California Legislature—2013–14 Regular Session

Assembly Bill No. 1856

Introduced by Assembly Member Wilk

February 19, 2014

An act to amend Sections 995.710, 995.720, 995.740, and 995.760 of the Code of Civil Procedure, relating to civil actions.

LEGISLATIVE COUNSEL’S DIGEST

AB 1856, as introduced, Wilk. Deposit in lieu of bond.

Existing law allows, among other things, bearer bonds and bearer notes of the United States or this state and certificates of deposit payable, not exceeding the federally insured amount, issued by banks or savings associations authorized to do business in this state and insured by the Federal Deposit Insurance Corporation to be deposit with the officer, as defined, in lieu of a bond required by an action or proceeding, except as provided.

This bill would allow all bonds and notes of the United States or the State of California and cashiers checks, payable to the officer, to be deposit with the officer in lieu of a bond, as specified.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 995.710 of the Code of Civil Procedure
is amended to read:

995.710.  

(a) Except as provided in subdivision (e) or to the
extent the statute providing for a bond precludes a deposit in lieu
of bond or limits the form of deposit, the principal may begin insert , end insert instead
of giving a bond, deposit with the officer any of the following:

(1) Lawful money of the United States. The money shall be
maintained by the officer in an interest-bearing trust account.

(2)  begin delete Bearer bonds or bearer notes end delete begin insert Bonds or notes, including end insert
begin insert bearer bonds and bearer notes, end insert of the United States or the State
of California. begin insert The deposit of a bond or note pursuant to this section
shall be accomplished by filing with the court, and serving upon
all parties and the appropriate officer of the bank holding the bond
or note, instructions executed by the person or entity holding title
to the bond or note that the county treasurer of the county where
the judgment was entered is the custodian of that account for the
purpose of staying enforcement of the judgment, and that the title
holder assigns to the Treasurer the right to collect, sell, or
otherwise apply the bond or note to enforce the judgment debtor’s
liability pursuant to Section 995.760. end insert

(3) Certificates of deposit payable to the officer, not exceeding
the federally insured amount, begin insert or a cashier’s check made payable
to the officer, end insert issued by banks or savings associations authorized
to do business in this state and insured by the Federal Deposit
Insurance Corporation. begin insert A cashier’s check shall be deposited by
the officer in an interest- bearing trust account and cleared by the
bank. end insert

(4) Savings accounts assigned to the officer, not exceeding the
federally insured amount, together with evidence of the deposit in
the savings accounts with banks authorized to do business in this
state and insured by the Federal Deposit Insurance Corporation.

(5) Investment certificates or share accounts assigned to the
officer, not exceeding the federally insured amount, issued by
savings associations authorized to do business in this state and
insured by the Federal Deposit Insurance Corporation.

(6) Certificates for funds or share accounts assigned to the
officer, not exceeding the guaranteed amount, issued by a credit
union, as defined in Section 14002 of the Financial Code, whose
share deposits are guaranteed by the National Credit Union
Administration or guaranteed by any other agency approved by
the Department of Financial Institutions.

(b) The deposit shall be in an amount or have a face value, or begin insert , end insert
in the case of begin delete bearer end delete bonds or begin delete bearer end delete notes begin insert , end insert 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. Notwithstanding any other provision of this chapter, in
the case of a deposit of begin delete bearer end delete bonds or begin delete bearer end delete notes other than in
an action or proceeding, the officer may, in the officer’s discretion,
require that the amount of the deposit be determined not by the
market value of the bonds or notes but by a formula based on the
principal amount of the bonds or notes.

(c) The deposit shall be accompanied by an agreement executed
by the principal authorizing the officer to collect, sell, or otherwise
apply the deposit to enforce the liability of the principal on the
deposit. The agreement shall include the address at which the
principal may be served with notices, papers, and other documents
under this chapter.

(d) The officer may prescribe terms and conditions to implement
this section.

(e) This section begin delete may end delete begin insert does end insert not begin delete be utilized after January 1, 1999,
for end delete begin insert apply to end insert deposits with the Secretary of State. begin delete Any principal
who made a deposit with the Secretary of State pursuant to this
section prior to January 1, 1999, may continue to utilize that deposit
in lieu of a bond pursuant to this section and the statute that
prescribes a bond; however, the deposit shall not be renewable
pursuant to this section. end delete

SEC. 2.  

Section 995.720 of the Code of Civil Procedure is
amended to read:

995.720.  

(a) The market value of begin insert bonds or notes, including end insert
bearer bonds begin delete or end delete begin insert and end insert bearer begin delete notes end delete begin insert notes, end insert shall be agreed upon by
stipulation of the principal and beneficiary or, if the bonds or notes
are given in an action or proceeding and the principal and
beneficiary are unable to agree, the market value shall be
determined by court order in the manner prescribed in this section.
A certified copy of the stipulation or court order shall be delivered
to the officer at the time of the deposit of the bonds or notes.

(b) If the bonds or notes are given in an action or proceeding,
the principal may file a written application with the court to
determine the market value of the bonds or notes. The application
shall be served upon the beneficiary and proof of service shall be
filed with the application. The application shall contain all of the
following:

(1) A specific description of the bonds or notes.

(2) A statement of the current market value of the bonds or notes
as of the date of the filing of the application.

(3) A statement of the amount of the bonds or notes that the
principal believes would be equal to the required amount of the
deposit.

(c) The application pursuant to subdivision (b) shall be heard
by the court not less than five days or more than 10 days after
service of the application. If at the time of the hearing no objection
is made to the current market value of the bonds or notes alleged
in the application, the court shall fix the amount of the bonds or
notes on the basis of the market value alleged in the application.
If the beneficiary contends that the current market value of the
bonds or notes is less than alleged in the application, the principal
shall offer evidence in support of the application, and the
beneficiary may offer evidence in opposition. At the conclusion
of the hearing, the court shall make an order determining the market
value of the bonds or notes and shall fix and determine the amount
of the bonds or notes to be deposited by the principal.

SEC. 3.  

Section 995.740 of the Code of Civil Procedure is
amended to read:

995.740.  

If no proceedings are pending to enforce the liability
of the principal on the deposit, the officer shall:

(a) Pay quarterly, on demand, any interest on the deposit, when
earned in accordance with the terms of the account or certificate,
to the principal.

(b) Deliver to the principal, on demand, any interest coupons
attached to begin insert bonds or notes, including end insert bearer bonds begin delete or end delete begin insert and end insert bearer
begin delete notes end delete begin insert notes, end insert as the interest coupons become due and payable, or
pay annually any interest payable on the bonds or notes.

SEC. 4.  

Section 995.760 of the Code of Civil Procedure is
amended to read:

995.760.  

(a) If the principal does not pay the amount of the
liability on the deposit within the time prescribed in Section
995.750, the deposit shall be collected, sold, or otherwise applied
to the liability upon order of the court that entered the judgment
of liability, made upon five days’ notice to the parties.

(b)  begin delete Bearer end delete begin insert Bonds or notes, including bearer end insert bonds begin delete or end delete begin insert and end insert bearer
begin delete notes end delete begin insert notes, end insert without a prevailing market price shall be sold at
public auction. Notice of sale shall be served on the principal.
begin delete Bearer bonds or bearer end delete begin insert Bonds or end insert notes having a prevailing market
price may be sold at private sale at a price not lower than the
prevailing market price.

(c) The deposit shall be distributed in the following order:

(1) First, to pay the cost of collection, sale, or other application
of the deposit.

(2) Second, to pay the judgment of liability of the principal on
the deposit.

(3) Third, the remainder, if any, shall be returned to the
principal.