BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2013-2014 Regular Session
AB 1856 (Wilk)
As Amended June 10, 2014
Hearing Date: June 17, 2014
Fiscal: No
Urgency: No
TH
SUBJECT
Deposit in Lieu of Bond
DESCRIPTION
This bill would generally allow all bonds and notes of the
United States and the State of California, as well as cashier's
checks issued by a bank, savings association, or credit union
authorized to do business in this state, to be deposited in lieu
of a bond pursuant to California's Bond and Undertakings Law.
BACKGROUND
Under existing law, an appeal from a money judgment does not
stay enforcement of the judgment "unless an undertaking is
given." (Code Civ. Proc. Sec. 917.1(a).) California's Bond and
Undertakings Law (Code Civ. Proc. Sec. 995.010 et seq.) governs
the undertaking procedures for appeals, as well as for most
other bonds and undertakings required by law. An undertaking on
appeal is often accomplished by posting a bond by an admitted
surety insurer. However, appellants and others required to post
bonds also have the option of making a deposit with a trial
court in lieu of a bond.
Currently, the Bond and Undertakings Law permits the following
assets to be deposited in lieu of a bond as specified: lawful
money of the United States; bearer bonds or bearer notes of the
United States or the State of California; certificates of
deposit payable to a designated officer; savings accounts
assigned to a designated officer; investment certificates or
share accounts assigned to a designated officer; and
certificates for funds or share accounts assigned to a
(more)
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designated officer. The ability to deposit one or more of these
assets as an alternative to securing a bond saves the cost of
having to pay the premium of a bond.
This bill would expand the scope of assets suitable for
depositing in lieu of a bond to include all bonds and notes of
the United States or the State of California, as well as
cashier's checks.
CHANGES TO EXISTING LAW
Existing law provides that unless an undertaking is given, the
perfecting of an appeal shall not stay enforcement of the
judgment or order of a trial court if the judgment or order is
for either money or the payment of money, or costs awarded by
the court, as specified. (Code Civ. Proc. Sec. 917.1(a).)
Existing law , the Bond and Undertakings Law, establishes the
procedures and requirements for executing, posting, filing,
furnishing, or otherwise providing a bond or undertaking as
security. (Code Civ. Proc. Sec. 995.010 et seq.)
Existing law provides that the Bond and Undertakings Law applies
to any bond or undertaking given as security pursuant to any
statute of this state, except to an undertaking of bail or where
another statute prescribes a different rule or is inconsistent.
(Code Civ. Proc. Sec. 995.020.)
Existing law provides that, except as specified or to the extent
a statute providing for a bond precludes a deposit in lieu of
bond or limits the form of deposit, a person may instead of
giving a bond, deposit with a designated officer any of the
following:
lawful money of the United States;
bearer bonds or bearer notes of the United States or the State
of California;
certificates of deposit;
savings accounts;
investment certificates or share accounts; and
certificates for funds or share accounts. (Code Civ. Proc.
Sec. 995.710(a).)
Existing law provides that a deposit in lieu of bond shall be in
an amount or have a face value, or in the case of bearer bonds
or bearer notes have a market value, equal to or in excess of
the amount that would be required to be secured by the bond if
the bond were given by an admitted surety insurer. (Code Civ.
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Proc. Sec. 995.710(b).)
Existing law also provides that a deposit in lieu of bond shall
be accompanied by an agreement executed by the depositor
authorizing the officer to collect, sell, or otherwise apply the
deposit to enforce the liability of the principal on the
deposit. (Code Civ. Proc. Sec. 995.710(c).)
This bill would provide that, except as specified or to the
extent a statute providing for a bond precludes a deposit in
lieu of bond or limits the form of deposit, a person may instead
of giving a bond and without prior court approval, deposit with
a designated officer any asset permitted by the Bond and
Undertakings Law.
This bill would expand the Bond and Undertakings Law to include
a cashier's check, made payable to a designated officer, issued
by a bank, savings association, or credit union authorized to do
business in this state, among the assets that may be deposited
in lieu of bond.
This bill would provide that all bonds or notes, including
bearer bonds and bearer notes, of the United States or the State
of California, may be deposited in lieu of bond under the Bond
and Undertakings Law. This bill would specify the terms upon
which the deposit of a bond or note shall be accomplished.
