Untitled Texas Attorney General Opinion ( 2000 )

OFFICE OF THE ATTORNEY GENERAL. STATE OF TEXAS
JOHN CORNYN
July l&2000
The Honorable Joe F. Grubbs Opinion No. JC-0256
Ellis County and District Attorney
Ellis County Courthouse Re: Whether a county clerk is required to accept
Waxahachie, Texas 75165-3759 for tiling a UCC financing statement in which the
listed secured party is the same person as the
listed debtor (RQ-0196-JC)
Dear Mr. Grubbs:
A county clerk must tile and record only those documents that the clerk is statutorily
authorized or required to tile. See TEX. Lot. GOV’T CODE ANN. 4 192.001 (Vernon 1999); Tex.
Att’y Gen. Op. No. JC-0156 (1999) at 1-2; Tex. Att’y Gen. LO-98-016, at 2-3. Youask whether the
Ellis County Clerk is required to accept for filing a purported UCC financing statement that names
the same person as both the secured party and the debtor. See Letter from Honorable Joe F. Grubbs,
Ellis County and District Attorney, to Honorable John Comyn, Texas Attorney General
(Feb. l&2000) [hereinafter “Request Letter”]. We conclude that such a document does not comply
with chapter 9 of the Business and Commerce Code and that the county clerk consequently is not
required to accept the document. We see no reason to limit our conclusion to the clerk of Ellis
County only.
The Ellis County Clerk has received documents for filing and recording that you describe as
“unusual and not necessarily regular on their faces.” Id. at 1. “In particular,” you state, “the
County Clerk has received UCC financing statements where on each the same person is named
a[s] the ‘debtor’ and as the ‘secured party.“’ Id. All ofthe purported financing statements claim that
the “debtor” is a “transmitting utility.” Id. You suspect that the persons seeking to tile these
purported financing statements may be affiliated with “a common[-]law court group” and “may be
attempting to prioritize liens in avoiding taxes.” Id. at 2. The Clerk has not tiled these documents,
and you ask whether the Clerk’s refusal is proper. Id. at 1.
This office concluded in Attorney General Opinion JC-0156 that a county clerk is required
to accept for filing only a document, “regular on its face,” that the clerk is “authorized, required, or
permitted” by statute to file. See Tex. Att’y Gen. Op. No. JC-0156 (1999) at 2; accord Tex. Att’y
Gen. LO-9X-016, at 2, 6. Section 192.001 of the Local Government Code, upon which the
conclusion of Attorney General Opinion JC-0156 is based, directs a county clerk to record each
instrument “that is required or permitted by law to be recorded.” TEX. LOC. GOV’T CODE
The Honorable Joe F. Grubbs Page 2 (X-0256)
ANN. 5 192.001 (Vernon 1999); see Tex. Att’y Gen. Op. No. JC-0156 (1999) at 2; Tex. Att’y Gen.
LO-98-016, at 2,6; City ofAbilene v. Fryar, 143 S.W.2d 654,657 (Tex. Civ. App.-Eastland 1940,
no writ). Conversely, a county clerk has no duty to accept for tiling a document that the clerk has
no statutory authority to file. See Tex. Att’y Gen. Op. No. JC-0156 (1999) at 2; accord Tex. Att’y
Gen. LO-98-016, at 6.
If a county clerk has a duty to accept a purported UCC financing statement such as you
describe, that duty arises under chapter 9 of the Business and Commerce Code. Chapter 9, which
is also known as “Uniform Commercial Code-Secured Transactions,“see TEX. Bus. & COM. CODE
ANN. 5 9.101 (Vernon 1991), regulates any transaction that is “intended to create a security interest
in personal property or fixtures including goods, documents, instruments, general intangibles, chattel
paper or accounts.” See id. 5 9.102 (Vernon Supp. 2000). For the purposes of chapter 9, a “debtor”
is a “person who owes payment or other performance of the obligation secured.” Id. 5 9.105(4). A
“secured party” is “a lender, seller[,] or other person in whose favor there is a security interest.” Id.
