                                  THE      ATTORSEY                GENERAL
                                                OF      TEXAS


                                                 August    12,   1987
.JlM MA.l-rox
A-~SEY        DESERAL


               Ronorable  Mike Driscoll                                 Opinion   No.   JM-767
               Harris County Attorney
               1001 Preston,   Suite 634                                He:    Filing    of financing  state-
               Houston,  Texas     77002                                ments with a county clerk under
                                                                        section     9.403(d)    of the Texas
                                                                        Business     and Commerce Code

                Dear Mr. Driscoll:

                       You seek clarification         of the county        clerk’s     responsibility        for
                filing     financing     statements     under      section      9.403(d)      of   the Texas
                Business’ and Commerce Code.             Your specific          concern     Is whether       the
                clerk   may refuse      to file    financing     statements        that do not appear to
                comply with certain        requirements      in section      9.402(a)     of the code.        As
                will be shown in the discussion            to follow,       the clerk’s       responsibility
                under     section    9.403(d)      does    not     include       the   responsibility          or
                authority     to “enforce”    section    9.402(a).

                       Chapter      9 of the Business           and Commerce Code governs              the legal
                enforceability         of    “security        agreements ,I’ agreements            that     create
                security      interests      In personal         property      to secure       the payment or
                performance       of an obligation.            See 59.102.        The primary purpose          of a
                security       agreement       is    to    ass=        enforcement       of    the’   underlying
                obligation.         To enforce        a security       interest     against     third    parties,
                such as prospective           lenders     or buyers,       the security      interest     must be
                “perfected.”         Villa    V. Alvarado         State Bank, 611 S.W.2d            483, 486-87
                (Tex. App. - Waco 1981, no writ).                  A financing      statement     must be filed
                to perfect       all   security      interests      except    those expressly        excepted     in
              . the code.       Sec. 9.302. Filing            is intended       as notice     to third parties
                that    an enforceable           security      interest      &y    exist    in the described
                property     of the debtor.           611 S.W.2d at 486-87.            Section    9.402 relates
                to the formal requisites             of financing       statements.

                        Section     9.402(a)   provides,     in part:

                                  A financing     statement       is sufficient     if it gives
                              the names of the debtor and the secured                  party,    is
                              signed    by the debtor,           gives    an address      of   the
                              secured    party     from which information             concerning
                              the security       interest       may be obtained,         gives     a
                              mailing     address      of   the .drbtor       and contains        a
                              statement      indicating        the    types,     or   describing
                              the items,      of   collateral.       . . .     A copy     of    the
                              security     agreement      is sufficient         as a financing




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               statement  If it contains    the above information       and
               is signed    by the debtor.     A carbon,    photographic
               or other reproduction     of a security    agreement or a
               financing   statement   Is sufficient     as a financing
               statement   If the security   agreement so provides       or
               if   the original    has been    filed  in this      state.
               (Emphasis added).

Tour specific      question     is whether    the county     clerk     must accept      for
filing    a reproduction      of a security     agreement    or financing       statement
when the security      agreement is not signed and it does not show on Its
face   that the original       has been filed     in Texas.       In other words,       you
ask whether      the county      clerk   must determine     whether       a copy of .the
security     agreement     or    financing    statement     is     “sufficient”      as     a
financing    statement within the meaning of section             9.402(a).

        Authorities          are    split      regarding         the       exact    nature      of    the
signatures        required      by section       9-402 of the Uniform Commercial Code,
section      9.402 In the Texas Business                and Commerce Code.             See Sommers v.
International           Business    Machines,         640 F.2d 686,           691 (5thCir.         1981)
(copy     of security         agreement must actually                 be signed);       but see J.K.
Merrill      6 Son. Inc. v. Carter,             702 P.2d 787. 791-92 (Idaho 1985) (copy
of signed         original     will    suffice)        (and conflicting           authorities      cited
therein).          None of these           authorities,        however,         address    your basic
concern,         i.e.      whether      the      filing       officer        must     determine       the
“sufficiency”           of the financing           statement        prior     to accepting       it for
filing.        These authorities            address      essentially         the legal      meaning of
“sufficient”          in section9.402.            The context        of these authorities          makes
it    clear,       however,      that    the “sufficiency”              requirements        In section
9.402     relate       to enforcing       a security       interest        against     a third party,
not     to the prerequisites               for filing        the financing           statement.       The
question       of “sufficiency”         under section          9.402 is a legal           question    for
 the courts,        not a question        for the filing          officer.

