EXPENDED, PROVIDE FOR TRANSFER OF FUNDS BETWEEN THE ACCOUNTS, AND TO ESTABLISH PROCEDURES FOR PAYMENTS FROM THE FUND; TO AMEND SECTION 44-2-70, AS AMENDED, RELATING TO FINANCIAL RESPONSIBILITY OF UNDERGROUND STORAGE TANK OWNERS AND OPERATORS, SO AS TO FURTHER PROVIDE FOR THE RESPONSIBILITY OF OWNERS AND OPERATORS, TO DELETE THE PROVISION THAT RELEASES MUST BE SUDDEN; TO AMEND SECTION 44-2-75, AS AMENDED, RELATING TO INSURANCE POOLS, SO AS TO PROVIDE THAT CERTAIN ACTIONS MAY BE TAKEN BY THE INSURANCE COMMISSIONER WHEN THE POOL IS INSOLVENT RATHER THAN SOLVENT; TO AMEND SECTION 44-2-110, AS AMENDED, RELATING TO THE EARLY DETECTION INCENTIVE PROGRAM, AND SECTION 44-2-130, AS AMENDED, RELATING TO COMPENSATION FROM THE FUND, SO AS TO PROVIDE THAT THESE SECTIONS APPLY TO RELEASES AT A SITE RATHER THAN TO SITES; TO AMEND SECTION 44-2-115, AS AMENDED, RELATING TO QUALIFIED SITES, SO AS TO PROVIDE THAT THIS SECTION APPLIES TO RELEASES AT A SITE RATHER THAN TO SITES AND TO ALLOW AN OWNER, WHO HAS BEEN DENIED COMPENSATION FROM THE SUPERB ACCOUNT, THE RIGHT TO FILE A PETITION WITH AN ADMINISTRATIVE LAW JUDGE AND THE RIGHT TO REQUEST RECONSIDERATION OF THE DENIAL BY A MEDIATION PANEL; TO AMEND SECTION 44-2-50, AS AMENDED, RELATING TO REGULATIONS TO BE PROMULGATED RELATING TO THE SUPERB ACCOUNT, SO AS TO REVISE THE DATE CERTAIN REGULATIONS MUST BE SUBMITTED TO THE GENERAL ASSEMBLY AND TO PROVIDE THAT THIS SECTION APPLIES TO RELEASES AT SITES RATHER THAN TO SITES; TO AMEND SECTION 44-2-60, AS AMENDED, RELATING TO REGISTRATION OF UNDERGROUND STORAGE TANKS AND ENVIRONMENTAL IMPACT FEES, SO AS TO REQUIRE THE OWNER OR OPERATOR OF AN UNDERGROUND STORAGE TANK TO HAVE A LICENSE TO PLACE PETROLEUM OR PETROLEUM PRODUCTS IN THE STORAGE TANK; TO AMEND SECTION 44-2-120, AS AMENDED, RELATING TO THE USE OF CONTRACTORS, SUBCONTRACTORS, AND EMPLOYEES FOR SITE REHABILITATION OR CLEANUP, SO AS TO REQUIRE THE PROMULGATION OF REGULATIONS RELATING TO THE EVALUATION AND APPROVAL OF SITE REHABILITATION CONTRACTORS TO PERFORM CERTAIN WORK, TO NOT EXTEND LIABILITY TO THE DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL OR THE STATE FOR THE SERVICES PROVIDED BY A CONTRACTOR UNDER THIS SECTION, AND TO REVISE THE STANDARDS FOR PROHIBITING CERTAIN PERSONS FROM PARTICIPATING IN SITE REHABILITATION PROJECTS; TO AMEND SECTION 8-11-165, AS AMENDED, RELATING TO THE AGENCY HEAD SALARY COMMISSION, SO AS TO REQUIRE AGENCY HEAD SALARY COMMISSION AND STATE BUDGET AND CONTROL BOARD APPROVAL TO SET THE SALARY OF A PRESIDENT OF A TECHNICAL COLLEGE IN EXCESS OF NINETY-FIVE PERCENT OF THE MIDPOINT OF THE AGENCY HEAD SALARY RANGE AND TO CORRECT OBSOLETE REFERENCES; TO AMEND SECTION 23-6-40, AS AMENDED, RELATING TO THE MANAGEMENT OF THE DEPARTMENT OF PUBLIC SAFETY, SO AS TO PROVIDE THAT THE DEPARTMENT DIRECTOR SHALL RECOMMEND THE SALARIES OF DEPUTY DIRECTORS; TO AMEND SECTION 57-1-450, AS AMENDED, RELATING TO THE MANAGEMENT OF THE DEPARTMENT OF TRANSPORTATION, SO AS TO PROVIDE THAT THE DEPARTMENT DIRECTOR SHALL RECOMMEND THE SALARIES OF DEPUTY DIRECTORS; BY ADDING SECTION 1-11-335 SO AS TO AUTHORIZE THE DIVISIONS OF THE BUDGET AND CONTROL BOARD TO PROVIDE TO AND RECEIVE FROM OTHER GOVERNMENTAL ENTITIES GOODS AND SERVICES, AND TO AUTHORIZE THESE DIVISIONS TO CHARGE AND PAY FOR THESE GOODS AND SERVICES, THE REVENUE FROM WHICH MUST BE USED FOR THE COSTS OF PROVIDING THE GOODS AND SERVICES; BY ADDING SECTION 11-9-95 SO AS TO PROVIDE THAT WITH RESPECT TO DEBTS OWED TO THE BUDGET AND CONTROL BOARD AT THE END OF ANY FISCAL YEAR, THE BOARD IS AUTHORIZED TO TRANSFER ANY FUNDS REMAINING IN THE AGENCY'S ACCOUNTS TO PAY THESE DEBTS PRIOR TO THE CLOSING OF THE BOOKS FOR THAT FISCAL YEAR, AND TO PROVIDE EXCEPTIONS; BY ADDING SECTION 48-52-435 SO AS TO PROVIDE THAT IN ORDER TO AVOID DUPLICATIVE STUDIES, FUNDS SHALL NOT BE EXPENDED BY STATE AGENCIES FOR STUDIES INVESTIGATING ALTERNATIVE ENERGY USAGE OR CONSERVATION MEASURES WITHOUT PRIOR APPROVAL OF THE STATE ENERGY OFFICE AND THE JOINT LEGISLATIVE COMMITTEE ON ENERGY; BY ADDING SECTION 11-9-115 SO AS TO PROVIDE THAT PRICES OFFERED IN CONNECTION WITH CONTRACTS FOR PURCHASES MADE BY THE STATE OF SOUTH CAROLINA FOR ANY COUNTY, MUNICIPALITY, COLLEGE OR UNIVERSITY, POLITICAL SUBDIVISION, SCHOOL DISTRICT, OR AGENCY OF THE STATE SHALL NOT BE SUBJECT TO FAIR TRADE CONTRACTS; BY ADDING SECTION 10-1-200 SO AS TO PROVIDE FOR THE REGULATION OF PARKING FACILITIES OWNED OR CONTROLLED BY AGENCIES OF STATE GOVERNMENT; BY ADDING SECTION 10-1-180 SO AS TO PROVIDE THAT THE EXPENDITURE OF FUNDS BY ANY STATE AGENCY, EXCEPT THE DEPARTMENT OF TRANSPORTATION FOR PERMANENT IMPROVEMENTS AS DEFINED IN THE STATE BUDGET, IS SUBJECT TO APPROVAL AND REGULATION OF THE STATE BUDGET AND CONTROL BOARD; BY ADDING SECTION 10-1-190 SO AS TO PROVIDE THAT, AS PART OF THE APPROVAL PROCESS RELATING TO TRADES OF STATE PROPERTY FOR NONSTATE PROPERTY, THE STATE BUDGET AND CONTROL BOARD IS AUTHORIZED TO APPROVE THE APPLICATION OF ANY NET PROCEEDS RESULTING FROM SUCH A TRANSACTION TO THE IMPROVEMENT OF THE PROPERTY HELD BY THE BOARD; BY ADDING SECTION 10-3-60 SO AS TO PROVIDE THAT REVENUES GENERATED FROM THE RENTALS OF THE FACILITIES OF THE GOVERNOR'S MANSION COMPLEX MAY BE RETAINED AND EXPENDED FOR THE BUDGETED OPERATION OF THE COMPLEX; TO AMEND ARTICLE 1, CHAPTER 35, TITLE 11, RELATING TO GENERAL PROVISIONS CONCERNING THE CONSOLIDATED PROCUREMENT CODE, BY ADDING SUBARTICLE 11 SO AS TO AUTHORIZE A GOVERNMENTAL BODY TO ACCEPT GIFTS-IN-KIND OF ARCHITECTURAL OR ENGINEERING SERVICES, OR BOTH, AND ITEMS OF CONSTRUCTION WITH A VALUE OF LESS THAN TWO HUNDRED FIFTY THOUSAND DOLLARS WITH THE APPROVAL OF CERTAIN INDIVIDUALS IF THE GIFT IS MADE OR ACCEPTED WITHOUT THE INTENT TO INFLUENCE THE JUDGMENT OF THE GOVERNMENTAL BODY; TO AMEND SECTION 11-35-5260, RELATING TO ANNUAL REPORTS BY A GOVERNMENTAL BODY BEING MADE ANNUALLY TO THE BUDGET AND CONTROL BOARD CONCERNING THE NUMBER AND DOLLAR VALUE OF CONTRACTS AWARDED TO ELIGIBLE MINORITY BUSINESSES DURING THE PRECEDING FISCAL YEAR, SO AS TO REQUIRE THE REPORTS TO BE MADE TO THE DIVISION OF OPERATIONS OF THE BOARD BY AUGUST FIFTEENTH OF THE TOTAL DOLLAR VOLUME OF BUSINESS THAT WAS CONTRACTED EITHER DIRECTLY OR THROUGH CERTIFIED SUBCONTRACTORS WHO ARE SMALL, MINORITY, OR WOMEN-OWNED BUSINESS DURING THE PREVIOUS FISCAL YEAR; BY ADDING SECTION 48-52-635 SO AS TO AUTHORIZE A STATE AGENCY TO CARRY FORWARD AND RETAIN SAVINGS REALIZED FROM ENERGY CONSERVATION MEASURES WHICH HAVE BEEN CERTIFIED BY THE STATE ENERGY OFFICE, AND TO PROVIDE HOW THESE SAVINGS MAY BE EXPENDED; BY ADDING SECTION 1-11-141 SO AS TO REQUIRE STATE AGENCIES TO INSURE STATE-OWNED VEHICLES THROUGH THE BUDGET AND CONTROL BOARD OR ABSORB THE COST OF ACCIDENT REPAIRS, TO ESTABLISH CONDITIONS UNDER WHICH A STATE EMPLOYEE WHILE DRIVING A STATE-OWNED VEHICLE IS LIABLE FOR THE COST OR A PORTION OF THE COST OF REPAIRS, AND TO PROVIDE FOR APPEALS; TO AMEND SECTION 1-11-270, RELATING TO THE DIVISION OF MOTOR VEHICLE MANAGEMENT ESTABLISHING CRITERIA FOR INDIVIDUAL ASSIGNMENT OF MOTOR VEHICLES, SO AS TO DEFINE THE CONDITIONS FOR WHICH A STATE-OWNED VEHICLE MAY BE ASSIGNED TO STATE EMPLOYEES; TO AMEND SECTION 1-11-710, RELATING TO THE BUDGET AND CONTROL BOARD MAKING INSURANCE AVAILABLE TO ACTIVE AND RETIRED EMPLOYEES, SO AS TO REQUIRE THE BUDGET AND CONTROL BOARD TO DEVELOP AND IMPLEMENT A PLAN TO INCREASE THE EMPLOYER CONTRIBUTION RATES OF STATE RETIREMENT SYSTEM TO A LEVEL ADEQUATE TO COVER THE EMPLOYER'S SHARE FOR THE CURRENT FISCAL YEAR'S COST OF PROVIDING HEALTH AND DENTAL INSURANCE TO RETIRED STATE AND SCHOOL DISTRICT EMPLOYEES; BY ADDING SECTION 1-11-580 SO AS TO REQUIRE THE BUDGET AND CONTROL BOARD TO MAKE QUARTERLY PAYMENTS ON INSURANCE CONTRACTS WHERE THE ANNUAL PREMIUM EXCEEDS FIFTY THOUSAND DOLLARS AND TO UNDERTAKE NEGOTIATIONS TO IMPLEMENT THIS REQUIREMENT; BY ADDING SECTION 1-11-750 SO AS TO ALLOW THE BUDGET AND CONTROL BOARD TO WITHHOLD LONG-TERM CARE INSURANCE PREMIUMS FOR STATE OF SOUTH CAROLINA RETIREES; BY ADDING SECTION 2-7-78 SO AS TO PROVIDE REQUIREMENTS FOR CERTIFICATION OF REVENUE IN THE GOVERNOR'S RECOMMENDED APPROPRIATIONS BILL AND THE CONFERENCE COMMITTEE REPORT ON THE BILL; BY ADDING SECTION 8-11-195 SO AS TO ESTABLISH GUIDELINES FOR STATE EMPLOYEE FURLOUGH POLICIES; BY ADDING SECTION 8-11-200 SO AS TO PROVIDE THE REQUIREMENTS FOR REIMBURSEMENT OF TRAVEL EXPENSES TO PERSONS INTERVIEWING FOR STATE EMPLOYMENT; BY ADDING SECTION 8-11-190 SO AS TO PROVIDE FOR THE USE OF PUBLIC FUNDS TO REWARD STATE EMPLOYEES; BY ADDING SECTION 1-11-50 SO AS TO PROVIDE THAT FUNDS ACCUMULATED BY THE DIVISION OF BUDGET AND ANALYSES, BUDGET AND CONTROL BOARD, UNDER CONTRACT FOR PROVIDING GOODS AND SERVICES WHICH ARE NOT EXPENDED MAY BE CARRIED FORWARD FOR THE COSTS ASSOCIATED WITH PROVIDING THESE GOODS AND SERVICES; BY ADDING SECTION 56-3-2322 SO AS TO AUTHORIZE THE DEPARTMENT OF REVENUE AND TAXATION TO SELL A DEALER LICENSE PLATE FOR USE ON A MOTOR VEHICLE WHICH THE DEALER LOANS TO A SCHOOL FOR DRIVER EDUCATION; TO AUTHORIZE A TWENTY DOLLAR FEE FOR THE LICENSE PLATE AND TO REQUIRE SURRENDER OF THE LICENSE PLATE WHEN IT IS NO LONGER USED FOR DRIVER EDUCATION; BY ADDING SECTION 11-9-370 SO AS TO PROVIDE THAT A STATE AGENCY COLLECTING REVENUE TO BE APPLIED TO PAYMENTS ON GENERAL OBLIGATION BONDS SHALL SUBMIT REVENUE COLLECTED TO THE STATE TREASURER AND THE REVENUE SUBMITTED CONSTITUTES A REIMBURSEMENT; BY ADDING SECTION 2-7-115 SO AS TO PROVIDE THAT THE APPROPRIATIONS FOR DEBT SERVICE IN THE GENERAL APPROPRIATIONS ACT ARE THE ESTIMATED DEBT SERVICE REQUIREMENTS OF BONDS OF THE STATE FOR EACH FISCAL YEAR, AND TO PROVIDE THAT THE INCLUSION OF THESE APPROPRIATIONS IN THE ANNUAL GENERAL APPROPRIATIONS ACT SHALL NOT PREVENT THE ISSUANCE OF ADDITIONAL BONDS PURSUANT TO CURRENT OR FUTURE AUTHORIZATIONS IF PERMITTED BY LAW; BY ADDING SECTION 11-1-100 SO AS TO AUTHORIZE AND DIRECT THE BUDGET AND CONTROL BOARD, AFTER REVIEW OF THE JOINT BOND REVIEW COMMITTEE, TO REGULATE THE STARTING DATE OF THE VARIOUS PROJECTS APPROVED FOR FUNDING THROUGH THE ISSUANCE OF CAPITAL IMPROVEMENT BONDS; BY ADDING SECTION 4-5-260 SO AS TO PROVIDE THAT, WITH RESPECT TO STATE AID TO SUBDIVISIONS FOR COUNTY GOVERNMENT AND THE ALLOCATION FORMULA FOR AN ANNEXED COUNTY, WHERE A PORTION OF ONE COUNTY IS ANNEXED TO ANOTHER COUNTY, THE TOTAL AMOUNT ALLOCATED TO THE TWO COUNTIES SHALL NOT EXCEED THE TOTAL WHICH WOULD BE ALLOCATED TO THE TWO COUNTIES SEPARATELY AND TO REQUIRE CONSIDERATION OF POPULATION; BY ADDING SECTION 6-27-45 SO AS TO PROVIDE THAT, NOTWITHSTANDING THE AMOUNT APPROPRIATED IN THE ANNUAL GENERAL APPROPRIATIONS ACT FOR "HOMESTEAD EXEMPTION REIMBURSEMENT", THERE MUST BE APPROPRIATED ANNUALLY WHATEVER AMOUNT IS NECESSARY TO REIMBURSE TO COUNTIES AND MUNICIPALITIES FOR ALL REIMBURSED HOMESTEAD EXEMPTIONS ALLOWED IN ACCORDANCE WITH THE PROVISIONS OF LAW; BY ADDING SECTION 11-3-240 SO AS TO SPECIFY THAT FOUR CENTS PER CAPITA BE APPROPRIATED TO EACH COUNTY TO BE APPLIED TOWARD THE EXPENSE OF PRINTING TAX FORMS AND SUPPLIES AND PROVIDE FOR THE MANNER OF PAYMENT; BY ADDING SECTION 6-7-185 SO AS TO SPECIFY HOW THE ANNUAL APPROPRIATION TO THE REGIONAL COUNCILS OF GOVERNMENTS IS ALLOCATED; BY ADDING SECTION 6-7-157 SO AS TO REQUIRE REGIONAL COUNCILS OF GOVERNMENT TO PROVIDE A SPENDING PLAN BEFORE RECEIPT OF STATE FUNDS AND PROVIDE FOR AN AUDIT OF APPROPRIATED FUNDS; BY ADDING SECTION 6-7-155 SO AS TO REQUIRE THE STATE TREASURER TO DISBURSE FUNDS TO REGIONAL COUNCILS OF GOVERNMENT UPON APPROVAL; BY ADDING SECTION 6-1-75 SO AS TO PROVIDE THAT WHERE A PORTION OF ONE COUNTY IS ANNEXED TO ANOTHER COUNTY, THE AMOUNT ALLOCATED UNDER AID TO SUBDIVISIONS TO THE TWO COUNTIES MUST NOT EXCEED THE AMOUNT THAT WOULD BE ALLOCATED TO THE COUNTIES SEPARATELY AND TO REQUIRE THE POPULATION OF THE ANNEXED AREAS TO BE TAKEN INTO CONSIDERATION IN DETERMINING THE PROPORTIONATE ALLOCATION FOR EACH COUNTY; BY ADDING SECTION 11-9-140 SO AS TO ALLOW THE BUDGET AND CONTROL BOARD TO TRANSFER TO THE BOND CONTINGENCY REVOLVING FUND ANY CAPITAL IMPROVEMENT BOND PROJECT BALANCES DETERMINED NOT TO BE USABLE OR NEEDED AND PROVIDE FOR EXEMPTIONS, REPORTING OF TRANSFERS, AND RELATED MATTERS; BY ADDING SECTION 1-11-180 SO AS TO PROVIDE ADDITIONAL POWERS TO THE BUDGET AND CONTROL BOARD AND AUTHORIZE PROMULGATION OF REGULATIONS; TO AMEND SECTION 1-1-810, RELATING TO THE PERIOD TO BE COVERED BY ANNUAL REPORTS, SO AS TO PROVIDE THAT EACH STATE AGENCY AND DEPARTMENT SHALL SUBMIT AN ANNUAL ACCOUNTABILITY REPORT; TO AMEND SECTION 1-1-820, RELATING TO CONTENTS OF ANNUAL REPORTS, SO AS TO PROVIDE THAT AN ACCOUNTABILITY REPORT MUST CONTAIN THE AGENCY MISSION, OBJECTIVES, AND PERFORMANCE MEASURES; BY ADDING SECTION 1-11-405 SO AS TO PROVIDE THAT NO AIRCRAFT MAY BE PURCHASED, LEASED, OR LEASE-PURCHASED FOR MORE THAN A THIRTY-DAY PERIOD BY ANY STATE AGENCY WITHOUT THE PRIOR AUTHORIZATION OF THE BUDGET AND CONTROL BOARD AND THE JOINT BOND REVIEW COMMITTEE; TO AMEND SECTION 44-53-530, AS AMENDED, RELATING TO THE SEIZURE AND FORFEITURE OF PROPERTY USED IN ILLEGAL CONTROLLED SUBSTANCE TRANSACTIONS, SO AS TO PROVIDE THAT IF THE PROPERTY SEIZED AND FORFEITED IS AN AIRCRAFT OR WATERCRAFT AND IS TRANSFERRED TO A STATE LAW ENFORCEMENT AGENCY OR OTHER STATE AGENCY, ITS USE AND RETAINAGE BY THAT AGENCY SHALL BE AT THE DISCRETION AND APPROVAL OF THE BUDGET AND CONTROL BOARD; TO REDUCE THE SOFT DRINKS TAX BY AN INCREMENTAL ONE-SIXTH IN FISCAL YEARS 1996-97 THROUGH 2000-2001; TO REPEAL ARTICLE 13, CHAPTER 21 OF TITLE 12 RELATING TO THE IMPOSITION OF THE SOFT DRINKS TAX, EFFECTIVE JULY 1, 2001, AND TO CREATE SPECIAL JOINT COMMITTEE TO REVIEW SALES AND EXCISE TAX STATUTES; TO AMEND SECTIONS 57-11-20, 12-27-400, AND 12-27-1270, ALL AS AMENDED, RELATING TO THE STATE HIGHWAY FUND, "C" FUNDS, AND THE ECONOMIC DEVELOPMENT ACCOUNT, SO AS TO REQUIRE INTEREST EARNED FROM THE STATE HIGHWAY FUND, THE COUNTY TRANSPORTATION FUND, AND THE ECONOMIC DEVELOPMENT ACCOUNT TO BE DEPOSITED IN THE STATE HIGHWAY FUND; TO AMEND SECTION 44-96-160, AS AMENDED, RELATING TO THE SALE AND DISPOSAL OF MOTOR OIL, SO AS TO PROVIDE THAT MOTOR CARRIERS RATHER THAN FOR HIRE MOTOR CARRIERS ARE EXEMPT FROM CERTAIN FEES, AND TO PROVIDE FOR TECHNICAL CORRECTIONS CONCERNING REPORTS FILED WITH THE ENVIRONMENTAL PROTECTION AGENCY REGARDING THE EXISTENCE OF WASTE OIL STORAGE TANKS; BY ADDING SECTION 58-23-25 SO AS TO DEFINE THE PUBLIC SERVICE COMMISSION'S MOTOR CARRIER REGULATORY AUTHORITY; BY ADDING SECTION 58-23-350 SO AS TO PROVIDE THE DEPARTMENT OF REVENUE AND TAXATION WITH AUTHORITY TO ISSUE CLASS E CERTIFICATES OF COMPLIANCE TO FOR-HIRE MOTOR VEHICLES, TO PROVIDE FOR THE FEE AND PROCEDURE TO OBTAIN A CERTIFICATE, PROCEDURES TO ENSURE COMPLIANCE WITH THESE REQUIREMENTS, AND THE POSSIBILITY THAT A CERTIFICATE HOLDER MAY BE ELIGIBLE FOR CERTAIN EXCEPTIONS PROVIDED IN SECTIONS 58-23-620 AND 44-96-160(V)(1); TO AMEND SECTION 58-23-590, RELATING TO LICENSE FEES FOR CLASS E AND F CERTIFICATE HOLDERS, SO AS TO ELIMINATE THE FEE SCHEDULE FOR CLASS E AND F CERTIFICATE HOLDERS, AND TO ALLOW THE PUBLIC SERVICE COMMISSION TO DETERMINE THE ASSESSMENTS FOR HOUSEHOLD GOODS AND HAZARDOUS WASTE DISPOSAL, TO ESTABLISH THE OFFICE COMPLIANCE AND PROVIDE IT WITH THE POWER TO ASSESS FEES, GRANT OPERATING CERTIFICATES, SET RATES, AND ENFORCE THE COMMISSION'S REGULATIONS; TO AMEND SECTION 58-23-620, RELATING TO SITUATIONS IN WHICH LOCAL LICENSE FEES MAY OR MAY NOT BE IMPOSED ON A CERTIFICATE A, B, C, D, E, OR F HOLDER, SO AS TO DELETE THE CERTIFICATE D AND TO PROVIDE CIRCUMSTANCES IN WHICH LOCAL LICENSE FEES MAY BE IMPOSED ON A CERTIFICATE OF COMPLIANCE OR A COMMON OR CONTRACT MOTOR CARRIER OF PROPERTY; TO AMEND SECTION 58-23-640, AS AMENDED, RELATING TO THE ASSESSMENT AND DISTRIBUTION OF THE PUBLIC SERVICE COMMISSION'S IDENTIFIER FEE, SO AS TO SUBSTITUTE "DEPARTMENT OF REVENUE AND TAXATION" FOR "PUBLIC SERVICE COMMISSION" AND PLACE ALL REVENUE GENERATED BY THE FEE IN THE GENERAL FUND; TO AMEND SECTION 58-23-650, AS AMENDED, RELATING TO THE PUBLIC SERVICE COMMISSION'S AUTHORITY TO ENTER INTO RECIPROCAL AGREEMENTS WITH REGULATORY AGENCIES OF OTHER STATES HAVING JURISDICTION OVER MOTOR CARRIERS, SO AS TO SUBSTITUTE "DEPARTMENT OF REVENUE AND TAXATION" FOR "PUBLIC SERVICE COMMISSION", AND TO PROVIDE THE DEPARTMENT OF PUBLIC SAFETY AUTHORITY TO ENFORCE THESE AGREEMENTS; TO AMEND SECTION 58-23-1120, RELATING TO REQUIRING A MOTOR CARRIER TO COMPLY WITH ORDERS AND REGULATIONS PRESCRIBED BY THE PUBLIC SERVICE COMMISSION, SO AS TO DEFINE THE ROLE OF THE PUBLIC SERVICE COMMISSION, THE DEPARTMENT OF PUBLIC SAFETY, AND THE TRANSPORT POLICE DIVISION OF THE DEPARTMENT OF PUBLIC SAFETY IN THE REGULATION OF MOTOR CARRIERS; TO REPEAL SECTION 58-23-580 RELATING TO LICENSE FEES FOR CLASS D CERTIFICATE HOLDERS; TO AMEND SECTION 24-21-510, RELATING TO DUTIES OF THE DEPARTMENT OF PROBATION, PAROLE, AND PARDON SERVICES FOR COMMUNITY CONTROL CENTERS, PRESENTENCE INVESTIGATIONS, AND SENTENCING OPTIONS, SO AS TO DELETE REFERENCES TO PRESENTENCE INVESTIGATIONS; TO REPEAL SECTIONS 24-21-520 AND 24-21-530 RELATING TO PRESENTENCE INVESTIGATIONS; TO ABOLISH THE COMMITTEE TO MAKE A STUDY OF STATE BIDDING PRACTICES, THE CORRECTIONAL SYSTEM STUDY COMMITTEE, THE EDUCATION FINANCE REVIEW COMMITTEE TO REVIEW AND ADVISE UPON THE PROBLEMS ENCOUNTERED IN PROVIDING A FREE AND APPROPRIATE EDUCATION FOR HANDICAPPED CHILDREN, THE COMMITTEE TO STUDY ALTERNATE ELECTRONIC FUNDS TRANSFER SYSTEMS, THE TASK FORCE TO STUDY AND MAKE RECOMMENDATIONS TO THE HOUSE OF REPRESENTATIVES ON A LONG-RANGE PLAN FOR SOUTH CAROLINA'S COAST, AND THE COMMITTEE TO STUDY THE CONSUMER FINANCE LAWS IN THIS STATE AS THEY RELATE TO RESTRICTED LOANS, SUPERVISED LOANS, AND SALES FINANCE CONTRACTS; TO REPEAL SECTION 11-35-520, ARTICLE 5, CHAPTER 11 OF TITLE 8, CHAPTER 22 OF TITLE 2, CHAPTER 23 OF TITLE 2, CHAPTER 27 OF TITLE 2, CHAPTER 29 OF TITLE 2, CHAPTER 31 OF TITLE 2, CHAPTER 33 OF TITLE 2, CHAPTER 37 OF TITLE 2, CHAPTER 49 OF TITLE 2, CHAPTER 57 OF TITLE 2, CHAPTER 61 OF TITLE 2, CHAPTER 67 OF TITLE 2, CHAPTER 32 OF TITLE 46, CHAPTER 9 OF TITLE 59 ALL RELATING TO VARIOUS COMMITTEES; TO REPEAL SECTIONS 56-5-5320 THROUGH 56-5-5440 RELATING TO INSPECTION OF VEHICLES; TO AMEND SECTION 12-7-435, AS AMENDED, RELATING TO DEDUCTIONS ALLOWED FROM SOUTH CAROLINA TAXABLE INCOME FOR PURPOSES OF THE STATE INDIVIDUAL INCOME TAX, SO AS TO EXTEND THE FIVE DOLLAR A DAY SUBSISTENCE ALLOWANCE DEDUCTION ALLOWED LAW ENFORCEMENT OFFICERS TO FIREFIGHTERS AND EMERGENCY MEDICAL SERVICE PERSONNEL; BY ADDING SECTION 2-3-22 SO AS TO PROHIBIT A MEMBER OF THE GENERAL ASSEMBLY FROM RECEIVING IN ANY ONE CALENDAR YEAR ON ACCOUNT OF SERVICE DURING THE REGULAR SESSION OF THE GENERAL ASSEMBLY ANY AMOUNT WHICH EXCEEDS THE TOTAL AMOUNT APPROPRIATED FOR PERSONAL SERVICE FOR MEMBERS OF THE GENERAL ASSEMBLY FOR THE APPLICABLE FISCAL YEAR DIVIDED BY ONE HUNDRED SEVENTY; TO PROVIDE THAT THE APPROPRIATION IN PART I-A OF THIS ACT FOR "OTHER OPERATING EXPENSES" UNDER "ELECTRONIC VOTING" UNDER STATE ELECTION COMMISSION MAY BE USED FOR THE PURCHASE OF VOTING MACHINES WHICH USE ELECTRONIC METHODS FOR CASTING WRITE-IN BALLOTS OR WHICH DO NOT EMPLOY PAPER AND HANDWRITING METHODS OR TECHNOLOGY FOR CASTING WRITE-IN BALLOTS; TO AMEND SECTION 7-13-800, RELATING TO THE PROVISION THAT WRITE-IN BALLOTS MUST BE IN THE HANDWRITING OF THE VOTER OR AUTHORIZED MANAGER, SO AS TO PROVIDE THAT NOTHING IN THIS SECTION SHALL BE CONSTRUED TO PREVENT THE USE OF ELECTRONIC METHODS OF CASTING WRITE-IN BALLOTS OR THE USE OF VOTING MACHINES WHICH DO NOT EMPLOY PAPER AND HANDWRITING METHODS OR TECHNOLOGY FOR CASTING WRITE-IN BALLOTS; BY ADDING SECTION 8-11-185 SO AS TO AUTHORIZE THE OFFICE OF HUMAN RESOURCES OF THE STATE BUDGET AND CONTROL BOARD TO USE FUNDS APPROPRIATED IN THE ANNUAL GENERAL APPROPRIATIONS ACT TO CREATE A REDUCTION IN FORCE APPLICANT POOL AND TO REQUIRE STATE AGENCIES TO REPORT TO THE OFFICE OF HUMAN RESOURCES INFORMATION ON EMPLOYEES AFFECTED BY A REDUCTION IN FORCE, TO REQUIRE STATE AGENCIES FILLING VACANCIES OR NEW POSITIONS TO PROVIDE PRIORITY CONSIDERATION TO PERSONS IN THE POOL WHO ARE APPROPRIATELY CLASSIFIED, AND TO PROHIBIT STATE AGENCIES FROM FILLING VACANCIES OR NEW POSITIONS WITHOUT FIRST SEEKING TO FILL THE POSITION FROM QUALIFIED MEMBERS OF THE POOL; TO AMEND SECTION 12-7-1220, AS AMENDED, RELATING TO THE STATE-TARGETED JOBS TAX CREDIT, SO AS TO EXTEND THE CREDIT TO A SOLE PROPRIETOR, PARTNERSHIP, LIMITED LIABILITY COMPANY, CORPORATION OF ANY CLASSIFICATION, OR ASSOCIATION, ALLOW THE CREDIT TO BE CLAIMED AGAINST THE INDIVIDUAL INCOME TAX LIABILITY OF THE SOLE PROPRIETOR, PARTNER, SUB S CORPORATION SHAREHOLDER, AND LIMITED LIABILITY COMPANY OWNER, PROVIDE FOR THE MANNER OF CLAIMING THE CREDIT, AND DELETE PROVISIONS PREVIOUSLY LIMITING THE ELIGIBILITY FOR THE CREDIT FOR SHAREHOLDERS OF A SUB S CORPORATION TO A CORPORATION ELIGIBLE TO USE THE FEE IN LIEU OF TAX; TO AMEND SECTION 50-11-20, AS AMENDED, RELATING TO THE MIGRATORY WATERFOWL COMMITTEE, SO AS TO REVISE THE COMMITTEE MEMBERS; TO AMEND SECTIONS 8-11-700, 8-11-720, AS AMENDED, 8-11-730, AS AMENDED, 8-11-740, AND 8-11-760, RELATING TO THE STATE EMPLOYEE LEAVE TRANSFER PROGRAM, SO AS FURTHER TO DEFINE WHAT CONSTITUTES A PERSONAL EMERGENCY FOR WHICH TRANSFERRED LEAVE MAY BE USED, AND TO MAKE OTHER TECHNICAL CHANGES FOR THE OPERATION OF THE PROGRAM; BY ADDING SECTION 12-21-2809 SO AS TO MAKE IT UNLAWFUL TO LICENSE OR OPERATE A VIDEO GAME WITH A FREE PLAY FEATURE IN A COUNTY WHERE PAYOFFS ON SUCH MACHINES ARE UNLAWFUL PURSUANT TO REFERENDUM AND TO PROVIDE A PENALTY FOR VIOLATIONS; TO AMEND SECTION 12-21-2710, RELATING TO COIN-OPERATED MACHINES AND DEVICES PROHIBITED BY LAW, SO AS TO INCLUDE VIDEO SLOT MACHINES WHICH DO NOT DISBURSE MONEY BUT WHICH HAVE A FREE PLAY FEATURE AND ALL OTHER VIDEO GAMES WHICH DO NOT DISBURSE MONEY BUT WHICH HAVE A FREE PLAY FEATURE REGARDLESS OF THE GAME ON THE MACHINES WITHIN THE CATEGORY OF DEVICES EXEMPT FROM THE PROHIBITION; TO AMEND SECTION 12-21-2720, AS AMENDED, RELATING TO LICENSE FEES FOR COIN-OPERATED MACHINES AND DEVICES, SO AS TO RAISE THE FEE FOR THE FIRST FIVE VIDEO GAMES WITH A FREE PLAY FEATURE IN A SINGLE PLACE OR PREMISES FROM THREE TO FOUR THOUSAND DOLLARS A BIENNIUM, TO DELETE A ONE-TIME FEE, TO PROVIDE FOR ADDITIONAL HIGHER FEES FOR MACHINES SIX THROUGH EIGHT, TO REQUIRE SUCH MACHINES WITH MULTI-PLAYER STATIONS TO BE LICENSED AS SEPARATE MACHINES, AND PROVIDE THAT CERTAIN LICENSE FEES PERMITTED BY THIS SECTION MAY BE IMPOSED IN ADDITION TO APPLICABLE LOCAL BUSINESS LICENSE FEES ON GROSS INCOME AS AUTHORIZED BY STATUTE; TO AMEND SECTION 12-21-2776, RELATING TO REGISTRATION AND METERING OF VIDEO GAMES WITH A FREE PLAY FEATURE, SO AS TO DELAY METERING OF SUCH MACHINES UNTIL JULY 1, 1998, AND REQUIRE QUARTERLY FINANCIAL REPORTING ON EACH MACHINE; TO AMEND SECTION 12-21-2804, RELATING TO REGULATIONS APPLICABLE TO VIDEO GAMES WITH A FREE PLAY FEATURE, SO AS TO ALLOW EIGHT MACHINES IN A SINGLE PLACE OR PREMISES AND TO EXTEND THE ALLOWED HOURS OF OPERATION AND TO UPDATE REFERENCES; TO REPEAL SECTION 12-21-2791 RELATING TO LIMITS ON CASH PAYOUTS; TO AMEND SECTION 12-21-2782, RELATING TO THE VIDEO GAMES MACHINE ACT, THE PROMULGATION OF REGULATIONS, AND GRANDFATHERING OF CERTAIN MACHINES, SO AS TO DELETE THE CURRENT PROVISIONS OF THE SECTION AND PROVIDE, AMONG OTHER THINGS, FOR CONTRACTING FOR THE PURCHASE, LEASE, OR OPERATION OF A COMPUTER MONITORING SYSTEM TO WHICH VIDEO GAME MACHINES MUST BE CONNECTED BY JULY 1, 1998; TO AMEND SECTION 58-3-100, AS AMENDED, RELATING TO THE ASSESSMENT OF EXPENSES FOR THE OPERATIONS OF THE SOUTH CAROLINA PUBLIC SERVICE COMMISSION, SO AS TO PROVIDE FOR ASSESSMENTS ON HOUSEHOLD GOODS CARRIERS AND HAZARDOUS WASTE FOR DISPOSAL CARRIERS, TO DELETE PROVISIONS RELATING TO REVENUE FROM REGISTRATION FEES AND ASSESSMENTS OF RADIO COMMON CARRIERS, TO CHANGE THE DATES FOR CERTIFICATION AND PAYMENT OF THESE ASSESSMENTS, RESPECTIVELY, FROM AUGUST FIRST AND OCTOBER FIRST TO MAY FIRST AND JULY FIFTEENTH, AND TO DELETE PROVISIONS RELATING TO THE USE OF REVENUES FROM ASSESSMENTS; TO AMEND TITLE 51, RELATING TO PARKS, RECREATION AND TOURISM, BY ADDING CHAPTER 22 CREATING THE LEGACY TRUST FUND FOR THE PURPOSE OF ACQUIRING SENSITIVE ECOLOGICAL RESOURCES, PRESERVING AND RENOVATING HISTORIC SITES, DEVELOPING STATE PARKS AND HERITAGE RESERVES, PROTECTING HABITAT OF ENDANGERED PLANT AND ANIMAL SPECIES, AND ORGANIZING AND DEVELOPING RESOURCE-BASED RECREATIONAL PROJECTS, AND TO PROVIDE FOR ITS GOVERNANCE AND OPERATIONS; BY ADDING SECTION 12-31-415 SO AS TO EXEMPT FROM THE ROAD TAX ON MOTOR CARRIERS ANY CARRIER WHICH OPERATED ONE HUNDRED PERCENT OF ITS MILES WITHIN THE BOUNDARIES OF THIS STATE; TO ELIMINATE PENALTIES DUE FROM ANY MOTOR CARRIER IMPOSED PURSUANT TO THE PROVISIONS OF CHAPTER 31 OF TITLE 12 LEVYING THE ROAD TAX IF THE CARRIER IS EXEMPTED FROM THE TAX BY THE SECTION ADDED BY THIS ACT; BY ADDING SECTION 12-31-60 SO AS TO PROVIDE THAT IN LIEU OF ALL OTHER PENALTIES AND INTEREST PROVIDED BY LAW, PENALTIES AND INTEREST PROVIDED UNDER THE INTERNATIONAL FUEL TAX AGREEMENT APPLY TO ALL REPORTS FILED WITH THE STATE AS A RESULT OF THAT AGREEMENT; BY ADDING SECTION 11-1-110 SO AS TO AUTHORIZE THE STATE BUDGET AND CONTROL BOARD TO ISSUE AND SELL BONDS, NOTES, OR OTHER OBLIGATIONS FOR THE PURPOSE OF ACQUIRING FACILITIES FOR THE USE AND OCCUPANCY OF STATE DEPARTMENTS AND AGENCIES WITH THESE OBLIGATIONS TO BE PAYABLE SOLELY FROM REVENUES DERIVED FROM THE LEASING OR SALE OF THE FACILITIES ACQUIRED WITH THE PROCEEDS OF THE SALE OF THESE OBLIGATIONS AND SECURED BY A PLEDGE OF REVENUES AND, AT THE OPTION OF THE BOARD, A MORTGAGE OF THESE FACILITIES; TO AMEND SECTION 44-7-84, AS AMENDED, RELATING TO DETERMINATION AND ALLOCATION OF MEDICAID NURSING HOME PATIENT DAYS, AND SECTION 44-7-90, RELATING TO VIOLATIONS AND PENALTIES RELATIVE TO PROVIDING MEDICAID PATIENT DAYS, SO AS TO REVISE THESE PROCEDURES, WAIVE CERTAIN PENALTIES, AND REVISE THE FORMULA FOR DETERMINING AND COLLECTING THE PENALTY; TO AMEND SECTION 14-1-200, RELATING TO THE ESTABLISHMENT