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NINETY-SIXTH DAY


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MORNING SESSION


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Senate Chamber, Olympia, Friday, April 16, 1993

     The Senate was called to order at 8:30 a.m. by President Pritchard. The Secretary called the roll and announced to the President that all Senators were present except Senators Bauer, Drew, Erwin, Hochstatter, McAuliffe, McCaslin, McDonald, Moyer, Niemi, Owen, Pelz, Rinehart, Roach, Sellar and Talmadge. On motion of Senator Oke, Senators Erwin, Hochstatter, McCaslin, McDonald, Moyer, Roach and Sellar were excused. On motion of Senator Spanel, Senators Bauer, Drew, McAuliffe, Niemi, Owen, Pelz, Rinehart and Talmadge were excused.

     The Sergeant at Arms Color Guard, consisting of Pages Eri Shiraishi and David Manchester, presented the Colors. Reverend Tammy Leiter, pastor of the Westminster Presbyterian Church of Olympia, offered the prayer.


MOTION


     On motion of Senator Jesernig, the reading of the Journal of the previous day was dispensed with and it was approved.


STATEMENT FOR THE JOURNAL


     Due to work in the health care reform conference committee, I missed the vote on the following bills: Substitute House Bill No. 1765, as amended by the Senate; Engrossed Substitute House Bill No. 1140, as amended by the Senate; Substitute House Bill No. 1072, as amended by the Senate; Engrossed House Bill No. 1175, as amended by the Senate; Substitute House Bill No. 1014, as amended by the Senate; House Bill No. 1351; Substitute House Bill No. 1582; Engrossed Substitute House Bill No. 1662, as amended by the Senate under suspension of the rules; Engrossed Substitute House Bill No. 1493, as amended by the Senate; and Substitute House Bill No. 1912, as amended by the Senate.

     I would have voted 'yes' on all the measures.

SENATOR PHIL TALMADGE, 34th District


SECOND READING


     SUBSTITUTE HOUSE BILL NO. 1765, by House Committee on Corrections (originally sponsored by Representatives L. Johnson, Morris, Long, Cooke, Dellwo, Mastin, Thibaudeau, Campbell, Riley, Johanson, Karahalios, Eide, J. Kohl, Springer and Leonard)

 

Creating a corrections mental health center operated through a partnership of the department of corrections and the University of Washington.


     The bill was read the second time.


MOTIONS


     On motion of Senator Adam Smith, the following Committee on Ways and Means amendment was adopted:

     Strike everything after the enacting clause and insert the following:

      "NEW SECTION. Sec. 1. (1) The department of corrections and the University of Washington may enter into a collaborative arrangement to provide improved services for mentally ill offenders with a focus on prevention, treatment, and reintegration into society. The participants in the collaborative arrangement may develop a strategic plan within sixty days after the effective date of this act to address the management of mentally ill offenders within the correctional system, facilitating their reentry into the community and the mental health system, and preventing the inappropriate incarceration of mentally ill individuals. The collaborative arrangement may also specify the establishment and maintenance of a corrections mental health center located at McNeil Island corrections center. The collaborative arrangement shall require that an advisory panel of key stakeholders be established and consulted throughout the development and implementation of the center. The stakeholders advisory panel shall include a broad array of interest groups drawn from representatives of mental health, criminal justice, and correctional systems. The stakeholders advisory panel shall include, but is not limited to, membership from: The department of corrections, the department of social and health services mental health division and division of juvenile rehabilitation, regional support networks, local and regional law enforcement agencies, the sentencing guidelines commission, county and city jails, mental health advocacy groups for the mentally ill, developmentally disabled, and traumatically brain-injured, and the general public. The center established by the department of corrections and University of Washington, in consultation with the stakeholder advisory groups, shall have the authority to:

      (a) Develop new and innovative treatment approaches for corrections mental health clients;

      (b) Improve the quality of mental health services within the department and throughout the corrections system;

      (c) Facilitate mental health staff recruitment and training to meet departmental, county, and municipal needs;

      (d) Expand research activities within the department in the area of treatment services, the design of delivery systems, the development of organizational models, and training for corrections mental health care professionals;

      (e) Improve the work environment for correctional employees by developing the skills, knowledge, and understanding of how to work with offenders with special chronic mental health challenges;

      (f) Establish a more positive rehabilitative environment for offenders;

      (g) Strengthen multidisciplinary mental health collaboration between the University of Washington, other groups committed to the intent of this section, and the department of corrections;

      (h) Strengthen department linkages between institutions of higher education, public sector mental health systems, and county and municipal corrections;

      (i) Assist in the continued formulation of corrections mental health policies;

      (j) Develop innovative and effective recruitment and training programs for correctional personnel working with mentally ill offenders;

      (k) Assist in the development of a coordinated continuum of mental health care capable of providing services from corrections entry to community return; and

      (l) Evaluate all current and innovative approaches developed within this center in terms of their effective and efficient achievement of improved mental health of inmates, development and utilization of personnel, the impact of these approaches on the functioning of correctional institutions, and the relationship of the corrections system to mental health and criminal justice systems. Specific attention should be paid to evaluating the effects of programs on the reintegration of mentally ill offenders into the community and the prevention of inappropriate incarceration of mentally ill persons.

      (2) The corrections mental health center may conduct research, training, and treatment activities for the mentally ill offender within selected sites operated by the department. The department shall provide support services for the center such as food services, maintenance, perimeter security, classification, offender supervision, and living unit functions. The University of Washington may develop, implement, and evaluate the clinical, treatment, research, and evaluation components of the mentally ill offender center. The institute of public policy and management may be consulted regarding the development of the center and in the recommendations regarding public policy. As resources permit, training within the center shall be available to state, county, and municipal agencies requiring the services. Other state colleges, state universities, and mental health providers may be involved in activities as required on a subcontract basis. Community mental health organizations, research groups, and community advocacy groups may be critical components of the center's operations and involved as appropriate to annual objectives. Mentally ill clients may be drawn from throughout the department's population and transferred to the center as clinical need, available services, and department jurisdiction permits.

      (3) The department shall prepare a report of the center's progress toward the attainment of stated goals and provide the report to the legislature annually.

      NEW SECTION. Sec. 2. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately."


     On motion of Senator Adam Smith, the following title amendment was adopted:

     On page 1, line 3 of the title, after "Washington;" strike the remainder of the title and insert "creating a new section; and declaring an emergency."


MOTION


     On motion of Senator Adam Smith, the rules were suspended, Substitute House Bill No. 1765, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 1765, as amended by the Senate.


ROLL CALL


     The Secretary called the roll on the final passage of Substitute House Bill No. 1765, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 34; Nays, 0; Absent, 0; Excused, 15.

     Voting yea: Senators Amondson, Anderson, Barr, Bluechel, Cantu, Deccio, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, Moore, Nelson, Newhouse, Oke, Prentice, Prince, Quigley, Rasmussen, M., Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 34.

     Excused: Senators Bauer, Drew, Erwin, Hochstatter, McAuliffe, McCaslin, McDonald, Moyer, Niemi, Owen, Pelz, Rinehart, Roach, Sellar and Talmadge - 15.

     SUBSTITUTE HOUSE BILL NO. 1765, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


SECOND READING


     ENGROSSED SUBSTITUTE HOUSE BILL NO. 1140, by House Committee on Local Government (originally sponsored by Representatives Locke, Horn, H. Myers, Eide, Valle, Rust, Leonard, Basich, Franklin, Shin, Springer and J. Kohl)

 

Revising provisions relating to metropolitan municipal corporations.


     The bill was read the second time.


MOTIONS


     On motion of Senator Haugen, the following Committee on Government Operations amendment was adopted:

     Strike everything after the enacting clause and insert the following:

      "Sec. 1. RCW 35.58.030 and 1965 c 7 s 35.58.030 are each amended to read as follows:

      Any area of the state containing two or more cities, at least one of which is ((a city of the first class)) of ten thousand or more population, may organize as a metropolitan municipal corporation for the performance of certain functions, as provided in this chapter. The boundaries of a metropolitan municipal corporation may not be expanded to include territory located in a county other than a component county except as a result of the consolidation of two or more contiguous metropolitan municipal corporations.

      Sec. 2. RCW 35.58.040 and 1991 c 363 s 39 are each amended to read as follows:

      At the time of its formation no metropolitan municipal corporation shall include only a part of any city, and every city shall be either wholly included or wholly excluded from the boundaries of such corporation. If subsequent to the formation of a metropolitan municipal corporation a part only of any city shall be included within the boundaries of a metropolitan municipal corporation such part shall be deemed to be "unincorporated" for the purpose of selecting a member of the metropolitan council pursuant to RCW 35.58.120(3) and such city shall neither select nor participate in the selection of a member on the metropolitan council pursuant to RCW 35.58.120.

      Any metropolitan municipal corporation now existing ((or hereafter created,)) within a county with a population of ((from two hundred ten thousand to less than one million bordering a county with a population of one million or more, or within a county with a population of)) one million or more((,)) shall, upon May 21, 1971, ((as to metropolitan corporations existing on such date or upon the date of formation as to metropolitan corporations formed after May 21, 1971,)) have the same boundaries as those of the respective central county of such metropolitan corporation((: PROVIDED, That)). The boundaries of such metropolitan corporation may not be enlarged or diminished after such date by annexation as provided in chapter 35.58 RCW ((as now or hereafter amended)) and any purported annexation of territory shall be deemed void. Any contiguous metropolitan municipal corporations may be consolidated into a single metropolitan municipal corporation upon such terms, for the purpose of performing such metropolitan function or functions, and to be effective at such time as may be approved by resolutions of the respective metropolitan councils. In the event of such consolidation the component city with the largest population shall be the central city of such consolidated metropolitan municipal corporation and the component county with the largest population shall be the central county of such consolidated metropolitan municipal corporation.

      Sec. 3. RCW 35.58.090 and 1973 1st ex.s. c 195 s 23 are each amended to read as follows:

      The election on the formation of the metropolitan municipal corporation shall be conducted by the auditor of the central county in accordance with the general election laws of the state and the results thereof shall be canvassed by the county canvassing board of the central county, which shall certify the result of the election to the ((board of)) county ((commissioners)) legislative authority of the central county, and shall cause a certified copy of such canvass to be filed in the office of the secretary of state. Notice of the election shall be published in one or more newspapers of general circulation in each component county in the manner provided in the general election laws. No person shall be entitled to vote at such election unless ((he)) that person is a qualified voter under the laws of the state in effect at the time of such election and has resided within the metropolitan area for at least thirty days preceding the date of the election. The ballot proposition shall be in substantially the following form:


"FORMATION OF METROPOLITAN

MUNICIPAL CORPORATION

 

Shall a metropolitan municipal corporation be established for the area described in a resolution of the ((board of commissioners)) county legislative authority of . . . . . . county adopted on the . . . . day of . . . . . ., 19. . ., to perform the metropolitan functions of . . . . . . (here insert the title of each of the functions to be authorized as set forth in the petition or initial resolution).

 

YES .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

                           NO. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .□"


      If a majority of the persons voting on the proposition residing within the central city shall vote in favor thereof and a majority of the persons voting on the proposition residing in the metropolitan area outside of the central city shall vote in favor thereof, the metropolitan municipal corporation shall thereupon be established and the ((board of commissioners)) county legislative authority of the central county shall adopt a resolution setting a time and place for the first meeting of the metropolitan council which shall be held not later than ((thirty)) sixty days after the date of such election. A copy of such resolution shall be transmitted to the legislative body of each component city and county and of each special district which shall be affected by the particular metropolitan functions authorized.

      At the same election there shall be submitted to the voters residing within the metropolitan area, for their approval or rejection, a proposition authorizing the metropolitan municipal corporation, if formed, to levy at the earliest time permitted by law on all taxable property located within the metropolitan municipal corporation a general tax, for one year, of twenty-five cents per thousand dollars of assessed value in excess of any constitutional or statutory limitation for authorized purposes of the metropolitan municipal corporation. The proposition shall be expressed on the ballots in substantially the following form:


"ONE YEAR TWENTY-FIVE CENTS

PER THOUSAND DOLLARS OF

ASSESSED VALUE LEVY

 

Shall the metropolitan municipal corporation, if formed, levy a general tax of twenty-five cents per thousand dollars of assessed value for one year upon all the taxable property within said corporation in excess of the constitutional and/or statutory tax limits for authorized purposes of the corporation?


                           YES .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

                           NO. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .□"


Such proposition to be effective must be approved by a majority of at least three-fifths of the persons voting on the proposition to levy such tax, with a forty percent validation requirement, in the manner set forth in Article VII, section 2(a) of the Constitution of this state((, as amended by Amendment 59 and as thereafter amended)).

      Sec. 4. RCW 35.58.120 and 1983 c 92 s 1 are each amended to read as follows:

      Unless the rights, powers, functions, and obligations of a metropolitan municipal corporation have been assumed by a county as provided in chapter 36.56 RCW, a metropolitan municipal corporation shall be governed by a metropolitan council composed of ((the following:

      (1) One member (a) who shall be the elected county executive of the central county, or (b) if there shall be no elected county executive, one member who shall be selected by, and from, the board of commissioners of the central county.

      (2) One additional member for each county commissioner district or county council district which shall contain fifteen thousand or more persons residing within the metropolitan municipal corporation, who shall be the county commissioner or county councilman from such district;

      (3) One additional member selected by the board of commissioners or county council of each component county for each county commissioner district or county council district containing fifteen thousand or more persons residing in the unincorporated portion of such commissioner district lying within the metropolitan municipal corporation each such appointee to be a resident of such unincorporated portion;

      (4) One member from each component city which shall have a population of fifteen thousand or more persons, who shall be the mayor of such city, if such city shall have the mayor-council form of government, and in other cities shall be selected by, and from, the mayor and city council of each of such cities.

      (5) One member representing all component cities which have less than fifteen thousand population each, to be selected by and from the mayors of such smaller cities in the following manner: The mayors of all such cities shall meet prior to July 1 of each even-numbered year at a time and place to be fixed by the metropolitan council. The chairperson of the metropolitan council shall preside. After nominations are made, successive ballots shall be taken until one candidate receives a majority of all votes cast.

      (6) One additional member selected by the city council of each component city containing a population of fifteen thousand or more for each fifty thousand population over and above the first fifteen thousand, such members to be selected from such city council until all councilmen are members and thereafter to be selected from other officers of such city.

      (7) For any metropolitan municipal corporation which shall be authorized to perform the function of metropolitan water pollution abatement, two additional members who shall be commissioners of a sewer district or a water district which is operating a sewer system and is a component part of the metropolitan municipal corporation and shall participate only in those council actions which relate to the performance of the function of metropolitan water pollution abatement. The commissioners of all such sewer districts and water districts which are component parts of the metropolitan municipal corporation shall meet on the first Tuesday of the month following May 21, 1971 and thereafter on the second Tuesday of June of each even-numbered year at seven o'clock p.m. at the office of the board of county commissioners of the central county. After election of a chairman, nominations shall be made to select members to serve on the metropolitan council and successive ballots taken for each member until one candidate receives a majority of votes cast. The two members so selected shall not be from districts whose boundaries come within ten miles of each other.

      (8) One member, who shall be chairman of the metropolitan council, selected by the other members of the council. The member shall not hold any public office of or be an employee of any component city or component county of the metropolitan municipal corporation)) elected officials of the component counties and component cities, and possibly other persons, as determined by agreement of each of the component counties and the component cities equal in number to at least twenty-five percent of the total number of component cities that have at least seventy-five percent of the combined component city populations. The agreement shall remain in effect until altered in the same manner as the initial composition is determined.

      Sec. 5. RCW 35.58.230 and 1965 c 7 s 35.58.230 are each amended to read as follows:

      If a metropolitan municipal corporation shall be authorized to perform the function of metropolitan water supply, the metropolitan council shall, prior to the effective date of the assumption of such function, cause a metropolitan water advisory committee to be formed by notifying the legislative body of each component city which operates a water system to appoint one person to serve on such advisory committee and the board of commissioners of each water district, any portion of which lies within the metropolitan area, to appoint one person to serve on such committee who shall be a water district commissioner. The metropolitan water advisory committee shall meet at the time and place provided in the notice and elect a chairman. The members of such committee shall serve at the pleasure of the appointing bodies and shall receive no compensation other than reimbursement for expenses actually incurred in the performance of their duties. The function of such advisory committee shall be to advise the metropolitan council with respect to matters relating to the performance of the water supply function.

      The requirement to create a metropolitan water advisory committee shall not apply to a county that has assumed the rights, powers, functions, and obligations of the metropolitan municipal corporation under chapter 36.56 RCW.

      Sec. 6. RCW 35.58.270 and 1967 c 105 s 12 are each amended to read as follows:

      If a metropolitan municipal corporation shall be authorized to perform the function of metropolitan transportation with a commission form of management, a metropolitan transit commission shall be formed prior to the effective date of the assumption of such function. Except as provided in this section, the metropolitan transit commission shall exercise all powers of the metropolitan municipal corporation with respect to metropolitan transportation facilities, including but not limited to the power to construct, acquire, maintain, operate, extend, alter, repair, control and manage a local public transportation system within and without the metropolitan area, to establish new passenger transportation services and to alter, curtail, or abolish any services as the commission may deem desirable and to fix tolls and fares.

      The comprehensive plan for public transportation service and any amendments thereof shall be adopted by the metropolitan council and the metropolitan transit commission shall provide transportation facilities and service consistent with such plan. The metropolitan transit commission shall authorize expenditures for transportation purposes within the budget adopted by the metropolitan council. Tolls and fares may be fixed or altered by the commission only after approval thereof by the metropolitan council. Bonds of the metropolitan municipal corporation for public transportation purposes shall be issued by the metropolitan council as provided in this chapter.

      The metropolitan transit commission shall consist of seven members. Six of such members shall be appointed by the metropolitan council and the seventh member shall be the chairman of the metropolitan council who shall be ex officio the chairman of the metropolitan transit commission. Three of the six appointed members of the commission shall be residents of the central city and three shall be residents of the metropolitan area outside of the central city. The three central city members of the first metropolitan transit commission shall be selected from the existing transit commission of the central city, if there be a transit commission in such city. The terms of first appointees shall be for one, two, three, four, five and six years, respectively. Thereafter, commissioners shall serve for a term of four years. Compensation of transit commissioners shall be determined by the metropolitan council.

      The requirement to create a metropolitan transit commission shall not apply to a county that has assumed the rights, powers, functions, and obligations of the metropolitan municipal corporation under chapter 36.56 RCW.

      Sec. 7. RCW 35.58.300 and 1965 c 7 s 35.58.300 are each amended to read as follows:

      If a metropolitan municipal corporation shall be authorized to perform the function of metropolitan parks and parkways, a metropolitan park board shall be formed prior to the effective date of the assumption of such function. Except as provided in this section, the metropolitan park board shall exercise all powers of the metropolitan municipal corporation with respect to metropolitan park and parkway facilities.

      The metropolitan park board shall authorize expenditures for park and parkway purposes within the budget adopted by the metropolitan council. Bonds of the metropolitan municipal corporation for park and parkway purposes shall be issued by the metropolitan council as provided in this chapter.

      The metropolitan park board shall consist of five members appointed by the metropolitan council at least two of whom shall be residents of the central city. The terms of first appointees shall be for one, two, three, four and five years, respectively. Thereafter members shall serve for a term of four years. Compensation of park board members shall be determined by the metropolitan council.

      The requirement to create a metropolitan park board shall not apply to a county that has assumed the rights, powers, functions, and obligations of the metropolitan municipal corporation under chapter 36.56 RCW.

      Sec. 8. RCW 35.58.320 and 1965 c 7 s 35.58.320 are each amended to read as follows:

      A metropolitan municipal corporation shall have power to acquire by purchase and condemnation all lands and property rights, both within and without the metropolitan area, which are necessary for its purposes. Such right of eminent domain shall be exercised by the metropolitan council in the same manner and by the same procedure as is or may be provided by law for cities ((of the first class)), except insofar as such laws may be inconsistent with the provisions of this chapter.

      Sec. 9. RCW 35.58.340 and 1965 c 7 s 35.58.340 are each amended to read as follows:

      Except as otherwise provided herein, a metropolitan municipal corporation may sell, or otherwise dispose of any real or personal property acquired in connection with any authorized metropolitan function and which is no longer required for the purposes of the metropolitan municipal corporation in the same manner as provided for cities ((of the first class)). When the metropolitan council determines that a metropolitan facility or any part thereof which has been acquired from a component city or county without compensation is no longer required for metropolitan purposes, but is required as a local facility by the city or county from which it was acquired, the metropolitan council shall by resolution transfer it to such city or county.

      Sec. 10. RCW 35.58.350 and 1965 c 7 s 35.58.350 are each amended to read as follows:

      All the powers and functions of a metropolitan municipal corporation shall be vested in the metropolitan council unless expressly vested in specific officers, boards, or commissions by this chapter, or vested in the county legislative authority of a county that has assumed the rights, powers, functions, and obligations of a metropolitan municipal corporation as provided in chapter 36.56 RCW. Without limitation of the foregoing authority, or of other powers given it by this chapter, the metropolitan council shall have the following powers:

      (1) To establish offices, departments, boards and commissions in addition to those provided by this chapter which are necessary to carry out the purposes of the metropolitan municipal corporation, and to prescribe the functions, powers and duties thereof.

      (2) To appoint or provide for the appointment of, and to remove or to provide for the removal of, all officers and employees of the metropolitan municipal corporation except those whose appointment or removal is otherwise provided by this chapter.

      (3) To fix the salaries, wages and other compensation of all officers and employees of the metropolitan municipal corporation unless the same shall be otherwise fixed in this chapter.

      (4) To employ such engineering, legal, financial, or other specialized personnel as may be necessary to accomplish the purposes of the metropolitan municipal corporation.

      Sec. 11. RCW 35.58.410 and 1965 c 7 s 35.58.410 are each amended to read as follows:

      (1) On or before the third Monday in June of each year, each metropolitan municipal corporation shall adopt a budget for the following calendar year. Such budget shall include a separate section for each authorized metropolitan function. Expenditures shall be segregated as to operation and maintenance expenses and capital and betterment outlays. Administrative and other expense general to the corporation shall be allocated between the authorized metropolitan functions. The budget shall contain an estimate of all revenues to be collected during the following budget year, including any surplus funds remaining unexpended from the preceding year. ((The remaining funds required to meet budget expenditures, if any, shall be designated as "supplemental income" and shall be obtained from the component cities and counties in the manner provided in this chapter.)) The metropolitan council shall not be required to confine capital or betterment expenditures made from bond proceeds or emergency expenditures to items provided in the budget. The affirmative vote of three-fourths of all members of the metropolitan council shall be required to authorize emergency expenditures.

      (2) Subsection (1) of this section shall not apply to a county that has assumed the rights, powers, functions, and obligations of a metropolitan municipal corporation under chapter 36.56 RCW. This subsection (2) shall apply only to each county that has assumed the rights, powers, functions, and obligations of a metropolitan municipal corporation under chapter 36.56 RCW.

      Each county that has assumed the rights, powers, functions, and obligations of a metropolitan municipal corporation under chapter 36.56 RCW shall, on or before the third Monday in June of each year, prepare an estimate of all revenues to be collected during the following calendar year, including any surplus funds remaining unexpended from the preceding year for each authorized metropolitan function.

      By June 30 of each year, the county shall adopt the rate for sewage disposal that will be charged to component cities and sewer districts during the following budget year.

      As long as any general obligation indebtedness remains outstanding that was issued by the metropolitan municipal corporation prior to the assumption by the county, the county shall continue to impose the taxes authorized by RCW 82.14.045 and 35.58.273(5) at the maximum rates and on all of the taxable events authorized by law. If, despite the continued imposition of those taxes, the estimate of revenues made on or before the third Monday in June shows that estimated revenues will be insufficient to make all debt service payments falling due in the following calendar year on all general obligation indebtedness issued by the metropolitan municipal corporation prior to the assumption by the county of the rights, powers, functions, and obligations of the metropolitan municipal corporation, the remaining amount required to make the debt service payments shall be designated as "supplemental income" and shall be obtained from component cities and component counties as provided under RCW 35.58.420.

      The county shall prepare and adopt a budget each year in accordance with applicable general law or county charter. If supplemental income has been designated under this subsection, the supplemental income shall be reflected in the budget that is adopted. If during the budget year the actual tax revenues from the taxes imposed under the authority of RCW 82.14.045 and 35.58.273(5) exceed the estimates upon which the supplemental income was based, the difference shall be refunded to the component cities and component counties in proportion to their payments promptly after the end of the budget year. A county that has assumed the rights, powers, functions, and obligations of a metropolitan municipal corporation under chapter 36.56 RCW shall not be required to confine capital or betterment expenditures for authorized metropolitan functions from bond proceeds or emergency expenditures to items provided in the budget.

      Sec. 12. RCW 39.36.020 and 1971 ex.s. c 218 s 1 are each amended to read as follows:

      (1) Except as otherwise expressly provided by law or in subsections (2), (3) and (4) of this section, no taxing district shall for any purpose become indebted in any manner to an amount exceeding three-eighths of one percent of the value of the taxable property in such taxing district without the assent of three-fifths of the voters therein voting at an election to be held for that purpose, nor in cases requiring such assent shall the total indebtedness incurred at any time exceed one and one-fourth percent on the value of the taxable property therein.

      (2) Counties, cities, towns, and public hospital districts are limited to an indebtedness amount not exceeding three-fourths of one percent of the value of the taxable property in such counties, cities, towns, or public hospital districts without the assent of three-fifths of the voters therein voting at an election held for that purpose. In cases requiring such assent counties, cities, towns, and public hospital districts are limited to a total indebtedness of two and one-half percent of the value of the taxable property therein. However, any county that has assumed the rights, powers, functions, and obligations of a metropolitan municipal corporation under chapter 36.56 RCW may become indebted to a larger amount for its authorized metropolitan functions, as provided under chapter 35.58 RCW, but not exceeding an additional three-fourths of one percent of the value of the taxable property in the county without the assent of three-fifths of the voters therein voting at an election held for that purpose, and in cases requiring such assent not exceeding an additional two and one-half percent of the value of the taxable property in the county.

      (3) School districts are limited to an indebtedness amount not exceeding three-eighths of one percent of the value of the taxable property in such district without the assent of three-fifths of the voters therein voting at an election held for that purpose. In cases requiring such assent school districts are limited to a total indebtedness of two and one-half percent of the value of the taxable property therein.

      (4) No part of the indebtedness allowed in this chapter shall be incurred for any purpose other than strictly county, city, town, school district, township, port district, metropolitan park district, or other municipal purposes: PROVIDED, That a city or town, with such assent, may become indebted to a larger amount, but not exceeding two and one-half percent additional, determined as herein provided, for supplying such city or town with water, artificial light, and sewers, when the works for supplying such water, light, and sewers shall be owned and controlled by the city or town; and a city or town, with such assent, may become indebted to a larger amount, but not exceeding two and one-half percent additional for acquiring or developing open space and park facilities: PROVIDED FURTHER, That any school district may become indebted to a larger amount but not exceeding two and one-half percent additional for capital outlays.

      (5) Such indebtedness may be authorized in any total amount in one or more propositions and the amount of such authorization may exceed the amount of indebtedness which could then lawfully be incurred. Such indebtedness may be incurred in one or more series of bonds from time to time out of such authorization but at no time shall the total general indebtedness of any taxing district exceed the above limitation.

      The term "value of the taxable property" as used in this section shall have the meaning set forth in RCW 39.36.015.

      Sec. 13. RCW 35.58.450 and 1984 c 186 s 18 are each amended to read as follows:

      Notwithstanding the limitations of chapter 39.36 RCW and any other statutory limitations otherwise applicable and limiting municipal debt, a metropolitan municipal corporation shall have the power to contract indebtedness and issue general obligation bonds and to pledge the full faith and credit of the corporation to the payment thereof, for any authorized capital purpose of the metropolitan municipal corporation, not to exceed an amount, together with any outstanding nonvoter approved general indebtedness, equal to three-fourths of one percent of the value of the taxable property within the metropolitan municipal corporation, as the term "value of the taxable property" is defined in RCW 39.36.015. A metropolitan municipal corporation may additionally contract indebtedness and issue general obligation bonds, for any authorized capital purpose of a metropolitan municipal corporation, together with any other outstanding general indebtedness, not to exceed an amount equal to five percent of the value of the taxable property within the corporation, as the term "value of the taxable property" is defined in RCW 39.36.015, when a proposition authorizing the indebtedness has been approved by three-fifths of the persons voting on said proposition at said election at which such election the total number of persons voting on such bond proposition shall constitute not less than forty percent of the total number of ((votes cast)) voters voting within the area of said metropolitan municipal corporation at the last preceding state general election. Such general obligation bonds may be authorized in any total amount in one or more propositions and the amount of such authorization may exceed the amount of bonds which could then lawfully be issued. Such bonds may be issued in one or more series from time to time out of such authorization. The elections shall be held pursuant to RCW 39.36.050.

      Whenever the voters of a metropolitan municipal corporation have, pursuant to RCW 84.52.056, approved excess property tax levies to retire such bond issues, both the principal of and interest on such general obligation bonds may be made payable from annual tax levies to be made upon all the taxable property within the metropolitan municipal corporation in excess of the constitutional and/or statutory tax limit. The principal of and interest on any general obligation bond may be made payable from any other taxes or any special assessments which the metropolitan municipal corporation may be authorized to levy or from any otherwise unpledged revenue which may be derived from the ownership or operation of properties or facilities incident to the performance of the authorized function for which such bonds are issued or may be made payable from any combination of the foregoing sources. The metropolitan council may include in the principal amount of such bond issue an amount for engineering, architectural, planning, financial, legal, urban design and other services incident to acquisition or construction solely for authorized capital purposes ((and may include an amount to establish a guaranty fund for revenue bonds issued solely for capital purposes)).

      General obligation bonds shall be issued and sold by the metropolitan council as provided in chapter 39.46 RCW and shall mature in not to exceed forty years from the date of issue.

      Sec. 14. RCW 35.58.460 and 1983 c 167 s 48 are each amended to read as follows:

      (1) A metropolitan municipal corporation may issue revenue bonds to provide funds to carry out its authorized metropolitan water pollution abatement, water supply, garbage disposal or transportation purposes, without submitting the matter to the voters of the metropolitan municipal corporation. The metropolitan council shall create a special fund or funds for the sole purpose of paying the principal of and interest on the bonds of each such issue, into which fund or funds the metropolitan council may obligate the metropolitan municipal corporation to pay such amounts of the gross revenue of the particular utility constructed, acquired, improved, added to, or repaired out of the proceeds of sale of such bonds, as the metropolitan council shall determine and may obligate the metropolitan municipal corporation to pay such amounts out of otherwise unpledged revenue which may be derived from the ownership, use or operation of properties or facilities owned, used or operated incident to the performance of the authorized function for which such bonds are issued or out of otherwise unpledged fees, tolls, charges, tariffs, fares, rentals, special taxes or other sources of payment lawfully authorized for such purpose, as the metropolitan council shall determine. The principal of, and interest on, such bonds shall be payable only out of such special fund or funds, and the owners of such bonds shall have a lien and charge against the gross revenue of such utility or any other revenue, fees, tolls, charges, tariffs, fares, special taxes or other authorized sources pledged to the payment of such bonds.

      Such revenue bonds and the interest thereon issued against such fund or funds shall be a valid claim of the owners thereof only as against such fund or funds and the revenue pledged therefor, and shall not constitute a general indebtedness of the metropolitan municipal corporation.

      Each such revenue bond shall state upon its face that it is payable from such special fund or funds, and all revenue bonds issued under this chapter shall be negotiable securities within the provisions of the law of this state. Such revenue bonds may be registered either as to principal only or as to principal and interest as provided in RCW 39.46.030, or may be bearer bonds; shall be in such denominations as the metropolitan council shall deem proper; shall be payable at such time or times and at such places as shall be determined by the metropolitan council; shall bear interest at such rate or rates as shall be determined by the metropolitan council; shall be signed by the chairman and attested by the secretary of the metropolitan council, ((one)) any of which signatures may be ((a)) facsimile signatures, and the seal of the metropolitan municipal corporation shall be impressed or imprinted thereon; any attached interest coupons shall be signed by the facsimile signatures of said officials.

      Such revenue bonds shall be sold in such manner, at such price and at such rate or rates of interest as the metropolitan council shall deem to be for the best interests of the metropolitan municipal corporation, either at public or private sale.

      The metropolitan council may at the time of the issuance of such revenue bonds make such covenants with the owners of said bonds as it may deem necessary to secure and guarantee the payment of the principal thereof and the interest thereon, including but not being limited to covenants to set aside adequate reserves to secure or guarantee the payment of such principal and interest, to maintain rates sufficient to pay such principal and interest and to maintain adequate coverage over debt service, to appoint a trustee or trustees for the bond owners to safeguard the expenditure of the proceeds of sale of such bonds and to fix the powers and duties of such trustee or trustees and to make such other covenants as the metropolitan council may deem necessary to accomplish the most advantageous sale of such bonds. The metropolitan council may also provide that revenue bonds payable out of the same source may later be issued on a parity with revenue bonds being issued and sold.

      The metropolitan council may include in the principal amount of any such revenue bond issue an amount to establish necessary reserves, an amount for working capital and an amount necessary for interest during the period of construction of any such metropolitan facilities plus six months. The metropolitan council may, if it deems it to the best interest of the metropolitan municipal corporation, provide in any contract for the construction or acquisition of any metropolitan facilities or additions or improvements thereto or replacements or extensions thereof that payment therefor shall be made only in such revenue bonds at the par value thereof.

      If the metropolitan municipal corporation shall fail to carry out or perform any of its obligations or covenants made in the authorization, issuance and sale of such bonds, the owner of any such bond may bring action against the metropolitan municipal corporation and compel the performance of any or all of such covenants.

      (2) Notwithstanding subsection (1) of this section, such bonds may be issued and sold in accordance with chapter 39.46 RCW.

      Sec. 15. RCW 35.58.490 and 1965 c 7 s 35.58.490 are each amended to read as follows:

      ((If a metropolitan municipal corporation shall have been authorized to levy a general tax on all taxable property located within the metropolitan municipal corporation in the manner provided in this chapter, either at the time of the formation of the metropolitan municipal corporation or subsequently, the)) A metropolitan council shall have the power to authorize the issuance of interest bearing warrants on such terms and conditions as the metropolitan council shall provide((, same to be repaid from the proceeds of such tax when collected)) and to repay the interest bearing warrants with any moneys legally authorized for such purposes, including tax receipts where appropriate.

      Sec. 16. RCW 35.58.500 and 1965 c 7 s 35.58.500 are each amended to read as follows:

      The metropolitan municipal corporation shall have the power to levy special assessments payable over a period of not exceeding twenty years on all property within the metropolitan area specially benefited by any improvement, on the basis of special benefits conferred, to pay in whole, or in part, the damages or costs of any such improvement, and for such purpose may establish local improvement districts and enlarged local improvement districts, issue local improvement warrants and bonds to be repaid by the collection of local improvement assessments and generally to exercise with respect to any improvements which it may be authorized to construct or acquire the same powers as may now or hereafter be conferred by law upon cities ((of the first class)). Such local improvement districts shall be created and such special assessments levied and collected and local improvement warrants and bonds issued and sold in the same manner as shall now or hereafter be provided by law for cities ((of the first class)). The duties imposed upon the city treasurer under such acts shall be imposed upon the treasurer of the county in which such local improvement district shall be located.

      A metropolitan municipal corporation may provide that special benefit assessments levied in any local improvement district may be paid into such revenue bond redemption fund or funds as may be designated by the metropolitan council to secure the payment of revenue bonds issued to provide funds to pay the cost of improvements for which such assessments were levied. If local improvement district assessments shall be levied for payment into a revenue bond fund, the local improvement district created therefor shall be designated a utility local improvement district. A metropolitan municipal corporation that creates a utility local improvement district shall conform with the laws relating to utility local improvement districts created by a city.

      Sec. 17. RCW 35.58.520 and 1965 c 7 s 35.58.520 are each amended to read as follows:

      A metropolitan municipal corporation shall have the power to invest its funds held in reserves or sinking funds or any such funds which are not required for immediate disbursement, in ((property or securities in which mutual savings banks may legally invest funds subject to their control)) any investments in which a city is authorized to invest, as provided in RCW 35.39.030.

      Sec. 18. RCW 35.58.530 and 1969 ex.s. c 135 s 3 are each amended to read as follows:

      Territory located within a component county that is annexed to a component city after the establishment of a metropolitan municipal corporation shall by such act be annexed to ((such)) the metropolitan municipal corporation. Territory within a metropolitan municipal corporation may be annexed to a city which is not within such metropolitan municipal corporation in the manner provided by law and in such event either (1) such city may be annexed to such metropolitan municipal corporation by ordinance of the legislative body of the city concurred in by resolution of the metropolitan council, or (2) if such city shall not be so annexed such territory shall remain within the metropolitan municipal corporation unless such city shall by resolution of its legislative body request the withdrawal of such territory subject to any outstanding indebtedness of the metropolitan corporation and the metropolitan council shall by resolution consent to such withdrawal.

      Any territory located within a component county that is contiguous to a metropolitan municipal corporation and lying wholly within an incorporated city or town may be annexed to such metropolitan municipal corporation by ordinance of the legislative body of such city or town requesting such annexation concurred in by resolution of the metropolitan council.

      Any other territory located within a component county that is adjacent to a metropolitan municipal corporation may be annexed thereto by vote of the qualified electors residing in the territory to be annexed, in the manner provided in this chapter. An election to annex such territory may be called pursuant to a petition or resolution in the following manner:

      (1) A petition calling for such an election shall be signed by at least four percent of the qualified voters residing within the territory to be annexed and shall be filed with the auditor of the central county.

      (2) A resolution calling for such an election may be adopted by the metropolitan council.

      Any resolution or petition calling for such an election shall describe the boundaries of the territory to be annexed, and state that the annexation of such territory to the metropolitan municipal corporation will be conducive to the welfare and benefit of the persons or property within the metropolitan municipal corporation and within the territory proposed to be annexed.

      Upon receipt of such a petition, the auditor shall examine the same and certify to the sufficiency of the signatures thereon. ((For the purpose of examining the signatures on such petition, the auditor shall be permitted access to the voter registration books of each city within the territory proposed to be annexed and of each county a portion of which shall be located within the territory proposed to be annexed. No person may withdraw his name from a petition after it has been filed with the auditor.)) Within thirty days following the receipt of such petition, the auditor shall transmit the same to the metropolitan council, together with his certificate as to the sufficiency thereof.

      NEW SECTION. Sec. 19. The following acts or parts of acts are each repealed:

      (1) RCW 35.58.118 and 1971 ex.s. c 303 s 4 & 1967 c 105 s 10;

      (2) RCW 35.58.440 and 1965 c 7 s 35.58.440; and

      (3) RCW 35A.57.010 and 1967 ex.s. c 119 s 35A.57.010."


     On motion of Senator Haugen, the following title amendment was adopted:

     On page 1, line 1 of the title, after "corporations;" strike the remainder of the title and insert "amending RCW 35.58.030, 35.58.040, 35.58.090, 35.58.120, 35.58.230, 35.58.270, 35.58.300, 35.58.320, 35.58.340, 35.58.350, 35.58.410, 39.36.020, 35.58.450, 35.58.460, 35.58.490, 35.58.500, 35.58.520, and 35.58.530; and repealing RCW 35.58.118, 35.58.440, and 35A.57.010."


MOTION


     On motion of Senator Haugen, the rules were suspended, Engrossed Substitute House Bill No. 1140, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute House Bill No. 1140, as amended by the Senate.


ROLL CALL


     The Secretary called the roll on the final passage of Engrossed Substitute House Bill No. 1140, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 39; Nays, 0; Absent, 0; Excused, 10.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McCaslin, McDonald, Moore, Nelson, Newhouse, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Roach, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 39.

     Excused: Senators Drew, Erwin, Hochstatter, McAuliffe, Moyer, Niemi, Owen, Rinehart, Sellar and Talmadge - 10.

     ENGROSSED SUBSTITUTE HOUSE BILL NO. 1140, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.

SECOND READING


     SUBSTITUTE HOUSE BILL NO. 1072, by House Committee on Judiciary (originally sponsored by Representatives Appelwick, Ludwig, Johanson and Ogden)

 

Changing provisions relating to guardians ad litem.


     The bill was read the second time.


MOTION


     Senator Roach moved that the following amendments by Senators Roach, Talmadge, Adam Smith, Rasmussen and Moyer be considered simultaneously and be adopted:

     On page 1, line 12, after "(2)" insert "Each guardian ad litem program shall maintain a background information record for each guardian ad litem in the program. The background file shall include, but is not limited to, the following information:

      (a) Level of formal education;

      (b) Training related to the guardian's duties;

      (c) Number of years' experience as a guardian ad litem;

      (d) Number of appointments as a guardian ad litem; and

      (e) Criminal history, as defined in RCW 9.94A.030.

      The background information report shall be updated annually. As a condition of appointment, the guardian ad litem's background information record shall be made available to the court. If the appointed guardian ad litem is not a member of a guardian ad litem program the person shall provide the background information to the court.

      (3)"

      On page 2, line 3, after "subsection" strike "(3)" and insert "(((3))) (4)"

      On page 2, at the beginning of line 5, strike "(3)" and insert "(((3))) (4)"

      On page 2, line 11, after "subsection" strike "(2)" and insert "(((2))) (3)"

      Correct any internal references accordingly.

     Debate ensued.

     The President declared the question before the Senate to be the adoption of the amendments by Senators Roach, Talmadge, Adam Smith, Rasmussen and Moyer on page 1, line 12; page 2, line 3; page 2, at the beginning of line 5; and page 2, line 11, to Substitute House Bill No. 1072.

     The motion by Senator Roach carried and the amendments were adopted.


     On motion of Senator Adam Smith, the rules were suspended, Substitute House Bill No. 1072, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 1072, as amended by the Senate.


ROLL CALL


     The Secretary called the roll on the final passage of Substitute House Bill No. 1072, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 41; Nays, 0; Absent, 0; Excused, 8.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, McDonald, Moore, Nelson, Newhouse, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 41.

     Excused: Senators Drew, Erwin, Hochstatter, Moyer, Niemi, Owen, Sellar and Talmadge - 8.

     SUBSTITUTE HOUSE BILL NO. 1072, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


SECOND READING


     ENGROSSED HOUSE BILL NO. 1175, by Representatives Jacobsen, Dellwo, Dorn, J. Kohl, Brumsickle, Linville, Dunshee, Pruitt, Johanson, Wood, Leonard and Basich

 

Regarding the study of American Indian languages and cultures in the common schools.


     The bill was read the second time.


MOTIONS


     Senator Pelz moved that the following Committee on Education amendment be adopted:

     Strike everything after the enacting clause and insert the following:

      "Sec. 1. RCW 28A.150.220 and 1990 c 33 s 105 are each amended to read as follows:

      (1) For the purposes of this section and RCW 28A.150.250 and 28A.150.260:

      (a) The term "total program hour offering" shall mean those hours when students are provided the opportunity to engage in educational activity planned by and under the direction of school district staff, as directed by the administration and board of directors of the district, inclusive of intermissions for class changes, recess and teacher/parent-guardian conferences which are planned and scheduled by the district for the purpose of discussing students' educational needs or progress, and exclusive of time actually spent for meals.

      (b) "Instruction in work skills" shall include instruction in one or more of the following areas: Industrial arts, home and family life education, business and office education, distributive education, agricultural education, health occupations education, vocational education, trade and industrial education, technical education and career education.

      (2) Satisfaction of the basic education goal identified in RCW 28A.150.210 shall be considered to be implemented by the following program requirements:

      (a) Each school district shall make available to students in kindergarten at least a total program offering of four hundred fifty hours. The program shall include reading, arithmetic, language skills and such other subjects and such activities as the school district shall determine to be appropriate for the education of the school district's students enrolled in such program;

      (b) Each school district shall make available to students in grades one through three, at least a total program hour offering of two thousand seven hundred hours. A minimum of ninety-five percent of the total program hour offerings shall be in the basic skills areas of reading/language arts (which may include foreign languages, including American Indian languages), mathematics, social studies, science, music, art, health and physical education. The remaining five percent of the total program hour offerings may include such subjects and activities as the school district shall determine to be appropriate for the education of the school district's students in such grades;

      (c) Each school district shall make available to students in grades four through six at least a total program hour offering of two thousand nine hundred seventy hours. A minimum of ninety percent of the total program hour offerings shall be in the basic skills areas of reading/language arts (which may include foreign languages, including American Indian languages), mathematics, social studies, science, music, art, health and physical education. The remaining ten percent of the total program hour offerings may include such subjects and activities as the school district shall determine to be appropriate for the education of the school district's students in such grades;

      (d) Each school district shall make available to students in grades seven through eight, at least a total program hour offering of one thousand nine hundred eighty hours. A minimum of eighty-five percent of the total program hour offerings shall be in the basic skills areas of reading/language arts (which may include foreign languages, including American Indian languages), mathematics, social studies, science, music, art, health and physical education. A minimum of ten percent of the total program hour offerings shall be in the area of work skills. The remaining five percent of the total program hour offerings may include such subjects and activities as the school district shall determine to be appropriate for the education of the school district's students in such grades;

      (e) Each school district shall make available to students in grades nine through twelve at least a total program hour offering of four thousand three hundred twenty hours. A minimum of sixty percent of the total program hour offerings shall be in the basic skills areas of language arts, foreign languages, which may be American Indian languages, mathematics, social studies, science, music, art, health and physical education. A minimum of twenty percent of the total program hour offerings shall be in the area of work skills. The remaining twenty percent of the total program hour offerings may include traffic safety or such subjects and activities as the school district shall determine to be appropriate for the education of the school district's students in such grades, with not less than one-half thereof in basic skills and/or work skills: PROVIDED, That each school district shall have the option of including grade nine within the program hour offering requirements of grades seven and eight so long as such requirements for grades seven through nine are increased to two thousand nine hundred seventy hours and such requirements for grades ten through twelve are decreased to three thousand two hundred forty hours.

      (3) In order to provide flexibility to the local school districts in the setting of their curricula, and in order to maintain the intent of this legislation, which is to stress the instruction of basic skills and work skills, any local school district may establish minimum course mix percentages that deviate by up to five percentage points above or below those minimums required by subsection (2) of this section, so long as the total program hour requirement is still met.

      (4) Nothing contained in subsection (2) of this section shall be construed to require individual students to attend school for any particular number of hours per day or to take any particular courses.

      (5) Each school district's kindergarten through twelfth grade basic educational program shall be accessible to all students who are five years of age, as provided by RCW 28A.225.160, and less than twenty-one years of age and shall consist of a minimum of one hundred eighty school days per school year in such grades as are conducted by a school district, and one hundred eighty half-days of instruction, or equivalent, in kindergarten: PROVIDED, That effective May 1, 1979, a school district may schedule the last five school days of the one hundred and eighty day school year for noninstructional purposes in the case of students who are graduating from high school, including, but not limited to, the observance of graduation and early release from school upon the request of a student, and all such students may be claimed as a full time equivalent student to the extent they could otherwise have been so claimed for the purposes of RCW 28A.150.250 and 28A.150.260.

      (6) The state board of education shall adopt rules to implement and ensure compliance with the program requirements imposed by this section, RCW 28A.150.250 and 28A.150.260, and such related supplemental program approval requirements as the state board may establish: PROVIDED, That each school district board of directors shall establish the basis and means for determining and monitoring the district's compliance with the basic skills and work skills percentage and course requirements of this section. The certification of the board of directors and the superintendent of a school district that the district is in compliance with such basic skills and work skills requirements may be accepted by the superintendent of public instruction and the state board of education.

