June 18, 2019

Colorado Supreme Court: Holder-in-Due-Course Status Does Not Preclude Forgery Defense

The Colorado Supreme Court issued its opinion in Liberty Mortgage Corp. v. Fiscus on Monday, May 16, 2016.

Negotiable Instruments—Holders in Due Course—Forgery—Ratification—Negligent Contribution.

Respondent Fiscus’s wife forged his name on three powers of attorney and used them to procure a promissory note that was ultimately assigned to petitioner Branch Banking and Trust Company. The note was secured by a deed of trust purporting to encumber property held in Fiscus’s name alone. Branch Banking and Trust claimed holder-in-due-course status under Article 3 of Colorado’s Uniform Commercial Code, and Fiscus raised a forgery defense. The Court of Appeals held that Article 3 does not apply to deeds of trust because they are not “negotiable instruments” as defined in the Code. The Supreme Court held that, even assuming Article 3 applies to such deeds of trust, holder-in-due-course status does not preclude a purported maker from asserting a forgery defense. Thus, because Fiscus had a valid forgery defense, not barred by any negligence or ratification on his part, the Court affirmed the judgment of the Court of Appeals but on different grounds. The Court did not address the negotiability of deeds of trust that secure promissory notes under Article 3.

Summary provided courtesy of The Colorado Lawyer.

Budget Bills, HOA Transfer Fee Bill, and More Signed by Governor

Governor Hickenlooper signed nine more bills into law last Friday, bringing the total of signed bills up to 147 with two vetoed bills. The nine signed on April 18, 2014, are summarized here.

  • HB 14-1057 – Concerning the Colorado Fraud Investigators Unit, by Rep. Clarice Navarro and Sen. Steve King. The bill increases the fraud investigation surcharge on Uniform Commercial Code (UCC) filings with the Secretary of State from $3 to $4 per filing, effective July 1, 2014, through June 30, 2017.
  • HB 14-1100 – Concerning the Use of Title Documents to Give Notice of Characteristics of Motor Vehicles that Affect a Vehicle’s Value, and, In Connection Therewith, Making an Appropriation, by Reps. Spencer Swalm & Dan Pabon and Sen. Kevin Grantham. The bill requires that a branding be placed on the title of a motor vehicle if the vehicle meets certain criteria, such as if the vehicle is non-repairable, was constructed from two or more vehicles, is junk, and so on.
  • HB 14-1141 – Concerning the Confidentiality of Social Security Numbers Under Statutes Protecting the Privacy of Individuals, by Rep. Don Coram and Sen. Ellen Roberts. The bill amends a statute within the Colorado Consumer Protection Act to provide that an organization may not require disclosure of an individual’s SSN in order for that individual to serve on the organization’s board of directors.
  • HB 14-1186 – Concerning the Release of Medical Records to a Person Other Than the Patient, and, In Connection Therewith, Setting Reasonable Fees to be Paid for the Release of the Medical Records, by Rep. Sue Schafer and Sen. Irene Aguilar. The bill requires health care facilities and providers to release medical records to anyone with a valid authorization or subpoena, and sets reasonable costs for copying the medical records.
  • HB 14-1254 – Concerning a Requirement to Disclose Fees Charged to a Unit Owners’ Association by a Community Association Manager, by Rep. Jeanne Labuda and Sen. David Balmer. The bill requires a licensed community association manager who provides services to an HOA to fully disclose all fees and costs that will be charged to the HOA or unit owners.
  • HB 14-1282 – Concerning the Specification of What Materials May Be Provided in a Language Other Than English by an Insurer to a Customer, by Rep. Dan Pabon and Sen. Lois Tochtrop. The bill specifies that an insurer providing materials to a customer in a language other than English need only supply copies in English of the insurance policies, endorsements, and riders.
  • HB 14-1308 – Concerning Procedures for a Department to Vary an Appropriation, by Rep. Cheri Gerou and Sen. Pat Steadman. The bill, a Joint Budget Committee bill, allows agencies to overexpend appropriations or transfer funds between agencies to cover certain costs in certain situations.
  • HB 14-1340 – Concerning the State Toxicology Laboratory, and, In Connection Therewith, Making an Appropriation, by Rep. Cheri Gerou and Sen. Kent Lambert. The bill, a Joint Budget Committee bill, requires the Colorado Bureau of Investigation to operate a State Toxicology Laboratory on or before July 1, 2015 in order to assist local law enforcement authorities in their enforcement of DUI laws.
  • HB 14-1341 – Concerning a Transfer of Moneys from the State General Fund to the Department of State Cash Fund for the Purpose of Repaying a Prior Transfer, by Rep. Jenise May and Sen. Pat Steadman. The bill, a Joint Budget Committee bill, requires the state treasurer to make a one-time transfer of general fund moneys to the Department of State cash fund in order to repay moneys borrowed during the 2008-2009 fiscal year.