OF SALARIES OF SUPREME COURT JUSTICES, JUDGES OF THE COURT OF APPEALS, CIRCUIT COURT, AND FAMILY COURT, AND CIRCUIT SOLICITORS, SO AS TO AUTHORIZE AN INCREASE IN THE SALARIES OF CIRCUIT SOLICITORS; TO AMEND SECTION 61-9-312, RELATING TO THE SPECIAL VERSION OF A SPECIAL RETAIL BEER AND WINE PERMIT FOR OFF-PREMISES CONSUMPTION, SO AS TO REVISE THE MANNER IN WHICH A CERTAIN PORTION OF THE REVENUE GENERATED BY THE PERMIT FEES SHALL BE USED; TO AMEND SECTION 44-11-10, RELATING TO STATE MENTAL HEALTH FACILITIES, SO AS TO REVISE THE USE OF CERTAIN FACILITIES; TO AMEND SECTION 12-27-400, AS AMENDED, RELATING TO TAXES ON GASOLINE SALES AND THE "C" FUNDS PROGRAM, SO AS TO SPECIFY THESE FUNDS MAY BE USED DIRECTLY TO PAY FOR HIGHWAY PROJECTS AND IN THE CASE OF COUNTIES WHICH WITHDRAW "C" FUNDS FROM THE STATE TREASURER'S OFFICE TO REQUIRE PROJECT EXPENDITURES TO BE DOCUMENTED ON A PER-PROJECT BASIS TO COUNTY TRANSPORTATION COMMITTEES, TO REQUIRE THE DOCUMENTATION TO BE PROVIDED BY THE ENTITY EXPENDING THE FUNDS, AND TO REQUIRE THESE DOCUMENTATION REPORTS TO BE FORWARDED TO THE DEPARTMENT OF TRANSPORTATION AND COMPILED AND REPORTED ANNUALLY TO THE GENERAL ASSEMBLY; BY ADDING SECTION 48-48-140 SO AS TO IMPOSE A TAX ON LOW-LEVEL RADIOACTIVE WASTE DISPOSAL OF TWO HUNDRED AND THIRTY-FIVE DOLLARS A CUBIC FOOT AND TO PROVIDE FOR DISTRIBUTION OF THE REVENUE; TO AMEND SECTION 48-48-80, AS AMENDED, RELATING TO LOW-LEVEL RADIOACTIVE WASTE DISPOSAL IN THIS STATE, SO AS TO AUTHORIZE THE GOVERNOR TO APPOINT A COMMITTEE TO NEGOTIATE WITH CERTAIN OTHER STATES TO ESTABLISH A NEW LOW-LEVEL RADIOACTIVE WASTE MANAGEMENT COMPACT AND TO ESTABLISH REQUIREMENTS FOR NEGOTIATIONS BY THE COMMITTEE; TO PROVIDE A TEMPORARY DISTRIBUTION TO THE GENERAL FUND OF THE STATE OF A PORTION OF THE REVENUE FROM THE TAX; TO REPEAL CHAPTER 47 OF TITLE 48 RELATING TO THE SOUTHEAST INTERSTATE LOW-LEVEL RADIOACTIVE WASTE MANAGEMENT COMPACT; BY ADDING SECTION 59-1-443 SO AS TO PROVIDE THAT ALL SCHOOLS SHALL PROVIDE FOR A MINUTE OF MANDATORY SILENCE AT THE BEGINNING OF EACH SCHOOL DAY; BY ADDING SECTION 59-101-335 SO AS TO PROVIDE THAT THE GOVERNING BOARDS OF ALL STATE-SUPPORTED COLLEGES, UNIVERSITIES, AND TECHNICAL SCHOOLS SHALL BE AUTHORIZED TO ESTABLISH PENALTIES AND BONDS FOR TRAFFIC AND PARKING VIOLATIONS OCCURRING ON PROPERTY WHICH IS OWNED, LEASED, SUPERVISED, OR OTHERWISE CONTROLLED BY THE INSTITUTION, AND TO PROVIDE THAT A SCHEDULE OF PENALTIES AND BONDS FOR SUCH OFFENSES SHALL BE AVAILABLE FOR INSPECTION DURING NORMAL BUSINESS HOURS AT THE INSTITUTION AT A LOCATION DESIGNATED BY THE BOARD; TO AMEND TITLE 59, RELATING TO EDUCATION, BY ADDING CHAPTER 143 SO AS TO ESTABLISH THE SOUTH CAROLINA EDUCATIONAL ASSISTANCE ENDOWMENT FUND, TO PROVIDE FOR THE REVENUES WHICH SHALL BE DEPOSITED IN THE FUND, AND TO PROVIDE FOR THE USE OF SUCH REVENUES FOR SCHOOL FACILITIES AND HIGHER EDUCATION GRANTS FOR SCHOLARSHIPS; TO AMEND SECTION 14-5-610, AS AMENDED, RELATING TO JUDICIAL CIRCUITS, SO AS TO INCREASE THE AT-LARGE NUMBER OF JUDGES FROM TEN TO THIRTEEN; TO AMEND SECTION 14-8-10, RELATING TO THE COURT OF APPEALS, SO AS TO INCREASE THE NUMBER OF ASSOCIATE JUDGES FROM FIVE TO EIGHT; TO AMEND SECTION 14-8-80, RELATING TO PANELS ON THE COURT OF APPEALS, SO AS TO INCREASE THE NUMBER OF PANELS FROM TWO TO THREE; TO AMEND SECTION 14-8-90, RELATING TO THE COURT OF APPEALS SITTING EN BANC, SO AS TO CONFORM TO THE INCREASE IN THE NUMBER OF ASSOCIATE JUDGES; TO AMEND SECTION 20-7-1410, RELATING TO FAMILY COURT JUDGES, SO AS TO INCREASE THE NUMBER OF JUDGES IN THE NINTH, THIRTEENTH, AND FIFTEENTH CIRCUITS; TO PROVIDE THAT THE TERMS OF ALL JUDGES ADDED BY THIS SECTION BEGIN FEBRUARY 1, 1996; AND TO PROVIDE THAT THE TERMS OF THE ASSOCIATE JUDGES OF THE COURT OF APPEALS ADDED BY THIS SECTION ARE STAGGERED; TO AMEND SECTIONS 12-51-40, AS AMENDED, AND 12-51-120, RELATING TO EXECUTIONS FOR DELINQUENT PROPERTY TAXES AND THE NOTICE REQUIRED TO THE PROPERTY OWNER OF RECORD IMMEDIATELY PRECEDING THE END OF THE REDEMPTION PERIOD, SO AS TO PROVIDE FOR THE METHOD OF MAILING THE NOTICES REQUIRED UNDER THESE SECTIONS; TO AMEND SECTION 1-11-140, AS AMENDED, RELATING TO ENTITIES ELIGIBLE FOR INSURANCE COVERAGE THROUGH THE OFFICE OF INSURANCE SERVICES OF THE STATE BUDGET AND CONTROL BOARD, SO AS TO EXTEND THE ELIGIBILITY FOR COVERAGE ALLOWED GOVERNMENTAL AND ELEEMOSYNARY HOSPITALS TO SUBSIDIARIES OR OTHER ENTITIES AFFILIATED WITH THESE HOSPITALS; TO AMEND SECTION 40-43-230, AS AMENDED, RELATING TO LICENSURE OF PHARMACISTS, SO AS TO SET THE FEE FOR LICENSURE RENEWAL AT SEVENTY DOLLARS; TO AMEND SECTION 12-10-40, RELATING TO THE DESIGNATION OF ENTERPRISE ZONES FOR PURPOSES OF THE ENTERPRISE ZONE ACT OF 1995, SO AS TO MAKE ELIGIBLE FOR THE DESIGNATION A RESEARCH PARK OPERATED BY THE SOUTH CAROLINA RESEARCH AUTHORITY; TO AMEND SECTION 44-93-170, AS AMENDED, RELATING TO THE INFECTIOUS WASTE CONTINGENCY FUND, SO AS TO CAP THE AMOUNT OF THE FUND AT THREE HUNDRED THOUSAND DOLLARS WITH ALL SUBSEQUENT FEES TO BE RETURNED TO HAMPTON COUNTY; TO AMEND SECTIONS 6-25-35 AND 6-25-100, RELATING TO THE EXTENSION OF CERTAIN PROVISIONS PERTAINING TO WATER, AND THE POWERS OF A JOINT MUNICIPAL WATER SYSTEM, SO AS TO FURTHER PROVIDE FOR THE POWERS OF A JOINT MUNICIPAL WATER SYSTEM WITH RESPECT TO PROJECTS AND UNDERTAKINGS OTHER THAN WATER PERMITTED BY LAW, AND TO CLARIFY THE CONDITIONS UNDER WHICH A JOINT MUNICIPAL WATER SYSTEM MAY INCUR DEBT; BY ADDING SECTION 58-1-65 SO AS TO PROVIDE THAT THERE IS NO LIABILITY ON THE PART OF AND NO CAUSE OF ACTION AGAINST, OWNERS AND OPERATORS OF WATER IMPOUNDMENTS FOR FEDERALLY REGULATED HYDROELECTRIC PROJECTS FOR ACTS, EVENTS, OCCURRENCES, OR FUTURE CONSEQUENCES OF ANY TREATMENT BY THE DEPARTMENT OF NATURAL RESOURCES, ITS AGENTS OR INDEPENDENT CONTRACTORS, IN PROVIDING FOR THE MANAGEMENT OF AQUATIC WEEDS, AND TO PROVIDE THAT THE IMMUNITY FOR OWNERS AND OPERATORS OF WATER IMPOUNDMENTS FOR FEDERALLY REGULATED HYDROELECTRIC PROJECTS ALSO EXTENDS TO ANY LIABILITY ARISING AS A RESULT OF ACTIONS BY INDIVIDUALS WHO WITHOUT PERMISSION FROM THE OWNER AND OPERATOR TREAT, SPRAY, OR IN ANY FASHION ATTEMPT TO MANAGE AQUATIC WEEDS IN THE IMPOUNDMENT; TO AMEND ARTICLE 1, CHAPTER 25, TITLE 57, RELATING TO GENERAL PROVISIONS REGARDING OUTDOOR ADVERTISING, BY ADDING SECTION 57-25-30 SO AS TO PROVIDE THAT BUS SHELTERS MAY BE ERECTED AND MAINTAINED WITHIN THE RIGHTS-OF-WAY OF PUBLIC ROADS UPON AUTHORIZATION OF THE DEPARTMENT OF TRANSPORTATION, TO PROVIDE FOR THE MANNER IN WHICH ADVERTISING MAY BE PLACED IN THESE BUS SHELTERS, AND TO REQUIRE A PERSON ERECTING BUS SHELTERS TO OBTAIN A PERMIT FROM THE DEPARTMENT OF TRANSPORTATION; TO CONFIRM THE POLICY OF THE STATE OF SOUTH CAROLINA WITH REGARD TO THE OPPORTUNITY TO ATTEND A SINGLE-GENDER COLLEGE AND TO ADOPT THE FINDINGS OF FACT IN U.S. V. COMMONWEALTH OF VIRGINIA AS THE BASIS FOR THE POLICY OF SOUTH CAROLINA IN CRAFTING A FRAMEWORK FOR THE ESTABLISHMENT OF AND MAINTENANCE OF SINGLE-GENDER PROGRAMS OF HIGHER LEARNING FOR BOTH SEXES AND TO PROVIDE CERTAIN EXCEPTIONS; TO AMEND SECTION 56-3-2150, AS AMENDED, AND SECTION 56-3-2170, RELATING TO THE ISSUANCE OF SPECIAL LICENSE PLATES TO MEMBERS OF MUNICIPAL AND COUNTY COUNCILS, SO AS TO PROVIDE A SPECIAL LICENSE PLATE FOR A MAYOR AND PROVIDE FOR THE DISTRIBUTION OF THE REVENUE FROM THE PLATES AND FOR PERIODIC REPORTING ON THE COSTS OF PRODUCTION AND ADMINISTRATION OF THESE SPECIAL PLATES; TO AMEND SECTION 9-11-140, AS AMENDED, OF THE 1976 CODE, RELATING TO THE ACCIDENTAL DEATH BENEFIT PROGRAM UNDER THE SOUTH CAROLINA POLICE OFFICERS RETIREMENT SYSTEM, SO AS TO PROVIDE FOR BENEFITS UNDER THE PROGRAM TO A SURVIVING SPOUSE RATHER THAN TO THE OFFICER'S WIDOW, AND TO PROVIDE FOR CONTINUED PAYMENTS AFTER THE REMARRIAGE OF THE OFFICER'S SPOUSE; TO AMEND SECTION 12-37-450, AS AMENDED, RELATING TO THE BUSINESS INVENTORY TAX EXEMPTION REIMBURSEMENT, SO AS TO PROVIDE FOR AN AUTOMATIC GENERAL FUND APPROPRIATION OF SUMS SUFFICIENT TO MEET THE REQUIRED 1987 REIMBURSEMENT AMOUNT; TO AMEND SECTION 12-36-60, RELATING TO THE DEFINITION OF "TANGIBLE PERSONAL PROPERTY" FOR PURPOSES OF THE SOUTH CAROLINA SALES AND USE TAX ACT, SO AS TO EXCLUDE FROM THE DEFINITION THE TRANSMISSION OF COMPUTER DATABASE INFORMATION BY A COOPERATIVE SERVICE WHEN THAT INFORMATION HAS BEEN ASSEMBLED BY AND IS FOR THE EXCLUSIVE USE OF THE MEMBERS OF THE COOPERATIVE SERVICE; TO AMEND SECTION 12-36-910, AS AMENDED, RELATING TO THE SALES TAX ON TANGIBLE PERSONAL PROPERTY, SO AS TO PROVIDE EXEMPTIONS FROM THE TAX AND DEFINE TERMS; BY ADDING SECTION 2-3-25 SO AS TO PROVIDE IF A MEMBER OF THE GENERAL ASSEMBLY RESIGNS OR IS EXPELLED, HE MUST REPAY ANY COMPENSATION RECEIVED ON A PRO RATA BASIS, AND PROVIDE THAT IF HE DOES NOT, THE COMPTROLLER GENERAL SHALL WITHHOLD THAT AMOUNT FROM ANY RETIREMENT BENEFITS HE RECEIVES; TO AMEND SECTION 12-36-2680, RELATING TO THE USE OF SALES TAX EXEMPTION CERTIFICATES MAINTAINED ON FILE USED IN MAKING VARIOUS TAX EXEMPT PURCHASES, SO AS TO DELETE THE REQUIREMENT THAT THE PURCHASER SIGN THE INVOICE AND TO MAKE THIS DELETION EFFECTIVE FOR EXEMPT SALES MADE ON OR AFTER JANUARY 1, 1995; TO AMEND SECTION 59-107-90, RELATING TO THE MAXIMUM AMOUNT OF OUTSTANDING STATE INSTITUTION BONDS, SO AS TO RAISE THE LIMIT FROM SIXTY TO NINETY MILLION DOLLARS; BY ADDING SECTION 59-127-75 SO AS TO ALLOCATE A CERTAIN PORTION OF THE FUNDS DISTRIBUTED PURSUANT TO THE HIGHER EDUCATION FORMULA OF THE COMMISSION ON HIGHER EDUCATION TO THE FELTON-LABORATORY SCHOOL AT SOUTH CAROLINA STATE UNIVERSITY; TO AMEND SECTIONS 14-1-206, 14-1-207, AND 14-1-208, RELATING TO ADDITIONAL ASSESSMENTS BASED ON FINES IMPOSED ON OFFENDERS IN GENERAL SESSIONS, FAMILY COURT, MAGISTRATE'S COURT, AND MUNICIPAL COURT, RESPECTIVELY, AND HOW THESE ASSESSMENTS ARE DISTRIBUTED, SO AS TO REDUCE BY ONE PERCENT THE AMOUNT TO BE CREDITED TO THE GENERAL FUND AND TO CREATE WITH THIS ONE PERCENT A FUND IN THE ATTORNEY GENERAL'S OFFICE UP TO FIVE HUNDRED THOUSAND DOLLARS FOR AID TO COUNTIES FOR EXPENSES IN DEATH PENALTY CASES; TO PROVIDE THAT THE MEMBERSHIP OF THE JOINT BOND REVIEW COMMITTEE IS INCREASED BY SIX ADDITIONAL MEMBERS FOR PURPOSES OF ANY MATTERS COMING BEFORE THE COMMITTEE REGARDING THE SALE, LEASE, RENTAL, USE, TRANSFER, OR OTHER DISPOSITION OF THE REAL OR PERSONAL PROPERTY OF THE MEDICAL UNIVERSITY OF SOUTH CAROLINA, IN WHOLE OR IN PART, WITH A VALUE IN EXCESS OF TWENTY-FIVE MILLION DOLLARS AS DETERMINED BY THE BUDGET AND CONTROL BOARD, TO PROVIDE THAT THE JOINT BOND REVIEW COMMITTEE SHALL BE ALLOWED TO PARTICIPATE IN A PUBLIC HEARING WHICH THE MEDICAL UNIVERSITY OF SOUTH CAROLINA MUST HOLD BEFORE THE MEDICAL UNIVERSITY OF SOUTH CAROLINA APPROVES THE TRANSACTION BUT THE COMMITTEE SHALL NOT ENGAGE IN APPROVING OR DISAPPROVING THE TRANSACTION AT THAT STAGE, TO PROVIDE THAT THE JOINT BOND REVIEW COMMITTEE MAY HOLD ITS OWN PUBLIC HEARINGS ON AND SHALL APPROVE OR DISAPPROVE ANY MEDICAL UNIVERSITY OF SOUTH CAROLINA PROPOSAL SUBMITTED, AND TO PROVIDE THAT THE BOARD OF TRUSTEES OF THE MEDICAL UNIVERSITY OF SOUTH CAROLINA SHALL NOT IMPLEMENT ANY PROPOSAL REGARDING A TRANSACTION WHICH HAS NOT RECEIVED A FAVORABLE VOTE FROM THE JOINT BOND REVIEW COMMITTEE; BY ADDING SECTION 10-1-163 SO AS TO REQUIRE ALL PORTRAITS, FLAGS, BANNERS, MONUMENTS, STATUES, AND PLAQUES WHICH MAY BE REMOVED FROM THE STATE HOUSE DURING RENOVATIONS TO BE RETURNED TO THEIR ORIGINAL LOCATION WHEN THE STATE HOUSE IS REOCCUPIED, TO PROVIDE THAT THE LOCATION OF THESE ITEMS MUST NOT BE CHANGED UNLESS APPROVED BY AN ACT PASSED BY THE GENERAL ASSEMBLY, AND TO PROVIDE FOR PAYMENT OF THE COSTS OF REMOVAL, RESTORING, REPLACING, AND DISPLAYING THESE ITEMS; TO AMEND SECTION 44-69-30, RELATING TO LICENSES FOR OPERATION OF HOME HEALTH AGENCIES, SO AS TO AUTHORIZE THE DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL TO ENTER INTO PARTNERSHIPS AND OTHER AGREEMENTS FOR THE PURPOSE OF ASSURING CONTINUED PROVISION OF HOME CARE SERVICES ADEQUATE TO MEET THE STATE'S NEEDS, AND TO FURTHER PROVIDE FOR THE DEPARTMENT'S AUTHORITY AND RESPONSIBILITY WITH REGARD TO THESE PARTNERSHIPS AND AGREEMENTS; TO AMEND TITLE 44, RELATING TO HEALTH, BY ADDING CHAPTER 122 SO AS TO DIRECT THE SOUTH CAROLINA HUMAN SERVICES COORDINATING COUNCIL TO DEVELOP AND COORDINATE THE IMPLEMENTATION OF COMMUNITY-BASED ADOLESCENT PREGNANCY PREVENTION PROGRAMS THROUGH FUNDING AVAILABLE FROM THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AND TO PROVIDE REQUIREMENTS FOR LOCAL PROJECTS AND SELECTION PROCEDURES; TO AMEND SECTION 40-43-260, AS AMENDED, RELATING TO DISCIPLINARY ACTION THAT MAY BE TAKEN AGAINST A PHARMACIST, SO AS TO AUTHORIZE THE BOARD TO IMPOSE A CIVIL FINE OF ONE THOUSAND DOLLARS; BY ADDING SECTION 11-11-330 SO AS TO ESTABLISH THE STATE PROPERTY TAX RELIEF FUND AND PROVIDE FOR THE MANNER IN WHICH FUNDS THEREIN SHALL BE USED FOR PROPERTY TAX RELIEF; BY ADDING SECTION 12-37-251 SO AS TO ALLOW A HOMESTEAD EXEMPTION FROM PROPERTY TAXES LEVIED FOR SCHOOL OPERATIONS OTHER THAN THOSE LEVIED FOR BONDED INDEBTEDNESS AND LEASE PURCHASE PAYMENTS FOR CAPITAL CONSTRUCTION; BY ADDING SECTION 12-43-217 SO AS TO REQUIRE QUADRENNIAL REASSESSMENT; TO AMEND SECTION 12-45-75, RELATING TO THE PAYING OF PROPERTY TAXES IN INSTALLMENTS, SO AS TO AUTHORIZE QUARTERLY INSTALLMENTS; BY ADDING SECTION 12-43-350 SO AS TO PROVIDE A STANDARDIZED TAX BILL; BY ADDING SECTION 12-47-75 SO AS TO PROVIDE FOR THE CREDITING OF ERRONEOUS PROPERTY TAX PAYMENTS; TO AMEND SECTION 12-43-220, AS AMENDED, RELATING TO CLASSIFICATION OF PROPERTY FOR PURPOSES OF THE PROPERTY TAX, SO AS TO PROVIDE FOR THE APPLICATION OF THE FOUR PERCENT CLASSIFICATION FOR OWNER-OCCUPIED RESIDENTIAL PROPERTY; AND TO EXTEND THE TIME FOR FILING FOR AGRICULTURAL USE VALUE.
(R212) H. 3363 -- Ways and Means Committee: A JOINT RESOLUTION TO APPROPRIATE MONIES FROM THE CAPITAL RESERVE FUND FOR FISCAL YEAR 1994-95.
(R213) H. 3839 -- Labor, Commerce and Industry Committee: AN ACT TO AMEND SECTION 34-3-540, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO COPIES AND REPRODUCTIONS OF BANKING RECORDS AND THEIR ADMISSIBILITY INTO EVIDENCE, SO AS TO FURTHER PROVIDE FOR THE MANNER IN WHICH THESE RECORDS MAY BE COPIED AND REPRODUCED, TO REVISE THE ENTITIES TO WHICH THIS SECTION APPLIES, AND TO FURTHER PROVIDE FOR THE MANNER IN WHICH COPIES AND REPRODUCTIONS OF THESE RECORDS MAY BE ADMITTED INTO EVIDENCE.
(R214) H. 4243 -- Rep. Wofford: AN ACT TO AMEND SECTION 7-7-120, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO VOTING PRECINCTS IN BERKELEY COUNTY, SO AS TO REDESIGNATE THE SANGAREE AND STRATFORD PRECINCTS.
Columbia, S.C., June 13, 1995
Mr. President and Senators:
The House respectfully informs your Honorable Body that it has overridden the veto by the Governor on R. 102, S. 368 by a vote of 42 to 6:
(R102) S. 368 -- Senator Land: AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 9-8-125 SO AS TO AUTHORIZE A MEMBER OF THE RETIREMENT SYSTEM FOR JUDGES AND SOLICITORS WHO IS AT LEAST SIXTY-FIVE YEARS OF AGE AND ELIGIBLE TO RECEIVE RETIREMENT BENEFITS FROM THE RETIREMENT SYSTEM FOR MEMBERS OF THE GENERAL ASSEMBLY BUT FOR THE MEMBER'S CURRENT EMPLOYMENT AS A JUDGE OR SOLICITOR TO ELECT TO RECEIVE THESE BENEFITS; AND TO AMEND THE 1976 CODE BY ADDING SECTION 9-9-55 SO AS TO ALLOW A MEMBER OF THE GENERAL ASSEMBLY SERVING ANY PART OF A YEAR TO ESTABLISH CREDIT FOR THE FULL YEAR UNDER THE RETIREMENT SYSTEM FOR MEMBERS OF THE GENERAL ASSEMBLY BY PAYING THE FULL ACTUARIAL COST OF THE SERVICE.
Very respectfully,
Speaker of the House
Received as information.
Columbia, S.C., June 13, 1995
Mr. President and Senators:
The House respectfully informs your Honorable Body that it has overridden the veto by the Governor on R. 117, S. 670 by a vote of 3 to 0:
(R117) S. 670 -- Senator Holland: AN ACT TO PROVIDE THAT EACH MEMBER OF THE KERSHAW COUNTY TRANSPORTATION COMMITTEE SHALL BE ALLOWED AND PAID FROM KERSHAW COUNTY "C" FUND REVENUES SEVENTY-FIVE DOLLARS FOR EACH MEETING AT WHICH HE IS IN ATTENDANCE, AND PROVIDE THAT THE COMMITTEE SHALL RECEIVE THE PAYMENT AUTHORIZED IN THIS ACT UPON ISSUANCE OF APPROVED VOUCHERS BY THE COMMITTEE'S CHAIRMAN, EXCEPT THAT THE CHAIRMAN MAY NOT APPROVE VOUCHERS IN ANY SINGLE FISCAL YEAR WHICH VOUCHERS AUTHORIZE PAYMENT FOR MORE THAN FIFTEEN MEETINGS PER FISCAL YEAR FOR EACH MEMBER OF THE COMMITTEE.
Very respectfully,
Speaker of the House
Received as information.
Columbia, S.C., June 13, 1995
Mr. President and Senators:
The House respectfully informs your Honorable Body that it has overridden the veto by the Governor on R. 124, S. 814 by a vote of 1 to 0:
(R124) S. 814 -- Senator Holland: AN ACT TO REPEAL ACT 467 OF 1969, RELATING TO THE JURISDICTION OF THE POLICE DEPARTMENT OF THE TOWN OF JEFFERSON IN CHESTERFIELD COUNTY.
Very respectfully,
Speaker of the House
Received as information.
Columbia, S.C., June 13, 1995
Mr. President and Senators:
The House respectfully informs your Honorable Body that it has sustained the veto by the Governor on R. 131, H. 3023 by a vote of 54 to 36:
(R131) H. 3023 -- Reps. Byrd, Baxley, Lloyd and Cromer: AN ACT TO ENACT THE GIFT OF LIFE ORGAN AND TISSUE PROCUREMENT ACT OF 1995 BY AMENDING THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-7-2414 SO AS TO PROVIDE FOR A DEDUCTION FROM STATE INCOME TAX REFUNDS OR A CONTRIBUTION TO BE ADDED TO STATE INCOME TAX PAYMENTS FOR THE SUPPORT OF THE GIFT OF LIFE TRUST FUND; BY ADDING ARTICLE 13 TO TITLE 44, CHAPTER 43, SO AS TO ESTABLISH THE GIFT OF LIFE TRUST FUND, TO PROVIDE FOR ITS BOARD OF DIRECTORS, DUTIES, AND FOR EXPENDITURE OF FUNDS; AND TO ADD SECTION 56-1-143 SO AS TO PROVIDE THAT THE DEPARTMENT OF REVENUE AND TAXATION SHALL OFFER PERSONS OBTAINING OR RENEWING A DRIVER'S LICENSE THE OPPORTUNITY TO CONTRIBUTE ONE DOLLAR TO THE GIFT OF LIFE TRUST FUND AND THESE FUNDS MUST BE CREDITED TO AN ACCOUNT IN THE STATE TREASURER'S OFFICE FOR USE BY THE TRUST FUND.
Very respectfully,
Speaker of the House
Received as information.
Reps. Meacham, White and Allison appeared in the Chamber to inform the Senate that the House of Representatives had completed its business and was ready to adjourn Sine Die.
At 4:49 P.M., on motion of Senator MOORE, the Senate receded from business subject to the call of the Chair.
At 4:53 P.M., the Senate resumed.
S. 219 -- Senators Greg Smith, Leventis, Cork, Rankin, Thomas and Hayes: A BILL TO AMEND SECTION 16-25-70, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO ARRESTS IN DOMESTIC VIOLENCE CASES, SO AS TO REQUIRE THAT A PERSON WHO COMMITS OR THREATENS TO COMMIT AN ACT OF DOMESTIC VIOLENCE UPON A FAMILY OR HOUSEHOLD MEMBER MUST BE ARRESTED.
On motion of Senator STILWELL, with unanimous consent, the Report of the Committee of Conference was taken up for immediate consideration.
Senator STILWELL spoke on the report.
On motion of Senator STILWELL, with unanimous consent, Free Conference Powers were granted.
Whereupon, the PRESIDENT appointed Senators HOLLAND, MOORE and COURSON to the Committee of Free Conference on the part of the Senate and a message was sent to the House accordingly.
On motion of Senator STILWELL, the Report of the Committee of Free Conference to S. 219 was adopted as follows:
The COMMITTEE OF FREE CONFERENCE, to whom was referred:
S. 219 -- Senators Greg Smith, Leventis, Cork, Rankin, Thomas and Hayes: A BILL TO AMEND SECTION 16-25-70, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO ARRESTS IN DOMESTIC VIOLENCE CASES, SO AS TO REQUIRE THAT A PERSON WHO COMMITS OR THREATENS TO COMMIT AN ACT OF DOMESTIC VIOLENCE UPON A FAMILY OR HOUSEHOLD MEMBER MUST BE ARRESTED.
Beg leave to report that they have duly and carefully considered the same and recommend:
That the same do pass with the following amendments:
Amend the bill, as and if amended, by striking all after the enacting words and inserting therein the following:
SECTION 1. Section 20-4-40 of the 1976 Code is amended to read:
"Section 20-4-40. There is created an action known as a 'Petition for an Order of Protection' in cases of abuse to a household member.
(a) A petition for relief under this section may be made by any household members in need of protection or by any household members on behalf of minor household members.
(b) A petition for relief must allege the existence of abuse to a household member. It must state the specific time, place, details of the abuse, and other facts and circumstances upon which relief is sought and must be verified.
(c) The petition must inform the respondent of the right to retain counsel.
(d) In a pending action for divorce or separate support and maintenance, the petition for relief shall be brought in the form of a motion for further relief and shall be served on counsel of record, if any. Where no action is pending, the petition shall be filed and served as an independent action.
(e) The clerk of court must provide simplified forms which will facilitate the preparation and filing of a petition under this section by any person not represented by counsel, including motions and affidavits to proceed in forma pauperis. Notwithstanding any other provision of law, the clerk of court may not assess any fee for the filing of a petition for relief."
SECTION 2. Title 36 of the 1976 Code is amended by adding:
In the spring of 1995, the South Carolina Senate Judiciary Committee requested the South Carolina Law Institute to appoint a committee (the "Committee") to evaluate the impact of proposed uniform Article 4A on South Carolina law and to assist the Senate Judiciary Committee in considering Article 4A for adoption in South Carolina. The Committee was comprised of lawyers, professors, bankers, corporate users of wire transfer services, and a representative of the Office of the Consumer Advocate. The Reporter and a research assistant provided support to the Committee. After review of the uniform statute and the Official Comments thereto, versions of Article 4A adopted by other states, South Carolina statutory and common law, and scholarly commentary, the Committee unanimously recommended that South Carolina adopt the uniform version of Article 4A.
Uniformity Of Article 4A.
Funds transfers are effected across state lines and often through different funds transfer systems. If participants in a funds transfer are to be certain of their obligations and liabilities, uniformity of funds transfer rules is imperative.
Virtually all jurisdictions have adopted Article 4A without change from the proposed uniform statute. The Committee reviewed all non-uniform provisions enacted by other states and determined that most of the provisions were not substantive. The Committee found no reason to vary Article 4A from the uniform version and accordingly recommended that South Carolina adopt the uniform version of Article 4A.
Like other Articles in the Uniform Commercial Code, the uniform version of Article 4A includes "Official Comments" addressing the purpose and meaning of the various sections and the policy considerations on which they are based. Because the Official Comments provide information of high value in interpreting and understanding Article 4A, the Committee recommended that they be included as part of South Carolina's Article 4A legislation. The majority of adopting states have done likewise. Only Oklahoma, one of the first states to enact Article 4A, adopted comprehensive state reporter's comments in addition to the Official Comments. See OKLA. STAT. ANN. tit. 12A Section 4A (West Supp. 1995). In order to avoid any implication of non-uniformity that might be raised by the content of Reporter's Comments, the Committee decided to include South Carolina Reporter's Comments only after sections which call for comment.
The Impact Of Article 4A On South Carolina Law.
At the time of the Committee's deliberations, no South Carolina statutory or case law dealt with funds transfers. Very few published opinions from other jurisdictions were available. Prior to the general enactment of Article 4A, courts decided funds transfer cases using various common law principles, or by analogy to Article 4 of the U.C.C. As a result, pre-Article 4A case law provides little guidance as to how a court would likely decide a funds transfer issue. For a discussion of how cases decided prior to the enactment of Article 4A might have been decided, see OKLA. STAT. ANN. tit. 12A, Section 4A (West Supp. 1995); Tony M. Davis, Comparing Article 4A with Existing Case Law on Funds Transfers: A Series of Case Studies, 42 ALA. L. REV. 823 (1991).
The enactment of Article 4A in South Carolina, although important to clarify national uniformity in regulation of funds transfers, should work little practical change in South Carolina law for two reasons. First, for funds transfer issues arising after 1989, it is likely that a South Carolina court would have looked to Article 4A for guidance. See, Manufacturas Int'l Ltda. v. Manufacturers Hanover Trust Co., 792 F.Supp. 180 (E.D.N.Y. 1992) (declining to apply Article 4A but discussing its provisions by analogy). Second, South Carolina banks using Fedwire as a funds transfer system have operated under Article 4A since January 1, 1991. Regulation J, which governs funds transfers through Fedwire, and which incorporated Article 4A as of that date, preempts inconsistent state law.[1]
[1] Note, however, that not all parties to a Fedwire are governed by Regulation J and therefore, by Article 4A. Specifically, Regulation J applies to parties in privity with a Reserve Bank, beneficiaries that maintain or use an account at a Reserve Bank, and other parties in a funds transfer that have notice of the use of Fedwire and of the applicability of Regulation J to Fedwire. 12 C.F.R. Section 210.25(b)(2)(1992).
The National Conference of Commissioners on Uniform State laws and The American Law Institute have approved a new Article 4A to the Uniform Commercial Code. Comments that follow each of the sections of the statute are intended as official comments. They explain in detail the purpose and meaning of the various sections and the policy considerations on which they are based.