      (7) Handicapped education programs, vocational-technical institute programs, state institution and state residential school programs, all of which programs are conducted for the common school age, kindergarten through secondary school program students encompassed by this section, shall be exempt from the basic skills and work skills percentage and course requirements of this section in order that the unique needs, abilities or limitations of such students may be met.

      (8) Any school district may petition the state board of education for a reduction in the total program hour offering requirements for one or more of the grade level groupings specified in this section. The state board of education shall grant all such petitions that are accompanied by an assurance that the minimum total program hour offering requirements in one or more other grade level groupings will be exceeded concurrently by no less than the number of hours of the reduction.

      Sec. 2. RCW 28A.150.220 and 1992 c 141 s 503 are each amended to read as follows:

      (1) Satisfaction of the basic education program requirements identified in RCW 28A.150.210 shall be considered to be implemented by the following program:

      (a) Each school district shall make available to students enrolled in kindergarten at least a total instructional offering of four hundred fifty hours. The program shall include instruction in the essential academic learning requirements under RCW 28A.630.885 and such other subjects and such activities as the school district shall determine to be appropriate for the education of the school district's students enrolled in such program;

      (b) Each school district shall make available to students enrolled in grades one through twelve, at least a district-wide annual average total instructional hour offering of one thousand hours. The state board of education may define alternatives to classroom instructional time for students in grades nine through twelve enrolled in alternative learning experiences. The state board of education shall establish rules to determine annual average instructional hours for districts including fewer than twelve grades. The program shall include the essential academic learning requirements under RCW 28A.630.885 and such other subjects and such activities as the school district shall determine to be appropriate for the education of the school district's students enrolled in such group;

      (c) If the essential academic learning requirements include a requirement of languages other than English, the requirement may be met by students receiving instruction in one or more American Indian languages.

      (2) Nothing contained in subsection (1) of this section shall be construed to require individual students to attend school for any particular number of hours per day or to take any particular courses.

      (3) Each school district's kindergarten through twelfth grade basic educational program shall be accessible to all students who are five years of age, as provided by RCW 28A.225.160, and less than twenty-one years of age and shall consist of a minimum of one hundred eighty school days per school year in such grades as are conducted by a school district, and one hundred eighty half-days of instruction, or equivalent, in kindergarten: PROVIDED, That effective May 1, 1979, a school district may schedule the last five school days of the one hundred and eighty day school year for noninstructional purposes in the case of students who are graduating from high school, including, but not limited to, the observance of graduation and early release from school upon the request of a student, and all such students may be claimed as a full time equivalent student to the extent they could otherwise have been so claimed for the purposes of RCW 28A.150.250 and 28A.150.260.

      (4) The state board of education shall adopt rules to implement and ensure compliance with the program requirements imposed by this section, RCW 28A.150.250 and 28A.150.260, and such related supplemental program approval requirements as the state board may establish.

      Sec. 3. RCW 28A.230.090 and 1992 c 141 s 402 and 1992 c 60 s 1 are each reenacted and amended to read as follows:

      (1) The state board of education shall establish high school graduation requirements or equivalencies for students. Any course in Washington state history and government used to fulfill high school graduation requirements is encouraged to include information on the culture, history, and government of the American Indian peoples who were the first inhabitants of the state.

      (2) In recognition of the statutory authority of the state board of education to establish and enforce minimum high school graduation requirements, the state board shall periodically reevaluate the graduation requirements and shall report such findings to the legislature in a timely manner as determined by the state board.

      (3) Pursuant to any foreign language requirement established by the state board of education or a local school district, or both, for purposes of high school graduation, students who receive instruction in American sign language or one or more American Indian languages shall be considered to have satisfied the state or local school district foreign language graduation requirement.

      (4) If requested by the student and his or her family, a student who has completed high school courses before attending high school shall be given high school credit which shall be applied to fulfilling high school graduation requirements if:

      (a) The course was taken with high school students, if the academic level of the course exceeds the requirements for seventh and eighth grade classes, and the student has successfully passed by completing the same course requirements and examinations as the high school students enrolled in the class; or

      (b) The academic level of the course exceeds the requirements for seventh and eighth grade classes and the course would qualify for high school credit, because the course is similar or equivalent to a course offered at a high school in the district as determined by the school district board of directors.

      (5) Students who have taken and successfully completed high school courses under the circumstances in subsection (4) of this section shall not be required to take an additional competency examination or perform any other additional assignment to receive credit. Subsection (4) of this section shall also apply to students enrolled in high school on April 11, 1990, who took the courses before attending high school.

      Sec. 4. RCW 28A.600.060 and 1991 c 116 s 22 are each amended to read as follows:

      The recipients of the Washington state honors awards shall be selected based on student achievement in both verbal and quantitative areas, as measured by a test or tests of general achievement selected by the superintendent of public instruction, and shall include student performance in the academic core areas of English, mathematics, science, social studies, and foreign languages, which may be American Indian languages. The performance level in such academic core subjects shall be determined by grade point averages, numbers of credits earned, and courses enrolled in during the beginning of the senior year.

      NEW SECTION. Sec. 5. Section 2 of this act shall take effect September 1, 1998. However, section 2 of this act shall not take effect if, by September 1, 1998, a law is enacted stating that a school accountability and academic assessment system is not in place."


     On motion of Senator Pelz, the following amendment to the Committee on Education amendment was adopted:

     On page 5, beginning on line 10, strike "requirement of languages other than English" and insert "foreign language requirement"

     The President declared the question before the Senate to be the adoption of the Committee on Education striking amendment, as amended, to Engrossed House Bill No. 1175.

     The Committee on Education striking amendment, as amended, to Engrossed House Bill No. 1175, was adopted.


MOTIONS


     On motion of Senator Pelz, the following title amendment was adopted:

     On page 1, line 1 of the title, after "education;" strike the remainder of the title and insert "amending RCW 28A.150.220, 28A.150.220, and 28A.600.060; reenacting and amending RCW 28A.230.090; and providing a contingent effective date."


     On motion of Senator Pelz, the rules were suspended, Engrossed House Bill No. 1175, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.


POINT OF INQUIRY


     Senator Anderson: "Senator Pelz, in the summary it references information included in history curriculum. Do we now, besides the reference to language of the Indian culture, have any history requirement changes with this bill?"

     Senator Pelz: "No, any course in Washington State History and Government used to fulfill high school graduation requirements is encouraged to include information on the culture, history and government of the American Indian people."

     Senator Anderson: "So, there is no change and mandate on curriculum?"

     Senator Pelz: "Absolutely not."

     The President declared the question before the Senate to be the roll call on the final passage of Engrossed House Bill No. 1175, as amended by the Senate.


ROLL CALL


     The Secretary called the roll on the final passage of Engrossed House Bill No. 1175, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 40; Nays, 2; Absent, 0; Excused, 7.

     Voting yea: Senators Amondson, Barr, Bauer, Bluechel, Cantu, Deccio, Drew, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, Moore, Nelson, Newhouse, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 40.

     Voting nay: Senators Anderson and McDonald - 2.

     Excused: Senators Erwin, Hochstatter, Moyer, Niemi, Owen, Sellar and Talmadge - 7.

     ENGROSSED HOUSE BILL NO. 1175, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


SECOND READING


     SUBSTITUTE HOUSE BILL NO. 1014, by House Committee on Financial Institutions and Insurance (originally sponsored by Representatives Appelwick and Riley)

 

Updating uniform commercial code articles 1, 3, and 4.


     The bill was read the second time.


MOTION


     On motion of Senator Moore, the following Committee on Labor and Commerce amendment was adopted:

      Strike everything after the enacting clause and insert the following:


"ARTICLE 1

GENERAL PROVISIONS

PART 2

GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION


      Sec. 1. RCW 62A.1-201 and 1992 c 134 s 14 are each amended to read as follows:

      Subject to additional definitions contained in the subsequent Articles of this Title which are applicable to specific Articles or Parts thereof, and unless the context otherwise requires, in this Title:

      (1) "Action" in the sense of a judicial proceeding includes recoupment, counterclaim, set-off, suit in equity and any other proceedings in which rights are determined.

      (2) "Aggrieved party" means a party entitled to resort to a remedy.

      (3) "Agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this Title (RCW 62A.1-205 and RCW 62A.2-208). Whether an agreement has legal consequences is determined by the provisions of this Title, if applicable; otherwise by the law of contracts (RCW 62A.1-103). (Compare "Contract".)

      (4) "Bank" means any person engaged in the business of banking.

      (5) "Bearer" means the person in possession of an instrument, document of title, or certificated security payable to bearer or indorsed in blank.

      (6) "Bill of lading" means a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods, and includes an airbill. "Airbill" means a document serving for air transportation as a bill of lading does for marine or rail transportation, and includes an air consignment note or air waybill.

      (7) "Branch" includes a separately incorporated foreign branch of a bank.

      (8) "Burden of establishing" a fact means the burden of persuading the triers of fact that the existence of the fact is more probable than its non-existence.

      (9) "Buyer in ordinary course of business" means a person who in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. All persons who sell minerals or the like (including oil and gas) at wellhead or minehead shall be deemed to be persons in the business of selling goods of that kind. "Buying" may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

      (10) "Conspicuous": A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals (as: NON-NEGOTIABLE BILL OF LADING) is conspicuous. Language in the body of a form is "conspicuous" if it is in larger or other contrasting type or color. But in a telegram any stated term is "conspicuous". Whether a term or clause is "conspicuous" or not is for decision by the court.

      (11) "Contract" means the total legal obligation which results from the parties' agreement as affected by this Title and any other applicable rules of law. (Compare "Agreement".)

      (12) "Creditor" includes a general creditor, a secured creditor, a lien creditor and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity and an executor or administrator of an insolvent debtor's or assignor's estate.

      (13) "Defendant" includes a person in the position of defendant in a cross-action or counterclaim.

      (14) "Delivery" with respect to instruments, documents of title, chattel paper, or certificated securities means voluntary transfer of possession.

      (15) "Document of title" includes bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers. To be a document of title a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass.

      (16) "Fault" means wrongful act, omission or breach.

      (17) "Fungible" with respect to goods or securities means goods or securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit. Goods which are not fungible shall be deemed fungible for the purposes of this Title to the extent that under a particular agreement or document unlike units are treated as equivalents.

      (18) "Genuine" means free of forgery or counterfeiting.

      (19) "Good faith" means honesty in fact in the conduct or transaction concerned.

      (20) "Holder" with respect to ((an instrument, certificated security, or document of title means the person in possession if (a) in the case of an instrument, it is payable to bearer or to the order of the person in possession, (b) in the case of a security, the person in possession is the registered owner, or the security has been indorsed to the person in possession by the registered owner, or the security is in bearer form, or (c) in the case of a document of title, the goods are deliverable to bearer or to the order of the person in possession)) a negotiable instrument, means the person in possession if the instrument is payable to bearer or, in the case of an instrument payable to an identified person, if the identified person is in possession. "Holder" with respect to a document of title means the person in possession if the goods are deliverable to bearer or to the order of the person in possession.

      (21) To "honor" is to pay or to accept and pay, or where a credit so engages to purchase or discount a draft complying with the terms of the credit.

      (22) "Insolvency proceedings" includes any assignment for the benefit of creditors or other proceedings intended to liquidate or rehabilitate the estate of the person involved.

      (23) A person is "insolvent" who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due or is insolvent within the meaning of the federal bankruptcy law.

      (24) "Money" means a medium of exchange authorized or adopted by a domestic or foreign government ((or intergovernmental organization)) and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.

      (25) A person has "notice" of a fact when

      (a) he has actual knowledge of it; or

      (b) he has received a notice or notification of it; or

      (c) from all the facts and circumstances known to him at the time in question he has reason to know that it exists.

A person "knows" or has "knowledge" of a fact when he has actual knowledge of it. "Discover" or "learn" or a word or phrase of similar import refers to knowledge rather than to reason to know. The time and circumstances under which a notice or notification may cease to be effective are not determined by this Title.

      (26) A person "notifies" or "gives" a notice or notification to another by taking such steps as may be reasonably required to inform the other in ordinary course whether or not such other actually comes to know of it. A person "receives" a notice or notification when

      (a) it comes to his attention; or

      (b) it is duly delivered at the place of business through which the contract was made or at any other place held out by him as the place for receipt of such communications.

      (27) Notice, knowledge or a notice or notification received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting that transaction, and in any event from the time when it would have been brought to his attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. Due diligence does not require an individual acting for the organization to communicate information unless such communication is part of his regular duties or unless he has reason to know of the transaction and that the transaction would be materially affected by the information.

      (28) "Organization" includes a corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, two or more persons having a joint or common interest, or any other legal or commercial entity.

      (29) "Party", as distinct from "third party", means a person who has engaged in a transaction or made an agreement within this Title.

      (30) "Person" includes an individual or an organization (See RCW 62A.1-102).

      (31) "Presumption" or "presumed" means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its nonexistence.

      (32) "Purchase" includes taking by sale, discount, negotiation, mortgage, pledge, lien, issue or re-issue, gift or any other voluntary transaction creating an interest in property.

      (33) "Purchaser" means a person who takes by purchase.

      (34) "Remedy" means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.

      (35) "Representative" includes an agent, an officer of a corporation or association, and a trustee, executor or administrator of an estate, or any other person empowered to act for another.

      (36) "Rights" includes remedies.

      (37) "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation, except for lease-purchase agreements under chapter 63.19 RCW. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer (RCW 62A.2-401) is limited in effect to a reservation of a "security interest". The term also includes any interest of a buyer of accounts or chattel paper which is subject to Article 9. The special property interest of a buyer of goods on identification of such goods to a contract for sale under RCW 62A.2-401 is not a "security interest", but a buyer may also acquire a "security interest" by complying with Article 9. Unless a lease or consignment is intended as security, reservation of title thereunder is not a "security interest" but a consignment is in any event subject to the provisions on consignment sales (RCW 62A.2-326). Whether a lease is intended as security is to be determined by the facts of each case; however, (a) the inclusion of an option to purchase does not of itself make the lease one intended for security, and (b) an agreement that upon compliance with the terms of the lease the lessee shall become or has the option to become the owner of the property for no additional consideration or for a nominal consideration does make the lease one intended for security.

      (38) "Send" in connection with any writing or notice means to deposit in the mail or deliver for transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and in the case of an instrument to an address specified thereon or otherwise agreed, or if there be none to any address reasonable under the circumstances. The receipt of any writing or notice within the time at which it would have arrived if properly sent has the effect of a proper sending.

      (39) "Signed" includes any symbol executed or adopted by a party with present intention to authenticate a writing.

      (40) "Surety" includes guarantor.

      (41) "Telegram" includes a message transmitted by radio, teletype, cable, any mechanical method of transmission, or the like.

      (42) "Term" means that portion of an agreement which relates to a particular matter.

      (43) "Unauthorized" signature means one made without actual, implied or apparent authority and includes a forgery.

      (44) "Value". Except as otherwise provided with respect to negotiable instruments and bank collections (RCW 62A.3-303, RCW 62A.4-208 and RCW 62A.4-209) a person gives "value" for rights if he acquires them

      (a) in return for a binding commitment to extend credit or for the extension of immediately available credit whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection; or

      (b) as security for or in total or partial satisfaction of a preexisting claim; or

      (c) by accepting delivery pursuant to a pre-existing contract for purchase; or

      (d) generally, in return for any consideration sufficient to support a simple contract.

      (45) "Warehouse receipt" means a receipt issued by a person engaged in the business of storing goods for hire.

      (46) "Written" or "writing" includes printing, typewriting or any other intentional reduction to tangible form.

      Sec. 2. RCW 62A.1-207 and 1965 ex.s. c 157 s 1-207 are each amended to read as follows:

      (1) A party who, with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as "without prejudice", "under protest" or the like are sufficient.

      (2) Subsection (1) of this section shall not apply to an accord and satisfaction.


ARTICLE 3

((COMMERCIAL PAPER)) NEGOTIABLE INSTRUMENTS


PART I

((SHORT TITLE, FORM AND INTERPRETATION))

GENERAL PROVISIONS AND DEFINITIONS


      Sec. 3. RCW 62A.3-101 and 1965 ex.s. c 157 s 3-101 are each amended to read as follows:

      SHORT TITLE. This Article ((shall be known and)) may be cited as Uniform Commercial Code -- ((Commercial Paper)) Negotiable Instruments.

      Sec. 4. RCW 62A.3-102 and 1965 ex.s. c 157 s 3-102 are each amended to read as follows:

      ((DEFINITIONS AND INDEX OF DEFINITIONS. (1) In this Article unless the context otherwise requires

      (a) "Issue" means the first delivery of an instrument to a holder or a remitter.

      (b) An "order" is a direction to pay and must be more than an authorization or request. It must identify the person to pay with reasonable certainty. It may be addressed to one or more such persons jointly or in the alternative but not in succession.

      (c) A "promise" is an undertaking to pay and must be more than an acknowledgment of an obligation.

      (d) "Secondary party" means a drawer or endorser.

      (e) "Instrument" means a negotiable instrument.

      (2) Other definitions applying to this Article and the sections in which they appear are:

      "Acceptance." RCW 62A.3-410.

      "Accommodation party." RCW 62A.3-415.

      "Alteration." RCW 62A.3-407.

      "Certificate of deposit." RCW 62A.3-104.

      "Certification." RCW 62A.3-411.

      "Check." RCW 62A.3-104.

      "Definite time." RCW 62A.3-109.

      "Dishonor." RCW 62A.3-507.

      "Draft." RCW 62A.3-104.

      "Holder in due course." RCW 62A.3-302.

      "Negotiation." RCW 62A.3-202.

      "Note." RCW 62A.3-104.

      "Notice of dishonor." RCW 62A.3-508.

      "On demand." RCW 62A.3-108.

      "Presentment." RCW 62A.3-504.

      "Protest." RCW 62A.3-509.

      "Restrictive indorsement." RCW 62A.3-205.

      "Signature." RCW 62A.3-401.

      (3) The following definitions in other Articles apply to this Article:

      "Account." RCW 62A.4-104.

      "Banking day." RCW 62A.4-104.

      "Clearing house." RCW 62A.4-104.

      "Collecting bank." RCW 62A.4-105.

      "Customer." RCW 62A.4-104.

      "Depositary bank." RCW 62A.4-105.

      "Documentary draft." RCW 62A.4-104.

      "Intermediary bank." RCW 62A.4-105.

      "Item." RCW 62A.4-104.

      "Midnight deadline." RCW 62A.4-104.

      "Payor bank." RCW 62A.4-105.

      (4) In addition Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.))

      SUBJECT MATTER. (a) This Article applies to negotiable instruments. It does not apply to money, to payment orders governed by Article 4A, or to securities governed by Article 8.

      (b) If there is conflict between this Article and Article 4 or 9, Articles 4 and 9 govern.

      (c) Regulations of the Board of Governors of the Federal Reserve System and operating circulars of the Federal Reserve Banks supersede any inconsistent provision of this Article to the extent of the inconsistency.

      Sec. 5. RCW 62A.3-103 and 1965 ex.s. c 157 s 3-103 are each amended to read as follows:

      ((LIMITATIONS ON SCOPE OF ARTICLE. (1) This Article does not apply to money, documents of title or investment securities.

      (2) The provisions of this Article are subject to the provisions of the Article on Bank Deposits and Collections (Article 4) and Secured Transactions (Article 9).))

      DEFINITIONS. (a) In this Article:

      (1) "Acceptor" means a drawee who has accepted a draft.

      (2) "Drawee" means a person ordered in a draft to make payment.

      (3) "Drawer" means a person who signs or is identified in a draft as a person ordering payment.

      (4) "Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing.

      (5) "Maker" means a person who signs or is identified in a note as a person undertaking to pay.

      (6) "Order" means a written instruction to pay money signed by the person giving the instruction. The instruction may be addressed to any person, including the person giving the instruction, or to one or more persons jointly or in the alternative but not in succession. An authorization to pay is not an order unless the person authorized to pay is also instructed to pay.

      (7) "Ordinary care" in the case of a person engaged in business means observance of reasonable commercial standards, prevailing in the area in which the person is located, with respect to the business in which the person is engaged. In the case of a bank that takes an instrument for processing for collection or payment by automated means, reasonable commercial standards do not require the bank to examine the instrument if the failure to examine does not violate the bank's prescribed procedures and the bank's procedures do not vary unreasonably from general banking usage not disapproved by this Article or Article 4.

      (8) "Party" means a party to an instrument.

      (9) "Promise" means a written undertaking to pay money signed by the person undertaking to pay. An acknowledgment of an obligation by the obligor is not a promise unless the obligor also undertakes to pay the obligation.

      (10) "Prove" with respect to a fact means to meet the burden of establishing the fact (RCW 62A.1-201(8)).

      (11) "Remitter" means a person who purchases an instrument from its issuer if the instrument is payable to an identified person other than the purchaser.

      (b) Other definitions applying to this Article and the sections in which they appear are:

      "Acceptance" RCW 62A.3-409

      "Accommodated party" RCW 62A.3-419

      "Accommodation party" RCW 62A.3-419

      "Alteration" RCW 62A.3-407

      "Anomalous indorsement" RCW 62A.3-205

      "Blank indorsement" RCW 62A.3-205

      "Cashier's check" RCW 62A.3-104

      "Certificate of deposit" RCW 62A.3-104

      "Certified check" RCW 62A.3-409

      "Check" RCW 62A.3-104

      "Consideration" RCW 62A.3-303

      "Draft" RCW 62A.3-104

      "Holder in due course" RCW 62A.3-302

      "Incomplete instrument" RCW 62A.3-115

      "Indorsement" RCW 62A.3-204

      "Indorser" RCW 62A.3-204

      "Instrument" RCW 62A.3-104

      "Issue" RCW 62A.3-105

      "Issuer" RCW 62A.3-105

      "Negotiable instrument" RCW 62A.3-104

      "Negotiation" RCW 62A.3-201

      "Note" RCW 62A.3-104

      "Payable at a definite

       time" RCW 62A.3-108

      "Payable on demand" RCW 62A.3-108

      "Payable to bearer" RCW 62A.3-109

      "Payable to order" RCW 62A.3-109

      "Payment" RCW 62A.3-602

      "Person entitled to

       enforce" RCW 62A.3-301

      "Presentment" RCW 62A.3-501

      "Reacquisition" RCW 62A.3-207

      "Special indorsement" RCW 62A.3-205

      "Teller's check" RCW 62A.3-104

      "Transfer of instrument" RCW 62A.3-203

      "Traveler's check" RCW 62A.3-104

      "Value" RCW 62A.3-303

      (c) The following definitions in other Articles apply to this Article:

      "Bank" RCW 62A.4-105

      "Banking day" RCW 62A.4-104

      "Clearing house" RCW 62A.4-104

      "Collecting bank" RCW 62A.4-105

      "Depositary bank" RCW 62A.4-105

      "Documentary draft" RCW 62A.4-104

      "Intermediary bank" RCW 62A.4-105

      "Item" RCW 62A.4-104

      "Payor bank" RCW 62A.4-105

      "Suspends payments" RCW 62A.4-104

      (d) In addition, Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.

      Sec. 6. RCW 62A.3-104 and 1965 ex.s. c 157 s 3-104 are each amended to read as follows:

      ((FORM OF NEGOTIABLE INSTRUMENTS; "DRAFT"; "CHECK"; "CERTIFICATE OF DEPOSIT"; "NOTE". (1) Any writing to be a negotiable instrument within this Article must

      (a) be signed by the maker or drawer; and

      (b) contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation or power given by the maker or drawer except as authorized by this Article; and

      (c) be payable on demand or at a definite time; and

      (d) be payable to order or to bearer.

      (2) A writing which complies with the requirements of this section is

      (a) a "draft" ("bill of exchange") if it is an order;

      (b) a "check" if it is a draft drawn on a bank and payable on demand;

      (c) a "certificate of deposit" if it is an acknowledgment by a bank of receipt of money with an engagement to repay it;

      (d) a "note" if it is a promise other than a certificate of deposit.

      (3) As used in other Articles of this Title, and as the context may require, the terms "draft", "check", "certificate of deposit" and "note" may refer to instruments which are not negotiable within this Article as well as to instruments which are so negotiable.))

      NEGOTIABLE INSTRUMENT. (a) Except as provided in subsections (c) and (d), "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

      (1) Is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

      (2) Is payable on demand or at a definite time; and

      (3) Does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor.

      (b) "Instrument" means a negotiable instrument.

      (c) An order that meets all of the requirements of subsection (a), except subsection (a)(1), and otherwise falls within the definition of "check" in subsection (f) is a negotiable instrument and a check.

      (d) A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, it contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this Article.

      (e) An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an instrument falls within the definition of both "note" and "draft," a person entitled to enforce the instrument may treat it as either.

      (f) "Check" means (i) a draft, other than a documentary draft, payable on demand and drawn on a bank, or (ii) a cashier's check or teller's check. An instrument may be a check even though it is described on its face by another term, such as "money order."

      (g) "Cashier's check" means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.

      (h) "Teller's check" means a draft drawn by a bank (i) on another bank, or (ii) payable at or through a bank.

      (i) "Traveler's check" means an instrument that (i) is payable on demand, (ii) is drawn on or payable at or through a bank, (iii) is designated by the term "traveler's check" or by a substantially similar term, and (iv) requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument.

      (j) "Certificate of deposit" means an instrument containing an acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank.

      Sec. 7. RCW 62A.3-105 and 1965 ex.s. c 157 s 3-105 are each amended to read as follows:

      ((WHEN PROMISE OR ORDER UNCONDITIONAL. (1) A promise or order otherwise unconditional is not made conditional by the fact that the instrument

      (a) is subject to implied or constructive conditions; or

      (b) states its consideration, whether performed or promised, or the transaction which gave rise to the instrument, or that the promise or order is made or the instrument matures in accordance with or "as per" such transaction; or

      (c) refers to or states that it arises out of a separate agreement or refers to a separate agreement for rights as to prepayment or acceleration; or

      (d) states that it is drawn under a letter of credit; or

      (e) states that it is secured, whether by mortgage, reservation of title or otherwise; or

      (f) indicates a particular account to be debited or any other fund or source from which reimbursement is expected; or

      (g) is limited to payment out of a particular fund or the proceeds of a particular source, if the instrument is issued by a government or governmental agency or unit; or

      (h) is limited to payment out of the entire assets of a partnership, unincorporated association, trust or estate by or on behalf of which the instrument is issued.

      (2) A promise or order is not unconditional if the instrument

      (a) states that it is subject to or governed by any other agreement; or

      (b) states that it is to be paid only out of a particular fund or source except as provided in this section.))

      ISSUE OF INSTRUMENT. (a) "Issue" means the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person.

      (b) An unissued instrument, or an unissued incomplete instrument that is completed, is binding on the maker or drawer, but nonissuance is a defense. An instrument that is conditionally issued or is issued for a special purpose is binding on the maker or drawer, but failure of the condition or special purpose to be fulfilled is a defense.

      (c) "Issuer" applies to issued and unissued instruments and means a maker or drawer of an instrument.

      Sec. 8. RCW 62A.3-106 and 1989 c 13 s 1 are each amended to read as follows:

      ((SUM CERTAIN--DEFINITIONS. (1) The sum payable is a sum certain even though it is to be paid

      (a) with stated interest or by stated installments; or

      (b) with stated different rates of interest before and after default or a specified date; or

      (c) with a stated discount or addition if paid before or after the date fixed for payment; or

      (d) with exchange or less exchange, whether at a fixed rate or at the current rate; or

      (e) with costs of collection or an attorney's fee or both upon default.

      (2) A rate of interest that cannot be calculated by looking only to the instrument is a stated rate of interest in subsection (1) of this section if the rate during any period is readily ascertainable by a reference in the instrument to a published statute, regulation, rule of court, generally accepted commercial or financial index, compendium of interest rates, or announced or established rate of one or more named financial institutions.

      (3) Graduated, variable, annuity or price-level adjusted payments are stated installments in subsection (1) of this section if such payments are provided for in the instrument.

      (4) Nothing in this section shall validate any term which is otherwise illegal.))

      UNCONDITIONAL PROMISE OR ORDER. (a) Except as provided in this section, for the purposes of RCW 62A.3-104(a), a promise or order is unconditional unless it states (i) an express condition to payment, (ii) that the promise or order is subject to or governed by another writing, or (iii) that rights or obligations with respect to the promise or order are stated in another writing. A reference to another writing does not of itself make the promise or order conditional.

      (b) A promise or order is not made conditional (i) by a reference to another writing for a statement of rights with respect to collateral, prepayment, or acceleration, or (ii) because payment is limited to resort to a particular fund or source.

      (c) If a promise or order requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the promise or order, the condition does not make the promise or order conditional for the purposes of RCW 62A.3-104(a). If the person whose specimen signature appears on an instrument fails to countersign the instrument, the failure to countersign is a defense to the obligation of the issuer, but the failure does not prevent a transferee of the instrument from becoming a holder of the instrument.

      (d) If a promise or order at the time it is issued or first comes into possession of a holder contains a statement, required by applicable statutory or administrative law, to the effect that the rights of a holder or transferee are subject to claims or defenses that the issuer could assert against the original payee, the promise or order is not thereby made conditional for the purposes of RCW 62A.3-104(a); but if the promise or order is an instrument, there cannot be a holder in due course of the instrument.

      Sec. 9. RCW 62A.3-107 and 1965 ex.s. c 157 s 3-107 are each amended to read as follows:

      ((MONEY. (1) An instrument is payable in money if the medium of exchange in which it is payable is money at the time the instrument is made. An instrument payable in "currency" or "current funds" is payable in money.

      (2) A promise or order to pay a sum stated in a foreign currency is for a sum certain in money and, unless a different medium of payment is specified in the instrument, may be satisfied by payment of that number of dollars which the stated foreign currency will purchase at the buying sight rate for that currency on the day on which the instrument is payable or, if payable on demand, on the day of demand. If such an instrument specifies a foreign currency as the medium of payment the instrument is payable in that currency.))

      INSTRUMENT PAYABLE IN FOREIGN MONEY. Unless the instrument otherwise provides, an instrument that states the amount payable in foreign money may be paid in the foreign money or in an equivalent amount in dollars calculated by using the current bank-offered spot rate at the place of payment for the purchase of dollars on the day on which the instrument is paid.

      Sec. 10. RCW 62A.3-108 and 1965 ex.s. c 157 s 3-108 are each amended to read as follows:

      ((PAYABLE ON DEMAND. Instruments payable on demand include those payable at sight or on presentation and those in which no time for payment is stated.))

      PAYABLE ON DEMAND OR AT DEFINITE TIME. (a) A promise or order is "payable on demand" if it (i) states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder, or (ii) does not state any time of payment.

      (b) A promise or order is "payable at a definite time" if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued, subject to rights of (i) prepayment, (ii) acceleration, (iii) extension at the option of the holder, or (iv) extension to a further definite time at the option of the maker or acceptor or automatically upon or after a specified act or event.

      (c) If an instrument, payable at a fixed date, is also payable upon demand made before the fixed date, the instrument is payable on demand until the fixed date and, if demand for payment is not made before that date, becomes payable at a definite time on the fixed date.

      Sec. 11. RCW 62A.3-109 and 1989 c 13 s 2 are each amended to read as follows:

      ((DEFINITE TIME. (1) An instrument is payable at a definite time if by its terms it is payable

      (a) on or before a stated date or at a fixed period after a stated date; or

      (b) at a fixed period after sight; or

      (c) at a definite time subject to any acceleration; or

      (d) at a definite time subject to extension at the option of the holder, or to extension to a further definite time at the option of the maker or acceptor or automatically upon or after a specified act or event; or

      (e) by variable, graduated, annuity or price-level adjusted payments.

      (2) An instrument which by its terms is otherwise payable only upon an act or event uncertain as to time of occurrence is not payable at a definite time even though the act or event has occurred.))

      PAYABLE TO BEARER OR TO ORDER. (a) A promise or order is payable to bearer if it:

      (1) States that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment;

      (2) Does not state a payee; or

      (3) States that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified person.

      (b) A promise or order that is not payable to bearer is payable to order if it is payable (i) to the order of an identified person or (ii) to an identified person or order. A promise or order that is payable to order is payable to the identified person.

      (c) An instrument payable to bearer may become payable to an identified person if it is specially indorsed pursuant to RCW 62A.3-205(a). An instrument payable to an identified person may become payable to bearer if it is indorsed in blank pursuant to RCW 62A.3-205(b).

      Sec. 12. RCW 62A.3-110 and 1965 ex.s. c 157 s 3-110 are each amended to read as follows:

      ((PAYABLE TO ORDER. (1) An instrument is payable to order when by its terms it is payable to the order or assigns of any person therein specified with reasonable certainty, or to him or his order, or when it is conspicuously designated on its face as "exchange" or the like and names a payee. It may be payable to the order of

      (a) the maker or drawer; or

      (b) the drawee; or

      (c) a payee who is not maker, drawer or drawee; or

      (d) two or more payees together or in the alternative; or

      (e) an estate, trust or fund, in which case it is payable to the order of the representative of such estate, trust or fund or his successors; or

      (f) an office, or an officer by his title as such in which case it is payable to the principal but the incumbent of the office or his successors may act as if he or they were the holder; or

      (g) a partnership or unincorporated association, in which case it is payable to the partnership or association and may be indorsed or transferred by any person thereto authorized.

      (2) An instrument not payable to order is not made so payable by such words as "payable upon return of this instrument properly indorsed."

      (3) An instrument made payable both to order and to bearer is payable to order unless the bearer words are handwritten or typewritten.))

      IDENTIFICATION OF PERSON TO WHOM INSTRUMENT IS PAYABLE. (a) The person to whom an instrument is initially payable is determined by the intent of the person, whether or not authorized, signing as, or in the name or behalf of, the issuer of the instrument. The instrument is payable to the person intended by the signer even if that person is identified in the instrument by a name or other identification that is not that of the intended person. If more than one person signs in the name or behalf of the issuer of an instrument and all the signers do not intend the same person as payee, the instrument is payable to any person intended by one or more of the signers.

      (b) If the signature of the issuer of an instrument is made by automated means, such as a check-writing machine, the payee of the instrument is determined by the intent of the person who supplied the name or identification of the payee, whether or not authorized to do so.

      (c) A person to whom an instrument is payable may be identified in any way, including by name, identifying number, office, or account number. For the purpose of determining the holder of an instrument, the following rules apply:

      (1) If an instrument is payable to an account and the account is identified only by number, the instrument is payable to the person to whom the account is payable. If an instrument is payable to an account identified by number and by the name of a person, the instrument is payable to the named person, whether or not that person is the owner of the account identified by number.

      (2) If an instrument is payable to:

      (i) A trust, an estate, or a person described as trustee or representative of a trust or estate, the instrument is payable to the trustee, the representative, or a successor of either, whether or not the beneficiary or estate is also named;

      (ii) A person described as agent or similar representative of a named or identified person, the instrument is payable to the represented person, the representative, or a successor of the representative;

      (iii) A fund or organization that is not a legal entity, the instrument is payable to a representative of the members of the fund or organization; or

      (iv) An office or to a person described as holding an office, the instrument is payable to the named person, the incumbent of the office, or a successor to the incumbent.

      (d) If an instrument is payable to two or more persons alternatively, it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the instrument. If an instrument is payable to two or more persons not alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them. If an instrument payable to two or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons alternatively.

      Sec. 13. RCW 62A.3-111 and 1965 ex.s. c 157 s 3-111 are each amended to read as follows:

      ((PAYABLE TO BEARER. An instrument is payable to bearer when by its terms it is payable to

      (a) bearer or the order of bearer; or

      (b) a specified person or bearer; or

      (c) "cash" or the order of "cash", or any other indication which does not purport to designate a specific payee.))

      PLACE OF PAYMENT. Except as otherwise provided for items in Article 4, an instrument is payable at the place of payment stated in the instrument. If no place of payment is stated, an instrument is payable at the address of the drawee or maker stated in the instrument. If no address is stated, the place of payment is the place of business of the drawee or maker. If a drawee or maker has more than one place of business, the place of payment is any place of business of the drawee or maker chosen by the person entitled to enforce the instrument. If the drawee or maker has no place of business, the place of payment is the residence of the drawee or maker.

      Sec. 14. RCW 62A.3-112 and 1965 ex.s. c 157 s 3-112 are each amended to read as follows:

      ((TERMS AND OMISSIONS NOT AFFECTING NEGOTIABILITY. (1) The negotiability of an instrument is not affected by

      (a) the omission of a statement of any consideration or of the place where the instrument is drawn or payable; or

      (b) a statement that collateral has been given to secure obligations either on the instrument or otherwise of an obligor on the instrument or that in case of default on those obligations the holder may realize on or dispose of the collateral; or

      (c) a promise or power to maintain or protect collateral or to give additional collateral; or

      (d) a term authorizing a confession of judgment on the instrument if it is not paid when due; or

      (e) a term purporting to waive the benefit of any law intended for the advantage or protection of any obligor; or

      (f) a term in a draft providing that the payee by indorsing or cashing it acknowledges full satisfaction of an obligation of the drawer; or

      (g) a statement in a draft drawn in a set of parts (RCW 62A.3-801) to the effect that the order is effective only if no other part has been honored.

      (2) Nothing in this section shall validate any term which is otherwise illegal.))

      INTEREST. (a) Unless otherwise provided in the instrument, (i) an instrument is not payable with interest, and (ii) interest on an interest-bearing instrument is payable from the date of the instrument.

      (b) Interest may be stated in an instrument as a fixed or variable amount of money or it may be expressed as a fixed or variable rate or rates. The amount or rate of interest may be stated or described in the instrument in any manner and may require reference to information not contained in the instrument. If an instrument provides for interest, but the amount of interest payable cannot be ascertained from the description, interest is payable at the judgment rate in effect at the place of payment of the instrument and at the time interest first accrues.

      Sec. 15. RCW 62A.3-113 and 1965 ex.s. c 157 s 3-113 are each amended to read as follows:

      ((SEAL. An instrument otherwise negotiable is within this Article even though it is under a seal.))

      DATE OF INSTRUMENT. (a) An instrument may be antedated or postdated. The date stated determines the time of payment if the instrument is payable at a fixed period after date. Except as provided in RCW 62A.4-401(c), an instrument payable on demand is not payable before the date of the instrument.

      (b) If an instrument is undated, its date is the date of its issue or, in the case of an unissued instrument, the date it first comes into possession of a holder.

      Sec. 16. RCW 62A.3-114 and 1965 ex.s. c 157 s 3-114 are each amended to read as follows:

      ((DATE, ANTEDATING, POSTDATING. (1) The negotiability of an instrument is not affected by the fact that it is undated, antedated or postdated.

      (2) Where an instrument is antedated or postdated the time when it is payable is determined by the stated date if the instrument is payable on demand or at a fixed period after date.

      (3) Where the instrument or any signature thereon is dated, the date is presumed to be correct.))

      CONTRADICTORY TERMS OF INSTRUMENT. If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers.

      Sec. 17. RCW 62A.3-115 and 1965 ex.s. c 157 s 3-115 are each amended to read as follows:

      ((INCOMPLETE INSTRUMENTS. (1) When a paper whose contents at the time of signing show that it is intended to become an instrument is signed while still incomplete in any necessary respect it cannot be enforced until completed, but when it is completed in accordance with authority given it is effective as completed.

      (2) If the completion is unauthorized the rules as to material alteration apply (RCW 62A.3-407), even though the paper was not delivered by the maker or drawer; but the burden of establishing that any completion is unauthorized is on the party so asserting.))

      INCOMPLETE INSTRUMENT. (a) "Incomplete instrument" means a signed writing, whether or not issued by the signer, the contents of which show at the time of signing that it is incomplete but that the signer intended it to be completed by the addition of words or numbers.

      (b) Subject to subsection (c), if an incomplete instrument is an instrument under RCW 62A.3-104, it may be enforced according to its terms if it is not completed, or according to its terms as augmented by completion. If an incomplete instrument is not an instrument under RCW 62A.3-104, but, after completion, the requirements of RCW 62A.3-104 are met, the instrument may be enforced according to its terms as augmented by completion.

      (c) If words or numbers are added to an incomplete instrument without authority of the signer, there is an alteration of the incomplete instrument under RCW 62A.3-407.

      (d) The burden of establishing that words or numbers were added to an incomplete instrument without authority of the signer is on the person asserting the lack of authority.

      Sec. 18. RCW 62A.3-116 and 1965 ex.s. c 157 s 3-116 are each amended to read as follows:

      ((INSTRUMENTS PAYABLE TO TWO OR MORE PERSONS. An instrument payable to the order of two or more persons

      (a) if in the alternative is payable to any one of them and may be negotiated, discharged or enforced by any of them who has possession of it;

      (b) if not in the alternative is payable to all of them and may be negotiated, discharged or enforced only by all of them.))

      JOINT AND SEVERAL LIABILITY; CONTRIBUTION. (a) Except as otherwise provided in the instrument, two or more persons who have the same liability on an instrument as makers, drawers, acceptors, indorsers who indorse as joint payees, or anomalous indorsers are jointly and severally liable in the capacity in which they sign.

      (b) Except as provided in RCW 62A.3-419(e) or by agreement of the affected parties, a party having joint and several liability who pays the instrument is entitled to receive from any party having the same joint and several liability contribution in accordance with applicable law.

      (c) Discharge of one party having joint and several liability by a person entitled to enforce the instrument does not affect the right under subsection (b) of a party having the same joint and several liability to receive contribution from the party discharged.

      Sec. 19. RCW 62A.3-117 and 1965 ex.s. c 157 s 3-117 are each amended to read as follows:

      ((INSTRUMENTS PAYABLE WITH WORDS OF DESCRIPTION. An instrument made payable to a named person with the addition of words describing him

      (a) as agent or officer of a specified person is payable to his principal but the agent or officer may act as if he were the holder;

      (b) as any other fiduciary for a specified person or purpose is payable to the payee and may be negotiated, discharged or enforced by him;

      (c) in any other manner is payable to the payee unconditionally and the additional words are without effect on subsequent parties.))

      OTHER AGREEMENTS AFFECTING INSTRUMENT. Subject to applicable law regarding exclusion of proof of contemporaneous or previous agreements, the obligation of a party to an instrument to pay the instrument may be modified, supplemented, or nullified by a separate agreement of the obligor and a person entitled to enforce the instrument, if the instrument is issued or the obligation is incurred in reliance on the agreement or as part of the same transaction giving rise to the agreement. To the extent an obligation is modified, supplemented, or nullified by an agreement under this section, the agreement is a defense to the obligation.

      Sec. 20. RCW 62A.3-118 and 1965 ex.s. c 157 s 3-118 are each amended to read as follows:

      ((AMBIGUOUS TERMS AND RULES OF CONSTRUCTION. The following rules apply to every instrument:

      (a) Where there is doubt whether the instrument is a draft or a note the holder may treat it as either. A draft drawn on the drawer is effective as a note.

      (b) Handwritten terms control typewritten and printed terms, and typewritten control printed.

      (c) Words control figures except that if the words are ambiguous figures control.

      (d) Unless otherwise specified a provision for interest means interest at the judgment rate at the place of payment from the date of the instrument, or if it is undated from the date of issue.

      (e) Unless the instrument otherwise specifies two or more persons who sign as maker, acceptor or drawer or indorser and as a part of the same transaction are jointly and severally liable even though the instrument contains such words as "I promise to pay."

      (f) Unless otherwise specified consent to extension authorizes a single extension for not longer than the original period. A consent to extension, expressed in the instrument, is binding on secondary parties and accommodation makers. A holder may not exercise his option to extend an instrument over the objection of a maker or acceptor or other party who in accordance with RCW 62A.3-604 tenders full payment when the instrument is due.))

      STATUTE OF LIMITATIONS. (a) Except as provided in subsection (e), an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.

      (b) Except as provided in subsection (d) or (e), if demand for payment is made to the maker of a note payable on demand, an action to enforce the obligation of a party to pay the note must be commenced within six years after the demand. If no demand for payment is made to the maker, an action to enforce the note is barred if neither principal nor interest on the note has been paid for a continuous period of ten years.

      (c) Except as provided in subsection (d), an action to enforce the obligation of a party to an unaccepted draft to pay the draft must be commenced within three years after dishonor of the draft or ten years after the date of the draft, whichever period expires first.

      (d) An action to enforce the obligation of the acceptor of a certified check or the issuer of a teller's check, cashier's check, or traveler's check must be commenced within three years after demand for payment is made to the acceptor or issuer, as the case may be.

      (e) An action to enforce the obligation of a party to a certificate of deposit to pay the instrument must be commenced within six years after demand for payment is made to the maker, but if the instrument states a due date and the maker is not required to pay before that date, the six-year period begins when a demand for payment is in effect and the due date has passed.

      (f) An action to enforce the obligation of a party to pay an accepted draft, other than a certified check, must be commenced (i) within six years after the due date or dates stated in the draft or acceptance if the obligation of the acceptor is payable at a definite time, or (ii) within six years after the date of the acceptance if the obligation of the acceptor is payable on demand.

      (g) Unless governed by other law regarding claims for indemnity or contribution, an action (i) for conversion of an instrument, for money had and received, or like action based on conversion, (ii) for breach of warranty, or (iii) to enforce an obligation, duty, or right arising under this Article and not governed by this section must be commenced within three years after the cause of action accrues.

      Sec. 21. RCW 62A.3-119 and 1965 ex.s. c 157 s 3-119 are each amended to read as follows:

      ((OTHER WRITINGS AFFECTING INSTRUMENT. (1) As between the obligor and his immediate obligee or any transferee the terms of an instrument may be modified or affected by any other written agreement executed as a part of the same transaction, except that a holder in due course is not affected by any limitation of his rights arising out of the separate written agreement if he had no notice of the limitation when he took the instrument.

      (2) A separate agreement does not affect the negotiability of an instrument.))

      NOTICE OF RIGHT TO DEFEND ACTION. In an action for breach of an obligation for which a third person is answerable over pursuant to this Article or Article 4, the defendant may give the third person written notice of the litigation, and the person notified may then give similar notice to any other person who is answerable over. If the notice states (i) that the person notified may come in and defend and (ii) that failure to do so will bind the person notified in an action later brought by the person giving the notice as to any determination of fact common to the two litigations, the person notified is so bound unless after seasonable receipt of the notice the person notified does come in and defend.


PART 2

NEGOTIATION, TRANSFER, AND ((NEGOTIATION)) INDORSEMENT


      Sec. 22. RCW 62A.3-201 and 1965 ex.s. c 157 s 3-201 are each amended to read as follows:

      ((TRANSFER: RIGHT TO INDORSEMENT. (1) Transfer of an instrument vests in the transferee such rights as the transferor has therein, except that a transferee who has himself been a party to any fraud or illegality affecting the instrument or who as a prior holder had notice of a defense or claim against it cannot improve his position by taking from a later holder in due course.

      (2) A transfer of a security interest in an instrument vests the foregoing rights in the transferee to the extent of the interest transferred.

      (3) Unless otherwise agreed any transfer for value of an instrument not then payable to bearer gives the transferee the specifically enforceable right to have the unqualified indorsement of the transferor. Negotiation takes effect only when the indorsement is made and until that time there is no presumption that the transferee is the owner.))

      NEGOTIATION. (a) "Negotiation" means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.

      (b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.

      Sec. 23. RCW 62A.3-202 and 1965 ex.s. c 157 s 3-202 are each amended to read as follows:

      ((NEGOTIATION. (1) Negotiation is the transfer of an instrument in such form that the transferee becomes a holder. If the instrument is payable to order it is negotiated by delivery with any necessary indorsement; if payable to bearer it is negotiated by delivery.