This bill would make other conforming changes to the Bond and
Undertakings Law reflecting the expanded class of assets that
may be deposited in lieu of bond.
COMMENT
1. Stated need for the bill
The author writes:
Under existing law, a defendant appealing a money judgment
must post security to prevent execution of the judgment
pending appeal. Security can be provided by bond, or by a
deposit with the court pursuant to CCP [Sec.] 995.710 et seq.
Among the other instruments identified in these statutes as
available for deposit are "bearer" bonds, "bearer" notes, and
"coupons" - instruments that are no longer issued under
current law. At the same time, the statutes do not mention
many types of government bonds and notes that are issued under
current law. So a party who wants to deposit the type of
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government bonds and notes issued under current law as
security needs to file a motion and make court appearances to
explain to the court why it is not depositing bearer bonds or
bearer notes, which are the only government bond options
provided by the statutes.
The statutes also omit any provision for depositing cashier's
checks, although cashier's checks are functionally equivalent
to cash and other instruments expressly accepted under the
statute, e.g., certificates of deposit and savings accounts .
. . . Cashier's checks are more convenient to deposit with
the clerk than the approved "[l]awful money of the United
States" . . . , especially when large sums are deposited.
AB 1856 is needed to update the law [to] allow litigants to
use the types of bonds and notes that are currently available.
This, in turn, will eliminate motion work and unnecessary
court appearances which have been necessary to interpret
archaic statutory provisions, saving much needed time and
resources for courts, attorneys and clients. . . . The
provisions of AB 1856 are also needed to permit the use of
cashier's checks as security. . .
2. Expanding Deposit in Lieu of Bond Provisions
This bill would allow parties in a variety of settings - from
litigants appealing judgments to businesses required to post
bonds in the course of their trade - additional flexibility in
depositing assets in lieu of obtaining bonds. Bonds issued by a
surety insurer typically include a premium priced as a
percentage of the sum of the bond issued. California's Bond and
Undertakings Law permits individuals with other suitable assets
to post these assets in lieu of bonds, thereby avoiding the cost
of paying a bond premium. According to the sponsor, the
Conference of California Bar Associations:
the list of instruments acceptable for deposit under the law
has not been updated since 1982. As a result, the list
includes instruments (e.g., bearer bonds and bearer notes)
which are no longer issued, but does not include common
instruments of acknowledged stability and value, such as U.S.
Treasury bonds, bonds issued by the state of California, and
cashier's checks, which are the functional equivalent of cash.
Adding additional instruments of acknowledged value, such as
cashier's checks and other types of bonds will give Californians
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a less expensive option for appealing money judgments or posting
bond equivalents as required by the rules of their profession.
Additionally, this bill would help avoid diverting judicial
resources to evaluate what classes of assets may be deposited in
place of bonds. According to supporters, litigants who wish to
post an asset not specifically listed in the Bond and
Undertakings Law are sometimes allowed to do so only after
filing a motion seeking prior approval from a court. The
Appellate Courts Section of the Los Angeles County Bar
Association, writing in support, states:
While clerks sometimes accept cashiers' checks, they often
refuse to accept them absent a court order because they are
not currently listed in [the Bond and Undertakings Law]. AB
1856 amends [this law] by adding cashier's checks to the list
of approved securities that can be deposited in lieu of an
appeal bond.
Clarifying that additional assets of stable and known value may
be deposited in lieu of bond without prior court approval under
the Bond and Undertakings Law will help conserve judicial
resources and save parties from needless expense in securing
prior authorization from a court.
Support : Appellate Courts Section of the Los Angeles County Bar
Association; California Appellate Law Group
Opposition : None Known
HISTORY
Source : Conference of California Bar Associations
Related Pending Legislation : None Known
Prior Legislation : AB 1672 (Assembly Judiciary Committee, Ch.
892, Stats. 1999) provided, among other things, the
reauthorization of the option of making a deposit with a trial
court in lieu of a bond during the appeal of a money judgment.
Prior Vote :
Senate Committee on Banking and Financial Institutions (Ayes 8,
Noes 0)
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Assembly Floor (Ayes 78, Noes 0)
Assembly Committee on Judiciary (Ayes 10, Noes 0)
Assembly Committee on Banking and Finance (Ayes 12, Noes 0)
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