Description of transaction covered by Article 4A.
There are a number of mechanisms for making payments through the banking system. Most of these mechanisms are covered in whole or part by state or federal statutes. In terms of number of transactions, payments made by check or credit card are the most common payment methods. Payment by check is covered by Articles 3 and 4 of the UCC, and some aspects of payment by credit card are covered by federal law. In recent years electronic funds transfers have been increasingly common in consumer transactions. For example, in some cases a retail customer can pay for purchases by use of an access or debit card inserted in a terminal at the retail store that allows the bank account of the customer to be instantly debited. Some aspects of these point-of-sale transactions and other consumer payments that are effected electronically are covered by a federal statute, the Electronic Fund Transfer Act (EFTA). If any part of a funds transfer is covered by EFTA, the entire funds transfer is excluded from Article 4A.
Another type of payment, commonly referred to as a wholesale wire transfer, is the primary focus of Article 4A. Payments that are covered by Article 4A are overwhelmingly between business or financial institutions. The dollar volume of payments made by wire transfer far exceeds the dollar volume of payments made by other means. The volume of payments by wire transfer over the two principal wire payment systems -- the Federal Reserve wire transfer network (Fedwire) and the New York Clearing House Interbank Payments Systems (CHIPS) -- exceeds one trillion dollars per day. Most payments carried out by use of automated clearing houses are consumer payments covered by EFTA and therefore not covered by Article 4A. There is, however, a significant volume of non-consumer ACH payments that closely resemble wholesale wire transfers. These payments are also covered by Article 4A.
There is some resemblance between payments made by wire transfer and payments made by other means such as paper-based checks and credit cards or electronically-based consumer payments, but there are also many differences. Article 4A excludes from its coverage these other payment mechanisms. Article 4A follows a policy of treating the transaction that it covers--a "funds transfer"--as a unique method of payment that is governed by unique principles of law that address the operational and policy issues presented by this kind of payment.
The funds transfer that is covered by Article 4A is not a complex transaction and can be illustrated by the following example which is used throughout the Prefatory Note as a basis for discussion. X, a debtor, wants to pay an obligation owed to Y. Instead of delivering to Y a negotiable instrument such as a check or some other writing such as a credit card slip that enables Y to obtain payment from a bank, X transmits an instruction to X's bank to credit a sum of money to the bank account of Y. In most cases X's bank and Y's bank are different banks. X's bank may carry out X's instruction by instructing Y's bank to credit Y's account in the amount that X requested. The instruction that X issues to its bank is a "payment order." X is the "sender" of the payment order and X's bank is the "receiving bank" with respect to X's order. Y is the "beneficiary" of X's order. When X's bank issues an instruction to Y's bank to carry out X's payment order, X's bank "executes" X's order. The instruction of X's bank to Y's bank is also a payment order. With respect to that order, X's bank is the sender, Y's bank is the receiving bank, and Y is the beneficiary. The entire series of transactions by which X pays Y is known as the "funds transfer." With respect to the funds transfer, X is the "originator," X's bank is the "originator's bank," Y is the "beneficiary" and Y's bank is the "beneficiary's bank." In more complex transactions there are one or more additional banks known as "intermediary banks" between X's bank and Y's bank. In the funds transfer the instruction contained in the payment order of X to its bank is carried out by a series of payment orders by each bank in the transmission chain to the next bank in the chain until Y's bank receives a payment order to make the credit to Y's account. In most cases, the payment order of each bank to the next bank in the chain is transmitted electronically, and often the payment order of X to its bank is also transmitted electronically, but the means of transmission does not have any legal significance. A payment order may be transmitted by any means, and in some cases the payment order is transmitted by a slow means such as first class mail. To reflect this fact, the broader term "funds transfer" rather than the narrower term "wire transfer" is used in Article 4A to describe the overall payment transaction.
Funds transfers are divided into two categories determined by whether the instruction to pay is given by the person making payment or the person receiving payment. If the instruction is given by the person making the payment, the transfer is commonly referred to as a "credit transfer." If the instruction is given by the person receiving payment, the transfer is commonly referred to as a "debit transfer." Article 4A governs credit transfers and excludes debit transfers.
Why is Article 4A needed?
There is no comprehensive body of law that defines the rights and obligations that arise from wire transfers. Some aspects of wire transfers are governed by rules of the principal transfer systems. Transfers made by Fedwire are governed by Federal Reserve Regulation J and transfers over CHIPS are governed by the CHIPS rules. Transfers made by means of automated clearing houses are governed by uniform rules adopted by various associations of banks in various parts of the nation or by Federal Reserve rules or operating circulars. But the various funds transfer system rules apply to only limited aspects of wire transfer transactions. The resolution of the many issues that are not covered by funds transfer system rules depends on contracts of the parties, to the extent that they exist, or principles of law applicable to other payment mechanisms that might be applied by analogy. The result is a great deal of uncertainty. There is no consensus about the juridical nature of a wire transfer and consequently of the rights and obligations that are created. Article 4A is intended to provide the comprehensive body of law that we do not have today.
Characteristics of a funds transfer.
There are a number of characteristics of funds transfers covered by Article 4A that have influenced the drafting of the statute. The typical funds transfer involves a large amount of money. Multimillion dollar transactions are commonplace. The originator of the transfer and the beneficiary are typically sophisticated business or financial organizations. High speed is another predominant characteristic. Most funds transfers are completed on the same day, even in complex transactions in which there are several intermediary banks in the transmission chain. A funds transfer is a highly efficient substitute for payments made by the delivery of paper instruments. Another characteristic is extremely low cost. A transfer that involves many millions of dollars can be made for a price of a few dollars. Price does not normally vary very much or at all with the amount of the transfer. This system of pricing may not be feasible if the bank is exposed to very large liabilities in connection with the transaction. The pricing system assumes that the price reflects primarily the cost of the mechanical operation performed by the bank, but in fact, a bank may have more or less potential liability with respect to a funds transfer depending upon the amount of the transfer. Risk of loss to banks carrying out a funds transfer may arise from a variety of causes. In some funds transfers, there may be extensions of very large amounts of credit for short periods of time by the banks that carry out a funds transfer. If a payment order is issued to the beneficiary's bank, it is normal for the bank to release funds to the beneficiary immediately. Sometimes, payment to the beneficiary's bank by the bank that issued the order to the beneficiary's bank is delayed until the end of the day. If that payment is not received because of the insolvency of the bank that is obliged to pay, the beneficiary's bank may suffer a loss. There is also risk of loss if a bank fails to execute the payment order of a customer, or if the order is executed late. There also may be an error in the payment order issued by a bank that is executing the payment order of its customer. For example, the error might relate to the amount to be paid or to the identity of the person to be paid. Because the dollar amounts involved in funds transfers are so large, the risk of loss if something goes wrong in a transaction may also be very large. A major policy issue in the drafting of Article 4A is that of determining how risk of loss is to be allocated given the price structure in the industry.
Concept of acceptance and effect of acceptance by the beneficiary's bank.
Rights and obligations under Article 4A arise as the result of "acceptance" of a payment order by the bank to which the order is addressed. Section 4A-209. The effect of acceptance varies depending upon whether the payment order is issued to the beneficiary's bank or to a bank other than the beneficiary's bank. Acceptance by the beneficiary's bank is particularly important because it defines when the beneficiary's bank becomes obligated to the beneficiary to pay the amount of the payment order. Although Article 4A follows convention in using the term "funds transfer" to identify the payment from X to Y that is described above, no money or property right of X is actually transferred to Y. X pays Y by causing Y's bank to become indebted to Y in the amount of the payment. This debt arises when Y's bank accepts the payment order that X's bank issued to Y's bank to execute X's order. If the funds transfer was carried out by use of one or more intermediary banks between X's bank and Y's bank, Y's bank becomes indebted to Y when Y's bank accepts the payment order issued to it by an intermediary bank. The funds transfer is completed when this debt is incurred. Acceptance, the event that determines when the debt of Y's bank to Y arises, occurs (i) when Y's bank pays Y or notifies Y of receipt of the payment order, or (ii) when Y's bank receives payment from the bank that issued a payment order to Y's bank.
The only obligation of the beneficiary's bank that results from acceptance of a payment order is to pay the amount of the order to the beneficiary. No obligation is owed to either the sender of the payment order accepted by the beneficiary's bank or to the originator of the funds transfer. The obligation created by acceptance by the beneficiary's bank is for the benefit of the beneficiary. The purpose of the sender's payment order is to effect payment by the originator to the beneficiary and that purpose is achieved when the beneficiary's bank accepts the payment order. Section 4A-405 states rules for determining when the obligation of the beneficiary's bank to the beneficiary has been paid.
Acceptance by a bank other than the beneficiary's bank.
In the funds transfer described above, what is the obligation of X's bank when it receives X's payment order? Funds transfers by a bank on behalf of its customer are made pursuant to an agreement or arrangement that may or may not be reduced to a formal document signed by the parties. It is probably true that in most cases there is either no express agreement or the agreement addresses only some aspects of the transaction. Substantial risk is involved in funds transfers and a bank may not be willing to give this service to all customers, and may not be willing to offer it to any customer unless certain safeguards against loss such as security procedures are in effect. Funds transfers often involve the giving of credit by the receiving bank to the customer, and that also may involve an agreement. These considerations are reflected in Article 4A by the principle that, in the absence of a contrary agreement, a receiving bank does not incur liability with respect to a payment order until it accepts it. If X and X's bank in the hypothetical case had an agreement that obliged the bank to act on X's payment orders and the bank failed to comply with the agreement, the bank can be held liable for breach of the agreement. But apart from any obligation arising by agreement, the bank does not incur any liability with respect to X's payment order until the bank accepts the order. X's payment order is treated by Article 4A as a request by X to the bank to take action that will cause X's payment order to be carried out. That request can be accepted by X's bank by "executing" X's payment order. Execution occurs when X's bank sends a payment order to Y's bank intended by X's bank to carry out the payment order of X. X's bank could also execute X's payment order by issuing a payment order to an intermediary bank instructing the intermediary bank to instruct Y's bank to make the credit to Y's account. In that case execution and acceptance of X's order occur when the payment order of X's bank is sent to the intermediary bank. When X's bank executes X's payment order the bank is entitled to receive payment from X and may debit an authorized account of X. If X's bank does not execute X's order and the amount of the order is covered by a withdrawable credit balance in X's authorized account, the bank must pay X interest on the money represented by X's order unless X is given prompt notice of rejection of the order. Section 4A-210(b).
Bank error in funds transfers.
If a bank, other than the beneficiary's bank, accepts a payment order, the obligations and liabilities are owed to the originator of the funds transfer. Assume in the example stated above, that X's bank executes X's payment order by issuing a payment order to an intermediary bank that executes the order of X's bank by issuing a payment order to Y's bank. The obligations of X's bank with respect to execution are owed to X. The obligations of the intermediary bank with respect to execution are also owed to X. Section 4A-302 states standards with respect to the time and manner of execution of payment orders. Section 4A-305 states the measure of damages for improper execution. It also states that a receiving bank is liable for damages if it fails to execute a payment order that it was obliged by express agreement to execute. In each case consequential damages are not recoverable unless an express agreement of the receiving bank provides for them. The policy basis for this limitation is discussed in Comment 2 to Section 4A-305.
Error in the consummation of a funds transfer is not uncommon. There may be a discrepancy in the amount that the originator orders to be paid to the beneficiary and the amount that the beneficiary's bank is ordered to pay. For example, if the originator's payment order instructs payment of $100,000 and the payment order of the originator's bank instructs payment of $1,000,000, the originator's bank is entitled to receive only $100,000 from the originator and has the burden of recovering the additional $900,000 paid to the beneficiary by mistake. In some cases, the originator's bank or an intermediary bank instructs payment to a beneficiary other than the beneficiary stated in the originator's payment order. If the wrong beneficiary is paid, the bank that issued the erroneous payment order is not entitled to receive payment of the payment order that it executed and has the burden of recovering the mistaken payment. The originator is not obliged to pay its payment order. Section 4A-303 and Section 4A-207 state rules for determining the rights and obligations of the various parties to the funds transfer in these cases and in other typical cases in which error is made.
Pursuant to Section 4A-402(c) the originator is excused from the obligation to pay the originator's bank if the funds transfer is not completed, i.e. payment by the originator to the beneficiary is not made. Payment by the originator to the beneficiary occurs when the beneficiary's bank accepts a payment order for the benefit of the beneficiary of the originator's payment order. Section 4A-406. If for any reason that acceptance does not occur, the originator is not required to pay the payment order that it issued or, if it already paid, is entitled to refund of the payment with interest. This "money-back guarantee" is an important protection of the originator of a funds transfer. The same rule applies to any other sender in the funds transfer. Each sender's obligation to pay is excused if the beneficiary's bank does not accept a payment order for the benefit of the beneficiary of that sender's order. There is an important exception to this rule. It is common practice for the originator of a funds transfer to designate the intermediary bank or banks through which the funds transfer is to be routed. The originator's bank is required by Section 4A-302 to follow the instruction of the originator with respect to intermediary banks. If the originator's bank sends a payment order to the intermediary bank designated in the originator's order and the intermediary bank causes the funds transfer to miscarry by failing to execute the payment order or by instructing payment to the wrong beneficiary, the originator's bank is not required to pay its payment order and if it has already paid it is entitled to recover payment from the intermediary bank. This remedy is normally adequate, but if the originator's bank has already paid its order and the intermediary bank has suspended payments or is not permitted by law to refund payment, the originator's bank will suffer a loss. Since the originator required the originator's bank to use the failed intermediary bank, Section 4A-402(e) provides that in this case the originator is obliged to pay its payment order and has a claim against the intermediary bank for the amount of the order. The same principle applies to any other sender that designates a subsequent intermediary bank.
Unauthorized payment orders.
An important issue addressed in Section 4A-202 and Section 4A-203 is how the risk of loss from unauthorized payment orders is to be allocated. In a large percentage of cases, the payment order of the originator of the funds transfer is transmitted electronically to the originator's bank. In these cases it may not be possible for the bank to know whether the electronic message has been authorized by its customer. To ensure that no unauthorized person is transmitting messages to the bank, the normal practice is to establish security procedures that usually involve the use of codes or identifying numbers or words. If the bank accepts a payment order that purports to be that of its customer after verifying its authenticity by complying with a security procedure agreed to by the customer and the bank, the customer is bound to pay the order even if it was not authorized. But there is an important limitation on this rule. The bank is entitled to payment in the case of an unauthorized order only if the court finds that the security procedure was a commercially reasonable method of providing security against unauthorized payment orders. The customer can also avoid liability if it can prove that the unauthorized order was not initiated by an employee or other agent of the customer having access to confidential security information or by a person who obtained that information from a source controlled by the customer. The policy issues are discussed in the comments following Section 4A-203. If the bank accepts an unauthorized payment order without verifying it in compliance with a security procedure, the loss falls on the bank.
Security procedures are also important in cases of error in the transmission of payment orders. There may be an error by the sender in the amount of the order, or a sender may transmit a payment order and then erroneously transmit a duplicate of the order. Normally, the sender is bound by the payment order even if it is issued by mistake. But in some cases an error of this kind can be detected by a security procedure. Although the receiving bank is not obliged to provide a security procedure for the detection of error, if such a procedure is agreed to by the bank Section 4A-205 provides that if the error is not detected because the receiving bank does not comply with the procedure, any resulting loss is borne by the bank failing to comply with the security procedure.
Insolvency losses.
Some payment orders do not involve the granting of credit to the sender by the receiving bank. In those cases, the receiving bank accepts the sender's order at the same time the bank receives payment of the order. This is true of a transfer of funds by Fedwire or of cases in which the receiving bank can debit a funded account of the sender. But in some cases the granting of credit is the norm. This is true of a payment order over CHIPS. In a CHIPS transaction the receiving bank usually will accept the order before receiving payment from the sending bank. Payment is delayed until the end of the day when settlement is made through the Federal Reserve System. If the receiving bank is an intermediary bank, it will accept by issuing a payment order to another bank and the intermediary bank is obliged to pay that payment order. If the receiving bank is the beneficiary's bank, the bank usually will accept by releasing funds to the beneficiary before the bank has received payment. If a sending bank suspends payments before settling its liabilities at the end of the day, the financial stability of banks that are net creditors of the insolvent bank may also be put into jeopardy, because the dollar volume of funds transfers between the banks may be extremely large. With respect to two banks that are dealing with each other in a series of transactions in which each bank is sometimes a receiving bank and sometimes a sender, the risk of insolvency can be managed if amounts payable as a sender and amounts receivable as a receiving bank are roughly equal. But if these amounts are significantly out of balance, a net creditor bank may have a very significant credit risk during the day before settlement occurs. The Federal Reserve System and the banking community are greatly concerned with this risk, and various measures have been instituted to reduce this credit exposure. Article 4A also addresses this problem. A receiving bank can always avoid this risk by delaying acceptance of a payment order until after the bank has received payment. For example, if the beneficiary's bank credits the beneficiary's account it can avoid acceptance by not notifying the beneficiary of the receipt of the order or by notifying the beneficiary that the credit may not be withdrawn until the beneficiary's bank receives payment. But if the beneficiary's bank releases funds to the beneficiary before receiving settlement, the result in a funds transfer other than a transfer by means of an automated clearing house or similar provisional settlement system is that the beneficiary's bank may not recover the funds if it fails to receive settlement. This rule encourages the banking system to impose credit limitations on banks that issue payment orders. These limitations are already in effect. CHIPS has also proposed a loss-sharing plan to be adopted for implementation in the second half of 1990 under which CHIPS participants will be required to provide funds necessary to complete settlement of the obligations of one or more participants that are unable to meet settlement obligations. Under this plan, it will be a virtual certainty that there will be settlement on CHIPS in the event of failure by a single bank. Section 4A-403(b) and (c) are also addressed to reducing risks of insolvency. Under these provisions, the amount owed by a failed bank with respect to payment orders it issued is the net amount owing after setting off amounts owed to the failed bank with respect to payment orders it received. This rule allows credit exposure to be managed by limitations on the net debit position of a bank.
Section 36-4A-101. Short title.
This chapter may be cited as Uniform Commercial Code--Funds Transfers.
Section 36-4A-102. Subject matter.
Except as otherwise provided in Section 36-4A-108, this chapter applies to funds transfers defined in Section 36-4A-104.
Article 4A governs a specialized method of payment referred to in the Article as a funds transfer but also commonly referred to in the commercial community as a wholesale wire transfer. A funds transfer is made by means of one or more payment orders. The scope of Article 4A is determined by the definitions of "payment order" and "funds transfer" found in Section 4A-103 and Section 4A-104.
The funds transfer governed by Article 4A is in large part a product of recent and developing technological changes. Before this Article was drafted there was no comprehensive body of law -- statutory or judicial -- that defined the juridical nature of a funds transfer or the rights and obligations flowing from payment orders. Judicial authority with respect to funds transfers is sparse, undeveloped, and not uniform. Judges have had to resolve disputes by referring to general principles of common law or equity, or they have sought guidance in statutes such as Article 4 which are applicable to other payment methods. But attempts to define rights and obligations in funds transfers by general principles or by analogy to rights and obligations in negotiable instrument law or the law of check collection have not been satisfactory.
In the drafting of Article 4A, a deliberate decision was made to write on a clean slate and to treat a funds transfer as a unique method of payment to be governed by unique rules that address the particular issues raised by this method of payment. A deliberate decision was also made to use precise and detailed rules to assign responsibility, define behavioral norms, allocate risks, and establish limits on liability, rather than to rely on broadly stated, flexible principles. In the drafting of these rules, a critical consideration was that the various parties to funds transfers need to be able to predict risk with certainty, to insure against risk, to adjust operational and security procedures, and to price funds transfer services appropriately. This consideration is particularly important given the very large amounts of money that are involved in funds transfers.
Funds transfers involve competing interests -- those of the banks that provide funds transfer services and the commercial and financial organizations that use the services, as well as the public interest. These competing interests were represented in the drafting process and they were thoroughly considered. The rules that emerged represent a careful and delicate balancing of those interests and are intended to be the exclusive means of determining the rights, duties, and liabilities of the affected parties in any situation covered by particular provisions of the Article. Consequently, resort to principles of law or equity outside of Article 4A is not appropriate to create rights, duties and liabilities inconsistent with those stated in this Article.
Section 36-4A-103. Payment order -- Definitions.
(a) In this chapter:
(1) 'Payment order' means an instruction of a sender to a receiving bank, transmitted orally, electronically, or in writing, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if:
(i) the instruction does not state a condition to payment to the beneficiary other than time of payment;
(ii) the receiving bank is to be reimbursed by debiting an account of, or otherwise receiving payment from, the sender; and
(iii) the instruction is transmitted by the sender directly to the receiving bank or to an agent, funds-transfer system, or communication system for transmittal to the receiving bank.
(2) 'Beneficiary' means the person to be paid by the beneficiary's bank.
(3) 'Beneficiary's bank' means the bank identified in a payment order in which an account of the beneficiary is to be credited pursuant to the order or which otherwise is to make payment to the beneficiary if the order does not provide for payment to an account.
(4) 'Receiving bank' means the bank to which the sender's instruction is addressed.
(5) 'Sender' means the person giving the instruction to the receiving bank.
(b) If an instruction complying with subsection (a)(1) is to make more than one payment to a beneficiary, the instruction is a separate payment order with respect to each payment.
(c) A payment order is issued when it is sent to the receiving bank.
This section is discussed in the Comment following Section 4A-104.
Section 36-4A-104. Funds transfer -- Definitions.
In this chapter:
(a) 'Funds transfer' means the series of transactions, beginning with the originator's payment order, made for the purpose of making payment to the beneficiary of the order. The term includes any payment order issued by the originator's bank or an intermediary bank intended to carry out the originator's payment order. A funds transfer is completed by acceptance by the beneficiary's bank of a payment order for the benefit of the beneficiary of the originator's payment order.
(b) 'Intermediary bank' means a receiving bank other than the originator's bank or the beneficiary's bank.
(c) 'Originator' means the sender of the first payment order in a funds transfer.
(d) 'Originator's bank' means (i) the receiving bank to which the payment order of the originator is issued if the originator is not a bank, or (ii) the originator if the originator is a bank.
1. Article 4A governs a method of payment in which the person making payment (the "originator") directly transmits an instruction to a bank either to make payment to the person receiving payment (the "beneficiary") or to instruct some other bank to make payment to the beneficiary. The payment from the originator to the beneficiary occurs when the bank that is to pay the beneficiary becomes obligated to pay the beneficiary. There are two basic definitions: "Payment order" stated in Section 4A-103 and "Funds transfer" stated in Section 4A-104. These definitions, other related definitions, and the scope of Article 4A can best be understood in the context of specific fact situations. Consider the following cases:
Case #1. X, which has an account in Bank A, instructs that bank to pay $1,000,000 to Y's account in Bank A. Bank A carries out X's instruction by making a credit of $1,000,000 to Y's account and notifying Y that the credit is available for immediate withdrawal. The instruction by X to Bank A is a "payment order" which was issued when it was sent to Bank A. Section 4A-103(a)(1) and (c). X is the "sender" of the payment order and Bank A is the "receiving bank." Section 4A-103(a)(5) and (a)(4). Y is the "beneficiary" of the payment order and Bank A is the "beneficiary's bank." Section 4A-103(a)(2) and (a)(3). When Bank A notified Y of receipt of the payment order, Bank A "accepted" the payment order. Section 4A-209(b)(1). When Bank A accepted the order, it incurred an obligation to Y to pay the amount of the order. Section 4A-404(a). When Bank A accepted X's order, X incurred an obligation to pay Bank A the amount of the order. Section 4A-402(b). Payment from X to Bank A would normally be made by a debit to X's account in Bank A. Section 4A-403(a)(3). At the time Bank A incurred the obligation to pay Y, payment of $1,000,000 by X to Y was also made. Section 4A-406(a). Bank A paid Y when it gave notice to Y of a withdrawable credit of $1,000,000 to Y's account. Section 4A-405(a). The overall transaction, which comprises the acts of X and Bank A, in which the payment by X to Y is accomplished is referred to as the "funds transfer." Section 4A-104(a). In this case only one payment order was involved in the funds transfer. A one-payment-order funds transfer is usually referred to as a "book transfer" because the payment is accomplished by the receiving bank's debiting the account of the sender and crediting the account of the beneficiary in the same bank. X, in addition to being the sender of the payment order to Bank A, is the "originator" of the funds transfer. Section 4A-104(c). Bank A is the "originator's bank" in the funds transfer as well as the beneficiary's bank. Section 4A-104(d).
Case #2. Assume the same facts as in Case #1 except that X instructs Bank A to pay $1,000,000 to Y's account in Bank B. With respect to this payment order, X is the sender, Y is the beneficiary, and Bank A is the receiving bank. Bank A carries out X's order by instructing Bank B to pay $1,000,000 to Y's account. This instruction is a payment order in which Bank A is the sender, Bank B is the receiving bank, and Y is the beneficiary. When Bank A issued its payment order to Bank B, Bank A "executed" X's order. Section 4A-301(a). In the funds transfer, X is the originator, Bank A is the originator's bank, and Bank B is the beneficiary's bank. When Bank A executed X's order, X incurred an obligation to pay Bank A the amount of the order. Section 4A-402(c). When Bank B accepts the payment order issued to it by Bank A, Bank B incurs an obligation to Y to pay the amount of the order (Section 4A-404 (a)) and Bank A incurs an obligation to pay Bank B. Section 4A-402(b). Acceptance by Bank B also results in payment of $1,000,000 by X to Y. Section 4A-406(a). In this case two payment orders are involved in the funds transfer.
Case #3. Assume the same facts as in Case #2 except that Bank A does not execute X's payment order by issuing a payment order to Bank B. One bank will not normally act to carry out a funds transfer for another bank unless there is a preexisting arrangement between the banks for transmittal of payment orders and settlement of accounts. For example, if Bank B is a foreign bank with which Bank A has no relationship, Bank A can utilize a bank that is a correspondent of both Bank A and Bank B. Assume Bank A issues a payment order to Bank C to pay $1,000,000 to Y's account in Bank B. With respect to this order, Bank A is the sender, Bank C is the receiving bank, and Y is the beneficiary. Bank C will execute the payment order of Bank A by issuing a payment order to Bank B to pay $1,000,000 to Y's account in Bank B. With respect to Bank C's payment order, Bank C is the sender, Bank B is the receiving bank, and Y is the beneficiary. Payment of $1,000,000 by X to Y occurs when Bank B accepts the payment order issued to it by Bank C. In this case the funds transfer involves three payment orders. In the funds transfer, X is the originator, Bank A is the originator's bank, Bank B is the beneficiary's bank, and Bank C is an "intermediary bank." Section 4A-104 (b). In some cases there may be more than one intermediary bank, and in those cases each intermediary bank is treated like Bank C in Case #3.
As the three cases demonstrate, a payment under Article 4A involves an overall transaction, the funds transfer, in which the originator, X, is making payment to the beneficiary, Y, but the funds transfer may encompass a series of payment orders that are issued in order to effect the payment initiated by the originator's payment order.
In some cases the originator and the beneficiary may be the same person. This will occur, for example, when a corporation orders a bank to transfer funds from an account of the corporation in that bank to another account of the corporation in that bank or in some other bank. In some funds transfers the first bank to issue a payment order is a bank that is executing a payment order of a customer that is not a bank. In this case the customer is the originator. In other cases, the first bank to issue a payment order is not acting for a customer, but is making a payment for its own account. In that event the first bank to issue a payment order is the originator as well as the originator's bank.
2. "Payment order" is defined in Section 4A-103(a)(1) as an instruction to a bank to pay, or to cause another bank to pay, a fixed or determinable amount of money. The bank to which the instruction is addressed is known as the "receiving bank." Section 4A-103(a)(4). "Bank" is defined in Section 4A-105(a)(2). The effect of this definition is to limit Article 4A to payments made through the banking system. A transfer of funds made by an entity outside the banking system is excluded. A transfer of funds through an entity other than a bank is usually a consumer transaction involving relatively small amounts of money and a single contract carried out by transfers of cash or a cash equivalent such as a check. Typically, the transferor delivers cash or a check to the company making the transfer, which agrees to pay a like amount to a person designated by the transferor. Transactions covered by Article 4A typically involve very large amounts of money in which several transactions involving several banks may be necessary to carry out the payment. Payments are normally made by debits or credits to bank accounts. Originators and beneficiaries are almost always business organizations and the transfers are usually made to pay obligations. Moreover, these transactions are frequently done on the basis of very short-term credit granted by the receiving bank to the sender of the payment order. Wholesale wire transfers involve policy questions that are distinct from those involved in consumer-based transactions by nonbanks.
3. Further limitations on the scope of Article 4A are found in the three requirements found in subparagraphs (i), (ii), and (iii) of Section 4A-103(a)(1). Subparagraph (i) states that the instruction to pay is a payment order only if it "does not state a condition to payment to the beneficiary other than time of payment." An instruction to pay a beneficiary sometimes is subject to a requirement that the beneficiary perform some act such as delivery of documents. For example, a New York bank may have issued a letter of credit in favor of X, a California seller of goods to be shipped to the New York bank's customer in New York. The terms of the letter of credit provide for payment to X if documents are presented to prove shipment of the goods. Instead of providing for presentment of the documents to the New York bank, the letter of credit states that they may be presented to a California bank that acts as an agent for payment. The New York bank sends an instruction to the California bank to pay X upon presentation of the required documents. The instruction is not covered by Article 4A because payment to the beneficiary is conditional upon receipt of shipping documents. The function of banks in a funds transfer under Article 4A is comparable to the role of banks in the collection and payment of checks in that it is essentially mechanical in nature. The low price and high speed that characterize funds transfers reflect this fact. Conditions to payment by the California bank other than time of payment impose responsibilities on that bank that go beyond those in Article 4A funds transfers. Although the payment by the New York bank to X under the letter of credit is not covered by Article 4A, if X is paid by the California bank, payment of the obligation of the New York bank to reimburse the California bank could be made by an Article 4A funds transfer. In such a case there is a distinction between the payment by the New York bank to X under the letter of credit and the payment by the New York bank to the California bank. For example, if the New York bank pays its reimbursement obligation to the California bank by a Fedwire naming the California bank as beneficiary (see Comment 1 to Section 4A-107), payment is made to the California bank rather than to X. That payment is governed by Article 4A and it could be made either before or after payment by the California bank to X. The payment by the New York bank to X under the letter of credit is not governed by Article 4A and it occurs when the California bank, as agent of the New York bank, pays X. No payment order was involved in that transaction. In this example, if the New York bank had erroneously sent an instruction to the California bank unconditionally instructing payment to X, the instruction would have been an Article 4A payment order. If the payment order was accepted (Section 4A-209(b)) by the California bank, a payment by the New York bank to X would have resulted (Section 4A-406(a)). But Article 4A would not prevent recovery of funds from X on the basis that X was not entitled to retain the funds under the law of mistake and restitution, letter of credit law, or other applicable law.
4. Transfers of funds made through the banking system are commonly referred to as either "credit" transfers or "debit" transfers. In a credit transfer the instruction to pay is given by the person making payment. In a debit transfer the instruction to pay is given by the person receiving payment. The purpose of subparagraph (ii) of subsection (a)(1) of Section 4A-103 is to include credit transfers in Article 4A and to exclude debit transfers. All of the instructions to pay in the three cases described in Comment 1 fall within subparagraph (ii). Take Case #2 as an example. With respect to X's instruction given to Bank A, Bank A will be reimbursed by debiting X's account or otherwise receiving payment from X. With respect to Bank A's instruction to Bank B, Bank B will be reimbursed by receiving payment from Bank A. In a debit transfer, a creditor, pursuant to authority from the debtor, is enabled to draw on the debtor's bank account by issuing an instruction to pay to the debtor's bank. If the debtor's bank pays, it will be reimbursed by the debtor rather than by the person giving the instruction. For example, the holder of an insurance policy may pay premiums by authorizing the insurance company to order the policyholder's bank to pay the insurance company. The order to pay may be in the form of a draft covered by Article 3, or it might be an instruction to pay that is not an instrument under that Article. The bank receives reimbursement by debiting the policyholder's account. Or, a subsidiary corporation may make payments to its parent by authorizing the parent to order the subsidiary's bank to pay the parent from the subsidiary's account. These transactions are not covered by Article 4A because subparagraph (2) is not satisfied. Article 4A is limited to transactions in which the account to be debited by the receiving bank is that of the person in whose name the instruction is given.
If the beneficiary of a funds transfer is the originator of the transfer, the transfer is governed by Article 4A if it is a credit transfer in form. If it is in the form of a debit transfer it is not governed by Article 4A. For example, Corporation has accounts in Bank A and Bank B. Corporation instructs Bank A to pay to Corporation's account in Bank B. The funds transfer is governed by Article 4A. Sometimes, Corporation will authorize Bank B to draw on Corporation's account in Bank A for the purpose of transferring funds into Corporation's account in Bank B. If Corporation also makes an agreement with Bank A under which Bank A is authorized to follow instructions of Bank B, as agent of Corporation, to transfer funds from Customer's account in Bank A, the instruction of Bank B is a payment order of Customer and is governed by Article 4A. This kind of transaction is known in the wire-transfer business as a "drawdown transfer." If Corporation does not make such an agreement with Bank A and Bank B instructs Bank A to make the transfer, the order is in form a debit transfer and is not governed by Article 4A. These debit transfers are normally ACH transactions in which Bank A relies on Bank B's warranties pursuant to ACH rules, including the warranty that the transfer is authorized.
5. The principal effect of subparagraph (iii) of subsection (a) of Section 4A-103 is to exclude from Article 4A payments made by check or credit card. In those cases the instruction of the debtor to the bank on which the check is drawn or to which the credit card slip is to be presented is contained in the check or credit card slip signed by the debtor. The instruction is not transmitted by the debtor directly to the debtor's bank. Rather, the instruction is delivered or otherwise transmitted by the debtor to the creditor who then presents it to the bank either directly or through bank collection channels. These payments are governed by Articles 3 and 4 and federal law. There are, however, limited instances in which the paper on which a check is printed can be used as the means of transmitting a payment order that is covered by Article 4A. Assume that Originator instructs Originator's Bank to pay $10,000 to the account of Beneficiary in Beneficiary's Bank. Since the amount of Originator's payment order is small, if Originator's Bank and Beneficiary's Bank do not have an account relationship, Originator's Bank may execute Originator's order by issuing a teller's check payable to Beneficiary's Bank for $10,000 along with instructions to credit Beneficiary's account in that amount. The instruction to Beneficiary's Bank to credit Beneficiary's account is a payment order. The check is the means by which Originator's Bank pays its obligation as sender of the payment order. The instruction of Originator's Bank to Beneficiary's Bank might be given in a letter accompanying the check or it may be written on the check itself. In either case the instruction to Beneficiary's Bank is a payment order but the check itself (which is an order to pay addressed to the drawee rather than to Beneficiary's Bank) is an instrument under Article 3 and is not a payment order. The check can be both the means by which Originator's Bank pays its obligation under Section 4A-402(b) to Beneficiary's Bank and the means by which the instruction to Beneficiary's Bank is transmitted.
6. Most payments covered by Article 4A are commonly referred to as wire transfers and usually involve some kind of electronic transmission, but the applicability of Article 4A does not depend upon the means used to transmit the instruction of the sender. Transmission may be by letter or other written communication, oral communication, or electronic communication. An oral communication is normally given by telephone. Frequently the message is recorded by the receiving bank to provide evidence of the transaction, but apart from problems of proof there is no need to record the oral instruction. Transmission of an instruction may be a direct communication between the sender and the receiving bank or through an intermediary such as an agent of the sender, a communication system such as international cable, or a funds transfer system such as CHIPS, SWIFT, or an automated clearing house.
Section 36-4A-105. Other definitions.
(a) In this chapter:
(1) 'Authorized account' means a deposit account of a customer in a bank designated by the customer as a source of payment of payment orders issued by the customer to the bank. If a customer does not so designate an account, any account of the customer is an authorized account if payment of a payment order from that account is not inconsistent with a restriction on the use of that account.
(2) 'Bank' means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union, and trust company. A branch or separate office of a bank is a separate bank for purposes of this chapter.
(3) 'Customer' means a person, including a bank, having an account with a bank or from whom a bank has agreed to receive payment orders.
(4) 'Funds-transfer business day' of a receiving bank means the part of a day during which the receiving bank is open for the receipt, processing, and transmittal of payment orders and cancellations and amendments of payment orders.
(5) 'Funds-transfer system' means a wire transfer network, automated clearing house, or other communication system of a clearing house or other association of banks through which a payment order by a bank may be transmitted to the bank to which the order is addressed.
(6) 'Good faith' means honesty in fact and the observance of reasonable commercial standards of fair dealing.
(7) 'Prove' with respect to a fact means to meet the burden of establishing the fact (Section 36-1-201(8)).
(b) Other definitions applying to this chapter and the sections in which they appear are:
'Acceptance' Section 36-4A-209
'Beneficiary' Section 36-4A-103
'Beneficiary's bank' Section 36-4A-103
'Executed' Section 36-4A-301
'Execution date' Section 36-4A-301
'Funds transfer' Section 36-4A-104
'Funds-transfer system rule' Section 36-4A-501
'Intermediary bank' Section 36-4A-104
'Originator' Section 36-4A-104
'Originator's bank' Section 36-4A-104
'Payment by beneficiary's bank
to beneficiary' Section 36-4A-405
'Payment by originator to
beneficiary' Section 36-4A-406
'Payment by sender
to receiving bank' Section 36-4A-403
'Payment date' Section 36-4A-401
'Payment order' Section 36-4A-103
'Receiving bank' Section 36-4A-103
'Security procedure' Section 36-4A-201
'Sender' Section 36-4A-103
(c) The following definitions in Chapter 4 apply to this chapter:
'Clearing house' Section 36-4-104
'Item' Section 36-4-104
'Suspends payments' Section 36-4-104
(d) In addition, Chapter 1 contains general definitions and principles of construction and interpretation applicable throughout this chapter.