      (2) An indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed thereto as to become a part thereof.

      (3) An indorsement is effective for negotiation only when it conveys the entire instrument or any unpaid residue. If it purports to be of less it operates only as a partial assignment.

      (4) Words of assignment, condition, waiver, guaranty, limitation or disclaimer of liability and the like accompanying an indorsement do not affect its character as an indorsement.))

      NEGOTIATION SUBJECT TO RESCISSION. (a) Negotiation is effective even if obtained (i) from an infant, a corporation exceeding its powers, or a person without capacity, (ii) by fraud, duress, or mistake, or (iii) in breach of duty or as part of an illegal transaction.

      (b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good faith and without knowledge of facts that are a basis for rescission or other remedy.

      Sec. 24. RCW 62A.3-203 and 1965 ex.s. c 157 s 3-203 are each amended to read as follows:

      ((WRONG OR MISSPELLED NAME. Where an instrument is made payable to a person under a misspelled name or one other than his own he may indorse in that name or his own or both; but signature in both names may be required by a person paying or giving value for the instrument.))

      TRANSFER OF INSTRUMENT; RIGHTS ACQUIRED BY TRANSFER. (a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.

      (b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.

      (c) Unless otherwise agreed, if an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, the transferee has a specifically enforceable right to the unqualified indorsement of the transferor, but negotiation of the instrument does not occur until the indorsement is made.

      (d) If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur. The transferee obtains no rights under this Article and has only the rights of a partial assignee.

      Sec. 25. RCW 62A.3-204 and 1965 ex.s. c 157 s 3-204 are each amended to read as follows:

      ((SPECIAL INDORSEMENT; BLANK INDORSEMENT. (1) A special indorsement specifies the person to whom or to whose order it makes the instrument payable. Any instrument specially indorsed becomes payable to the order of the special indorsee and may be further negotiated only by his indorsement.

      (2) An indorsement in blank specifies no particular indorsee and may consist of a mere signature. An instrument payable to order and indorsed in blank becomes payable to bearer and may be negotiated by delivery alone until specially indorsed.

      (3) The holder may convert a blank indorsement into a special indorsement by writing over the signature of the indorser in blank any contract consistent with the character of the indorsement.))

      INDORSEMENT. (a) "Indorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring indorser's liability on the instrument, but regardless of the intent of the signer, a signature and its accompanying words is an indorsement unless the accompanying words, terms of the instrument, place of the signature, or other circumstances unambiguously indicate that the signature was made for a purpose other than indorsement. For the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument.

      (b) "Indorser" means a person who makes an indorsement.

      (c) For the purpose of determining whether the transferee of an instrument is a holder, an indorsement that transfers a security interest in the instrument is effective as an unqualified indorsement of the instrument.

      (d) If an instrument is payable to a holder under a name that is not the name of the holder, indorsement may be made by the holder in the name stated in the instrument or in the holder's name or both, but signature in both names may be required by a person paying or taking the instrument for value or collection.

      Sec. 26. RCW 62A.3-205 and 1965 ex.s. c 157 s 3-205 are each amended to read as follows:

      ((RESTRICTIVE INDORSEMENTS. An indorsement is restrictive which either

      (a) is conditional; or

      (b) purports to prohibit further transfer of the instrument; or

      (c) includes the words "for collection", "for deposit", "pay any bank", or like terms signifying a purpose of deposit or collection; or

      (d) otherwise states that it is for the benefit or use of the indorser or of another person.))

      SPECIAL INDORSEMENT; BLANK INDORSEMENT; ANOMALOUS INDORSEMENT. (a) If an indorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the indorsement identifies a person to whom it makes the instrument payable, it is a "special indorsement." When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person. The principles stated in RCW 62A.3-110 apply to special indorsements.

      (b) If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a "blank indorsement." When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.

      (c) The holder may convert a blank indorsement that consists only of a signature into a special indorsement by writing, above the signature of the indorser, words identifying the person to whom the instrument is made payable.

      (d) "Anomalous indorsement" means an indorsement made by a person who is not the holder of the instrument. An anomalous indorsement does not affect the manner in which the instrument may be negotiated.

      Sec. 27. RCW 62A.3-206 and 1965 ex.s. c 157 s 3-206 are each amended to read as follows:

      ((EFFECT OF RESTRICTIVE INDORSEMENT. (1) No restrictive indorsement prevents further transfer or negotiation of the instrument.

      (2) An intermediary bank, or a payor bank which is not the depositary bank, is neither given notice nor otherwise affected by a restrictive indorsement of any person except the bank's immediate transferor or the person presenting for payment.

      (3) Except for an intermediary bank, any transferee under an indorsement which is conditional or includes the words "for collection", "for deposit", "pay any bank", or like terms (subparagraphs (a) and (c) of RCW 62A.3-205) must pay or apply any value given by him for or on the security of the instrument consistently with the indorsement and to the extent that he does so he becomes a holder for value. In addition such transferee is a holder in due course if he otherwise complies with the requirements of RCW 62A.3-302 on what constitutes a holder in due course.

      (4) The first taker under an indorsement for the benefit of the indorser or another person (subparagraph (d) of RCW 62A.3-205) must pay or apply any value given by him for or on the security of the instrument consistently with the indorsement and to the extent that he does so he becomes a holder for value. In addition such taker is a holder in due course if he otherwise complies with the requirements of RCW 62A.3-302 on what constitutes a holder in due course. A later holder for value is neither given notice nor otherwise affected by such restrictive indorsement unless he has knowledge that a fiduciary or other person has negotiated the instrument in any transaction for his own benefit or otherwise in breach of duty (subsection (2) of RCW 62A.3-304).))

      RESTRICTIVE INDORSEMENT. (a) An indorsement limiting payment to a particular person or otherwise prohibiting further transfer or negotiation of the instrument is not effective to prevent further transfer or negotiation of the instrument.

      (b) An indorsement stating a condition to the right of the indorsee to receive payment does not affect the right of the indorsee to enforce the instrument. A person paying the instrument or taking it for value or collection may disregard the condition, and the rights and liabilities of that person are not affected by whether the condition has been fulfilled.

      (c) If an instrument bears an indorsement (i) described in RCW 62A.4-201(b), or (ii) in blank or to a particular bank using the words "for deposit," "for collection," or other words indicating a purpose of having the instrument collected by a bank for the indorser or for a particular account, the following rules apply:

      (1) A person, other than a bank, who purchases the instrument when so indorsed converts the instrument unless the amount paid for the instrument is received by the indorser or applied consistently with the indorsement.

      (2) A depositary bank that purchases the instrument or takes it for collection when so indorsed converts the instrument unless the amount paid by the bank with respect to the instrument is received by the indorser or applied consistently with the indorsement.

      (3) A payor bank that is also the depositary bank or that takes the instrument for immediate payment over the counter from a person other than a collecting bank converts the instrument unless the proceeds of the instrument are received by the indorser or applied consistently with the indorsement.

      (4) Except as otherwise provided in subsection (c)(3), a payor bank or intermediary bank may disregard the indorsement and is not liable if the proceeds of the instrument are not received by the indorser or applied consistently with the indorsement.

      (d) Except for an indorsement covered by subsection (c), if an instrument bears an indorsement using words to the effect that payment is to be made to the indorsee as agent, trustee, or other fiduciary for the benefit of the indorser or another person, the following rules apply:

      (1) Unless there is notice of breach of fiduciary duty as provided in RCW 62A.3-307, a person who purchases the instrument from the indorsee or takes the instrument from the indorsee for collection or payment may pay the proceeds of payment or the value given for the instrument to the indorsee without regard to whether the indorsee violates a fiduciary duty to the indorser.

      (2) A subsequent transferee of the instrument or person who pays the instrument is neither given notice nor otherwise affected by the restriction in the indorsement unless the transferee or payor knows that the fiduciary dealt with the instrument or its proceeds in breach of fiduciary duty.

      (e) The presence on an instrument of an indorsement to which this section applies does not prevent a purchaser of the instrument from becoming a holder in due course of the instrument unless the purchaser is a converter under subsection (c) or has notice or knowledge of breach of fiduciary duty as stated in subsection (d).

      (f) In an action to enforce the obligation of a party to pay the instrument, the obligor has a defense if payment would violate an indorsement to which this section applies and the payment is not permitted by this section.

      Sec. 28. RCW 62A.3-207 and 1965 ex.s. c 157 s 3-207 are each amended to read as follows:

      ((NEGOTIATION EFFECTIVE ALTHOUGH IT MAY BE RESCINDED. (1) Negotiation is effective to transfer the instrument although the negotiation is

      (a) made by an infant, a corporation exceeding its powers, or any other person without capacity; or

      (b) obtained by fraud, duress or mistake of any kind; or

      (c) part of an illegal transaction; or

      (d) made in breach of duty.

      (2) Except as against a subsequent holder in due course such negotiation is in an appropriate case subject to rescission, the declaration of a constructive trust or any other remedy permitted by law.))

      REACQUISITION. Reacquisition of an instrument occurs if it is transferred to a former holder, by negotiation or otherwise. A former holder who reacquires the instrument may cancel indorsements made after the reacquirer first became a holder of the instrument. If the cancellation causes the instrument to be payable to the reacquirer or to bearer, the reacquirer may negotiate the instrument. An indorser whose indorsement is canceled is discharged, and the discharge is effective against any subsequent holder.


PART 3

((RIGHTS OF A HOLDER)) ENFORCEMENT OF INSTRUMENTS


      Sec. 29. RCW 62A.3-301 and 1965 ex.s. c 157 s 3-301 are each amended to read as follows:

      ((RIGHTS OF A HOLDER. The holder of an instrument whether or not he is the owner may transfer or negotiate it and, except as otherwise provided in RCW 62A.3-603 on payment or satisfaction, discharge it or enforce payment in his own name.))

      PERSON ENTITLED TO ENFORCE INSTRUMENT. "Person entitled to enforce" an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to RCW 62A.3-309 (section 37 of this act) or 62A.3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.

      Sec. 30. RCW 62A.3-302 and 1965 ex.s. c 157 s 3-302 are each amended to read as follows:

      HOLDER IN DUE COURSE. (((1) A holder in due course is a holder who takes the instrument

      (a) for value; and

      (b) in good faith; and

      (c) without notice that it is overdue or has been dishonored or of any defense against or claim to it on the part of any person.

      (2) A payee may be a holder in due course.

      (3) A holder does not become a holder in due course of an instrument:

      (a) by purchase of it at judicial sale or by taking it under legal process; or

      (b) by acquiring it in taking over an estate; or

      (c) by purchasing it as part of a bulk transaction not in regular course of business of the transferor.

      (4) A purchaser of a limited interest can be a holder in due course only to the extent of the interest purchased.))

      (a) Subject to subsection (c) and RCW 62A.3-106(d), "holder in due course" means the holder of an instrument if:

      (1) The instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and

      (2) The holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in RCW 62A.3-306, and (vi) without notice that any party has a defense or claim in recoupment described in RCW 62A.3-305(a).

      (b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.

      (c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization.

      (d) If, under RCW 62A.3-303(a)(1), the promise of performance that is the consideration for an instrument has been partially performed, the holder may assert rights as a holder in due course of the instrument only to the fraction of the amount payable under the instrument equal to the value of the partial performance divided by the value of the promised performance.

      (e) If (i) the person entitled to enforce an instrument has only a security interest in the instrument and (ii) the person obliged to pay the instrument has a defense, claim in recoupment, or claim to the instrument that may be asserted against the person who granted the security interest, the person entitled to enforce the instrument may assert rights as a holder in due course only to an amount payable under the instrument which, at the time of enforcement of the instrument, does not exceed the amount of the unpaid obligation secured.

      (f) To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.

      (g) This section is subject to any law limiting status as a holder in due course in particular classes of transactions.

      Sec. 31. RCW 62A.3-303 and 1965 ex.s. c 157 s 3-303 are each amended to read as follows:

      ((TAKING FOR VALUE. A holder takes the instrument for value

      (a) to the extent that the agreed consideration has been performed or that he acquires a security interest in or a lien on the instrument otherwise than by legal process; or

      (b) when he takes the instrument in payment of or as security for an antecedent claim against any person whether or not the claim is due; or

      (c) when he gives a negotiable instrument for it or makes an irrevocable commitment to a third person.))

      VALUE AND CONSIDERATION. (a) An instrument is issued or transferred for value if:

      (1) The instrument is issued or transferred for a promise of performance, to the extent the promise has been performed;

      (2) The transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceeding;

      (3) The instrument is issued or transferred as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due;

      (4) The instrument is issued or transferred in exchange for a negotiable instrument; or

      (5) The instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument.

      (b) "Consideration" means any consideration sufficient to support a simple contract. The drawer or maker of an instrument has a defense if the instrument is issued without consideration. If an instrument is issued for a promise of performance, the issuer has a defense to the extent performance of the promise is due and the promise has not been performed. If an instrument is issued for value as stated in subsection (a), the instrument is also issued for consideration.

      Sec. 32. RCW 62A.3-304 and 1965 ex.s. c 157 s 3-304 are each amended to read as follows:

      ((NOTICE TO PURCHASER. (1) The purchaser has notice of a claim or defense if

      (a) the instrument is so incomplete, bears such visible evidence of forgery or alteration, or is otherwise so irregular as to call into question its validity, terms or ownership or to create an ambiguity as to the party to pay; or

      (b) the purchaser has notice that the obligation of any party is voidable in whole or in part, or that all parties have been discharged.

      (2) The purchaser has notice of a claim against the instrument when he has knowledge that a fiduciary has negotiated the instrument in payment of or as security for his own debt or in any transaction for his own benefit or otherwise in breach of duty.

      (3) The purchaser has notice that an instrument is overdue if he has reason to know

      (a) that any part of the principal amount is overdue or that there is an uncured default in payment of another instrument of the same series; or

      (b) that acceleration of the instrument has been made; or

      (c) that he is taking a demand instrument after demand has been made or more than a reasonable length of time after its issue. A reasonable time for a check drawn and payable within the states and territories of the United States and the District of Columbia is presumed to be thirty days.

      (4) Knowledge of the following facts does not of itself give the purchaser notice of a defense or claim

      (a) that the instrument is antedated or postdated;

      (b) that it was issued or negotiated in return for an executory promise or accompanied by a separate agreement, unless the purchaser has notice that a defense or claim has arisen from the terms thereof;

      (c) that any party has signed for accommodation;

      (d) that an incomplete instrument has been completed, unless the purchaser has notice of any improper completion;

      (e) that any person negotiating the instrument is or was a fiduciary;

      (f) that there has been default in payment of interest on the instrument or in payment of any other instrument, except one of the same series.

      (5) The filing or recording of a document does not of itself constitute notice within the provisions of this Article to a person who would otherwise be a holder in due course.

      (6) To be effective notice must be received at such time and in such manner as to give a reasonable opportunity to act on it.))

      OVERDUE INSTRUMENT. (a) An instrument payable on demand becomes overdue at the earliest of the following times:

      (1) On the day after the day demand for payment is duly made;

      (2) If the instrument is a check, 90 days after its date; or

      (3) If the instrument is not a check, when the instrument has been outstanding for a period of time after its date which is unreasonably long under the circumstances of the particular case in light of the nature of the instrument and usage of the trade.

      (b) With respect to an instrument payable at a definite time the following rules apply:

      (1) If the principal is payable in installments and a due date has not been accelerated, the instrument becomes overdue upon default under the instrument for nonpayment of an installment, and the instrument remains overdue until the default is cured.

      (2) If the principal is not payable in installments and the due date has not been accelerated, the instrument becomes overdue on the day after the due date.

      (3) If a due date with respect to principal has been accelerated, the instrument becomes overdue on the day after the accelerated due date.

      (c) Unless the due date of principal has been accelerated, an instrument does not become overdue if there is default in payment of interest but no default in payment of principal.

      Sec. 33. RCW 62A.3-305 and 1965 ex.s. c 157 s 3-305 are each amended to read as follows:

      ((RIGHTS OF A HOLDER IN DUE COURSE. To the extent that a holder is a holder in due course he takes the instrument free from

      (1) all claims to it on the part of any person; and

      (2) all defenses of any party to the instrument with whom the holder has not dealt except

      (a) infancy, to the extent that it is a defense to a simple contract; and

      (b) such other incapacity, or duress, or illegality of the transaction, as renders the obligation of the party a nullity; and

      (c) such misrepresentation as has induced the party to sign the instrument with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms; and

      (d) discharge in insolvency proceedings; and

      (e) any other discharge of which the holder has notice when he takes the instrument.))

      DEFENSES AND CLAIMS IN RECOUPMENT. (a) Except as stated in subsection (b), the right to enforce the obligation of a party to pay an instrument is subject to the following:

      (1) A defense of the obligor based on (i) infancy of the obligor to the extent it is a defense to a simple contract, (ii) duress, lack of legal capacity, or illegality of the transaction which, under other law, nullifies the obligation of the obligor, (iii) fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to learn of its character or its essential terms, or (iv) discharge of the obligor in insolvency proceedings;

      (2) A defense of the obligor stated in another section of this Article or a defense of the obligor that would be available if the person entitled to enforce the instrument were enforcing a right to payment under a simple contract; and

      (3) A claim in recoupment of the obligor against the original payee of the instrument if the claim arose from the transaction that gave rise to the instrument; but the claim of the obligor may be asserted against a transferee of the instrument only to reduce the amount owing on the instrument at the time the action is brought.

      (b) The right of a holder in due course to enforce the obligation of a party to pay the instrument is subject to defenses of the obligor stated in subsection (a)(1), but is not subject to defenses of the obligor stated in subsection (a)(2) or claims in recoupment stated in subsection (a)(3) against a person other than the holder.

      (c) Except as stated in subsection (d), in an action to enforce the obligation of a party to pay the instrument, the obligor may not assert against the person entitled to enforce the instrument a defense, claim in recoupment, or claim to the instrument (RCW 62A.3-306) of another person, but the other person's claim to the instrument may be asserted by the obligor if the other person is joined in the action and personally asserts the claim against the person entitled to enforce the instrument. An obligor is not obliged to pay the instrument if the person seeking enforcement of the instrument does not have rights of a holder in due course and the obligor proves that the instrument is a lost or stolen instrument.

      (d) In an action to enforce the obligation of an accommodation party to pay an instrument, the accommodation party may assert against the person entitled to enforce the instrument any defense or claim in recoupment under subsection (a) that the accommodated party could assert against the person entitled to enforce the instrument, except the defenses of discharge in insolvency proceedings, infancy, and lack of legal capacity.

      Sec. 34. RCW 62A.3-306 and 1965 ex.s. c 157 s 3-306 are each amended to read as follows:

      ((RIGHTS OF ONE NOT HOLDER IN DUE COURSE. Unless he has the rights of a holder in due course any person takes the instrument subject to

      (a) all valid claims to it on the part of any person; and

      (b) all defenses of any party which would be available in an action on a simple contract; and

      (c) the defenses of want or failure of consideration, non-performance of any condition precedent, non-delivery, or delivery for a special purpose (RCW 62A.3-408); and

      (d) the defense that he or a person through whom he holds the instrument acquired it by theft, or that payment or satisfaction to such holder would be inconsistent with the terms of a restrictive indorsement. The claim of any third person to the instrument is not otherwise available as a defense to any party liable thereon unless the third person himself defends the action for such party.))

      CLAIMS TO AN INSTRUMENT. A person taking an instrument, other than a person having rights of a holder in due course, is subject to a claim of a property or possessory right in the instrument or its proceeds, including a claim to rescind a negotiation and to recover the instrument or its proceeds. A person having rights of a holder in due course takes free of the claim to the instrument.

      Sec. 35. RCW 62A.3-307 and 1965 ex.s. c 157 s 3-307 are each amended to read as follows:

      ((BURDEN OF ESTABLISHING SIGNATURES, DEFENSES AND DUE COURSE. (1) Unless specifically denied in the pleadings each signature on an instrument is admitted. When the effectiveness of a signature is put in issue

      (a) the burden of establishing it is on the party claiming under the signature; but

      (b) the signature is presumed to be genuine or authorized except where the action is to enforce the obligation of a purported signer who has died or become incompetent before proof is required.

      (2) When signatures are admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defense.

      (3) After it is shown that a defense exists a person claiming the rights of a holder in due course has the burden of establishing that he or some person under whom he claims is in all respects a holder in due course.))

      NOTICE OF BREACH OF FIDUCIARY DUTY. (a) In this section:

      (1) "Fiduciary" means an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument.

      (2) "Represented person" means the principal, beneficiary, partnership, corporation, or other person to whom the duty stated in subsection (a)(1) is owed.

      (b) If (i) an instrument is taken from a fiduciary for payment or collection or for value, (ii) the taker has knowledge of the fiduciary status of the fiduciary, and (iii) the represented person makes a claim to the instrument or its proceeds on the basis that the transaction of the fiduciary is a breach of fiduciary duty, the following rules apply:

      (1) Notice of breach of fiduciary duty by the fiduciary is notice of the claim of the represented person.

      (2) In the case of an instrument payable to the represented person or the fiduciary as such, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.

      (3) If an instrument is issued by the represented person or the fiduciary as such, and made payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty.

      (4) If an instrument is issued by the represented person or the fiduciary as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.

      NEW SECTION. Sec. 36. A new section is added to Title 62A RCW, to be codified as RCW 62A.3-308, to read as follows:

      PROOF OF SIGNATURES AND STATUS AS HOLDER IN DUE COURSE. (a) In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature. If an action to enforce the instrument is brought against a person as the undisclosed principal of a person who signed the instrument as a party to the instrument, the plaintiff has the burden of establishing that the defendant is liable on the instrument as a represented person under RCW 62A.3-402(a).

      (b) If the validity of signatures is admitted or proved and there is compliance with subsection (a), a plaintiff producing the instrument is entitled to payment if the plaintiff proves entitlement to enforce the instrument under RCW 62A.3-301, unless the defendant proves a defense or claim in recoupment. If a defense or claim in recoupment is proved, the right to payment of the plaintiff is subject to the defense or claim, except to the extent the plaintiff proves that the plaintiff has rights of a holder in due course which are not subject to the defense or claim.

      NEW SECTION. Sec. 37. A new section is added to Title 62A RCW, to be codified as RCW 62A.3-309, to read as follows:

      ENFORCEMENT OF LOST, DESTROYED, OR STOLEN INSTRUMENT. (a) A person not in possession of an instrument is entitled to enforce the instrument if (i) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred, (ii) the loss of possession was not the result of a transfer by the person or a lawful seizure, and (iii) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

      (b) A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person's right to enforce the instrument. If that proof is made, RCW 62A.3-308 (section 36 of this act) applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

      NEW SECTION. Sec. 38. A new section is added to Title 62A RCW, to be codified as RCW 62A.3-310, to read as follows:

      EFFECT OF INSTRUMENT ON OBLIGATION FOR WHICH TAKEN. (a) Unless otherwise agreed, if a certified check, cashier's check, or teller's check is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment of the obligation. Discharge of the obligation does not affect any liability that the obligor may have as an indorser of the instrument.

      (b) Unless otherwise agreed and except as provided in subsection (a), if a note or an uncertified check is taken for an obligation, the obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of the instrument were taken, and the following rules apply:

      (1) In the case of an uncertified check, suspension of the obligation continues until dishonor of the check or until it is paid or certified. Payment or certification of the check results in discharge of the obligation to the extent of the amount of the check.

      (2) In the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid. Payment of the note results in discharge of the obligation to the extent of the payment.





      (3) Except as provided in subsection (b)(4), if the check or note is dishonored and the obligee of the obligation for which the instrument was taken is the person entitled to enforce the instrument, the obligee may enforce either the instrument or the obligation. In the case of an instrument of a third person which is negotiated to the obligee by the obligor, discharge of the obligor on the instrument also discharges the obligation.

      (4) If the person entitled to enforce the instrument taken for an obligation is a person other than the obligee, the obligee may not enforce the obligation to the extent the obligation is suspended. If the obligee is the person entitled to enforce the instrument but no longer has possession of it because it was lost, stolen, or destroyed, the obligation may not be enforced to the extent of the amount payable on the instrument, and to that extent the obligee's rights against the obligor are limited to enforcement of the instrument.

      (c) If an instrument other than one described in subsection (a) or (b) is taken for an obligation, the effect is (i) that stated in subsection (a) if the instrument is one on which a bank is liable as maker or acceptor, or (ii) that stated in subsection (b) in any other case.

      NEW SECTION. Sec. 39. A new section is added to Title 62A RCW, to be codified as RCW 62A.3-311, to read as follows:

      ACCORD AND SATISFACTION BY USE OF INSTRUMENT. (a) If a person against whom a claim is asserted proves that (i) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply.

      (b) Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.

      (c) Subject to subsection (d), a claim is not discharged under subsection (b) if either of the following applies:

      (1) The claimant, if an organization, proves that (i) within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place, and (ii) the instrument or accompanying communication was not received by that designated person, office, or place.

      (2) The claimant, whether or not an organization, proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted. This subsection (c)(2) does not apply if the claimant is an organization that sent a statement complying with subsection (c)(1)(i).

      (d) A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim.

      NEW SECTION. Sec. 40. A new section is added to Title 62A RCW, to be codified as RCW 62A.3-312, to read as follows:

      LOST, DESTROYED, OR STOLEN CASHIER'S CHECK, TELLER'S CHECK, OR CERTIFIED CHECK. (a) In this section:

      (1) "Check" means a cashier's check, teller's check, or certified check.

      (2) "Claimant" means a person who claims the right to receive the amount of a cashier's check, teller's check, or certified check that was lost, destroyed, or stolen.

      (3) "Declaration of loss" means a written statement, made under penalty of perjury, to the effect that (i) the declarer lost possession of a check, (ii) the declarer is the drawer or payee of the check, in the case of a certified check, or the remitter or payee of the check, in the case of a cashier's check or teller's check, (iii) the loss of possession was not the result of a transfer by the declarer or a lawful seizure, and (iv) the declarer cannot reasonably obtain possession of the check because the check was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amendable to service of process.

      (4) "Obligated bank" means the insurer of a cashier's check or teller's check or the acceptor of a certified check.

      (b) A claimant may assert a claim to the amount of a check by a communication to the obligated bank describing the check with reasonable certainty and requesting payment of the amount of the check, if (i) the claimant is the drawer or payee of a certified check or the remitter or payee of a cashier's check or teller's check, (ii) the communication contains or is accompanied by a declaration of loss of the claimant with respect to the check, (iii) the communication is received at a time and in a manner affording the bank a reasonable time to act on it before the check is paid, and (iv) the claimant provides reasonable identification if requested by the obligated bank. Delivery of a declaration of loss is a warranty of the truth of the statements made in the declaration. If a claim is asserted in compliance with this subsection, the following rules apply:

      (1) The claim becomes enforceable at the later of (i) the time the claim is asserted, or (ii) the ninetieth day following the date of the check, in the case of a cashier's check or teller's check, or the ninetieth day following the date of the acceptance, in the case of a certified check.

      (2) Until the claim becomes enforceable, it has no legal effect and the obligated bank may pay the check or, in the case of a teller's check, may permit the drawee to pay the check. Payment to a person entitled to enforce the check discharges all liability of the obligated bank with respect to the check.

      (3) If the claim becomes enforceable before the check is presented for payment, the obligated bank is not obliged to pay the check.

      (4) When the claim becomes enforceable, the obligated bank becomes obliged to pay the amount of the check to the claimant if payment of the check has not been made to a person entitled to enforce the check. Subject to RCW 62A.4-302(a), payment to the claimant discharges all liability of the obligated bank with respect to the check.

      (c) If the obligated bank pays the amount of a check to a claimant under subsection (b)(4) and the check is presented for payment by a person having rights of a holder in due course, the claimant is obliged to (i) refund the payment to the obligated bank if the check is paid, or (ii) pay the amount of the check to the person having rights of a holder in due course if the check is dishonored.

      (d) If a claimant has the right to assert a claim under subsection (b) and is also a person entitled to enforce a cashier's check, teller's check, or certified check that is lost, destroyed, or stolen, the claimant may assert rights with respect to the check under this section.





PART 4

LIABILITY OF PARTIES


      Sec. 41. RCW 62A.3-401 and 1965 ex.s. c 157 s 3-401 are each amended to read as follows:

      SIGNATURE. (((1) No)) (a) A person is not liable on an instrument unless ((his signature appears thereon)) (i) the person signed the instrument, or (ii) the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under RCW 62A.3-402.

      (((2))) (b) A signature ((is)) may be made ((by use of any name, including any trade or assumed name, upon an instrument, or by any word or mark used in lieu of a written signature)) (i) manually or by means of a device or machine, and (ii) by the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed or adopted by a person with present intention to authenticate a writing.

      Sec. 42. RCW 62A.3-402 and 1965 ex.s. c 157 s 3-402 are each amended to read as follows:

      ((SIGNATURE IN AMBIGUOUS CAPACITY. Unless the instrument clearly indicates that a signature is made in some other capacity it is an indorsement.))

      SIGNATURE BY REPRESENTATIVE. (a) If a person acting, or purporting to act, as a representative signs an instrument by signing either the name of the represented person or the name of the signer, the represented person is bound by the signature to the same extent the represented person would be bound if the signature were on a simple contract. If the represented person is bound, the signature of the representative is the "authorized signature of the represented person" and the represented person is liable on the instrument, whether or not identified in the instrument.

      (b) If a representative signs the name of the representative to an instrument and the signature is an authorized signature of the represented person, the following rules apply:

      (1) If the form of the signature shows unambiguously that the signature is made on behalf of the represented person who is identified in the instrument, the representative is not liable on the instrument.

      (2) Subject to subsection (c), if (i) the form of the signature does not show unambiguously that the signature is made in a representative capacity or (ii) the represented person is not identified in the instrument, the representative is liable on the instrument to a holder in due course that took the instrument without notice that the representative was not intended to be liable on the instrument. With respect to any other person, the representative is liable on the instrument unless the representative proves that the original parties did not intend the representative to be liable on the instrument.

      (c) If a representative signs the name of the representative as drawer of a check without indication of the representative status and the check is payable from an account of the represented person who is identified on the check, the signer is not liable on the check if the signature is an authorized signature of the represented person.

      Sec. 43. RCW 62A.3-403 and 1965 ex.s. c 157 s 3-403 are each amended to read as follows:

      ((SIGNATURE BY AUTHORIZED REPRESENTATIVE. (1) A signature may be made by an agent or other representative, and his authority to make it may be established as in other cases of representation. No particular form of appointment is necessary to establish such authority.

      (2) An authorized representative who signs his own name to an instrument

      (a) is personally obligated if the instrument neither names the person represented nor shows that the representative signed in a representative capacity;

      (b) except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity, or if the instrument does not name the person represented but does show that the representative signed in a representative capacity.

      (3) Except as otherwise established the name of an organization preceded or followed by the name and office of an authorized individual is a signature made in a representative capacity.))

      UNAUTHORIZED SIGNATURE. (a) Unless otherwise provided in this Article or Article 4, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith pays the instrument or takes it for value. An unauthorized signature may be ratified for all purposes of this Article.

      (b) If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking.

      (c) The civil or criminal liability of a person who makes an unauthorized signature is not affected by any provision of this Article which makes the unauthorized signature effective for the purposes of this Article.

      Sec. 44. RCW 62A.3-404 and 1965 ex.s. c 157 s 3-404 are each amended to read as follows:

      ((UNAUTHORIZED SIGNATURES. (1) Any unauthorized signature is wholly inoperative as that of the person whose name is signed unless he ratifies it or is precluded from denying it; but it operates as the signature of the unauthorized signer in favor of any person who in good faith pays the instrument or takes it for value.

      (2) Any unauthorized signature may be ratified for all purposes of this Article. Such ratification does not of itself affect any rights of the person ratifying against the actual signer.))

      IMPOSTORS; FICTITIOUS PAYEES. (a) If an impostor, by use of the mails or otherwise, induces the issuer of an instrument to issue the instrument to the impostor, or to a person acting in concert with the impostor, by impersonating the payee of the instrument or a person authorized to act for the payee, an indorsement of the instrument by any person in the name of the payee is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.

      (b) If (i) a person whose intent determines to whom an instrument is payable (RCW 62A.3-110 (a) or (b)) does not intend the person identified as payee to have any interest in the instrument, or (ii) the person identified as payee of an instrument is a fictitious person, the following rules apply until the instrument is negotiated by special indorsement:

      (1) Any person in possession of the instrument is its holder.

      (2) An indorsement by any person in the name of the payee stated in the instrument is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.

      (c) Under subsection (a) or (b), an indorsement is made in the name of a payee if (i) it is made in a name substantially similar to that of the payee or (ii) the instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to that of the payee.

      (d) With respect to an instrument to which subsection (a) or (b) applies, if a person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure contributes to loss resulting from payment of the instrument, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.

      Sec. 45. RCW 62A.3-405 and 1965 ex.s. c 157 s 3-405 are each amended to read as follows:

      ((IMPOSTORS; SIGNATURE IN NAME OF PAYEE. (1) An indorsement by any person in the name of a named payee is effective if

      (a) an impostor by use of the mails or otherwise has induced the maker or drawer to issue the instrument to him or his confederate in the name of the payee; or

      (b) a person signing as or on behalf of a maker or drawer intends the payee to have no interest in the instrument; or

      (c) an agent or employee of the maker or drawer has supplied him with the name of the payee intending the latter to have no such interest.

      (2) Nothing in this section shall affect the criminal or civil liability of the person so indorsing.))

      EMPLOYER'S RESPONSIBILITY FOR FRAUDULENT INDORSEMENT BY EMPLOYEE. (a) In this section:

      (1) "Employee" includes an independent contractor and employee of an independent contractor retained by the employer.

      (2) "Fraudulent indorsement" means (i) in the case of an instrument payable to the employer, a forged indorsement purporting to be that of the employer, or (ii) in the case of an instrument with respect to which the employer is the issuer, a forged indorsement purporting to be that of the person identified as payee.

      (3) "Responsibility" with respect to instruments means authority (i) to sign or indorse instruments on behalf of the employer, (ii) to process instruments received by the employer for bookkeeping purposes, for deposit to an account, or for other disposition, (iii) to prepare or process instruments for issue in the name of the employer, (iv) to supply information determining the names or addresses of payees of instruments to be issued in the name of the employer, (v) to control the disposition of instruments to be issued in the name of the employer, or (vi) to act otherwise with respect to instruments in a responsible capacity. "Responsibility" does not include authority that merely allows an employee to have access to instruments or blank or incomplete instrument forms that are being stored or transported or are part of incoming or outgoing mail, or similar access.

      (b) For the purpose of determining the rights and liabilities of a person who, in good faith, pays an instrument or takes it for value or for collection, if an employer entrusted an employee with responsibility with respect to the instrument and the employee or a person acting in concert with the employee makes a fraudulent indorsement of the instrument, the indorsement is effective as the indorsement of the person to whom the instrument is payable if it is made in the name of that person. If the person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure contributes to loss resulting from the fraud, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.

      (c) Under subsection (b), an indorsement is made in the name of the person to whom an instrument is payable if (i) it is made in a name substantially similar to the name of that person or (ii) the instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to the name of that person.

      Sec. 46. RCW 62A.3-406 and 1965 ex.s. c 157 s 3-406 are each amended to read as follows:

      NEGLIGENCE CONTRIBUTING TO FORGED SIGNATURE OR ALTERATION ((OR UNAUTHORIZED SIGNATURE)) OF INSTRUMENT. ((Any)) (a) A person ((who by his negligence substantially)) whose failure to exercise ordinary care contributes to ((a material)) an alteration of ((the)) an instrument or to the making of ((an unauthorized signature)) a forged signature on an instrument is precluded from asserting the alteration or ((lack of authority)) the forgery against a ((holder in due course or against a drawee or other payor)) person who, in good faith, pays the instrument ((in good faith and in accordance with the reasonable commercial standards of the drawee's or payor's business)) or takes it for value or for collection.

      (b) Under subsection (a), if the person asserting the preclusion fails to exercise ordinary care in paying or taking the instrument and that failure contributes to loss, the loss is allocated between the person precluded and the person asserting the preclusion according to the extent to which the failure of each to exercise ordinary care contributed to the loss.

      (c) Under subsection (a), the burden of proving failure to exercise ordinary care is on the person asserting the preclusion. Under subsection (b), the burden of proving failure to exercise ordinary care is on the person precluded.

      Sec. 47. RCW 62A.3-407 and 1965 ex.s. c 157 s 3-407 are each amended to read as follows:

      ALTERATION. (((1) Any alteration of an instrument is material which changes the contract of any party thereto in any respect, including any such change in

      (a) the number or relations of the parties; or

      (b) an incomplete instrument, by completing it otherwise than as authorized; or

      (c) the writing as signed, by adding to it or by removing any part of it.

      (2) As against any person other than a subsequent holder in due course

      (a) alteration by the holder which is both fraudulent and material discharges any party whose contract is thereby changed unless that party assents or is precluded from asserting the defense;

      (b) no other alteration discharges any party and the instrument may be enforced according to its original tenor, or as to incomplete instruments according to the authority given.

      (3) A subsequent holder in due course may in all cases enforce the instrument according to its original tenor, and when an incomplete instrument has been completed, he may enforce it as completed.)) (a) "Alteration" means (i) an unauthorized change in an instrument that purports to modify in any respect the obligation of a party, or (ii) an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.

      (b) Except as provided in subsection (c), an alteration fraudulently made discharges a party whose obligation is affected by the alteration unless that party assents or is precluded from asserting the alteration. No other alteration discharges a party, and the instrument may be enforced according to its original terms.

      (c) A payor bank or drawee paying a fraudulently altered instrument or a person taking it for value, in good faith and without notice of the alteration, may enforce rights with respect to the instrument (i) according to its original terms, or (ii) in the case of an incomplete instrument altered by unauthorized completion, according to its terms as completed.

      Sec. 48. RCW 62A.3-408 and 1965 ex.s. c 157 s 3-408 are each amended to read as follows:

      ((CONSIDERATION. Want or failure of consideration is a defense as against any person not having the rights of a holder in due course (RCW 62A.3-305), except that no consideration is necessary for an instrument or obligation thereon given in payment of or as security for an antecedent obligation of any kind. Nothing in this section shall be taken to displace any statute outside this Title under which a promise is enforceable notwithstanding lack or failure of consideration. Partial failure of consideration is a defense pro tanto whether or not the failure is in an ascertained or liquidated amount.))

      DRAWEE NOT LIABLE ON UNACCEPTED DRAFT. A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it.

      Sec. 49. RCW 62A.3-409 and 1965 ex.s. c 157 s 3-409 are each amended to read as follows:

      ((DRAFT NOT AN ASSIGNMENT. (1) A check or other draft does not of itself operate as an assignment of any funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until he accepts it.

      (2) Nothing in this section shall affect any liability in contract, tort or otherwise arising from any letter of credit or other obligation or representation which is not an acceptance.))

      ACCEPTANCE OF DRAFT; CERTIFIED CHECK. (a) "Acceptance" means the drawee's signed agreement to pay a draft as presented. It must be written on the draft and may consist of the drawee's signature alone. Acceptance may be made at any time and becomes effective when notification pursuant to instructions is given or the accepted draft is delivered for the purpose of giving rights on the acceptance to any person.

      (b) A draft may be accepted although it has not been signed by the drawer, is otherwise incomplete, is overdue, or has been dishonored.

      (c) If a draft is payable at a fixed period after sight and the acceptor fails to date the acceptance, the holder may complete the acceptance by supplying a date in good faith.

      (d) "Certified check" means a check accepted by the bank on which it is drawn. Acceptance may be made as stated in subsection (a) or by a writing on the check which indicates that the check is certified. The drawee of a check has no obligation to certify the check, and refusal to certify is not dishonor of the check.

      Sec. 50. RCW 62A.3-410 and 1965 ex.s. c 157 s 3-410 are each amended to read as follows:

      ((DEFINITION AND OPERATION OF ACCEPTANCE. (1) Acceptance is the drawee's signed engagement to honor the draft as presented. It must be written on the draft, and may consist of his signature alone. It becomes operative when completed by delivery or notification.

      (2) A draft may be accepted although it has not been signed by the drawer or is otherwise incomplete or is overdue or has been dishonored.

      (3) Where the draft is payable at a fixed period after sight and the acceptor fails to date his acceptance the holder may complete it by supplying a date in good faith.))

      ACCEPTANCE VARYING DRAFT. (a) If the terms of a drawee's acceptance vary from the terms of the draft as presented, the holder may refuse the acceptance and treat the draft as dishonored. In that case, the drawee may cancel the acceptance.

      (b) The terms of a draft are not varied by an acceptance to pay at a particular bank or place in the United States, unless the acceptance states that the draft is to be paid only at that bank or place.

      (c) If the holder assents to an acceptance varying the terms of a draft, the obligation of each drawer and indorser that does not expressly assent to the acceptance is discharged.

      Sec. 51. RCW 62A.3-411 and 1965 ex.s. c 157 s 3-411 are each amended to read as follows:

      ((CERTIFICATION OF A CHECK. (1) Certification of a check is acceptance. Where a holder procures certification the drawer and all prior indorsers are discharged.

      (2) Unless otherwise agreed a bank has no obligation to certify a check.

      (3) A bank may certify a check before returning it for lack of proper indorsement. If it does so the drawer is discharged.))

      REFUSAL TO PAY CASHIER'S CHECKS, TELLER'S CHECKS, AND CERTIFIED CHECKS. (a) In this section, "obligated bank" means the acceptor of a certified check or the issuer of a cashier's check or teller's check bought from the issuer.

      (b) If the obligated bank wrongfully (i) refuses to pay a cashier's check or certified check, (ii) stops payment of a teller's check, or (iii) refuses to pay a dishonored teller's check, the person asserting the right to enforce the check is entitled to compensation for expenses and loss of interest resulting from the nonpayment and may recover consequential damages if the obligated bank refuses to pay after receiving notice of particular circumstances giving rise to the damages.

      (c) Expenses or consequential damages under subsection (b) are not recoverable if the refusal of the obligated bank to pay occurs because (i) the bank suspends payments, (ii) the obligated bank asserts a claim or defense of the bank that it has reasonable grounds to believe is available against the person entitled to enforce the instrument, (iii) the obligated bank has a reasonable doubt whether the person demanding payment is the person entitled to enforce the instrument, or (iv) payment is prohibited by law.

      Sec. 52. RCW 62A.3-412 and 1965 ex.s. c 157 s 3-412 are each amended to read as follows:

      ((ACCEPTANCE VARYING DRAFT. (1) Where the drawee's proffered acceptance in any manner varies the draft as presented the holder may refuse the acceptance and treat the draft as dishonored in which case the drawee is entitled to have his acceptance cancelled.

      (2) The terms of the draft are not varied by an acceptance to pay at any particular bank or place in the United States, unless the acceptance states that the draft is to be paid only at such bank or place.

      (3) Where the holder assents to an acceptance varying the terms of the draft each drawer and indorser who does not affirmatively assent is discharged.))

      OBLIGATION OF ISSUER OF NOTE OR CASHIER'S CHECK. The issuer of a note or cashier's check or other draft drawn on the drawer is obliged to pay the instrument (i) according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder, or (ii) if the issuer signed an incomplete instrument, according to its terms when completed, to the extent stated in RCW 62A.3-115 and 62A.3-407. The obligation is owed to a person entitled to enforce the instrument or to an indorser who paid the instrument under RCW 62A.3-415.

      Sec. 53. RCW 62A.3-413 and 1965 ex.s. c 157 s 3-413 are each amended to read as follows:

      ((CONTRACT OF MAKER, DRAWER AND ACCEPTOR. (1) The maker or acceptor engages that he will pay the instrument according to its tenor at the time of his engagement or as completed pursuant to RCW 62A.3-115 on incomplete instruments.

      (2) The drawer engages that upon dishonor of the draft and any necessary notice of dishonor or protest he will pay the amount of the draft to the holder or to any indorser who takes it up. The drawer may disclaim this liability by drawing without recourse.

      (3) By making, drawing or accepting the party admits as against all subsequent parties including the drawee the existence of the payee and his then capacity to indorse.))

      OBLIGATION OF ACCEPTOR. (a) The acceptor of a draft is obliged to pay the draft (i) according to its terms at the time it was accepted, even though the acceptance states that the draft is payable "as originally drawn" or equivalent terms, (ii) if the acceptance varies the terms of the draft, according to the terms of the draft as varied, or (iii) if the acceptance is of a draft that is an incomplete instrument, according to its terms when completed, to the extent stated in RCW 62A.3-115 and 62A.3-407. The obligation is owed to a person entitled to enforce the draft or to the drawer or an indorser who paid the draft under RCW 62A.3-414 or 62A.3-415.

      (b) If the certification of a check or other acceptance of a draft states the amount certified or accepted, the obligation of the acceptor is that amount. If (i) the certification or acceptance does not state an amount, (ii) the amount of the instrument is subsequently raised, and (iii) the instrument is then negotiated to a holder in due course, the obligation of the acceptor is the amount of the instrument at the time it was taken by the holder in due course.

      Sec. 54. RCW 62A.3-414 and 1965 ex.s. c 157 s 3-414 are each amended to read as follows:

      ((CONTRACT OF INDORSER; ORDER OF LIABILITY. (1) Unless the indorsement otherwise specifies (as by such words as "without recourse") every indorser engages that upon dishonor and any necessary notice of dishonor and protest he will pay the instrument according to its tenor at the time of his indorsement to the holder or to any subsequent indorser who takes it up, even though the indorser who takes it up was not obligated to do so.

      (2) Unless they otherwise agree indorsers are liable to one another in the order in which they indorse, which is presumed to be the order in which their signatures appear on the instrument.))

      OBLIGATION OF DRAWER. (a) This section does not apply to cashier's checks or other drafts drawn on the drawer.

      (b) If an unaccepted draft is dishonored, the drawer is obliged to pay the draft (i) according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder, or (ii) if the drawer signed an incomplete instrument, according to its terms when completed, to the extent stated in RCW 62A.3-115 and 62A.3-407. The obligation is owed to a person entitled to enforce the draft or to an indorser who paid the draft under RCW 62A.3-415.

      (c) If a draft is accepted by a bank, the drawer is discharged, regardless of when or by whom acceptance was obtained.

      (d) If a draft is accepted and the acceptor is not a bank, the obligation of the drawer to pay the draft if the draft is dishonored by the acceptor is the same as the obligation of an indorser under RCW 62A.3-415 (a) and (c).

      (e) If a draft states that it is drawn "without recourse" or otherwise disclaims liability of the drawer to pay the draft, the drawer is not liable under subsection (b) to pay the draft if the draft is not a check. A disclaimer of the liability stated in subsection (b) is not effective if the draft is a check.

      (f) If (i) a check is not presented for payment or given to a depositary bank for collection within 30 days after its date, (ii) the drawee suspends payments after expiration of the 30-day period without paying the check, and (iii) because of the suspension of payments, the drawer is deprived of funds maintained with the drawee to cover payment of the check, the drawer to the extent deprived of funds may discharge its obligation to pay the check by assigning to the person entitled to enforce the check the rights of the drawer against the drawee with respect to the funds.

      Sec. 55. RCW 62A.3-415 and 1965 ex.s. c 157 s 3-415 are each amended to read as follows:

      ((CONTRACT OF ACCOMMODATION PARTY. (1) An accommodation party is one who signs the instrument in any capacity for the purpose of lending his name to another party to it.

      (2) When the instrument has been taken for value before it is due the accommodation party is liable in the capacity in which he has signed even though the taker knows of the accommodation.

