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PERMANENT EDITORIAL BOARD PROPOSED REVISION OF ARTICLE 8 [i] (MEMORANDA AND MATERIALS RELATED TO THE REVISION OF ARTICLE 8, November 1975-February 1977)

handle is hein.ali/alicc0144 and id is 1 raw text is: <.'ovember 4. 1975 TO: Donald A. Scott, Esquir-e Chairman, ABA Committee on Stock Certificates FROM: Carl W. Funk, Counsel, Permanent Editorial Board SUBJECT: Report of Committee on Stock Certificates dated September 15, 1975 Page 2 - I question the statement at the end of paragraph 2 that jurisdiction in quasi-in-rem actions, e.g., the admini- stration of a decedent's estate, exists only where the certificate can be found. Does not the state of the domicile of the decedent have jurisdiction, wherever the certificate may happen to be? Page 6 - I likewise question the first sentence of the third paragraph on page 6 reading in such transactions, negotia- bility is not nearly so essential. Such transactions refers to pledges and collateral loans, and it seems to mean the negotiability of a pledged stock certificate is absolutely essential. Otherwise I think lenders would be reluctant to advance money on it; and will be true not only in the case of margin loans and broker s loans, but also where a bank is making a normal collateral loan. PacTe 11 - In thesecond paragraph of Section 3 it is stated that non-margin loans are normally preceded by a period of negotiation and credit investigation. I don't think this is true. Many loans are made by banks immediately on application, if the borrower is prepared to deliver to the bank a share certificate properly endorsed, and the negotiations can involve only a few minutes, if the borrower is well known to the bank. Therefore, it seems 'to me that removing the protection of being a bohafide purchaser in good faith may seriously impede legi- timate transactions. Page 14 - First full paragraph. The statement that a gratuitaus transferee by operation of law will not normally seek to transfer his interest without first obtaining a replacement certificate in his own name from the transfer agent is not correct where the gratuitous transferee is the personal representative of a decedent. Here the personal representative may very well, soon after the death of the decedent, sell shares in the decedent's name in order to get cash quickly to pay early administration expenses, and will do this by delivering the share certificate with appropriate endorsements and

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