1. The definition of "bank" in subsection (a)(2) includes some institutions that are not commercial banks. The definition reflects the fact that many financial institutions now perform functions previously restricted to commercial banks, including acting on behalf of customers in funds transfers. Since many funds transfers involve payment orders to or from foreign countries, the definition also covers foreign banks. The definition also includes Federal Reserve Banks. Funds transfers carried out by Federal Reserve Banks are described in Comments 1 and 2 to Section 4A-107.
2. Funds transfer business is frequently transacted by banks outside of general banking hours. Thus, the definition of banking day in Section 4-104(1)(c) cannot be used to describe when a bank is open for funds transfer business. Subsection (a)(4) defines a new term, "funds transfer business day," which is applicable to Article 4A. The definition states, "is open for the receipt, processing, and transmittal of payment orders and cancellations and amendments of payment orders." In some cases it is possible to electronically transmit payment orders and other communications to a receiving bank at any time. If the receiving bank is not open for the processing of an order when it is received, the communication is stored in the receiving bank's computer for retrieval when the receiving bank is open for processing. The use of the conjunctive makes clear that the defined term is limited to the period during which all functions of the receiving bank can be performed, i.e., receipt, processing, and transmittal of payment orders, cancellations, and amendments.
3. Subsection (a)(5) defines "funds transfer system." The term includes a system such as CHIPS which provides for transmission of a payment order as well as settlement of the obligation of the sender to pay the order. It also includes automated clearing houses, operated by a clearing house or other association of banks, which process and transmit payment orders of banks to other banks. In addition the term includes organizations that provide only transmission services such as SWIFT. The definition also includes the wire transfer network and automated clearing houses of Federal Reserve Banks. Systems of the Federal Reserve Banks, however, are treated differently from systems of other associations of banks. Funds transfer systems other than systems of the Federal Reserve Banks are treated in Article 4A as a means of communication of payment orders between participating banks. Section 4A-206. The Comment to that section and the Comment to Section 4A-107 explain how Federal Reserve Banks function under Article 4A. Funds transfer systems are also able to promulgate rules binding on participating banks that, under Section 4A-501, may supplement or in some cases may even override provisions of Article 4A.
4. Subsection (d) incorporates definitions stated in Article 1 as well as principles of construction and interpretation stated in that Article. Included is Section 1-103. The last paragraph of the Comment to Section 4A-102 is addressed to the issue of the extent to which general principles of law and equity should apply to situations covered by provisions of Article 4A.
Section 36-4A-106. Time payment order is received.
(a) The time of receipt of a payment order or communication canceling or amending a payment order is determined by the rules applicable to receipt of a notice stated in Section 36-1-201(27). A receiving bank may fix a cut-off time or times on a funds-transfer business day for the receipt and processing of payment orders and communications canceling or amending payment orders. Different cut-off times may apply to payment orders, cancellations, or amendments, or to different categories of payment orders, cancellations, or amendments. A cut-off time may apply to senders generally or different cut-off times may apply to different senders or categories of payment orders. If a payment order or communication canceling or amending a payment order is received after the close of a funds-transfer business day or after the appropriate cut-off time on a funds-transfer business day, the receiving bank may treat the payment order or communication as received at the opening of the next funds-transfer business day.
(b) If this chapter refers to an execution date or payment date or states a day on which a receiving bank is required to take action, and the date or day does not fall on a funds-transfer business day, the next day that is a funds-transfer business day is treated as the date or day stated, unless the contrary is stated in this chapter.
The time that a payment order is received by a receiving bank usually defines the payment date or the execution date of a payment order. Section 4A-401 and Section 4A-301. The time of receipt of a payment order, or communication canceling or amending a payment order is defined in subsection (a) by reference to the rules stated in Section 1-201(27). Thus, time of receipt is determined by the same rules that determine when a notice is received. Time of receipt, however, may be altered by a cut-off time.
Section 36-4A-107. Federal reserve regulations and operating circulars.
Regulations of the Board of Governors of the Federal Reserve System and operating circulars of the Federal Reserve Banks supersede any inconsistent provision of this chapter to the extent of the inconsistency.
1. Funds transfers under Article 4A may be made, in whole or in part, by payment orders through a Federal Reserve Bank in what is usually referred to as a transfer by Fedwire. If Bank A, which has an account in Federal Reserve Bank X, wants to pay $1,000,000 to Bank B, which has an account in Federal Reserve Bank Y, Bank A can issue an instruction to Reserve Bank X requesting a debit of $1,000,000 to Bank A's Reserve account and an equal credit to Bank B's Reserve account. Reserve Bank X will debit Bank A's account and will credit the account of Reserve Bank Y. Reserve Bank X will issue an instruction to Reserve Bank Y requesting a debit of $1,000,000 to the account of Reserve Bank X and an equal credit to Bank B's account in Reserve Bank Y. Reserve Bank Y will make the requested debit and credit and will give Bank B an advice of credit. The definition of "bank" in Section 4A-105(a)(2) includes both Reserve Bank X and Reserve Bank Y. Bank A's instruction to Reserve Bank X to pay money to Bank B is a payment order under Section 4A-103(a)(1). Bank A is the sender and Reserve Bank X is the receiving bank. Bank B is the beneficiary of Bank A's order and of the funds transfer. Bank A is the originator of the funds transfer and is also the originator's bank. Section 4A-104(c) and (d). Reserve Bank X, an intermediary bank under Section 4A-104(b), executes Bank A's order by sending a payment order to Reserve Bank Y instructing that bank to credit the Federal Reserve account of Bank B. Reserve Bank Y is the beneficiary's bank.
Suppose the transfer of funds from Bank A to Bank B is part of a larger transaction in which Originator, a customer of Bank A, wants to pay Beneficiary, a customer of Bank B. Originator issues a payment order to Bank A to pay $1,000,000 to the account of Beneficiary in Bank B. Bank A may execute Originator's order by means of Fedwire which simultaneously transfers $1,000,000 from Bank A to Bank B and carries a message instructing Bank B to pay $1,000,000 to the account of Y. The Fedwire transfer is carried out as described in the previous paragraph, except that the beneficiary of the funds transfer is Beneficiary rather than Bank B. Reserve Bank X and Reserve Bank Y are intermediary banks. When Reserve Bank Y advises Bank B of the credit to its Federal Reserve account, it will also instruct Bank B to pay to the account of Beneficiary. The instruction is a payment order to Bank B which is the beneficiary's bank. When Reserve Bank Y advises Bank B of the credit to its Federal Reserve account Bank B receives payment of the payment order issued to it by Reserve Bank Y. Section 4A-403(a)(1). The payment order is automatically accepted by Bank B at the time it receives the payment order of Reserve Bank Y. Section 4A-209(b)(2). At the time of acceptance by Bank B payment by Originator to Beneficiary also occurs. Thus, in a Fedwire transfer, payment to the beneficiary's bank, acceptance by the beneficiary's bank, and payment by the originator to the beneficiary all occur simultaneously by operation of law at the time the payment order to the beneficiary's bank is received.
If Originator orders payment to the account of Beneficiary in Bank C rather than Bank B, the analysis is somewhat modified. Bank A may not have any relationship with Bank C and may not be able to make payment directly to Bank C. In that case, Bank A could send a Fedwire instructing Bank B to instruct Bank C to pay Beneficiary. The analysis is the same as the previous case except that Bank B is an intermediary bank and Bank C is the beneficiary's bank.
2. A funds transfer can also be made through a Federal Reserve Bank in an automated clearing house transaction. In a typical case, Originator instructs Originator's Bank to pay to the account of Beneficiary in Beneficiary's Bank. Originator's instruction to pay a particular beneficiary is transmitted to Originator's Bank along with many other instructions for payment to other beneficiaries by many different beneficiary's banks. All of these instructions are contained in a magnetic tape or other electronic device. Transmission of instructions to the various beneficiary's banks requires that Originator's instructions be processed and repackaged with instructions of other originators so that all instructions to a particular beneficiary's bank are transmitted together to that bank. The repackaging is done in processing centers usually referred to as automated clearing houses. Automated clearing houses are operated either by Federal Reserve Banks or by other associations of banks. If Originator's Bank chooses to execute Originator's instructions by transmitting them to a Federal Reserve Bank for processing by the Federal Reserve Bank, the transmission to the Federal Reserve Bank results in the issuance of payment orders by Originator's Bank to the Federal Reserve Bank, which is an intermediary bank. Processing by the Federal Reserve Bank will result in the issuance of payment orders by the Federal Reserve Bank to Beneficiary's Bank as well as payment orders to other beneficiary's banks making payments to carry out Originator's instructions.
3. Although the terms of Article 4A apply to funds transfers involving Federal Reserve Banks, federal preemption would make ineffective any Article 4A provision that conflicts with federal law. The payments activities of the Federal Reserve Banks are governed by regulations of the Federal Reserve Board and by operating circulars issued by the Reserve Banks themselves. In some instances, the operating circulars are issued pursuant to a Federal Reserve Board regulation. In other cases, the Reserve Bank issues the operating circular under its own authority under the Federal Reserve Act, subject to review by the Federal Reserve Board. Section 4A-107 states that Federal Reserve Board regulations and operating circulars of the Federal Reserve Banks supersede any inconsistent provision of Article 4A to the extent of the inconsistency. Federal Reserve Board regulations, being valid exercises of regulatory authority pursuant to a federal statute, take precedence over state law if there is an inconsistency. Childs v. Federal Reserve Bank of Dallas, 719 F.2d 812 (5th Cir. 1983), reh. den. 724 F.2d 127 (5th Cir. 1984). Section 4A-107 treats operating circulars as having the same effect whether issued under the Reserve Bank's own authority or under a Federal Reserve Board regulation.
Section 36-4A-108. Exclusion of consumer transactions governed by federal law.
This chapter does not apply to a funds transfer any part of which is governed by the Electronic Fund Transfer Act of 1978 (Title XX, Public Law 95-630, 92 Stat. 3728, 15 U.S.C. Section 1693 et seq.) as amended from time to time.
The Electronic Fund Transfer Act of 1978 is a federal statute that covers a wide variety of electronic funds transfers involving consumers. The types of transfers covered by the federal statute are essentially different from the wholesale wire transfers that are the primary focus of Article 4A. Section 4A-108 excludes a funds transfer from Article 4A if any part of the transfer is covered by the federal law. Existing procedures designed to comply with federal law will not be affected by Article 4A. The effect of Section 4A-108 is to make Article 4A and EFTA mutually exclusive. For example, if a funds transfer is to a consumer account in the beneficiary's bank and the funds transfer is made in part by use of Fedwire and in part by means of an automated clearing house, EFTA applies to the ACH part of the transfer but not to the Fedwire part. Under Section 4A-108, Article 4A does not apply to any part of the transfer. However, in the absence of any law to govern the part of the funds transfer that is not subject to EFTA, a court might apply appropriate principles from Article 4A by analogy.
Section 36-4A-201. Security procedure.
'Security procedure' means a procedure established by agreement of a customer and a receiving bank for the purpose of (i) verifying that a payment order or communication amending or canceling a payment order is that of the customer, or (ii) detecting error in the transmission or the content of the payment order or communication. A security procedure may require the use of algorithms or other codes, identifying words or numbers, encryption, callback procedures, or similar security devices. Comparison of a signature on a payment order or communication with an authorized specimen signature of the customer is not by itself a security procedure.
A large percentage of payment orders and communications amending or canceling payment orders are transmitted electronically, and it is standard practice to use security procedures that are designed to assure the authenticity of the message. Security procedures can also be used to detect error in the content of messages or to detect payment orders that are transmitted by mistake as in the case of multiple transmission of the same payment order. Security procedures might also apply to communications that are transmitted by telephone or in writing. Section 4A-201 defines these security procedures. The definition of security procedure limits the term to a procedure "established by agreement of a customer and a receiving bank." The term does not apply to procedures that the receiving bank may follow unilaterally in processing payment orders. The question of whether loss that may result from the transmission of a spurious or erroneous payment order will be borne by the receiving bank or the sender or purported sender is affected by whether a security procedure was or was not in effect and whether there was or was not compliance with the procedure. Security procedures are referred to in Sections 4A-202 and 4A-203, which deal with authorized and verified payment orders, and Section 4A-205, which deals with erroneous payment orders.
Section 36-4A-202. Authorized and verified payment orders.
(a) A payment order received by the receiving bank is the authorized order of the person identified as sender if that person authorized the order or is otherwise bound by it under the law of agency.
(b) If a bank and its customer have agreed that the authenticity of payment orders issued to the bank in the name of the customer as sender will be verified pursuant to a security procedure, a payment order received by the receiving bank is effective as the order of the customer, whether or not authorized, if (i) the security procedure is a commercially reasonable method of providing security against unauthorized payment orders, and (ii) the bank proves that it accepted the payment order in good faith and in compliance with the security procedure and any written agreement or instruction of the customer restricting acceptance of payment orders issued in the name of the customer. The bank is not required to follow an instruction that violates a written agreement with the customer or notice of which is not received at a time and in a manner affording the bank a reasonable opportunity to act on it before the payment order is accepted.
(c) Commercial reasonableness of a security procedure is a question of law to be determined by considering the wishes of the customer expressed to the bank, the circumstances of the customer known to the bank, including the size, type, and frequency of payment orders normally issued by the customer to the bank, alternative security procedures offered to the customer, and security procedures in general use by customers and receiving banks similarly situated. A security procedure is deemed to be commercially reasonable if (i) the security procedure was chosen by the customer after the bank offered, and the customer refused, a security procedure that was commercially reasonable for that customer, and (ii) the customer expressly agreed in writing to be bound by any payment order, whether or not authorized, issued in its name and accepted by the bank in compliance with the security procedure chosen by the customer.
(d) The term 'sender' in this chapter includes the customer in whose name a payment order is issued if the order is the authorized order of the customer under subsection (a), or it is effective as the order of the customer under subsection (b).
(e) This section applies to amendments and cancellations of payment orders to the same extent it applies to payment orders.
(f) Except as provided in this section and in Section 36-4A-203(a)(1), rights and obligations arising under this section or Section 36-4A-203 may not be varied by agreement.
This section is discussed in the Comment following Section 4A-203.
Section 36-4A-203. Unenforceability of certain verified payment orders.
(a) If an accepted payment order is not, under Section 36-4A-202(a), an authorized order of a customer identified as sender, but is effective as an order of the customer pursuant to Section 36-4A-202(b), the following rules apply:
(1) By express written agreement, the receiving bank may limit the extent to which it is entitled to enforce or retain payment of the payment order.
(2) The receiving bank is not entitled to enforce or retain payment of the payment order if the customer proves that the order was not caused, directly or indirectly, by a person (i) entrusted at any time with duties to act for the customer with respect to payment orders or the security procedure, or (ii) who obtained access to transmitting facilities of the customer or who obtained, from a source controlled by the customer and without authority of the receiving bank, information facilitating breach of the security procedure, regardless of how the information was obtained or whether the customer was at fault. Information includes any access device, computer software, or the like.
(b) This section applies to amendments of payment orders to the same extent it applies to payment orders.
1. Some person will always be identified as the sender of a payment order. Acceptance of the order by the receiving bank is based on a belief by the bank that the order was authorized by the person identified as the sender. If the receiving bank is the beneficiary's bank acceptance means that the receiving bank is obliged to pay the beneficiary. If the receiving bank is not the beneficiary's bank, acceptance means that the receiving bank has executed the sender's order and is obliged to pay the bank that accepted the order issued in execution of the sender's order. In either case the receiving bank may suffer a loss unless it is entitled to enforce payment of the payment order that it accepted. If the person identified as the sender of the order refuses to pay on the ground that the order was not authorized by that person, what are the rights of the receiving bank? In the absence of a statute or agreement that specifically addresses the issue, the question usually will be resolved by the law of agency. In some cases, the law of agency works well. For example, suppose the receiving bank executes a payment order given by means of a letter apparently written by a corporation that is a customer of the bank and apparently signed by an officer of the corporation. If the receiving bank acts solely on the basis of the letter, the corporation is not bound as the sender of the payment order unless the signature was that of the officer and the officer was authorized to act for the corporation in the issuance of payment orders, or some other agency doctrine such as apparent authority or estoppel causes the corporation to be bound. Estoppel can be illustrated by the following example. Suppose P is aware that A, who is unauthorized to act for P, has fraudulently misrepresented to T that A is authorized to act for P. T believes A and is about to rely on the misrepresentation. If P does not notify T of the true facts although P could easily do so, P may be estopped from denying A's lack of authority. A similar result could follow if the failure to notify T is the result of negligence rather than a deliberate decision. Restatement, Second, Agency Section 8B. Other equitable principles such as subrogation or restitution might also allow a receiving bank to recover with respect to an unauthorized payment order that it accepted. In Gatoil (U.S.A.), Inc. v. Forest Hill State Bank, 1 U.C.C. Rep. Serv. 2d 171 (D.Md. 1986), a joint venturer not authorized to order payments from the account of the joint venture, ordered a funds transfer from the account. The transfer paid a bona fide debt of the joint venture. Although the transfer was unauthorized, the court refused to require recredit of the account because the joint venture suffered no loss. The result can be rationalized on the basis of subrogation of the receiving bank to the right of the beneficiary of the funds transfer to receive the payment from the joint venture.
But in most cases these legal principles give the receiving bank very little protection in the case of an authorized payment order. Cases like those just discussed are not typical of the way that most payment orders are transmitted and accepted, and such cases are likely to become even less common. Given the large amount of the typical payment order, a prudent receiving bank will be unwilling to accept a payment order unless it has assurance that the order is what it purports to be. This assurance is normally provided by security procedures described in Section 4A-201.
In a very large percentage of cases covered by Article 4A, transmission of the payment order is made electronically. The receiving bank may be required to act on the basis of a message that appears on a computer screen. Common law concepts of authority of agent to bind principal are not helpful. There is no way of determining the identity or the authority of the person who caused the message to be sent. The receiving bank is not relying on the authority of any particular person to act for the purported sender. The case is not comparable to payment of a check by the drawee bank on the basis of a signature that is forged. Rather, the receiving bank relies on a security procedure pursuant to which the authenticity of the message can be "tested" by various devices which are designed to provide certainty that the message is that of the sender identified in the payment order. In the wire transfer business the concept of "authorized" is different from that found in agency law. In that business a payment order is treated as the order of the person in whose name it is issued if it is properly tested pursuant to a security procedure and the order passes the test.
Section 4A-202 reflects the reality of the wire transfer business. A person in whose name a payment order is issued is considered to be the sender of the order if the order is "authorized" as stated in subsection (a) or if the order is "verified" pursuant to a security procedure in compliance with subsection (b). If subsection (b) does not apply, the question of whether the customer is responsible for the order is determined by the law of agency. The issue is one of actual or apparent authority of the person who caused the order to be issued in the name of the customer. In some cases the law of agency might allow the customer to be bound by an unauthorized order if conduct of the customer can be used to find an estoppel against the customer to deny that the order was unauthorized. If the customer is bound by the order under any of these agency doctrines, subsection (a) treats the order as authorized and thus the customer is deemed to be the sender of the order. In most cases, however, subsection (b) will apply. In that event there is no need to make an agency law analysis to determine authority. Under Section 4A-202, the issue of liability of the purported sender of the payment order will be determined by agency law only if the receiving bank did not comply with subsection (b).
2. The scope of Section 4A-202 can be illustrated by the following cases. Case #1. A payment order purporting to be that of Customer is received by Receiving Bank, but the order was fraudulently transmitted by a person who had no authority to act for Customer. Case #2. An authentic payment order was sent by Customer, but before the order was received by Receiving Bank the order was fraudulently altered by an unauthorized person to change the beneficiary. Case #3. An authentic payment order was received by Receiving Bank, but before the order was executed by Receiving Bank a person who had no authority to act for Customer fraudulently sent a communication purporting to amend the order by changing the beneficiary. In each case Receiving Bank acted on the fraudulent communication by accepting the payment order. These cases are all essentially similar and they are treated identically by Section 4A-202. In each case Receiving Bank acted on a communication that it thought was authorized by Customer when in fact the communication was fraudulent. No distinction is made between Case #1 in which Customer took no part at all in the transaction and Case #2 and Case #3 in which an authentic order was fraudulently altered or amended by an unauthorized person. If subsection (b) does not apply, each case is governed by subsection (a). If there are no additional facts on which an estoppel might be found, Customer is not responsible in Case #1 for the fraudulently issued payment order, in Case #2 for the fraudulent alteration, or in Case #3 for the fraudulent amendment. Thus, in each case Customer is not liable to pay the order and Receiving Bank takes the loss. The only remedy of Receiving Bank is to seek recovery from the person who received payment as beneficiary of the fraudulent order. If there was verification in compliance with subsection (b), Customer will take the loss unless Section 4A-203 applies.
3. Subsection (b) of Section 4A-202 is based on the assumption that losses due to fraudulent payment orders can best be avoided by the use of commercially reasonable security procedures, and that the use of such procedures should be encouraged. The subsection is designed to protect both the customer and the receiving bank. A receiving bank needs to be able to rely on objective criteria to determine whether it can safely act on a payment order. Employees of the bank can be trained to "test" a payment order according to the various steps specified in the security procedure. The bank is responsible for the acts of these employees. Subsection (b)(ii) requires the bank to prove that it accepted the payment order in good faith and "in compliance with the security procedure." If the fraud was not detected because the bank's employee did not perform the acts required by the security procedure, the bank has not complied. Subsection (b)(ii) also requires the bank to prove that it complied with any agreement or instruction that restricts acceptance of payment orders issued in the name of the customer. A customer may want to protect itself by imposing limitations on acceptance of payment orders by the bank. For example, the customer may prohibit the bank from accepting a payment order that is not payable from an authorized account, that exceeds the credit balance in specified accounts of the customer, or that exceeds some other amount. Another limitation may relate to the beneficiary. The customer may provide the bank with a list of authorized beneficiaries and prohibit acceptance of any payment order to a beneficiary not appearing on the list. Such limitations may be incorporated into the security procedure itself or they may be covered by a separate agreement or instruction. In either case, the bank must comply with the limitations if the conditions stated in subsection (b) are met. Normally limitations on acceptance would be incorporated into an agreement between the customer and the receiving bank, but in some cases the instruction might be unilaterally given by the customer. If standing instructions or an agreement state limitations on the ability of the receiving bank to act, provision must be made for later modification of the limitations. Normally, this would be done by an agreement that specifies particular procedures to be followed. Thus, subsection (b) states that the receiving bank is not required to follow an instruction that violates a written agreement. The receiving bank is not bound by an instruction unless it has adequate notice of it. Subsections (25), (26) and (27) of Section 1-201 apply.
Subsection (b)(i) assures that the interests of the customer will be protected by providing an incentive to a bank to make available to the customer a security procedure that is commercially reasonable. If a commercially reasonable security procedure is not made available to the customer, subsection (b) does not apply. The result is that subsection (a) applies and the bank acts at its peril in accepting a payment order that may be unauthorized. Prudent banking practice may require that security procedures be utilized in virtually all cases except for those in which personal contact between the customer and the bank eliminates the possibility of an unauthorized order. The burden of making available commercially reasonable security procedures is imposed on receiving banks because they generally determine what security procedures can be used and are in the best position to evaluate the efficacy of procedures offered to customers to combat fraud. The burden on the customer is to supervise its employees to assure compliance with the security procedure and to safeguard confidential security information and access to transmitting facilities so that the security procedure cannot be breached.
4. The principal issue that is likely to arise in litigation involving subsection (b) is whether the security procedure in effect when a fraudulent payment order was accepted was commercially reasonable. The concept of what is commercially reasonable in a given case is flexible. Verification entails labor and equipment costs that can vary greatly depending upon the degree of security that is sought. A customer that transmits very large numbers of payment orders in very large amounts may desire and may reasonably expect to be provided with state-of-the-art procedures that provide maximum security. But the expense involved may make use of a state-of-the-art procedure infeasible for a customer that normally transmits payment orders infrequently or in relatively low amounts. Another variable is the type of receiving bank. It is reasonable to require large money center banks to make available state-of-the-art security procedures. On the other hand, the same requirement may not be reasonable for a small country bank. A receiving bank might have several security procedures that are designed to meet the varying needs of different customers. The type of payment order is another variable. For example, in a wholesale wire transfer, each payment order is normally transmitted electronically and individually. A testing procedure will be individually applied to each payment order. In funds transfers to be made by means of an automated clearing house, many payment orders are incorporated into an electronic device such as a magnetic tape that is physically delivered. Testing of the individual payment orders is not feasible. Thus, a different kind of security procedure must be adopted to take into account the different mode of transmission.
The issue of whether a particular security procedure is commercially reasonable is a question of law. Whether the receiving bank complied with the procedure is a question of fact. It is appropriate to make the finding concerning commercial reasonability a matter of law because security procedures are likely to be standardized in the banking industry and a question of law standard leads to more predictability concerning the level of security that a bank must offer to its customers. The purpose of subsection (b) is to encourage banks to institute reasonable safeguards against fraud but not to make them insurers against fraud. A security procedure is not commercially unreasonable simply because another procedure might have been better or because the judge deciding the question would have opted for a more stringent procedure. The standard is not whether the security procedure is the best available. Rather it is whether the procedure is reasonable for the particular customer and the particular bank, which is a lower standard. On the other hand, a security procedure that fails to meet prevailing standards of good banking practice applicable to the particular bank should not be held to be commercially reasonable. Subsection (c) states factors to be considered by the judge in making the determination of commercial reasonableness. Sometimes an informed customer refuses a security procedure that is commercially reasonable and suitable for that customer and insists on using a higher-risk procedure because it is more convenient or cheaper. In that case, under the last sentence of subsection (c), the customer has voluntarily assumed the risk of failure of the procedure and cannot shift the loss to the bank. But this result follows only if the customer expressly agrees in writing to assume that risk. It is implicit in the last sentence of subsection (c) that a bank that accedes to the wishes of its customer in this regard is not acting in bad faith by so doing so long as the customer is made aware of the risk. In all cases, however, a receiving bank cannot get the benefit of subsection (b) unless it has made available to the customer a security procedure that is commercially reasonable and suitable for use by that customer. In most cases, the mutual interest of bank and customer to protect against fraud should lead to agreement to a security procedure which is commercially reasonable.
5. The effect of Section 4A-202(b) is to place the risk of loss on the customer if an unauthorized payment order is accepted by the receiving bank after verification by the bank in compliance with a commercially reasonable security procedure. An exception to this result is provided by Section 4A-203(a)(2). The customer may avoid the loss resulting from such a payment order if the customer can prove that the fraud was not committed by a person described in that subsection. Breach of a commercially reasonable security procedure requires that the person committing the fraud have knowledge of how the procedure works and knowledge of codes, identifying devices, and the like. That person may also need access to transmitting facilities through an access device or other software in order to breach the security procedure. This confidential information must be obtained either from a source controlled by the customer or from a source controlled by the receiving bank. If the customer can prove that the person committing the fraud did not obtain the confidential information from an agent or former agent of the customer or from a source controlled by the customer, the loss is shifted to the bank. "Prove" is defined in Section 4A-105(a)(7). Because of bank regulation requirements, in this kind of case there will always be a criminal investigation as well as an internal investigation of the bank to determine the probable explanation for the breach of security. Because a funds transfer fraud usually will involve a very large amount of money, both the criminal investigation and the internal investigation are likely to be thorough. In some cases there may be an investigation by bank examiners as well. Frequently, these investigations will develop evidence of who is at fault and the cause of the loss. The customer will have access to evidence developed in these investigations and that evidence can be used by the customer in meeting its burden of proof.
6. The effect of Section 4A-202(b) may also be changed by an agreement meeting the requirements of Section 4A-203(a)(1). Some customers may be unwilling to take all or part of the risk of loss with respect to unauthorized payment orders even if all of the requirements of Section 4A-202(b) are met. By virtue of Section 4A-203(a)(1), a receiving bank may assume all of the risk of loss with respect to unauthorized payment orders, or the customer and bank may agree that losses from unauthorized payment orders are to be divided as provided in the agreement.
7. In a large majority of cases the sender of a payment order is a bank. In many cases in which there is a bank sender, both the sender and the receiving bank will be members of a funds transfer system over which the payment order is transmitted. Since Section 4A-202(f) does not prohibit a funds transfer system rule from varying rights and obligations under Section 4A-202, a rule of the funds transfer system can determine how loss due to an unauthorized payment order from a participating bank to another participating bank is to be allocated. A funds transfer system rule, however, cannot change the rights of a customer that is not a participating bank. Section 4A-501(b). Section 4A-202(f) also prevents variation by agreement except to the extent stated.
Section 36-4A-204. Refund of payment and duty of customer to report with respect to unauthorized payment order.
(a) If a receiving bank accepts a payment order issued in the name of its customer as sender which is (i) not authorized and not effective as the order of the customer under Section 36-4A-202, or (ii) not enforceable, in whole or in part, against the customer under Section 36-4A-203, the bank shall refund any payment of the payment order received from the customer to the extent the bank is not entitled to enforce payment and shall pay interest on the refundable amount calculated from the date the bank received payment to the date of the refund. However, the customer is not entitled to interest from the bank on the amount to be refunded if the customer fails to exercise ordinary care to determine that the order was not authorized by the customer and to notify the bank of the relevant facts within a reasonable time not exceeding ninety days after the date the customer received notification from the bank that the order was accepted or that the customer's account was debited with respect to the order. The bank is not entitled to any recovery from the customer on account of a failure by the customer to give notification as stated in this section.
(b) Reasonable time under subsection (a) may be fixed by agreement as stated in Section 36-1-204(1), but the obligation of a receiving bank to refund payment as stated in subsection (a) may not otherwise be varied by agreement.
1. With respect to unauthorized payment orders, in a very large percentage of cases a commercially reasonable security procedure will be in effect. Section 4A-204 applies only to cases in which (i) no commercially reasonable security procedure is in effect, (ii) the bank did not comply with a commercially reasonable security procedure that was in effect, (iii) the sender can prove, pursuant to Section 4A-203(a)(2), that the culprit did not obtain confidential security information controlled by the customer, or (iv) the bank, pursuant to Section 4A-203(a)(1) agreed to take all or part of the loss resulting from an unauthorized payment order. In each of these cases the bank takes the risk of loss with respect to an unauthorized payment order because the bank is not entitled to payment from the customer with respect to the order. The bank normally debits the customer's account or otherwise receives payment from the customer shortly after acceptance of the payment order. Subsection (a) of Section 4A-204 states that the bank must recredit the account or refund payment to the extent the bank is not entitled to enforce payment.
2. Section 4A-204 is designed to encourage a customer to promptly notify the receiving bank that it has accepted an unauthorized payment order. Since cases of unauthorized payment orders will almost always involve fraud, the bank's remedy is normally to recover from the beneficiary of the unauthorized order if the beneficiary was party to the fraud. This remedy may not be worth very much and it may not make any difference whether or not the bank promptly learns about the fraud. But in some cases prompt notification may make it easier for the bank to recover some part of its loss from the culprit. The customer will routinely be notified of the debit to its account with respect to an unauthorized order or will otherwise be notified of acceptance of the order. The customer has a duty to exercise ordinary care to determine that the order was unauthorized after it has received notification from the bank, and to advise the bank of the relevant facts within a reasonable time not exceeding ninety days after receipt of notification. Reasonable time is not defined and it may depend on the facts of the particular case. If a payment order for $1,000,000 is wholly unauthorized, the customer should normally discover it in far less than ninety days. If a $1,000,000 payment order was authorized but the name of the beneficiary was fraudulently changed, a much longer period may be necessary to discover the fraud. But in any event, if the customer delays more than ninety days, the customer's duty has not been met. The only consequence of a failure of the customer to perform this duty is a loss of interest on the refund payable by the bank. A customer that acts promptly is entitled to interest from the time the customer's account was debited or the customer otherwise made payment. The rate of interest is stated in Section 4A-506. If the customer fails to perform the duty, no interest is recoverable for any part of the period before the bank learns that it accepted an unauthorized order. But the bank is not entitled to any recovery from the customer based on negligence for failure to inform the bank. Loss of interest is in the nature of a penalty on the customer designed to provide an incentive for the customer to police its account. There is no intention to impose a duty on the customer that might result in shifting loss from the unauthorized order to the customer.
Section 36-4A-205. Erroneous payment orders.
(a) If an accepted payment order was transmitted pursuant to a security procedure for the detection of error and the payment order (i) erroneously instructed payment to a beneficiary not intended by the sender, (ii) erroneously instructed payment in an amount greater than the amount intended by the sender, or (iii) was an erroneously transmitted duplicate of a payment order previously sent by the sender, the following rules apply:
(1) If the sender proves that the sender or a person acting on behalf of the sender pursuant to Section 36-4A-206 complied with the security procedure and that the error would have been detected if the receiving bank had also complied, the sender is not obliged to pay the order to the extent stated in paragraphs (2) and (3).
(2) If the funds transfer is completed on the basis of an erroneous payment order described in clause (i) or (iii) of subsection (a), the sender is not obliged to pay the order and the receiving bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution.
(3) If the funds transfer is completed on the basis of a payment order described in clause (ii) of subsection (a), the sender is not obliged to pay the order to the extent the amount received by the beneficiary is greater than the amount intended by the sender. In that case, the receiving bank is entitled to recover from the beneficiary the excess amount received to the extent allowed by the law governing mistake and restitution.
(b) If (i) the sender of an erroneous payment order described in subsection (a) is not obliged to pay all or part of the order, and (ii) the sender receives notification from the receiving bank that the order was accepted by the bank or that the sender's account was debited with respect to the order, the sender has a duty to exercise ordinary care, on the basis of information available to the sender, to discover the error with respect to the order and to advise the bank of the relevant facts within a reasonable time, not exceeding ninety days, after the bank's notification was received by the sender. If the bank proves that the sender failed to perform that duty, the sender is liable to the bank for the loss the bank proves it incurred as a result of the failure, but the liability of the sender may not exceed the amount of the sender's order.
(c) This section applies to amendments to payment orders to the same extent it applies to payment orders.
1. This section concerns error in the content or in the transmission of payment orders. It deals with three kinds of error. Case #1. The order identifies a beneficiary not intended by the sender. For example, Sender intends to wire funds to a beneficiary identified only by an account number. The wrong account number is stated in the order. Case #2. The error is in the amount of the order. For example, Sender intends to wire $1,000 to Beneficiary. Through error, the payment order instructs payment of $1,000,000. Case #3. A payment order is sent to the receiving bank and then, by mistake, the same payment order is sent to the receiving bank again. In Case #3, the receiving bank may have no way of knowing whether the second order is a duplicate of the first or is another order. Similarly, in Case #1 and Case #2, the receiving bank may have no way of knowing that the error exists. In each case, if this section does not apply and the funds transfer is completed, Sender is obliged to pay the order. Section 4A-402. Sender's remedy, based on payment by mistake, is to recover from the beneficiary that received payment.
Sometimes, however, transmission of payment orders of the sender to the receiving bank is made pursuant to a security procedure designed to detect one or more of the errors described above. Since "security procedure" is defined by Section 4A-201 as "a procedure established by agreement of a customer and a receiving bank for the purpose of * * * detecting error * * *," Section 4A-205 does not apply if the receiving bank and the customer did not agree to the establishment of a procedure for detecting error. A security procedure may be designed to detect an account number that is not one to which Sender normally makes payment. In that case, the security procedure may require a special verification that payment to the stated account number was intended. In the case of dollar amounts, the security procedure may require different codes for different dollar amounts. If a $1,000,000 payment order contains a code that is inappropriate for that amount, the error in amount should be detected. In the case of duplicate orders, the security procedure may require that each payment order be identified by a number or code that applies to no other order. If the number or code of each payment order received is registered in a computer base, the receiving bank can quickly identify a duplicate order. The three cases covered by this section are essentially similar. In each, if the error is not detected, some beneficiary will receive funds that the beneficiary was not intended to receive. If this section applies, the risk of loss with respect to the error of the sender is shifted to the bank which has the burden of recovering the funds from the beneficiary. The risk of loss is shifted to the bank only if the sender proves that the error would have been detected if there had been compliance with the procedure and that the sender (or an agent under Section 4A-206) complied. In the case of a duplicate order or a wrong beneficiary, the sender doesn't have to pay the order. In the case of an overpayment, the sender does not have to pay the order to the extent of the overpayment. If subsection (a)(1) applies, the position of the receiving bank is comparable to that of a receiving bank that erroneously executes a payment order as stated in Section 4A-303. However, failure of the sender to timely report the error is covered by Section 4A-205(b) rather than by Section 4A-304 which applies only to erroneous execution under Section 4A-303. A receiving bank to which the risk of loss is shifted by subsection (a)(1) or (2) is entitled to recover the amount erroneously paid to the beneficiary to the extent allowed by the law of mistake and restitution. Rights of the receiving bank against the beneficiary are similar to those of a receiving bank that erroneously executes a payment order as stated in Section 4A-303. Those rights are discussed in Comment 2 to Section 4A-303.
2. A security procedure established for the purpose of detecting error is not effective unless both sender and receiving bank comply with the procedure. Thus, the bank undertakes a duty of complying with the procedure for the benefit of the sender. This duty is recognized in subsection (a)(1). The loss with respect to the sender's error is shifted to the bank if the bank fails to comply with the procedure and the sender (or an agent under Section 4A-206) does comply. Although the customer may have been negligent in transmitting the erroneous payment order, the loss is put on the bank on a last-clear-chance theory. A similar analysis applies to subsection (b). If the loss with respect to an error is shifted to the receiving bank and the sender is notified by the bank that the erroneous payment order was accepted, the sender has a duty to exercise ordinary care to discover the error and notify the bank of the relevant facts within a reasonable time not exceeding 90 days. If the bank can prove that the sender failed in this duty it is entitled to compensation for the loss incurred as a result of the failure. Whether the bank is entitled to recover from the sender depends upon whether the failure to give timely notice would have made any difference. If the bank could not have recovered from the beneficiary that received payment under the erroneous payment order even if timely notice had been given, the sender's failure to notify did not cause any loss of the bank.
