(a) If a security certificate contains the signatures necessary to its issue or transfer but is incomplete in any other respect:

(1) any person may complete it by filling in the blanks as authorized; and

(2) even if the blanks are incorrectly filled in, the security certificate as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.

(b) A complete security certificate that has been improperly altered, even if fraudulently, remains enforceable, but only according to its original terms.

History: 1978 Comp., § 55-8-206, enacted by Laws 1996, ch. 47, § 26.

OFFICIAL COMMENTS

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

1. The problem of forged or unauthorized signatures necessary for the issue or transfer of a security is not involved here, and a person in possession of a blank certificate is not, by this section, given authority to fill in blanks with such signatures. Completion of blanks left in a transfer instruction is dealt with elsewhere (Section 8-305(a) [55-8-305 NMSA 1978]).

2. Blanks left upon issue of a security certificate are the only ones dealt with here, and a purchaser for value without notice is protected. A purchaser is not in a good position to determine whether blanks were completed by the issuer or by some person not authorized to complete them. On the other hand the issuer can protect itself by not placing its signature on the writing until the blanks are completed or, if it does sign before all blanks are completed, by carefully selecting the agents and employees to whom it entrusts the writing after authentication. With respect to a security certificate that is completed by the issuer but later is altered, the issuer has done everything it can to protect the purchaser and thus is not charged with the terms as altered. However, it is charged according to the original terms, since it is not thereby prejudiced. If the completion or alteration is obviously irregular, the purchaser may not qualify as a purchaser who took without notice under this section.

3. Only the purchaser who physically takes the certificate is directly protected. However, a transferee may receive protection indirectly through Section 8-302(a) [55-8-302 NMSA 1978].

4. The protection granted a purchaser for value without notice under this section is modified to the extent that an overissue may result where an incorrect amount is inserted into a blank (Section 8-210 [55-8-210 NMSA 1978]).

"Notice" Section 1-201(25) [55-1-201 NMSA 1978]

"Purchaser" Sections 1-201(33) & 8-116 [55-8-116 NMSA 1978]

"Security certificate" Section 8-102(a)(16) [55-8-102 NMSA 1978]

"Unauthorized signature" Section 1-201(43)

"Value" Sections 1-201(44) & 8-116

Repeals and reenactments. — Laws 1996, ch. 47, § 26 repealed former 55-8-206 NMSA 1978, as amended by Laws 1987, ch. 248 § 15, relating to completion or alteration of certificated security or initial transaction statement, and enacted a new section, effective May 15, 1996. For provisions of former section, see the 1995 NMSA 1978 on NMOneSource.com.

Am. Jur. 2d, A.L.R. and C.J.S. references. — Effect of entrusting another with stock certificate endorsed or assigned in blank, to estop owner as against bona fide purchaser or pledgee for value, 73 A.L.R. 1405.