2018 New Mexico Statutes
Chapter 55 - Uniform Commercial Code
Article 8 - Investment Securities
Section 55-8-405 - Replacement of lost, destroyed or wrongfully taken security certificate.
(a) If an owner of a certificated security, whether in registered or bearer form, claims that the certificate has been lost, destroyed or wrongfully taken, the issuer shall issue a new certificate if the owner:
(1) so requests before the issuer has notice that the certificate has been acquired by a protected purchaser;
(2) files with the issuer a sufficient indemnity bond; and
(3) satisfies other reasonable requirements imposed by the issuer.
(b) If, after the issue of a new security certificate, a protected purchaser of the original certificate presents it for registration of transfer, the issuer shall register the transfer unless an overissue would result. In that case, the issuer's liability is governed by Section 55-8-210 NMSA 1978. In addition to any rights on the indemnity bond, an issuer may recover the new certificate from a person to whom it was issued or any person taking under that person, except a protected purchaser.
History: 1978 Comp., § 55-8-405, enacted by Laws 1996, ch. 47, § 42.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
1. This section enables the owner to obtain a replacement of a lost, destroyed or stolen certificate, provided that reasonable requirements are satisfied and a sufficient indemnity bond supplied.
2. Where an "original" security certificate has reached the hands of a protected purchaser, the registered owner -- who was in the best position to prevent the loss, destruction or theft of the security certificate -- is now deprived of the new security certificate issued as a replacement. This changes the pre-UCC law under which the original certificate was ineffective after the issue of a replacement except insofar as it might represent an action for damages in the hands of a purchaser for value without notice. Keller v. Eureka Brick Mach. Mfg. Co., 43 Mo.App. 84, 11 L.R.A. 472 (1890). Where both the original and the new certificate have reached protected purchasers the issuer is required to honor both certificates unless an overissue would result and the security is not reasonably available for purchase. See Section 8-210 [55-8-210 NMSA 1978]. In the latter case alone, the protected purchaser of the original certificate is relegated to an action for damages. In either case, the issuer itself may recover on the indemnity bond.
"Bearer form" Section 8-102(a)(2) [55-8-102 NMSA 1978]
"Certificated security" Section 8-102(a)(4)
"Issuer" Section 8-201 [55-8-201 NMSA 1978]
"Notice" Section 1-201(25) [55-1-201 NMSA 1978]
"Overissue" Section 8-210 [55-8-210 NMSA 1978]
"Protected purchaser" Section 8-303 [55-8-303 NMSA 1978]
"Registered form" Section 8-102(a)(13)
"Security certificate" Section 8-102(a)(16)
Repeals and reenactments. — Laws 1996, ch. 47, § 42, repealed former 55-8-405 NMSA 1978, as amended by Laws 1987, ch. 248, § 43, and enacted a new section, effective May 15, 1996.
Issuer's obligation to issue a replacement stock certificate. — Section 55-8-405 NMSA 1978 precludes the issuance of a replacement stock certificate only if the issuer has notice that the original certificate has been acquired by a protected purchaser, not where the issuer has notice of an adverse claim. Wilde v. Westland Dev. Co., Inc., 2010-NMCA-085, 148 N.M. 627, 241 P.3d 628.
Exclusive remedy for registering a stock certificate when a replacement stock certificate has been issued. — Section 55-8-405 NMSA 1978 provides the exclusive remedy through which the holder of an original stock certificate can register the certificate when a replacement stock certificate has been issued and a stock issuer's actions in accordance with its obligations under 55-8-405 NMSA 1978 displaces common law claims stemming from those actions. Wilde v. Westland Dev. Co., Inc., 2010-NMCA-085, 148 N.M. 627, 241 P.3d 628.
Issuer's obligation to issue a replacement stock certificate. — Where a registered shareholder sold and transferred the shareholder's original certificate of shares in the defendant corporation; the original certificate was subsequently transferred to plaintiff in 1989; the intervening original certificate holders did not register the original certificate in their names; when plaintiff attempted to register the original certificate in plaintiff's name in 1990 and in 2007, the corporation refused to register the certificate; in 1998, a descendant of the registered shareholder filed an affidavit with the corporation stating that the descendant was the heir of the registered shareholder and the corporation issued a replacement certificate to the descendant; plaintiff did not contend that plaintiff was a protected purchaser, that defendants had notice that the certificate had been acquired by a protected purchaser, that plaintiff gave value for the certificate, or that there was an effective endorsement on the certificate such that plaintiff could be deemed to have control of the certificate; and plaintiff's only contention was that plaintiff possessed the physical copy of the certificate, the corporation was obligated under 55-8-405 NMSA 1978 to issue a replacement certificate to the descendant of the registered shareholder. Wilde v. Westland Dev. Co., Inc., 2010-NMCA-085, 148 N.M. 627, 241 P.3d 628.
No conversion of a stock certificate occurred when a replacement certificate was issued to a person who did not own the original stock certificate. — Where a registered shareholder sold and transferred the shareholder's original certificate of shares in the defendant corporation; the original certificate was subsequently transferred to plaintiff in 1989; the intervening original certificate holders did not register the original certificate in their names; plaintiff attempted to register the original certificate in plaintiff's name in 1990; the corporation refused to register the certificate; and in 2004, a descendant of the registered shareholder filed an affidavit with the corporation stating that the descendant was the successor of the estate of the registered shareholder and the corporation issued a replacement certificate to the descendant, the issuance of the replacement certificate to the descendant did not constitute conversion because plaintiff was a protected purchaser under 55-8-405 NMSA 1978, who could have sought to compel the corporation to register the original certificate, the issuance of the replacement certificate to the descendant had no effect on the value of the original certificate possessed by plaintiff, and the descendant's conduct in obtaining the replacement certificate did not constitute the unlawful exercise of dominion and control over plaintiff's original certificate. Wilde v. Westland Dev. Co., Inc., 2010-NMCA-085, 148 N.M. 627, 241 P.3d 628.
Am. Jur. 2d, A.L.R. and C.J.S. references. — Rights of owner and bona fide purchaser of lost or stolen stock certificates, 52 A.L.R. 947.
Issuance by corporation of new stock certificates without requiring surrender of old, 61 A.L.R. 436, 150 A.L.R. 148.
Constitutionality, construction and application of statute relating to lost, destroyed or stolen certificate of corporate stock, 125 A.L.R. 997.
Degree or quantum of evidence necessary to establish a lost instrument and its contents, 148 A.L.R. 400.
Statutory requirements respecting issuance of corporate stock as applicable to foreign corporations, 8 A.L.R.2d 1185.