3. Section 4A-205 is subject to variation by agreement under Section 4A-501. Thus, if a receiving bank and its customer have agreed to a security procedure for detection of error, the liability of the receiving bank for failing to detect an error of the customer as provided in Section 4A-205 may be varied as provided in an agreement of the bank and the customer.
Section 36-4A-206. Transmission of payment order through funds-transfer or other communication system.
(a) If a payment order addressed to a receiving bank is transmitted to a funds-transfer system or other third-party communication system for transmittal to the bank, the system is deemed to be an agent of the sender for the purpose of transmitting the payment order to the bank. If there is a discrepancy between the terms of the payment order transmitted to the system and the terms of the payment order transmitted by the system to the bank, the terms of the payment order of the sender are those transmitted by the system. This section does not apply to a funds-transfer system of the Federal Reserve Banks.
(b) This section applies to cancellations and amendments of payment orders to the same extent it applies to payment orders.
1. A payment order may be issued to a receiving bank directly by delivery of a writing or electronic device or by an oral or electronic communication. If an agent of the sender is employed to transmit orders on behalf of the sender, the sender is bound by the order transmitted by the agent on the basis of agency law. Section 4A-206 is an application of that principle to cases in which a funds transfer or communication system acts as an intermediary in transmitting the sender's order to the receiving bank. The intermediary is deemed to be an agent of the sender for the purpose of transmitting payment orders and related messages for the sender. Section 4A-206 deals with error by the intermediary.
2. Transmission by an automated clearing house of an association of banks other than the Federal Reserve Banks is an example of a transaction covered by Section 4A-206. Suppose Originator orders Originator's Bank to cause a large number of payments to be made to many accounts in banks in various parts of the country. These payment orders are electronically transmitted to Originator's Bank and stored in an electronic device that is held by Originator's Bank. Or, transmission of the various payment orders is made by delivery to Originator's Bank of an electronic device containing the instruction to the bank. In either case the terms of the various payment orders by Originator are determined by the information contained in the electronic device. In order to execute the various orders, the information in the electronic device must be processed. For example, if some of the orders are for payments to accounts in Bank X and some to accounts in Bank Y, Originator's Bank will execute these orders of Originator by issuing a series of payment orders to Bank X covering all payments to accounts in that bank, and by issuing a series of payment orders to Bank Y covering all payments to accounts in that bank. The orders to Bank X may be transmitted together by means of an electronic device, and those to Bank Y may be included in another electronic device. Typically, this processing is done by an automated clearing house acting for a group of banks including Originator's Bank. The automated clearing house is a funds transfer system. Section 4A-105(a)(5). Originator's Bank delivers Originator's electronic device or transmits the information contained in the device to the funds transfer system for processing into payment orders of Originator's Bank to the appropriate beneficiary's banks. The processing may result in an erroneous payment order. Originator's Bank, by use of Originator's electronic device, may have given information to the funds transfer system instructing payment of $100,000 to an account in Bank X, but because of human error or an equipment malfunction the processing may have converted that instruction into an instruction to Bank X to make a payment of $1,000,000. Under Section 4A-206, Originator's Bank issued a payment order for $1,000,000 to Bank X when the erroneous information was sent to Bank X. Originator's Bank is responsible for the error of the automated clearing house. The liability of the funds transfer system that made the error is not governed by Article 4A. It is left to the law of contract, a funds transfer system rule, or other applicable law.
In the hypothetical case just discussed, if the automated clearing house is operated by a Federal Reserve Bank, the analysis is different. Section 4A-206 does not apply. Originator's Bank will execute Originator's payment orders by delivery or transmission of the electronic information to the Federal Reserve Bank for processing. The result is that Originator's Bank has issued payment orders to the Federal Reserve Bank which, in this case, is acting as an intermediary bank. When the Federal Reserve Bank has processed the information given to it by Originator's Bank, it will issue payment orders to the various beneficiary's banks. If the processing results in an erroneous payment order, the Federal Reserve Bank has erroneously executed the payment order of Originator's Bank and the case is governed by Section 4A-303.
Section 36-4A-207. Misdescription of beneficiary.
(a) Subject to subsection (b), if, in a payment order received by the beneficiary's bank, the name, bank account number, or other identification of the beneficiary refers to a nonexistent or unidentifiable person or account, no person has rights as a beneficiary of the order and acceptance of the order cannot occur.
(b) If a payment order received by the beneficiary's bank identifies the beneficiary both by name and by an identifying or bank account number and the name and number identify different persons, the following rules apply:
(1) Except as otherwise provided in subsection (c), if the beneficiary's bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order. The beneficiary's bank need not determine whether the name and number refer to the same person.
(2) If the beneficiary's bank pays the person identified by name or knows that the name and number identify different persons, no person has rights as beneficiary except the person paid by the beneficiary's bank if that person was entitled to receive payment from the originator of the funds transfer. If no person has rights as beneficiary, acceptance of the order cannot occur.
(c) If (i) a payment order described in subsection (b) is accepted, (ii) the originator's payment order described the beneficiary inconsistently by name and number, and (iii) the beneficiary's bank pays the person identified by number as permitted by subsection (b)(1), the following rules apply:
(1) If the originator is a bank, the originator is obliged to pay its order.
(2) If the originator is not a bank and proves that the person identified by number was not entitled to receive payment from the originator, the originator is not obliged to pay its order unless the originator's bank proves that the originator, before acceptance of the originator's order, had notice that payment of a payment order issued by the originator might be made by the beneficiary's bank on the basis of an identifying or bank account number even if it identifies a person different from the named beneficiary. Proof of notice may be made by any admissible evidence. The originator's bank satisfies the burden of proof if it proves that the originator, before the payment order was accepted, signed a writing stating the information to which the notice relates.
(d) In a case governed by subsection (b)(1), if the beneficiary's bank rightfully pays the person identified by number and that person was not entitled to receive payment from the originator, the amount paid may be recovered from that person to the extent allowed by the law governing mistake and restitution as follows:
(1) If the originator is obliged to pay its payment order as stated in subsection (c), the originator has the right to recover.
(2) If the originator is not a bank and is not obliged to pay its payment order, the originator's bank has the right to recover.
1. Subsection (a) deals with the problem of payment orders issued to the beneficiary's bank for payment to nonexistent or unidentifiable persons or accounts. Since it is not possible in that case for the funds transfer to be completed, subsection (a) states that the order cannot be accepted. Under Section 4A-402(c), a sender of a payment order is not obliged to pay its order unless the beneficiary's bank accepts a payment order instructing payment to the beneficiary of that sender's order. Thus, if the beneficiary of a funds transfer is nonexistent or unidentifiable, each sender in the funds transfer that has paid its payment order is entitled to get its money back.
2. Subsection (b), which takes precedence over subsection (a), deals with the problem of payment orders in which the description of the beneficiary does not allow identification of the beneficiary because the beneficiary is described by name and by an identifying number or an account number and the name and number refer to different persons. A very large percentage of payment orders issued to the beneficiary's bank by another bank are processed by automated means using machines capable of reading orders on standard formats that identify the beneficiary by an identifying number or the number of a bank account. The processing of the order by the beneficiary's bank and the crediting of the beneficiary's account are done by use of the identifying or bank account number without human reading of the payment order itself. The process is comparable to that used in automated payment of checks. The standard format, however, may also allow the inclusion of the name of the beneficiary and other information which can be useful to the beneficiary's bank and the beneficiary but which plays no part in the process of payment. If the beneficiary's bank has both the account number and name of the beneficiary supplied by the originator of the funds transfer, it is possible for the beneficiary's bank to determine whether the name and number refer to the same person, but if a duty to make that determination is imposed on the beneficiary's bank the benefits of automated payment are lost. Manual handling of payment orders is both expensive and subject to human error. If payment orders can be handled on an automated basis there are substantial economies of operation and the possibility of clerical error is reduced. Subsection (b) allows banks to utilize automated processing by allowing banks to act on the basis of the number without regard to the name if the bank does not know that the name and number refer to different persons. "Know" is defined in Section 1-201(25) to mean actual knowledge, and Section 1-201(27) states rules for determining when an organization has knowledge of information received by the organization. The time of payment is the pertinent time at which knowledge or lack of knowledge must be determined.
Although the clear trend is for beneficiary's banks to process payment orders by automated means, Section 4A-207 is not limited to cases in which processing is done by automated means. A bank that processes by semi-automated means or even manually may rely on number as stated in Section 4A-207.
In cases covered by subsection (b) the erroneous identification would in virtually all cases be the identifying or bank account number. In the typical case the error is made by the originator of the funds transfer. The originator should know the name of the person who is to receive payment and can further identify that person by an address that would normally be known to the originator. It is not unlikely, however, that the originator may not be sure whether the identifying or account number refers to the person the originator intends to pay. Subsection (b)(1) deals with the typical case in which the beneficiary's bank pays on the basis of the account number and is not aware at the time of payment that the named beneficiary is not the holder of the account which was paid. In some cases the false number will be the result of error by the originator. In other cases fraud is involved. For example, Doe is the holder of shares in Mutual Fund. Thief, impersonating Doe, requests redemption of the shares and directs Mutual Fund to wire the redemption proceeds to Doe's account #12345 in Beneficiary's Bank. Mutual Fund originates a funds transfer by issuing a payment order to Originator's Bank to make the payment to Doe's account #12345 in Beneficiary's Bank. Originator's Bank executes the order by issuing a conforming payment order to Beneficiary's Bank which makes payment to account #12345. That account is the account of Roe rather than Doe. Roe might be a person acting in concert with Thief or Roe might be an innocent third party. Assume that Roe is a gem merchant that agreed to sell gems to Thief who agreed to wire the purchase price to Roe's account in Beneficiary's Bank. Roe believed that the credit to Roe's account was a transfer of funds from Thief and released the gems to Thief in good faith in reliance on the payment. The case law is unclear on the responsibility of a beneficiary's bank in carrying out a payment order in which the identification of the beneficiary by name and number is conflicting. See Securities Fund Services, Inc. v. American National Bank, 542 F.Supp. 323 (N.D.Ill. 1982) and Bradford Trust Co. v. Texas American Bank, 790 F.2d 407 (5th Cir. 1986). Section 4A-207 resolves the issue.
If Beneficiary's Bank did not know about the conflict between the name and number, subsection (b)(1) applies. Beneficiary's Bank has no duty to determine whether there is a conflict and it may rely on the number as the proper identification of the beneficiary of the order. When it accepts the order, it is entitled to payment from Originator's Bank. Section 4A-402(b). On the other hand, if Beneficiary's Bank knew about the conflict between the name and number and nevertheless paid Roe, subsection (b)(2) applies. Under that provision, acceptance of the payment order of Originator's Bank did not occur because there is no beneficiary of that order. Since acceptance did not occur Originator's Bank is not obliged to pay Beneficiary's Bank. Section 4A-402(b). Similarly, Mutual Fund is excused from its obligation to pay Originator's Bank. Section 4A-402(c). Thus, Beneficiary's Bank takes the loss. Its only cause of action is against Thief. Roe is not obliged to return the payment to the beneficiary's bank because Roe received the payment in good faith and for value. Article 4A makes irrelevant the issue of whether Mutual Fund was or was not negligent in issuing its payment order.
3. Normally, subsection (b)(1) will apply to the hypothetical case discussed in Comment 2. Beneficiary's Bank will pay on the basis of the number without knowledge of the conflict. In that case subsection (c) places the loss on either Mutual Fund or Originator's Bank. It is not unfair to assign the loss to Mutual Fund because it is the person who dealt with the impostor and it supplied the wrong account number. It could have avoided the loss if it had not used an account number that it was not sure was that of Doe. Mutual Fund, however, may not have been aware of the risk involved in giving both name and number. Subsection (c) is designed to protect the originator, Mutual Fund, in this case. Under that subsection, the originator is responsible for the inconsistent description of the beneficiary if it had notice that the order might be paid by the beneficiary's bank on the basis of the number. If the originator is a bank, the originator always has that responsibility. The rationale is that any bank should know how payment orders are processed and paid. If the originator is not a bank, the originator's bank must prove that its customer, the originator, had notice. Notice can be proved by any admissible evidence, but the bank can always prove notice by providing the customer with a written statement of the required information and obtaining the customer's signature to the statement. That statement will then apply to any payment order accepted by the bank thereafter. The information need not be supplied more than once.
In the hypothetical case if Originator's Bank made the disclosure stated in the last sentence of subsection (c)(2), Mutual Fund must pay Originator's Bank. Under subsection (d)(1), Mutual Fund has an action to recover from Roe if recovery from Roe is permitted by the law governing mistake and restitution. Under the assumed facts Roe should be entitled to keep the money as a person who took it in good faith and for value since it was taken as payment for the gems. In that case, Mutual Fund's only remedy is against Thief. If Roe was not acting in good faith, Roe has to return the money to Mutual Fund. If Originator's Bank does not prove that Mutual Fund had notice as stated in subsection (c)(2), Mutual Fund is not required to pay Originator's Bank. Thus, the risk of loss falls on Originator's Bank whose remedy is against Roe or Thief as stated above. Subsection (d)(2).
Section 36-4A-208. Misdescription of intermediary bank or beneficiary's bank.
(a) This subsection applies to a payment order identifying an intermediary bank or the beneficiary's bank only by an identifying number.
(1) The receiving bank may rely on the number as the proper identification of the intermediary or beneficiary's bank and need not determine whether the number identifies a bank.
(2) The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order.
(b) This subsection applies to a payment order identifying an intermediary bank or the beneficiary's bank both by name and an identifying number if the name and number identify different persons.
(1) If the sender is a bank, the receiving bank may rely on the number as the proper identification of the intermediary or beneficiary's bank if the receiving bank, when it executes the sender's order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person or whether the number refers to a bank. The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order.
(2) If the sender is not a bank and the receiving bank proves that the sender, before the payment order was accepted, had notice that the receiving bank might rely on the number as the proper identification of the intermediary or beneficiary's bank even if it identifies a person different from the bank identified by name, the rights and obligations of the sender and the receiving bank are governed by subsection (b)(1), as though the sender were a bank. Proof of notice may be made by any admissible evidence. The receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a writing stating the information to which the notice relates.
(3) Regardless of whether the sender is a bank, the receiving bank may rely on the name as the proper identification of the intermediary or beneficiary's bank if the receiving bank, at the time it executes the sender's order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person.
(4) If the receiving bank knows that the name and number identify different persons, reliance on either the name or the number in executing the sender's payment order is a breach of the obligation stated in Section 36-4A-302(a)(1).
1. This section addresses an issue similar to that addressed by Section 4A-207. Because of automation in the processing of payment orders, a payment order may identify the beneficiary's bank or an intermediary bank by an identifying number. The bank identified by number might or might not also be identified by name. The following two cases illustrate Section 4A-208(a) and (b):
Case #1. Originator's payment order to Originator's Bank identifies the beneficiary's bank as Bank A and instructs payment to Account #12345 in that bank. Originator's Bank executes Originator's order by issuing a payment order to Intermediary Bank. In the payment order of Originator's Bank, the beneficiary's bank is identified as Bank A but is also identified by number, #67890. The identifying number refers to Bank B rather than Bank A. If processing by Intermediary Bank of the payment order of Originator's Bank is done by automated means, Intermediary Bank, in executing the order, will rely on the identifying number and will issue a payment order to Bank B rather than Bank A. If there is an Account #12345 in Bank B, the payment order of Intermediary Bank would normally be accepted and payment would be made to a person not intended by Originator. In this case, Section 4A-208(b)(1) puts the risk of loss on Originator's Bank. Intermediary Bank may rely on the number #67890 as the proper identification of the beneficiary's bank. Intermediary Bank has properly executed the payment order of Originator's Bank. By using the wrong number to describe the beneficiary's bank, Originator's Bank has improperly executed Originator's payment order because the payment order of Originator's Bank provides for payment to the wrong beneficiary, the holder of Account #12345 in Bank B rather than the holder of Account #12345 in Bank A. Section 4A-302(a) (1) and Section 4A-303(c). Originator's Bank is not entitled to payment from Originator but is required to pay Intermediary Bank. Section 4A-303(c) and Section 4A-402(c). Intermediary Bank is also entitled to compensation for any loss and expenses resulting from the error by Originator's Bank.
If there is no Account #12345 in Bank B, the result is that there is no beneficiary of the payment order issued by Originator's Bank and the funds transfer will not be completed. Originator's Bank is not entitled to payment from Originator and Intermediary Bank is not entitled to payment from Originator's Bank. Section 4A-402(c). Since Originator's Bank improperly executed Originator's payment order, it may be liable for damages under Section 4A-305. As stated above, Intermediary Bank is entitled to compensation for loss and expenses resulting from the error by Originator's Bank.
Case #2. Suppose the same payment order by Originator to Originator's Bank as in Case #1. In executing the payment order Originator's Bank issues a payment order to Intermediary Bank in which the beneficiary's bank is identified only by number, #67890. That number does not refer to Bank A. Rather, it identifies a person that is not a bank. If processing by Intermediary Bank of the payment order of Originator's Bank is done by automated means, Intermediary Bank will rely on the number #67890 to identify the beneficiary's bank. Intermediary Bank has no duty to determine whether the number identifies a bank. The funds transfer cannot be completed in this case because no bank is identified as the beneficiary's bank. Subsection (a) puts the risk of loss on Originator's Bank. Originator's Bank is not entitled to payment from Originator. Section 4A-402(c). Originator's Bank has improperly executed Originator's payment order and may be liable for damages under Section 4A-305. Originator's Bank is obliged to compensate Intermediary Bank for loss and expenses resulting from the error by Originator's Bank.
Subsection (a) also applies if #67890 identifies a bank, but the bank is not Bank A. Intermediary Bank may rely on the number as the proper identification of the beneficiary's bank. If the bank to which Intermediary Bank sends its payment order accepts the order, Intermediary Bank is entitled to payment from Originator's Bank, but Originator's Bank is not entitled to payment from Originator. The analysis is similar to that in Case #1.
2. Subsection (b)(2) of Section 4A-208 addresses cases in which an erroneous identification of a beneficiary's bank or intermediary bank by name and number is made in a payment order of a sender that is not a bank. Suppose Originator issues a payment order to Originator's Bank that instructs that bank to use an intermediary bank identified as Bank A and by an identifying number, #67890. The identifying number refers to Bank B. Originator intended to identify Bank A as intermediary bank. If Originator's Bank relied on the number and issued a payment order to Bank B, the rights of Originator's Bank depend upon whether the proof of notice stated in subsection (b)(2) is made by Originator's Bank. If proof is made, Originator's Bank's rights are governed by subsection (b)(1) of Section 4A-208. Originator's Bank is not liable for breach of Section 4A-302(a)(1) and is entitled to compensation from Originator for any loss and expenses resulting from Originator's error. If notice is not proved, Originator's Bank may not rely on the number in executing Originator's payment order. Since Originator's Bank does not get the benefit of subsection (b)(1) in that case, Originator's Bank improperly executed Originator's payment order and is in breach of the obligation stated in Section 4A-302(a)(1). If notice is not given, Originator's Bank can rely on the name if it is not aware of the conflict in name and number. Subsection (b)(3).
3. Although the principal purpose of Section 4A-208 is to accommodate automated processing of payment orders, Section 4A-208 applies regardless of whether processing is done by automation, semi-automated means, or manually.
Section 36-4A-209. Acceptance of payment order.
(a) Subject to subsection (d), a receiving bank other than the beneficiary's bank accepts a payment order when it executes the order.
(b) Subject to subsections (c) and (d), a beneficiary's bank accepts a payment order at the earliest of the following times:
(1) when the bank (i) pays the beneficiary as stated in Section 36-4A-405(a) or 36-4A-405(b), or (ii) notifies the beneficiary of receipt of the order or that the account of the beneficiary has been credited with respect to the order unless the notice indicates that the bank is rejecting the order or that funds with respect to the order may not be withdrawn or used until receipt of payment from the sender of the order;
(2) when the bank receives payment of the entire amount of the sender's order pursuant to Section 36-4A-403(a)(1) or 36-4A-403(a)(2); or
(3) the opening of the next funds-transfer business day of the bank following the payment date of the order if, at that time, the amount of the sender's order is fully covered by a withdrawable credit balance in an authorized account of the sender or the bank has otherwise received full payment from the sender, unless the order was rejected before that time or is rejected within (i) one hour after that time, or (ii) one hour after the opening of the next business day of the sender following the payment date if that time is later. If notice of rejection is received by the sender after the payment date and the authorized account of the sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the order for the number of days elapsing after the payment date to the day the sender receives notice or learns that the order was not accepted, counting that day as an elapsed day. If the withdrawable credit balance during that period falls below the amount of the order, the amount of interest payable is reduced accordingly.
(c) Acceptance of a payment order cannot occur before the order is received by the receiving bank. Acceptance does not occur under subsection (b)(2) or (b)(3) if the beneficiary of the payment order does not have an account with the receiving bank, the account has been closed, or the receiving bank is not permitted by law to receive credits for the beneficiary's account.
(d) A payment order issued to the originator's bank cannot be accepted until the payment date if the bank is the beneficiary's bank, or the execution date if the bank is not the beneficiary's bank. If the originator's bank executes the originator's payment order before the execution date or pays the beneficiary of the originator's payment order before the payment date and the payment order is subsequently canceled pursuant to Section 36-4A-211(b), the bank may recover from the beneficiary any payment received to the extent allowed by the law governing mistake and restitution.
1. This section treats the sender's payment order as a request by the sender to the receiving bank to execute or pay the order and that request can be accepted or rejected by the receiving bank. Section 4A-209 defines when acceptance occurs. Section 4A-210 covers rejection. Acceptance of the payment order imposes an obligation on the receiving bank to the sender if the receiving bank is not the beneficiary's bank, or to the beneficiary if the receiving bank is the beneficiary's bank. These obligations are stated in Section 4A-302 and Section 4A-404.
2. Acceptance by a receiving bank other than the beneficiary's bank is defined in Section 4A-209(a). That subsection states the only way that a bank other than the beneficiary's bank can accept a payment order. A payment order to a bank other than the beneficiary's bank is, in effect, a request that the receiving bank execute the sender's order by issuing a payment order to the beneficiary's bank or to an intermediary bank. Normally, acceptance occurs at the time of execution, but there is an exception stated in subsection (d) and discussed in Comment 9. Execution occurs when the receiving bank "issues a payment order intended to carry out" the sender's order. Section 4A-301(a). In some cases the payment order issued by the receiving bank may not conform to the sender's order. For example, the receiving bank might make a mistake in the amount of its order, or the order might be issued to the wrong beneficiary's bank or for the benefit of the wrong beneficiary. In all of these cases there is acceptance of the sender's order by the bank when the receiving bank issues its order intended to carry out the sender's order, even though the bank's payment order does not in fact carry out the instruction of the sender. Improper execution of the sender's order may lead to liability to the sender for damages or it may mean that the sender is not obliged to pay its payment order. These matters are covered in Section 4A-303, Section 4A-305, and Section 4A-402.
3. A receiving bank has no duty to accept a payment order unless the bank makes an agreement, either before or after issuance of the payment order, to accept it, or acceptance is required by a funds transfer system rule. If the bank makes such an agreement it incurs a contractual obligation based on the agreement and may be held liable for breach of contract if a failure to execute violates the agreement. In many cases a bank will enter into an agreement with its customer to govern the rights and obligations of the parties with respect to payment orders issued to the bank by the customer or, in cases in which the sender is also a bank, there may be a funds transfer system rule that governs the obligations of a receiving bank with respect to payment orders transmitted over the system. Such agreements or rules can specify the circumstances under which a receiving bank is obliged to execute a payment order and can define the extent of liability of the receiving bank for breach of the agreement or rule. Section 4A-305(d) states the liability for breach of an agreement to execute a payment order.
4. In the case of a payment order issued to the beneficiary's bank, acceptance is defined in Section 4A-209(b). The function of a beneficiary's bank that receives a payment order is different from that of a receiving bank that receives a payment order for execution. In the typical case, the beneficiary's bank simply receives payment from the sender of the order, credits the account of the beneficiary and notifies the beneficiary of the credit. Acceptance by the beneficiary's bank does not create any obligation to the sender. Acceptance by the beneficiary's bank means that the bank is liable to the beneficiary for the amount of the order. Section 4A-404(a). There are three ways in which the beneficiary's bank can accept a payment order which are described in the following comments.
5. Under Section 4A-209(b)(1), the beneficiary's bank can accept a payment order by paying the beneficiary. In the normal case of crediting an account of the beneficiary, payment occurs when the beneficiary is given notice of the right to withdraw the credit, the credit is applied to a debt of the beneficiary, or "funds with respect to the order" are otherwise made available to the beneficiary. Section 4A-405(a). The quoted phrase covers cases in which funds are made available to the beneficiary as a result of receipt of a payment order for the benefit of the beneficiary but the release of funds is not expressed as payment of the order. For example, the beneficiary's bank might express a release of funds equal to the amount of the order as a "loan" that will be automatically repaid when the beneficiary's bank receives payment by the sender of the order. If the release of funds is designated as a loan pursuant to a routine practice of the bank, the release is conditional payment of the order rather than a loan, particularly if normal incidents of a loan such as the signing of a loan agreement or note and the payment of interest are not present. Such a release of funds is payment to the beneficiary under Section 4A-405(a). Under Section 4A-405(c) the bank cannot recover the money from the beneficiary if the bank does not receive payment from the sender of the payment order that it accepted. Exceptions to this rule are stated in Section 4A-405(d) and (e). The beneficiary's bank may also accept by notifying the beneficiary that the order has been received. "Notifies" is defined in Section 1-201(26). In some cases a beneficiary's bank will receive a payment order during the day but settlement of the sender's obligation to pay the order will not occur until the end of the day. If the beneficiary's bank wants to defer incurring liability to the beneficiary until the beneficiary's bank receives payment, it can do so. The beneficiary's bank incurs no liability to the beneficiary with respect to a payment order that it receives until it accepts the order. If the bank does not accept pursuant to subsection (b)(1), acceptance does not occur until the end of the day when the beneficiary's bank receives settlement. If the sender settles, the payment order will be accepted under subsection (b)(2) and the funds will be released to the beneficiary the next morning. If the sender doesn't settle, no acceptance occurs. In either case the beneficiary's bank suffers no loss.
6. In most cases the beneficiary's bank will receive a payment order from another bank. If the sender is a bank and the beneficiary's bank receives payment from the sender by final settlement through the Federal Reserve System or a funds transfer system (Section 4A-403(a)(1)) or, less commonly, through credit to an account of the beneficiary's bank with the sender or another bank (Section 4A-403(a)(2)), acceptance by the beneficiary's bank occurs at the time payment is made. Section 4A-209(b)(2). A minor exception to this rule is stated in Section 4A-209(c). Section 4A-209(b)(2) results in automatic acceptance of payment orders issued to a beneficiary's bank by means of Fedwire because the Federal Reserve account of the beneficiary's bank is credited and final payment is made to that bank when the payment order is received.
Subsection (b)(2) would also apply to cases in which the beneficiary's bank mistakenly pays a person who is not the beneficiary of the payment order issued to the beneficiary's bank. For example, suppose the payment order provides for immediate payment to Account #12345. The beneficiary's bank erroneously credits Account #12346 and notifies the holder of that account of the credit. No acceptance occurs in this case under subsection (b)(1) because the beneficiary of the order has not been paid or notified. The holder of Account #12345 is the beneficiary of the order issued to the beneficiary's bank. But acceptance will normally occur if the beneficiary's bank takes no other action, because the bank will normally receive settlement with respect to the payment order. At that time the bank has accepted because the sender paid its payment order. The bank is liable to pay the holder of Account #12345. The bank has paid the holder of Account #12346 by mistake, and has a right to recover the payment if the credit is withdrawn, to the extent provided in the law governing mistake and restitution.
7. Subsection (b)(3) covers cases of inaction by the beneficiary's bank. It applies whether or not the sender is a bank and covers a case in which the sender and the beneficiary both have accounts with the receiving bank and payment will be made by debiting the account of the sender and crediting the account of the beneficiary. Subsection (b)(3) is similar to subsection (b)(2) in that it bases acceptance by the beneficiary's bank on payment by the sender. Payment by the sender is effected by a debit to the sender's account if the account balance is sufficient to cover the amount of the order. On the payment date (Section 4A-401) of the order the beneficiary's bank will normally credit the beneficiary's account and notify the beneficiary of receipt of the order if it is satisfied that the sender's account balance covers the order or is willing to give credit to the sender. In some cases, however, the bank may not be willing to give credit to the sender and it may not be possible for the bank to determine until the end of the day on the payment date whether there are sufficient good funds in the sender's account. There may be various transactions during the day involving funds going into and out of the account. Some of these transactions may occur late in the day or after the close of the banking day. To accommodate this situation, subsection (b)(3) provides that the status of the account is determined at the opening of the next funds transfer business day of the beneficiary's bank after the payment date of the order. If the sender's account balance is sufficient to cover the order, the beneficiary's bank has a source of payment and the result in almost all cases is that the bank accepts the order at that time if it did not previously accept under subsection (b)(1). In rare cases, a bank may want to avoid acceptance under subsection (b)(3) by rejecting the order as discussed in Comment 8.
8. Section 4A-209 is based on a general principle that a receiving bank is not obliged to accept a payment order unless it has agreed or is bound by a funds transfer system rule to do so. Thus, provision is made to allow the receiving bank to prevent acceptance of the order. This principle is consistently followed if the receiving bank is not the beneficiary's bank. If the receiving bank is not the beneficiary's bank, acceptance is in the control of the receiving bank because it occurs only if the order is executed. But in the case of the beneficiary's bank acceptance can occur by passive receipt of payment under subsection (b)(2) or (3). In the case of a payment made by Fedwire acceptance cannot be prevented. In other cases the beneficiary's bank can prevent acceptance by giving notice of rejection to the sender before payment occurs under Section 4A-403(a)(1) or (2). A minor exception to the ability of the beneficiary's bank to reject is stated in Section 4A-502(c)(3).
Under subsection (b)(3) acceptance occurs at the opening of the next funds transfer business day of the beneficiary's bank following the payment date unless the bank rejected the order before that time or it rejects within one hour after that time. In some cases the sender and the beneficiary's bank may not be in the same time zone or the beginning of the business day of the sender and the funds transfer business day of the beneficiary's bank may not coincide. For example, the sender may be located in California and the beneficiary's bank in New York. Since in most cases notice of rejection would be communicated electronically or by telephone, it might not be feasible for the bank to give notice before one hour after the opening of the funds transfer business day in New York because at that hour, the sender's business day may not have started in California. For that reason, there are alternative deadlines stated in subsection (b)(3). In the case stated, the bank acts in time if it gives notice within one hour after the opening of the business day of the sender. But if the notice of rejection is received by the sender after the payment date, the bank is obliged to pay interest to the sender if the sender's account does not bear interest. In that case the bank had the use of funds of the sender that the sender could reasonably assume would be used to pay the beneficiary. The rate of interest is stated in Section 4A-506. If the sender receives notice on the day after the payment date the sender is entitled to one day's interest. If receipt of notice is delayed for more than one day, the sender is entitled to interest for each additional day of delay.
9. Subsection (d) applies only to a payment order by the originator of a funds transfer to the originator's bank and it refers to the following situation. On April 1, Originator instructs Bank A to make a payment on April 15 to the account of Beneficiary in Bank B. By mistake, on April 1, Bank A executes Originator's payment order by issuing a payment order to Bank B instructing immediate payment to Beneficiary. Bank B credited Beneficiary's account and immediately released the funds to Beneficiary. Under subsection (d) no acceptance by Bank A occurred on April 1 when Originator's payment order was executed because acceptance cannot occur before the execution date which in this case would be April 15 or shortly before that date. Section 4A-301(b). Under Section 4A-402(c), Originator is not obliged to pay Bank A until the order is accepted and that can't occur until the execution date. But Bank A is required to pay Bank B when Bank B accepted Bank A's order on April 1. Unless Originator and Beneficiary are the same person, in almost all cases Originator is paying a debt owed to Beneficiary and early payment does not injure Originator because Originator does not have to pay Bank A until the execution date. Section 4A-402(c). Bank A takes the interest loss. But suppose that on April 3, Originator concludes that no debt was owed to Beneficiary or that the debt was less than the amount of the payment order. Under Section 4A-211(b) Originator can cancel its payment order if Bank A has not accepted. If early execution of Originator's payment order is acceptance, Originator can suffer a loss because cancellation after acceptance is not possible without the consent of Bank A and Bank B. Section 4A-211(c). If Originator has to pay Bank A, Originator would be required to seek recovery of the money from Beneficiary. Subsection (d) prevents this result and puts the risk of loss on Bank A by providing that the early execution does not result in acceptance until the execution date. Since on April 3 Originator's order was not yet accepted, Originator can cancel it under Section 4A-211(b). The result is that Bank A is not entitled to payment from Originator but is obliged to pay Bank B. Bank A has paid Beneficiary by mistake. If Originator's payment order is cancelled, Bank A becomes the originator of an erroneous funds transfer to Beneficiary. Bank A has the burden of recovering payment from Beneficiary on the basis of a payment by mistake. If Beneficiary received the money in good faith in payment of a debt owed to Beneficiary by Originator, the law of mistake and restitution may allow Beneficiary to keep all or part of the money received. If Originator owed money to Beneficiary, Bank A has paid Originator's debt and, under the law of restitution, which applies pursuant to Section 1-103, Bank A is subrogated to Beneficiary's rights against Originator on the debt.
If Bank A is the Beneficiary's bank and Bank A credited Beneficiary's account and released the funds to Beneficiary on April 1, the analysis is similar. If Originator's order is cancelled, Bank A has paid Beneficiary by mistake. The right of Bank A to recover the payment from Beneficiary is similar to Bank A's rights in the preceding paragraph.
Section 36-4A-210. Rejection of payment order.
(a) A payment order is rejected by the receiving bank by a notice of rejection transmitted to the sender orally, electronically, or in writing. A notice of rejection need not use any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or will not execute or pay the order. Rejection is effective when the notice is given if transmission is by a means that is reasonable in the circumstances. If notice of rejection is given by a means that is not reasonable, rejection is effective when the notice is received. If an agreement of the sender and receiving bank establishes the means to be used to reject a payment order, (i) any means complying with the agreement is reasonable and (ii) any means not complying is not reasonable unless no significant delay in receipt of the notice resulted from the use of the noncomplying means.
(b) This subsection applies if a receiving bank other than the beneficiary's bank fails to execute a payment order despite the existence on the execution date of a withdrawable credit balance in an authorized account of the sender sufficient to cover the order. If the sender does not receive notice of rejection of the order on the execution date and the authorized account of the sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the order for the number of days elapsing after the execution date to the earlier of the day the order is canceled pursuant to Section 36-4A-211(d) or the day the sender receives notice or learns that the order was not executed, counting the final day of the period as an elapsed day. If the withdrawable credit balance during that period falls below the amount of the order, the amount of interest is reduced accordingly.
(c) If a receiving bank suspends payments, all unaccepted payment orders issued to it are deemed rejected at the time the bank suspends payments.
(d) Acceptance of a payment order precludes a later rejection of the order. Rejection of a payment order precludes a later acceptance of the order.
1. With respect to payment orders issued to a receiving bank other than the beneficiary's bank, notice of rejection is not necessary to prevent acceptance of the order. Acceptance can occur only if the receiving bank executes the order. Section 4A-209(a). But notice of rejection will routinely be given by such a bank in cases in which the bank cannot or is not willing to execute the order for some reason. There are many reasons why a bank doesn't execute an order. The payment order may not clearly instruct the receiving bank because of some ambiguity in the order or an internal inconsistency. In some cases, the receiving bank may not be able to carry out the instruction because of equipment failure, credit limitations on the receiving bank, or some other factor which makes proper execution of the order infeasible. In those cases notice of rejection is a means of informing the sender of the facts so that a corrected payment order can be transmitted or the sender can seek alternate means of completing the funds transfer. The other major reason for not executing an order is that the sender's account is insufficient to cover the order and the receiving bank is not willing to give credit to the sender. If the sender's account is sufficient to cover the order and the receiving bank chooses not to execute the order, notice of rejection is necessary to prevent liability to pay interest to the sender if the case falls within Section 4A-210(b) which is discussed in Comment 3.
2. A payment order to the beneficiary's bank can be accepted by inaction of the bank. Section 4A-209(b)(2) and (3). To prevent acceptance under those provisions it is necessary for the receiving bank to send notice of rejection before acceptance occurs. Subsection (a) of Section 4A-210 states the rule that rejection is accomplished by giving notice of rejection. This incorporates the definitions in Section 1-201(26). Rejection is effective when notice is given if it is given by a means that is reasonable in the circumstances. Otherwise it is effective when the notice is received. The question of when rejection is effective is important only in the relatively few cases under subsection (b)(2) and (3) in which a notice of rejection is necessary to prevent acceptance. The question of whether a particular means is reasonable depends on the facts in a particular case. In a very large percentage of cases the sender and the receiving bank will be in direct electronic contact with each other and in those cases a notice of rejection can be transmitted instantaneously. Since time is of the essence in a large proportion of funds transfers, some quick means of transmission would usually be required, but this is not always the case. The parties may specify by agreement the means by which communication between the parties is to be made.
3. Subsection (b) deals with cases in which a sender does not learn until after the execution date that the sender's order has not been executed. It applies only to cases in which the receiving bank was assured of payment because the sender's account was sufficient to cover the order. Normally, the receiving bank will accept the sender's order if it is assured of payment, but there may be some cases in which the bank chooses to reject. Unless the receiving bank had obligated itself by agreement to accept, the failure to accept is not wrongful. There is no duty of the receiving bank to accept the payment order unless it is obliged to accept by express agreement. Section 4A-212. But even if the bank has not acted wrongfully, the receiving bank had the use of the sender's money that the sender could reasonably assume was to be the source of payment of the funds transfer. Until the sender learns that the order was not accepted the sender is denied the use of that money. Subsection (b) obliges the receiving bank to pay interest to the sender as restitution unless the sender receives notice of rejection on the execution date. The time of receipt of notice is determined pursuant to Section 1-201(27). The rate of interest is stated in Section 4A-506. If the sender receives notice on the day after the execution date, the sender is entitled to one day's interest. If receipt of notice is delayed for more than one day, the sender is entitled to interest for each additional day of delay.