Governor Hickenlooper plans to sign HB 14-1337 – Concerning an Increase in the General Fund Reserve, a Joint Budget Committee bill, today, April 21, 2014, at a press conference.

For a list of Governor Hickenlooper’s legislative decisions, click here.

Bills Regarding Crimes Against Pregnant Women, UCC Article 9 Security Interests, and Valuations of Real Property Signed

On June 5, 2013, Governor Hickenlooper signed 52 bills, the final bills of the 2013 legislative session. Any bills as yet not signed or vetoed by the governor 30 days after the last day of the legislative session, May 8, 2013, will become law.

Although there is not room here to summarize all of the bills signed on June 5, some of them are discussed below.

For a complete list of Governor Hickenlooper’s 2013 legislative decisions, click here.

HB 13-1284: Allowing Debtors Without Driver’s Licenses to be Identified via State-Issued ID Cards for UCC Purposes

On March 27, 2013, Rep. Bob Gardner and Sen. Ellen Roberts introduced HB 13-1284 – Concerning Documents that can be Filed Regarding Security Interests under the “Uniform Commercial Code.” This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

CBA sponsored legislation by the Business Law Section

Article 9 of the “Uniform Commercial Code” regulates the creation of security interests. Revisions adopted in H.B. 12-1262 specify that the form of the debtor’s name that should be entered when filing a financing statement is the name that appears on the debtor’s driver’s license. The bill specifies that if the debtor does not have a driver’s license, the form of the debtor’s name to enter on a financing statement is the name that appears on the debtor’s identification card.

Colorado has adopted nonuniform provisions that regulate who can file an information statement about a security interest and the effect of such a filing. H.B. 12-1262 rendered these provisions obsolete, but they were not repealed in that bill. The bill repeals these provisions.

On April 18 the bill passed 3rd and final reading in the House and is scheduled for Senate Judiciary Committee review on Monday, April 29 at 1:30 p.m.

HB 13-1157: Adopting Amendments of the Uniform Commercial Code Regarding Electronic Transactions

On January 29, 2013, Rep. Frank McNulty and Sen. Angela Giron introduced HB 13-1157 – Concerning Adoption of the 2012 “Uniform Commercial Code” Article 4.5 AmendmentsThis summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Colorado Commission on Uniform State Laws

Current state law governing funds transfers applies only to commercial transfers and does not apply to a funds transfer any part of which is governed by the federal “Electronic Fund Transfer Act of 1978” (federal act), which originally governed only consumer transfers. Federal law has been amended, effective in February 2013, to apply to remittance transfers, which are a transfer of money by a foreign worker to his or her home country, regardless of whether the transfer is a funds transfer otherwise covered by the federal act. Remittance transfers can be either commercial or consumer transfers. If state law is not amended, neither federal nor state law will apply to some aspects of remittance transfers.

The bill specifies that state law does apply to a remittance transfer that is not an electronic funds transfer under the federal act. On Feb. 19, the House approved the bill on 3rd Reading; the bill has been introduced in the Senate and has been assigned o the Business, Labor & Technology Committee.

Since this summary, the Senate Business, Labor & Technology Committee referred the bill unamended to the Senate Committee of the Whole.