Amended in Senate June 10, 2014

Amended in Assembly April 21, 2014

Amended in Assembly March 20, 2014

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 amended, 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 deposited 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 cashier’s checks, payable to the officer, to be deposited 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 without
prior court approval, end insert instead of giving a bond, deposit with the
officer any of the following:

(1) Lawful money of the United States begin insert or a cashier’s check,
made payable to the officer, issued by a bank, savings association,
or credit union authorized to do business in this state end insert . The money
shall be begin delete maintained end delete begin insert held in trust end insert by the officer in begin delete an end delete interest-bearing
begin delete trust account end delete begin insert deposit or share accounts end insert .

(2) Bonds or notes, including bearer bonds and bearer notes, of
the United States or the State of California. 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
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 begin delete Treasurer end delete
begin insert treasurer end insert the right to collect, sell, or otherwise apply the bond or
note to enforce the judgment debtor’s liability pursuant to Section
995.760.

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

(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)  begin delete Certificates for funds or share accounts assigned end delete begin insert Share
certificates payable end insert to the officer, not exceeding the guaranteed
begin insert or insured end insert amount, issued by a credit union, as defined in Section
14002 of the Financial Code, whose share begin delete deposits end delete begin insert accounts end insert are
begin delete guaranteed end delete begin insert insured end insert by the National Credit Union Administration
or guaranteed begin insert or insured end insert by any other agency begin delete approved by the
Department of Financial Institutions end delete begin insert that the Commissioner of
Business Oversight has not deemed to be unsatisfactory end insert .

(b) The deposit shall be in an amount or have a face value, or,
in the case of bonds or 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.
Notwithstanding any other provision of this chapter, in the case
of a deposit of bonds or 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 does not apply to deposits with the Secretary
of State.

SEC. 2.  

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

995.720.  

(a) The market value of bonds or notes, including
bearer bonds and bearer notes, 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 bonds or notes, including bearer bonds and bearer notes,
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) Bonds or notes, including bearer bonds and bearer notes,
without a prevailing market price shall be sold at public auction.
Notice of sale shall be served on the principal. Bonds or 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.