4. Subsection (d) treats acceptance and rejection as mutually exclusive. If a payment order has been accepted, rejection of that order becomes impossible. If a payment order has been rejected it cannot be accepted later by the receiving bank. Once notice of rejection has been given, the sender may have acted on the notice by making the payment through other channels. If the receiving bank wants to act on a payment order that it has rejected it has to obtain the consent of the sender. In that case the consent of the sender would amount to the giving of a second payment order that substitutes for the rejected first order. If the receiving bank suspends payments (Section 4-104(1)(k)), subsection (c) provides that unaccepted payment orders are deemed rejected at the time suspension of payments occurs. This prevents acceptance by passage of time under Section 4A-209(b)(3).
Section 36-4A-211. Cancellation and amendment of payment order.
(a) A communication of the sender of a payment order canceling or amending the order may be transmitted to the receiving bank orally, electronically, or in writing. If a security procedure is in effect between the sender and the receiving bank, the communication is not effective to cancel or amend the order unless the communication is verified pursuant to the security procedure or the bank agrees to the cancellation or amendment.
(b) Subject to subsection (a), a communication by the sender canceling or amending a payment order is effective to cancel or amend the order if notice of the communication is received at a time and in a manner affording the receiving bank a reasonable opportunity to act on the communication before the bank accepts the payment order.
(c) After a payment order has been accepted, cancellation or amendment of the order is not effective unless the receiving bank agrees or a funds-transfer system rule allows cancellation or amendment without agreement of the bank.
(1) With respect to a payment order accepted by a receiving bank other than the beneficiary's bank, cancellation or amendment is not effective unless a conforming cancellation or amendment of the payment order issued by the receiving bank is also made.
(2) With respect to a payment order accepted by the beneficiary's bank, cancellation or amendment is not effective unless the order was issued in execution of an unauthorized payment order, or because of a mistake by a sender in the funds transfer which resulted in the issuance of a payment order (i) that is a duplicate of a payment order previously issued by the sender, (ii) that orders payment to a beneficiary not entitled to receive payment from the originator, or (iii) that orders payment in an amount greater than the amount the beneficiary was entitled to receive from the originator. If the payment order is canceled or amended, the beneficiary's bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution.
(d) An unaccepted payment order is canceled by operation of law at the close of the fifth funds-transfer business day of the receiving bank after the execution date or payment date of the order.
(e) A canceled payment order cannot be accepted. If an accepted payment order is canceled, the acceptance is nullified and no person has any right or obligation based on the acceptance. Amendment of a payment order is deemed to be cancellation of the original order at the time of amendment and issue of a new payment order in the amended form at the same time.
(f) Unless otherwise provided in an agreement of the parties or in a funds-transfer system rule, if the receiving bank, after accepting a payment order, agrees to cancellation or amendment of the order by the sender or is bound by a funds-transfer system rule allowing cancellation or amendment without the bank's agreement, the sender, whether or not cancellation or amendment is effective, is liable to the bank for any loss and expenses, including reasonable attorney's fees, incurred by the bank as a result of the cancellation or amendment or attempted cancellation or amendment.
(g) A payment order is not revoked by the death or legal incapacity of the sender unless the receiving bank knows of the death or of an adjudication of incapacity by a court of competent jurisdiction and has reasonable opportunity to act before acceptance of the order.
(h) A funds-transfer system rule is not effective to the extent it conflicts with subsection (c)(2).
1. This section deals with cancellation and amendment of payment orders. It states the conditions under which cancellation or amendment is both effective and rightful. There is no concept of wrongful cancellation or amendment of a payment order. If the conditions stated in this section are not met the attempted cancellation or amendment is not effective. If the stated conditions are met the cancellation or amendment is effective and rightful. The sender of a payment order may want to withdraw or change the order because the sender has had a change of mind about the transaction or because the payment order was erroneously issued or for any other reason. One common situation is that of multiple transmission of the same order. The sender that mistakenly transmits the same order twice wants to correct the mistake by canceling the duplicate order. Or, a sender may have intended to order a payment of $1,000,000 but mistakenly issued an order to pay $10,000,000. In this case the sender might try to correct the mistake by canceling the order and issuing another order in the proper amount. Or, the mistake could be corrected by amending the order to change it to the proper amount. Whether the error is corrected by amendment or cancellation and reissue the net result is the same. This result is stated in the last sentence of subsection (e).
2. Subsection (a) allows a cancellation or amendment of a payment order to be communicated to the receiving bank "orally, electronically, or in writing." The quoted phrase is consistent with the language of Section 4A-103(a) applicable to payment orders. Cancellations and amendments are normally subject to verification pursuant to security procedures to the same extent as payment orders. Subsection (a) recognizes this fact by providing that in cases in which there is a security procedure in effect between the sender and the receiving bank the bank is not bound by a communication canceling or amending an order unless verification has been made. This is necessary to protect the bank because under subsection (b) a cancellation or amendment can be effective by unilateral action of the sender. Without verification the bank cannot be sure whether the communication was or was not effective to cancel or amend a previously verified payment order.
3. If the receiving bank has not yet accepted the order, there is no reason why the sender should not be able to cancel or amend the order unilaterally so long as the requirements of subsections (a) and (b) are met. If the receiving bank has accepted the order, it is possible to cancel or amend but only if the requirements of subsection (c) are met.
First consider the case of a receiving bank other than the beneficiary's bank. If the bank has not yet accepted the order, the sender can unilaterally cancel or amend. The communication amending or canceling the payment order must be received in time to allow the bank to act on it before the bank issues its payment order in execution of the sender's order. The time that the sender's communication is received is governed by Section 4A-106. If a payment order does not specify a delayed payment date or execution date, the order will normally be executed shortly after receipt. Thus, as a practical matter, the sender will have very little time in which to instruct cancellation or amendment before acceptance. In addition, a receiving bank will normally have cut-off times for receipt of such communications, and the receiving bank is not obliged to act on communications received after the cut-off hour. Cancellation by the sender after execution of the order by the receiving bank requires the agreement of the bank unless a funds transfer rule otherwise provides. Subsection (c). Although execution of the sender's order by the receiving bank does not itself impose liability on the receiving bank (under Section 4A-402 no liability is incurred by the receiving bank to pay its order until it is accepted), it would commonly be the case that acceptance follows shortly after issuance. Thus, as a practical matter, a receiving bank that has executed a payment order will incur a liability to the next bank in the chain before it would be able to act on the cancellation request of its customer. It is unreasonable to impose on the receiving bank a risk of loss with respect to a cancellation request without the consent of the receiving bank.
The statute does not state how or when the agreement of the receiving bank must be obtained for cancellation after execution. The receiving bank's consent could be obtained at the time cancellation occurs or it could be based on a preexisting agreement. Or, a funds transfer system rule could provide that cancellation can be made unilaterally by the sender. By virtue of that rule any receiving bank covered by the rule is bound. Section 4A-501. If the receiving bank has already executed the sender's order, the bank would not consent to cancellation unless the bank to which the receiving bank has issued its payment order consents to cancellation of that order. It makes no sense to allow cancellation of a payment order unless all subsequent payment orders in the funds transfer that were issued because of the cancelled payment order are also cancelled. Under subsection (c)(1), if a receiving bank consents to cancellation of the payment order after it is executed, the cancellation is not effective unless the receiving bank also cancels the payment order issued by the bank.
4. With respect to a payment order issued to the beneficiary's bank, acceptance is particularly important because it creates liability to pay the beneficiary, it defines when the originator pays its obligation to the beneficiary, and it defines when any obligation for which the payment is made is discharged. Since acceptance affects the rights of the originator and the beneficiary it is not appropriate to allow the beneficiary's bank to agree to cancellation or amendment except in unusual cases. Except as provided in subsection (c)(2), cancellation or amendment after acceptance by the beneficiary's bank is not possible unless all parties affected by the order agree. Under subsection (c)(2), cancellation or amendment is possible only in the four cases stated. The following examples illustrate subsection (c)(2):
Case #1. Originator's Bank executed a payment order issued in the name of its customer as sender. The order was not authorized by the customer and was fraudulently issued. Beneficiary's Bank accepted the payment order issued by Originator's Bank. Under subsection (c)(2) Originator's Bank can cancel the order if Beneficiary's Bank consents. It doesn't make any difference whether the payment order that Originator's Bank accepted was or was not enforceable against the customer under Section 4A-202(b). Verification under that provision is important in determining whether Originator's Bank or the customer has the risk of loss, but it has no relevance under Section 4A-211(c)(2). Whether or not verified, the payment order was not authorized by the customer. Cancellation of the payment order to Beneficiary's Bank causes the acceptance of Beneficiary's Bank to be nullified. Subsection (e). Beneficiary's Bank is entitled to recover payment from the beneficiary to the extent allowed by the law of mistake and restitution. In this kind of case the beneficiary is usually a party to the fraud who has no right to receive or retain payment of the order.
Case #2. Originator owed Beneficiary $1,000,000 and ordered Bank A to pay that amount to the account of Beneficiary in Bank B. Bank A issued a complying order to Bank B, but by mistake issued a duplicate order as well. Bank B accepted both orders. Under subsection (c)(2)(i) cancellation of the duplicate order could be made by Bank A with the consent of Bank B. Beneficiary has no right to receive or retain payment of the duplicate payment order if only $1,000,000 was owed by Originator to Beneficiary. If Originator owed $2,000,000 to Beneficiary, the law of restitution might allow Beneficiary to retain the $1,000,000 paid by Bank B on the duplicate order. In that case Bank B is entitled to reimbursement from Bank A under subsection (f).
Case #3. Originator owed $1,000,000 to X. Intending to pay X, Originator ordered Bank A to pay $1,000,000 to Y's account in Bank B. Bank A issued a complying payment order to Bank B which Bank B accepted by releasing the $1,000,000 to Y. Under subsection (c)(2)(ii) Bank A can cancel its payment order to Bank B with the consent of Bank B if Y was not entitled to receive payment from Originator. Originator can also cancel its order to Bank A with Bank A's consent. Subsection (c) (1). Bank B may recover the $1,000,000 from Y unless the law of mistake and restitution allows Y to retain some or all of the amount paid. If no debt was owed to Y, Bank B should have a right of recovery.
Case #4. Originator owed Beneficiary $10,000. By mistake Originator ordered Bank A to pay $1,000,000 to the account of Beneficiary in Bank B. Bank A issued a complying order to Bank B which accepted by notifying Beneficiary of its right to withdraw $1,000,000. Cancellation is permitted in this case under subsection (c)(2)(iii). If Bank B paid Beneficiary it is entitled to recover the payment except to the extent the law of mistake and restitution allows Beneficiary to retain payment. In this case Beneficiary might be entitled to retain $10,000, the amount of the debt owed to Beneficiary. If Beneficiary may retain $10,000, Bank B would be entitled to $10,000 from Bank A pursuant to subsection (f). In this case Originator also cancelled its order. Thus Bank A would be entitled to $10,000 from Originator pursuant to subsection (f).
5. Unless constrained by a funds transfer system rule, a receiving bank may agree to cancellation or amendment of the payment order under subsection (c) but is not required to do so regardless of the circumstances. If the receiving bank has incurred liability as a result of its acceptance of the sender's order, there are substantial risks in agreeing to cancellation or amendment. This is particularly true for a beneficiary's bank. Cancellation or amendment after acceptance by the beneficiary's bank can be made only in the four cases stated and the beneficiary's bank may not have any way of knowing whether the requirements of subsection (c) have been met or whether it will be able to recover payment from the beneficiary that received payment. Even with indemnity the beneficiary's bank may be reluctant to alienate its customer, the beneficiary, by denying the customer the funds. Subsection (c) leaves the decision to the beneficiary's bank unless the consent of the beneficiary's bank is not required under a funds transfer system rule or other interbank agreement. If a receiving bank agrees to cancellation or amendment under subsection (c)(1) or (2), it is automatically entitled to indemnification from the sender under subsection (f). The indemnification provision recognizes that a sender has no right to cancel a payment order after it is accepted by the receiving bank. If the receiving bank agrees to cancellation, it is doing so as an accommodation to the sender and it should not incur a risk of loss in doing so.
6. Acceptance by the receiving bank of a payment order issued by the sender is comparable to acceptance of an offer under the law of contracts. Under that law the death or legal incapacity of an offeror terminates the offer even though the offeree has no notice of the death or incapacity. Restatement Second, Contracts Section 48. Comment a. to that section states that the "rule seems to be a relic of the obsolete view that a contract requires a 'meeting of minds,' and it is out of harmony with the modern doctrine that a manifestation of assent is effective without regard to actual mental assent." Subsection (g), which reverses the Restatement rule in the case of a payment order, is similar to Section 4-405(1) which applies to checks. Subsection (g) does not address the effect of the bankruptcy of the sender of a payment order before the order is accepted, but the principle of subsection (g) has been recognized in Bank of Marin v. England, 385 U.S. 99 (1966). Although Bankruptcy Code Section 542(c) may not have been drafted with wire transfers in mind, its language can be read to allow the receiving bank to charge the sender's account for the amount of the payment order if the receiving bank executed it in ignorance of the bankruptcy.
7. Subsection (d) deals with stale payment orders. Payment orders normally are executed on the execution date or the day after. An order issued to the beneficiary's bank is normally accepted on the payment date or the day after. If a payment order is not accepted on its execution or payment date or shortly thereafter, it is probable that there was some problem with the terms of the order or the sender did not have sufficient funds or credit to cover the amount of the order. Delayed acceptance of such an order is normally not contemplated, but the order may not have been cancelled by the sender. Subsection (d) provides for cancellation by operation of law to prevent an unexpected delayed acceptance.
8. A funds transfer system rule can govern rights and obligations between banks that are parties to payment orders transmitted over the system even if the rule conflicts with Article 4A. In some cases, however, a rule governing a transaction between two banks can affect a third party in an unacceptable way. Subsection (h) deals with such a case. A funds transfer system rule cannot allow cancellation of a payment order accepted by the beneficiary's bank if the rule conflicts with subsection (c)(2). Because rights of the beneficiary and the originator are directly affected by acceptance, subsection (c)(2) severely limits cancellation. These limitations cannot be altered by funds transfer system rule.
Section 36-4A-212. Liability and duty of receiving bank regarding unaccepted payment order.
If a receiving bank fails to accept a payment order that it is obliged by express agreement to accept, the bank is liable for breach of the agreement to the extent provided in the agreement or in this chapter, but does not otherwise have any duty to accept a payment order or, before acceptance, to take any action, or refrain from taking action, with respect to the order except as provided in this chapter or by express agreement. Liability based on acceptance arises only when acceptance occurs as stated in Section 36-4A-209, and liability is limited to that provided in this chapter. A receiving bank is not the agent of the sender or beneficiary of the payment order it accepts, or of any other party to the funds transfer, and the bank owes no duty to any party to the funds transfer except as provided in this chapter or by express agreement.
With limited exceptions stated in this Article, the duties and obligations of receiving banks that carry out a funds transfer arise only as a result of acceptance of payment orders or of agreements made by receiving banks. Exceptions are stated in Section 4A-209(b)(3) and Section 4A-210(b). A receiving bank is not like a collecting bank under Article 4. No receiving bank, whether it be an originator's bank, an intermediary bank, or a beneficiary's bank, is an agent for any other party in the funds transfer.
Section 36-4A-301. Execution and execution date.
(a) A payment order is 'executed' by the receiving bank when it issues a payment order intended to carry out the payment order received by the bank. A payment order received by the beneficiary's bank can be accepted but cannot be executed.
(b) 'Execution date' of a payment order means the day on which the receiving bank may properly issue a payment order in execution of the sender's order. The execution date may be determined by instruction of the sender but cannot be earlier than the day the order is received and, unless otherwise determined, is the day the order is received. If the sender's instruction states a payment date, the execution date is the payment date or an earlier date on which execution is reasonably necessary to allow payment to the beneficiary on the payment date.
1. The terms "executed," "execution" and "execution date" are used only with respect to a payment order to a receiving bank other than the beneficiary's bank. The beneficiary's bank can accept the payment order that it receives, but it does not execute the order. Execution refers to the act of the receiving bank in issuing a payment order "intended to carry out" the payment order that the bank received. A receiving bank has executed an order even if the order issued by the bank does not carry out the order received by the bank. For example, the bank may have erroneously issued an order to the wrong beneficiary, or in the wrong amount or to the wrong beneficiary's bank. In each of these cases execution has occurred but the execution is erroneous. Erroneous execution is covered in Section 4A-303.
2. "Execution date" refers to the time a payment order should be executed rather than the day it is actually executed. Normally the sender will not specify an execution date, but most payment orders are meant to be executed immediately. Thus, the execution date is normally the day the order is received by the receiving bank. It is common for the sender to specify a "payment date" which is defined in Section 4A-401 as "the day on which the amount of the order is payable to the beneficiary by the beneficiary's bank." Except for automated clearing house transfers, if a funds transfer is entirely within the United States and the payment is to be carried out electronically, the execution date is the payment date unless the order is received after the payment date. If the payment is to be carried out through an automated clearing house, execution may occur before the payment date. In an ACH transfer the beneficiary is usually paid one or two days after issue of the originator's payment order. The execution date is determined by the stated payment date and is a date before the payment date on which execution is reasonably necessary to allow payment on the payment date. A funds transfer system rule could also determine the execution date of orders received by the receiving bank if both the sender and the receiving bank are participants in the funds transfer system. The execution date can be determined by the payment order itself or by separate instructions of the sender or an agreement of the sender and the receiving bank. The second sentence of subsection (b) must be read in the light of Section 4A-106 which states that if a payment order is received after the cut-off time of the receiving bank it may be treated by the bank as received at the opening of the next funds transfer business day.
3. Execution on the execution date is timely, but the order can be executed before or after the execution date. Section 4A-209(d) and Section 4A-402(c) state the consequences of early execution and Section 4A-305(a) states the consequences of late execution.
Section 36-4A-302. Obligations of receiving bank in execution of payment order.
(a) Except as provided in subsections (b) through (d), if the receiving bank accepts a payment order pursuant to Section 36-4A-209(a), the bank has the following obligations in executing the order:
(1) The receiving bank is obliged to issue, on the execution date, a payment order complying with the sender's order and to follow the sender's instructions concerning (i) any intermediary bank or funds-transfer system to be used in carrying out the funds transfer, or (ii) the means by which payment orders are to be transmitted in the funds transfer. If the originator's bank issues a payment order to an intermediary bank, the originator's bank is obliged to instruct the intermediary bank according to the instruction of the originator. An intermediary bank in the funds transfer is similarly bound by an instruction given to it by the sender of the payment order it accepts.
(2) If the sender's instruction states that the funds transfer is to be carried out telephonically or by wire transfer or otherwise indicates that the funds transfer is to be carried out by the most expeditious means, the receiving bank is obliged to transmit its payment order by the most expeditious available means, and to instruct any intermediary bank accordingly. If a sender's instruction states a payment date, the receiving bank is obliged to transmit its payment order at a time and by means reasonably necessary to allow payment to the beneficiary on the payment date or as soon thereafter as is feasible.
(b) Unless otherwise instructed, a receiving bank executing a payment order may (i) use any funds-transfer system if use of that system is reasonable in the circumstances, and (ii) issue a payment order to the beneficiary's bank or to an intermediary bank through which a payment order conforming to the sender's order can expeditiously be issued to the beneficiary's bank if the receiving bank exercises ordinary care in the selection of the intermediary bank. A receiving bank is not required to follow an instruction of the sender designating a funds-transfer system to be used in carrying out the funds transfer if the receiving bank, in good faith, determines that it is not feasible to follow the instruction or that following the instruction would unduly delay completion of the funds transfer.
(c) Unless subsection (a)(2) applies or the receiving bank is otherwise instructed, the bank may execute a payment order by transmitting its payment order by first-class mail or by any means reasonable in the circumstances. If the receiving bank is instructed to execute the sender's order by transmitting its payment order by a particular means, the receiving bank may issue its payment order by the means stated or by any means as expeditious as the means stated.
(d) Unless instructed by the sender, (i) the receiving bank may not obtain payment of its charges for services and expenses in connection with the execution of the sender's order by issuing a payment order in an amount equal to the amount of the sender's order less the amount of the charges, and (ii) may not instruct a subsequent receiving bank to obtain payment of its charges in the same manner.
1. In the absence of agreement, the receiving bank is not obliged to execute an order of the sender. Section 4A-212. Section 4A-302 states the manner in which the receiving bank may execute the sender's order if execution occurs. Subsection (a)(1) states the residual rule. The payment order issued by the receiving bank must comply with the sender's order and, unless some other rule is stated in the section, the receiving bank is obliged to follow any instruction of the sender concerning which funds transfer system is to be used, which intermediary banks are to be used, and what means of transmission is to be used. The instruction of the sender may be incorporated in the payment order itself or may be given separately. For example, there may be a master agreement between the sender and receiving bank containing instructions governing payment orders to be issued from time to time by the sender to the receiving bank. In most funds transfers, speed is a paramount consideration. A sender that wants assurance that the funds transfer will be expeditiously completed can specify the means to be used. The receiving bank can follow the instructions literally or it can use an equivalent means. For example, if the sender instructs the receiving bank to transmit by telex, the receiving bank could use telephone instead. Subsection (c). In most cases the sender will not specify a particular means but will use a general term such as "by wire" or "wire transfer" or "as soon as possible." These words signify that the sender wants a same-day transfer. In these cases the receiving bank is required to use a telephonic or electronic communication to transmit its order and is also required to instruct any intermediary bank to which it issues its order to transmit by similar means. Subsection (a)(2). In other cases, such as an automated clearing house transfer, a same-day transfer is not contemplated. Normally the sender's instruction or the context in which the payment order is received makes clear the type of funds transfer that is appropriate. If the sender states a payment date with respect to the payment order, the receiving bank is obliged to execute the order at a time and in a manner to meet the payment date if that is feasible. Subsection (a)(2). This provision would apply to many ACH transfers made to pay recurring debts of the sender. In other cases, involving relatively small amounts, time may not be an important factor and cost may be a more important element. Fast means, such as telephone or electronic transmission, are more expensive than slow means such as mailing. Subsection (c) states that in the absence of instructions the receiving bank is given discretion to decide. It may issue its payment order by first-class mail or by any means reasonable in the circumstances. Section 4A-305 states the liability of a receiving bank for breach of the obligations stated in Section 4A-302.
2. Subsection (b) concerns the choice of intermediary banks to be used in completing the funds transfer, and the funds transfer system to be used. If the receiving bank is not instructed about the matter, it can issue an order directly to the beneficiary's bank or can issue an order to an intermediary bank. The receiving bank also has discretion concerning use of a funds transfer system. In some cases it may be reasonable to use either an automated clearing house system or a wire transfer system such as Fedwire or CHIPS. Normally, the receiving bank will follow the instruction of the sender in these matters, but in some cases it may be prudent for the bank not to follow instructions. The sender may have designated a funds transfer system to be used in carrying out the funds transfer, but it may not be feasible to use the designated system because of some impediment such as a computer breakdown which prevents prompt execution of the order. The receiving bank is permitted to use an alternate means of transmittal in a good faith effort to execute the order expeditiously. The same leeway is not given to the receiving bank if the sender designates an intermediary bank through which the funds transfer is to be routed. The sender's designation of that intermediary bank may mean that the beneficiary's bank is expecting to obtain a credit from that intermediary bank and may have relied on that anticipated credit. If the receiving bank uses another intermediary bank the expectations of the beneficiary's bank may not be realized. The receiving bank could choose to route the transfer to another intermediary bank and then to the designated intermediary bank if there were some reason such as a lack of a correspondent-bank relationship or a bilateral credit limitation, but the designated intermediary bank cannot be circumvented. To do so violates the sender's instructions.
3. The normal rule, under subsection (a)(1), is that the receiving bank, in executing a payment order, is required to issue a payment order that complies as to amount with that of the sender's order. In most cases the receiving bank issues an order equal to the amount of the sender's order and makes a separate charge for services and expenses in executing the sender's order. In some cases, particularly if it is an intermediary bank that is executing an order, charges are collected by deducting them from the amount of the payment order issued by the executing bank. If that is done, the amount of the payment order accepted by the beneficiary's bank will be slightly less than the amount of the originator's payment order. For example, Originator, in order to pay an obligation of $1,000,000 owed to Beneficiary, issues a payment order to Originator's Bank to pay $1,000,000 to the account of Beneficiary in Beneficiary's Bank. Originator's Bank issues a payment order to Intermediary Bank for $1,000,000 and debits Originator's account for $1,000,010. The extra $10 is the fee of Originator's Bank. Intermediary Bank executes the payment order of Originator's Bank by issuing a payment order to Beneficiary's Bank for $999,990, but under Section 4A-402(c) is entitled to receive $1,000,000 from Originator's Bank. The $10 difference is the fee of Intermediary Bank. Beneficiary's Bank credits Beneficiary's account for $999,990. When Beneficiary's Bank accepts the payment order of Intermediary Bank the result is a payment of $999,990 from Originator to Beneficiary. Section 4A-406(a). If that payment discharges the $1,000,000 debt, the effect is that Beneficiary has paid the charges of Intermediary Bank and Originator has paid the charges of Originator's Bank. Subsection (d) of Section 4A-302 allows Intermediary Bank to collect its charges by deducting them from the amount of the payment order, but only if instructed to do so by Originator's Bank. Originator's Bank is not authorized to give that instruction to Intermediary Bank unless Originator authorized the instruction. Thus, Originator can control how the charges of Originator's Bank and Intermediary Bank are to be paid. Subsection (d) does not apply to charges of Beneficiary's Bank to Beneficiary.
In the case discussed in the preceding paragraph the $10 charge is trivial in relation to the amount of the payment and it may not be important to Beneficiary how the charge is paid. But it may be very important if the $1,000,000 obligation represented the price of exercising a right such as an option favorable to Originator and unfavorable to Beneficiary. Beneficiary might well argue that it was entitled to receive $1,000,000. If the option was exercised shortly before its expiration date, the result could be loss of the option benefit because the required payment of $1,000,000 was not made before the option expired. Section 4A-406(c) allows Originator to preserve the option benefit. The amount received by Beneficiary is deemed to be $1,000,000 unless Beneficiary demands the $10 and Originator does not pay it.
Section 36-4A-303. Erroneous execution of payment order.
(a) A receiving bank that (i) executes the payment order of the sender by issuing a payment order in an amount greater than the amount of the sender's order, or (ii) issues a payment order in execution of the sender's order and then issues a duplicate order, is entitled to payment of the amount of the sender's order under Section 36-4A-402(c) if that subsection is otherwise satisfied. The bank is entitled to recover from the beneficiary of the erroneous order the excess payment received to the extent allowed by the law governing mistake and restitution.
(b) A receiving bank that executes the payment order of the sender by issuing a payment order in an amount less than the amount of the sender's order is entitled to payment of the amount of the sender's order under Section 36-4A-402(c) if (i) that subsection is otherwise satisfied and (ii) the bank corrects its mistake by issuing an additional payment order for the benefit of the beneficiary of the sender's order. If the error is not corrected, the issuer of the erroneous order is entitled to receive or retain payment from the sender of the order it accepted only to the extent of the amount of the erroneous order. This subsection does not apply if the receiving bank executes the sender's payment order by issuing a payment order in an amount less than the amount of the sender's order for the purpose of obtaining payment of its charges for services and expenses pursuant to instruction of the sender.
(c) If a receiving bank executes the payment order of the sender by issuing a payment order to a beneficiary different from the beneficiary of the sender's order and the funds transfer is completed on the basis of that error, the sender of the payment order that was erroneously executed and all previous senders in the funds transfer are not obliged to pay the payment orders they issued. The issuer of the erroneous order is entitled to recover from the beneficiary of the order the payment received to the extent allowed by the law governing mistake and restitution.
1. Section 4A-303 states the effect of erroneous execution of a payment order by the receiving bank. Under Section 4A-402(c) the sender of a payment order is obliged to pay the amount of the order to the receiving bank if the bank executes the order, but the obligation to pay is excused if the beneficiary's bank does not accept a payment order instructing payment to the beneficiary of the sender's order. If erroneous execution of the sender's order causes the wrong beneficiary to be paid, the sender is not required to pay. If erroneous execution causes the wrong amount to be paid the sender is not obliged to pay the receiving bank an amount in excess of the amount of the sender's order. Section 4A-303 takes precedence over Section 4A-402(c) and states the liability of the sender and the rights of the receiving bank in various cases of erroneous execution.
2. Subsections (a) and (b) deal with cases in which the receiving bank executes by issuing a payment order in the wrong amount. If Originator ordered Originator's Bank to pay $1,000,000 to the account of Beneficiary in Beneficiary's Bank, but Originator's Bank erroneously instructed Beneficiary's Bank to pay $2,000,000 to Beneficiary's account, subsection (a) applies. If Beneficiary's Bank accepts the order of Originator's Bank, Beneficiary's Bank is entitled to receive $2,000,000 from Originator's Bank, but Originator's Bank is entitled to receive only $1,000,000 from Originator. Originator's Bank is entitled to recover the overpayment from Beneficiary to the extent allowed by the law governing mistake and restitution. Originator's Bank would normally have a right to recover the overpayment from Beneficiary, but in unusual cases the law of restitution might allow Beneficiary to keep all or part of the overpayment. For example, if Originator owed $2,000,000 to Beneficiary and Beneficiary received the extra $1,000,000 in good faith in discharge of the debt, Beneficiary may be allowed to keep it. In this case Originator's Bank has paid an obligation of Originator and under the law of restitution, which applies through Section 1-103, Originator's Bank would be subrogated to Beneficiary's rights against Originator on the obligation paid by Originator's Bank.
If Originator's Bank erroneously executed Originator's order by instructing Beneficiary's Bank to pay less than $1,000,000, subsection (b) applies. If Originator's Bank corrects its error by issuing another payment order to Beneficiary's Bank that results in payment of $1,000,000 to Beneficiary, Originator's Bank is entitled to payment of $1,000,000 from Originator. If the mistake is not corrected, Originator's Bank is entitled to payment from Originator only in the amount of the order issued by Originator's Bank.
3. Subsection (a) also applies to duplicate payment orders. Assume Originator's Bank properly executes Originator's $1,000,000 payment order and then by mistake issues a second $1,000,000 payment order in execution of Originator's order. If Beneficiary's Bank accepts both orders issued by Originator's Bank, Beneficiary's Bank is entitled to receive $2,000,000 from Originator's Bank but Originator's Bank is entitled to receive only $1,000,000 from Originator. The remedy of Originator's Bank is the same as that of a receiving bank that executes by issuing an order in an amount greater than the sender's order. It may recover the overpayment from Beneficiary to the extent allowed by the law governing mistake and restitution and in a proper case as stated in Comment 2 may have subrogation rights if it is not entitled to recover from Beneficiary.
4. Suppose Originator instructs Originator's Bank to pay $1,000,000 to Account #12345 in Beneficiary's Bank. Originator's Bank erroneously instructs Beneficiary's Bank to pay $1,0000,000 to Account #12346 and Beneficiary's Bank accepted. Subsection (c) covers this case. Originator is not obliged to pay its payment order, but Originator's Bank is required to pay $1,000,000 to Beneficiary's Bank. The remedy of Originator's Bank is to recover $1,000,000 from the holder of Account #12346 that received payment by mistake. Recovery based on the law of mistake and restitution is described in Comment 2.
Section 36-4A-304. Duty of sender to report erroneously executed payment order.
If the sender of a payment order that is erroneously executed as stated in Section 36-4A-303 receives notification from the receiving bank that the order was executed or that the sender's account was debited with respect to the order, the sender has a duty to exercise ordinary care to determine, on the basis of information available to the sender, that the order was erroneously executed and to notify the bank of the relevant facts within a reasonable time not exceeding ninety days after the notification from the bank was received by the sender. If the sender fails to perform that duty, the bank is not obliged to pay interest on any amount refundable to the sender under Section 36-4A-402(d) for the period before the bank learns of the execution error. The bank is not entitled to any recovery from the sender on account of a failure by the sender to perform the duty stated in this section.
This section is identical in effect to Section 4A-204 which applies to unauthorized orders issued in the name of a customer of the receiving bank. The rationale is stated in Comment 2 to Section 4A-204.
Section 36-4A-305. Liability for late or improper execution or failure to execute payment order.
(a) If a funds transfer is completed but execution of a payment order by the receiving bank in breach of Section 36-4A-302 results in delay in payment to the beneficiary, the bank is obliged to pay interest to either the originator or the beneficiary of the funds transfer for the period of delay caused by the improper execution. Except as provided in subsection (c), additional damages are not recoverable.
(b) If execution of a payment order by a receiving bank in breach of Section 36-4A-302 results in (i) noncompletion of the funds transfer, (ii) failure to use an intermediary bank designated by the originator, or (iii) issuance of a payment order that does not comply with the terms of the payment order of the originator, the bank is liable to the originator for its expenses in the funds transfer and for incidental expenses and interest losses, to the extent not covered by subsection (a), resulting from the improper execution. Except as provided in subsection (c), additional damages are not recoverable.
(c) In addition to the amounts payable under subsections (a) and (b), damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank.
(d) If a receiving bank fails to execute a payment order it was obliged by express agreement to execute, the receiving bank is liable to the sender for its expenses in the transaction and for incidental expenses and interest losses resulting from the failure to execute. Additional damages, including consequential damages, are recoverable to the extent provided in an express written agreement of the receiving bank, but are not otherwise recoverable.
(e) Reasonable attorney's fees are recoverable if demand for compensation under subsection (a) or (b) is made and refused before an action is brought on the claim. If a claim is made for breach of an agreement under subsection (d) and the agreement does not provide for damages, reasonable attorney's fees are recoverable if demand for compensation under subsection (d) is made and refused before an action is brought on the claim.
(f) Except as stated in this section, the liability of a receiving bank under subsections (a) and (b) may not be varied by agreement.
1. Subsection (a) covers cases of delay in completion of a funds transfer resulting from an execution by a receiving bank in breach of Section 4A-302(a). The receiving bank is obliged to pay interest on the amount of the order for the period of the delay. The rate of interest is stated in Section 4A-506. With respect to wire transfers (other than ACH transactions) within the United States, the expectation is that the funds transfer will be completed the same day. In those cases, the originator can reasonably expect that the originator's account will be debited on the same day as the beneficiary's account is credited. If the funds transfer is delayed, compensation can be paid either to the originator or to the beneficiary. The normal practice is to compensate the beneficiary's bank to allow that bank to compensate the beneficiary by back-valuing the payment by the number of days of delay. Thus, the beneficiary is in the same position that it would have been in if the funds transfer had been completed on the same day. Assume on Day 1, Originator's Bank issues its payment order to Intermediary Bank which is received on that day. Intermediary Bank does not execute that order until Day 2 when it issues an order to Beneficiary's Bank which is accepted on that day. Intermediary Bank complies with subsection (a) by paying one day's interest to Beneficiary's Bank for the account of Beneficiary.
2. Subsection (b) applies to cases of breach of Section 4A-302 involving more than mere delay. In those cases the bank is liable for damages for improper execution but they are limited to compensation for interest losses and incidental expenses of the sender resulting from the breach, the expenses of the sender in the funds transfer and attorney's fees. This subsection reflects the judgment that imposition of consequential damages on a bank for commission of an error is not justified.
The leading common law case on the subject of consequential damages is Evra Corp. v. Swiss Bank Corp., 673 F.2d 951 (7th Cir. 1982), in which Swiss Bank, an intermediary bank, failed to execute a payment order. Because the beneficiary did not receive timely payment the originator lost a valuable ship charter. The lower court awarded the originator $2.1 million for lost profits even though the amount of the payment order was only $27,000. The Seventh Circuit reversed, in part on the basis of the common law rule of Hadley v. Baxendale that consequential damages may not be awarded unless the defendant is put on notice of the special circumstances giving rise to them. Swiss Bank may have known that the originator was paying the shipowner for the hire of a vessel but did not know that a favorable charter would be lost if the payment was delayed. "Electronic payments are not so unusual as to automatically place a bank on notice of extraordinary consequences if such a transfer goes awry. Swiss Bank did not have enough information to infer that if it lost a $27,000 payment order it would face liability in excess of $2 million." 673 F.2d at 956.
If Evra means that consequential damages can be imposed if the culpable bank has notice of particular circumstances giving rise to the damages, it does not provide an acceptable solution to the problem of bank liability for consequential damages. In the typical case transmission of the payment order is made electronically. Personnel of the receiving bank that process payment orders are not the appropriate people to evaluate the risk of liability for consequential damages in relation to the price charged for the wire transfer service. Even if notice is received by higher level management personnel who could make an appropriate decision whether the risk is justified by the price, liability based on notice would require evaluation of payment orders on an individual basis. This kind of evaluation is inconsistent with the high-speed, low-price, mechanical nature of the processing system that characterizes wire transfers. Moreover, in Evra the culpable bank was an intermediary bank with which the originator did not deal. Notice to the originator's bank would not bind the intermediary bank, and it seems impractical for the originator's bank to convey notice of this kind to intermediary banks in the funds transfer. The success of the wholesale wire transfer industry has largely been based on its ability to effect payment at low cost and great speed. Both of these essential aspects of the modern wire transfer system would be adversely affected by a rule that imposed on banks liability for consequential damages. A banking industry amicus brief in Evra stated: "Whether banks can continue to make EFT services available on a widespread basis, by charging reasonable rates, depends on whether they can do so without incurring unlimited consequential risks. Certainly, no bank would handle for $3.25 a transaction entailing potential liability in the millions of dollars."
