BILL ANALYSIS �
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
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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
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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