(a) Except as otherwise provided in Subsections (b) and (c) of this section, a purchaser of a certificated or uncertificated security acquires all rights in the security that the transferor had or had power to transfer.

(b) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

(c) A purchaser of a certificated security who as a previous holder had notice of an adverse claim does not improve its position by taking from a protected purchaser.

History: 1978 Comp., § 55-8-302, enacted by Laws 1996, ch. 47, § 32; 2001, ch. 139, § 144.

OFFICIAL COMMENTS

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

1. Subsection (a) provides that if a certificated or uncertificated security is delivered (Section 8-301 [55-8-301 NMSA 1978]) to a purchaser in a transfer, the purchaser acquires all rights that the transferor had or had power to transfer. This statement of the familiar "shelter" principle is qualified by the exceptions that a purchaser of a limited interest acquires only that interest, Subsection (b), and that a person who does not qualify as a protected purchaser cannot improve its position by taking from a subsequent protected purchaser, Subsection (c).

2. Although this section provides that a purchaser acquires a property interest in a certificated or uncertificated security upon "delivery," it does not state that a person can acquire an interest in a security only by delivery. Article 8 is not a comprehensive codification of all of the law governing the creation or transfer of interests in securities. For example, the grant of a security interest is a transfer of a property interest, but the formal steps necessary to effectuate such a transfer are governed by Article 9 not by Article 8. Under the Article 9 rules, a security interest in a certificated or uncertificated security can be created by execution of a security agreement under Section 9-203 [55-9-203 NMSA 1978] and can be perfected by filing. A transfer of an Article 9 security interest can be implemented by an Article 8 delivery, but need not be.

Similarly, Article 8 does not determine whether a property interest in certificated or uncertificated security is acquired under other law, such as the law of gifts, trusts, or equitable remedies. Nor does Article 8 deal with transfers by operation of law. For example, transfers from decedent to administrator, from ward to guardian, and from bankrupt to trustee in bankruptcy are governed by other law as to both the time they occur and the substance of the transfer. The Article 8 rules do, however, determine whether the issuer is obligated to recognize the rights that a third party, such as a transferee, may acquire under other law. See Sections 8-207 [55-8-207 NMSA 1978], 8-401 [55-8-401 NMSA 1978], and 8-404 [55-8-404 NMSA 1978].

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

"Delivery" Section 8-301 [55-8-301 NMSA 1978]

"Notice of adverse claim" Section 8-105 [55-8-105 NMSA 1978]

"Protected purchaser" Section 8-303 [55-8-303 NMSA 1978]

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

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

Repeals and reenactments. — Laws 1996, ch. 47, § 31, repealed former 55-8-302 NMSA 1978, as amended by Laws 1987, ch. 248, § 19, relating to bona fide purchasers, adverse claims, and the title acquired by a bona fide purchaser, and enacted a new section, effective May 15, 1996. For provisions of former section, see the 1995 NMSA 1978 on NMOneSource.com.

The 2001 amendment, effective July 1, 2001, substituted "Except as otherwise provided in Subsections (b) and (c) of this section, a purchaser of a certificated or uncertificated security acquires" for "Except as otherwise provided in Subsections (b) and (c) upon delivery of a certificated or uncertificated security to a purchaser, the purchaser".

Collection upon stolen or lost negotiable bond or coupon. — Under former Section 55-8-302 NMSA 1978 a person may become the lawful holder of a negotiable bond or bond coupon where he is a "bona fide purchaser," as defined under the statute, and be entitled to collection upon a negotiable bond or coupon, even though the bond was stolen or lost. 1962 Op. Att'y Gen. No. 62-139 (rendered under prior law).

Am. Jur. 2d, A.L.R. and C.J.S. references. — Rights of purchaser of stolen bonds, 18 A.L.R. 717.

Rights of owner and bona fide purchaser of lost or stolen stock certificates, 52 A.L.R. 947.

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.

Priority as between lien of corporation and bona fide purchaser of corporate stock, 81 A.L.R. 989.