      (3) As against a holder in due course and without notice of the accommodation oral proof of the accommodation is not admissible to give the accommodation party the benefit of discharges dependent on his character as such. In other cases the accommodation character may be shown by oral proof.

      (4) An indorsement which shows that it is not in the chain of title is notice of its accommodation character.

      (5) An accommodation party is not liable to the party accommodated, and if he pays the instrument has a right of recourse on the instrument against such party.))

      OBLIGATION OF INDORSER. (a) Subject to subsections (b), (c), (d), and (e) and to RCW 62A.3-419(d), if an instrument is dishonored, an indorser is obliged to pay the amount due on the instrument (i) according to the terms of the instrument at the time it was indorsed, or (ii) if the indorser indorsed an incomplete instrument, according to its terms when completed, to the extent stated in RCW 62A.3-115 and 62A.3-407. The obligation of the indorser is owed to a person entitled to enforce the instrument or to a subsequent indorser who paid the instrument under this section.

      (b) If an indorsement states that it is made "without recourse" or otherwise disclaims liability of the indorser, the indorser is not liable under subsection (a) to pay the instrument.

      (c) If notice of dishonor of an instrument is required by RCW 62A.3-503 and notice of dishonor complying with that section is not given to an indorser, the liability of the indorser under subsection (a) is discharged.

      (d) If a draft is accepted by a bank after an indorsement is made, the liability of the indorser under subsection (a) is discharged.

      (e) If an indorser of a check is liable under subsection (a) and the check is not presented for payment, or given to a depositary bank for collection, within 30 days after the day the indorsement was made, the liability of the indorser under subsection (a) is discharged.

      Sec. 56. RCW 62A.3-416 and 1965 ex.s. c 157 s 3-416 are each amended to read as follows:

      ((CONTRACT OF GUARANTOR. (1) "Payment guaranteed" or equivalent words added to a signature mean that the signer engages that if the instrument is not paid when due he will pay it according to its tenor without resort by the holder to any other party.

      (2) "Collection guaranteed" or equivalent words added to a signature mean that the signer engages that if the instrument is not paid when due he will pay it according to its tenor, but only after the holder has reduced his claim against the maker or acceptor to judgment and execution has been returned unsatisfied, or after the maker or acceptor has become insolvent or it is otherwise apparent that it is useless to proceed against him.

      (3) Words of guaranty which do not otherwise specify guarantee payment.

      (4) No words of guaranty added to the signature of a sole maker or acceptor affect his liability on the instrument. Such words added to the signature of one of two or more makers or acceptors create a presumption that the signature is for the accommodation of the others.

      (5) When words of guaranty are used presentment, notice of dishonor and protest are not necessary to charge the user.

      (6) Any guaranty written on the instrument is enforcible notwithstanding any statute of frauds.))

      TRANSFER WARRANTIES. (a) A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by indorsement, to any subsequent transferee that:

      (1) The warrantor is a person entitled to enforce the instrument;

      (2) All signatures on the instrument are authentic and authorized;

      (3) The instrument has not been altered;

      (4) The instrument is not subject to a defense or claim in recoupment of any party which can be asserted against the warrantor; and

      (5) The warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.

      (b) A person to whom the warranties under subsection (a) are made and who took the instrument in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, but not more than the amount of the instrument plus expenses and loss of interest incurred as a result of the breach.

      (c) The warranties stated in subsection (a) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under subsection (b) is discharged to the extent of any loss caused by the delay in giving notice of the claim.

      (d) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.

      Sec. 57. RCW 62A.3-417 and 1965 ex.s. c 157 s 3-417 are each amended to read as follows:

      ((WARRANTIES ON PRESENTMENT AND TRANSFER. (1) Any person who obtains payment or acceptance and any prior transferor warrants to a person who in good faith pays or accepts that

      (a) he has a good title to the instrument or is authorized to obtain payment or acceptance on behalf of one who has a good title; and

      (b) he has no knowledge that the signature of the maker or drawer is unauthorized, except that this warranty is not given by a holder in due course acting in good faith

      (i) to a maker with respect to the maker's own signature; or

      (ii) to a drawer with respect to the drawer's own signature, whether or not the drawer is also the drawee; or

      (iii) to an acceptor of a draft if the holder in due course took the draft after the acceptance or obtained the acceptance without knowledge that the drawer's signature was unauthorized; and

      (c) the instrument has not been materially altered, except that this warranty is not given by a holder in due course acting in good faith

      (i) to the maker of a note; or

      (ii) to the drawer of a draft whether or not the drawer is also the drawee; or

      (iii) to the acceptor of a draft with respect to an alteration made prior to the acceptance if the holder in due course took the draft after the acceptance, even though the acceptance provided "payable as originally drawn" or equivalent terms; or

      (iv) to the acceptor of a draft with respect to an alteration made after the acceptance.

      (2) Any person who transfers an instrument and receives consideration warrants to his transferee and if the transfer is by indorsement to any subsequent holder who takes the instrument in good faith that

      (a) he has a good title to the instrument or is authorized to obtain payment or acceptance on behalf of one who has a good title and the transfer is otherwise rightful; and

      (b) all signatures are genuine or authorized; and

      (c) the instrument has not been materially altered; and

      (d) no defense of any party is good against him; and

      (e) he has no knowledge of any insolvency proceeding instituted with respect to the maker or acceptor or the drawer of an unaccepted instrument.

      (3) By transferring "without recourse" the transferor limits the obligation stated in subsection (2)(d) to a warranty that he has no knowledge of such a defense.

      (4) A selling agent or broker who does not disclose the fact that he is acting only as such gives the warranties provided in this section, but if he makes such disclosure warrants only his good faith and authority.))

      PRESENTMENT WARRANTIES. (a) If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, (i) the person obtaining payment or acceptance, at the time of presentment, and (ii) a previous transferor of the draft, at the time of transfer, warrant to the drawee making payment or accepting the draft in good faith that:

      (1) The warrantor is, or was, at the time the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;

      (2) The draft has not been altered; and

      (3) The warrantor has no knowledge that the signature of the drawer of the draft is unauthorized.

      (b) A drawee making payment may recover from any warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount the drawee received or is entitled to receive from the drawer because of the payment. In addition, the drawee is entitled to compensation for expenses and loss of interest resulting from the breach. The right of the drawee to recover damages under this subsection is not affected by any failure of the drawee to exercise ordinary care in making payment. If the drawee accepts the draft, breach of warranty is a defense to the obligation of the acceptor. If the acceptor makes payment with respect to the draft, the acceptor is entitled to recover from any warrantor for breach of warranty the amounts stated in this subsection.

      (c) If a drawee asserts a claim for breach of warranty under subsection (a) based on an unauthorized indorsement of the draft or an alteration of the draft, the warrantor may defend by proving that the indorsement is effective under RCW 62A.3-404 or 62A.3-405 or the drawer is precluded under RCW 62A.3-406 or 62A.4-406 from asserting against the drawee the unauthorized indorsement or alteration.

      (d) If (i) a dishonored draft is presented for payment to the drawer or an indorser or (ii) any other instrument is presented for payment to a party obliged to pay the instrument, and (iii) payment is received, the following rules apply:

      (1) The person obtaining payment and a prior transferor of the instrument warrant to the person making payment in good faith that the warrantor is, or was, at the time the warrantor transferred the instrument, a person entitled to enforce the instrument or authorized to obtain payment on behalf of a person entitled to enforce the instrument.

      (2) The person making payment may recover from any warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.

      (e) The warranties stated in subsections (a) and (d) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under subsection (b) or (d) is discharged to the extent of any loss caused by the delay in giving notice of the claim.

      (f) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.

      Sec. 58. RCW 62A.3-418 and 1965 ex.s. c 157 s 3-418 are each amended to read as follows:

      ((FINALITY OF PAYMENT OR ACCEPTANCE. Except for recovery of bank payments as provided in the Article on Bank Deposits and Collections (Article 4) and except for liability for breach of warranty on presentment under the preceding section, payment or acceptance of any instrument is final in favor of a holder in due course, or a person who has in good faith changed his position in reliance on the payment.))

      PAYMENT OR ACCEPTANCE BY MISTAKE. (a) Except as provided in subsection (c), if the drawee of a draft pays or accepts the draft and the drawee acted on the mistaken belief that (i) payment of the draft had not been stopped pursuant to RCW 62A.4-403 or (ii) the signature of the drawer of the draft was authorized, the drawee may recover the amount of the draft from the person to whom or for whose benefit payment was made or, in the case of acceptance, may revoke the acceptance. Rights of the drawee under this subsection are not affected by failure of the drawee to exercise ordinary care in paying or accepting the draft.

      (b) Except as provided in subsection (c), if an instrument has been paid or accepted by mistake and the case is not covered by subsection (a), the person paying or accepting may, to the extent permitted by the law governing mistake and restitution, (i) recover the payment from the person to whom or for whose benefit payment was made or (ii) in the case of acceptance, may revoke the acceptance.

      (c) The remedies provided by subsection (a) or (b) may not be asserted against a person who took the instrument in good faith and for value or who in good faith changed position in reliance on the payment or acceptance. This subsection does not limit remedies provided by RCW 62A.3-417 or 62A.4-407.

      (d) Notwithstanding RCW 62A.4-213, if an instrument is paid or accepted by mistake and the payor or acceptor recovers payment or revokes acceptance under subsection (a) or (b), the instrument is deemed not to have been paid or accepted and is treated as dishonored, and the person from whom payment is recovered has rights as a person entitled to enforce the dishonored instrument.

      Sec. 59. RCW 62A.3-419 and 1965 ex.s. c 157 s 3-419 are each amended to read as follows:

      ((CONVERSION OF INSTRUMENT; INNOCENT REPRESENTATIVE. (1) An instrument is converted when

      (a) a drawee to whom it is delivered for acceptance refuses to return it on demand; or

      (b) any person to whom it is delivered for payment refuses on demand either to pay or to return it; or

      (c) it is paid on a forged indorsement.

      (2) In an action against a drawee under subsection (1) the measure of the drawee's liability is the face amount of the instrument. In any other action under subsection (1) the measure of liability is presumed to be the face amount of the instrument.

      (3) Subject to the provisions of this Title concerning restrictive indorsements a representative, including a depositary or collecting bank, who has in good faith and in accordance with the reasonable commercial standards applicable to the business of such representative dealt with an instrument or its proceeds on behalf of one who was not the true owner is not liable in conversion or otherwise to the true owner beyond the amount of any proceeds remaining in his hands.

      (4) An intermediary bank or payor bank which is not a depositary bank is not liable in conversion solely by reason of the fact that proceeds of an item indorsed restrictively (RCW 62A.3-205 and RCW 62A.3-206) are not paid or applied consistently with the restrictive indorsement of an indorser other than its immediate transferor.))

      INSTRUMENTS SIGNED FOR ACCOMMODATION. (a) If an instrument is issued for value given for the benefit of a party to the instrument ("accommodated party") and another party to the instrument ("accommodation party") signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party "for accommodation."

      (b) An accommodation party may sign the instrument as maker, drawer, acceptor, or indorser and, subject to subsection (d), is obliged to pay the instrument in the capacity in which the accommodation party signs. The obligation of an accommodation party may be enforced notwithstanding any statute of frauds and whether or not the accommodation party receives consideration for the accommodation.

      (c) A person signing an instrument is presumed to be an accommodation party and there is notice that the instrument is signed for accommodation if the signature is an anomalous indorsement or is accompanied by words indicating that the signer is acting as surety or guarantor with respect to the obligation of another party to the instrument. Except as provided in RCW 62A.3-605, the obligation of an accommodation party to pay the instrument is not affected by the fact that the person enforcing the obligation had notice when the instrument was taken by that person that the accommodation party signed the instrument for accommodation.

      (d) If the signature of a party to an instrument is accompanied by words indicating unambiguously that the party is guaranteeing collection rather than payment of the obligation of another party to the instrument, the signer is obliged to pay the amount due on the instrument to a person entitled to enforce the instrument only if (i) execution of judgment against the other party has been returned unsatisfied, (ii) the other party is insolvent or in an insolvency proceeding, (iii) the other party cannot be served with process, or (iv) it is otherwise apparent that payment cannot be obtained from the other party.

      (e) An accommodation party who pays the instrument is entitled to reimbursement from the accommodated party and is entitled to enforce the instrument against the accommodated party. An accommodated party who pays the instrument has no right of recourse against, and is not entitled to contribution from, an accommodation party.

      NEW SECTION. Sec. 60. A new section is added to Title 62A RCW, to be codified as RCW 62A.3-420, to read as follows:

      CONVERSION OF INSTRUMENT. (a) The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by (i) the issuer or acceptor of the instrument or (ii) a payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee.

      (b) In an action under subsection (a), the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiff's interest in the instrument.

      (c) A representative, other than a depositary bank, who has in good faith dealt with an instrument or its proceeds on behalf of one who was not the person entitled to enforce the instrument is not liable in conversion to that person beyond the amount of any proceeds that it has not paid out.


PART 5

((PRESENTMENT, NOTICE OF)) DISHONOR ((AND PROTEST))


      Sec. 61. RCW 62A.3-501 and 1965 ex.s. c 157 s 3-501 are each amended to read as follows:

      ((WHEN PRESENTMENT, NOTICE OF DISHONOR, AND PROTEST NECESSARY OR PERMISSIBLE. (1) Unless excused (RCW 62A.3-511) presentment is necessary to charge secondary parties as follows:

      (a) presentment for acceptance is necessary to charge the drawer and indorsers of a draft where the draft so provides, or is payable elsewhere than at the residence or place of business of the drawee, or its date of payment depends upon such presentment. The holder may at his option present for acceptance any other draft payable at a stated date;

      (b) presentment for payment is necessary to charge any indorser;

      (c) in the case of any drawer, the acceptor of a draft payable at a bank or the maker of a note payable at a bank, presentment for payment is necessary, but failure to make presentment discharges such drawer, acceptor or maker only as stated in RCW 62A.3-502(1)(b).

      (2) Unless excused (RCW 62A.3-511)

      (a) notice of any dishonor is necessary to charge any indorser;

      (b) in the case of any drawer, the acceptor of a draft payable at a bank or the maker of a note payable at a bank, notice of any dishonor is necessary, but failure to give such notice discharges such drawer, acceptor or maker only as stated in RCW 62A.3-502(1)(b).

      (3) Unless excused (RCW 62A.3-511) protest of any dishonor is necessary to charge the drawer and indorsers of any draft which on its face appears to be drawn or payable outside of the states and territories of the United States and the District of Columbia. The holder may at his option make protest of any dishonor of any other instrument and in the case of a foreign draft may on insolvency of the acceptor before maturity make protest for better security.

      (4) Notwithstanding any provision of this section, neither presentment nor notice of dishonor nor protest is necessary to charge an indorser who has indorsed an instrument after maturity.))

      PRESENTMENT. (a) "Presentment" means a demand made by or on behalf of a person entitled to enforce an instrument (i) to pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted draft payable at a bank, to the bank, or (ii) to accept a draft made to the drawee.

      (b) The following rules are subject to Article 4, agreement of the parties, and clearinghouse rules and the like:

      (1) Presentment may be made at the place of payment of the instrument and must be made at the place of payment if the instrument is payable at a bank in the United States; may be made by any commercially reasonable means, including an oral, written, or electronic communication; is effective when the demand for payment or acceptance is received by the person to whom presentment is made; and is effective if made to any one of two or more makers, acceptors, drawees, or other payors.

      (2) Upon demand of the person to whom presentment is made, the person making presentment must (i) exhibit the instrument, (ii) give reasonable identification and, if presentment is made on behalf of another person, reasonable evidence of authority to do so, and (iii) sign a receipt on the instrument for any payment made or surrender the instrument if full payment is made.

      (3) Without dishonoring the instrument, the party to whom presentment is made may (i) return the instrument for lack of a necessary indorsement, or (ii) refuse payment or acceptance for failure of the presentment to comply with the terms of the instrument, an agreement of the parties, or other applicable law or rule.

      (4) The party to whom presentment is made may treat presentment as occurring on the next business day after the day of presentment if the party to whom presentment is made has established a cut-off hour not earlier than 2:00 p.m. for the receipt and processing of instruments presented for payment or acceptance and presentment is made after the cut-off hour.

      Sec. 62. RCW 62A.3-502 and 1965 ex.s. c 157 s 3-502 are each amended to read as follows:

      ((UNEXCUSED DELAY; DISCHARGE. (1) Where without excuse any necessary presentment or notice of dishonor is delayed beyond the time when it is due

      (a) any indorser is discharged; and

      (b) any drawer or the acceptor of a draft payable at a bank or the maker of a note payable at a bank who because the drawee or payor bank becomes insolvent during the delay is deprived of funds maintained with the drawee or payor bank to cover the instrument may discharge his liability by written assignment to the holder of his rights against the drawee or payor bank in respect of such funds, but such drawer, acceptor or maker is not otherwise discharged.

      (2) Where without excuse a necessary protest is delayed beyond the time when it is due any drawer or indorser is discharged.))

      DISHONOR. (a) Dishonor of a note is governed by the following rules:

      (1) If the note is payable on demand, the note is dishonored if presentment is duly made to the maker and the note is not paid on the day of presentment.

      (2) If the note is not payable on demand and is payable at or through a bank or the terms of the note require presentment, the note is dishonored if presentment is duly made and the note is not paid on the day it becomes payable or the day of presentment, whichever is later.

      (3) If the note is not payable on demand and subsection (a)(2) does not apply, the note is dishonored if it is not paid on the day it becomes payable.

      (b) Dishonor of an unaccepted draft other than a documentary draft is governed by the following rules:

      (1) If a check is duly presented for payment to the payor bank otherwise than for immediate payment over the counter, the check is dishonored if the payor bank makes timely return of the check or sends timely notice of dishonor or nonpayment under RCW 62A.4-301 or 62A.4-302, or becomes accountable for the amount of the check under RCW 62A.4-302.

      (2) If a draft is payable on demand and subsection (b)(1) does not apply, the draft is dishonored if presentment for payment is duly made to the drawee and the draft is not paid on the day of presentment.

      (3) If a draft is payable on a date stated in the draft, the draft is dishonored if (i) presentment for payment is duly made to the drawee and payment is not made on the day the draft becomes payable or the day of presentment, whichever is later, or (ii) presentment for acceptance is duly made before the day the draft becomes payable and the draft is not accepted on the day of presentment.

      (4) If a draft is payable on elapse of a period of time after sight or acceptance, the draft is dishonored if presentment for acceptance is duly made and the draft is not accepted on the day of presentment.

      (c) Dishonor of an unaccepted documentary draft occurs according to the rules stated in subsection (b) (2), (3), and (4), except that payment or acceptance may be delayed without dishonor until no later than the close of the third business day of the drawee following the day on which payment or acceptance is required by subsection (b) (2), (3), and (4).

      (d) Dishonor of an accepted draft is governed by the following rules:

      (1) If the draft is payable on demand, the draft is dishonored if presentment for payment is duly made to the acceptor and the draft is not paid on the day of presentment; or

      (2) If the draft is not payable on demand, the draft is dishonored if presentment for payment is duly made to the acceptor and payment is not made on the day it becomes payable or the day of presentment, whichever is later.

      (e) In any case in which presentment is otherwise required for dishonor under this section and presentment is excused under RCW 62A.3-504, dishonor occurs without presentment if the instrument is not duly accepted or paid.

      (f) If a draft is dishonored because timely acceptance of the draft was not made and the person entitled to demand acceptance consents to a late acceptance, from the time of acceptance the draft is treated as never having been dishonored.

      Sec. 63. RCW 62A.3-503 and 1965 ex.s. c 157 s 3-503 are each amended to read as follows:

      ((TIME OF PRESENTMENT. (1) Unless a different time is expressed in the instrument the time for any presentment is determined as follows:

      (a) where an instrument is payable at or a fixed period after a stated date any presentment for acceptance must be made on or before the date it is payable;

      (b) where an instrument is payable after sight it must either be presented for acceptance or negotiated within a reasonable time after date or issue whichever is later;

      (c) where an instrument shows the date on which it is payable presentment for payment is due on that date;

      (d) where an instrument is accelerated presentment for payment is due within a reasonable time after the acceleration;

      (e) with respect to the liability of any secondary party presentment for acceptance or payment of any other instrument is due within a reasonable time after such party becomes liable thereon.

      (2) A reasonable time for presentment is determined by the nature of the instrument, any usage of banking or trade and the facts of the particular case. In the case of an uncertified check which is drawn and payable within the United States and which is not a draft drawn by a bank the following are presumed to be reasonable periods within which to present for payment or to initiate bank collection:

      (a) with respect to the liability of the drawer, thirty days after date or issue whichever is later; and

      (b) with respect to the liability of an endorser, seven days after his indorsement.

      (3) Where any presentment is due on a day which is not a full business day for either the person making presentment or the party to pay or accept, presentment is due on the next following day which is a full business day for both parties.

      (4) Presentment to be sufficient must be made at a reasonable hour, and if at a bank during its banking day.))

      NOTICE OF DISHONOR. (a) The obligation of an indorser stated in RCW 62A.3-415(a) and the obligation of a drawer stated in RCW 62A.3-414(d) may not be enforced unless (i) the indorser or drawer is given notice of dishonor of the instrument complying with this section or (ii) notice of dishonor is excused under RCW 62A.3-504(b).

      (b) Notice of dishonor may be given by any person; may be given by any commercially reasonable means, including an oral, written, or electronic communication; and is sufficient if it reasonably identifies the instrument and indicates that the instrument has been dishonored or has not been paid or accepted. Return of an instrument given to a bank for collection is sufficient notice of dishonor.

      (c) Subject to RCW 62A.3-504(c), with respect to an instrument taken for collection by a collecting bank, notice of dishonor must be given (i) by the bank before midnight of the next banking day following the banking day on which the bank receives notice of dishonor of the instrument, or (ii) by any other person within 30 days following the day on which the person receives notice of dishonor. With respect to any other instrument, notice of dishonor must be given within 30 days following the day on which dishonor occurs.

      Sec. 64. RCW 62A.3-504 and 1965 ex.s. c 157 s 3-504 are each amended to read as follows:

      ((HOW PRESENTMENT MADE. (1) Presentment is a demand for acceptance or payment made upon the maker, acceptor, drawee or other payor by or on behalf of the holder.

      (2) Presentment may be made

      (a) by mail, in which event the time of presentment is determined by the time of receipt of the mail; or

      (b) through a clearing house; or

      (c) at the place of acceptance or payment specified in the instrument or if there be none at the place of business or residence of the party to accept or pay. If neither the party to accept or pay nor anyone authorized to act for him is present or accessible at such place presentment is excused.

      (3) It may be made

      (a) to any one of two or more makers, acceptors, drawees or other payors; or

      (b) to any person who has authority to make or refuse the acceptance or payment.

      (4) A draft accepted or a note made payable at a bank in the United States must be presented at such bank.

      (5) In the cases described in RCW 62A.4-210 presentment may be made in the manner and with the result stated in that section.))

      EXCUSED PRESENTMENT AND NOTICE OF DISHONOR. (a) Presentment for payment or acceptance of an instrument is excused if (i) the person entitled to present the instrument cannot with reasonable diligence make presentment, (ii) the maker or acceptor has repudiated an obligation to pay the instrument or is dead or in insolvency proceedings, (iii) by the terms of the instrument presentment is not necessary to enforce the obligation of indorsers or the drawer, (iv) the drawer or indorser whose obligation is being enforced has waived presentment or otherwise has no reason to expect or right to require that the instrument be paid or accepted, or (v) the drawer instructed the drawee not to pay or accept the draft or the drawee was not obligated to the drawer to pay the draft.

      (b) Notice of dishonor is excused if (i) by the terms of the instrument notice of dishonor is not necessary to enforce the obligation of a party to pay the instrument, or (ii) the party whose obligation is being enforced waived notice of dishonor. A waiver of presentment is also a waiver of notice of dishonor.

      (c) Delay in giving notice of dishonor is excused if the delay was caused by circumstances beyond the control of the person giving the notice and the person giving the notice exercised reasonable diligence after the cause of the delay ceased to operate.

      Sec. 65. RCW 62A.3-505 and 1965 ex.s. c 157 s 3-505 are each amended to read as follows:

      ((RIGHTS OF PARTY TO WHOM PRESENTMENT IS MADE. (1) The party to whom presentment is made may without dishonor require

      (a) exhibition of the instrument; and

      (b) reasonable identification of the person making presentment and evidence of his authority to make it if made for another; and

      (c) that the instrument be produced for acceptance or payment at a place specified in it, or if there be none at any place reasonable in the circumstances; and

      (d) a signed receipt on the instrument for any partial or full payment and its surrender upon full payment.

      (2) Failure to comply with any such requirement invalidates the presentment but the person presenting has a reasonable time in which to comply and the time for acceptance or payment runs from the time of compliance.))

      EVIDENCE OF DISHONOR. (a) The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated:

      (1) A document regular in form as provided in subsection (b) that purports to be a protest;

      (2) A purported stamp or writing of the drawee, payor bank, or presenting bank on or accompanying the instrument stating that acceptance or payment has been refused unless reasons for the refusal are stated and the reasons are not consistent with dishonor;

      (3) A book or record of the drawee, payor bank, or collecting bank, kept in the usual course of business which shows dishonor, even if there is no evidence of who made the entry.

      (b) A protest is a certificate of dishonor made by a United States consul or vice-consul, or a notary public or other person authorized to administer oaths by the law of the place where dishonor occurs. It may be made upon information satisfactory to that person. The protest must identify the instrument and certify either that presentment has been made or, if not made, the reason why it was not made, and that the instrument has been dishonored by nonacceptance or nonpayment. The protest may also certify that notice of dishonor has been given to some or all parties.

      Sec. 66. RCW 62A.3-512 and 1990 c 203 s 2 are each amended to read as follows:

      ((No)) A person may not record the number of a credit card given as identification under RCW ((62A.3-505(1)(b))) 62A.3-501(a)(2) or given as proof of credit worthiness when payment for goods or services is made by check or draft. Nothing in this section prohibits the recording of the number of a credit card given in lieu of a deposit to secure payment in the event of a default, loss, damage, or other occurrence.

      Sec. 67. RCW 62A.3-515 and 1991 c 168 s 1 are each amended to read as follows:

      (((1) Whenever)) (a) If a check as defined in RCW 62A.3-104 ((has been)) is dishonored by nonacceptance or nonpayment, the payee or holder of the check is entitled to collect a reasonable handling fee for each ((such)) instrument. ((When such)) If the check ((has)) is not ((been)) paid within fifteen days and after the holder of ((such)) the check sends ((such)) a notice of dishonor as provided by RCW 62A.3-520 to the drawer at ((his or her)) the drawer's last known address, ((then)) and if the instrument does not provide for the payment of interest, or collection costs and attorneys fees, the drawer of ((such)) the instrument ((shall also be)) is liable for payment of interest at the rate of twelve percent per annum from the date of dishonor, and cost of collection not to exceed forty dollars or the face amount of the check, whichever is ((the lesser)) less. In addition, in the event of court action on the check, the court, after ((such)) notice and the expiration of ((said)) the fifteen days, shall award a reasonable attorneys fee, and three times the face amount of the check or three hundred dollars, whichever is less, as part of the damages payable to the holder of the check. This section ((shall)) does not apply to ((any)) an instrument ((which has been)) that is dishonored by reason of ((any)) a justifiable stop payment order.

      (((2)(a))) (b)(1) Subsequent to the commencement of ((the)) an action on the check (subsection (a)) but prior to the hearing, the defendant may tender to the plaintiff as satisfaction of the claim, an amount of money equal to the ((sum of the)) face amount of the check, a reasonable handling fee, accrued interest, collection costs equal to the face amount of the check not to exceed forty dollars, and the incurred court and service costs.

      (((b))) (2) Nothing in this section precludes the right to commence action in ((any)) a court under chapter 12.40 RCW for small claims.

      Sec. 68. RCW 62A.3-520 and 1991 c 168 s 2 are each amended to read as follows:

      The notice of dishonor shall be sent by mail to the drawer at ((his or her)) the drawer's last known address, and ((said)) the notice shall be substantially in the following form:


NOTICE OF DISHONOR OF CHECK


      A check drawn by you and made payable by you to .......... in the amount of .......... has not been accepted for payment by .........., which is the drawee bank designated on your check. This check is dated .........., and it is numbered, No. ...........

      You are CAUTIONED that unless you pay the amount of this check within fifteen days after the date this letter is postmarked, you may very well have to pay the following additional amounts:

      (1) Costs of collecting the amount of the check, including an attorney's fee which will be set by the court;

      (2) Interest on the amount of the check which shall accrue at the rate of twelve percent per annum from the date of dishonor; and

      (3) Three hundred dollars or three times the face amount of the check, whichever is less, by award of the court.

      You are also CAUTIONED that law enforcement agencies may be provided with a copy of this notice of dishonor and the check drawn by you for the possibility of proceeding with criminal charges if you do not pay the amount of this check within fifteen days after the date this letter is postmarked.

      You are advised to make your payment to .......... at the following address: ..........

      Sec. 69. RCW 62A.3-522 and 1981 c 254 s 3 are each amended to read as follows:

      In addition to sending a notice of dishonor to the drawer of the check under RCW 62A.3-520, the holder of the check shall execute an affidavit certifying service of the notice by mail. The affidavit of service by mail ((shall)) must be attached to a copy of the notice of dishonor and ((shall)) must be substantially in the following form:


AFFIDAVIT OF SERVICE BY MAIL


      I, .........., hereby certify that on the _... day of .........., 19.., a copy of the foregoing Notice was served on .......... by mailing via the United States Postal Service, postage prepaid, at .........., Washington.

                           Dated:                                                __......

                                                                                                                      (Signature)


      The holder shall retain the affidavit ((shall be retained)) with the check but shall file a copy of the affidavit ((shall be filed)) with the clerk of the court in which an action on the check is commenced.

      Sec. 70. RCW 62A.3-525 and 1981 c 254 s 4 are each amended to read as follows:

      No interest, collection costs, and attorneys' fees, except handling fees, ((shall be recovered)) are recoverable on any dishonored check under the provisions of RCW 62A.3-515 where the holder of ((such)) the check or any agent, employee, or assign of the holder has demanded:

      (1) Interest or collection costs in excess of that provided by RCW 62A.3-515; or

      (2) Interest or collection costs prior to the expiration of fifteen days after the mailing of notice of dishonor, as provided by RCW 62A.3-515 and 62A.3-520; or

      (3) Attorneys' fees either without having ((such)) the fees set by the court, or prior to the expiration of fifteen days after the mailing of notice of dishonor, as provided by RCW 62A.3-515 and 62A.3-520.


PART 6

DISCHARGE AND PAYMENT


      Sec. 71. RCW 62A.3-601 and 1965 ex.s. c 157 s 3-601 are each amended to read as follows:

      ((DISCHARGE OF PARTIES. (1) The extent of the discharge of any party from liability on an instrument is governed by the sections on

      (a) payment or satisfaction (RCW 62A.3-603); or

      (b) tender of payment (RCW 62A.3-604); or

      (c) cancellation or renunciation (RCW 62A.3-605); or

      (d) impairment of right of recourse or of collateral (RCW 62A.3-606); or

      (e) reacquisition of the instrument by a prior party (RCW 62A.3-208); or

      (f) fraudulent and material alteration (RCW 62A.3-407); or

      (g) certification of a check (RCW 62A.3-411); or

      (h) acceptance varying a draft (RCW 62A.3-412); or

      (i) unexcused delay in presentment or notice of dishonor or protest (RCW 62A.3-502).

      (2) Any party is also discharged from his liability on an instrument to another party by any other act or agreement with such party which would discharge his simple contract for the payment of money.

      (3) The liability of all parties is discharged when any party who has himself no right of action or recourse on the instrument

      (a) reacquires the instrument in his own right; or

      (b) is discharged under any provision of this Article, except as otherwise provided with respect to discharge for impairment of recourse or of collateral (RCW 62A.3-606).))

      DISCHARGE AND EFFECT OF DISCHARGE. (a) The obligation of a party to pay the instrument is discharged as stated in this Article or by an act or agreement with the party which would discharge an obligation to pay money under a simple contract.

      (b) Discharge of the obligation of a party is not effective against a person acquiring rights of a holder in due course of the instrument without notice of the discharge.

      Sec. 72. RCW 62A.3-602 and 1965 ex.s. c 157 s 3-602 are each amended to read as follows:

      ((EFFECT OF DISCHARGE AGAINST HOLDER IN DUE COURSE. No discharge of any party provided by this Article is effective against a subsequent holder in due course unless he has notice thereof when he takes the instrument.))

      PAYMENT. (a) Subject to subsection (b), an instrument is paid to the extent payment is made (i) by or on behalf of a party obliged to pay the instrument, and (ii) to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim to the instrument under RCW 62A.3-306 by another person.

      (b) The obligation of a party to pay the instrument is not discharged under subsection (a) if:

      (1) A claim to the instrument under RCW 62A.3-306 is enforceable against the party receiving payment and (i) payment is made with knowledge by the payor that payment is prohibited by injunction or similar process of a court of competent jurisdiction, or (ii) in the case of an instrument other than a cashier's check, teller's check, or certified check, the party making payment accepted, from the person having a claim to the instrument, indemnity against loss resulting from refusal to pay the person entitled to enforce the instrument; or

      (2) The person making payment knows that the instrument is a stolen instrument and pays a person it knows is in wrongful possession of the instrument.

      Sec. 73. RCW 62A.3-603 and 1965 ex.s. c 157 s 3-603 are each amended to read as follows:

      ((PAYMENT OR SATISFACTION. (1) The liability of any party is discharged to the extent of his payment or satisfaction to the holder even though it is made with knowledge of a claim of another person to the instrument unless prior to such payment or satisfaction the person making the claim either supplies indemnity deemed adequate by the party seeking the discharge or enjoins payment or satisfaction by order of a court of competent jurisdiction in an action in which the adverse claimant and the holder are parties. This subsection does not, however, result in the discharge of the liability

      (a) of a party who in bad faith pays or satisfies a holder who acquired the instrument by theft or who (unless having the rights of a holder in due course) holds through one who so acquired it; or

      (b) of a party (other than an intermediary bank or a payor bank which is not a depositary bank) who pays or satisfies the holder of an instrument which has been restrictively indorsed in a manner not consistent with the terms of such restrictive indorsement.

      (2) Payment or satisfaction may be made with the consent of the holder by any person including a stranger to the instrument. Surrender of the instrument to such a person gives him the rights of a transferee (RCW 62A.3-201).))

      TENDER OF PAYMENT. (a) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument, the effect of tender is governed by principles of law applicable to tender of payment under a simple contract.

      (b) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument and the tender is refused, there is discharge, to the extent of the amount of the tender, of the obligation of an indorser or accommodation party having a right of recourse with respect to the obligation to which the tender relates.

      (c) If tender of payment of an amount due on an instrument is made to a person entitled to enforce the instrument, the obligation of the obligor to pay interest after the due date on the amount tendered is discharged. If presentment is required with respect to an instrument and the obligor is able and ready to pay on the due date at every place of payment stated in the instrument, the obligor is deemed to have made tender of payment on the due date to the person entitled to enforce the instrument.

      Sec. 74. RCW 62A.3-604 and 1965 ex.s. c 157 s 3-604 are each amended to read as follows:

      ((TENDER OF PAYMENT. (1) Any party making tender of full payment to a holder when or after it is due is discharged to the extent of all subsequent liability for interest, costs and attorney's fees.

      (2) The holder's refusal of such tender wholly discharges any party who has a right of recourse against the party making the tender.

      (3) Where the maker or acceptor of an instrument payable otherwise than on demand is able and ready to pay at every place of payment specified in the instrument when it is due, it is equivalent to tender.))

      DISCHARGE BY CANCELLATION OR RENUNCIATION. (a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument (i) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party's signature, or the addition of words to the instrument indicating discharge, or (ii) by agreeing not to sue or otherwise renouncing rights against the party by a signed writing.

      (b) Cancellation or striking out of an indorsement pursuant to subsection (a) does not affect the status and rights of a party derived from the indorsement.

      Sec. 75. RCW 62A.3-605 and 1965 ex.s. c 157 s 3-605 are each amended to read as follows:

      ((CANCELLATION AND RENUNCIATION. (1) The holder of an instrument may even without consideration discharge any party

      (a) in any manner apparent on the face of the instrument or the indorsement, as by intentionally cancelling the instrument or the party's signature by destruction or mutilation, or by striking out the party's signature; or

      (b) by renouncing his rights by a writing signed and delivered or by surrender of the instrument to the party to be discharged.

      (2) Neither cancellation nor renunciation without surrender of the instrument affects the title thereto.))

      DISCHARGE OF INDORSERS AND ACCOMMODATION PARTIES. (a) In this section, the term "indorser" includes a drawer having the obligation described in RCW 62A.3-414(d).

      (b) Discharge, under RCW 62A.3-604, of the obligation of a party to pay an instrument does not discharge the obligation of an indorser or accommodation party having a right of recourse against the discharged party.

      (c) If a person entitled to enforce an instrument agrees, with or without consideration, to an extension of the due date of the obligation of a party to pay the instrument, the extension discharges an indorser or accommodation party having a right of recourse against the party whose obligation is extended to the extent the indorser or accommodation party proves that the extension caused loss to the indorser or accommodation party with respect to the right of recourse.

      (d) If a person entitled to enforce an instrument agrees, with or without consideration, to a material modification of the obligation of a party other than an extension of the due date, the modification discharges the obligation of an indorser or accommodation party having a right of recourse against the person whose obligation is modified to the extent the modification causes loss to the indorser or accommodation party with respect to the right of recourse. The loss suffered by the indorser or accommodation party as a result of the modification is equal to the amount of the right of recourse unless the person enforcing the instrument proves that no loss was caused by the modification or that the loss caused by the modification was an amount less than the amount of the right of recourse.

      (e) If the obligation of a party to pay an instrument is secured by an interest in collateral and a person entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of an indorser or accommodation party having a right of recourse against the obligor is discharged to the extent of the impairment. The value of an interest in collateral is impaired to the extent (i) the value of the interest is reduced to an amount less than the amount of the right of recourse of the party asserting discharge, or (ii) the reduction in value of the interest causes an increase in the amount by which the amount of the right of recourse exceeds the value of the interest. The burden of proving impairment is on the party asserting discharge.

      (f) If the obligation of a party is secured by an interest in collateral not provided by an accommodation party and a person entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of any party who is jointly and severally liable with respect to the secured obligation is discharged to the extent the impairment causes the party asserting discharge to pay more than that party would have been obliged to pay, taking into account rights of contribution, if impairment had not occurred. If the party asserting discharge is an accommodation party not entitled to discharge under subsection (e), the party is deemed to have a right to contribution based on joint and several liability rather than a right to reimbursement. The burden of proving impairment is on the party asserting discharge.

      (g) Under subsection (e) or (f), impairing value of an interest in collateral includes (i) failure to obtain or maintain perfection or recordation of the interest in collateral, (ii) release of collateral without substitution of collateral of equal value, (iii) failure to perform a duty to preserve the value of collateral owed, under Article 9 or other law, to a debtor or surety or other person secondarily liable, or (iv) failure to comply with applicable law in disposing of collateral.

      (h) An accommodation party is not discharged under subsection (c), (d), or (e) unless the person entitled to enforce the instrument knows of the accommodation or has notice under RCW 62A.3-419(c) that the instrument was signed for accommodation.

      (i) A party is not discharged under this section if (i) the party asserting discharge consents to the event or conduct that is the basis of the discharge, or (ii) the instrument or a separate agreement of the party provides for waiver of discharge under this section either specifically or by general language indicating that parties waive defenses based on suretyship or impairment of collateral.

      NEW SECTION. Sec. 76. The following acts or parts of acts are each repealed:

      (1) RCW 62A.3-120 and 1965 ex.s. c 157 s 3-120;

      (2) RCW 62A.3-121 and 1965 ex.s. c 157 s 3-121;

      (3) RCW 62A.3-122 and 1965 ex.s. c 157 s 3-122;

      (4) RCW 62A.3-208 and 1965 ex.s. c 157 s 3-208;

      (5) RCW 62A.3-506 and 1965 ex.s. c 157 s 3-506;

      (6) RCW 62A.3-507 and 1965 ex.s. c 157 s 3-507;

      (7) RCW 62A.3-508 and 1965 ex.s. c 157 s 3-508;

      (8) RCW 62A.3-509 and 1965 ex.s. c 157 s 3-509;

      (9) RCW 62A.3-510 and 1965 ex.s. c 157 s 3-510;

      (10) RCW 62A.3-511 and 1965 ex.s. c 157 s 3-511;

      (11) RCW 62A.3-606 and 1965 ex.s. c 157 s 3-606;

      (12) RCW 62A.3-701 and 1965 ex.s. c 157 s 3-701;

      (13) RCW 62A.3-801 and 1965 ex.s. c 157 s 3-801;

      (14) RCW 62A.3-802 and 1965 ex.s. c 157 s 3-802;

      (15) RCW 62A.3-803 and 1965 ex.s. c 157 s 3-803;

      (16) RCW 62A.3-804 and 1965 ex.s. c 157 s 3-804; and

      (17) RCW 62A.3-805 and 1965 ex.s. c 157 s 3-805.


ARTICLE 4

BANK DEPOSITS AND COLLECTIONS

PART 1

GENERAL PROVISIONS AND DEFINITIONS


      Sec. 77. RCW 62A.4-101 and 1965 ex.s. c 157 s 4-101 are each amended to read as follows:

      SHORT TITLE. This Article ((shall be known and)) may be cited as Uniform Commercial Code--Bank Deposits and Collections.

      Sec. 78. RCW 62A.4-102 and 1965 ex.s. c 157 s 4-102 are each amended to read as follows:

      APPLICABILITY. (((1))) (a) To the extent that items within this Article are also within ((the scope of)) Articles 3 and 8, they are subject to ((the provisions of)) those Articles. ((In the event of)) If there is conflict ((the provisions of)), this Article governs ((those of)) Article 3, but ((the provisions of)) Article 8 governs ((those of)) this Article.

      (((2))) (b) The liability of a bank for action or non-action with respect to ((any)) an item handled by it for purposes of presentment, payment, or collection is governed by the law of the place where the bank is located. In the case of action or non-action by or at a branch or separate office of a bank, its liability is governed by the law of the place where the branch or separate office is located.

      Sec. 79. RCW 62A.4-103 and 1965 ex.s. c 157 s 4-103 are each amended to read as follows:

      VARIATION BY AGREEMENT; MEASURE OF DAMAGES; ((CERTAIN)) ACTION CONSTITUTING ORDINARY CARE. (((1))) (a) The effect of the provisions of this Article may be varied by agreement ((except that no agreement can)), but the parties to the agreement cannot disclaim a bank's responsibility for its ((own)) lack of good faith or failure to exercise ordinary care or ((can)) limit the measure of damages for ((such)) the lack or failure((; but)). However, the parties may determine by agreement ((determine)) the standards by which ((such)) the bank's responsibility is to be measured if ((such)) those standards are not manifestly unreasonable.

      (((2))) (b) Federal Reserve regulations and operating ((letters)) circulars, clearing-house rules, and the like((,)) have the effect of agreements under subsection (((1))) (a), whether or not specifically assented to by all parties interested in items handled.

      (((3))) (c) Action or non-action approved by this Article or pursuant to Federal Reserve regulations or operating ((letters constitutes)) circulars is the exercise of ordinary care and, in the absence of special instructions, action or non-action consistent with clearing-house rules and the like or with a general banking usage not disapproved by this Article, is prima facie ((constitutes)) the exercise of ordinary care.

      (((4))) (d) The specification or approval of certain procedures by this Article ((does)) is not ((constitute)) disapproval of other procedures ((which)) that may be reasonable under the circumstances.

      (((5))) (e) The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount ((which)) that could not have been realized by the ((use)) exercise of ordinary care((, and where)). If there is also bad faith it includes any other damages((, if any, suffered by)) the party suffered as a proximate consequence.

      Sec. 80. RCW 62A.4-104 and 1981 c 122 s 1 are each amended to read as follows:

      DEFINITIONS AND INDEX OF DEFINITIONS. (((1))) (a) In this Article, unless the context otherwise requires:

      (((a))) (1) "Account" means any deposit or credit account with a bank ((and includes)), including a ((checking)) demand, time, ((interest or)) savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit;

      (((b))) (2) "Afternoon" means the period of a day between noon and midnight;

      (((c))) (3) "Banking day" means ((that)) the part of ((any)) a day on which a bank is open to the public for carrying on substantially all of its banking functions, except that it shall not include a Saturday, Sunday, or legal holiday;

      (((d))) (4) "Clearing house" means ((any)) an association of banks or other payors regularly clearing items;

      (((e))) (5) "Customer" means ((any)) a person having an account with a bank or for whom a bank has agreed to collect items ((and includes)), including a bank ((carrying)) that maintains an account ((with)) at another bank;

      (((f))) (6) "Documentary draft" means ((any negotiable or non-negotiable draft with accompanying documents, securities or other papers to be delivered against honor of the draft)) a draft to be presented for acceptance or payment if specified documents, certificated securities (RCW 62A.8-102) or instructions for uncertificated securities (RCW 62A.8-308), or other certificates, statements, or the like are to be received by the drawee or other payor before acceptance or payment of the draft;

      (7) "Draft" means a draft as defined in RCW 62A.3-104 or an item, other than an instrument, that is an order;

      (8) "Drawee" means a person ordered in a draft to make payment;

      (((g))) (9) "Item" means ((any)) an instrument ((for the)) or a promise or order to pay money handled by a bank for collection or payment ((of money even though it is not negotiable but does not include money)). The term does not include a payment order governed by Article 4A or a credit or debit card slip;

      (((h))) (10) "Midnight deadline" with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later;

      (((i) "Properly payable" includes the availability of funds for payment at the time of decision to pay or dishonor;

      (j))) (11) "Settle" means to pay in cash, by clearing-house settlement, in a charge or credit or by remittance, or otherwise as ((instructed)) agreed. A settlement may be either provisional or final;

      (((k))) (12) "Suspends payments" with respect to a bank means that it has been closed by order of the supervisory authorities, that a public officer has been appointed to take it over or that it ceases or refuses to make payments in the ordinary course of business.

      (((2))) (b) Other definitions applying to this Article and the sections in which they appear are:

      "Agreement for electronic presentment" section 86 of this act.

      "Bank" RCW 62A.4-105.

      "Collecting bank" RCW 62A.4-105.

      "Depositary bank" RCW 62A.4-105.

      "Intermediary bank" RCW 62A.4-105.

      "Payor bank" RCW 62A.4-105.

      "Presenting bank" RCW 62A.4-105.

      (("Remitting bank" RCW 62A.4-105.))

      "Presentment notice" section 86 of this act.

      (((3))) (c) The following definitions in other Articles apply to this Article:

      "Acceptance" RCW ((62A.3-410)) 62A.3-409.

      "Alteration" RCW 62A.3-407.

      "Cashier's check" RCW 62A.3-104.

      "Certificate of deposit" RCW 62A.3-104.

      (("Certification" RCW 62A.3-411.))

      "Certified check" RCW 62A.3-409.

      "Check" RCW 62A.3-104.

      "Draft" RCW 62A.3-104.

      "Good faith" RCW 62A.3-103.

      "Holder in due course" RCW 62A.3-302.

      "Instrument" RCW 62A.3-104.

      "Notice of dishonor" RCW ((62A.3-508)) 62A.3-503.

      "Order" RCW 62A.3-103.

      "Ordinary care" RCW 62A.3-103.

      "Person entitled to enforce" RCW 62A.3-301.

      "Presentment" RCW ((62A.3-504)) 62A.3-501.

      "Promise" RCW 62A.3-103.