As the court in Evra also noted, the originator of the funds transfer is in the best position to evaluate the risk that a funds transfer will not be made on time and to manage that risk by issuing a payment order in time to allow monitoring of the transaction. The originator, by asking the beneficiary, can quickly determine if the funds transfer has been completed. If the originator has sent the payment order at a time that allows a reasonable margin for correcting error, no loss is likely to result if the transaction is monitored. The other published cases on this issue reach the Evra result. Central Coordinates, Inc. v. Morgan Guaranty Trust Co., 40 U.C.C. Rep. Serv. 1340 (N.Y.Sup.Ct. 1985), and Gatoil (U.S.A.), Inc. v. Forest Hill State Bank, 1 U.C.C. Rep. Serv. 2d 171 (D.Md. 1986).
Subsection (c) allows the measure of damages in subsection (b) to be increased by an express written agreement of the receiving bank. An originator's bank might be willing to assume additional responsibilities and incur additional liability in exchange for a higher fee.
3. Subsection (d) governs cases in which a receiving bank has obligated itself by express agreement to accept payment orders of a sender. In the absence of such an agreement there is no obligation by a receiving bank to accept a payment order. Section 4A-212. The measure of damages for breach of an agreement to accept a payment order is the same as that stated in subsection (b). As in the case of subsection (b), additional damages, including consequential damages, may be recovered to the extent stated in an express written agreement of the receiving bank.
4. Reasonable attorney's fees are recoverable only in cases in which damages are limited to statutory damages stated in subsection (a), (b) and (d). If additional damages are recoverable because provided for by an express written agreement, attorney's fees are not recoverable. The rationale is that there is no need for statutory attorney's fees in the latter case, because the parties have agreed to a measure of damages which may or may not provide for attorney's fees.
5. The effect of subsection (f) is to prevent reduction of a receiving bank's liability under Section 4A-305.
No South Carolina case has applied the rule in Hadley v. Baxendale, relating to the availability of consequential damages in contract, to a funds transfer. Adoption of this section [Section 36-4A-305] modifies the potential common-law applicability of the rule in Hadley in the funds transfer context. For a discussion of this effect and the policies underlying Section 36-4A-305, see the Official Comment to this section.
Section 36-4A-401. Payment date.
'Payment date' of a payment order means the day on which the amount of the order is payable to the beneficiary by the beneficiary's bank. The payment date may be determined by instruction of the sender but cannot be earlier than the day the order is received by the beneficiary's bank and, unless otherwise determined, is the day the order is received by the beneficiary's bank.
"Payment date" refers to the day the beneficiary's bank is to pay the beneficiary. The payment date may be expressed in various ways so long as it indicates the day the beneficiary is to receive payment. For example, in ACH transfers the payment date is the equivalent of "settlement date" or "effective date." Payment date applies to the payment order issued to the beneficiary's bank, but a payment order issued to a receiving bank other than the beneficiary's bank may also state a date for payment to the beneficiary. In the latter case, the statement of a payment date is to instruct the receiving bank concerning time of execution of the sender's order. Section 4A-301(b).
Section 36-4A-402. Obligation of sender to pay receiving bank.
(a) This section is subject to Sections 36-4A-205 and 36-4A-207.
(b) With respect to a payment order issued to the beneficiary's bank, acceptance of the order by the bank obliges the sender to pay the bank the amount of the order, but payment is not due until the payment date of the order.
(c) This subsection is subject to subsection (e) and to Section 36-4A-303. With respect to a payment order issued to a receiving bank other than the beneficiary's bank, acceptance of the order by the receiving bank obliges the sender to pay the bank the amount of the sender's order. Payment by the sender is not due until the execution date of the sender's order. The obligation of that sender to pay its payment order is excused if the funds transfer is not completed by acceptance by the beneficiary's bank of a payment order instructing payment to the beneficiary of that sender's payment order.
(d) If the sender of a payment order pays the order and was not obliged to pay all or part of the amount paid, the bank receiving payment is obliged to refund payment to the extent the sender was not obliged to pay. Except as provided in Sections 36-4A-204 and 36-4A-304, interest is payable on the refundable amount from the date of payment.
(e) If a funds transfer is not completed as stated in subsection (c) and an intermediary bank is obliged to refund payment as stated in subsection (d) but is unable to do so because not permitted by applicable law or because the bank suspends payments, a sender in the funds transfer that executed a payment order in compliance with an instruction, as stated in Section 36-4A-302(a)(1), to route the funds transfer through that intermediary bank is entitled to receive or retain payment from the sender of the payment order that it accepted. The first sender in the funds transfer that issued an instruction requiring routing through that intermediary bank is subrogated to the right of the bank that paid the intermediary bank to refund as stated in subsection (d).
(f) The right of the sender of a payment order to be excused from the obligation to pay the order as stated in subsection (c) or to receive refund under subsection (d) may not be varied by agreement.
1. Subsection (b) states that the sender of a payment order to the beneficiary's bank must pay the order when the beneficiary's bank accepts the order. At that point the beneficiary's bank is obliged to pay the beneficiary. Section 4A-404(a). The last clause of subsection (b) covers a case of premature acceptance by the beneficiary's bank. In some funds transfers, notably automated clearing house transfers, a beneficiary's bank may receive a payment order with a payment date after the day the order is received. The beneficiary's bank might accept the order before the payment date by notifying the beneficiary of receipt of the order. Although the acceptance obliges the beneficiary's bank to pay the beneficiary, payment is not due until the payment date. The last clause of subsection (b) is consistent with that result. The beneficiary's bank is also not entitled to payment from the sender until the payment date.
2. Assume that Originator instructs Bank A to order immediate payment to the account of Beneficiary in Bank B. Execution of Originator's payment order by Bank A is acceptance under Section 4A-209(a). Under the second sentence of Section 4A-402(c) the acceptance creates an obligation of Originator to pay Bank A the amount of the order. The last clause of that sentence deals with attempted funds transfers that are not completed. In that event the obligation of the sender to pay its payment order is excused. Originator makes payment to Beneficiary when Bank B, the beneficiary's bank, accepts a payment order for the benefit of Beneficiary. Section 4A-406(a). If that acceptance by Bank B does not occur, the funds transfer has miscarried because Originator has not paid Beneficiary. Originator doesn't have to pay its payment order, and if it has already paid it is entitled to refund of the payment with interest. The rate of interest is stated in Section 4A-506. This "money-back guarantee" is an important protection of Originator. Originator is assured that it will not lose its money if something goes wrong in the transfer. For example, risk of loss resulting from payment to the wrong beneficiary is borne by some bank, not by Originator. The most likely reason for noncompletion is a failure to execute or an erroneous execution of a payment order by Bank A or an intermediary bank. Bank A may have issued its payment order to the wrong bank or it may have identified the wrong beneficiary in its order. The money-back guarantee is particularly important to Originator if noncompletion of the funds transfer is due to the fault of an intermediary bank rather than Bank A. In that case Bank A must refund payment to Originator, and Bank A has the burden of obtaining refund from the intermediary bank that it paid.
Subsection (c) can result in loss if an intermediary bank suspends payments. Suppose Originator instructs Bank A to pay to Beneficiary's account in Bank B and to use Bank C as an intermediary bank. Bank A executes Originator's order by issuing a payment order to Bank C. Bank A pays Bank C. Bank C fails to execute the order of Bank A and suspends payments. Under subsections (c) and (d), Originator is not obliged to pay Bank A and is entitled to refund from Bank A of any payment that it may have made. Bank A is entitled to a refund from Bank C, but Bank C is insolvent. Subsection (e) deals with this case. Bank A was required to issue its payment order to Bank C because Bank C was designated as an intermediary bank by Originator. Section 4A-302(a)(1). In this case Originator takes the risk of insolvency of Bank C. Under subsection (e), Bank A is entitled to payment from Originator and Originator is subrogated to the right of Bank A under subsection (d) to refund of payment from Bank C.
3. A payment order is not like a negotiable instrument on which the drawer or maker has liability. Acceptance of the order by the receiving bank creates an obligation of the sender to pay the receiving bank the amount of the order. That is the extent of the sender's liability to the receiving bank and no other person has any rights against the sender with respect to the sender's order.
Section 36-4A-403. Payment by sender to receiving bank.
(a) Payment of the sender's obligation under Section 36-4A-402 to pay the receiving bank occurs as follows:
(1) If the sender is a bank, payment occurs when the receiving bank receives final settlement of the obligation through a Federal Reserve Bank or through a funds-transfer system.
(2) If the sender is a bank and the sender (i) credited an account of the receiving bank with the sender, or (ii) caused an account of the receiving bank in another bank to be credited, payment occurs when the credit is withdrawn or, if not withdrawn, at midnight of the day on which the credit is withdrawable and the receiving bank learns of that fact.
(3) If the receiving bank debits an account of the sender with the receiving bank, payment occurs when the debit is made to the extent the debit is covered by a withdrawable credit balance in the account.
(b) If the sender and receiving bank are members of a funds-transfer system that nets obligations multilaterally among participants, the receiving bank receives final settlement when settlement is complete in accordance with the rules of the system. The obligation of the sender to pay the amount of a payment order transmitted through the funds-transfer system may be satisfied, to the extent permitted by the rules of the system, by setting off and applying against the sender's obligation the right of the sender to receive payment from the receiving bank of the amount of any other payment order transmitted to the sender by the receiving bank through the funds-transfer system. The aggregate balance of obligations owed by each sender to each receiving bank in the funds-transfer system may be satisfied, to the extent permitted by the rules of the system, by setting off and applying against that balance the aggregate balance of obligations owed to the sender by other members of the system. The aggregate balance is determined after the right of setoff stated in the second sentence of this subsection has been exercised.
(c) If two banks transmit payment orders to each other under an agreement that settlement of the obligations of each bank to the other under Section 36-4A-402 will be made at the end of the day or other period, the total amount owed with respect to all orders transmitted by one bank shall be set off against the total amount owed with respect to all orders transmitted by the other bank. To the extent of the setoff, each bank has made payment to the other.
(d) In a case not covered by subsection (a), the time when payment of the sender's obligation under Section 36-4A-402(b) or 36-4A-402(c) occurs is governed by applicable principles of law that determine when an obligation is satisfied.
1. This section defines when a sender pays the obligation stated in Section 4A-402. If a group of two or more banks engage in funds transfers with each other, the participating banks will sometimes be senders and sometimes receiving banks. With respect to payment orders other than Fedwires, the amounts of the various payment orders may be credited and debited to accounts of one bank with another or to a clearing house account of each bank and amounts owed and amounts due are netted. Settlement is made through a Federal Reserve Bank by charges to the Federal Reserve accounts of the net debtor banks and credits to the Federal Reserve accounts of the net creditor banks. In the case of Fedwires the sender's obligation is settled by a debit to the Federal Reserve account of the sender and a credit to the Federal Reserve account of the receiving bank at the time the receiving bank receives the payment order. Both of these cases are covered by subsection (a)(1). When the Federal Reserve settlement becomes final the obligation of the sender under Section 4A-402 is paid.
2. In some cases a bank does not settle an obligation owed to another bank through a Federal Reserve Bank. This is the case if one of the banks is a foreign bank without access to the Federal Reserve payment system. In this kind of case, payment is usually made by credits or debits to accounts of the two banks with each other or to accounts of the two banks in a third bank. Suppose Bank B has an account in Bank A. Bank A advises Bank B that its account in Bank A has been credited $1,000,000 and that the credit is immediately withdrawable. Bank A also instructs Bank B to pay $1,000,000 to the account of Beneficiary in Bank B. This case is covered by subsection (a)(2). Bank B may want to immediately withdraw this credit. For example, it might do so by instructing Bank A to debit the account and pay some third party. Payment by Bank A to Bank B of Bank A's payment order occurs when the withdrawal is made. Suppose Bank B does not withdraw the credit. Since Bank B is the beneficiary's bank, one of the effects of receipt of payment by Bank B is that acceptance of Bank A's payment order automatically occurs at the time of payment. Section 4A-209(b)(2). Acceptance means that Bank B is obliged to pay $1,000,000 to Beneficiary. Section 4A-404(a). Subsection (a)(2) of Section 4A-403 states that payment does not occur until midnight if the credit is not withdrawn. This allows Bank B an opportunity to reject the order if it does not have time to withdraw the credit to its account and it is not willing to incur the liability to Beneficiary before it has use of the funds represented by the credit.
3. Subsection (a)(3) applies to a case in which the sender (bank or nonbank) has a funded account in the receiving bank. If Sender has an account in Bank and issues a payment order to Bank, Bank can obtain payment from Sender by debiting the account of Sender, which pays its Section 4A-402 obligation to Bank when the debit is made.
4. Subsection (b) deals with multilateral settlements made through a funds transfer system and is based on the CHIPS settlement system. In a funds transfer system such as CHIPS, which allows the various banks that transmit payment orders over the system to settle obligations at the end of each day, settlement is not based on individual payment orders. Each bank using the system engages in funds transfers with many other banks using the system. Settlement for any participant is based on the net credit or debit position of that participant with all other banks using the system. Subsection (b) is designed to make clear that the obligations of any sender are paid when the net position of that sender is settled in accordance with the rules of the funds transfer system. This provision is intended to invalidate any argument, based on common-law principles, that multilateral netting is not valid because mutuality of obligation is not present. Subsection (b) dispenses with any mutuality of obligation requirements. Subsection (c) applies to cases in which two banks send payment orders to each other during the day and settle with each other at the end of the day or at the end of some other period. It is similar to subsection (b) in that it recognizes that a sender's obligation to pay a payment order is satisfied by a setoff. The obligations of each bank as sender to the other as receiving bank are obligations of the bank itself and not as representative of customers. These two sections are important in the case of insolvency of a bank. They make clear that liability under Section 4A-402 is based on the net position of the insolvent bank after setoff.
5. Subsection (d) relates to the uncommon case in which the sender doesn't have an account relationship with the receiving bank and doesn't settle through a Federal Reserve Bank. An example would be a customer that pays over the counter for a payment order that the customer issues to the receiving bank. Payment would normally be by cash, check or bank obligation. When payment occurs is determined by law outside Article 4A.
Section 36-4A-404. Obligation of beneficiary's bank to pay and give notice to beneficiary.
(a) Subject to Sections 36-4A-211(e), 36-4A-405(d), and 36-4A-405(e), if a beneficiary's bank accepts a payment order, the bank is obliged to pay the amount of the order to the beneficiary of the order. Payment is due on the payment date of the order, but if acceptance occurs on the payment date after the close of the funds-transfer business day of the bank, payment is due on the next funds-transfer business day. If the bank refuses to pay after demand by the beneficiary and receipt of notice of particular circumstances that will give rise to consequential damages as a result of nonpayment, the beneficiary may recover damages resulting from the refusal to pay to the extent the bank had notice of the damages, unless the bank proves that it did not pay because of a reasonable doubt concerning the right of the beneficiary to payment.
(b) If a payment order accepted by the beneficiary's bank instructs payment to an account of the beneficiary, the bank is obliged to notify the beneficiary of receipt of the order before midnight of the next funds-transfer business day following the payment date. If the payment order does not instruct payment to an account of the beneficiary, the bank is required to notify the beneficiary only if notice is required by the order. Notice may be given by first-class mail or any other means reasonable in the circumstances. If the bank fails to give the required notice, the bank is obliged to pay interest to the beneficiary on the amount of the payment order from the day notice should have been given until the day the beneficiary learned of receipt of the payment order by the bank. No other damages are recoverable. Reasonable attorney's fees are also recoverable if demand for interest is made and refused before an action is brought on the claim.
(c) The right of a beneficiary to receive payment and damages as stated in subsection (a) may not be varied by agreement or a funds-transfer system rule. The right of a beneficiary to be notified as stated in subsection (b) may be varied by agreement of the beneficiary or by a funds-transfer system rule if the beneficiary is notified of the rule before initiation of the funds transfer.
1. The first sentence of subsection (a) states the time when the obligation of the beneficiary's bank arises. The second and third sentences state when the beneficiary's bank must make funds available to the beneficiary. They also state the measure of damages for failure, after demand, to comply. Since the Expedited Funds Availability Act, 12 U.S.C. 4001 et seq., also governs funds availability in a funds transfer, the second and third sentences of subsection (a) may be subject to preemption by that Act.
2. Subsection (a) provides that the beneficiary of an accepted payment order may recover consequential damages if the beneficiary's bank refuses to pay the order after demand by the beneficiary if the bank at that time had notice of the particular circumstances giving rise to the damages. Such damages are recoverable only to the extent the bank had "notice of the damages." The quoted phrase requires that the bank have notice of the general type or nature of the damages that will be suffered as a result of the refusal to pay and their general magnitude. There is no requirement that the bank have notice of the exact or even the approximate amount of the damages, but if the amount of damages is extraordinary the bank is entitled to notice of that fact. For example, in Evra Corp. v. Swiss Bank Corp., 673 F.2d 951 (7th Cir. 1982), failure to complete a funds transfer of only $27,000 required to retain rights to a very favorable ship charter resulted in a claim for more than $2,000,000 of consequential damages. Since it is not reasonably foreseeable that a failure to make a relatively small payment will result in damages of this magnitude, notice is not sufficient if the beneficiary's bank has notice only that the $27,000 is necessary to retain rights on a ship charter. The bank is entitled to notice that an exceptional amount of damages will result as well. For example, there would be adequate notice if the bank had been made aware that damages of $1,000,000 or more might result.
3. Under the last clause of subsection (a) the beneficiary's bank is not liable for damages if its refusal to pay was "because of a reasonable doubt concerning the right of the beneficiary to payment." Normally there will not be any question about the right of the beneficiary to receive payment. Normally, the bank should be able to determine whether it has accepted the payment order and, if it has been accepted, the first sentence of subsection (a) states that the bank is obliged to pay. There may be uncommon cases, however, in which there is doubt whether acceptance occurred. For example, if acceptance is based on receipt of payment by the beneficiary's bank under Section 4A-403 (a)(1) or (2), there may be cases in which the bank is not certain that payment has been received. There may also be cases in which there is doubt about whether the person demanding payment is the person identified in the payment order as beneficiary of the order.
The last clause of subsection (a) does not apply to cases in which a funds transfer is being used to pay an obligation and a dispute arises between the originator and the beneficiary concerning whether the obligation is in fact owed. For example, the originator may try to prevent payment to the beneficiary by the beneficiary's bank by alleging that the beneficiary is not entitled to payment because of fraud against the originator or a breach of contract relating to the obligation. The fraud or breach of contract claim of the originator may be grounds for recovery by the originator from the beneficiary after the beneficiary is paid, but it does not affect the obligation of the beneficiary's bank to pay the beneficiary. Unless the payment order has been cancelled pursuant to Section 4A-211(c), there is no excuse for refusing to pay the beneficiary and, in a proper case, the refusal may result in consequential damages. Except in the case of a book transfer, in which the beneficiary's bank is also the originator's bank, the originator of a funds transfer cannot cancel a payment order to the beneficiary's bank, with or without the consent of that bank, because the originator is not the sender of that order. Thus, the beneficiary's bank may safely ignore any instruction by the originator to withhold payment to the beneficiary.
4. Subsection (b) states the duty of the beneficiary's bank to notify the beneficiary of receipt of the order. If acceptance occurs under Section 4A-209(b)(1) the beneficiary is normally notified. Thus, subsection (b) applies primarily to cases in which acceptance occurs under Section 4A-209(b)(2) or (3). Notice under subsection (b) is not required if the person entitled to the notice agrees or a funds transfer system rule provides that notice is not required and the beneficiary is given notice of the rule. In ACH transactions the normal practice is not to give notice to the beneficiary unless notice is requested by the beneficiary. This practice can be continued by adoption of a funds transfer system rule. Subsection (a) is not subject to variation by agreement or by a funds transfer system rule.
Section 36-4A-405. Payment by beneficiary's bank to beneficiary.
(a) If the beneficiary's bank credits an account of the beneficiary of a payment order, payment of the bank's obligation under Section 36-4A-404(a) occurs when and to the extent (i) the beneficiary is notified of the right to withdraw the credit, (ii) the bank lawfully applies the credit to a debt of the beneficiary, or (iii) funds with respect to the order are otherwise made available to the beneficiary by the bank.
(b) If the beneficiary's bank does not credit an account of the beneficiary of a payment order, the time when payment of the bank's obligation under Section 36-4A-404(a) occurs is governed by principles of law that determine when an obligation is satisfied.
(c) Except as stated in subsections (d) and (e), if the beneficiary's bank pays the beneficiary of a payment order under a condition to payment or agreement of the beneficiary giving the bank the right to recover payment from the beneficiary if the bank does not receive payment of the order, the condition to payment or agreement is not enforceable.
(d) A funds-transfer system rule may provide that payments made to beneficiaries of funds transfers made through the system are provisional until receipt of payment by the beneficiary's bank of the payment order it accepted. A beneficiary's bank that makes a payment that is provisional under the rule is entitled to refund from the beneficiary if (i) the rule requires that both the beneficiary and the originator be given notice of the provisional nature of the payment before the funds transfer is initiated, (ii) the beneficiary, the beneficiary's bank, and the originator's bank agreed to be bound by the rule, and (iii) the beneficiary's bank did not receive payment of the payment order that it accepted. If the beneficiary is obliged to refund payment to the beneficiary's bank, acceptance of the payment order by the beneficiary's bank is nullified and no payment by the originator of the funds transfer to the beneficiary occurs under Section 36-4A-406.
(e) This subsection applies to a funds transfer that includes a payment order transmitted over a funds-transfer system that (i) nets obligations multilaterally among participants, and (ii) has in effect a loss-sharing agreement among participants for the purpose of providing funds necessary to complete settlement of the obligations of one or more participants that do not meet their settlement obligations. If the beneficiary's bank in the funds transfer accepts a payment order and the system fails to complete settlement pursuant to its rules with respect to any payment order in the funds transfer, (i) the acceptance by the beneficiary's bank is nullified and no person has any right or obligation based on the acceptance, (ii) the beneficiary's bank is entitled to recover payment from the beneficiary, (iii) no payment by the originator to the beneficiary occurs under Section 36-4A-406, and (iv) subject to Section 36-4A-402(e), each sender in the funds transfer is excused from its obligation to pay its payment order under Section 36-4A-402(c) because the funds transfer has not been completed.
1. This section defines when the beneficiary's bank pays the beneficiary and when the obligation of the beneficiary's bank under Section 4A-404 to pay the beneficiary is satisfied. In almost all cases the bank will credit an account of the beneficiary when it receives a payment order. In the typical case the beneficiary is paid when the beneficiary is given notice of the right to withdraw the credit. Subsection (a)(i). In some cases payment might be made to the beneficiary not by releasing funds to the beneficiary, but by applying the credit to a debt of the beneficiary. Subsection (a)(ii). In this case the beneficiary gets the benefit of the payment order because a debt of the beneficiary has been satisfied. The two principal cases in which payment will occur in this manner are setoff by the beneficiary's bank and payment of the proceeds of the payment order to a garnishing creditor of the beneficiary. These cases are discussed in Comment 2 to Section 4A-502.
2. If a beneficiary's bank releases funds to the beneficiary before it receives payment from the sender of the payment order, it assumes the risk that the sender may not pay the sender's order because of suspension of payments or other reason. Subsection (c). As stated in Comment 5 to Section 4A-209, the beneficiary's bank can protect itself against this risk by delaying acceptance. But if the bank accepts the order it is obliged to pay the beneficiary. If the beneficiary's bank has given the beneficiary notice of the right to withdraw a credit made to the beneficiary's account, the beneficiary has received payment from the bank. Once payment has been made to the beneficiary with respect to an obligation incurred by the bank under Section 4A-404(a), the payment cannot be recovered by the beneficiary's bank unless subsection (d) or (e) applies. Thus, a right to withdraw a credit cannot be revoked if the right to withdraw constituted payment of the bank's obligation. This principle applies even if funds were released as a "loan" (see Comment 5 to Section 4A-209), or were released subject to a condition that they would be repaid in the event the bank does not receive payment from the sender of the payment order, or the beneficiary agreed to return the payment if the bank did not receive payment from the sender.
3. Subsection (c) is subject to an exception stated in subsection (d) which is intended to apply to automated clearing house transfers. ACH transfers are made in batches. A beneficiary's bank will normally accept, at the same time and as part of a single batch, payment orders with respect to many different originator's banks. Comment 2 to Section 4A-206. The custom in ACH transactions is to release funds to the beneficiary early on the payment date even though settlement to the beneficiary's bank does not occur until later in the day. The understanding is that payments to beneficiaries are provisional until the beneficiary's bank receives settlement. This practice is similar to what happens when a depositary bank releases funds with respect to a check forwarded for collection. If the check is dishonored the bank is entitled to recover the funds from the customer. ACH transfers are widely perceived as check substitutes. Section 4A-405(d) allows the funds transfer system to adopt a rule making payments to beneficiaries provisional. If such a rule is adopted, a beneficiary's bank that releases funds to the beneficiary will be able to recover the payment if it doesn't receive payment of the payment order that it accepted. There are two requirements with respect to the funds transfer system rule. The beneficiary, the beneficiary's bank and the originator's bank must all agree to be bound by the rule and the rule must require that both the beneficiary and the originator be given notice of the provisional nature of the payment before the funds transfer is initiated. There is no requirement that the notice be given with respect to a particular funds transfer. Once notice of the provisional nature of the payment has been given, the notice is effective for all subsequent payments to or from the person to whom the notice was given. Subsection (d) provides only that the funds transfer system rule must require notice to the beneficiary and the originator. The beneficiary's bank will know what the rule requires, but it has no way of knowing whether the originator's bank complied with the rule. Subsection (d) does not require proof that the originator received notice. If the originator's bank failed to give the required notice and the originator suffered as a result, the appropriate remedy is an action by the originator against the originator's bank based on that failure. But the beneficiary's bank will not be able to get the benefit of subsection (d) unless the beneficiary had notice of the provisional nature of the payment because subsection (d) requires an agreement by the beneficiary to be bound by the rule. Implicit in an agreement to be bound by a rule that makes a payment provisional is a requirement that notice be given of what the rule provides. The notice can be part of the agreement or separately given. For example, notice can be given by providing a copy of the system's operating rules.
With respect to ACH transfers made through a Federal Reserve Bank acting as an intermediary bank, the Federal Reserve Bank is obliged under Section 4A-402(b) to pay a beneficiary's bank that accepts the payment order. Unlike Fedwire transfers, under current ACH practice a Federal Reserve Bank that processes a payment order does not obligate itself to pay if the originator's bank fails to pay the Federal Reserve Bank. It is assumed that the Federal Reserve will use its right of preemption which is recognized in Section 4A-107 to disclaim the Section 4A-402(b) obligation in ACH transactions if it decides to retain the provisional payment rule.
4. Subsection (e) is another exception to subsection (c). It refers to funds transfer systems having loss-sharing rules described in the subsection. CHIPS has proposed a rule that fits the description. Under the CHIPS loss-sharing rule the CHIPS banks will have agreed to contribute funds to allow the system to settle for payment orders sent over the system during the day in the event that one or more banks are unable to meet their settlement obligations. Subsection (e) applies only if CHIPS fails to settle despite the loss-sharing rule. Since funds under the loss-sharing rule will be instantly available to CHIPS and will be in an amount sufficient to cover any failure that can be reasonably anticipated, it is extremely unlikely that CHIPS would ever fail to settle. Thus, subsection (e) addresses an event that should never occur. If that event were to occur, all payment orders made over the system would be canceled under the CHIPS rule. Thus, no bank would receive settlement, whether or not a failed bank was involved in a particular funds transfer. Subsection (e) provides that each funds transfer in which there is a payment order with respect to which there is a settlement failure is unwound. Acceptance by the beneficiary's bank in each funds transfer is nullified. The consequences of nullification are that the beneficiary has no right to receive or retain payment by the beneficiary's bank, no payment is made by the originator to the beneficiary and each sender in the funds transfer is, subject to Section 4A-402(e), not obliged to pay its payment order and is entitled to refund under Section 4A-402(d) if it has already paid.
Section 36-4A-406. Payment by originator to beneficiary; discharge of underlying obligation.
(a) Subject to Sections 36-4A-211(e), 36-4A-405(d), and 36-4A-405(e), the originator of a funds transfer pays the beneficiary of the originator's payment order (i) at the time a payment order for the benefit of the beneficiary is accepted by the beneficiary's bank in the funds transfer and (ii) in an amount equal to the amount of the order accepted by the beneficiary's bank, but not more than the amount of the originator's order.
(b) If payment under subsection (a) is made to satisfy an obligation, the obligation is discharged to the same extent discharge would result from payment to the beneficiary of the same amount in money, unless (i) the payment under subsection (a) was made by a means prohibited by the contract of the beneficiary with respect to the obligation, (ii) the beneficiary, within a reasonable time after receiving notice of receipt of the order by the beneficiary's bank, notified the originator of the beneficiary's refusal of the payment, (iii) funds with respect to the order were not withdrawn by the beneficiary or applied to a debt of the beneficiary, and (iv) the beneficiary would suffer a loss that could reasonably have been avoided if payment had been made by a means complying with the contract. If payment by the originator does not result in discharge under this section, the originator is subrogated to the rights of the beneficiary to receive payment from the beneficiary's bank under Section 36-4A-404(a).
(c) For the purpose of determining whether discharge of an obligation occurs under subsection (b), if the beneficiary's bank accepts a payment order in an amount equal to the amount of the originator's payment order less charges of one or more receiving banks in the funds transfer, payment to the beneficiary is deemed to be in the amount of the originator's order unless upon demand by the beneficiary the originator does not pay the beneficiary the amount of the deducted charges.
(d) Rights of the originator or of the beneficiary of a funds transfer under this section may be varied only by agreement of the originator and the beneficiary.
1. Subsection (a) states the fundamental rule of Article 4A that payment by the originator to the beneficiary is accomplished by providing to the beneficiary the obligation of the beneficiary's bank to pay. Since this obligation arises when the beneficiary's bank accepts a payment order, the originator pays the beneficiary at the time of acceptance and in the amount of the payment order accepted.
2. In a large percentage of funds transfers, the transfer is made to pay an obligation of the originator. Subsection (a) states that the beneficiary is paid by the originator when the beneficiary's bank accepts a payment order for the benefit of the beneficiary. When that happens the effect under subsection (b) is to substitute the obligation of the beneficiary's bank for the obligation of the originator. The effect is similar to that under Article 3 if a cashier's check payable to the beneficiary had been taken by the beneficiary. Normally, payment by funds transfer is sought by the beneficiary because it puts money into the hands of the beneficiary more quickly. As a practical matter the beneficiary and the originator will nearly always agree to the funds transfer in advance. Under subsection (b) acceptance by the beneficiary's bank will result in discharge of the obligation for which payment was made unless the beneficiary had made a contract with respect to the obligation which did not permit payment by the means used. Thus, if there is no contract of the beneficiary with respect to the means of payment of the obligation, acceptance by the beneficiary's bank of a payment order to the account of the beneficiary can result in discharge.
3. Suppose Beneficiary's contract stated that payment of an obligation owed by Originator was to be made by a cashier's check of Bank A. Instead, Originator paid by a funds transfer to Beneficiary's account in Bank B. Bank B accepted a payment order for the benefit of Beneficiary by immediately notifying Beneficiary that the funds were available for withdrawal. Before Beneficiary had a reasonable opportunity to withdraw the funds Bank B suspended payments. Under the unless clause of subsection (b) Beneficiary is not required to accept the payment as discharging the obligation owed by Originator to Beneficiary if Beneficiary's contract means that Beneficiary was not required to accept payment by wire transfer. Beneficiary could refuse the funds transfer as payment of the obligation and could resort to rights under the underlying contract to enforce the obligation. The rationale is that Originator cannot impose the risk of Bank B's insolvency on Beneficiary if Beneficiary had specified another means of payment that did not entail that risk. If Beneficiary is required to accept Originator's payment, Beneficiary would suffer a loss that would not have occurred if payment had been made by a cashier's check on Bank A, and Bank A has not suspended payments. In this case Originator will have to pay twice. It is obliged to pay the amount of its payment order to the bank that accepted it and has to pay the obligation it owes to Beneficiary which has not been discharged. Under the last sentence of subsection (b) Originator is subrogated to Beneficiary's right to receive payment from Bank B under Section 4A-404(a).
4. Suppose Beneficiary's contract called for payment by a Fedwire transfer to Bank B, but the payment order accepted by Bank B was not a Fedwire transfer. Before the funds were withdrawn by Beneficiary, Bank B suspended payments. The sender of the payment order to Bank B paid the amount of the order to Bank B. In this case the payment by Originator did not comply with Beneficiary's contract, but the noncompliance did not result in a loss to Beneficiary as required by subsection (b) (iv). A Fedwire transfer avoids the risk of insolvency of the sender of the payment order to Bank B, but it does not affect the risk that Bank B will suspend payments before withdrawal of the funds by Beneficiary. Thus, the unless clause of subsection (b) is not applicable and the obligation owed to Beneficiary is discharged.
5. Charges of receiving banks in a funds transfer normally are nominal in relationship to the amount being paid by the originator to the beneficiary. Wire transfers are normally agreed to in advance and the parties may agree concerning how these charges are to be divided between the parties. Subsection (c) states a rule that applies in the absence of agreement. In some funds transfers charges of banks that execute payment orders are collected by deducting the charges from the amount of the payment order issued by the bank, i.e. the bank issues a payment order that is slightly less than the amount of the payment order that is being executed. The process is described in Comment 3 to Section 4A-302. The result in such a case is that the payment order accepted by the beneficiary's bank will be slightly less than the amount of the originator's order. Subsection (c) recognizes the principle that a beneficiary is entitled to full payment of a debt paid by wire transfer as a condition to discharge. On the other hand, Subsection (c) prevents a beneficiary from denying the originator the benefit of the payment by asserting that discharge did not occur because deduction of bank charges resulted in less than full payment. The typical case is one in which the payment is made to exercise a valuable right such as an option which is unfavorable to the beneficiary. Subsection (c) allows discharge notwithstanding the deduction unless the originator fails to reimburse the beneficiary for the deducted charges after demand by the beneficiary.
Section 36-4A-501. Variation by agreement and effect of funds-transfer system rule.
(a) Except as otherwise provided in this chapter, the rights and obligations of a party to a funds transfer may be varied by agreement of the affected party.
(b) 'Funds-transfer system rule' means a rule of an association of banks (i) governing transmission of payment orders by means of a funds-transfer system of the association or rights and obligations with respect to those orders, or (ii) to the extent the rule governs rights and obligations between banks that are parties to a funds transfer in which a Federal Reserve Bank, acting as an intermediary bank, sends a payment order to the beneficiary's bank. Except as otherwise provided in this chapter, a funds-transfer system rule governing rights and obligations between participating banks using the system may be effective even if the rule conflicts with this chapter and indirectly affects another party to the funds transfer who does not consent to the rule. A funds-transfer system rule may also govern rights and obligations of parties other than participating banks using the system to the extent stated in Sections 36-4A-404(c), 36-4A-405(d), and 36-4A-507(c).
1. This section is designed to give some flexibility to Article 4A. Funds transfer system rules govern rights and obligations between banks that use the system. They may cover a wide variety of matters such as form and content of payment orders, security procedures, cancellation rights and procedures, indemnity rights, compensation rules for delays in completion of a funds transfer, time and method of settlement, credit restrictions with respect to senders of payment orders and risk allocation with respect to suspension of payments by a participating bank. Funds transfer system rules can be very effective in supplementing the provisions of Article 4A and in filling gaps that may be present in Article 4A. To the extent they do not conflict with Article 4A there is no problem with respect to their effectiveness. In that case they merely supplement Article 4A. Section 4A-501 goes further. It states that unless the contrary is stated, funds transfer system rules can override provisions of Article 4A. Thus, rights and obligations of a sender bank and a receiving bank with respect to each other can be different from that stated in Article 4A to the extent a funds transfer system rule applies. Since funds transfer system rules are defined as those governing the relationship between participating banks, a rule can have a direct effect only on participating banks. But a rule that affects the conduct of a participating bank may indirectly affect the rights of nonparticipants such as the originator or beneficiary of a funds transfer, and such a rule can be effective even though it may affect nonparticipants without their consent. For example, a rule might prevent execution of a payment order or might allow cancellation of a payment order with the result that a funds transfer is not completed or is delayed. But a rule purporting to define rights and obligations of nonparticipants in the system would not be effective to alter Article 4A rights because the rule is not within the definition of funds transfer system rule. Rights and obligations arising under Article 4A may also be varied by agreement of the affected parties, except to the extent Article 4A otherwise provides. Rights and obligations arising under Article 4A can also be changed by Federal Reserve regulations and operating circulars of Federal Reserve Banks. Section 4A-107.
2. Subsection (b)(ii) refers to ACH transfers. Whether an ACH transfer is made through an automated clearing house of a Federal Reserve Bank or through an automated clearing house of another association of banks, the rights and obligations of the originator's bank and the beneficiary's bank are governed by uniform rules adopted by various associations of banks in various parts of the nation. With respect to transfers in which a Federal Reserve Bank acts as intermediary bank these rules may be incorporated, in whole or in part, in operating circulars of the Federal Reserve Bank. Even if not so incorporated these rules can still be binding on the association banks. If a transfer is made through a Federal Reserve Bank, the rules are effective under subsection (b)(ii). If the transfer is not made through a Federal Reserve Bank, the association rules are effective under subsection (b)(i).
Section 36-4A-502. Creditor process served on receiving bank; setoff by beneficiary's bank.
(a) As used in this section, 'creditor process' means levy, attachment, garnishment, notice of lien, sequestration, or similar process issued by or on behalf of a creditor or other claimant with respect to an account.
(b) This subsection applies to creditor process with respect to an authorized account of the sender of a payment order if the creditor process is served on the receiving bank. For the purpose of determining rights with respect to the creditor process, if the receiving bank accepts the payment order the balance in the authorized account is deemed to be reduced by the amount of the payment order to the extent the bank did not otherwise receive payment of the order, unless the creditor process is served at a time and in a manner affording the bank a reasonable opportunity to act on it before the bank accepts the payment order.