        The    filing    officer’s      filing         and    recording    responsibilities          are
 set   forth    in section     9.403(d):

                     Except  as provided         in Subsection         (g)    [special
                filing    and indexing       for property        relating      to real
                p*ope*tyl      a    filing       officer       shall      mark     each
                financing    statement        with a file         number and with
                the date and hour of filing                  and shall      hold     the
                financing      statement        or     a microfilm         or     other
                photographic      copy thereof          for public       inspection.
                In’ addition      the filing         officer     shall     index     the
                financing    statements       according       to the name of the
                debtor    and shall note in the index the file                   number
                and .the     address       of    the     debtor      given      in the
                financing     statement.           The filing        off ice?     shall
                mark each continuation            statement with the date and
                hour of filing        and shall       note it in the index of
                the original      financing       statement.




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    Nothing    in this provision     or in any other provision      of chapter   9 of
    the code refers    to any responsibility     of the filing    officer   to accept
    only   financing   statements     that are legally  “sufficient”      within   the
    meaning of section     9.402(a).

           Sections       9.402(a)        and 9.403(d)         are independent           provisions        of the
    code.      The filing          officer’s        responsibility            under subsection             (d)     of
    section     9.403      is governed          by section        q.403.        This duty is ‘simply               to
    accept,       record,        and index          financing          statements         as    soon      as      the
    appropriate        fees,     as provided         in subsection           (e) of section          9.403.       are
    tendered.        The order of the filing                of financing          statements        is of vital
    importance         because        it     relates       to     priorities         between       conflicting
    security       interests.           See 59.312;          see,      e.g.,     Borg-Warner         Acceptance
    Corporation        v. Wolfe i%y              National       Bank, 544 S.W.2d 947 (Tex.                     Civ.
    APP . - Dallas           1976,      no writ).         It is in the self-interest                       of the
    filing      party       to    assure       that     the     financing         statement         is    legally
    sufficient;        it is not the filing              officer’s        responsibility          to datermine
    whether      the financing            statement       is legally           sufficient        to perfect          a
    security      interest.         Of course,         the clerk has the authority                    to require
    that     financing         statements         be legible           and contain          the     information
    necessary       to record        and index the statements.                    As indicated,          however,
    under      section        9.403(d)        the     clerk’s        responsibility            is     to    record
    correctly       the order of filing               and to index financing                 statements,          not
    to verify         or question           the correctness              of    the information-            in the
P   financing        statement.           When the legislature                  defines      the duty          of    a
    county clerk         as a duty simply to file                  certain      ‘documents.       that duty is
    generally        deemed ministerial               rather        than discretionary.                 See R.E.
    Turrentine       v. Lasane.          389 S.W.2d 336, 337 (Tex. Clv. App. - Wax1965,
    no wit).             Such a duty              cannot      be      expanded        to    enforcing         other
    provisions        related      to the legal          effect       of the documents filed.                   See,
    s,        Attorney       General Opinion Nos. JM-508 (1986) ; C-695 (1966).

                                                  SUMMARY

                            Sections       9.402(a)    and 9.403(d)         of the Texas
                    Business         and      Commerce       Code      are     independent
                    provisions.         The filing       officer’s       legal    responsi-
                    bility     with regard to filing             financing     statements,
                    and authority          is governed     by section       9.403, cot by
                    section      9.402.       The filing      officer     may not refuse
                    to file      financing      statements       that do not appear to
                    be     legally      “sufficient”        within      the meaning         of
                    section      9.402(a).




                                                                J
                                                                     Very   truly     yours,



                                                                     JIM         MATTOX
                                                                     Attorney     General      of   Texas


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MARY KELLER
Executive Assistant     Attorney     General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney         General

RICK GILPIN
Chairman. Opinion     Committee

Prepared    by Jennifer   Riggs
Assistant    Attorney   General




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