      (("Protest" RCW 62A.3-509.))

      "Prove" RCW 62A.3-103.

      (("Secondary party" RCW 62A.3-102.))

      "Teller's check" RCW 62A.3-104.

      "Unauthorized signature" RCW 62A.3-403.

      (((4))) (d) In addition Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.

      Sec. 81. RCW 62A.4-105 and 1965 ex.s. c 157 s 4-105 are each amended to read as follows:

      "BANK"; "DEPOSITARY BANK"; "PAYOR BANK"; "INTERMEDIARY BANK"; "COLLECTING BANK"; (("PAYOR BANK";)) "PRESENTING BANK"((; "REMITTING BANK")). In this Article ((unless the context otherwise requires)):

      (((a))) (1) "Bank" means a person engaged in the business of banking, including a savings bank, savings and loan association, credit union, or trust company;

      (2) "Depositary bank" means the first bank to ((which)) take an item ((is transferred for collection)) even though it is also the payor bank, unless the item is presented for immediate payment over the counter;

      (((b))) (3) "Payor bank" means a bank ((by which an item)) that is ((payable as drawn or accepted)) the drawee of a draft;

      (((c))) (4) "Intermediary bank" means ((any)) a bank to which an item is transferred in course of collection except the depositary or payor bank;

      (((d))) (5) "Collecting bank" means ((any)) a bank handling the item for collection except the payor bank;

      (((e))) (6) "Presenting bank" means ((any)) a bank presenting an item except a payor bank((;

      (f) "Remitting bank" means any payor or intermediary bank remitting for an item)).

      Sec. 82. RCW 62A.4-106 and 1965 ex.s. c 157 s 4-106 are each amended to read as follows:

      ((SEPARATE OFFICE OF A BANK. A branch or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notices or orders shall be given under this Article and under Article 3.)) PAYABLE THROUGH OR PAYABLE AT BANK; COLLECTING BANK. (a) If an item states that it is "payable through" a bank identified in the item, (i) the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item, and (ii) the item may be presented for payment only by or through the bank.

      (b) If an item states that it is "payable at" a bank identified in the item, (i) the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item, and (ii) the item may be presented for payment only by or through the bank.

      (c) If a draft names a nonbank drawee and it is unclear whether a bank named in the draft is a codrawee or a collecting bank, the bank is a collecting bank.

      Sec. 83. RCW 62A.4-107 and 1965 ex.s. c 157 s 4-107 are each amended to read as follows:

      ((TIME OF RECEIPT OF ITEMS. (1) For the purpose of allowing time to process items, prove balances, and make the necessary entries on its books to determine its position for the day, a bank may fix an afternoon hour of two P.M. or later as a cut-off hour for the handling of money and items and the making of entries on its books.

      (2) Any item or deposit of money received on any day after a cut-off hour so fixed or after the close of the banking day may be treated as being received at the opening of the next banking day.)) SEPARATE OFFICE OF A BANK. A branch or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notices or orders must be given under this Article and under Article 3.

      Sec. 84. RCW 62A.4-108 and 1965 ex.s. c 157 s 4-108 are each amended to read as follows:

      ((DELAYS. (1) Unless otherwise instructed, a collecting bank in a good faith effort to secure payment may, in the case of specific items and with or without the approval of any person involved, waive, modify or extend time limits imposed or permitted by this Title for a period not in excess of an additional banking day without discharge of secondary parties and without liability to its transferor or any prior party.

      (2) Delay by a collecting bank or payor bank beyond time limits prescribed or permitted by this Title or by instructions is excused if caused by interruption of communication facilities, suspension of payments by another bank, war, emergency conditions or other circumstances beyond the control of the bank provided it exercises such diligence as the circumstances require.)) TIME OF RECEIPT OF ITEMS. (a) For the purpose of allowing time to process items, prove balances, and make the necessary entries on its books to determine its position for the day, a bank may fix an afternoon hour of two P.M. or later as a cut-off hour for the handling of money and items and the making of entries on its books.

      (b) An item or deposit of money received on any day after a cut-off hour so fixed or after the close of the banking day may be treated as being received at the opening of the next banking day.

      Sec. 85. RCW 62A.4-109 and 1965 ex.s. c 157 s 4-109 are each amended to read as follows:

      ((The "process of posting" means the usual procedure followed by a payor bank in determining to pay an item and in recording the payment including one or more of the following or other steps as determined by the bank:

      (a) verification of any signature;

      (b) ascertaining that sufficient funds are available;

      (c) affixing a "paid" or other stamp;

      (d) entering a charge or entry to a customer's account;

      (e) correcting or reversing an entry or erroneous action with respect to the item.)) DELAYS. (a) Unless otherwise instructed, a collecting bank in a good faith effort to secure payment of a specific item drawn on a payor other than a bank, and with or without the approval of any person involved, may waive, modify, or extend time limits imposed or permitted by this Title for a period not exceeding two additional banking days without discharge of drawers or indorsers or liability to its transferor or a prior party.

      (b) Delay by a collecting bank or payor bank beyond time limits prescribed or permitted by this Title or by instructions is excused if (i) the delay is caused by interruption of communication or computer facilities, suspension of payments by another bank, war, emergency conditions, failure of equipment, or other circumstances beyond the control of the bank, and (ii) the bank exercises such diligence as the circumstances require.

      NEW SECTION. Sec. 86. A new section is added to Title 62A RCW, to be codified as RCW 62A.4-110, to read as follows:

      ELECTRONIC PRESENTMENT. (a) "Agreement for electronic presentment" means an agreement, clearing-house rule, or Federal Reserve regulation or operating circular, providing that presentment of an item may be made by transmission of an image of an item or information describing the item ("presentment notice") rather than delivery of the item itself. The agreement may provide for procedures governing retention, presentment, payment, dishonor, and other matters concerning items subject to the agreement.

      (b) Presentment of an item pursuant to an agreement for presentment is made when the presentment notice is received.

      (c) If presentment is made by presentment notice, a reference to "item" or "check" in this Article means the presentment notice unless the context otherwise indicates.

      NEW SECTION. Sec. 87. A new section is added to Title 62A RCW, to be codified as RCW 62A.4-111, to read as follows:

      STATUTE OF LIMITATIONS. An action to enforce an obligation, duty, or right arising under this Article must be commenced within three years after the cause of action accrues.


PART 2

COLLECTION OF ITEMS:

DEPOSITORY AND COLLECTING BANKS


      Sec. 88. RCW 62A.4-201 and 1965 ex.s. c 157 s 4-201 are each amended to read as follows:

      ((PRESUMPTION AND DURATION OF AGENCY)) STATUS OF COLLECTING BANK((S)) AS AGENT AND PROVISIONAL STATUS OF CREDITS; APPLICABILITY OF ARTICLE; ITEM INDORSED "PAY ANY BANK". (((1))) (a) Unless a contrary intent clearly appears and ((prior to)) before the time that a settlement given by a collecting bank for an item is or becomes final (((subsection (3) of RCW 62A.4-211 and RCW 62A.4-212 and RCW 62A.4-213))), the bank, with respect to the item, is an agent or sub-agent of the owner of the item and any settlement given for the item is provisional. This provision applies regardless of the form of indorsement or lack of indorsement and even though credit given for the item is subject to immediate withdrawal as of right or is in fact withdrawn; but the continuance of ownership of an item by its owner and any rights of the owner to proceeds of the item are subject to rights of a collecting bank such as those resulting from outstanding advances on the item and ((valid)) rights of recoupment or setoff. ((When)) If an item is handled by banks for purposes of presentment, payment ((and)), collection, or return, the relevant provisions of this Article apply even though action of the parties clearly establishes that a particular bank has purchased the item and is the owner of it.

      (((2))) (b) After an item has been indorsed with the words "pay any bank" or the like, only a bank may acquire the rights of a holder until the item has been:

      (((a) until the item has been)) (1) Returned to the customer initiating collection; or

      (((b) until the item has been)) (2) Specially indorsed by a bank to a person who is not a bank.

      Sec. 89. RCW 62A.4-202 and 1965 ex.s. c 157 s 4-202 are each amended to read as follows:

      RESPONSIBILITY FOR COLLECTION OR RETURN; WHEN ACTION ((SEASONABLE)) TIMELY. (((1))) (a) A collecting bank must ((use)) exercise ordinary care in:

      (((a))) (1) Presenting an item or sending it for presentment; ((and

      (b))) (2) Sending notice of dishonor or non-payment or returning an item other than a documentary draft to the bank's transferor ((or directly to the depositary bank under subsection (2) of RCW 62A.4-212)) after learning that the item has not been paid or accepted, as the case may be; ((and

      (c))) (3) Settling for an item when the bank receives final settlement; and

      (((d) making or providing for any necessary protest; and

      (e))) (4) Notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof.

      (((2) A collecting bank taking proper action before its midnight deadline following receipt of an item, notice or payment acts seasonably; taking proper action within a reasonably longer time may be seasonable but the bank has the burden of so establishing.)) (b) A collecting bank exercises ordinary care under subsection (a) by taking proper action before its midnight deadline following receipt of an item, notice, or settlement. Taking proper action within a reasonably longer time may constitute the exercise of ordinary care, but the bank has the burden of establishing timeliness.

      (((3)))(c) Subject to subsection (((1)(a))) (a)(1), a bank is not liable for the insolvency, neglect, misconduct, mistake or default of another bank or person or for loss or destruction of an item in the possession of others or in transit ((or in the possession of others)).

      Sec. 90. RCW 62A.4-203 and 1965 ex.s. c 157 s 4-203 are each amended to read as follows:

      EFFECT OF INSTRUCTIONS. Subject to ((the provisions of)) Article 3 concerning conversion of instruments (((RCW 62A.3-419))) (RCW 62A.3-420 (section 60 of this act)) and ((the provisions of both Article 3 and this Article concerning)) restrictive indorsements (RCW 62A.3-206), only a collecting bank's transferor can give instructions ((which)) that affect the bank or constitute notice to it, and a collecting bank is not liable to prior parties for any action taken pursuant to ((such)) the instructions or in accordance with any agreement with its transferor.

      Sec. 91. RCW 62A.4-204 and 1965 ex.s. c 157 s 4-204 are each amended to read as follows:

      METHODS OF SENDING AND PRESENTING; SENDING ((DIRECT)) DIRECTLY TO PAYOR BANK. (((1))) (a) A collecting bank ((must)) shall send items by a reasonably prompt method, taking into consideration ((any)) relevant instructions, the nature of the item, the number of ((such)) those items on hand, ((and)) the cost of collection involved, and the method generally used by it or others to present ((such)) those items.

      (((2))) (b) A collecting bank may send:

      (((a) any)) (1) An item ((direct)) directly to the payor bank;

      (((b) any)) (2) An item to ((any)) a non-bank payor if authorized by its transferor; and

      (((c) any)) (3) An item other than documentary drafts to ((any)) a non-bank payor, if authorized by Federal Reserve regulation or operating ((letter)) circular, clearing-house rule, or the like.

      (((3))) (c) Presentment may be made by a presenting bank at a place where the payor bank or other payor has requested that presentment be made.

      Sec. 92. RCW 62A.4-205 and 1965 ex.s. c 157 s 4-205 are each amended to read as follows:

      ((SUPPLYING MISSING INDORSEMENT; NO NOTICE FROM PRIOR INDORSEMENT.)) DEPOSITARY BANK HOLDER OF UNINDORSED ITEM.

      If a customer delivers an item to a depositary bank for collection:

      (((1) A depositary bank which has taken an item for collection may supply any indorsement of the customer which is necessary to title unless the item contains the words "payee's indorsement required" or the like. In the absence of such a requirement a statement placed on the item by the depositary bank to the effect that the item was deposited by a customer or credited to his account is effective as the customer's indorsement.

      (2) An intermediary bank, or payor bank which is not a depositary bank, is neither given notice nor otherwise affected by a restrictive indorsement of any person except the bank's immediate transferor.)) (a) The depositary bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer indorses the item, and, if the bank satisfies the other requirements of RCW 62A.3-302, it is a holder in due course; and

      (b) The depositary bank warrants to collecting banks, the payor bank or other payor, and the drawer that the amount of the item was paid to the customer or deposited to the customer's account.

      Sec. 93. RCW 62A.4-206 and 1965 ex.s. c 157 s 4-206 are each amended to read as follows:

      TRANSFER BETWEEN BANKS. Any agreed method ((which)) that identifies the transferor bank is sufficient for the item's further transfer to another bank.

      Sec. 94. RCW 62A.4-207 and 1965 ex.s. c 157 s 4-207 are each amended to read as follows:

      TRANSFER WARRANTIES ((OF CUSTOMER AND COLLECTING BANK ON TRANSFER OR PRESENTMENT OF ITEMS; TIME FOR CLAIMS. (1) Each customer or collecting bank who obtains payment or acceptance of an item and each prior customer and collecting bank warrants to the payor bank or other payor who in good faith pays or accepts the item that

      (a) he has a good title to the item or is authorized to obtain payment or acceptance on behalf of one who has a good title; and

      (b) he has no knowledge that the signature of the maker or drawer is unauthorized, except that this warranty is not given by any customer or collecting bank that is a holder in due course and acts in good faith

      (i) to a maker with respect to the maker's own signature; or

      (ii) to a drawer with respect to the drawer's own signature, whether or not the drawer is also the drawee; or

      (iii) to an acceptor of an item if the holder in due course took the item after the acceptance or obtained the acceptance without knowledge that the drawer's signature was unauthorized; and

      (c) the item has not been materially altered, except that this warranty is not given by any customer or collecting bank that is a holder in due course and acts in good faith

      (i) to the maker of a note; or

      (ii) to the drawer of a draft whether or not the drawer is also the drawee; or

      (iii) to the acceptor of an item with respect to an alteration made prior to the acceptance if the holder in due course took the item after the acceptance, even though the acceptance provided "payable as originally drawn" or equivalent terms; or

      (iv) to the acceptor of an item with respect to an alteration made after the acceptance.

      (2) Each customer and collecting bank who transfers an item and receives a settlement or other consideration for it warrants to his transferee and to any subsequent collecting bank who takes the item in good faith that

      (a) he has a good title to the item or is authorized to obtain payment or acceptance on behalf of one who has a good title and the transfer is otherwise rightful; and

      (b) all signatures are genuine or authorized; and

      (c) the item has not been materially altered; and

      (d) no defense of any party is good against him; and

      (e) he has no knowledge of any insolvency proceeding instituted with respect to the maker or acceptor or the drawer of an unaccepted item.

In addition each customer and collecting bank so transferring an item and receiving a settlement or other consideration engages that upon dishonor and any necessary notice of dishonor and protest he will take up the item.

      (3) The warranties and the engagement to honor set forth in the two preceding subsections arise notwithstanding the absence of indorsement or words of guaranty or warranty in the transfer or presentment and a collecting bank remains liable for their breach despite remittance to its transferor. Damages for breach of such warranties or engagement to honor shall not exceed the consideration received by the customer or collecting bank responsible plus finance charges and expenses related to the item, if any.

      (4) Unless a claim for breach of warranty under this section is made within a reasonable time after the person claiming learns of the breach, the person liable is discharged to the extent of any loss caused by the delay in making claim)). (a) A customer or collecting bank that transfers an item and receives a settlement or other consideration warrants to the transferee and to any subsequent collecting bank that:

      (1) The warrantor is a person entitled to enforce the item;

      (2) All signatures on the item are authentic and authorized;

      (3) The item has not been altered;

      (4) The item is not subject to a defense or claim in recoupment (RCW 62A.3-305(a)) of any party that can be asserted against the warrantor; and

      (5) The warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.

      (b) If an item is dishonored, a customer or collecting bank transferring the item and receiving settlement or other consideration is obliged to pay the amount due on the item (i) according to the terms of the item at the time it was transferred, or (ii) if the transfer was of an incomplete item, according to its terms when completed as stated in RCW 62A.3-115 and 62A.3-407. The obligation of a transferor is owed to the transferee and to any subsequent collecting bank that takes the item in good faith. A transferor cannot disclaim its obligation under this subsection by an indorsement stating that it is made "without recourse" or otherwise disclaiming liability.

      (c) A person to whom the warranties under subsection (a) are made and who took the item in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, but not more than the amount of the item plus expenses and loss of interest incurred as a result of the breach.

      (d) The warranties stated in subsection (a) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within thirty days after the claimant has reason to know of the breach and the identity of the warrantor, the warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.

      (e) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.

      Sec. 95. RCW 62A.4-208 and 1965 ex.s. c 157 s 4-208 are each amended to read as follows:

      ((SECURITY INTEREST OF COLLECTING BANK IN ITEMS, ACCOMPANYING DOCUMENTS AND PROCEEDS. (1) A bank has a security interest in an item and any accompanying documents or the proceeds of either

      (a) in case of an item deposited in an account to the extent to which credit given for the item has been withdrawn or applied;

      (b) in case of an item for which it has given credit available for withdrawal as of right, to the extent of the credit given whether or not the credit is drawn upon and whether or not there is a right of charge-back; or

      (c) if it makes an advance on or against the item.

      (2) When credit which has been given for several items received at one time or pursuant to a single agreement is withdrawn or applied in part the security interest remains upon all the items, any accompanying documents or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.

      (3) Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents and proceeds. To the extent and so long as the bank does not receive final settlement for the item or give up possession of the item or accompanying documents for purposes other than collection, the security interest continues and is subject to the provisions of Article 9 except that

      (a) no security agreement is necessary to make the security interest enforceable (subsection (1)(b) of RCW 62A.9-203); and

      (b) no filing is required to perfect the security interest; and

      (c) the security interest has priority over conflicting perfected security interests in the item, accompanying documents or proceeds.)) PRESENTMENT WARRANTIES. (a) If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, (i) the person obtaining payment or acceptance, at the time of presentment, and (ii) a previous transferor of the draft, at the time of transfer, warrant to the drawee that pays or accepts the draft in good faith that:

      (1) The warrantor is, or was, at the time the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;

      (2) The draft has not been altered; and

      (3) The warrantor has no knowledge that the signature of the purported drawer of the draft is unauthorized.

      (b) A drawee making payment may recover from a warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount the drawee received or is entitled to receive from the drawer because of the payment. In addition, the drawee is entitled to compensation for expenses and loss of interest resulting from the breach. The right of the drawee to recover damages under this subsection is not affected by any failure of the drawee to exercise ordinary care in making payment. If the drawee accepts the draft (i) breach of warranty is a defense to the obligation of the acceptor, and (ii) if the acceptor makes payment with respect to the draft, the acceptor is entitled to recover from a warrantor for breach of warranty the amounts stated in this subsection.

      (c) If a drawee asserts a claim for breach of warranty under subsection (a) based on an unauthorized indorsement of the draft or an alteration of the draft, the warrantor may defend by proving that the indorsement is effective under RCW 62A.3-404 or 62A.3-405 or the drawer is precluded under RCW 62A.3-406 or 62A.4-406 from asserting against the drawee the unauthorized indorsement or alteration.

      (d) If (i) a dishonored draft is presented for payment to the drawer or an indorser or (ii) any other item is presented for payment to a party obliged to pay the item, and the item is paid, the person obtaining payment and a prior transferor of the item warrant to the person making payment in good faith that the warrantor is, or was, at the time the warrantor transferred the item, a person entitled to enforce the item or authorized to obtain payment on behalf of a person entitled to enforce the item. The person making payment may recover from any warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.

      (e) The warranties stated in subsections (a) and (d) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within thirty days after the claimant has reason to know of the breach and the identity of the warrantor, the warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.

      (f) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.

      Sec. 96. RCW 62A.4-209 and 1965 ex.s. c 157 s 4-209 are each amended to read as follows:

      ((WHEN BANK GIVES VALUE FOR PURPOSES OF HOLDER IN DUE COURSE. For purposes of determining its status as a holder in due course, the bank has given value to the extent that it has a security interest in an item provided that the bank otherwise complies with the requirements of RCW 62A.3-302 on what constitutes a holder in due course.)) ENCODING AND RETENTION WARRANTIES. (a) A person who encodes information on or with respect to an item after issue warrants to any subsequent collecting bank and to the payor bank or other payor that the information is correctly encoded. If the customer of a depositary bank encodes, that bank also makes the warranty.

      (b) A person who undertakes to retain an item pursuant to an agreement for electronic presentment warrants to any subsequent collecting bank and to the payor bank or other payor that retention and presentment of the item comply with the agreement. If a customer of a depositary bank undertakes to retain an item, that bank also makes this warranty.

      (c) A person to whom warranties are made under this section and who took the item in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, plus expenses and loss of interest incurred as a result of the breach.

      Sec. 97. RCW 62A.4-210 and 1965 ex.s. c 157 s 4-210 are each amended to read as follows:

      ((PRESENTMENT BY NOTICE OF ITEM NOT PAYABLE BY, THROUGH OR AT A BANK; LIABILITY OF SECONDARY PARTIES. (1) Unless otherwise instructed, a collecting bank may present an item not payable by, through or at a bank by sending to the party to accept or pay a written notice that the bank holds the item for acceptance or payment. The notice must be sent in time to be received on or before the day when presentment is due and the bank must meet any requirement of the party to accept or pay under RCW 62A.3-505 by the close of the bank's next banking day after it knows of the requirement.

      (2) Where presentment is made by notice and neither honor nor request for compliance with a requirement under RCW 62A.3-505 is received by the close of business on the day after maturity or in the case of demand items by the close of business on the third banking day after notice was sent, the presenting bank may treat the item as dishonored and charge any secondary party by sending him notice of the facts.)) SECURITY INTEREST OF COLLECTING BANK IN ITEMS, ACCOMPANYING DOCUMENTS AND PROCEEDS. (a) A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either:

      (1) In case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied;

      (2) In case of an item for which it has given credit available for withdrawal as of right, to the extent of the credit given whether or not the credit is drawn upon or there is a right of charge-back; or

      (3) If it makes an advance on or against the item.

      (b) If credit given for several items received at one time or pursuant to a single agreement is withdrawn or applied in part, the security interest remains upon all the items, any accompanying documents or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.

      (c) Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents, and proceeds. So long as the bank does not receive final settlement for the item or give up possession of the item or accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to Article 9, but:

      (1) No security agreement is necessary to make the security interest enforceable (subsection (1) of RCW 62A.9-203);

      (2) No filing is required to perfect the security interest; and

      (3) The security interest has priority over conflicting perfected security interests in the item, accompanying documents, or proceeds.

      Sec. 98. RCW 62A.4-211 and 1965 ex.s. c 157 s 4-211 are each amended to read as follows:

      ((MEDIA OF REMITTANCE; PROVISIONAL AND FINAL SETTLEMENT IN REMITTANCE CASES. (1) A collecting bank may take in settlement of an item

      (a) a check of the remitting bank or of another bank on any bank except the remitting bank; or

      (b) a cashier's check or similar primary obligation of a remitting bank which is a member of or clears through a member of the same clearing house or group as the collecting bank; or

      (c) appropriate authority to charge an account of the remitting bank or of another bank with the collecting bank; or

      (d) if the item is drawn upon or payable by a person other than a bank, a cashier's check, certified check or other bank check or obligation.

      (2) If before its midnight deadline the collecting bank properly dishonors a remittance check or authorization to charge on itself or presents or forwards for collection a remittance instrument of or on another bank which is of a kind approved by subsection (1) or has not been authorized by it, the collecting bank is not liable to prior parties in the event of the dishonor of such check, instrument or authorization.

      (3) A settlement for an item by means of a remittance instrument or authorization to charge is or becomes a final settlement as to both the person making and the person receiving the settlement

      (a) if the remittance instrument or authorization to charge is of a kind approved by subsection (1) or has not been authorized by the person receiving the settlement and in either case the person receiving the settlement acts seasonably before its midnight deadline in presenting, forwarding for collection or paying the instrument or authorization,--at the time the remittance instrument or authorization is finally paid by the payor by which it is payable;

      (b) if the person receiving the settlement has authorized remittance by a non-bank check or obligation or by a cashier's check or similar primary obligation of or a check upon the payor or other remitting bank which is not of a kind approved by subsection (1)(b),--at the time of the receipt of such remittance check or obligation; or

      (c) if in a case not covered by sub-paragraphs (a) or (b) the person receiving the settlement fails to seasonably present, forward for collection, pay or return a remittance instrument or authorization to it to charge before its midnight deadline,--at such midnight deadline.)) WHEN BANK GIVES VALUE FOR PURPOSES OF HOLDER IN DUE COURSE. For purposes of determining its status as a holder in due course, bank has given value to the extent it has a security interest in an item, if the bank otherwise complies with the requirements of RCW 62A.3-302 on what constitutes a holder in due course.

      Sec. 99. RCW 62A.4-212 and 1965 ex.s. c 157 s 4-212 are each amended to read as follows:

      ((RIGHT OF CHARGE-BACK OR REFUND. (1) If a collecting bank has made provisional settlement with its customer for an item and itself fails by reason of dishonor, suspension of payments by a bank or otherwise to receive a settlement for the item which is or becomes final, the bank may revoke the settlement given by it, charge back the amount of any credit given for the item to its customer's account or obtain refund from its customer whether or not it is able to return the items if by its midnight deadline or within a longer reasonable time after it learns the facts it returns the item or sends notification of the facts. These rights to revoke, charge-back and obtain refund terminate if and when a settlement for the item received by the bank is or becomes final (subsection (3) of RCW 62A.4-211 and subsections (2) and (3) of RCW 62A.4-213).

      (2) Within the time and manner prescribed by this section and RCW 62A.4-301, an intermediary or payor bank, as the case may be, may return an unpaid item directly to the depositary bank and may send for collection a draft on the depositary bank and obtain reimbursement. In such case, if the depositary bank has received provisional settlement for the item, it must reimburse the bank drawing the draft and any provisional credits for the item between banks shall become and remain final.

      (3) A depositary bank which is also the payor may charge-back the amount of an item to its customer's account or obtain refund in accordance with the section governing return of an item received by a payor bank for credit on its books (RCW 62A.4-301)

      (4) The right to charge-back is not affected by

      (a) prior use of the credit given for the item; or

      (b) failure by any bank to exercise ordinary care with respect to the item but any bank so failing remains liable.

      (5) A failure to charge-back or claim refund does not affect other rights of the bank against the customer or any other party.

      (6) If credit is given in dollars as the equivalent of the value of an item payable in a foreign currency the dollar amount of any charge-back or refund shall be calculated on the basis of the buying sight rate for the foreign currency prevailing on the day when the person entitled to the charge-back or refund learns that it will not receive payment in ordinary course.)) PRESENTMENT BY NOTICE OF ITEM NOT PAYABLE BY, THROUGH, OR AT A BANK; LIABILITY OF DRAWER OR INDORSER. (a) Unless otherwise instructed, a collecting bank may present an item not payable by, through or at a bank by sending to the party to accept or pay a written notice that the bank holds the item for acceptance or payment. The notice must be sent in time to be received on or before the day when presentment is due and the bank must meet any requirement of the party to accept or pay under RCW 62A.3-501 by the close of the bank's next banking day after it knows of the requirement.

      (b) If presentment is made by notice and payment, acceptance, or request for compliance with a requirement under RCW 62A.3-501 is not received by the close of business on the day after maturity or, in the case of demand items, by the close of business on the third banking day after notice was sent, the presenting bank may treat the item as dishonored and charge any drawer or indorser by sending it notice of the facts.

      Sec. 100. RCW 62A.4-213 and 1965 ex.s. c 157 s 4-213 are each amended to read as follows:

      ((FINAL PAYMENT OF ITEM BY PAYOR BANK; WHEN PROVISIONAL DEBITS AND CREDITS BECOME FINAL; WHEN CERTAIN CREDITS BECOME AVAILABLE FOR WITHDRAWAL. (1) An item is finally paid by a payor bank when the bank has done any of the following, whichever happens first:

      (a) paid the item in cash; or

      (b) settled for the item without reserving a right to revoke the settlement and without having such right under statute, clearing house rule or agreement; or

      (c) completed the process of posting the item to the indicated account of the drawer, maker or other person to be charged therewith; or

      (d) made a provisional settlement for the item and failed to revoke the settlement in the time and manner permitted by statute, clearing house rule or agreement.

Upon a final payment under subparagraphs (b), (c) or (d) the payor bank shall be accountable for the amount of the item.

      (2) If provisional settlement for an item between the presenting and payor banks is made through a clearing house or by debits or credits in an account between them, then to the extent that provisional debits or credits for the item are entered in accounts between the presenting and payor banks or between the presenting and successive prior collecting banks seriatim, they become final upon final payment of the item by the payor bank.

      (3) If a collecting bank receives a settlement for an item which is or becomes final (subsection (3) of RCW 62A.4-211, subsection (2) of RCW 62A.4-213) the bank is accountable to its customer for the amount of the item and any provisional credit given for the item in an account with its customer becomes final.

      (4) Subject to any right of the bank to apply the credit to an obligation of the customer, credit given by a bank for an item in an account with its customer becomes available for withdrawal as of right

      (a) in any case where the bank has received a provisional settlement for the item,--when such settlement becomes final and the bank has had a reasonable time to learn that the settlement is final;

      (b) in any case where the bank is both a depositary bank and a payor bank and the item is finally paid,--at the opening of the bank's second banking day following receipt of the item.

      (5) A deposit of money in a bank is final when made but, subject to any right of the bank to apply the deposit to an obligation of the customer, the deposit becomes available for withdrawal as of right at the opening of the bank's next banking day following receipt of the deposit.)) MEDIUM AND TIME OF SETTLEMENT BY BANK. (a) With respect to settlement by a bank, the medium and time of settlement may be prescribed by Federal Reserve regulations or circulars, clearing-house rules, and the like, or agreement. In the absence of such prescription:

      (1) The medium of settlement is cash or credit to an account in a Federal Reserve bank of or specified by the person to receive settlement; and

      (2) The time of settlement, is:

      (i) With respect to tender of settlement by cash, a cashier's check, or teller's check, when the cash or check is sent or delivered;

      (ii) With respect to tender of settlement by credit in an account in a Federal Reserve bank, when the credit is made;

      (iii) With respect to tender of settlement by a credit or debit to an account in a bank, when the credit or debit is made or, in the case of tender of settlement by authority to charge an account, when the authority is sent or delivered; or

      (iv) With respect to tender of settlement by a funds transfer, when payment is made pursuant to RCW 62A.4A-406(1) to the person receiving settlement.

      (b) If the tender of settlement is not by a medium authorized by subsection (a) or the time of settlement is not fixed by subsection (a), no settlement occurs until the tender of settlement is accepted by the person receiving settlement.

      (c) If settlement for an item is made by cashier's check or teller's check and the person receiving settlement, before its midnight deadline:

      (1) Presents or forwards the check for collection, settlement is final when the check is finally paid; or

      (2) Fails to present or forward the check for collection, settlement is final at the midnight deadline of the person receiving settlement.

      (d) If settlement for an item is made by giving authority to charge the account of the bank giving settlement in the bank receiving settlement, settlement is final when the charge is made by the bank receiving settlement if there are funds available in the account for the amount of the item.

      Sec. 101. RCW 62A.4-214 and 1965 ex.s. c 157 s 4-214 are each amended to read as follows:

      ((INSOLVENCY AND PREFERENCE. (1) Any item in or coming into the possession of a payor or collecting bank which suspends payment and which item is not finally paid shall be returned by the receiver, trustee or agent in charge of the closed bank to the presenting bank or the closed bank's customer.

      (2) If a payor bank finally pays an item and suspends payments without making a settlement for the item with its customer or the presenting bank which settlement is or becomes final, the owner of the item has a preferred claim against the payor bank.

      (3) If a payor bank gives or a collecting bank gives or receives a provisional settlement for an item and thereafter suspends payments, the suspension does not prevent or interfere with the settlement becoming final if such finality occurs automatically upon the lapse of certain time or the happening of certain events (subsection (3) of RCW 62A.4-211, subsections (1)(d), (2) and (3) of RCW 62A.4-213).

      (4) If a collecting bank receives from subsequent parties settlement for an item which settlement is or becomes final and suspends payments without making a settlement for the item with its customer which is or becomes final, the owner of the item has a preferred claim against such collecting bank.)) RIGHT OF CHARGE-BACK OR REFUND; LIABILITY OF COLLECTING BANK; RETURN OF ITEM. (a) If a collecting bank has made provisional settlement with its customer for an item and fails by reason of dishonor, suspension of payments by a bank, or otherwise to receive a settlement for the item which is or becomes final, the bank may revoke the settlement given by it, charge back the amount of any credit given for the item to its customer's account, or obtain refund from its customer, whether or not it is able to return the items, if by its midnight deadline or within a longer reasonable time after it learns the facts it returns the item or sends notification of the facts. If the return or notice is delayed beyond the bank's midnight deadline or a longer reasonable time after it learns the facts, the bank may revoke the settlement, charge back the credit, or obtain refund from its customer, but it is liable for any loss resulting from the delay. These rights to revoke, charge-back, and obtain refund terminate if and when a settlement for the item received by the bank is or becomes final.

      (b) A collecting bank returns an item when it is sent or delivered to the bank's customer or transferor or pursuant to its instructions.

      (c) A depositary bank that is also the payor may charge-back the amount of an item to its customer's account or obtain refund in accordance with the section governing return of an item received by a payor bank for credit on its books (RCW 62A.4-301).

      (d) The right to charge-back is not affected by:

      (1) Previous use of a credit given for the item; or

      (2) Failure by any bank to exercise ordinary care with respect to the item, but a bank so failing remains liable.

      (e) A failure to charge-back or claim refund does not affect other rights of the bank against the customer or any other party.

      (f) If credit is given in dollars as the equivalent of the value of an item payable in a foreign money, the dollar amount of any charge-back or refund must be calculated on the basis of the bank-offered spot rate for the foreign money prevailing on the day when the person entitled to the charge-back or refund learns that it will not receive payment in ordinary course.

      NEW SECTION. Sec. 102. A new section is added to Title 62A RCW, to be codified as RCW 62A.4-215, to read as follows:

      FINAL PAYMENT OF ITEM BY PAYOR BANK; WHEN PROVISIONAL DEBITS AND CREDITS BECOME FINAL; WHEN CERTAIN CREDITS BECOME AVAILABLE FOR WITHDRAWAL. (a) An item is finally paid by a payor bank when the bank has first done any of the following:

      (1) Paid the item in cash;

      (2) Settled for the item without having a right to revoke the settlement under statute, clearing-house rule, or agreement; or

      (3) Made a provisional settlement for the item and failed to revoke the settlement in the time and manner permitted by statute, clearing-house rule, or agreement.

      (b) If provisional settlement for an item does not become final, the item is not finally paid.

      (c) If provisional settlement for an item between the presenting and payor banks is made through a clearing house or by debits or credits in an account between them, then to the extent that provisional debits or credits for the item are entered in accounts between the presenting and payor banks or between the presenting and successive prior collecting banks seriatim, they become final upon final payment of the item by the payor bank.

      (d) If a collecting bank receives a settlement for an item which is or becomes final, the bank is accountable to its customer for the amount of the item and any provisional credit given for the item in an account with its customer becomes final.

      (e) Subject to (i) applicable law stating a time for availability of funds and (ii) any right of the bank to apply the credit to an obligation of the customer, credit given by a bank for an item in a customer's account becomes available for withdrawal as of right:

      (1) If the bank has received a provisional settlement for the item, when the settlement becomes final and the bank has had a reasonable time to receive return of the item and the item has not been received within that time;

      (2) If the bank is both the depositary bank and the payor bank, and the item is finally paid, at the opening of the bank's second banking day following receipt of the item.

      (f) Subject to applicable law stating a time for availability of funds and any right of a bank to apply a deposit to an obligation of the depositor, a deposit of money becomes available for withdrawal as of right at the opening of the bank's next banking day after receipt of the deposit.

      NEW SECTION. Sec. 103. A new section is added to Title 62A RCW, to be codified as RCW 62A.4-216, to read as follows:

      INSOLVENCY AND PREFERENCE. (a) If an item is in or comes into the possession of a payor or collecting bank that suspends payment and the item has not been finally paid, the item must be returned by the receiver, trustee, or agent in charge of the closed bank to the presenting bank or the closed bank's customer.

      (b) If a payor bank finally pays an item and suspends payments without making a settlement for the item with its customer or the presenting bank which settlement is or becomes final, the owner of the item has a preferred claim against the payor bank.

      (c) If a payor bank gives or a collecting bank gives or receives a provisional settlement for an item and thereafter suspends payments, the suspension does not prevent or interfere with the settlement's becoming final if the finality occurs automatically upon the lapse of certain time or the happening of certain events.

      (d) If a collecting bank receives from subsequent parties settlement for an item, which settlement is or becomes final and the bank suspends payments without making a settlement for the item with its customer which settlement is or becomes final, the owner of the item has a preferred claim against the collecting bank.


PART 3

COLLECTION OF ITEMS: PAYOR BANKS


      Sec. 104. RCW 62A.4-301 and 1965 ex.s. c 157 s 4-301 are each amended to read as follows:

      DEFERRED POSTING; RECOVERY OF PAYMENT BY RETURN OF ITEMS; TIME OF DISHONOR; RETURN OF ITEMS BY PAYOR BANK. (((1) Where an authorized settlement)) (a) If a payor bank settles for a demand item (other than a documentary draft) ((received by a payor bank)) presented otherwise than for immediate payment over the counter ((has been made)) before midnight of the banking day of receipt, the payor bank may revoke the settlement and recover ((any payment)) the settlement if, before it has made final payment (((subsection (1) of RCW 62A.4-213))) and before its midnight deadline, it:

      (((a))) (1) Returns the item; or

      (((b))) (2) Sends written notice of dishonor or nonpayment if the item is ((held for protest or is otherwise)) unavailable for return.

      (((2))) (b) If a demand item is received by a payor bank for credit on its books, it may return ((such)) the item or send notice of dishonor and may revoke any credit given or recover the amount thereof withdrawn by its customer, if it acts within the time limit and in the manner specified in ((the preceding)) subsection (a).

      (((3))) (c) Unless previous notice of dishonor has been sent, an item is dishonored at the time when for purposes of dishonor it is returned or notice sent in accordance with this section.

      (((4))) (d) An item is returned:

      (((a))) (1) As to an item ((received)) presented through a clearing house, when it is delivered to the presenting or last collecting bank or to the clearing house or is sent or delivered in accordance with ((its)) clearing-house rules; or

      (((b))) (2) In all other cases, when it is sent or delivered to the bank's customer or transferor or pursuant to ((his)) instructions.

      Sec. 105. RCW 62A.4-302 and 1965 ex.s. c 157 s 4-302 are each amended to read as follows:

      PAYOR BANK'S RESPONSIBILITY FOR LATE RETURN OF ITEM. ((In the absence of a valid defense such as breach of a presentment warranty (subsection (1) of RCW 62A.4-207), settlement effected or the like,)) (a) If an item is presented ((on)) to and received by a payor bank, the bank is accountable for the amount of:

      (((a))) (1) A demand item, other than a documentary draft, whether properly payable or not, if the bank, in any case ((where)) in which it is not also the depositary bank, retains the item beyond midnight of the banking day of receipt without settling for it or, ((regardless of)) whether or not it is also the depositary bank, does not pay or return the item or send notice of dishonor until after its midnight deadline; or

      (((b))) (2) any other properly payable item unless, within the time allowed for acceptance or payment of that item, the bank either accepts or pays the item or returns it and accompanying documents.

      (b) The liability of a payor bank to pay an item pursuant to subsection (a) is subject to defenses based on breach of a presentment warranty (RCW 62A.4-208) or proof that the person seeking enforcement of the liability presented or transferred the item for the purpose of defrauding the payor bank.

      Sec. 106. RCW 62A.4-303 and 1965 ex.s. c 157 s 4-303 are each amended to read as follows:

      WHEN ITEMS SUBJECT TO NOTICE, ((STOP-ORDER)) STOP-PAYMENT ORDER, LEGAL PROCESS, OR SETOFF; ORDER IN WHICH ITEMS MAY BE CHARGED OR CERTIFIED. (((1))) (a) Any knowledge, notice, or ((stop-order)) stop-payment order received by, legal process served upon, or setoff exercised by a payor bank((, whether or not effective under other rules of law)) comes too late to terminate, suspend, or modify the bank's right or duty to pay an item or to charge its customer's account for the item((, comes too late to so terminate, suspend or modify such right or duty)) if the knowledge, notice, stop-payment order, or legal process is received or served and a reasonable time for the bank to act thereon expires or the setoff is exercised after the ((bank has done any)) earliest of the following:

      (((a) accepted or certified)) (1) The bank accepts or certifies the item;

      (((b) paid)) (2) The bank pays the item in cash;

      (((c) settled)) (3) The bank settles for the item without ((reserving)) having a right to revoke the settlement ((and without having such right)) under statute, clearing-house rule, or agreement;

      (((d) completed the process of posting the item to the indicated account of the drawer, maker or other person to be charged therewith or otherwise has evidenced by examination of such indicated account and by action its decision to pay the item; or

      (e))) (4) The bank becomes accountable for the amount of the item under ((subsection (1)(d) of RCW 62A.4-213 and)) RCW 62A.4-302 dealing with the payor bank's responsibility for late return of items((.)); or

      (5) With respect to checks, a cutoff hour no earlier than one hour after the opening of the next banking day after the banking day on which the bank received the check and no later than the close of that next banking day or, if no cutoff hour is fixed, the close of the next banking day after the banking day on which the bank received the check.

      (((2))) (b) Subject to ((the provisions of)) subsection (((1))) (a) items may be accepted, paid, certified, or charged to the indicated account of its customer in any order ((convenient to the bank)).


PART 4

RELATIONSHIP BETWEEN PAYOR BANK AND ITS CUSTOMER


      Sec. 107. RCW 62A.4-401 and 1965 ex.s. c 157 s 4-401 are each amended to read as follows:

      WHEN BANK MAY CHARGE CUSTOMER'S ACCOUNT. (((1) As against its customer,)) (a) A bank may charge against ((his)) the account ((any)) of a customer an item ((which)) that is ((otherwise)) properly payable from that account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and bank.

      (((2))) (b) A customer is not liable for the amount of an overdraft if the customer neither signed the item nor benefited from the proceeds of the item.

      (c) A bank may charge against the account of a customer a check that is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the bank of the postdating describing the check with reasonable certainty. The notice is effective for the period stated in RCW 62A.4-403(b) for stop-payment orders, and must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it before the bank takes any action with respect to the check described in RCW 62A.4-303. A bank may not collect a fee from a customer based on the customer's giving notice to the bank of a postdating. If a bank charges against the account of a customer a check before the date stated in the notice of postdating, the bank is liable for damages for the loss resulting from its act. The loss may include damages for dishonor of subsequent items under RCW 62A.4-402.

      (d) A bank ((which)) that in good faith makes payment to a holder may charge the indicated account of its customer according to:

      (((a))) (1) The original ((tenor)) terms of ((his)) the altered item; or

      (((b))) (2) The ((tenor)) terms of ((his)) the completed item, even though the bank knows the item has been completed unless the bank has notice that the completion was improper.

      Sec. 108. RCW 62A.4-402 and 1965 ex.s. c 157 s 4-402 are each amended to read as follows:

      BANK'S LIABILITY TO CUSTOMER FOR WRONGFUL DISHONOR; TIME OF DETERMINING INSUFFICIENCY OF ACCOUNT. (a) Except as otherwise provided in this Article, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft.

      (b) A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. ((When the dishonor occurs through mistake)) Liability is limited to actual damages proved((. If so proximately caused)) and ((proved damages)) may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.

      (c) A payor bank's determination of the customer's account balance on which a decision to dishonor for insufficiency of available funds is based may be made at any time between the time the item is received by the payor bank and the time that the payor bank returns the item or gives notice in lieu of return, and no more than one determination need be made. If, at the election of the payor bank, a subsequent balance determination is made for the purpose of reevaluating the bank's decision to dishonor the item, the account balance at that time is determinative of whether a dishonor for insufficiency of available funds is wrongful.

      Sec. 109. RCW 62A.4-403 and 1965 ex.s. c 157 s 4-403 are each amended to read as follows:

      CUSTOMER'S RIGHT TO STOP PAYMENT; BURDEN OF PROOF OF LOSS. (((1))) (a) A customer or any other person authorized to draw on the account if there is more than one person may ((by order to his bank)) stop payment of any item ((payable for his)) drawn on the customer's account ((but)) or close the account by an order ((must be)) to the bank describing the item or account with reasonable certainty received at ((such)) a time and in ((such)) a manner ((as to)) that affords the bank a reasonable opportunity to act on it ((prior to)) before any action by the bank with respect to the item described in RCW 62A.4-303. If the signature of more than one person is required to draw on an account, any of these persons may stop payment or close the account.

      (((2) An oral order is binding upon the bank only for fourteen calendar days unless confirmed in writing within that period. A written order is effective for only six months unless renewed in writing)) (b) A stop-payment order is effective for six months, but it lapses after fourteen calendar days if the original order was oral and was not confirmed in writing within that period. A stop-payment order may be renewed for additional six-month periods by a writing given to the bank within a period during which the stop-payment order is effective.

      (((3))) (c) The burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a binding stop-payment order or order to close the account is on the customer. The loss from payment of an item contrary to a stop-payment order may include damages for dishonor of subsequent items under RCW 62A.4-402.

      Sec. 110. RCW 62A.4-405 and 1965 ex.s. c 157 s 4-405 are each amended to read as follows:

      DEATH OR INCOMPETENCE OF CUSTOMER. (((1))) (a) A payor or collecting bank's authority to accept, pay, or collect an item or to account for proceeds of its collection, if otherwise effective, is not rendered ineffective by incompetence of a customer of either bank existing at the time the item is issued or its collection is undertaken if the bank does not know of an adjudication of incompetence. Neither death nor incompetence of a customer revokes ((such)) the authority to accept, pay, collect, or account until the bank knows of the fact of death or of an adjudication of incompetence and has reasonable opportunity to act on it.

      (((2))) (b) Even with knowledge, a bank may for ten days after the date of death pay or certify checks drawn on or ((prior to)) before that date unless ordered to stop payment by a person claiming an interest in the account.

      Sec. 111. RCW 62A.4-406 and 1991 sp.s. c 19 s 1 are each amended to read as follows:

      (((1) When a bank sends to its customer a statement of account accompanied by items paid in good faith in support of the debit entries or holds the statement and items pursuant to a request or instructions of its customer or otherwise in a reasonable manner makes the statement and items available to the customer, the customer must exercise reasonable care and promptness to examine the statement and items to discover his or her unauthorized signature or any alteration on an item and must notify the bank promptly after discovery thereof.

      (2))) (a) A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid, copies of the items paid, or provide information in the statement of account sufficient to allow the customer reasonably to identify the items paid. Until January 1, 1998, the statement of account provides sufficient information if the item is described by item number, amount, and date of payment. If the bank does not return the items paid or copies of the items paid, it shall provide in the statement of account the telephone number that the customer may call to request an item or copy of an item pursuant to subsection (b) of this section.

      (b) If the items are not returned to the customer, the person retaining the items shall either retain the items or, if the items are destroyed, maintain the capacity to furnish legible copies of the items until the expiration of seven years after receipt of the items. A customer may request an item from the bank that paid the item, and that bank must provide in a reasonable time either the item or, if the item has been destroyed or is not otherwise obtainable, a legible copy of the item. A bank shall provide, upon request and without charge to the customer, at least five items or copies of items with respect to each statement of account sent to the customer. A bank may charge fees for additional items or copies of items in accordance with section 118 of this act. Requests for ten items or less shall be processed and completed within ten business days.

      (c) If a bank sends or makes available a statement of account or items pursuant to subsection (a), the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. If, based on the statement or items provided, the customer should reasonably have discovered the unauthorized payment, the customer must promptly notify the bank of the relevant facts.