(c) If a beneficiary's bank has received a payment order for payment to the beneficiary's account in the bank, the following rules apply:
(1) The bank may credit the beneficiary's account. The amount credited may be set off against an obligation owed by the beneficiary to the bank or may be applied to satisfy creditor process served on the bank with respect to the account.
(2) The bank may credit the beneficiary's account and allow withdrawal of the amount credited unless creditor process with respect to the account is served at a time and in a manner affording the bank a reasonable opportunity to act to prevent withdrawal.
(3) If creditor process with respect to the beneficiary's account has been served and the bank has had a reasonable opportunity to act on it, the bank may not reject the payment order except for a reason unrelated to the service of process.
(d) Creditor process with respect to a payment by the originator to the beneficiary pursuant to a funds transfer may be served only on the beneficiary's bank with respect to the debt owed by that bank to the beneficiary. Any other bank served with the creditor process is not obliged to act with respect to the process.
1. When a receiving bank accepts a payment order, the bank normally receives payment from the sender by debiting an authorized account of the sender. In accepting the sender's order the bank may be relying on a credit balance in the account. If creditor process is served on the bank with respect to the account before the bank accepts the order but the bank employee responsible for the acceptance was not aware of the creditor process at the time the acceptance occurred, it is unjust to the bank to allow the creditor process to take the credit balance on which the bank may have relied. Subsection (b) allows the bank to obtain payment from the sender's account in this case. Under that provision, the balance in the sender's account to which the creditor process applies is deemed to be reduced by the amount of the payment order unless there was sufficient time for notice of the service of creditor process to be received by personnel of the bank responsible for the acceptance.
2. Subsection (c) deals with payment orders issued to the beneficiary's bank. The bank may credit the beneficiary's account when the order is received, but under Section 4A-404(a) the bank incurs no obligation to pay the beneficiary until the order is accepted pursuant to Section 4A-209(b). Thus, before acceptance, the credit to the beneficiary's account is provisional. But under Section 4A-209(b) acceptance occurs if the beneficiary's bank pays the beneficiary pursuant to Section 4A-405(a). Under that provision, payment occurs if the credit to the beneficiary's account is applied to a debt of the beneficiary. Subsection (c)(1) allows the bank to credit the beneficiary's account with respect to a payment order and to accept the order by setting off the credit against an obligation owed to the bank or applying the credit to creditor process with respect to the account.
Suppose a beneficiary's bank receives a payment order for the benefit of a customer. Before the bank accepts the order, the bank learns that creditor process has been served on the bank with respect to the customer's account. Normally there is no reason for a beneficiary's bank to reject a payment order, but if the beneficiary's account is garnished, the bank may be faced with a difficult choice. If it rejects the order, the garnishing creditor's potential recovery of funds of the beneficiary is frustrated. It may be faced with a claim by the creditor that the rejection was a wrong to the creditor. If the bank accepts the order, the effect is to allow the creditor to seize funds of its customer, the beneficiary. Subsection (c)(3) gives the bank no choice in this case. It provides that it may not favor its customer over the creditor by rejecting the order. The beneficiary's bank may rightfully reject only if there is an independent basis for rejection.
3. Subsection (c)(2) is similar to subsection (b). Normally the beneficiary's bank will release funds to the beneficiary shortly after acceptance or it will accept by releasing funds. Since the bank is bound by a garnishment order served before funds are released to the beneficiary, the bank might suffer a loss if funds were released without knowledge that a garnishment order had been served. Subsection (c)(2) protects the bank if it did not have adequate notice of the garnishment when the funds were released.
4. A creditor may want to reach funds involved in a funds transfer. The creditor may try to do so by serving process on the originator's bank, an intermediary bank or the beneficiary's bank. The purpose of subsection (d) is to guide the creditor and the court as to the proper method of reaching the funds involved in a funds transfer. A creditor of the originator can levy on the account of the originator in the originator's bank before the funds transfer is initiated, but that levy is subject to the limitations stated in subsection (b). The creditor of the originator cannot reach any other funds because no property of the originator is being transferred. A creditor of the beneficiary cannot levy on property of the originator and until the funds transfer is completed by acceptance by the beneficiary's bank of a payment order for the benefit of the beneficiary, the beneficiary has no property interest in the funds transfer which the beneficiary's creditor can reach. A creditor of the beneficiary that wants to reach the funds to be received by the beneficiary must serve creditor process on the beneficiary's bank to reach the obligation of the beneficiary's bank to pay the beneficiary which arises upon acceptance by the beneficiary's bank under Section 4A-404(a).
5. "Creditor process" is defined in subsection (a) to cover a variety of devices by which a creditor of the holder of a bank account or a claimant to a bank account can seize the account. Procedure and nomenclature varies widely from state to state. The term used in Section 4A-502 is a generic term.
Section 36-4A-503. Injunction or restraining order with respect to funds transfer.
For proper cause and in compliance with applicable law, a court may restrain (i) a person from issuing a payment order to initiate a funds transfer, (ii) an originator's bank from executing the payment order of the originator, or (iii) the beneficiary's bank from releasing funds to the beneficiary or the beneficiary from withdrawing the funds. A court may not otherwise restrain a person from issuing a payment order, paying or receiving payment of a payment order, or otherwise acting with respect to a funds transfer.
This section is related to Section 4A-502(d) and to Comment 4 to Section 4A-502. It is designed to prevent interruption of a funds transfer after it has been set in motion. The initiation of a funds transfer can be prevented by enjoining the originator or the originator's bank from issuing a payment order. After the funds transfer is completed by acceptance of a payment order by the beneficiary's bank, that bank can be enjoined from releasing funds to the beneficiary or the beneficiary can be enjoined from withdrawing the funds. No other injunction is permitted. In particular, intermediary banks are protected, and injunctions against the originator and the originator's bank are limited to issuance of a payment order. Except for the beneficiary's bank, nobody can be enjoined from paying a payment order, and no receiving bank can be enjoined from receiving payment from the sender of the order that it accepted.
Section 36-4A-504. Order in which items and payment orders may be charged to account; order of withdrawals from account.
(a) If a receiving bank has received more than one payment order of the sender or one or more payment orders and other items that are payable from the sender's account, the bank may charge the sender's account with respect to the various orders and items in any sequence.
(b) In determining whether a credit to an account has been withdrawn by the holder of the account or applied to a debt of the holder of the account, credits first made to the account are first withdrawn or applied.
Subsection (a) concerns priority among various obligations that are to be paid from the same account. A customer may have written checks on its account with the receiving bank and may have issued one or more payment orders payable from the same account. If the account balance is not sufficient to cover all of the checks and payment orders, some checks may be dishonored and some payment orders may not be accepted. Although there is no concept of wrongful dishonor of a payment order in Article 4A in the absence of an agreement to honor by the receiving bank, some rights and obligations may depend on the amount in the customer's account. Section 4A-209(b)(3) and Section 4A-210(b). Whether dishonor of a check is wrongful also may depend upon the balance in the customer's account. Under subsection (a), the bank is not required to consider the competing items and payment orders in any particular order. Rather it may charge the customer's account for the various items and orders in any order. Suppose there is $12,000 in the customer's account. If a check for $5,000 is presented for payment and the bank receives a $10,000 payment order from the customer, the bank could dishonor the check and accept the payment order. Dishonor of the check is not wrongful because the account balance was less than the amount of the check after the bank charged the account $10,000 on account of the payment order. Or, the bank could pay the check and not execute the payment order because the amount of the order is not covered by the balance in the account.
Section 36-4A-505. Preclusion of objection to debit of customer's account.
If a receiving bank has received payment from its customer with respect to a payment order issued in the name of the customer as sender and accepted by the bank, and the customer received notification reasonably identifying the order, the customer is precluded from asserting that the bank is not entitled to retain the payment unless the customer notifies the bank of the customer's objection to the payment within one year after the notification was received by the customer.
This section is in the nature of a statute of repose for objecting to debits made to the customer's account. A receiving bank that executes payment orders of a customer may have received payment from the customer by debiting the customer's account with respect to a payment order that the customer was not required to pay. For example, the payment order may not have been authorized or verified pursuant to Section 4A-202 or the funds transfer may not have been completed. In either case the receiving bank is obliged to refund the payment to the customer and this obligation to refund payment cannot be varied by agreement. Section 4A-204 and Section 4A-402. Refund may also be required if the receiving bank is not entitled to payment from the customer because the bank erroneously executed a payment order. Section 4A-303. A similar analysis applies to that case. Section 4A-402(d) and (f) require refund and the obligation to refund may not be varied by agreement. Under 4A-505, however, the obligation to refund may not be asserted by the customer if the customer has not objected to the debiting of the account within one year after the customer received notification of the debit.
Section 36-4A-506. Rate of interest.
(a) If, under this chapter, a receiving bank is obliged to pay interest with respect to a payment order issued to the bank, the amount payable may be determined (i) by agreement of the sender and receiving bank, or (ii) by a funds-transfer system rule if the payment order is transmitted through a funds-transfer system.
(b) If the amount of interest is not determined by an agreement or rule as stated in subsection (a), the amount is calculated by multiplying the applicable Federal Funds rate by the amount on which interest is payable, and then multiplying the product by the number of days for which interest is payable. The applicable Federal Funds rate is the average of the Federal Funds rates published by the Federal Reserve Bank of New York for each of the days for which interest is payable divided by three hundred sixty. The Federal Funds rate for any day on which a published rate is not available is the same as the published rate for the next preceding day for which there is a published rate. If a receiving bank that accepted a payment order is required to refund payment to the sender of the order because the funds transfer was not completed, but the failure to complete was not due to any fault by the bank, the interest payable is reduced by a percentage equal to the reserve requirement on deposits of the receiving bank.
1. A receiving bank is required to pay interest on the amount of a payment order received by the bank in a number of situations. Sometimes the interest is payable to the sender and in other cases it is payable to either the originator or the beneficiary of the funds transfer. The relevant provisions are Section 4A-204(a), Section 4A-209(b) (3), Section 4A-210(b), Section 4A-305(a), Section 4A-402(d) and Section 4A-404(b). The rate of interest may be governed by a funds transfer system rule or by agreement as stated in subsection (a). If subsection (a) doesn't apply, the rate is determined under subsection (b). Subsection (b) is illustrated by the following example. A bank is obliged to pay interest on $1,000,000 for three days, July 3, July 4, and July 5. The published Fed Funds rate is .082 for July 3 and .081 for July 5. There is no published rate for July 4 because that day is not a banking day. The rate for July 3 applies to July 4. The applicable Fed Funds rate is .08167 (the average of .082, .082, and .081) divided by 360 which equals .0002268. The amount of interest payable is $1,000,000 X .0002268 X 3 = $680.40.
2. In some cases, interest is payable in spite of the fact that there is no fault by the receiving bank. The last sentence of subsection (b) applies to those cases. For example, a funds transfer might not be completed because the beneficiary's bank rejected the payment order issued to it by the originator's bank or an intermediary bank. Section 4A-402(c) provides that the originator is not obliged to pay its payment order and Section 4A-402(d) provides that the originator's bank must refund any payment received plus interest. The requirement to pay interest in this case is not based on fault by the originator's bank. Rather, it is based on restitution. Since the originator's bank had the use of the originator's money, it is required to pay the originator for the value of that use. The value of that use is not determined by multiplying the interest rate by the refundable amount because the originator's bank is required to deposit with the Federal Reserve a percentage of the bank's deposits as a reserve requirement. Since that deposit does not bear interest, the bank had use of the refundable amount reduced by a percentage equal to the reserve requirement. If the reserve requirement is 12%, the amount of interest payable by the bank under the formula stated in subsection (b) is reduced by 12%.
Section 36-4A-507. Choice of law.
(a) The following rules apply unless the affected parties otherwise agree or subsection (c) applies:
(1) The rights and obligations between the sender of a payment order and the receiving bank are governed by the law of the jurisdiction in which the receiving bank is located.
(2) The rights and obligations between the beneficiary's bank and the beneficiary are governed by the law of the jurisdiction in which the beneficiary's bank is located.
(3) The issue of when payment is made pursuant to a funds transfer by the originator to the beneficiary is governed by the law of the jurisdiction in which the beneficiary's bank is located.
(b) If the parties described in each paragraph of subsection (a) have made an agreement selecting the law of a particular jurisdiction to govern rights and obligations between each other, the law of that jurisdiction governs those rights and obligations, whether or not the payment order or the funds transfer bears a reasonable relation to that jurisdiction.
(c) A funds-transfer system rule may select the law of a particular jurisdiction to govern (i) rights and obligations between participating banks with respect to payment orders transmitted or processed through the system, or (ii) the rights and obligations of some or all parties to a funds transfer any part of which is carried out by means of the system. A choice of law made pursuant to clause (i) is binding on participating banks. A choice of law made pursuant to clause (ii) is binding on the originator, other sender, or a receiving bank having notice that the funds-transfer system might be used in the funds transfer and of the choice of law by the system when the originator, other sender, or receiving bank issued or accepted a payment order. The beneficiary of a funds transfer is bound by the choice of law if, when the funds transfer is initiated, the beneficiary has notice that the funds-transfer system might be used in the funds transfer and of the choice of law by the system. The law of a jurisdiction selected pursuant to this subsection may govern, whether or not that law bears a reasonable relation to the matter in issue.
(d) In the event of inconsistency between an agreement under subsection (b) and a choice-of-law rule under subsection (c), the agreement under subsection (b) prevails.
(e) If a funds transfer is made by use of more than one funds-transfer system and there is inconsistency between choice-of-law rules of the systems, the matter in issue is governed by the law of the selected jurisdiction that has the most significant relationship to the matter in issue.
1. Funds transfers are typically interstate or international in character. If part of a funds transfer is governed by Article 4A and another part is governed by other law, the rights and obligations of parties to the funds transfer may be unclear because there is no clear consensus in various jurisdictions concerning the juridical nature of the transaction. Unless all of a funds transfer is governed by a single law it may be very difficult to predict the result if something goes wrong in the transfer. Section 4A-507 deals with this problem. Subsection (b) allows parties to a funds transfer to make a choice-of-law agreement. Subsection (c) allows a funds transfer system to select the law of a particular jurisdiction to govern funds transfers carried out by means of the system. Subsection (a) states residual rules if no choice of law has occurred under subsection (b) or subsection (c).
2. Subsection (a) deals with three sets of relationships. Rights and obligations between the sender of a payment order and the receiving bank are governed by the law of the jurisdiction in which the receiving bank is located. If the receiving bank is the beneficiary's bank the rights and obligations of the beneficiary are also governed by the law of the jurisdiction in which the receiving bank is located. Suppose Originator, located in Canada, sends a payment order to Originator's Bank located in a state in which Article 4A has been enacted. The order is for payment to an account of Beneficiary in a bank in England. Under subsection (a)(1), the rights and obligations of Originator and Originator's Bank toward each other are governed by Article 4A if an action is brought in a court in the Article 4A state. If an action is brought in a Canadian court, the conflict of laws issue will be determined by Canadian law which might or might not apply the law of the state in which Originator's Bank is located. If that law is applied, the execution of Originator's order will be governed by Article 4A, but with respect to the payment order of Originator's Bank to the English bank, Article 4A may or may not be applied with respect to the rights and obligations between the two banks. The result may depend upon whether action is brought in a court in the state in which Originator's Bank is located or in an English court. Article 4A is binding only on a court in a state that enacts it. It can have extraterritorial effect only to the extent courts of another jurisdiction are willing to apply it. Subsection (c) also bears on the issues discussed in this Comment.
Under Section 4A-406 payment by the originator to the beneficiary of the funds transfer occurs when the beneficiary's bank accepts a payment order for the benefit of the beneficiary. A jurisdiction in which Article 4A is not in effect may follow a different rule or it may not have a clear rule. Under Section 4A-507(a)(3) the issue is governed by the law of the jurisdiction in which the beneficiary's bank is located. Since the payment to the beneficiary is made through the beneficiary's bank it is reasonable that the issue of when payment occurs be governed by the law of the jurisdiction in which the bank is located. Since it is difficult in many cases to determine where a beneficiary is located, the location of the beneficiary's bank provides a more certain rule.
3. Subsection (b) deals with choice-of-law agreements and it gives maximum freedom of choice. Since the law of funds transfers is not highly developed in the case law there may be a strong incentive to choose the law of a jurisdiction in which Article 4A is in effect because it provides a greater degree of certainly with respect to the rights of various parties. With respect to commercial transactions, it is often said that "[u]niformity and predictability based upon commercial convenience are the prime considerations in making the choice of governing law . . . ." R. Leflar, American Conflicts Law, Section 185 (1977). Subsection (b) is derived in part from recently enacted choice-of-law rules in the States of New York and California. N.Y. Gen. Obligations Law 5-1401 (McKinney's 1989 Supp.) and California Civil Code Section 1646.5. This broad endorsement of freedom of contract is an enhancement of the approach taken by Restatement (Second) of Conflict of Laws Section 187(b) (1971). The Restatement recognizes the basic right of freedom of contract, but the freedom granted the parties may be more limited than the freedom granted here. Under the formulation of the Restatement, if there is no substantial relationship to the jurisdiction whose law is selected and there is no "other" reasonable basis for the parties' choice, then the selection of the parties need not be honored by a court. Further, if the choice is violative of a fundamental policy of a state which has a materially greater interest than the chosen state, the selection could be disregarded by a court. Those limitations are not found in subsection (b).
4. Subsection (c) may be the most important provision in regard to creating uniformity of law in funds transfers. Most rights stated in Article 4A regard parties who are in privity of contract such as originator and beneficiary, sender and receiving bank, and beneficiary's bank and beneficiary. Since they are in privity they can make a choice of law by agreement. But that is not always the case. For example, an intermediary bank that improperly executes a payment order is not in privity with either the originator or the beneficiary. The ability of a funds transfer system to make a choice of law by rule is a convenient way of dispensing with individual agreements and to cover cases in which agreements are not feasible. It is probable that funds transfer systems will adopt a governing law to increase the certainty of commercial transactions that are effected over such systems. A system rule might adopt the law of an Article 4A state to govern transfers on the system in order to provide a consistent, unitary, law governing all transfers made on the system. To the extent such system rules develop, individual choice-of-law agreements become unnecessary.
Subsection (c) has broad application. A system choice of law applies not only to rights and obligations between banks that use the system, but may also apply to other parties to the funds transfer so long as some part of the transfer was carried out over the system. The originator and any other sender or receiving bank in the funds transfer is bound if at the time it issues or accepts a payment order it had notice that the funds transfer involved use of the system and that the system chose the law of a particular jurisdiction. Under Section 4A-107, the Federal Reserve by regulation could make a similar choice of law to govern funds transfers carried out by use of Federal Reserve Banks. Subsection (d) is a limitation on subsection (c). If parties have made a choice-of-law agreement that conflicts with a choice of law made under subsection (c), the agreement prevails.
5. Subsection (e) addresses the case in which a funds transfer involves more than one funds transfer system and the systems adopt conflicting choice-of-law rules. The rule that has the most significant relationship to the matter at issue prevails. For example, each system should be able to make a choice of law governing payment orders transmitted over that system without regard to a choice of law made by another system."
SECTION 3. Section 36-1-105(2) is amended to read:
"(2) Where one of the following provisions of this title specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law (including the conflict of laws rules) so specified:
Rights of seller's creditors against
sold goods. Section 36-2-402.
Applicability of the Chapter on
Bank Deposits and Collections. Section 36-4-102.
Bulk transfers subject to the
Chapter on Bulk Transfers. Section 36-6-102.
Applicability of the Chapter on
Investment Securities. Section 36-8-106.
Perfection provisions of the
Chapter on Secured Transactions. Section 36-9-103.
Governing law in the Chapter on
Funds Transfers. Section 36-4A-507."
SECTION 4. This act takes effect upon approval by the Governor.
Amend title to conform.
/s/Donald H. Holland /s/James H. Hodges /s/Thomas L. Moore /s/Sandra S. Wofford /s/H. Samuel Stilwell /s/Rebecca D. "Becky" Meacham On Part of the Senate. On Part of the House.
, and a message was sent to the House accordingly.
Senator MOORE from the Committee of Conference on H. 4239, the Sine Die Resolution, submitted a favorable with amendment report on:
H. 4304 -- Reps. Haskins, Boan and D. Smith: A CONCURRENT RESOLUTION TO FIX 12:00 NOON ON TUESDAY, OCTOBER 24, 1995, AS THE TIME FOR ELECTING PERSONS TO FILL THE JUDICIAL OFFICES CREATED IN THE 1995-96 GENERAL APPROPRIATIONS ACT.
On motion of Senator MOORE, with unanimous consent, the Resolution was taken up for immediate consideration.
The Sine Die Committee proposed the following amendment (4304R001.GFM), which was adopted:
Amend the resolution, as and if amended, by striking all after the resolving clause and inserting the following:
/That the mandatory SINE DIE adjournment date for the General Assembly prescribed in Section 2-1-180 of the 1976 Code is extended, as authorized by that code section, to permit the General Assembly to continue in session under the terms and conditions set forth below. When the respective houses adjourn on or before 5:00 p.m. on Thursday, June 15, 1995, each house shall stand adjourned to meet thereafter under the following terms and conditions:
(1) When the respective houses of the General Assembly adjourn on Thursday, June 15, 1995, not later than 5:00 p.m., they shall stand adjourned to meet at 10:00 a.m. on June 16, 19, 20, 21, 22, and 23, 1995, for consideration of local and uncontested matters which have the unanimous consent of the members of the delegation affected by the legislation, the consideration of vetoes, and for consideration of resolutions expressing sympathy or congratulations, provided that the President of the Senate and the Speaker of the House are authorized to call their respective bodies back into statewide session on any of these dates for the purpose of considering gubernatorial vetoes and they are further authorized to meet on June 16, 19, 20, 21, 22, or 23 for the ratification of acts which have been enrolled.
(2) When each house adjourns on Friday, June 23, 1995, it shall stand adjourned SINE DIE./
Amend title to conform.
Senator MOORE explained the amendment.
The amendment was adopted.
The Resolution, as amended, was adopted, returned to the House with amendments.
On motion of Senator ELLIOTT, with unanimous consent, the appointment of magistrates from Horry County, if received from the Governor prior to Sine Die adjournment and which meet the necessary Senate requirements, would be confirmed.
At 5:15 P.M., Senator MOORE asked unanimous consent to make a motion to invite the House of Representatives to attend the Senate Chamber for the purpose of ratifying acts at 5:30 P.M.
There was no objection and a message was sent to the House accordingly.
On motion of Senator MOORE, with unanimous consent, the Senate agreed that upon the completion of the ratification of acts, the Senate would stand adjourned Sine Die, in accordance with the provisions of H. 4239, the Sine Die Resolution.
At 5:30 P.M., Senator MOORE asked unanimous consent to make a motion to invite the House of Representatives to attend the Senate Chamber for the purpose of ratifying acts at 11:30 A.M. on Thursday, June 15, 1995, and upon completion of the ratification of acts, the Senate would stand adjourned Sine Die, in accordance with the provisions of H. 4239, the Sine Die Resolution.
There was no objection and a message was sent to the House accordingly.
At 5:30 P.M., on motion of Senator MOORE, the Senate receded from business until Thursday, June 15, at 11:30 A.M.
The Senate reassembled at 11:30 A.M., on Thursday, June 15, 1995, and was called to order by the PRESIDENT.
Pursuant to an invitation the Honorable Speaker and House of Representatives appeared in the Senate Chamber on June 15, 1995, at 11:30 A.M. and the following Acts and Joint Resolution were ratified:
(R215) S. 101 -- Senators Leventis, Ryberg, Rose, Giese and Elliott: AN ACT TO AMEND SECTION 22-3-550, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO A MAGISTRATE'S JURISDICTION OVER CERTAIN CRIMINAL OFFENSES AND A MAGISTRATE'S AUTHORITY TO IMPOSE SENTENCES, SO AS TO REVISE THE CRIMINAL OFFENSES OVER WHICH MAGISTRATES HAVE JURISDICTION AND A MAGISTRATE'S AUTHORITY TO IMPOSE SENTENCES, AND TO PROVIDE THAT THE PROHIBITION AGAINST A MAGISTRATE SENTENCING ANY PERSON TO CONSECUTIVE TERMS OF IMPRISONMENT TOTALING MORE THAN NINETY DAYS DOES NOT APPLY TO SENTENCES FOR CONVICTIONS RESULTING FROM FRAUDULENT CHECK OR SHOPLIFTING VIOLATIONS AND TO REQUIRE THE MAGISTRATE TO SPECIFY AN AMOUNT OF RESTITUTION AT THE TIME OF SENTENCING IN THESE CASES AS AN ALTERNATIVE TO ANY IMPRISONMENT OF MORE THAN NINETY DAYS; TO AMEND SECTION 16-25-60, AS AMENDED, RELATING TO PERSONS REQUIRED TO APPEAR BEFORE A JUDGE IN CRIMINAL DOMESTIC VIOLENCE CASES, SO AS TO FURTHER PROVIDE FOR THE CONDITIONS FOR SUSPENDING SENTENCE; TO AMEND SECTION 20-4-70 RELATING TO DURATION OF PROTECTION ORDERS IN DOMESTIC ABUSE CASES, SO AS TO FURTHER PROVIDE FOR THE DURATION AND ENFORCEMENT OF THESE ORDERS; TO AMEND SECTION 34-11-70, AS AMENDED, RELATING TO FRAUDULENT CHECKS, SO AS TO INCREASE THE SERVICE CHARGES WHICH MAY BE IMPOSED IN CONNECTION WITH SUCH CHECKS AND CERTAIN NOTICE REQUIREMENTS UNDER THE SECTION; TO AMEND SECTION 56-5-765 RELATING TO INVESTIGATIONS OF TRAFFIC COLLISIONS INVOLVING MOTOR VEHICLES OR MOTORCYCLES OF LAW ENFORCEMENT AGENCIES, SO AS TO FURTHER PROVIDE FOR THE TYPES OF COLLISIONS TO WHICH THE SECTION APPLIES AND THE AUTHORITY OF THE LAW ENFORCEMENT AGENCY INVOLVED TO INVESTIGATE THE COLLISION; TO ADD SECTION 56-5-2780 SO AS TO PROVIDE THE PENALTIES FOR UNLAWFULLY PASSING A STOPPED SCHOOL BUS INCLUDING PROVIDING FOR A FELONY IF THE VIOLATION CAUSES GREAT BODILY INJURY OR DEATH TO A PEDESTRIAN; AND TO AMEND SECTION 56-5-2775, AS AMENDED, RELATING TO PENALTIES FOR UNLAWFULLY PASSING A STOPPED SCHOOL BUS AND FOR UNLAWFULLY PASSING OR PROCEEDING AT TRAFFIC OR RAILROAD CROSSINGS, SO AS TO DELETE REFERENCES TO PENALTIES FOR UNLAWFULLY PASSING A STOPPED SCHOOL BUS WHICH ARE NOW PROVIDED IN SECTION 56-5-2780.
(R216) S. 126 -- Senators Land and Washington: AN ACT TO AMEND SECTION 9-1-1650 CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO AMOUNTS PAID AT TERMINATION OF EMPLOYMENT AND CERTAIN ELECTIONS UNDER THE STATE RETIREMENT SYSTEM SO AS TO PERMIT AN ACTIVE CONTRIBUTING MEMBER TO NAME CONTINGENT BENEFICIARIES; TO AMEND SECTION 9-8-110 RELATING TO PAYMENTS ON THE DEATH OF A MEMBER OR BENEFICIARY OF THE RETIREMENT SYSTEM FOR JUDGES AND SOLICITORS, SO AS TO PERMIT AN ACTIVE CONTRIBUTING MEMBER TO NAME SECONDARY BENEFICIARIES AND TO DELETE THE PROVISION TERMINATING CERTAIN BENEFITS PAID TO THE SURVIVING SPOUSE OF A MEMBER UPON REMARRIAGE; TO ADD SECTION 9-9-55 SO AS TO PROVIDE THAT ANY MEMBER OF THE GENERAL ASSEMBLY WHO SERVED IN THE GENERAL ASSEMBLY ANY PORTION OF A YEAR MAY ESTABLISH CREDIT FOR THE ENTIRE YEAR BY PAYING THE FULL ACTUARIAL COST THEREOF; TO AMEND SECTION 9-9-100, AS AMENDED, RELATING TO PAYMENTS ON THE DEATH OF A MEMBER OR BENEFICIARY OF THE GENERAL ASSEMBLY RETIREMENT SYSTEM, SO AS TO PERMIT AN ACTIVE CONTRIBUTING MEMBER TO NAME CONTINGENT BENEFICIARIES; AND TO AMEND SECTION 9-11-110 RELATING TO LUMP SUM BENEFITS PAID IN THE EVENT OF DEATH OF A MEMBER OF THE POLICE OFFICER'S RETIREMENT SYSTEM PRIOR TO RETIREMENT, SO AS TO PERMIT AN ACTIVE CONTRIBUTING MEMBER TO NAME CONTINGENT BENEFICIARIES.
(R217) H. 3647 -- Ways and Means Committee: AN ACT TO AMEND SECTION 11-11-140, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE LIMITATION ON GENERAL FUND APPROPRIATIONS IN THE ANNUAL GENERAL APPROPRIATIONS ACT, SO AS TO PROHIBIT APPROPRIATIONS OF SURPLUS REVENUES BEFORE THE CLOSING OF THE STATE'S BOOKS FOR A FISCAL YEAR AND TO PROVIDE THAT THE AMOUNT UNAVAILABLE FOR APPROPRIATION IN THE ANNUAL GENERAL APPROPRIATIONS ACT PURSUANT TO THE LIMITATION, AFTER TRANSFER TO THE GENERAL FUND OF AMOUNTS NECESSARY TO OFFSET A RECOGNIZED BUDGET SHORTFALL FOR THE YEAR FOR WHICH THE LIMITATION APPLIED, IS APPROPRIATED TO THE PROPERTY TAX RELIEF FUND.
(R218) H. 3690 -- Ways and Means Committee: A JOINT RESOLUTION TO MAKE SUPPLEMENTAL APPROPRIATIONS FROM FISCAL YEAR 1994-95 SURPLUS GENERAL FUND REVENUES AND TO PROVIDE FOR THE EXPENDITURE OF THESE APPROPRIATIONS, TO APPROPRIATE FUNDS FOR ARENA PROJECTS CONTINGENT UPON RECEIPT OF AN EQUIVALENT AMOUNT FROM THE SOUTHEAST COMPACT FOR LOW-LEVEL NUCLEAR WASTE AND THE APPROVAL OF A FINANCING PLAN BY THE STATE BUDGET AND CONTROL BOARD, TO PROVIDE FOR THE REDUCTION OF THE BALANCE OF THE INTERGOVERNMENTAL LOAN MADE TO THE PATRIOT'S POINT DEVELOPMENT AUTHORITY BY AN AMOUNT EQUAL TO THE VALUE OF THE IMPROVEMENTS MADE WITH LOAN PROCEEDS AND PROVIDE FOR VALUATION OF THE ASSETS, TO PROVIDE FOR THE USE OF UNALLOCATED FISCAL YEAR 1994-95 EDUCATION FINANCE ACT FUNDS, TO PROVIDE FOR FTE AND APPROPRIATIONS TRANSFERS BETWEEN THE DEPARTMENT OF REVENUE AND TAXATION AND THE DEPARTMENT OF PUBLIC SAFETY, TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 6-1-80 SO AS TO PROVIDE PROCEDURES FOR THE NOTICE REQUIREMENTS FOR ADOPTING LOCAL GOVERNMENT AND SCHOOL DISTRICT BUDGETS, AND TO AMEND SECTIONS 44-2-20, 44-2-50, AND 44-2-80, ALL AS AMENDED, RELATING TO DEFINITIONS, REGULATIONS, AND THE CONTAINMENT, REMOVAL, AND ABATEMENT OF RELEASED REGULATED SUBSTANCES FOR PURPOSES OF THE SUPERB PROGRAM, SO AS TO PROVIDE ADDITIONAL DEFINITIONS, TO EXEMPT FROM CERTAIN CORRECTIVE ACTIONS PERSONS WHO DO NOT MANAGE TANKS OR ENGAGE IN THE PETROLEUM BUSINESS WHOSE QUALITY OF OWNERSHIP IS PRIMARILY TO PROTECT OR ENFORCE A SECURITY INTEREST IN THE TANK, TO CHANGE REFERENCES FROM REMOVAL TO ABATEMENT AND SITE REHABILITATION, AND TO EXEMPT FROM CERTAIN SITE REHABILITATION ACTIONS PERSONS WHO DO NOT MANAGE TANKS OR ENGAGE IN THE PETROLEUM BUSINESS WHOSE QUALITY OF OWNERSHIP IS PRIMARILY TO PROTECT OR ENFORCE A SECURITY INTEREST IN THE TANK AND CERTAIN PERSONS WHO ACQUIRE PROPERTY FROM AN UNDERGROUND TANK THAT HAS BEEN REMOVED.
(R219) H. 3787 -- Reps. Richardson, Cotty, Rice, Cobb-Hunter, Keyserling, J. Brown, Worley, S. Whipper, Limehouse, Moody-Lawrence, Byrd, Shissias, Herdklotz, Lloyd, D. Smith, Wilkes, Mason and Thomas: AN ACT TO AMEND SECTION 12-33-210, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO ALCOHOLIC BEVERAGE LICENSES FOR PURPOSES OF THE ALCOHOLIC BEVERAGE CONTROL ACT, SO AS TO PROVIDE FOR PRORATED LICENSES; TO AMEND SECTION 61-1-105 RELATING TO THE REFUND OF THE AMOUNT OF THE LICENSE OR PERMIT FEE IF A LICENSEE OR PERMITTEE LOSES HIS BUSINESS LEASE, OR CLOSES THE BUSINESS DUE TO FIRE OR OTHER NATURAL DISASTER OR DIES WITHIN THE FIRST YEAR OF THE LICENSE OR PERMIT PERIOD, SO AS TO DELETE THE SPECIFIC REASONS AND PROVIDE THAT IT MUST BE REFUNDED FOR ANY REASON IF OCCURRING DURING THE FIRST YEAR AND PROVIDE THAT NO LICENSEE OR PERMITTEE IS ELIGIBLE FOR A REFUND UNDER THE PROVISIONS OF THIS SECTION IF THE LICENSE OR PERMIT HAS BEEN CANCELED, RELINQUISHED, OR REVOKED AS A RESULT OF AN ENFORCEMENT ACTION OR A FAILURE TO ADHERE TO THE CONDITIONS OF THE LICENSE OR PERMIT; TO AMEND SECTIONS 61-3-710, 61-5-70, AND 61-9-310, ALL AS AMENDED, RELATING TO PERMITTING AND LICENSING PERIODS FOR BEER, WINE, AND ALCOHOLIC BEVERAGES, SO AS TO PROVIDE FOR PRORATED FEES FOR BEER AND WINE PERMITS, AND TO DELETE OBSOLETE PROVISIONS; AND TO REPEAL SECTION 12-33-220, RELATING TO AN OBSOLETE PROVISION ALLOWING PRORATION OF LICENSES, AND TO PROVIDE FOR REFUNDS IN CASES OF CERTAIN LICENSES ISSUED AFTER NOVEMBER, 1994.
Having received a favorable report from the Greenville County Delegation, on motion of Senator J. VERNE SMITH, the following appointment was confirmed in open session:
Initial Appointment, Greenville County Magistrate, with term to commence April 30, 1994, and to expire April 30, 1998, service to commence at 5:00 P.M., June 23, 1995:
Honorable Bobby L. Morgan, 118 Gaston Drive, Travelers Rest, S.C. 29690 VICE Charles R. Garrett (resigned)
Having received a favorable report from the Horry County Delegation, the following appointments were confirmed in open session:
Myrtle Beach Air Force Base Redevelopment Authority, with terms to commence June 30, 1994, and to expire June 30, 1996:
Mr. Jackie Woodbury, 5282 Highway 9, Green Sea, S.C. 29545
Mr. Tony K. Cox, Callahan, Teal, Skelley, Post Office Box 3523, North Myrtle Beach, S.C. 29582
Myrtle Beach Air Force Base Redevelopment Authority, with term to commence June 30, 1994, and to expire June 30, 1998:
Mr. George Graham, P.O. Box 915, Conway, S.C. 29526
Reappointment, Horry County Magistrate, with term to commence April 30, 1995, and to expire April 30, 1999:
Honorable Harry D. McDowell, 3817 Walnut Street, Loris, S.C. 29569
Having received a favorable report from the Sumter County Delegation, the following appointment was confirmed in open session:
Reappointment, Sumter County Magistrate, with term to commence April 30, 1994, and to expire April 30, 1998:
Honorable George R. Gibson, Post Office Box 236, Mayesville, S.C. 29104
Having received a favorable report from the Spartanburg County Delegation, the following appointments were confirmed in open session:
Reappointment, Spartanburg County Magistrate, with term to commence April 30, 1995, and to expire April 30, 1999:
Honorable Samuel Franklin Adams, 250 Hummingbird Lane, Chesnee, S.C. 29323
Initial Appointment, Spartanburg County Magistrate, with term to commence April 30, 1995, and to expire April 30 1999:
Honorable Jimmy B. Henson, Post Office Box 416, Pacolet Mills, S.C. 29373 VICE Horace Mauldin Pearson
MOTION ADOPTED
On motion of Senator J. VERNE SMITH, with unanimous consent, the Senate stood adjourned out of respect to the memory of Mr. Francis Manning Glenn, an honored veteran of South Carolina.
MOTION ADOPTED
On motion of Senator MATTHEWS, with unanimous consent, the Senate stood adjourned in honor of Frank Goodwin, who has served the Senate faithfully and admirably for twenty-one years as Senate Porter.
At 11:45 A.M., on Thursday, June 15, 1995, on motion of Senator WILLIAMS, the Senate adjourned Sine Die, in accordance with the provisions of H. 4239, the Sine Die Resolution.
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