5 9.105(13). A “security interest” is “an interest in personal property or fixtures [that] secures
payment or performance of an obligation.” Id. § 1,201(37)(A); see also id. $ 9.105(d) (stating that
relevant definitions may be found in chapter 1, Business and Commerce Code).
Under chapter 9, a secured party generally must file a financing statement with the county
clerk to perfect a security interest in a transaction. See id. $3 9.302(a), .303(a), ,304. But see id.
Q 9.104, .302, ,305. A proper financing statement names the debtor and the secured party; bears
the debtor’s signature; lists the secured party’s address so that information concerning the security
interest may be obtained; states the debtor’s mailing address; and lists or describes the types or items
of collateral. See id. 5 9.402(a). To perfect a security interest in certain kinds of goods, the secured
party, not the debtor, must sign the financing statement. See id. 5 9.402(b).
Once a security interest is perfected, and if the debtor defaults on the loan from the secured
party, the secured party may take possession and dispose of the collateral listed on the financing
statement. See id. $5 9.501(a), ,503, ,504 (Vernon 1991); accord Bunk One, Tex. Y. Stewart, 967
S.W.2d 419, 435 (Tex. App.-Houston [14th Dist.] 1998, pet. denied). “A secured patty takes
priority over [the holder ofl an unperfected security interest and may take priority over other secured
parties depending upon when the parties perfected their interest.” Bank One, Ten., 967 S.W.2d at
435; see also TEX. Bus. & COM. CODE ANN. $3 9.301, ,312 (Vernon Supp. 2000). A person who
“intentionally or knowingly” presents or causes to be presented for filing a “groundless” financing
statement that the person knows is groundless may commit a Class A misdemeanor. See TEX. PEN.
CODE ANN. 5 37.101 (Vernon Supp. 2000).
A document that purports to be a chapter 9 financing statement but that lists the same person
as the debtor and the secured party does not create a security interest. “A security interest is an
interest in property [that] is given, by contract, from one person to another person to secure an
obligation [that] the giver of the security interest (the debtor) owes to the person to whom the
security interest is given.” N.D. Att’y Gen. Op. No. 99-13, 1999 WL 717972, at *2. Where the
debtor and the secured party are natural persons, they must be different people. If the debtor and
The Honorable Joe F. Grubbs - Page 3 (X-0256)
secured party are the same entity, the debtor cannot be legally obligated to repay a loan of money
or property to the secured party. See TEX. BUS. & COM. CODE ANN. 5 9.105(a)(4), (13) (Vernon
Supp. 2000) (defining “debtor” and “secured party”). Similarly, a debtor cannot default on a loan
from him- or herself in a way that would make sense of the statutory liability and criminal penalty
provisions. See id. 5 9.412; TEX. PEN. CODE ANN. 5 37.101 (Vernon Supp. 2000).
Because this type of purported financing statement does not, on its face, create a security
interest, a county clerk has no duty to file it and, indeed, may refuse to file it. See id.; accord Tex.
Att’y Gen. Op. JC-0156 (1999) at 2 (stating that county clerk may not accept for tiling any document
that clerk lacks statutory authority to file); Tex. Att’y Gen. LO-98-01 6, at 6 (same). Depending upon
the knowledge or intent of a person who attempted to file such a financing statement, he or she may
be guilty of a Class A misdemeanor under section 37.101 of the Penal Code. See TEX. PEN. CODE
ANN. 5 37.101 (Vernon Supp. 2000). Whether a person has committed a crime in any particular
circumstance is a question of fact that cannot be resolved in an attorney general opinion. See Tex.
Att’y Gen. Op. Nos. JC-0020 (1999) at 2; DM-98 (1992) at 3; H-56 (1973) at 3.
The Honorable Joe F. Grubbs - Page 4 (X-0256)
SUMMARY
A county clerk is not required to accept for tiling a document,
purported to be a financing statement under chapter 9 ofthe Business
and Commerce Code, if the document names the same person as the
debtor and the secured party.
Attorney General of Texas
ANDY TAYLOR
First Assistant Attorney General
CLARK RENT ERVIN
Deputy Attorney General - General Counsel
ELIZABETH ROBINSON
Chair, Opinion Committee