      (d) If the bank ((establishes)) proves that the customer, failed with respect to an item, to comply with the duties imposed on the customer by subsection (((1) of this section)) (c) the customer is precluded from asserting against the bank:

      (((a) His or her)) (1) The customer's unauthorized signature or any alteration on the item, if the bank also ((establishes)) proves that it suffered a loss by reason of ((such)) the failure; and

      (((b) An)) (2) The customer's unauthorized signature or alteration by the same wrong-doer on any other item paid in good faith by the bank ((after the first item and statement was available to the customer for a reasonable period and before the bank receives notification from the customer of any such unauthorized signature or alteration)) if the payment was made before the bank received notice from the customer of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time, not exceeding thirty days, in which to examine the item or statement of account and notify the bank.

      (((3) The preclusion under subsection (2) of this section does not apply if the customer establishes lack of ordinary care on the part of the bank in paying the item(s).

      (4))) (e) If subsection (d) applies and the customer proves that the bank failed to exercise ordinary care in paying the item and that the failure substantially contributed to loss, the loss is allocated between the customer precluded and the bank asserting the preclusion according to the extent to which the failure of the customer to comply with subsection (c) and the failure of the bank to exercise ordinary care contributed to the loss. If the customer proves that the bank did not pay the item in good faith, the preclusion under subsection (d) does not apply.

      (f) Without regard to care or lack of care of either the customer or the bank, a natural person whose account is primarily for personal, family, or household purposes who does not within one year, and any other customer who does not within sixty days, from the time the statement and items are made available to the customer (subsection (((1) of this section)) (a)) discover and report ((his or her)) the customer's unauthorized signature or any alteration on the face or back of the item or does not within ((three years)) one year from that time discover and report any unauthorized indorsement is precluded from asserting against the bank such unauthorized signature or indorsement or such alteration((.

      (5) If under this section a payor bank has a valid defense against a claim of a customer upon or resulting from payment of an item and waives or fails upon request to assert the defense the bank may not assert against any collecting bank or other prior party presenting or transferring the item a claim based upon the unauthorized signature or alteration giving rise to the customer's claim)). If there is a preclusion under this subsection, the payor bank may not recover for breach of warranty under RCW 62A.4-208 with respect to the unauthorized signature or alteration to which the preclusion applies.

      Sec. 112. RCW 62A.4-407 and 1965 ex.s. c 157 s 4-407 are each amended to read as follows:

      PAYOR BANK'S RIGHT TO SUBROGATION ON IMPROPER PAYMENT. If a payor bank has paid an item over the ((stop payment)) order of the drawer or maker to stop payment, or after an account has been closed, or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent necessary to prevent loss to the bank by reason of its payment of the item, the payor bank ((shall be)) is subrogated to the rights:

      (((a))) (1) Of any holder in due course on the item against the drawer or maker; ((and))

      (((b))) (2) Of the payee or any other holder of the item against the drawer or maker either on the item or under the transaction out of which the item arose; and

      (((c))) (3) Of the drawer or maker against the payee or any other holder of the item with respect to the transaction out of which the item arose.


PART 5

COLLECTION OF DOCUMENTARY DRAFTS


      Sec. 113. RCW 62A.4-501 and 1965 ex.s. c 157 s 4-501 are each amended to read as follows:

      HANDLING OF DOCUMENTARY DRAFTS; DUTY TO SEND FOR PRESENTMENT AND TO NOTIFY CUSTOMER OF DISHONOR. A bank ((which)) that takes a documentary draft for collection ((must)) shall present or send the draft and accompanying documents for presentment and, upon learning that the draft has not been paid or accepted in due course ((must)), shall seasonably notify its customer of ((such)) the fact even though it may have discounted or bought the draft or extended credit available for withdrawal as of right.

      Sec. 114. RCW 62A.4-502 and 1965 ex.s. c 157 s 4-502 are each amended to read as follows:

      PRESENTMENT OF "ON ARRIVAL" DRAFTS. ((When)) If a draft or the relevant instructions require presentment "on arrival", "when goods arrive" or the like, the collecting bank need not present until in its judgment a reasonable time for arrival of the goods has expired. Refusal to pay or accept because the goods have not arrived is not dishonor; the bank must notify its transferor of ((such)) the refusal but need not present the draft again until it is instructed to do so or learns of the arrival of the goods.

      Sec. 115. RCW 62A.4-503 and 1965 ex.s. c 157 s 4-503 are each amended to read as follows:

      RESPONSIBILITY OF PRESENTING BANK FOR DOCUMENTS AND GOODS; REPORT OF REASONS FOR DISHONOR; REFEREE IN CASE OF NEED. Unless otherwise instructed and except as provided in Article 5, a bank presenting a documentary draft:

      (((a))) (1) Must deliver the documents to the drawee on acceptance of the draft if it is payable more than three days after presentment; otherwise, only on payment; and

      (((b))) (2) Upon dishonor, either in the case of presentment for acceptance or presentment for payment, may seek and follow instructions from any referee in case of need designated in the draft or, if the presenting bank does not choose to utilize ((his)) the referee's services, it must use diligence and good faith to ascertain the reason for dishonor, must notify its transferor of the dishonor and of the results of its effort to ascertain the reasons therefor, and must request instructions. ((But)) However, the presenting bank is under no obligation with respect to goods represented by the documents except to follow any reasonable instructions seasonably received; it has a right to reimbursement for any expense incurred in following instructions and to prepayment of or indemnity for ((such)) those expenses.

      Sec. 116. RCW 62A.4-504 and 1965 ex.s. c 157 s 4-504 are each amended to read as follows:

      PRIVILEGE OF PRESENTING BANK TO DEAL WITH GOODS; SECURITY INTEREST FOR EXPENSES. (((1))) (a) A presenting bank ((which)) that, following the dishonor of a documentary draft, has seasonably requested instructions but does not receive them within a reasonable time may store, sell, or otherwise deal with the goods in any reasonable manner.

      (((2))) (b) For its reasonable expenses incurred by action under subsection (((1))) (a) the presenting bank has a lien upon the goods or their proceeds, which may be foreclosed in the same manner as an unpaid seller's lien.

      NEW SECTION. Sec. 117. For the purposes of maintaining the uniformity of the Uniform Commercial Code (Title 62A RCW), the code reviser may reuse the codification numbers of those sections repealed in section 76 of this act.

      NEW SECTION. Sec. 118. A new section is added to chapter 30.22 RCW to read as follows:



      A financial institution may charge a customer for furnishing items or copies of items as defined in RCW 62A.4-104, in excess of the number of free items or copies of items provided for in 62A.4-406(b), fifty cents per copy furnished plus fees for retrieval at a rate not to exceed the rate assessed when complying with summons issued by the Internal Revenue Service.

      NEW SECTION. Sec. 119. No provision in this act changes or modifies existing common law or other law of Washington state concerning the recovery of attorneys' fees.

      NEW SECTION. Sec. 120. This act shall take effect July 1, 1994."


MOTIONS


     On motion of Senator Moore, the following title amendment was adopted:

     On page 1, line 1 of the title, after "code;" strike the remainder of the title and insert "amending RCW 62A.1-201, 62A.1-207, 62A.3-101, 62A.3-102, 62A.3-103, 62A.3-104, 62A.3-105, 62A.3-106, 62A.3-107, 62A.3-108, 62A.3-109, 62A.3-110, 62A.3-111, 62A.3-112, 62A.3-113, 62A.3-114, 62A.3-115, 62A.3-116, 62A.3-117, 62A.3-118, 62A.3-119, 62A.3-201, 62A.3-202, 62A.3-203, 62A.3-204, 62A.3-205, 62A.3-206, 62A.3-207, 62A.3-301, 62A.3-302, 62A.3-303, 62A.3-304, 62A.3-305, 62A.3-306, 62A.3-307, 62A.3-401, 62A.3-402, 62A.3-403, 62A.3-404, 62A.3-405, 62A.3-406, 62A.3-407, 62A.3-408, 62A.3-409, 62A.3-410, 62A.3-411, 62A.3-412, 62A.3-413, 62A.3-414, 62A.3-415, 62A.3-416, 62A.3-417, 62A.3-418, 62A.3-419, 62A.3-501, 62A.3-502, 62A.3-503, 62A.3-504, 62A.3-505, 62A.3-512, 62A.3-515, 62A.3-520, 62A.3-522, 62A.3-525, 62A.3-601, 62A.3-602, 62A.3-603, 62A.3-604, 62A.3-605, 62A.4-101, 62A.4-102, 62A.4-103, 62A.4-104, 62A.4-105, 62A.4-106, 62A.4-107, 62A.4-108, 62A.4-109, 62A.4-201, 62A.4-202, 62A.4-203, 62A.4-204, 62A.4-205, 62A.4-206, 62A.4-207, 62A.4-208, 62A.4-209, 62A.4-210, 62A.4-211, 62A.4-212, 62A.4-213, 62A.4-214, 62A.4-301, 62A.4-302, 62A.4-303, 62A.4-401, 62A.4-402, 62A.4-403, 62A.4-405, 62A.4-406, 62A.4-407, 62A.4-501, 62A.4-502, 62A.4-503, and 62A.4-504; adding a new section to chapter 30.22 RCW; adding new sections to Title 62A RCW; creating new sections; repealing RCW 62A.3-120, 62A.3-121, 62A.3-122, 62A.3-208, 62A.3-506, 62A.3-507, 62A.3-508, 62A.3-509, 62A.3-510, 62A.3-511, 62A.3-606, 62A.3-701, 62A.3-801, 62A.3-802, 62A.3-803, 62A.3-804, and 62A.3-805; and providing an effective date."


     On motion of Senator Moore, the rules were suspended, Substitute House Bill No. 1014, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 1014, as amended by the Senate.


ROLL CALL


     The Secretary called the roll on the final passage of Substitute House Bill No. 1014, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 42; Nays, 0; Absent, 1; Excused, 6.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Drew, Erwin, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, McDonald, Moore, Nelson, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 42.

     Absent: Senator Newhouse - 1.

     Excused: Senators Hochstatter, Moyer, Niemi, Owen, Sellar and Talmadge - 6.

     SUBSTITUTE HOUSE BILL NO. 1014, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


MOTION


     On motion of Senator Oke, Senator Newhouse was excused.


SECOND READING


     HOUSE BILL NO. 1351, by Representatives Veloria, Heavey, King and Lisk (by request of Department of Labor and Industries)

 

Defining hospital in regard to self-insurers.


     The bill was read the second time.


MOTION


     On motion of Senator Moore, the rules were suspended, House Bill No. 1351 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of House Bill No. 1351.


ROLL CALL


     The Secretary called the roll on the final passage of House Bill No. 1351 and the bill passed the Senate by the following vote: Yeas, 42; Nays, 0; Absent, 0; Excused, 7.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Drew, Erwin, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, McDonald, Moore, Nelson, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 42.

     Excused: Senators Hochstatter, Moyer, Newhouse, Niemi, Owen, Sellar and Talmadge - 7.

     HOUSE BILL NO. 1351, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


SECOND READING


     SUBSTITUTE HOUSE BILL NO. 1582, by House Committee on Financial Institutions and Insurance (originally sponsored by Representatives Zellinsky, Mielke, R. Meyers, Dellwo, Campbell, Dorn, Dyer and Basich)

 

Permitting certain transactions by insurance agent-brokers.


     The bill was read the second time.


MOTION


     On motion of Senator Moore, the rules were suspended, Substitute House Bill No. 1582 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 1582.


ROLL CALL


     The Secretary called the roll on the final passage of Substitute House Bill No. 1582 and the bill passed the Senate by the following vote: Yeas, 42; Nays, 0; Absent, 1; Excused, 6.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Drew, Erwin, Franklin, Fraser, Gaspard, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, McDonald, Moore, Nelson, Newhouse, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 42.

     Absent: Senator Hargrove - 1.

     Excused: Senators Hochstatter, Moyer, Niemi, Owen, Sellar and Talmadge - 6.

     SUBSTITUTE HOUSE BILL NO. 1582, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


     There being no objection, the President advanced the Senate to the seventh order of business.

     There being no objection, the Senate resumed consideration of Engrossed Substitute House Bill No. 1662, as amended by the Senate, deferred on third reading April 7, 1993.


MOTIONS


     On motion of Senator Skratek, the rules were suspended, Engrossed Substitute House Bill No. 1662, as amended by the Senate, was returned to second reading and read the second time.


     Senator Skratek moved that the Senate reconsider the vote by which the Committee on Trade, Technology and Economic Development striking amendment was adopted.

     The President declared the question before the Senate to be the motion by Senator Skratek to reconsider the vote by which the Committee on Trade, Technology and Economic Development striking amendment to Engrossed Substitute House Bill No. 1662 was adopted.

     The motion for reconsideration of the Committee on Trade, Technology and Economic Development striking amendment to Engrossed Substitute House Bill No. 1662 carried.


MOTION


     Senator Vognild moved that the following amendments by Senators Vognild and Nelson to the Committee on Trade, Technology and Economic Development amendment be considered simultaneously and be adopted:

     On page 4, line 16 of the amendment, after "state" strike "and federally recognized Indian tribes"

      On page 4, line 24 of the amendment, after "subdivision" strike "or tribe"

      On page 5, line 27 of the amendment, after "subdivision" strike "or tribe"

      On page 5, line 31 of the amendment, after "subdivision" strike "or tribe"

      On page 5, beginning on line 37 of the amendment, after "subdivision" strike "or federally recognized Indian tribe"

      On page 6, line 6 of the amendment, after "subdivision" strike "or federally recognized Indian tribe"

      On page 7, beginning on line 4 of the amendment, after "subdivision" strike "or federally recognized Indian tribe"

      On page 8, line 10 of the amendment, after "subdivisions" strike "and federally recognized Indian tribes"

      On page 8, line 36 of the amendment, after "subdivision" strike "or tribe"

     Debate ensued.

     The President declared the question before the Senate to be the adoption of the amendments by Senator Vognild and Nelson on page 4, lines 16 and 24; page 5, lines 27, 31, and beginning line 37; page 6, line 6; page 7, beginning on line 4; and page 8, lines 10 and 36, to the Committee on Trade, Technology and Economic Development striking amendment, on reconsideration, to Engrossed Substitute House Bill No. 1662.

     The motion by Senator Vognild carried and the amendments to the Committee on Trade, Technology and Economic Development striking amendment, on reconsideration, were adopted.

     The President declared the question before the Senate to be the adoption of the Committee on Trade, Technology and Economic Development striking amendment, as amended on reconsideration, to Engrossed Substitute House Bill No. 1662.

     The Committee on Trade, Technology and Economic Development striking amendment, as amended on reconsideration, to Engrossed Substitute House Bill No. 1662 was adopted.


MOTION


     On motion of Senator Skratek, the rules were suspended, Engrossed Substitute House Bill No. 1662, as amended by the Senate under suspension of the rules, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute House Bill No. 1662, as amended by the Senate under suspension of the rules.


ROLL CALL


     The Secretary called the roll on the final passage of Engrossed Substitute House Bill No. 1662, as amended by the Senate under suspension of the rules, and the bill passed the Senate by the following vote: Yeas, 44; Nays, 0; Absent, 0; Excused, 5.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Drew, Erwin, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, McDonald, Moore, Nelson, Newhouse, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sellar, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 44.

     Excused: Senators Hochstatter, Moyer, Niemi, Owen and Talmadge - 5.

     ENGROSSED SUBSTITUTE HOUSE BILL NO. 1662, as amended by the Senate under suspension of the rules, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


MOTION


     On motion of Senator Jesernig, the Senate advanced to the eighth order of business.


MOTION


     On motion of Senator Bauer, the following resolution was adopted:


SENATE RESOLUTION 1993-8617


By Senators Bauer, Cantu, Prince, Jesernig, West and Sutherland


     WHEREAS, The Washington State Legislature in 1981 established the Washington Scholars Program to recognize selected senior students from Washington public and private high schools for their academic achievements, leadership abilities, and community service contributions; and

     WHEREAS, Three senior students are selected from each of the state's forty-nine legislative districts by a review committee composed of distinguished secondary and postsecondary educators; and

     WHEREAS, The students selected for special recognition as Washington Scholars have distinguished themselves by their energy and diversity as student leaders; as participants in music, debate, sports, and other programs; and through valuable service to their communities; and

     WHEREAS, The families of the students have nurtured and supported the interests and talents of their children; and

     WHEREAS, The state of Washington benefits from the accomplishments of these caring and gifted individuals, not only as students, but as citizens of our communities and our state;

     NOW, THEREFORE, BE IT RESOLVED, That the Senate commend the families of these students for their encouragement and support; and

     BE IT FURTHER RESOLVED, That the Washington Scholars be recognized and congratulated for their hard work, dedication, and maturity in achieving this noteworthy accomplishment; and

     BE IT FURTHER RESOLVED, That the Secretary of the Senate immediately transmit copies of this resolution to all of the Washington scholars from each of the forty-nine legislative districts.


     Senators Bauer and Prince spoke to Senate Resolution 1993-8617.


INTRODUCTION OF SPECIAL GUESTS


     The President introduced and congratulated the Washington Scholars and their parents who were seated in the gallery.


     There being no objection, the President returned the Senate to the sixth order of business.


SECOND READING


     HOUSE BILL NO. 1395, by Representatives Scott, Long, G. Cole, Riley, Johanson, Leonard, Ogden, King and Locke

 

Allowing counties to impose additional marriage license fees for funding family services.


     The bill was read the second time.


MOTION


     Senator Nelson moved that the following amendment be adopted:

     Strike everything after the enacting clause and insert the following:

      "Sec. 1. RCW 36.18.010 and 1991 c 26 s 2 are each amended to read as follows:

      County auditors or recording officers shall collect the following fees for their official services:

      For recording instruments, for the first page, legal size (eight and one-half by fourteen inches or less), five dollars; for each additional legal size page, one dollar; the fee for recording multiple transactions contained in one instrument will be calculated individually for each transaction requiring separate indexing as required under RCW 65.04.050;

      For preparing and certifying copies, for the first legal size page, three dollars; for each additional legal size page, one dollar;

      For preparing noncertified copies, for each legal size page, one dollar;

      For administering an oath or taking an affidavit, with or without seal, two dollars;

      For issuing a marriage license, ((eight)) fifteen dollars, (eight dollars of this fee ((includes)) is for the purpose of taking necessary affidavits, filing returns, indexing, and transmittal of a record of the marriage to the state registrar of vital statistics; the remainder is for the funding of family service centers) plus an additional five-dollar fee for use and support of the prevention of child abuse and neglect activities to be transmitted monthly to the state treasurer and deposited in the state general fund, which five-dollar fee shall expire June 30, 1995, plus an additional ten-dollar fee to be transmitted monthly to the state treasurer and deposited in the state general fund. The legislature intends to appropriate an amount at least equal to the revenue generated by this fee for the purposes of the displaced homemaker act, chapter 28B.04 RCW;

      For searching records per hour, eight dollars;

      For recording plats, fifty cents for each lot except cemetery plats for which the charge shall be twenty-five cents per lot; also one dollar for each acknowledgment, dedication, and description: PROVIDED, That there shall be a minimum fee of twenty-five dollars per plat;

      For recording of miscellaneous records, not listed above, for first legal size page, five dollars; for each additional legal size page, one dollar;

      For modernization and improvement of the recording and indexing system, a surcharge as provided in RCW 36.22.170."

     Debate ensued.


MOTION


     On motion of Senator Jesernig, further consideration of House Bill No. 1395 was deferred.


SECOND READING


     ENGROSSED SUBSTITUTE HOUSE BILL NO. 1493, by House Committee on Trade, Economic Development and Housing (originally sponsored by Representatives Wineberry, Forner, Shin, Sheldon, Leonard, Basich, Locke, J. Kohl, Morris and Anderson)

 

Assisting minority and women-owned businesses.


     The bill was read the second time.


MOTIONS


     Senator Skratek moved that the following Committee on Trade, Technology and Economic Development amendment be adopted:

     Strike everything after the enacting clause and insert the following:

      "NEW SECTION. Sec. 1. INTENT. It is the intent of the legislature to combat discrimination in the economy.

      (1) The legislature finds that discrimination is in part responsible for:

      (a) The disproportionately small percentage of the state's businesses that are owned by minorities and women;

      (b) The limited and unequal opportunity minority and women entrepreneurs and business owners have to procure small business financing; and

      (c) The difficulty many minority and women-owned contracting businesses have in securing bonds and contract work.

      (2) The legislature further finds that:

      (a) Many minority and women entrepreneurs and business owners lack training in how to establish and operate a business. This lack of training inhibits their competitiveness when they apply for business loans, bonds, and contracts;

      (b) Minorities and women are an increasingly expanding portion of the population and work force. In order for these individuals to fully contribute to the society and economy it is necessary to ensure that minority and women entrepreneurs and business owners are provided an equal opportunity to procure small business financing, bonds, and contracts; and

      (c) The growth of small businesses will have a favorable impact on the Washington economy by creating jobs, increasing competition in the marketplace, and expanding tax revenues. Access to financial markets, bonds, and contracts by entrepreneurs and small business owners is vital to this process. Without reasonable access to financing, bonds, and contracts, talented and aggressive entrepreneurs and small business owners are cut out of the economic system and the state's economy suffers.

      (3) Therefore, the legislature declares there to be a substantial public purpose in providing technical assistance in the areas of marketing, finance, and management, and access to capital resources, bonds, and contracts, to help start or expand a minority or women-owned business, and specifically to encourage and make possible greater participation by minorities and women in international trade, public works and construction, and public facility concessions. To accomplish these purposes, it is the intent of the legislature to:

      (a) Develop or contract for training courses in financing, marketing, managing, accounting, and recordkeeping for a small business and to make these programs available to minority and women entrepreneurs and small business owners;

      (b) Make public works and construction projects, public facility concessions, and purchase of goods and services accessible to a greater number of minority and women-owned businesses;

      (c) Provide for the lending of nonstate funds to qualified minority and women entrepreneurs and business owners in order to provide the maximum practicable opportunity for innovative minority and women entrepreneurs and business owners to compete for small business financing; and

      (d) Provide professional services assistance grants and bond guarantees on behalf of qualified contractors in order to provide the maximum practicable opportunity for minority and women-owned contracting businesses to participate in the Washington state economy by bidding and completing various public and private contracting jobs.

      NEW SECTION. Sec. 2. DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

      (1) "Minority" means persons of color, including African-Americans, Hispanic/Latino Americans, Native Americans, and Asian/Pacific Islanders Americans;

      (2) "Minority and women-owned business" means any resident minority business enterprise or women's business enterprise, certified as such by the office of minority and women's business enterprises under chapter 39.19 RCW and consistent with subsection (1) of this section.


I. EDUCATION AND TECHNICAL ASSISTANCE


      Sec. 3. RCW 43.31.085 and 1989 c 430 s 2 are each amended to read as follows:

      MARKETING, FINANCE, AND MANAGEMENT ASSISTANCE. The business assistance center shall:

      (1) Serve as the state's lead agency and advocate for the development and conservation of businesses.

      (2) Coordinate the delivery of state programs to assist businesses.

      (3) Provide comprehensive referral services to businesses requiring government assistance.

      (4) Serve as the business ombudsman within state government and advise the governor and the legislature of the need for new legislation to improve the effectiveness of state programs to assist businesses.

      (5) Aggressively promote business awareness of the state's business programs and distribute information on the services available to businesses.

      (6) Develop, in concert with local economic development and business assistance organizations, coordinated processes that complement both state and local activities and services.

      (7) ((The business assistance center shall)) Work with other federal, state, and local agencies and organizations to ensure that business assistance services including small business, trade services, and distressed area programs are provided in a coordinated and cost-effective manner.

      (8) Provide or contract for technical assistance to minority and women-owned business enterprises in a variety of areas, including, but not limited to, marketing, finance, bidding and estimating assistance, public contracting assistance, and management.

      (9) In collaboration with the child care coordinating committee in the department of social and health services, prepare and disseminate information on child care options for employers and the existence of the program. As much as possible, and through interagency agreements where necessary, such information should be included in the routine communications to employers from (a) the department of revenue, (b) the department of labor and industries, (c) the department of community development, (d) the employment security department, (e) the department of trade and economic development, (f) the small business development center, and (g) the department of social and health services.

      (((9))) (10) In collaboration with the child care coordinating committee in the department of social and health services, compile information on and facilitate employer access to individuals, firms, organizations, and agencies that provide technical assistance to employers to enable them to develop and support child care services or facilities.

      (((10))) (11) Actively seek public and private money to support the child care facility fund described in RCW 43.31.502, staff and assist the child care facility fund committee as described in RCW 43.31.504, and work to promote applications to the committee for loan guarantees, loans, and grants.

      Sec. 4. RCW 43.31.055 and 1985 c 466 s 6 are each amended to read as follows:

      EXPORT ASSISTANCE. The department shall assist in expanding the state's role as a major international gateway for landing and transshipping goods bound for domestic and foreign markets. The department shall identify and work with Washington businesses, especially minority and women-owned businesses and ethnic community-based organizations, which can utilize state assistance to increase domestic and foreign exports and are capable of increasing production of goods and services, including but not limited to manufactured goods, raw materials, services, and retail trade. The department shall participate in trade and industry exhibitions both foreign and domestic to promote and market state products and services. The department's activities shall include, but not be limited to:

      (1) Operating an active and vigorous effort to market the state's products and services internationally, coordinated with private and public international trade efforts throughout the state.

      (2) Coordinating with the domestic and foreign export market development activities of the state department of agriculture.

      (3) Sending delegations to foreign countries and other states to promote trade with Washington.

      (4) Acting as a centralized location for the assimilation and distribution of trade information.

      (5) Identifying domestic and international markets in which minority and women-owned businesses may have an advantage and providing technical assistance to develop capacity for minority and women-owned businesses to participate in international trade.

      NEW SECTION. Sec. 5. A new section is added to chapter 43.210 RCW to read as follows:

      The small business export finance assistance center shall develop a minority business export outreach program. The program shall provide outreach services to minority-owned businesses in Washington to inform them of the importance of and opportunities in international trade, and to inform them of the export assistance programs available to assist these businesses to become exporters.

      NEW SECTION. Sec. 6. A new section is added to chapter 43.31 RCW to read as follows:

      ENTREPRENEURIAL TRAINING COURSES. The department of trade and economic development shall contract with public and private agencies, institutions, and organizations to conduct entrepreneurial training courses for minority and women-owned small businesses. The instruction shall be intensive, practical training courses in financing, marketing, managing, accounting, and recordkeeping for a small business, with an emphasis on federal, state, local, or private programs available to assist small businesses. The business assistance center may recommend professional instructors, with practical knowledge and experience on how to start and operate a business, to teach the courses. Instruction shall be offered in major population centers throughout the state at times and locations which are convenient for minority and women small business owners and entrepreneurs.

      NEW SECTION. Sec. 7. If specific funding for the purposes of sections 5 and 6 of this act, referencing sections 5 and 6 of this act by bill and section numbers, is not provided by June 30, 1993, in the omnibus appropriations act, sections 5 and 6 of this act are null and void.


II. FAIRNESS IN CONTRACTING AND CONCESSIONS


      Sec. 8. RCW 39.19.060 and 1983 c 120 s 6 are each amended to read as follows:

      Each state agency and educational institution shall comply with the annual goals established for that agency or institution under this chapter for public works and procuring goods or services. This chapter applies to all public works and procurement by state agencies and educational institutions, including all contracts and other procurement under chapters 28B.10, 39.04, 39.29, 43.19, and 47.28 RCW. Each state agency shall adopt a plan, developed in consultation with the director and the advisory committee, to insure that minority and women-owned businesses are afforded the maximum practicable opportunity to directly and meaningfully participate in the execution of public contracts for public works and goods and services. The plan shall include specific measures the agency will undertake to increase the participation of certified minority and women-owned businesses. The office shall annually notify the governor, the state auditor, and the legislative budget committee of all agencies and educational institutions not in compliance with this chapter.

      NEW SECTION. Sec. 9. A new section is added to chapter 39.19 RCW to read as follows:

      (1) State agencies shall not require a performance bond for any public works project that does not exceed twenty-five thousand dollars awarded to a prequalified and certified minority or woman-owned business that has been prequalified as provided under subsection (2) of this section.

      (2) A limited prequalification questionnaire shall be required assuring:

      (a) That the bidder has adequate financial resources or the ability to secure such resources;

      (b) That the bidder can meet the performance schedule;

      (c) That the bidder is experienced in the type of work to be performed; and

      (d) That all equipment to be used is adequate and functioning and that all equipment operators are qualified to operate such equipment.


III. LOAN FUND AND GUARANTEES


      Sec. 10. RCW 43.168.030 and 1985 c 164 s 3 are each amended to read as follows:

      (1) The Washington state development loan fund committee is established as an entity within the department of community development. The committee shall have ((seven)) eight members. The director shall appoint the members, subject to the following requirements: (a) Three members shall be experienced in investment finance and have skills in providing capital to new and innovative businesses, in starting and operating businesses and providing professional services to small or expanding businesses; (b) two members shall be residents of distressed areas; (c) one member shall represent organized labor; ((and)) (d) one member shall represent a minority business; and (e) one member shall represent a women-owned business. Careful consideration in making these appointments shall be taken to ensure that the various geographic regions of the state are represented, that members will be available for meetings on a regular basis, and will have a commitment to working with local governments and local development organizations.

      (2) Each member appointed by the director shall serve a term of three years, except that of the members first appointed, two shall serve two-year terms and two shall serve one-year terms. A person appointed to fill a vacancy of a member shall be appointed in a like manner and shall serve for only the unexpired term. A member is eligible for reappointment. A member may be removed by the director only for cause.

      (3) The director shall designate a member of the board as its chairperson. The committee may elect such other officers as it deems appropriate. ((Four)) Five members of the committee constitute a quorum and ((four)) five affirmative votes are necessary for the transaction of business or the exercise of any power or function of the committee.

      (4) The members of the committee shall serve without compensation, but are entitled to reimbursement for actual and necessary expenses incurred in the performance of official duties in accordance with RCW 43.03.050 and 43.03.060.

      (5) Members shall not be liable to the state, to the fund, or to any other person as a result of their activities, whether ministerial or discretionary, as members except for wilful dishonesty or intentional violations of law. The department may purchase liability insurance for members and may indemnify these persons against the claims of others.

      Sec. 11. RCW 43.168.050 and 1990 1st ex.s. c 17 s 74 are each amended to read as follows:

      (1) The committee may only approve an application providing a loan for a project which the committee finds:

      (a) Will result in the creation of employment opportunities ((or)), the maintenance of threatened employment, or development or expansion of business ownership by minorities and women;

      (b) Has been approved by the director as conforming to federal rules and regulations governing the spending of federal community development block grant funds;

      (c) Will be of public benefit and for a public purpose, and that the benefits, including increased or maintained employment, improved standard of living, ((and)) the employment of disadvantaged workers, and development or expansion of business ownership by minorities and women, will primarily accrue to residents of the area;

      (d) Will probably be successful;

      (e) Would probably not be completed without the loan because other capital or financing at feasible terms is unavailable or the return on investment is inadequate.

      (2) The committee shall, subject to federal block grant criteria, give higher priority to economic development projects that contain provisions for child care.

      (3) The committee may not approve an application if it fails to provide for adequate reporting or disclosure of financial data to the committee. The committee may require an annual or other periodic audit of the project books.

      (4) The committee may require that the project be managed in whole or in part by a local development organization and may prescribe a management fee to be paid to such organization by the recipient of the loan or grant.

      (5)(a) Except as provided in (b) of this subsection, the committee shall not approve any application which would result in a loan or grant in excess of three hundred fifty thousand dollars.

      (b) The committee may approve an application which results in a loan or grant of up to seven hundred thousand dollars if the application has been approved by the director.

      (6) The committee shall fix the terms and rates pertaining to its loans.

      (7) Should there be more demand for loans than funds available for lending, the committee shall provide loans for those projects which will lead to the greatest amount of employment or benefit to a community. In determining the "greatest amount of employment or benefit" the committee shall also consider the employment which would be saved by its loan and the benefit relative to the community, not just the total number of new jobs or jobs saved.

      (8) To the extent permitted under federal law the committee shall require applicants to provide for the transfer of all payments of principal and interest on loans to the Washington state development loan fund created under this chapter. Under circumstances where the federal law does not permit the committee to require such transfer, the committee shall give priority to applications where the applicants on their own volition make commitments to provide for the transfer.

      (9) The committee shall not approve any application to finance or help finance a shopping mall.

      (10) For loans not made to minority and women-owned businesses, the committee shall make at least eighty percent of the appropriated funds available to projects located in distressed areas, and may make up to twenty percent available to projects located in areas not designated as distressed. For loans not made to minority and women-owned businesses, the committee shall not make funds available to projects located in areas not designated as distressed if the fund's net worth is less than seven million one hundred thousand dollars.

      (11) If an objection is raised to a project on the basis of unfair business competition, the committee shall evaluate the potential impact of a project on similar businesses located in the local market area. A grant may be denied by the committee if a project is not likely to result in a net increase in employment within a local market area.

      (12) For loans to minority and women-owned businesses who do not meet the credit criteria, the committee may consider nontraditional credit standards to offset past discrimination that has precluded full participation of minority or women-owned businesses in the economy. For applicants with high potential who do not meet the credit criteria, the committee shall consider developing alternative borrowing methods. For applicants denied loans due to credit problems, the committee shall provide financial counseling within available resources and provide referrals to credit rehabilitation services. In circumstances of competing applications, priority shall be given to members of eligible groups which previously have been least served by this fund.

      NEW SECTION. Sec. 12. A new section is added to chapter 43.168 RCW to read as follows:

      Subject to the restrictions contained in this chapter, the committee is authorized to approve applications of minority and women-owned businesses for loans or loan guarantees from the fund. Applications approved by the committee under this chapter shall conform to applicable federal requirements. The committee shall prioritize available funds for loan guarantees rather than loans when possible. The committee may enter into agreements with other public or private lending institutions to develop a joint loan guarantee program for minority and women-owned businesses. If such a program is developed, the committee may provide funds, in conjunction with the other organizations, to operate the program. This section does not preclude the committee from making individual loan guarantees.

      To the maximum extent practicable, the funds available under this section shall be made available on an equal basis to minority and women-owned businesses. The committee shall submit to the appropriate committees of the senate and house of representatives quarterly reports that detail the number of loans approved and the characteristics of the recipients by ethnic and gender groups.

      Sec. 13. RCW 43.168.070 and 1987 c 461 s 5 are each amended to read as follows:

      The committee may receive and approve applications on a monthly basis but shall receive and approve applications on at least a quarterly basis for each fiscal year. The committee shall make every effort to simplify the loan process for applicants. Department staff shall process and assist in the preparation of applications. Each application shall show in detail the nature of the project, the types and numbers of jobs to be created, wages to be paid to new employees, and methods to hire unemployed persons from the area. Each application shall contain a credit analysis of the business to receive the loan. The chairperson of the committee may convene the committee on short notice to respond to applications of a serious or immediate nature.

      Sec. 14. RCW 43.168.100 and 1986 c 204 s 1 are each amended to read as follows:

      The committee may make grants of state funds to local governments which qualify as "entitlement communities" under the federal law authorizing community development block grants. These grants may only be made on the condition that the entitlement community provide the committee with assurances that it will: (1) Spend the grant moneys for purposes and in a manner which satisfies state constitutional requirements; (2) spend the grant moneys for purposes and in a manner which would satisfy federal requirements; and (3) spend ((double the)) at least the same amount of the grant for loans to businesses from the federal funds received by the entitlement community.


IV. BONDING ASSISTANCE


      NEW SECTION. Sec. 15. DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout sections 16 through 25 of this act.

      (1) "Approved surety company" means a surety company approved by the department for participation in providing direct bonding assistance to qualified contractors.

      (2) "Bond" means any bond or security required for bid, payment, or performance of contracts.

      (3) "Department" means the department of trade and economic development.

      (4) "Program" means the Washington state small business bonding assistance program provided for in this chapter.

      (5) "Qualified contractor" means any resident minority business enterprise or women's business enterprise, as determined by the department to be consistent with the requirements of chapter 39.19 RCW and engaged in the contracting business, which has obtained a certificate of accreditation from the Washington state small business bonding assistance program.

      NEW SECTION. Sec. 16. PROGRAM ESTABLISHED. There is established within the department of trade and economic development the Washington state small business bonding assistance program to assist resident minority and women-owned small contracting businesses to acquire the managerial and financial skills, standards, and assistance necessary to enable them to obtain bid, payment, and performance bonds from surety companies for either advertised or designated contracts. The department shall implement the program by establishing a course of instruction as set forth in section 18 of this act. The department shall encourage surety companies and other private interests to help implement this course of instruction to assist minority and women-owned small contracting businesses. The department shall adopt rules to ensure the proper implementation of the program set forth in this chapter.

      NEW SECTION. Sec. 17. ASSISTANCE. The department shall seek information, advice, and assistance from regional minority contractor organizations, and the United States small business administration and any other appropriate organization or agency.

      The following departments, offices, and agencies shall, at the request of the department, provide information, advice, and assistance to the department:

      (1) The department of general administration;

      (2) The Washington state business assistance center;

      (3) The office of the insurance commissioner;

      (4) The Washington state economic development finance authority; and

      (5) The office of minority and women's business enterprises.

      NEW SECTION. Sec. 18. SPECIALIZED INSTRUCTION FOR SMALL CONTRACTING BUSINESSES. The business assistance center shall modify the entrepreneurial training course established in section 6 of this act in order to provide instruction which is appropriate to the specific needs of contracting businesses. This course of instruction shall be available to resident minority and women-owned small business contractors. The instruction shall be intensive, practical training courses in financing, bidding for contracts, managing, accounting, and recordkeeping for a contracting business, with an emphasis on federal, state, local, or private programs available to assist small contractors. The business assistance center shall appoint professional instructors, with practical knowledge and experience in the field of small business contracting, to teach those courses developed to meet the specific needs of contracting businesses. Instruction shall be offered in major population centers throughout the state at times and locations which are convenient for people in the contracting business.

      NEW SECTION. Sec. 19. ACCREDITATION OF SMALL CONTRACTING BUSINESSES. Any resident minority or women-owned small business contractor may select a key management employee or employees to attend any course of instruction established under section 6 of this act. When the records, maintained by the business assistance center, indicate that a key management employee of a small contracting business has attended all the courses offered, and has successfully completed any tests required, the department shall award the small contracting business a certificate of accreditation which acknowledges successful completion of the courses. The department may also award a certificate of accreditation if a review of the key management employee's education, experience, and business history indicates that the business already possesses the knowledge and skills offered through the course of instruction, or if the key management employee successfully completes all tests required of those who attend the entrepreneurial training course.

      NEW SECTION. Sec. 20. PROFESSIONAL SERVICES ASSISTANCE--GRANTS. Any qualified contractor seeking a grant for professional services assistance may apply to the department. If approved, the department may enter into an agreement to provide a grant of up to two thousand five hundred dollars on behalf of a qualified contractor for the acquisition of the professional services of certified public accountants, construction management companies, or any other technical, surety, financial, or managerial professionals. This assistance is only available to a qualified contractor on a one-time basis.

      NEW SECTION. Sec. 21. GRANT MONITORING. The department shall administer all grants issued to assist qualified contractors and shall monitor the performance of all grant recipients in order to provide such further assistance as is necessary to ensure that all program requirements are met and that the program's purpose is fulfilled. However, nothing in this chapter should be construed to restrict the rendering of program services to any qualified contractor over and above the services provided by the grant.

      NEW SECTION. Sec. 22. BOND GUARANTEE APPLICATIONS. If a qualified contractor makes a bond application to an approved surety company for a public or private contracting job, but fails to obtain the bond because the contractor is unable to meet the requirements of the surety company on such bonding contracts, for reasons other than nonperformance, and if the approved surety company applies to the department to have the bond guaranteed by the program, then the department may provide a bond guarantee of up to seventy-five thousand dollars on behalf of the qualified contractor.

      NEW SECTION. Sec. 23. BOND GUARANTEE APPROVAL. Upon receipt of an approved surety company's application for a bond guarantee, the program supervisor shall review the application in order to verify that:

      (1) The bond being sought by the qualified contractor is needed;

      (2) The contracting job is within the qualified contractor's capability to perform; and

      (3) The qualified contractor has not been denied a bond due to nonperformance.

      Based upon subsections (1) through (3) of this section, the department shall either approve or disapprove the application. If the application is approved, the department has the authority to enter into a contract with the approved surety company. Under the terms of this contract the approved surety company shall enter into a contract with, and issue the required bond to, the qualified contractor at the standard fees and charges usually made by the company for the type and amount of the bond issued. The bond issued by the approved surety company shall be guaranteed by money in the program fund. The approved surety company shall also agree to make a reasonable, good faith effort to pursue and collect any claims it may have against a qualified contractor who defaults on a bond guaranteed by the program, including, but not limited to, the institution of legal proceedings against the defaulting contractor, prior to collecting on the guarantee.

      NEW SECTION. Sec. 24. PROGRAM FUND ESTABLISHED. The Washington state small business bonding assistance program fund is created in the state treasury. Any amounts appropriated, donated, or granted to the program shall be deposited and credited to the program fund. Moneys in the program fund may be spent only after appropriation. Expenditures from the program fund shall only be used as follows:

      (1) To pay the implementation costs of the program provided for in this chapter;

      (2) To be disbursed by the department to enable qualified contractors to obtain services provided for in this chapter; and

      (3) To guarantee bonds issued pursuant to sections 22 and 23 of this act and to pay such bonds in the event of default by a qualified contractor.

      However, the full faith and credit of the state of Washington shall not be used to secure the bonds and the state's liability shall be limited to the money appropriated by the legislature.

      NEW SECTION. Sec. 25. FUND SUPPORT. The department shall solicit funds and support from surety companies and other public and private entities with an interest in assisting Washington's small business contractors and may enter into agreements with such companies and interests by which they provide funds to the program fund to be matched with funds from nonstate sources.

      NEW SECTION. Sec. 26. The department may receive gifts, grants, and endowments from public or private sources that may be made from time to time, in trust or otherwise, for the use and benefit of the Washington state small business bonding assistance program and spend gifts, grants, endowments or any income from the public or private sources according to their terms.

      NEW SECTION. Sec. 27. If specific funding for the purposes of sections 15 through 26 of this act, referencing sections 15 through 26 of this act by bill and section numbers, is not provided by June 30, 1993, in the omnibus appropriations act, sections 15 through 26 of this act are null and void.


V. LINKED DEPOSITS


      Sec. 28. RCW 39.19.030 and 1989 c 175 s 85 are each amended to read as follows:

      There is hereby created the office of minority and women's business enterprises. The governor shall appoint a director for the office, subject to confirmation by the senate. The director may employ a deputy director and a confidential secretary, both of which shall be exempt under chapter 41.06 RCW, and such staff as are necessary to carry out the purposes of this chapter.

      The office shall consult with the minority and women's business enterprises advisory committee to:

      (1) Develop, plan, and implement programs to provide an opportunity for participation by qualified minority and women-owned and controlled businesses in public works and the process by which goods and services are procured by state agencies and educational institutions from the private sector;

      (2) Develop a comprehensive plan insuring that qualified minority and women-owned and controlled businesses are provided an opportunity to participate in public contracts for public works and goods and services;

      (3) Identify barriers to equal participation by qualified minority and women-owned and controlled businesses in all state agency and educational institution contracts;

      (4) Establish annual overall goals for participation by qualified minority and women-owned and controlled businesses for each state agency and educational institution to be administered on a contract-by-contract basis or on a class-of-contracts basis;

      (5) Develop and maintain a central minority and women's business enterprise certification list for all state agencies and educational institutions. No business is entitled to certification under this chapter unless it meets the definition of small business concern as established by the office. All applications for certification under this chapter shall be sworn under oath;

      (6) Develop, implement, and operate a system of monitoring compliance with this chapter;

      (7) Adopt rules under chapter 34.05 RCW, the Administrative Procedure Act, governing: (a) Establishment of agency goals; (b) development and maintenance of a central minority and women's business enterprise certification program, including a definition of "small business concern" which shall be consistent with the small business requirements defined under section 3 of the Small Business Act, 15 U.S.C. Sec. 632, and its implementing regulations as guidance; (c) procedures for monitoring and enforcing compliance with goals, regulations, contract provisions, and this chapter; and (d) utilization of standard clauses by state agencies and educational institutions, as specified in RCW 39.19.050;

      (8) Develop and implement, in consultation with the supervisor of the division of banking, a system of monitoring minority and women's business enterprises' access to capital and rating as satisfactory or unsatisfactory the performance of each of the state's public depositaries in lending money for minority and women's business enterprises;

      (9) Submit an annual report to the governor and the legislature outlining the progress in implementing this chapter;

      (((9))) (10) Investigate complaints of violations of this chapter with the assistance of the involved agency or educational institution; and

      (((10))) (11) Cooperate and act jointly or by division of labor with the United States or other states, and with political subdivisions of the state of Washington and their respective minority, socially and economically disadvantaged and women business enterprise programs to carry out the purposes of this chapter. However, the power which may be exercised by the office under this subsection permits investigation and imposition of sanctions only if the investigation relates to a possible violation of chapter 39.19 RCW, and not to violation of local ordinances, rules, regulations, however denominated, adopted by political subdivisions of the state.

      Sec. 29. RCW 43.85.230 and 1984 c 177 s 20 are each amended to read as follows:

      The state treasurer may deposit moneys not required to meet current demands upon a term deposit basis not to exceed ((one year)) five years at such interest rates and upon such conditions as to withdrawals of such moneys as may be agreed upon between the state treasurer and any qualified public depositary.

      Sec. 30. RCW 43.86A.030 and 1982 c 74 s 1 are each amended to read as follows:

      Funds held in public depositaries not as demand deposits as provided in RCW 43.86A.020 and 43.86A.030, shall be available for a time certificate of deposit investment program according to the following formula: The state treasurer shall apportion to all participating depositaries an amount equal to five percent of the three year average mean of general state revenues as certified in accordance with Article VIII, section 1(b) of the state Constitution, or fifty percent of the total surplus treasury investment availability, whichever is less. Within thirty days after certification, those funds determined to be available according to this formula for the time certificate of deposit investment program shall be deposited in qualified public depositaries. These deposits shall be allocated among the participating depositaries on a basis to be determined by the state treasurer. Effective July 1, 1994, deposits shall be made only in those otherwise qualified public depositaries which have received a satisfactory rating from the office of minority and women's business enterprises under RCW 39.19.030(8). The formula so devised shall be a matter of public record giving consideration to, but not limited to deposits, assets, loans, capital structure, investments or some combination of these factors: PROVIDED, That, if in the judgment of the state treasurer the amount of allocation for certificates of deposit as determined by this section will impair the cash flow needs of the state treasury, the state treasurer may adjust the amount of the allocation accordingly.


VI. MISCELLANEOUS


      NEW SECTION. Sec. 31. This act may be known and cited as the omnibus minority and women-owned businesses assistance act.

      NEW SECTION. Sec. 32. Sections 1, 2, and 15 through 26 of this act shall constitute a new chapter in Title 43 RCW.

      NEW SECTION. Sec. 33. CAPTIONS NOT LAW. Part headings and section captions as used in this act do not constitute part of the law.

      NEW SECTION. Sec. 34. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

      NEW SECTION. Sec. 35. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1993."


