BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1856
                                                                  Page  1

          Date of Hearing:  April 22, 2014

                           ASSEMBLY COMMITTEE ON JUDICIARY
                                Bob Wieckowski, Chair
                     AB 1856 (Wilk) - As Amended: April 21, 2014

                                  PROPOSED CONSENT 
           
          SUBJECT  :  Deposit in Lieu of Bond 

           KEY ISSUE  :  Should a cashier's check be added to the list of  
          instruments that may be submitted to the court in lieu of a  
          surety bond requirement, and should the provision for filing  
          "bearer" bonds and notes in lieu of posting bond be clarified to  
          reflect more modern forms? 

                                      SYNOPSIS

          Under existing law, a party may be required to post a surety  
          bond or some other "undertaking" with the court in order to  
          secure a contested judgment upon appeal.  As a general rule, a  
          trial court judgment or order is stayed upon appeal; the bond  
          ensures that if the judgment or order is affirmed, the funds  
          will be there to satisfy the judgment.  However, existing law  
          has long allowed a party to substitute, in lieu of a bond, some  
          other functional equivalent, such as directly depositing with  
          the court any of the following: cash, bearer bonds or bearer  
          notes of the United States or California, certificates of  
          deposit, certificates of share accounts, investment  
          certificates, or savings accounts assigned to the officer of the  
          court.  This non-controversial bill would add to the existing  
          list of substitutes a cashier's check.  The bill also seeks to  
          update the existing statute to reflect modern forms of bonds and  
          notes.  For example, read literally, the existing statute only  
          permits the use of "bearer" bonds or notes, even though "bearer"  
          bonds have not been issued by the U.S. Treasury since 1982.   
          According to the sponsor, the Conference of California Bar  
          Associations, this measure will clarify what is essentially  
          existing practice in many, and perhaps most, courts:  acceptance  
          of cashier's checks and all validly-issued bonds and notes,  
          including, but not limited to, the older "bearer" bonds or  
          notes.  There is no opposition to this bill, which passed out of  
          the Assembly Banking & Finance Committee on consent. 

           SUMMARY  :  Allows cashier's checks to be deposited with the  








                                                                  AB 1856
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          appropriate officer of the court in lieu of a bond, and makes  
          clarifying changes relating to the use of bonds or notes of the  
          United States or the State of California in lieu of bond.   
          Specifically,  this bill  :  

          1)Clarifies that bonds or notes, including, but not limited to,  
            bearer bonds and bearer notes, of the United States or the  
            State of California may be deposited with the appropriate  
            officer of the court instead of giving bond.  Specifies that  
            the bond or note shall be filed with the court and served upon  
            all parties and, with appropriate instructions, upon the  
            appropriate officer of the bank holding the bond or note. 

          2)Provides that a cashier's check, issued by a bank or savings  
            association that is insured by the Federal Deposit Insurance  
            Corporation and made payable to the appropriate officer of the  
            court, may be submitted in lieu of giving bond.  Requires the  
            officer to deposit the cashier's check in an interest-bearing  
            trust account. 

           EXISTING LAW  :

          1)Defines "officer" as a sheriff, marshal, clerk of court, judge  
            or magistrate (if there is no clerk), board, commission,  
            department, or other public official or entity to whom the  
            bond is given or with whom a copy of the bond is filed or who  
            is required to determine the sufficiency of the sureties or to  
            approve the bond.  (Code of Civil Procedure Section 995.160.)

          2)Defines "principal" as a person who gives a bond.  (Code of  
            Civil Procedure Section 995.170.)

          3)Provides that the principal may, instead of giving a bond,  
            deposit with the officer any of the following:

             a)   Lawful money of the United States.

             b)   Bearer bonds or bearer notes of the United States or the  
               State of California. 

             c)   Certificates of deposit payable to the officer.

             d)   Savings accounts assigned to the officer.

             e)   Investment certificates or share accounts assigned to  








                                                                  AB 1856
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               the officer. 

             f)   Certificates for funds or share accounts assigned to the  
               officer.  (Code of Civil Procedure Section 995.710.)

           FISCAL EFFECT  :  As currently in print this bill is keyed  
          non-fiscal. 

           COMMENTS  :  Under existing law, a party may be required to post  
          bond or provide some other form of security to the court in  
          order to secure the amount of any judgment or order of a trial  
          court, if that trial court judgment or order is appealed.   
          However, where such a security is required, existing law has  
          long allowed a person, in lieu of posting bond, to directly  
          deposit with the appropriate officer of the court some  
          functional equivalent to the bond, including cash, bearer bonds  
          or bearer notes of the United States or California, certificates  
          of deposit, investment certificates, or savings accounts  
          assigned to the officer of the court.  This bill would add to  
          that list of substitutes a cashier's check and clarify  
          provisions relating to the depositing of bonds and notes of the  
          United States or California in lieu of posting bond.  The  
          sponsor believes that a cashier's check should be added to the  
          list of substitutes since it is the functional equivalent of the  
          other substitutes now accepted.  Many court clerks already  
          accept cashier's checks, but others, reportedly, refuse to  
          accept them absent a separate motion and court order.  These  
          courts do not refuse cashier's checks because they provide any  
          less security than the other instruments accepted; rather,  
          according to the sponsor, they refuse cashier's checks because  
          they are not expressly listed in the Code of Civil Procedure.   
          In addition, this bill seeks to eliminate some "archaic"  
          language in the existing provision permitting the use of  
          treasury bonds and notes of the United States and California.   
          For example, the existing statute, read literally, only permits  
          "bearer bonds" or "bearer notes," even though the U.S. Treasury  
          ceased issuing "bearer" bonds in 1982.  This bill would still  
          permit the use of bearer bonds and bearer notes for those who  
          still hold them; however, it will clarify that U.S. and  
          California bonds and notes, including bearer bonds and bearer  
          notes, may be submitted to, and accepted by, the court in lieu  
          of posting bond. 

           ARGUMENTS IN SUPPORT  :  According to the Conference of California  
          Bar Associations (the sponsor), "AB 1856 would amend selected  








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          provisions of California's Bond and Undertaking Law to update  
          the list of financial instruments that may be deposited with the  
          court in lieu of an appeal bond to stay execution of a judgment  
          pending appeal.  The purpose of the bill is to update the list  
          of acceptable forms of security to reflect current instruments  
          of unquestioned value, and thereby to eliminate the need to  
          expend the litigants' and court's time and resources on  
          unnecessary motions to have these forms of security approved."   
          The sponsor concludes that this measure is "a straightforward  
          and valuable bill to improve the administration of justice in  
          California for the benefit of litigants, courts, and, by  
          extension, taxpayers." 

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Conference of California Bar Associations (sponsor)
          Appellate Courts Section of the Los Angeles County Bar  
          Association 

           Opposition 
           
          None on file 
           
          Analysis Prepared by  :   Thomas Clark / JUD. / (916) 319-2334