(a) The interest of a debtor in a certificated security may be reached by a creditor only by actual seizure of the security certificate by the officer making the attachment or levy, except as otherwise provided in Subsection (d). However, a certificated security for which the certificate has been surrendered to the issuer may be reached by a creditor by legal process upon the issuer.

(b) The interest of a debtor in an uncertificated security may be reached by a creditor only by legal process upon the issuer at its chief executive office in the United States, except as otherwise provided in Subsection (d).

(c) The interest of a debtor in a security entitlement may be reached by a creditor only by legal process upon the securities intermediary with whom the debtor's securities account is maintained, except as otherwise provided in Subsection (d).

(d) The interest of a debtor in a certificated security for which the certificate is in the possession of a secured party or in an uncertificated security registered in the name of a secured party or a security entitlement maintained in the name of a secured party may be reached by a creditor by legal process upon the secured party.

(e) A creditor whose debtor is the owner of a certificated security, uncertificated security or security entitlement is entitled to aid from a court of competent jurisdiction, by injunction or otherwise, in reaching the certificated security, uncertificated security or security entitlement or in satisfying the claim by means allowed at law or in equity in regard to property that cannot readily be reached by other legal process.

History: 1978 Comp., § 55-8-112, enacted by Laws 1996, ch. 47, § 16.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

1. In dealing with certificated securities the instrument itself is the vital thing, and therefore a valid levy cannot be made unless all possibility of the certificate's wrongfully finding its way into a transferee's hands has been removed. This can be accomplished only when the certificate is in the possession of a public officer, the issuer, or an independent third party. A debtor who has been enjoined can still transfer the security in contempt of court. See Overlock v. Jerome-Portland Copper Mining Co., 29 Ariz. 560, 243 P. 400 (1926). Therefore, although injunctive relief is provided in subsection (e) so that creditors may use this method to gain control of the certificated security, the security certificate itself must be reached to constitute a proper levy whenever the debtor has possession.

2. Subsection (b) provides that when the security is uncertificated and registered in the debtor's name, the debtor's interest can be reached only by legal process upon the issuer. The most logical place to serve the issuer would be the place where the transfer records are maintained, but that location might be difficult to identify, especially when the separate elements of a computer network might be situated in different places. The chief executive office is selected as the appropriate place by analogy to Section 9-103(3)(d) [55-9-103 NMSA 1978]. See Comment 5(c) to that section. This section indicates only how attachment is to be made, not when it is legally justified. For that reason there is no conflict between this section and Shaffer v. Heitner, 433 U.S. 186 (1977).

3. Subsection (c) provides that a security entitlement can be reached only by legal process upon the debtor's security intermediary. Process is effective only if directed to the debtor's own security intermediary. If Debtor holds securities through Broker, and Broker in turn holds through Clearing Corporation, Debtor's property interest is a security entitlement against Broker. Accordingly, Debtor's creditor cannot reach Debtor's interest by legal process directed to the Clearing Corporation. See also Section 8-115 [55-8-115 NMSA 1978].

4. Subsection (d) provides that when a certificated security, an uncertificated security, or a security entitlement is controlled by a secured party, the debtor's interest can be reached by legal process upon the secured party. This section does not attempt to provide for rights as between the creditor and the secured party, as, for example, whether or when the secured party must liquidate the security.

"Certificated security" Section 8-102(a)(4) [55-8-102 NMSA 1978]

"Issuer" Section 8-201 [55-8-201 NMSA 1978]

"Secured party" Section 9-105(1)(m) [55-9-105 NMSA 1978]

"Securities intermediary" Section 8-102(a)(14)

"Security certificate" Section 8-102(a)(16)

"Security entitlement" Section 8-102(a)(17)

"Uncertificated security" Section 8-102(a)(18)

Am. Jur. 2d, A.L.R. and C.J.S. references. — Shares of corporate stock as subject of execution or attachment, 1 A.L.R. 653.

Withdrawal value of stock in building and loan association as basis of attachment or execution by member or as subject of garnishment by member's creditor, 94 A.L.R. 1017.

Situs of corporate stock (or stock in joint stock company) for purpose of attachment, garnishment or execution, 122 A.L.R. 338.

Effect of attachment, garnishment, execution, etc., as regards right or duty of corporation to refuse to transfer stock on books to one presenting properly endorsed certificate, because of knowledge or suspicion of conflicting rights of registered holder or of a third person, 139 A.L.R. 290, 75 A.L.R.2d 746.