MOTIONS


     On motion of Senator Skratek, the following Committee on Ways and Means amendment to the Committee on Trade, Technology and Economic Development striking amendment was adopted:

     On page 15, after line 23 of the amendment, strike all material through "accordingly." on page 18, line 13, and insert the following:


"V. WASHINGTON STATE LINKED DEPOSIT PROGRAM


      NEW SECTION. Sec. 28. The legislature finds that minority and women's business enterprises have been historically excluded from access to capital in the marketplace. The lack of capital has been a major barrier to the development and expansion of business by various minority groups and women. There has been a significant amount of attention on the capital needs of minority and women's business enterprises. It is the intent of the legislature to remedy the problem of a lack of access to capital by minority and women's business enterprises, and other small businesses by authorizing the state treasurer to operate a program that links state deposits to business loans by financial institutions to minority and women's business enterprises.

      NEW SECTION. Sec. 29. A new section is added to chapter 43.86A RCW to read as follows:

      (1) The state treasurer shall establish a linked deposit program for investment of deposits in qualified public depositaries. As a condition of participating in the program, qualified public depositaries must make qualifying loans as provided in this section. Each time certificate of deposit purchased by the state treasurer shall be equal to the amount of the qualifying loan made by the qualified public depositary. The state treasurer is authorized to set interest rates on certificates and on qualifying loans consistent with the intent of sections 28 through 32, chapter . . ., Laws of 1993 (sections 28 through 32 of this act) and sound financial practices.

      (2) Qualifying loans made under this section are those that:

      (a) Are loans that have terms that do not exceed five years;

      (b) Are made to a minority or women's business enterprise that has received state certification under chapter 39.19 RCW;

      (c) Are made to minority or women's business enterprises that are considered a small business as defined in RCW 43.31.025;

      (d) Are made where the interest rate on the loan to the minority or women's business enterprise does not exceed the interest rate on the corresponding time certificate of deposit by two hundred fifty basis points;

      (e) Are made where the points or fees charged at loan closing do not exceed one percent of the loan amount; and

      (f) Are consistent with other criteria set by the state treasurer.

      (3) In setting interest rates of time certificate of deposits, the state treasurer shall offer rates so that a two hundred basis point preference will be given to the qualified public depositary.

      NEW SECTION. Sec. 30. A new section is added to chapter 43.63A RCW to read as follows:

      (1) The department shall provide technical assistance and loan packaging services that enable minority and women-owned business enterprises to obtain financing under the linked deposit program created under section 29 of this act.

      (2) The department shall, in consultation with the state treasurer, monitor the performance of loans made to minority and women-owned business enterprises under section 29 of this act.

      Sec. 31. RCW 43.85.230 and 1984 c 177 s 20 are each amended to read as follows:

      The state treasurer may deposit moneys not required to meet current demands upon a term deposit basis not to exceed ((one year)) five years at such interest rates and upon such conditions as to withdrawals of such moneys as may be agreed upon between the state treasurer and any qualified public depositary.

      Sec. 32. RCW 43.86A.030 and 1982 c 74 s 1 are each amended to read as follows:

      (1) Funds held in public depositaries not as demand deposits as provided in RCW 43.86A.020 and 43.86A.030, shall be available for a time certificate of deposit investment program according to the following formula: The state treasurer shall apportion to all participating depositaries an amount equal to five percent of the three year average mean of general state revenues as certified in accordance with Article VIII, section 1(b) of the state Constitution, or fifty percent of the total surplus treasury investment availability, whichever is less. Within thirty days after certification, those funds determined to be available according to this formula for the time certificate of deposit investment program shall be deposited in qualified public depositaries. These deposits shall be allocated among the participating depositaries on a basis to be determined by the state treasurer.

      (2) The state treasurer may use up to fifty million dollars per year of all funds available under this section for the purposes of section 29 of this act. The amounts made available to these public depositaries shall be equal to the amounts of outstanding loans made under section 29 of this act.

      (3) The formula so devised shall be a matter of public record giving consideration to, but not limited to deposits, assets, loans, capital structure, investments or some combination of these factors((: PROVIDED, That)). However, if in the judgment of the state treasurer the amount of allocation for certificates of deposit as determined by this section will impair the cash flow needs of the state treasury, the state treasurer may adjust the amount of the allocation accordingly.

      NEW SECTION. Sec. 33. A new section is added to chapter 43.86A RCW to read as follows:

      The state and those acting as its agents are not liable in any manner for payment of the principal or interest on qualifying loans made under section 29 of this act. Any delay in payments or defaults on the part of the borrower does not in any manner affect the deposit agreement between the qualified public depositary and the state treasurer.

      NEW SECTION. Sec. 34. A new section is added to chapter 43.131 RCW to read as follows:

      The linked deposit program shall be terminated on June 30, 1996, as provided in section 35 of this act.

      NEW SECTION. Sec. 35. A new section is added to chapter 43.131 RCW to read as follows:

      The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective June 30, 1997:

      (1) Section 29 of this act;

      (2) Section 30 of this act; and

      (3) Section 33 of this act.

      NEW SECTION. Sec. 36. If specific funding for the purposes of sections 28 through 35 of this act, referencing sections 28 through 35 of this act by bill and section numbers, is not provided by June 30, 1993, in the omnibus appropriations act, sections 28 through 35 of this act are null and void."

      Renumber the remaining part headings and sections consecutively and correct internal references accordingly.


     On motion of Senator Pelz, the following amendment by Senator Pelz to the Committee on Trade, Technology and Economic Development striking amendment was adopted:

     On page 5, after line 23 of the amendment, insert the following:

     "NEW SECTION. Sec. 7. A new section is added to chapter 43.31 RCW to read as follows:

     BUSINESS ASSISTANCE CENTER MINORITY AND WOMEN BUSINESS DEVELOPMENT OFFICE. There is established within the department's business assistance center the minority and women business development office. This office shall provide business-related assistance to minorities and women as well as serve as an outreach program to increase minority and women-owned businesses' awareness and use of existing business assistance services."

     Renumber the remaining sections consecutively and correct internal references accordingly.

     The President declared the question before the Senate to be the adoption of the Committee on Trade, Technology and Economic Development striking amendment, as amended, to Engrossed Substitute House Bill No. 1493.

     The Committee on Trade, Technology and Economic Development striking amendment, as amended, to Engrossed Substitute House Bill No. 1493 was adopted.


MOTIONS


     On motion of Senator Skratek, the following title amendments were considered simultaneously and were adopted:

     On page 1, line 1 of the title, after "businesses;" strike the remainder of the title and insert "amending RCW 43.31.085, 43.31.055, 39.19.060, 43.168.030, 43.168.050, 43.168.070, 43.168.100, 39.19.030, 43.85.230, and 43.63A.030; adding a new section to chapter 43.210 RCW; adding a new section to chapter 43.31 RCW; adding a new section to chapter 39.19 RCW; adding a new section to chapter 43.168 RCW; adding new sections to chapter 43.131 RCW; adding a new chapter to Title 43 RCW; creating new sections; providing an effective date; and declaring an emergency."

     On page 19, beginning on line 6 of the title amendment, after "43.168.100," strike the remainder of the title amendment and insert "43.85.230, and 43.86A.030; adding a new section to chapter 43.210 RCW; adding a new section to chapter 43.31 RCW; adding a new section to chapter 39.19 RCW; adding a new section to chapter 43.168 RCW; adding new sections to chapter 43.86A RCW; adding a new section to chapter 43.63A RCW; adding new sections to chapter 43.131 RCW; adding a new chapter to Title 43 RCW; creating new sections; providing an effective date; and declaring an emergency."

     On page 19, at the beginning of line 8 of the title amendment, strike "adding a new section" and insert "adding new sections"


     On motion of Senator Skratek, the rules were suspended, Engrossed Substitute House Bill No. 1493, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute House Bill No. 1493, as amended by the Senate.


ROLL CALL


     The Secretary called the roll on the final passage of Engrossed Substitute House Bill No. 1493, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 44; Nays, 0; Absent, 0; Excused, 5.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Drew, Erwin, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, McDonald, Moore, Nelson, Newhouse, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sellar, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 44.

     Excused: Senators Hochstatter, Moyer, Niemi, Owen and Talmadge - 5.

     ENGROSSED SUBSTITUTE HOUSE BILL NO. 1493, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


MOTION


     On motion of Senator Oke, Senator McCaslin was excused.


SECOND READING


     ENGROSSED SUBSTITUTE HOUSE BILL NO. 1307, by House Committee on Trade, Economic Development and Housing (originally sponsored by Representatives Locke, Eide, Silver, Dunshee, L. Johnson, Pruitt, Brough, Sheldon, Jones, Long, Franklin, Talcott, J. Kohl, Wood, Lemmon, Jacobsen, Wang, Leonard, Quall, Rayburn and King)

 

Reauthorizing and modifying the Washington service corps.


     The bill was read the second time.


MOTION


     Senator Sheldon moved that the following Committee on Trade, Technology and Economic Development amendment be adopted:

     Strike everything after the enacting clause and insert the following:

      "Sec. 1. RCW 50.65.030 and 1987 c 167 s 3 are each amended to read as follows:

      The Washington service corps is established within the employment security department. The commissioner shall:

      (1) Appoint a director ((for the exchange)) and other personnel as necessary to carry out the purposes of this chapter;

      (2) Coordinate youth employment and training efforts under the department's jurisdiction and cooperate with other agencies or departments providing youth services to ensure that funds appropriated for the purposes of this chapter will not be expended to duplicate existing services, but will increase the services of youth to the state;

      (3) The employment security department is authorized to place subgrants with other federal, state, and local governmental agencies and private agencies to provide youth employment projects and to increase the numbers of youth employed;

      (4) Determine appropriate financial support levels by private business, community groups, foundations, public agencies, and individuals which will provide matching funds for enrollees in service projects under work agreements. The matching funds requirement may be waived for public agencies or reduced for private agencies;

      (5) Recruit enrollees who are residents of the state unemployed at the time of application and are at least eighteen years of age but have not reached their twenty-sixth birthday;

      (6) Recruit supervising agencies to host the enrollees in full-time service activities ((which shall not exceed six)) of eleven months' duration((, which may be extended for an additional six months by mutual consent));

      (7) Assist supervising agencies in the development of scholarships and matching funds from private and public agencies, individuals, and foundations in order to support a portion of the enrollee's stipend and benefits;

      (8) Develop general employment guidelines for placement of enrollees in supervising agencies to establish appropriate authority for hiring, firing, grievance procedures, and employment standards which are consistent with state and federal law;

      (9) Match enrollees with appropriate public agencies and available service projects;

      (10) Monitor enrollee activities for compliance with this chapter and compliance with work agreements;

      (11) Assist enrollees in transition to employment upon termination from the programs, including such activities as orientation to the labor market, on-the-job training, and placement in the private sector;

      (12) Establish a program for providing incentives to encourage successful completion of terms of enrollment in the service corps and the continuation of educational pursuits. Such incentives shall be in the form of educational assistance equivalent to two years of community or technical college tuition for eleven months of service. Educational assistance funding shall only be used for tuition, fees, and course-related books and supplies. Enrollees who receive educational assistance funding shall start using it within one year of their service completion and shall finish using it within four years of their service completion;

      (13) Enter into agreements with the state's community and technical college system and other educational institutions or independent nonprofit agencies to provide special education in basic skills, including reading, writing, and mathematics for those participants who may benefit by participation in such classes. Participation is not mandatory but shall be strongly encouraged.

      Sec. 2. RCW 50.65.040 and 1987 c 167 s 4 are each amended to read as follows:

      The commissioner may select and enroll in the Washington service corps program any person who is at least eighteen years of age but has not reached their twenty-sixth birthday, is a resident of the state, and who is not for medical, legal, or psychological reasons incapable of service. ((In the selection of enrollees of the service corps, preference shall be given to youths residing in areas, both urban and rural, in which there exists substantial unemployment above the state average.)) Efforts shall be made to enroll youths who are economically, socially, physically, or educationally disadvantaged. The commissioner may prescribe such additional standards and procedures in consultation with supervising agencies as may be necessary in conformance with this chapter. In addition, the commissioner may select and enroll youth fourteen to seventeen years of age on special projects during the summer and at other times during the school year that may complement and support their school curriculum or that link and support service with learning.

      Sec. 3. RCW 50.65.060 and 1987 c 167 s 6 are each amended to read as follows:

      Placements in the Washington service corps shall be made in supervising agencies under work agreements as provided under this chapter and shall include those assignments which provide for addressing community needs and conservation problems and will assist the community in economic development efforts. Each work agreement shall:

      (1) Demonstrate that the service project is appropriate for the enrollee's interests, skills, and abilities and that the project is designed to meet unmet community needs;

      (2) Include a requirement of regular performance evaluation. This shall include clear work performance standards set by the supervising agency and procedures for identifying strengths, recommended improvement areas and conditions for probation or dismissal of the enrollee; and

      (3) Include a commitment for partial financial support for the enrollee ((for a)) from private industry, public ((agency)) agencies, community groups, or foundations. The commissioner may establish additional standards for the development of placements for enrollees with supervising agencies and assure that the work agreements comply with those standards. This section shall not apply to conservation corps programs established by chapter 43.220 RCW.

      Agencies of the state may use the ((youth employment exchange)) Washington service corps for the purpose of employing youth qualifying under this chapter.

      NEW SECTION. Sec. 4. For each enrollee, the work agreements, or combination of work agreements, developed under RCW 50.65.060 shall:

      (1) Include a variety of experiences consisting of: Indoor activities; outdoor activities; and volunteer activities;

      (2) Provide time for participation in a core training program common to all participants.

      NEW SECTION. Sec. 5. The Washington service corps scholarship account is created in the custody of the state treasurer. The account shall consist of a portion of Washington service corps funding, deposited by the commissioner, in an amount sufficient to provide for the future awarding of educational assistance grants described in RCW 50.65.030. Expenditures from the account may be used only for educational assistance grants described in RCW 50.65.030. Only the commissioner or the commissioner's designee may authorize expenditures from the account. The account is subject to the allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures. All earnings of investments of surplus balances in the account shall be deposited to the treasury income account created in RCW 43.84.092.

      Sec. 6. RCW 50.65.080 and 1983 1st ex.s. c 50 s 8 are each amended to read as follows:

      The commissioner shall seek and may accept, on behalf of the ((youth employment exchange)) Washington service corps, charitable donations of cash and other assistance including, but not limited to, equipment and materials if the donations are available for appropriate use for the purposes set forth in this chapter.

      NEW SECTION. Sec. 7. RCW 50.65.900 and 1987 c 167 s 9 & 1983 1st ex.s. c 50 s 14 are each repealed.

      NEW SECTION. Sec. 8. Sections 4 and 5 of this act are each added to chapter 50.65 RCW.

      NEW SECTION. Sec. 9. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1993.

      NEW SECTION. Sec. 10. A new section is added to chapter 50.65 RCW to read as follows:

      No individual may participate in the Washington serves program created by chapter . . . (Substitute House Bill No. 1969), Laws of 1993, if the person has previously participated for six months or longer in the Washington service corps within the last three years."


MOTION


     On motion of Senator Sheldon, the following Committee on Ways and Means amendment to the Committee on Trade, Technology and Economic Development amendment was adopted:

     On page 1, at the beginning of the amendment, strike the entire amendment and title amendment, and insert the following:

      Strike everything after the enacting clause and insert the following:

      "Sec. 1. RCW 50.65.030 and 1987 c 167 s 3 are each amended to read as follows:

      The Washington service corps is established within the employment security department. The commissioner shall:

      (1) Appoint a director ((for the exchange)) and other personnel as necessary to carry out the purposes of this chapter;

      (2) Coordinate youth employment and training efforts under the department's jurisdiction and cooperate with other agencies or departments providing youth services to ensure that funds appropriated for the purposes of this chapter will not be expended to duplicate existing services, but will increase the services of youth to the state;

      (3) The employment security department is authorized to place subgrants with other federal, state, and local governmental agencies and private agencies to provide youth employment projects and to increase the numbers of youth employed;

      (4) Determine appropriate financial support levels by private business, community groups, foundations, public agencies, and individuals which will provide matching funds for enrollees in service projects under work agreements. The matching funds requirement may be waived for public agencies or reduced for private agencies;

      (5) Recruit enrollees who are residents of the state unemployed at the time of application and are at least eighteen years of age but have not reached their twenty-sixth birthday;

      (6) Recruit supervising agencies to host the enrollees in full-time service activities which shall not exceed six months' duration, which may be extended for an additional six months by mutual consent;

      (7) Assist supervising agencies in the development of scholarships and matching funds from private and public agencies, individuals, and foundations in order to support a portion of the enrollee's stipend and benefits;

      (8) Develop general employment guidelines for placement of enrollees in supervising agencies to establish appropriate authority for hiring, firing, grievance procedures, and employment standards which are consistent with state and federal law;

      (9) Match enrollees with appropriate public agencies and available service projects;

      (10) Monitor enrollee activities for compliance with this chapter and compliance with work agreements;

      (11) Assist enrollees in transition to employment upon termination from the programs, including such activities as orientation to the labor market, on-the-job training, and placement in the private sector;

      (12) Establish a program for providing incentives to encourage successful completion of terms of enrollment in the service corps and the continuation of educational pursuits. Such incentives shall be in the form of educational assistance;

      (13) Enter into agreements with the state's community and technical college system and other educational institutions or independent nonprofit agencies to provide special education in basic skills, including reading, writing, and mathematics for those participants who may benefit by participation in such classes. Participation is not mandatory but shall be strongly encouraged.

      Sec. 2. RCW 50.65.060 and 1987 c 167 s 6 are each amended to read as follows:

      Placements in the Washington service corps shall be made in supervising agencies under work agreements as provided under this chapter and shall include those assignments which provide for addressing community needs and conservation problems and will assist the community in economic development efforts. Each work agreement shall:

      (1) Demonstrate that the service project is appropriate for the enrollee's interests, skills, and abilities and that the project is designed to meet unmet community needs;

      (2) Include a requirement of regular performance evaluation. This shall include clear work performance standards set by the supervising agency and procedures for identifying strengths, recommended improvement areas and conditions for probation or dismissal of the enrollee; and

      (3) Include a commitment for partial financial support for the enrollee ((for a)) from private industry, public ((agency)) agencies, community groups, or foundations. The commissioner may establish additional standards for the development of placements for enrollees with supervising agencies and assure that the work agreements comply with those standards. This section shall not apply to conservation corps programs established by chapter 43.220 RCW.

      Agencies of the state may use the ((youth employment exchange)) Washington service corps for the purpose of employing youth qualifying under this chapter.

      Sec. 3. RCW 50.65.080 and 1983 1st ex.s. c 50 s 8 are each amended to read as follows:

      The commissioner shall seek and may accept, on behalf of the ((youth employment exchange)) Washington service corps, charitable donations of cash and other assistance including, but not limited to, equipment and materials if the donations are available for appropriate use for the purposes set forth in this chapter.

      NEW SECTION. Sec. 4. RCW 50.65.900 and 1987 c 167 s 9 & 1983 1st ex.s. c 50 s 14 are each repealed.

      NEW SECTION. Sec. 5. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1993."

     The President declared the question before the Senate to be the adoption of the Committee on Trade, Technology and Economic Development striking amendment, as amended by the Committee on Ways and Means amendment, to Engrossed Substitute House Bill No. 1307.

     The Committee on Trade, Technology and Economic Development striking amendment, as amended by the Committee on Ways amendment, to Engrossed Substitute House Bill No. 1307 was adopted.


MOTIONS


     On motion of Senator Sheldon, the following title amendment was adopted:

     On page 1, line 1 of the title, after "corps;" strike the remainder of the title and insert "amending RCW 50.65.030, 50.65.060, and 50.65.080; repealing RCW 50.65.900; providing an effective date; and declaring an emergency."


     On motion of Senator Sheldon, the rules were suspended, Engrossed Substitute House Bill No. 1307, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.


POINT OF INQUIRY


     Senator Deccio: "Senator Sheldon, can you explain to the body how this is going to be funded?"

     Senator Sheldon: "We'll get that information for you very soon, Senator. We are just going to check with the staff. Thank you."


MOTION


     On motion of Senator Jesernig, further consideration of Engrossed Substitute House Bill No. 1307, as amended by the Senate, was deferred.


SECOND READING


     SUBSTITUTE HOUSE BILL NO. 1912, by House Committee on Corrections (originally sponsored by Representatives Morris and Long)

 

Establishing guidelines for allowing witnesses at an execution.


     The bill was read the second time.


MOTIONS


     On motion of Senator Adam Smith, the following Committee on Law and Justice amendment was adopted:

     On page 2, line 28, after "order of the" strike "Walla Walla"


     On motion of Senator Adam Smith, the rules were suspended, Substitute House Bill No. 1912, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 1912, as amended by the Senate.


ROLL CALL


     The Secretary called the roll on the final passage of Substitute House Bill No. 1912, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 43; Nays, 0; Absent, 0; Excused, 6.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Drew, Erwin, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McDonald, Moore, Nelson, Newhouse, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sellar, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 43.

     Excused: Senators Hochstatter, McCaslin, Moyer, Niemi, Owen and Talmadge - 6.

     SUBSTITUTE HOUSE BILL NO. 1912, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


MOTION


     At 10:11 a.m., on motion of Senator Jesernig, the Senate was declared to be at ease.


     The Senate was called to order at 11:15 a.m., by President Pritchard.

     There being no objection, the President reverted the Senate to the fourth order of business.


MESSAGES FROM THE HOUSE


April 15, 1993


MR. PRESIDENT:

     The House has passed:

     SUBSTITUTE SENATE BILL NO. 5134,

     SENATE BILL NO. 5541,

     SENATE BILL NO. 5649, and the same are herewith transmitted.

ALAN THOMPSON, Chief Clerk


April 15, 1993


MR. PRESIDENT:

     The House has passed SUBSTITUTE SENATE BILL NO. 5068, and the same is herewith transmitted.

ALAN THOMPSON, Chief Clerk


SIGNED BY THE PRESIDENT


     The President signed:

     SUBSTITUTE SENATE BILL NO. 5068,

     SUBSTITUTE SENATE BILL NO. 5134,

     SENATE BILL NO. 5541,

     SENATE BILL NO. 5649.


     There being no objection, the President advanced the Senate to the sixth order of business.


STATEMENT FOR JOURNAL


     I missed the vote on Senate Bill No. 5343 due to a conference with other legislators on another pending piece of legislation. I would have voted 'yes' on the measure.

SENATOR DEAN SUTHERLAND, 17th District


SECOND READING


     SENATE BILL NO. 5343, by Senators Vognild, Nelson, Skratek and von Reichbauer (by request of Department of Transportation)

 

Authorizing state highway bonds.


MOTION


     On motion of Senator Vognild, Substitute Senate Bill No. 5343 was not substituted for Senate Bill No. 5343.


     Senate Bill No. 5343 was read the second time.


MOTION


     On motion of Senator Vognild, the rules were suspended, Senate Bill No. 5343 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Senate Bill No. 5343.


ROLL CALL


     The Secretary called the roll on the final passage of Senate Bill No. 5343 and the bill passed the Senate by the following vote: Yeas, 44; Nays, 0; Absent, 3; Excused, 2.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Drew, Erwin, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, Moore, Moyer, Nelson, Newhouse, Niemi, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sellar, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Talmadge, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 44.

     Absent: Senators McDonald, Oke and Sutherland - 3.

     Excused: Senators Hochstatter and Owen - 2.

     SENATE BILL NO. 5343, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


SECOND READING


     SENATE BILL NO. 5371, by Senators Vognild and Talmadge

 

Authorizing highway bonds.


     The bill was read the second time.


MOTION


     On motion of Senator Vognild, the rules were suspended, Senate Bill No. 5371 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Senate Bill No. 5371.


ROLL CALL


     The Secretary called the roll on the final passage of Senate Bill No. 5371 and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Drew, Erwin, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, McDonald, Moore, Moyer, Nelson, Newhouse, Niemi, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sellar, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Talmadge, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 47.

     Excused: Senators Hochstatter and Owen - 2.

     SENATE BILL NO. 5371, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.



SECOND READING


     ENGROSSED SUBSTITUTE HOUSE BILL NO. 1197, by House Committee on Human Services (originally sponsored by Representatives Leonard, Cooke, Riley, Flemming, Valle, Brown, G. Cole, Mielke, Veloria, Wineberry, Dorn, Anderson, J. Kohl, Karahalios, H. Myers, Vance, Ogden, King, Jones, Eide, Johanson, R. Meyers, Cothern, Roland, Holm, Wolfe, Franklin, Thibaudeau, Springer, Basich, Kremen, Foreman, Kessler, Campbell, Dunshee, Lemmon, Linville and Pruitt)

 

Allowing families to retain a greater percentage of income before public benefits are reduced or terminated.


     The bill was read the second time.


MOTION


     Senator Talmadge moved that the following Committee on Health and Human Services amendment be adopted:

     Strike everything after the enacting clause and insert the following:

      "NEW SECTION. Sec. 1. The legislature finds that:

      (1) Public assistance is intended to be a temporary financial relief program, recognizing that families can be confronted with a financial crisis at any time in life. Successful public assistance programs depend on the availability of adequate resources to assist individuals deemed eligible for the benefits of such a program. In this way, eligible families are given sufficient assistance to reenter productive employment in a minimal time period.

      (2) The current public assistance system requires a reduction in grant standards when income is received. In most cases, family income is limited to levels substantially below the standard of need. This is a strong disincentive to work. To remove this disincentive, the legislature intends to allow families to retain a greater percentage of income before it results in the reduction or termination of benefits;

      (3) Employment, training, and education services provided to employable recipients of public assistance are effective tools in achieving economic self-sufficiency. Support services that are targeted to the specific needs of the individual offer the best hope of achieving economic self-sufficiency in a cost-effective manner;

      (4) State welfare-to-work programs, which move individuals from dependence to economic independence, must be operated cooperatively and collaboratively between state agencies and programs. They also must include public assistance recipients as active partners in self-sufficiency planning activities. Participants in economic independence programs and services will benefit from the concepts of personal empowerment, self-motivation, and self-esteem; and

      (5) Many barriers to economic independence are found in federal statutes and rules, and provide states with limited options for restructuring existing programs in order to create incentives for employment over continued dependence.

      NEW SECTION. Sec. 2. For purposes of determining the amount of grant payments to recipients of aid to families with dependent children, all countable nonexempt earned income shall be subtracted from an amount equal to one hundred percent of the need standard. The department shall adopt rules necessary to implement the intent of this section.

      NEW SECTION. Sec. 3. The department shall amend the state plan to eliminate the one hundred hour work rule for recipients of aid to families with dependent children-employable. The department shall seek federal approval for the amendment to the state plan and report on federal action to the appropriate standing committees of the legislature by December 1, 1993.

      NEW SECTION. Sec. 4. The department shall initiate a pilot project using electronic benefit transfer technology for the food stamp, aid to families with dependent children, and women, infant, and children programs. The department shall report to the appropriate standing committees of the legislature on the project implementation status by December 1, 1994.

      Sec. 5. RCW 74.04.005 and 1992 c 165 s 1 and 1992 c 136 s 1 are each reenacted and amended to read as follows:

      For the purposes of this title, unless the context indicates otherwise, the following definitions shall apply:

      (1) "Public assistance" or "assistance"—Public aid to persons in need thereof for any cause, including services, medical care, assistance grants, disbursing orders, work relief, general assistance and federal-aid assistance.

      (2) "Department"—The department of social and health services.

      (3) "County or local office"—The administrative office for one or more counties or designated service areas.

      (4) "Director" or "secretary" means the secretary of social and health services.

      (5) "Federal-aid assistance"—The specific categories of assistance for which provision is made in any federal law existing or hereafter passed by which payments are made from the federal government to the state in aid or in respect to payment by the state for public assistance rendered to any category of needy persons for which provision for federal funds or aid may from time to time be made, or a federally administered needs-based program.

      (6)(a) "General assistance"—Aid to persons in need who:

      (i) Are not eligible to receive federal-aid assistance, other than food stamps and medical assistance; however, an individual who refuses or fails to cooperate in obtaining federal-aid assistance, without good cause, is not eligible for general assistance;

      (ii) Meet one of the following conditions:

      (A) Pregnant: PROVIDED, That need is based on the current income and resource requirements of the federal aid to families with dependent children program: PROVIDED FURTHER, That during any period in which an aid for dependent children employable program is not in operation, only those pregnant women who are categorically eligible for medicaid are eligible for general assistance; ((or))

      (B) Under twenty years of age and ineligible for aid to families with dependent children solely due to federal age requirements, and are full-time students reasonably expected to complete a program of secondary school or the equivalent level of vocational or technical training before the end of the month in which the person reaches age twenty. Reasonably expected to complete a program of secondary school or the equivalent level of vocational or technical training means maintaining a grade point average equal to or greater than a 2.5. For purposes of determining payment amount, the student is considered a member of the aid to families with dependent children household of which the student would be a member but for the federal age requirement. In determining eligibility, earnings of a full-time student shall be disregarded, in accordance with department standards, notwithstanding the earnings limitation imposed by RCW 74.04.266;

      (C) Subject to chapter 165, Laws of 1992, incapacitated from gainful employment by reason of bodily or mental infirmity that will likely continue for a minimum of ninety days as determined by the department((.)); or

      (((C))) (D) Persons who are unemployable due to alcohol or drug addiction are not eligible for general assistance. Persons receiving general assistance on July 26, 1987, or becoming eligible for such assistance thereafter, due to an alcohol or drug-related incapacity, shall be referred to appropriate assessment, treatment, shelter, or supplemental security income referral services as authorized under chapter 74.50 RCW. Referrals shall be made at the time of application or at the time of eligibility review. Alcoholic and drug addicted clients who are receiving general assistance on July 26, 1987, may remain on general assistance if they otherwise retain their eligibility until they are assessed for services under chapter 74.50 RCW. Subsection (6)(a)(ii)(((B)))(C) of this section shall not be construed to prohibit the department from granting general assistance benefits to alcoholics and drug addicts who are incapacitated due to other physical or mental conditions that meet the eligibility criteria for the general assistance program;

      (iii) Are citizens or aliens lawfully admitted for permanent residence or otherwise residing in the United States under color of law; and

      (iv) Have furnished the department their social security account number. If the social security account number cannot be furnished because it has not been issued or is not known, an application for a number shall be made prior to authorization of assistance, and the social security number shall be provided to the department upon receipt.

      (b) Notwithstanding the provisions of subsection (6)(a)(i), (ii), and (c) of this section, general assistance shall be provided to the following recipients of federal-aid assistance:

      (i) Recipients of supplemental security income whose need, as defined in this section, is not met by such supplemental security income grant because of separation from a spouse; or

      (ii) ((To the extent authorized by the legislature in the biennial appropriations act, to)) Recipients of aid to families with dependent children whose needs are not being met because of a temporary reduction in monthly income below the entitled benefit payment level caused by loss or reduction of wages or unemployment compensation benefits or some other unforeseen circumstances. The amount of general assistance authorized shall not exceed the difference between the entitled benefit payment level and the amount of income actually received. Payment shall be made within fifteen days of the request.

      (c) General assistance shall be provided only to persons who are not members of assistance units receiving federal aid assistance, except as provided in subsection (6)(a)(ii)(A) and (b) of this section, and will accept available services which can reasonably be expected to enable the person to work or reduce the need for assistance unless there is good cause to refuse. Failure to accept such services shall result in termination until the person agrees to cooperate in accepting such services and subject to the following maximum periods of ineligibility after reapplication:

      (i) First failure: One week;

      (ii) Second failure within six months: One month;

      (iii) Third and subsequent failure within one year: Two months.

      (d) Persons found eligible for general assistance based on incapacity from gainful employment may, if otherwise eligible, receive general assistance pending application for federal supplemental security income benefits. Any general assistance that is subsequently duplicated by the person's receipt of supplemental security income for the same period shall be considered a debt due the state and shall by operation of law be subject to recovery through all available legal remedies.

      (e) The department shall adopt by rule medical criteria for general assistance eligibility to ensure that eligibility decisions are consistent with statutory requirements and are based on clear, objective medical information.

      (f) The process implementing the medical criteria shall involve consideration of opinions of the treating or consulting physicians or health care professionals regarding incapacity, and any eligibility decision which rejects uncontroverted medical opinion must set forth clear and convincing reasons for doing so.

      (g) Recipients of general assistance based upon a finding of incapacity from gainful employment who remain otherwise eligible shall not have their benefits terminated absent a clear showing of material improvement in their medical or mental condition or specific error in the prior determination that found the recipient eligible by reason of incapacitation. Recipients of general assistance based upon pregnancy who relinquish their child for adoption, remain otherwise eligible, and are not eligible to receive benefits under the federal aid to families with dependent children program shall not have their benefits terminated until the end of the month in which the period of six weeks following the birth of the recipient's child falls. Recipients of the federal aid to families with dependent children program who lose their eligibility solely because of the birth and relinquishment of the qualifying child may receive general assistance through the end of the month in which the period of six weeks following the birth of the child falls.

      (7) "Applicant"—Any person who has made a request, or on behalf of whom a request has been made, to any county or local office for assistance.

      (8) "Recipient"—Any person receiving assistance and in addition those dependents whose needs are included in the recipient's assistance.

      (9) "Standards of assistance"—The level of income required by an applicant or recipient to maintain a level of living specified by the department.

      (10) "Resource"—Any asset, tangible or intangible, owned by or available to the applicant at the time of application, which can be applied toward meeting the applicant's need, either directly or by conversion into money or its equivalent: PROVIDED, That an applicant may retain the following described resources and not be ineligible for public assistance because of such resources.

      (a) A home, which is defined as real property owned and used by an applicant or recipient as a place of residence, together with a reasonable amount of property surrounding and contiguous thereto, which is used by and useful to the applicant. Whenever a recipient shall cease to use such property for residential purposes, either for himself or his dependents, the property shall be considered as a resource which can be made available to meet need, and if the recipient or his dependents absent themselves from the home for a period of ninety consecutive days such absence, unless due to hospitalization or health reasons or a natural disaster, shall raise a rebuttable presumption of abandonment: PROVIDED, That if in the opinion of three physicians the recipient will be unable to return to the home during his lifetime, and the home is not occupied by a spouse or dependent children or disabled sons or daughters, such property shall be considered as a resource which can be made available to meet need.

      (b) Household furnishings and personal effects and other personal property having great sentimental value to the applicant or recipient, as limited by the department consistent with limitations on resources and exemptions for federal aid assistance.

      (c) A motor vehicle, other than a motor home, used and useful having an equity value not to exceed one thousand five hundred dollars.

      (d) All other resources, including any excess of values exempted, not to exceed one thousand dollars or other limit as set by the department, to be consistent with limitations on resources and exemptions necessary for federal aid assistance.

      (e) Applicants for or recipients of general assistance shall have their eligibility based on resource limitations consistent with the aid to families with dependent children program rules adopted by the department.

      (f) If an applicant for or recipient of public assistance possesses property and belongings in excess of the ceiling value, such value shall be used in determining the need of the applicant or recipient, except that: (i) The department may exempt resources or income when the income and resources are determined necessary to the applicant's or recipient's restoration to independence, to decrease the need for public assistance, or to aid in rehabilitating the applicant or recipient or a dependent of the applicant or recipient; and (ii) the department may provide grant assistance for a period not to exceed nine months from the date the agreement is signed pursuant to this section to persons who are otherwise ineligible because of excess real property owned by such persons when they are making a good faith effort to dispose of that property: PROVIDED, That:

      (A) The applicant or recipient signs an agreement to repay the lesser of the amount of aid received or the net proceeds of such sale;

      (B) If the owner of the excess property ceases to make good faith efforts to sell the property, the entire amount of assistance may become an overpayment and a debt due the state and may be recovered pursuant to RCW 43.20B.630;

      (C) Applicants and recipients are advised of their right to a fair hearing and afforded the opportunity to challenge a decision that good faith efforts to sell have ceased, prior to assessment of an overpayment under this section; and

      (D) At the time assistance is authorized, the department files a lien without a sum certain on the specific property.

      (11) "Income"—(a) All appreciable gains in real or personal property (cash or kind) or other assets, which are received by or become available for use and enjoyment by an applicant or recipient during the month of application or after applying for or receiving public assistance. The department may by rule and regulation exempt income received by an applicant for or recipient of public assistance which can be used by him to decrease his need for public assistance or to aid in rehabilitating him or his dependents, but such exemption shall not, unless otherwise provided in this title, exceed the exemptions of resources granted under this chapter to an applicant for public assistance. In determining the amount of assistance to which an applicant or recipient of aid to families with dependent children is entitled, the department is hereby authorized to disregard as a resource or income the earned income exemptions consistent with federal requirements. The department may permit the above exemption of earnings of a child to be retained by such child to cover the cost of special future identifiable needs even though the total exceeds the exemptions or resources granted to applicants and recipients of public assistance, but consistent with federal requirements. In formulating rules and regulations pursuant to this chapter, the department shall define income and resources and the availability thereof, consistent with federal requirements. All resources and income not specifically exempted, and any income or other economic benefit derived from the use of, or appreciation in value of, exempt resources, shall be considered in determining the need of an applicant or recipient of public assistance.

      (b) If, under applicable federal requirements, the state has the option of considering property in the form of lump sum compensatory awards or related settlements received by an applicant or recipient as income or as a resource, the department shall consider such property to be a resource.

      (12) "Need"—The difference between the applicant's or recipient's standards of assistance for himself and the dependent members of his family, as measured by the standards of the department, and value of all nonexempt resources and nonexempt income received by or available to the applicant or recipient and the dependent members of his family.

      (13) For purposes of determining eligibility for public assistance and participation levels in the cost of medical care, the department shall exempt restitution payments made to people of Japanese and Aleut ancestry pursuant to the Civil Liberties Act of 1988 and the Aleutian and Pribilof Island Restitution Act passed by congress, P.L. 100-383, including all income and resources derived therefrom.

      (14) In the construction of words and phrases used in this title, the singular number shall include the plural, the masculine gender shall include both the feminine and neuter genders and the present tense shall include the past and future tenses, unless the context thereof shall clearly indicate to the contrary.

      Sec. 6. RCW 74.25.020 and 1992 c 165 s 3 are each amended to read as follows:

      (1) The department of social and health services is authorized to contract with public and private employment and training agencies and other public service entities to provide services prescribed or allowed under the federal social security act, as amended, to carry out the purposes of the jobs training program. The department of social and health services has sole authority and responsibility to carry out the job opportunities and basic skills training program. No contracting entity shall have the authority to review, change, or disapprove any administrative decision, or otherwise substitute its judgment for that of the department of social and health services as to the application of policies and rules adopted by the department of social and health services.

      (2) To the extent feasible under federal law, the department of social and health services and all entities contracting with it shall give first priority of service to individuals volunteering for program participation((: PROVIDED, That the department shall require nonexempt parents under age twenty-four to actively participate in orientation, assessment, and either education, vocational training, or employment programs. At least one nonexempt parent in the aid to families with dependent children-employable program shall actively participate in orientation, assessment, and either job search, education, training, or employment. Social services shall be offered to participants in accordance with federal law. The department shall adopt appropriate sanctions to ensure compliance with the requirements and policies of this chapter)).

      (3) The department of social and health services shall adopt rules under chapter 34.05 RCW establishing criteria constituting circumstances of good cause for an individual failing or refusing to participate in an assigned program component, or failing or refusing to accept or retain employment. These criteria shall include, but not be limited to, the following circumstances: (a) If the individual is a parent or other relative personally providing care for a child under age six years, and the employment would require the individual to work more than twenty hours per week; (b) if child care, or day care for an incapacitated individual living in the same home as a dependent child, is necessary for an individual to participate or continue participation in the program or accept employment, and such care is not available, and the department of social and health services fails to provide such care; (c) the employment would result in the family of the participant experiencing a net loss of cash income; or (d) circumstances that are beyond the control of the individual's household, either on a short-term or on an ongoing basis.

      (4) The department of social and health services shall adopt rules under chapter 34.05 RCW as necessary to effectuate the intent and purpose of this chapter.

      NEW SECTION. Sec. 7. The department may provide grants to community action agencies or other local nonprofit organizations to provide job opportunities and basic skills training program participants with transitional support services, one-to-one assistance, and job retention services.

      NEW SECTION. Sec. 8. A new section is added to chapter 74.04 RCW to read as follows:

      Minors who are head of a household receiving aid to families with dependent children benefits as the head of a household may have a protective payee designated to receive their welfare funds. Whenever possible, protective payees shall be a responsible, immediate adult family member. Protective payees shall have a duty to make sure housing and utility costs are paid in a timely manner. Where an adequate protective payee cannot be found, the department shall assume the protective payee function.

      NEW SECTION. Sec. 9. A new section is added to chapter 74.04 RCW to read as follows:

      In determining food stamp eligibility, the department shall exclude as income the child support exempted by 42 U.S.C. Sec. 602(a)(8)(vi) or 657 (b).

      NEW SECTION. Sec. 10. By October 1, 1993, the department shall request the governor to seek congressional and federal agency action on any federal legislation or federal regulation that may be necessary to implement chapter 74.-- RCW (sections 2 through 4, 7, and 10 of this act), and any other section of chapter . . ., Laws of 1993 (this act) that may require a federal waiver.

      NEW SECTION. Sec. 11. Sections 2 through 4, 7, and 10 of this act shall constitute a new chapter in Title 74 RCW."


MOTION


     Senator Talmadge moved that the following Committee on Ways and Means amendment to the Committee on Health and Human Services striking amendment be adopted:

     On page 1, at the beginning of the amendment, strike the entire amendment and title amendment and insert the following:

      Strike everything after the enacting clause and insert the following:

      "NEW SECTION. Sec. 1. The legislature finds that:

      (1) Public assistance is intended to be a temporary financial relief program, recognizing that families can be confronted with a financial crisis at any time in life. Successful public assistance programs depend on the availability of adequate resources to assist individuals deemed eligible for the benefits of such a program. In this way, eligible families are given sufficient assistance to reenter productive employment in a minimal time period.

      (2) The current public assistance system requires a reduction in grant standards when income is received. In most cases, family income is limited to levels substantially below the standard of need. This is a strong disincentive to work. To remove this disincentive, the legislature intends to allow families to retain a greater percentage of income before it results in the reduction or termination of benefits;

      (3) Employment, training, and education services provided to employable recipients of public assistance are effective tools in achieving economic self-sufficiency. Support services that are targeted to the specific needs of the individual offer the best hope of achieving economic self-sufficiency in a cost-effective manner;

      (4) State welfare-to-work programs, which move individuals from dependence to economic independence, must be operated cooperatively and collaboratively between state agencies and programs. They also must include public assistance recipients as active partners in self-sufficiency planning activities. Participants in economic independence programs and services will benefit from the concepts of personal empowerment, self-motivation, and self-esteem;

      (5) Many barriers to economic independence are found in federal statutes and rules, and provide states with limited options for restructuring existing programs in order to create incentives for employment over continued dependence;

      (6) The legislature finds that the personal and societal costs of teenage childbearing are substantial. Teen parents are less likely to finish high school and more likely to depend upon public assistance than women who delay childbearing until adulthood; and

      (7) The legislature intends that an effort be made to ensure that each teenage parent who is a public assistance recipient live in a setting that increases the likelihood that the teen parent will complete high school and achieve economic independence.

      NEW SECTION. Sec. 2. For purposes of determining the amount of grant payments to recipients of aid to families with dependent children, all countable nonexempt earned income shall be subtracted from an amount equal to fifty-five percent of the need standard. The department shall adopt rules necessary to implement the intent of this section.

      NEW SECTION. Sec. 3. The department shall amend the state plan to eliminate the one hundred hour work rule for recipients of aid to families with dependent children-employable. The department shall seek federal approval for the amendment to the state plan and report on federal action to the appropriate standing committees of the legislature by December 1, 1993.

      NEW SECTION. Sec. 4. The department shall initiate a pilot project using electronic benefit transfer technology for the food stamp, aid to families with dependent children, and women, infant, and children programs. The department shall report to the appropriate standing committees of the legislature on the project implementation status by December 1, 1994.

      Sec. 5. RCW 74.04.005 and 1992 c 165 s 1 and 1992 c 136 s 1 are each reenacted and amended to read as follows:

      For the purposes of this title, unless the context indicates otherwise, the following definitions shall apply:

      (1) "Public assistance" or "assistance"—Public aid to persons in need thereof for any cause, including services, medical care, assistance grants, disbursing orders, work relief, general assistance and federal-aid assistance.

      (2) "Department"—The department of social and health services.

      (3) "County or local office"—The administrative office for one or more counties or designated service areas.

      (4) "Director" or "secretary" means the secretary of social and health services.

      (5) "Federal-aid assistance"—The specific categories of assistance for which provision is made in any federal law existing or hereafter passed by which payments are made from the federal government to the state in aid or in respect to payment by the state for public assistance rendered to any category of needy persons for which provision for federal funds or aid may from time to time be made, or a federally administered needs-based program.

      (6)(a) "General assistance"—Aid to persons in need who:

      (i) Are not eligible to receive federal-aid assistance, other than food stamps and medical assistance; however, an individual who refuses or fails to cooperate in obtaining federal-aid assistance, without good cause, is not eligible for general assistance;

      (ii) Meet one of the following conditions:

      (A) Pregnant: PROVIDED, That need is based on the current income and resource requirements of the federal aid to families with dependent children program: PROVIDED FURTHER, That during any period in which an aid for dependent children employable program is not in operation, only those pregnant women who are categorically eligible for medicaid are eligible for general assistance; ((or))

      (B) Under twenty years of age and ineligible for aid to families with dependent children solely due to federal age requirements, and are full-time students reasonably expected to complete a program of secondary school or the equivalent level of vocational or technical training before the end of the month in which the person reaches age twenty. Reasonably expected to complete a program of secondary school or the equivalent level of vocational or technical training means maintaining a grade point average equal to or greater than a 2.5. For purposes of determining payment amount, the student is considered a member of the aid to families with dependent children household of which the student would be a member but for the federal age requirement. In determining eligibility, earnings of a full-time student shall be disregarded, in accordance with department standards, notwithstanding the earnings limitation imposed by RCW 74.04.266;

      (C) Subject to chapter 165, Laws of 1992, incapacitated from gainful employment by reason of bodily or mental infirmity that will likely continue for a minimum of ninety days as determined by the department((.)); or

      (((C))) (D) Persons who are unemployable due to alcohol or drug addiction are not eligible for general assistance. Persons receiving general assistance on July 26, 1987, or becoming eligible for such assistance thereafter, due to an alcohol or drug-related incapacity, shall be referred to appropriate assessment, treatment, shelter, or supplemental security income referral services as authorized under chapter 74.50 RCW. Referrals shall be made at the time of application or at the time of eligibility review. Alcoholic and drug addicted clients who are receiving general assistance on July 26, 1987, may remain on general assistance if they otherwise retain their eligibility until they are assessed for services under chapter 74.50 RCW. Subsection (6)(a)(ii)(((B)))(C) of this section shall not be construed to prohibit the department from granting general assistance benefits to alcoholics and drug addicts who are incapacitated due to other physical or mental conditions that meet the eligibility criteria for the general assistance program;

      (iii) Are citizens or aliens lawfully admitted for permanent residence or otherwise residing in the United States under color of law; and

      (iv) Have furnished the department their social security account number. If the social security account number cannot be furnished because it has not been issued or is not known, an application for a number shall be made prior to authorization of assistance, and the social security number shall be provided to the department upon receipt.

      (b) Notwithstanding the provisions of subsection (6)(a)(i), (ii), and (c) of this section, general assistance shall be provided to the following recipients of federal-aid assistance:

      (i) Recipients of supplemental security income whose need, as defined in this section, is not met by such supplemental security income grant because of separation from a spouse; or

      (ii) ((To the extent authorized by the legislature in the biennial appropriations act, to)) Recipients of aid to families with dependent children whose needs are not being met because of a temporary reduction in monthly income below the entitled benefit payment level caused by loss or reduction of wages or unemployment compensation benefits or some other unforeseen circumstances. The amount of general assistance authorized shall not exceed the difference between the entitled benefit payment level and the amount of income actually received. Payment shall be made within fifteen days of the request.

      (c) General assistance shall be provided only to persons who are not members of assistance units receiving federal aid assistance, except as provided in subsection (6)(a)(ii)(A) and (b) of this section, and will accept available services which can reasonably be expected to enable the person to work or reduce the need for assistance unless there is good cause to refuse. Failure to accept such services shall result in termination until the person agrees to cooperate in accepting such services and subject to the following maximum periods of ineligibility after reapplication:

      (i) First failure: One week;

      (ii) Second failure within six months: One month;

      (iii) Third and subsequent failure within one year: Two months.

      (d) Persons found eligible for general assistance based on incapacity from gainful employment may, if otherwise eligible, receive general assistance pending application for federal supplemental security income benefits. Any general assistance that is subsequently duplicated by the person's receipt of supplemental security income for the same period shall be considered a debt due the state and shall by operation of law be subject to recovery through all available legal remedies.

      (e) The department shall adopt by rule medical criteria for general assistance eligibility to ensure that eligibility decisions are consistent with statutory requirements and are based on clear, objective medical information.

      (f) The process implementing the medical criteria shall involve consideration of opinions of the treating or consulting physicians or health care professionals regarding incapacity, and any eligibility decision which rejects uncontroverted medical opinion must set forth clear and convincing reasons for doing so.

      (g) Recipients of general assistance based upon a finding of incapacity from gainful employment who remain otherwise eligible shall not have their benefits terminated absent a clear showing of material improvement in their medical or mental condition or specific error in the prior determination that found the recipient eligible by reason of incapacitation. Recipients of general assistance based upon pregnancy who relinquish their child for adoption, remain otherwise eligible, and are not eligible to receive benefits under the federal aid to families with dependent children program shall not have their benefits terminated until the end of the month in which the period of six weeks following the birth of the recipient's child falls. Recipients of the federal aid to families with dependent children program who lose their eligibility solely because of the birth and relinquishment of the qualifying child may receive general assistance through the end of the month in which the period of six weeks following the birth of the child falls.

      (h) Students with earnings shall not be eligible for the essential persons program unless the earnings are disregarded.

      (7) "Applicant"—Any person who has made a request, or on behalf of whom a request has been made, to any county or local office for assistance.

      (8) "Recipient"—Any person receiving assistance and in addition those dependents whose needs are included in the recipient's assistance.

      (9) "Standards of assistance"—The level of income required by an applicant or recipient to maintain a level of living specified by the department.

      (10) "Resource"—Any asset, tangible or intangible, owned by or available to the applicant at the time of application, which can be applied toward meeting the applicant's need, either directly or by conversion into money or its equivalent: PROVIDED, That an applicant may retain the following described resources and not be ineligible for public assistance because of such resources.

      (a) A home, which is defined as real property owned and used by an applicant or recipient as a place of residence, together with a reasonable amount of property surrounding and contiguous thereto, which is used by and useful to the applicant. Whenever a recipient shall cease to use such property for residential purposes, either for himself or his dependents, the property shall be considered as a resource which can be made available to meet need, and if the recipient or his dependents absent themselves from the home for a period of ninety consecutive days such absence, unless due to hospitalization or health reasons or a natural disaster, shall raise a rebuttable presumption of abandonment: PROVIDED, That if in the opinion of three physicians the recipient will be unable to return to the home during his lifetime, and the home is not occupied by a spouse or dependent children or disabled sons or daughters, such property shall be considered as a resource which can be made available to meet need.

      (b) Household furnishings and personal effects and other personal property having great sentimental value to the applicant or recipient, as limited by the department consistent with limitations on resources and exemptions for federal aid assistance.

      (c) A motor vehicle, other than a motor home, used and useful having an equity value not to exceed one thousand five hundred dollars.

      (d) All other resources, including any excess of values exempted, not to exceed one thousand dollars or other limit as set by the department, to be consistent with limitations on resources and exemptions necessary for federal aid assistance.

      (e) Applicants for or recipients of general assistance shall have their eligibility based on resource limitations consistent with the aid to families with dependent children program rules adopted by the department.

      (f) If an applicant for or recipient of public assistance possesses property and belongings in excess of the ceiling value, such value shall be used in determining the need of the applicant or recipient, except that: (i) The department may exempt resources or income when the income and resources are determined necessary to the applicant's or recipient's restoration to independence, to decrease the need for public assistance, or to aid in rehabilitating the applicant or recipient or a dependent of the applicant or recipient; and (ii) the department may provide grant assistance for a period not to exceed nine months from the date the agreement is signed pursuant to this section to persons who are otherwise ineligible because of excess real property owned by such persons when they are making a good faith effort to dispose of that property: PROVIDED, That:

      (A) The applicant or recipient signs an agreement to repay the lesser of the amount of aid received or the net proceeds of such sale;

      (B) If the owner of the excess property ceases to make good faith efforts to sell the property, the entire amount of assistance may become an overpayment and a debt due the state and may be recovered pursuant to RCW 43.20B.630;

      (C) Applicants and recipients are advised of their right to a fair hearing and afforded the opportunity to challenge a decision that good faith efforts to sell have ceased, prior to assessment of an overpayment under this section; and

      (D) At the time assistance is authorized, the department files a lien without a sum certain on the specific property.

      (11) "Income"—(a) All appreciable gains in real or personal property (cash or kind) or other assets, which are received by or become available for use and enjoyment by an applicant or recipient during the month of application or after applying for or receiving public assistance. The department may by rule and regulation exempt income received by an applicant for or recipient of public assistance which can be used by him to decrease his need for public assistance or to aid in rehabilitating him or his dependents, but such exemption shall not, unless otherwise provided in this title, exceed the exemptions of resources granted under this chapter to an applicant for public assistance. In determining the amount of assistance to which an applicant or recipient of aid to families with dependent children is entitled, the department is hereby authorized to disregard as a resource or income the earned income exemptions consistent with federal requirements. The department may permit the above exemption of earnings of a child to be retained by such child to cover the cost of special future identifiable needs even though the total exceeds the exemptions or resources granted to applicants and recipients of public assistance, but consistent with federal requirements. In formulating rules and regulations pursuant to this chapter, the department shall define income and resources and the availability thereof, consistent with federal requirements. All resources and income not specifically exempted, and any income or other economic benefit derived from the use of, or appreciation in value of, exempt resources, shall be considered in determining the need of an applicant or recipient of public assistance.

      (b) If, under applicable federal requirements, the state has the option of considering property in the form of lump sum compensatory awards or related settlements received by an applicant or recipient as income or as a resource, the department shall consider such property to be a resource.

      (12) "Need"—The difference between the applicant's or recipient's standards of assistance for himself and the dependent members of his family, as measured by the standards of the department, and value of all nonexempt resources and nonexempt income received by or available to the applicant or recipient and the dependent members of his family.

      (13) For purposes of determining eligibility for public assistance and participation levels in the cost of medical care, the department shall exempt restitution payments made to people of Japanese and Aleut ancestry pursuant to the Civil Liberties Act of 1988 and the Aleutian and Pribilof Island Restitution Act passed by congress, P.L. 100-383, including all income and resources derived therefrom.

      (14) In the construction of words and phrases used in this title, the singular number shall include the plural, the masculine gender shall include both the feminine and neuter genders and the present tense shall include the past and future tenses, unless the context thereof shall clearly indicate to the contrary.

      NEW SECTION. Sec. 6. A new section is added to chapter 74.04 RCW to read as follows:

      The department shall amend the state plan to include an aid to families with dependent children essential persons program that would, to the extent permitted under federal law, allow eighteen to twenty year old students to be eligible for federal aid to families with dependent children matching grants.

      Sec. 7. RCW 74.25.020 and 1992 c 165 s 3 are each amended to read as follows:

      (1) The department of social and health services is authorized to contract with public and private employment and training agencies and other public service entities to provide services prescribed or allowed under the federal social security act, as amended, to carry out the purposes of the jobs training program. The department of social and health services has sole authority and responsibility to carry out the job opportunities and basic skills training program. No contracting entity shall have the authority to review, change, or disapprove any administrative decision, or otherwise substitute its judgment for that of the department of social and health services as to the application of policies and rules adopted by the department of social and health services.

      (2) To the extent feasible under federal law, the department of social and health services and all entities contracting with it shall give first priority of service to individuals volunteering for program participation((: PROVIDED, That the department shall require nonexempt parents under age twenty-four to actively participate in orientation, assessment, and either education, vocational training, or employment programs. At least one nonexempt parent in the aid to families with dependent children-employable program shall actively participate in orientation, assessment, and either job search, education, training, or employment. Social services shall be offered to participants in accordance with federal law. The department shall adopt appropriate sanctions to ensure compliance with the requirements and policies of this chapter)).

      (3) The department of social and health services shall adopt rules under chapter 34.05 RCW establishing criteria constituting circumstances of good cause for an individual failing or refusing to participate in an assigned program component, or failing or refusing to accept or retain employment. These criteria shall include, but not be limited to, the following circumstances: (a) If the individual is a parent or other relative personally providing care for a child under age six years, and the employment would require the individual to work more than twenty hours per week; (b) if child care, or day care for an incapacitated individual living in the same home as a dependent child, is necessary for an individual to participate or continue participation in the program or accept employment, and such care is not available, and the department of social and health services fails to provide such care; (c) the employment would result in the family of the participant experiencing a net loss of cash income; or (d) circumstances that are beyond the control of the individual's household, either on a short-term or on an ongoing basis.

      (4) The department of social and health services shall adopt rules under chapter 34.05 RCW as necessary to effectuate the intent and purpose of this chapter.

      NEW SECTION. Sec. 8. The department may provide grants to community action agencies or other local nonprofit organizations to provide job opportunities and basic skills training program participants with transitional support services, one-to-one assistance, and job retention services.

      NEW SECTION. Sec. 9. The department of social and health services shall design a program for implementation involving recipients of aid to families with dependent children. A goal of this program is to develop a system that segments the aid to families with dependent children recipient population and identifies subgroups, matches services to the needs of the subgroup, and prioritizes available services. The department shall specify the services to be offered in each population segment. The general focus of the services offered shall be on job training, work force preparedness, and job retention.

      The program shall be designed for state-wide implementation on July 1, 1994. A proposal for implementation may include phasing certain components over time or geographic area. The department shall submit this program to the appropriate committees of the senate and house of representatives by December 1, 1993.

      NEW SECTION. Sec. 10. A new section is added to chapter 74.12 RCW to read as follows:

      (1) As part of the orientation and assessment conducted pursuant to RCW 74.25.020, the department shall assist the family of the recipient in determining, in the following order of priority, the most appropriate living situation that will best ensure the safety and well-being for each recipient of aid to families with dependent children who is receiving those benefits as a head of household and is under age eighteen. Appropriate living situations may include, but are not limited to:

      (a) The parent's home;

      (b) The home of a relative;

      (c) A group living situation with adult supervision and guidance;

      (d) Living independently; and

      (e) Payment of the recipient's grant to another as provided in RCW 74.12.250.

      (2) In conducting the assessment, the department shall consider all relevant factors, including but not limited to:

      (a) Whether the recipient is enrolled in and attending school;

      (b) Whether the recipient is employed;

      (c) The situation in the home of the recipient's parents, including but not limited to, whether there is substance abuse or domestic violence in the home and the adequacy of the dwelling; and

      (d) Whether there is a history of physical, emotional, or sexual abuse of the recipient by a person living in or frequenting the recipient's parents' home.

      (3) If, as a result of the assessment, the department becomes aware of a recipient's need for other services that will help the recipient complete high school or achieve economic independence, and be an effective parent, the department shall make every effort to link the recipient with the services, including parenting classes.

      NEW SECTION. Sec. 11. A new section is added to chapter 74.04 RCW to read as follows:

      In determining food stamp eligibility, the department shall exclude as income the child support exempted by 42 U.S.C. Sec. 602(a)(8)(vi) or 657 (b).

      NEW SECTION. Sec. 12. By October 1, 1993, the department shall request the governor to seek congressional and federal agency action on any federal legislation or federal regulation that may be necessary to implement chapter 74.-- RCW (sections 2 through 4, 8, and 12 of this act), and any other section of chapter . . ., Laws of 1993 (this act) that may require a federal waiver.

      NEW SECTION. Sec. 13. Sections 2 through 4, 8, and 12 of this act shall constitute a new chapter in Title 74 RCW.

      NEW SECTION. Sec. 14. Section 2 of this act shall take effect July 1, 1994, if specific funding for the purposes of section 2 of this act, referencing section 2 of this act by bill and section number, is provided by July 1, 1994, in the omnibus appropriations act. If specific funding is not so provided, section 2 of this act shall be null and void.

      NEW SECTION. Sec. 15. Section 3 of this act shall take effect July 1, 1993, if specific funding for the purposes of section 3 of this act, referencing section 3 of this act by bill and section number, is provided by July 1, 1993, in the omnibus appropriations act. If specific funding is not so provided, section 3 of this act shall be null and void.

      NEW SECTION. Sec. 16. Section 4 of this act shall take effect July 1, 1993, if specific funding for the purposes of section 4 of this act, referencing section 4 of this act by bill and section number, is provided by July 1, 1993, in the omnibus appropriations act. If specific funding is not so provided, section 4 of this act shall be null and void.

      NEW SECTION. Sec. 17. Section 5 of this act shall take effect July 1, 1993, if specific funding for the purposes of section 5 of this act, referencing section 5 of this act by bill and section number, is provided by July 1, 1993, in the omnibus appropriations act. If specific funding is not so provided, section 5 of this act shall be null and void.

      NEW SECTION. Sec. 18. Section 11 of this act shall take effect July 1, 1994, if specific funding for the purposes of section 11 of this act, referencing section 11 of this act by bill and section number, is provided by July 1, 1994, in the omnibus appropriations act. If specific funding is not so provided, section 11 of this act shall be null and void.

      NEW SECTION. Sec. 19. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions."

     Debate ensued.

     The President declared the question before the Senate to be the adoption of the Committee on Ways and Means amendment to the Committee on Health and Human Services striking amendment to Engrossed Substitute House Bill No. 1197.

     The Committee on Ways and Means amendment to the Committee on Health and Human Services striking amendment to Engrossed Substitute House Bill No. 1197 was adopted.


     The President declared the question before the Senate to be the adoption of the Committee on Health and Human Services striking amendment, as amended by the Committee on Ways and Means amendment, to Engrossed Substitute House Bill No. 1197.

     The Committee on Health and Human Services striking amendment, as amended by the Committee on Ways and Means amendment, to Engrossed Substitute House Bill No. 1197 was adopted.


MOTIONS


     On motion of Senator Talmadge, the following title amendment was adopted:

     On page 1, line 1 of the title, after "assistance;" strike the remainder of the title and insert "amending RCW 74.25.020; reenacting and amending RCW 74.04.005; adding new sections to chapter 74.04 RCW; adding a new section to chapter 74.12 RCW; adding a new chapter to Title 74 RCW; creating new sections; providing effective dates; and declaring an emergency."


     On motion of Senator Talmadge, the rules were suspended, Engrossed Substitute House Bill No. 1197, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.


POINT OF INQUIRY


     Senator Anderson: "Senator Talmadge, as we were adopting the amendments, did we adopt the Health and Human Services amendment to the Ways and Means amendment?"

     Senator Talmadge: "Vice versus, we adopted the Ways and Means Committee amendment to the Health and Human Services Committee amendment."

     Senator Anderson: "There is still some confusion about the food stamp cash out in this. Could you point out what section in the Ways and Means amendment that language is, then?"

     Senator Talmadge: "There is no food stamp cash out in this bill. If I could explain, the two places where food stamps crop up or where people might have that perception, there is a pilot project that is allowed for electronic benefits transfer in the bill. That is not cashing out food stamps. This is merely to avoid paper work. It is a pilot project to examine the question of whether elimination of paper work would be useful.

     "The second piece is the bill that Senator Winsley actually brought to the committee. The fifty dollar child support pass-through for food stamps. Under existing law, we provide a fifty dollar incentive to people that work with us--a fifty dollar food stamp incentive--for people that work with us in making child support collections. The way the law is set up with this fifty dollar amount coming in, it might make them ineligible for certain aspects of public assistance. What we have told the Department of Social and Health Services to do is to coordinate the eligibility levels for food stamps and for public assistance for these people that are helping us gain monies to the state by collecting child support from people that should pay it. There is no food stamp cash out in this bill, as was true in the original House Bill."

     Senator Anderson: "If I may, in the original House Bill, in the New Section 5, there was a reference--'The Department may replace food stamps with a cash equivalent for individuals eligible--on and on--for if Congress grants that.' That language has been removed?"

     Senator Talmadge: "Yes, it is not in this bill."

     The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute House Bill No. 1197, as amended by the Senate.


ROLL CALL


     The Secretary called the roll on the final passage of Engrossed Substitute House Bill No. 1197, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 38; Nays, 9; Absent, 0; Excused, 2.

     Voting yea: Senators Anderson, Bauer, Bluechel, Deccio, Drew, Erwin, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, Moore, Moyer, Nelson, Niemi, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Sellar, Sheldon, Skratek, Smith, A., Snyder, Spanel, Sutherland, Talmadge, Vognild, von Reichbauer, Williams, Winsley and Wojahn - 38.

     Voting nay: Senators Amondson, Barr, Cantu, McCaslin, McDonald, Newhouse, Roach, Smith, L. and West - 9.

     Excused: Senators Hochstatter and Owen - 2.

     ENGROSSED SUBSTITUTE HOUSE BILL NO. 1197, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


MOTION


     On motion of Senator Jesernig, the Senate advanced to the seventh order of business.

     There being no objection, the Senate resumed consideration of Engrossed Substitute House Bill No. 1307, as amended by the Senate, deferred on third reading earlier today.


REMARKS BY SENATOR SHELDON


     Senator Sheldon: "Thank you, Mr. President, and I appreciate your patience. I would like to respond to a question by Senator Deccio on funding for the Washington Service Corp. The total cost of the program is slightly in excess of five million dollars. One point eight million dollars is in the existing administrative contingency fund, one point one will be from matching local funds, and this is consistent with what has been done in the past. Seven hundred thousand has been appropriated by the House Committee and that does leave some funding still unavailable currently, but the program will be cut back if that funding is not available."

     Senator Deccio: "Thank you, I would like to thank Senator Sheldon. My concern was that if there was not sufficient funds, the program would be cut rather than figuring out some way to levy some additional taxes. I thank her for the information."


MOTION


     On motion of Senator Sheldon, Senator Fraser was excused.

     The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute House Bill No. 1307, as amended by the Senate.


ROLL CALL


     The Secretary called the roll on the final passage of Engrossed Substitute House Bill No. 1307, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 46; Nays, 0; Absent, 0; Excused, 3.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Drew, Erwin, Franklin, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, McDonald, Moore, Moyer, Nelson, Newhouse, Niemi, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sellar, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Talmadge, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 46.

     Excused: Senators Fraser, Hochstatter and Owen - 3.

     ENGROSSED SUBSTITUTE HOUSE BILL NO. 1307, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


MOTION


     On motion of Senator Jesernig, the Senate returned to the sixth order of business.


MOTION


     On motion of Senator Oke, Senator Bluechel was excused.


SECOND READING


     SUBSTITUTE HOUSE BILL NO. 1013, by House Committee on Judiciary (originally sponsored by Representatives Appelwick and Riley)

 

Adopting the revised uniform commercial code on bulk sales.


     The bill was read the second time.


MOTIONS


     On motion of Senator Adam Smith, the following Committee on Law and Justice amendment was adopted:

     Strike everything after the enacting clause and insert the following:

      "NEW SECTION. Sec. 6-101 The following acts or parts of acts are repealed:

      (1) RCW 62A.6-101 and 1965 ex.s. c 157 s 6-101;

      (2) RCW 62A.6-102 and 1967 c 114 s 2 & 1965 ex.s. c 157 s 6-102;

      (3) RCW 62A.6-103 and 1965 ex.s. c 157 s 6-103;

      (4) RCW 62A.6-104 and 1975 1st ex.s. c 278 s 33 & 1965 ex.s. c 156 s 6-104;

      (5) RCW 62A.6-105 and 1971 c 23 s 1 & 1965 ex.s. c 157 s 6-105;

      (6) RCW 62A.6-106 and 1965 ex.s. c 157 s 6-106;

      (7) RCW 62A.6-107 and 1975 1st ex.s. c 278 s 34 & 1965 ex.s. c 157 s 6-107;

      (8) RCW 62A.6-108 and 1965 ex.s. c 157 s 6-108;

      (9) RCW 62A.6-109 and 1967 c 114 s 3 & 1965 ex.s. c 157 s 6-109;

      (10) RCW 62A.6-110 and 1965 ex.s. c 157 s 6-110;

      (11) RCW 62A.6-111 and 1965 ex.s. c 157 s 6-111; and

      (12) RCW 62A.9-111 and 1965 ex.s. c 157 s 9-111.

      Sec. 6-102. RCW 62A.1-105 and 1981 c 41 s 1 are each amended to read as follows:

      (1) Except as provided hereafter in this section, when a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties. Failing such agreement this Title applies to transactions bearing an appropriate relation to this state.

      (2) Where one of the following provisions of this Title specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law (including the conflict of laws rules) so specified:

      Rights of creditors against sold goods. RCW 62A.2-402.

      Applicability of the Article on Bank Deposits and Collections. RCW 62A.4-102.

      ((Bulk transfers subject to the Article on Bulk Transfers. RCW 62A.6-102.))

      Applicability of the Article on Investment Securities. RCW 62A.8-106.

      Perfection provisions of the Article on Secured Transactions. RCW 62A.9-103.

      Sec. 6-103. RCW 62A.2-403 and 1967 c 114 s 8 are each amended to read as follows:

      (1) A purchaser of goods acquires all title which his or her transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though

      (a) the transferor was deceived as to the identity of the purchaser, or

      (b) the delivery was in exchange for a check which is later dishonored, or

      (c) it was agreed that the transaction was to be a "cash sale".

      (2) Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him or her power to transfer all rights of the entruster to a buyer in ordinary course of business.

      (3) "Entrusting" includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods have been such as to be larcenous under the criminal law.

      (4) The rights of other purchasers of goods and of lien creditors are governed by the Articles on Secured Transactions (Article 9)((, Bulk Transfers (Article 6))) and Documents of Title (Article 7)."


     On motion of Senator Adam Smith, the following title amendment was adopted:

     On page 1, line 1 of the title, after "Sales;" strike the remainder of the title and insert "amending RCW 62A.1-105 and 62A.2-403; and repealing RCW 62A.6-101, 62A.6-102, 62A.6-103, 62A.6-104, 62A.6-105, 62A.6-106, 62A.6-107, 62A.6-108, 62A.6-109, 62A.6-110, 62A.6-111, and 62A.9-111."


MOTION


     On motion of Senator Adam Smith, the rules were suspended, Substitute House Bill No. 1013, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 1013, as amended by the Senate.


ROLL CALL


     The Secretary called the roll on the final passage of Substitute House Bill No. 1013, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 0; Excused, 4.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Cantu, Deccio, Drew, Erwin, Franklin, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, McDonald, Moore, Moyer, Nelson, Newhouse, Niemi, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sellar, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Talmadge, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 45.

     Excused: Senators Bluechel, Fraser, Hochstatter and Owen - 4.

     SUBSTITUTE HOUSE BILL NO. 1013, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


SECOND READING


     HOUSE BILL NO. 1015, by Representatives Appelwick and Riley

 

Adopting the Uniform Commercial Code article on leases.


     The bill was read the second time.


MOTIONS


     On motion of Senator Adam Smith, the following Committee on Law and Justice amendments were considered simultaneously and were adopted:

     On page 25, line 14, after "lease" insert ","

      On page 25, line 15, after "whole" insert ", or the accession is leased under tariff No. 74 for residential conversion burners leased by a natural gas utility"

      On page 25, line 16, after "(4)" strike "The" and insert "Unless the accession is leased under tariff No. 74 for residential conversion burners leased by a natural gas utility, the"


     On motion of Senator Adam Smith, the rules were suspended, House Bill No. 1015, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of House Bill No. 1015, as amended by the Senate.


ROLL CALL


     The Secretary called the roll on the final passage of House Bill No. 1015, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 46; Nays, 0; Absent, 0; Excused, 3.

     Voting yea: Senators Amondson, Anderson, Barr, Bauer, Bluechel, Cantu, Deccio, Drew, Erwin, Franklin, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, McDonald, Moore, Moyer, Nelson, Newhouse, Niemi, Oke, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Roach, Sellar, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Talmadge, Vognild, von Reichbauer, West, Williams, Winsley and Wojahn - 46.

     Excused: Senators Fraser, Hochstatter and Owen - 3.

     HOUSE BILL NO. 1015, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


     There being no objection, the Senate resumed consideration of House Bill No. 1395 and the pending striking amendment by Senator Nelson, deferred earlier today.

     Debate ensued.

     The President declared the question before the Senate to be the adoption of the striking amendment by Senator Nelson to House Bill No. 1395.

     The striking amendment by Senator Nelson to House Bill No. 1395 was not adopted on a rising vote.



MOTION


     Senator Erwin moved that the following amendment be adopted:

     Strike everything after the enacting clause and insert the following:

      "Sec. 1. RCW 26.04.160 and 1985 c 82 s 2 are each amended to read as follows:

      (1) Application for ((such)) a marriage license must be made and filed with the appropriate county auditor upon blanks to be provided by the county auditor for that purpose, which application shall be under the oath of each of the applicants, and each application shall state the name, address at the time of execution of application, age, birthplace, whether single, widowed or divorced, and whether under control of a guardian, residence during the past six months: PROVIDED, That each county may require such other and further information on said application as it shall deem necessary.

      (2) The county legislative authority may impose an additional fee up to one dollar on a marriage license for the purpose of funding family services such as family support centers.

      Sec. 2. RCW 36.18.020 and 1992 c 54 s 1 are each amended to read as follows:

      Clerks of superior courts shall collect the following fees for their official services:

      (1) The party filing the first or initial paper in any civil action, including an action for restitution, or change of name, shall pay, at the time said paper is filed, a fee of one hundred ten dollars except in proceedings filed under RCW 26.50.030 or 49.60.227 where the petitioner shall pay a filing fee of twenty dollars, or an unlawful detainer action under chapter 59.18 or 59.20 RCW where the plaintiff shall pay a filing fee of thirty dollars. If the defendant serves or files an answer to an unlawful detainer complaint under chapter 59.18 or 59.20 RCW, the plaintiff shall pay, prior to proceeding with the unlawful detainer action, an additional eighty dollars which shall be considered part of the filing fee. The thirty dollar filing fee under this subsection for an unlawful detainer action shall not include an order to show cause or any other order or judgment except a default order or default judgment in an unlawful detainer action. The county legislative authority may impose an additional fee up to twenty dollars on any petition for dissolution of marriage, legal separation, or a declaration concerning the validity of a marriage, for the purpose of funding family services such as family support centers.

      (2) Any party, except a defendant in a criminal case, filing the first or initial paper on an appeal from a court of limited jurisdiction or any party on any civil appeal, shall pay, when said paper is filed, a fee of one hundred ten dollars.

      (3) The party filing a transcript or abstract of judgment or verdict from a United States court held in this state, or from the superior court of another county or from a district court in the county of issuance, shall pay at the time of filing, a fee of fifteen dollars.

      (4) For the filing of a tax warrant by the department of revenue of the state of Washington, a fee of five dollars shall be paid.

      (5) For the filing of a petition for modification of a decree of dissolution, a fee of twenty dollars shall be paid.

      (6) The party filing a demand for jury of six in a civil action, shall pay, at the time of filing, a fee of fifty dollars; if the demand is for a jury of twelve the fee shall be one hundred dollars. If, after the party files a demand for a jury of six and pays the required fee, any other party to the action requests a jury of twelve, an additional fifty-dollar fee will be required of the party demanding the increased number of jurors.

      (7) For filing any paper, not related to or a part of any proceeding, civil or criminal, or any probate matter, required or permitted to be filed in the clerk's office for which no other charge is provided by law, or for filing a petition, written agreement, or memorandum as provided in RCW 11.96.170, the clerk shall collect two dollars.

      (8) For preparing, transcribing or certifying any instrument on file or of record in the clerk's office, with or without seal, for the first page or portion thereof, a fee of two dollars, and for each additional page or portion thereof, a fee of one dollar. For authenticating or exemplifying any instrument, a fee of one dollar for each additional seal affixed.

      (9) For executing a certificate, with or without a seal, a fee of two dollars shall be charged.

      (10) For each garnishee defendant named in an affidavit for garnishment and for each writ of attachment, a fee of five dollars shall be charged.

      (11) For approving a bond, including justification thereon, in other than civil actions and probate proceedings, a fee of two dollars shall be charged.

      (12) In probate proceedings, the party instituting such proceedings, shall pay at the time of filing the first paper therein, a fee of one hundred ten dollars: PROVIDED, HOWEVER, A fee of two dollars shall be charged for filing a will only, when no probate of the will is contemplated. Except as provided for in subsection (13) of this section a fee of two dollars shall be charged for filing a petition, written agreement, or memorandum as provided in RCW 11.96.170.

      (13) For filing any petition to contest a will admitted to probate or a petition to admit a will which has been rejected, or a petition objecting to a written agreement or memorandum as provided in RCW 11.96.170, there shall be paid a fee of one hundred ten dollars.

      (14) For the issuance of each certificate of qualification and each certified copy of letters of administration, letters testamentary or letters of guardianship there shall be a fee of two dollars.

      (15) For the preparation of a passport application there shall be a fee of four dollars.

      (16) For searching records for which a written report is issued there shall be a fee of eight dollars per hour.

      (17) Upon conviction or plea of guilty, upon failure to prosecute an appeal from a court of limited jurisdiction as provided by law, or upon affirmance of a conviction by a court of limited jurisdiction, a defendant in a criminal case shall be liable for a fee of one hundred ten dollars.

      (18) With the exception of demands for jury hereafter made and garnishments hereafter issued, civil actions and probate proceedings filed prior to midnight, July 1, 1972, shall be completed and governed by the fee schedule in effect as of January 1, 1972: PROVIDED, That no fee shall be assessed if an order of dismissal on the clerk's record be filed as provided by rule of the supreme court.

      (19) No fee shall be collected when a petition for relinquishment of parental rights is filed pursuant to RCW 26.33.080 or for forms and instructional brochures provided under RCW 26.50.030.

      Sec. 3. RCW 43.08.250 and 1992 c 54 s 3 are each amended to read as follows:

      The money received by the state treasurer from fees, fines, forfeitures, penalties, reimbursements or assessments by any court organized under Title 3 or 35 RCW, or chapter 2.08 RCW, shall be deposited in the public safety and education account which is hereby created in the state treasury. The legislature shall appropriate the funds in the account to promote traffic safety education, highway safety, criminal justice training, crime victims' compensation, judicial education, the judicial information system, civil representation of indigent persons, family support centers, winter recreation parking, and state game programs. During the fiscal biennium ending June 30, 1993, the legislature may appropriate moneys from the public safety and education account for the purposes of local jail population data collection under RCW 10.98.130, the department of corrections' county partnership program under RCW 72.09.300, the treatment alternatives to street crimes program, the criminal litigation unit of the attorney general's office, and contracts with county officials to provide support enforcement services."


MOTION


     On motion of Senator Erwin, and there being no objection, the striking amendment to House Bill No. 1395 was withdrawn.


MOTION


     On motion of Senator Talmadge, the rules were suspended, House Bill No. 1395 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     Debate ensued.

     The President declared the question before the Senate to be the roll call on the final passage of House Bill No. 1395.


ROLL CALL


     The Secretary called the roll on the final passage of House Bill No. 1395 and the bill passed the Senate by the following vote: Yeas, 34; Nays, 13; Absent, 0; Excused, 2.

     Voting yea: Senators Bauer, Bluechel, Deccio, Drew, Erwin, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McCaslin, Moore, Moyer, Niemi, Pelz, Prentice, Prince, Quigley, Rasmussen, M., Rinehart, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Talmadge, Vognild, Winsley and Wojahn - 34.

     Voting nay: Senators Amondson, Anderson, Barr, Cantu, McDonald, Nelson, Newhouse, Oke, Roach, Sellar, von Reichbauer, West and Williams - 13.

     Excused: Senators Hochstatter and Owen - 2.

     HOUSE BILL NO. 1395, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.


MOTION


     At 12:17 p.m., on motion of Senator Jesernig, the Senate recessed until 1:00 p.m.


     The Senate was called to order at 1:04 p.m. by President Pritchard.

 

MOTION


     On motion of Senator Oke, Senators Cantu, McCaslin, Prince, von Reichbauer and Winsley were excused.

 

SECOND READING


     SUBSTITUTE HOUSE BILL NO. 1047, by House Committee on Environmental Affairs (originally sponsored by Representatives Rust, Horn, Valle, Long, Springer, Brough, Forner, Miller, Edmondson, Lemmon, Tate, Chandler, Wood, Roland and J. Kohl)

 

Requiring solid waste reports and landfill fee reciprocity on waste received from outside the state.


     The bill was read the second time.


MOTIONS


     On motion of Senator Fraser, the following Committee on Ecology and Parks amendment was adopted:

     Strike everything after the enacting clause and insert the following:

      "NEW SECTION. Sec. 1. A new section is added to chapter 70.95 RCW to read as follows:

      The legislature finds that:

      (1) The state of Washington has responded to the increasing challenges of safe, affordable disposal of solid waste by an ambitious program of waste reduction, recycling and reuse, as well as strict standards to ensure the safe handling, transportation, and disposal of solid waste;

      (2) All communities in Washington participate in these programs through locally available recycling services, increased source separation and material recovery requirements, programs for waste reduction and product reuse, and performance standards that apply to all solid waste disposal facilities in the state;

      (3) New requirements for the siting and performance of disposal facilities have greatly decreased the number of such facilities in Washington, and the state has a significant interest in ensuring adequate disposal capacity within the state;

      (4) The landfilling, incineration, and other disposal of solid waste may adversely impact public health and environmental quality, and the state has a significant interest in decreasing volumes of the waste stream destined for disposal;

      (5) Because of the decreasing number of disposal facilities and other reasons, solid waste is being transported greater distances, often beyond the community where generated and is increasingly being transported between states;

      (6) Washington's waste management priorities and programs are a balanced approach of increased reuse, recycling and waste reduction, the strengthening of markets for recycled content products, and the safe disposal of the remaining waste stream, with the costs of these programs shared equitably by all persons generating waste in the state;

      (7) Those residing in other states who generate waste destined for disposal within Washington should also share the costs of waste diversion and management of Washington's disposal facilities, so that the risks of waste disposal and the costs of mitigating those risks are shared equitably by all waste generators, regardless of their location;

      (8) Because Washington state may not directly regulate waste handling, reduction, and recycling activities beyond its state boundaries, the only reasonable alternative to ensure this equitable treatment of waste being disposed within Washington is to implement a program of reviewing such activities as to waste originating outside of Washington, and to assign the additional costs, when necessary, to ensure that the waste meets standards substantially equivalent to those applicable to waste generated within the state, and, in some cases, to prohibit disposal of waste where its generation and management is not subject to standards substantially equivalent to those applicable to waste generated within the state.

      NEW SECTION. Sec. 2. A new section is added to chapter 70.95 RCW to read as follows:

      (1) At least sixty days prior to receiving solid waste generated from outside of the state, the operator of a solid waste disposal site facility shall report to the department the types and quantities of waste to be received from an out-of-state source. The department shall develop guidelines for reporting this information. The guidelines shall provide for less than sixty days notice for shipments of waste made on a short-term or emergency basis. The requirements of this subsection shall take effect upon completion of the guidelines.

      (2) Upon notice under subsection (1) of this section, the department shall identify all activities and costs necessary to ensure that solid waste generated out-of-state meets standards relating to solid waste reduction, recycling, and management substantially equivalent to those required of solid waste generated within the state. The department may assess a fee on the out-of-state waste sufficient to recover the actual costs incurred in ensuring that the out-of-state waste meets equivalent state standards. The department may delegate, to a local health department, authority to implement the activities identified by the department under this subsection. All money received from fees imposed under this subsection shall be deposited into the solid waste management account created by RCW 70.95.800, and shall be used solely for the activities required by this section.

      (3) The department may prohibit in-state disposal of solid waste generated from outside of the state, unless the generators of the waste meet: (a) Waste reduction and recycling requirements substantially equivalent to those applicable in Washington state; and (b) solid waste handling standards substantially equivalent to those applicable in Washington state.

      (4) The department may adopt rules to implement this section.

      NEW SECTION. Sec. 3. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

      NEW SECTION. Sec. 4. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately."


     On motion of Senator Fraser, the following title amendment was adopted:

     On page 1, line 1 of the title, after "state;" strike the remainder of the title and insert "adding new sections to chapter 70.95 RCW; and declaring an emergency."


MOTION


     On motion of Senator Fraser, the rules were suspended, Substitute House Bill No. 1047, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.


POINT OF INQUIRY


     Senator Anderson: "Senator Fraser, this is a good bill. In the discussion, however, did you have a chance to look to see if this may jeopardize any type of reciprocity from other states? In other words, Washington is very dependent on, for example, sending things to Arlington, Oregon. Would this jeopardize if that state didn't have the same type of standards that we did--any reciprocity?"

     Senator Fraser: "My understanding is that there is not a problem, especially with Oregon. They have similar legislation. Also, this has been--I'm not aware of reciprocity problems. Also, the bill does, to the best of my knowledge, meet the test of the commerce clause in that it doesn't discriminate against out-of-state waste. The fee that is involved is merely to cover the state's cost in management and processing of waste."

     The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 1047, as amended by the Senate.

 

ROLL CALL


     The Secretary called the roll on the final passage of Substitute House Bill No. 1047, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 38; Nays, 0; Absent, 4; Excused, 7.

     Voting yea: Senators Anderson, Barr, Bauer, Bluechel, Drew, Erwin, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, Moore, Moyer, Nelson, Newhouse, Niemi, Oke, Pelz, Prentice, Quigley, Rasmussen, M., Rinehart, Roach, Sellar, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Talmadge, West, Williams and Wojahn - 38.

     Absent: Senators Amondson, Deccio, McDonald and Vognild - 4.

     Excused: Senators Cantu, Hochstatter, McCaslin, Owen, Prince, von Reichbauer and Winsley - 7.

     SUBSTITUTE HOUSE BILL NO. 1047, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.

 

SECOND READING


     SUBSTITUTE HOUSE BILL NO. 1057, by House Committee on Trade, Economic Development and Housing (originally sponsored by Representatives Franklin, Zellinsky, Campbell and Springer)

 

Correcting double amendments relating to regulation of mobile and manufactured homes.


     The bill was read the second time.


MOTION


     On motion of Senator Moore, the rules were suspended, Substitute House Bill No. 1057 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

     The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 1057.


ROLL CALL


     The Secretary called the roll on the final passage of Substitute House Bill No. 1057 and the bill passed the Senate by the following vote: Yeas, 39; Nays, 0; Absent, 3; Excused, 7.

     Voting yea: Senators Anderson, Barr, Bauer, Bluechel, Drew, Erwin, Franklin, Fraser, Gaspard, Hargrove, Haugen, Jesernig, Loveland, McAuliffe, McDonald, Moore, Moyer, Nelson, Newhouse, Niemi, Oke, Pelz, Prentice, Quigley, Rasmussen, M., Rinehart, Roach, Sellar, Sheldon, Skratek, Smith, A., Smith, L., Snyder, Spanel, Sutherland, Talmadge, West, Williams and Wojahn - 39.

     Absent: Senators Amondson, Deccio and Vognild - 3.

     Excused: Senators Cantu, Hochstatter, McCaslin, Owen, Prince, von Reichbauer and Winsley - 7.

     SUBSTITUTE HOUSE BILL NO. 1057, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.

 

SECOND READING


     ENGROSSED SUBSTITUTE HOUSE BILL NO. 1086, by House Committee on Environmental Affairs (originally sponsored by Representatives Valle, Edmondson, Rust and Kremen)

 

Modifying littering penalties.


     The bill was read the second time.


MOTIONS


     Senator Fraser moved that the following Committee on Ecology and Parks amendment be adopted:

     Strike everything after the enacting clause and insert the following:

      "Sec. 1. RCW 70.93.060 and 1983 c 277 s 1 are each amended to read as follows:

      (1) No person shall throw, drop, deposit, discard, or otherwise dispose of litter upon any public property in the state or upon private property in this state not owned by him or in the waters of this state whether from a vehicle or otherwise including but not limited to any public highway, public park, beach, campground, forest land, recreational area, trailer park, highway, road, street, or alley except:

      (((1))) (a) When ((such)) the property is designated by the state or ((by any of)) its agencies or political subdivisions for the disposal of garbage and refuse, and ((such)) the person is authorized to use such property for ((such)) that purpose;

      (((2))) (b) Into a litter receptacle in ((such)) a manner that ((the litter)) will ((be prevented)) prevent litter from being carried away or deposited by the elements upon any part of said private or public property or waters.

      ((Any person violating the provisions of this section shall be guilty of a misdemeanor and the fine for such violation shall not be less than fifty dollars for each offense. In addition thereto, except where infirmity or age or other circumstance would create a hardship, such person shall be directed by the court in which conviction is obtained to pick up and remove litter from public property and/or private property, with prior permission of the legal owner, for not less than eight hours nor more than sixteen hours for each separate offense. The court shall schedule the time to be spent on such activities in such a manner that it does not interfere with the person's employment and does not interfere substantially with the person's family responsibilities))

      (2)(a) It is a class 3 civil infraction as defined in RCW 7.80.120 for a person to litter in an amount less than or equal to one cubic foot.

      (b) It is a class 1 civil infraction as defined in RCW 7.80.120 for a person to litter in an amount greater than one cubic foot. Unless suspended or modified by a court, the person shall also pay a litter cleanup fee of twenty-five dollars per cubic foot of litter. The court may, in addition to or in lieu of part or all of the cleanup fee, order the person to pick up and remove litter from the property, with prior permission of the legal owner or, in the case of public property, of the agency managing the property.

      Sec. 2. RCW 70.93.070 and 1983 c 277 s 2 are each amended to read as follows:

      The director shall prescribe the procedures for the collection of ((fines and bail forfeitures including the imposition of additional penalty charges for late payment of fines)) penalties, costs, and other charges allowed by chapter 7.80 RCW for violations of this chapter. Included in the procedures shall be provisions requiring ((the distribution of)) that one-half of the monetary amount ((of fines)) actually collected ((under the enforcement)) by the state or local government entity enforcing the provisions of this chapter ((by a local governmental agency to)) be distributed to that local governmental ((agency)) entity.

      Sec. 3. RCW 70.95.240 and 1969 ex.s. c 134 s 24 are each amended to read as follows:

      (1) After the adoption of regulations or ordinances by any county, city, or jurisdictional board of health providing for the issuance of permits as provided in RCW 70.95.160, it shall be unlawful for any person to dump or deposit or permit the dumping or depositing of any solid waste onto or under the surface of the ground or into the waters of this state except at a solid waste disposal site for which there is a valid permit((: PROVIDED, That nothing herein)). This section shall not prohibit a person from dumping or depositing solid waste resulting from his own activities onto or under the surface of ground owned or leased by him when such action does not violate statutes or ordinances, or create a nuisance. ((Any person violating this section shall be guilty of a misdemeanor))

      (2)(a) It is a class 3 civil infraction as defined in RCW 7.80.120 for a person to litter in an amount less than or equal to one cubic foot.

      (b) It is a class 1 civil infraction as defined in RCW 7.80.120 for a person to litter in an amount greater than one cubic foot. Unless suspended or modified by a court, the person shall also pay a litter cleanup fee of twenty-five dollars per cubic foot of litter. The court may, in addition to or in lieu of part or all of the cleanup fee, order the person to pick up and remove litter from the property, with prior permission of the legal owner or, in the case of public property, of the agency managing the property."


     Senator Fraser moved that the following amendment to the Committee on Ecology and Parks striking amendment be adopted:

     On page 3, after line 11 insert the following:

      "NEW SECTION. Sec. 4. The legislature finds that the release into the atmosphere of large numbers of balloons inflated with lighter-than-air gasses poses a danger and nuisance to the environment, particularly to wildlife and marine animals. The legislature also finds that balloons released into the atmosphere are a significant source of litter and impair the fundamental need for a healthful, clean and beautiful environment.

      NEW SECTION. Sec. 5. A new section is added to chapter 70.93 RCW to read as follows:

      (1) Except as provided in subsection (2) of this section, it is unlawful for any person to intentionally release, organize the release, or intentionally cause to be released within a twenty-four hour period twenty-five or more balloons inflated with a gas that is lighter than air.

      (2) It is not a violation of this section for a person to release:

      (a) Balloons on behalf of a government agency or pursuant to a governmental contract for scientific or meteorological purposes;

      (b) Hot air balloons that are recovered after launching; or

      (c) Balloons indoors.

      (3) A violation of this section is a class 1 civil infraction under chapter 7.80 RCW.

      NEW SECTION. Sec. 6. A new section is added to chapter 70.93 RCW to read as follows:

      Any person may petition a district court to enjoin the release of twenty-five or more balloons in violation of section 2 of this act.

      NEW SECTION. Sec. 7. If any provision of this act or its application to any person or circumstances is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected."


POINT OF ORDER


     Senator West: "Mr. President, I would like to challenge the scope and object of this amendment. The bill creates penalties for littering and changes current penalties for the offense of littering. The amendment creates a new offense. The new offense is releasing of balloons. It is clearly beyond the scope; the scope of the bill is merely a penalty adjustment. This creates a new crime, so I would ask, Mr. President, that you rule that way."

     Further debate ensued.


MOTION


     On motion of Senator Jesernig, further consideration of Engrossed Substitute House Bill No. 1086 was deferred.

 

SECOND READING


     ENGROSSED SUBSTITUTE HOUSE BILL NO. 1372, by House Committee on State Government (originally sponsored by Representatives Pruitt, R. Fisher, Mielke, Sheldon, Dorn, Long, Veloria, Roland, Romero, Shin, R. Meyers, Finkbeiner, Jones, Dunshee, Jacobsen, Riley, Holm, Mastin, Kessler, Linville, Springer, Wolfe, Franklin, Kremen, Johanson, Karahalios, Flemming, Tate, L. Johnson, J. Kohl, Dellwo, G. Cole and Anderson) (by request of State Auditor)

 

Creating the government accountability task force.


     The bill was read the second time.


MOTIONS


     On motion of Senator Rinehart, the following Committee on Ways and Means amendment was adopted:

     Strike everything after the enacting clause and insert the following:

      "NEW SECTION. Sec. 1. The legislature finds that many of the systems currently in place for assuring accountability in state government programs are not operated comprehensively, do not take advantage of modern management techniques, and do not contribute adequately to the optimum use of scarce resources. Critical variables that are not always taken into account include whether stated goals and objectives are being achieved, and whether desired results are being accomplished.

      Agency executives need more accurate information for setting policy, determining whether new or existing programs are effective, and improving internal controls for agency management. These needs must be met at all levels of operation, and must be clearly communicated to the legislature and all interested parties.

      Ensuring accountability in government involves a long-term commitment to policy planning, quality management, and results-oriented evaluation. It is the intent of this act to facilitate program evaluations and performance audits of selected state agencies and programs through the coordinated resources of the executive and legislative branches of state government.

      Sec. 2. RCW 43.88.020 and 1991 c 358 s 6 are each amended to read as follows: