 ..‘ OFFICE OF THE ATTORNEY GENERAL . ST.%TE OF TEXAS

   JOHN      CORNYN




                                                  March 27,2002




The Honorable Gwyn Shea                                     Opinion No. JC-0486
Texas Secretary of State
P.O. Box 12697, Capitol Station                             Re: Whether a financing statement terminating a
Austin, Texas 78711                                         “pre-effective-date financing statement” should be
                                                            filed with the Secretary of State or the county
                                                            clerk (RQ-0449-JC)


Dear Secretary Shea:

         The Uniform Commercial Code - Secured Transactions, codified at chapter 9 of the Business
and Commerce Code, see TEX. BUS. & COM. CODE ANN. $5 9.101-.709 (Vernon Supp. 2002) (the
“Act”), provides for the perfection and regulation of security interests in personal property and
fixtures. See id. The Act was substantially revised in 1999, including the provisions establishing
the office in which financing statements must be filed to perfect security interests in the various
types of personal property and fixture collateral. See Act of May 17,1999,76th Leg., R.S., ch. 414,
9 1.Ol , 1999 Tex. Gen. Laws 2639,270O. The revised provisions became effective July 1,200l.
See id. 5 3.01, 1999 Tex. Gen. Laws at 2747.

         Your question relates to a “pre-effective-date financing statement,” defined as a financing
statement filed to perfect security interests in collateral prior to the July 1,200l effective date of the
revisions. See TEX.Bus. & COM.CODEANN. § 9.707(a), (e) (V emon Supp. 2002). Section 9.707(e)
of the Act, a transition provision, deals with the termination of a “pre-effective-date          financing
statement.” See id. 9.707(e). You ask whether under section 9.707(e), a financing statement to
terminate a pre-effective-date financing statement originally filed with the office of the county clerk
should be filed with the county clerk’s office or with the office of the Secretary of State.’ Based on
the plain language of section 9.707(e) of the Act, we conclude that if a pre-effective-date financing
statement was originally filed in the office of the county clerk, then a financing statement to
terminate that original filing must also be filed in the county clerk’s office unless an initial financing
statement relating to the pre-effective-date    financing statement has been filed in the office of the
Secretary of State.




         ‘See Letter from Geoffrey S. Connor, Assistant Secretary of State, to Honorable   John Comyn, Texas Attorney
General (Oct. 9, 2001) (on file with Opinion Committee) [hereinafter Request Letter].
The Honorable     Gwyn Shea - Page 2                       (JC-0486)




       Section 9.707 of the Act provides in relevant part as follows:

                 (a) In this section, “pre-effective-date financing statement” means a
                 financing statement filed before the revision takes effect.




                 (e) Whether or not the law of this state governs perfection of a
                 security interest, the effectiveness of a pre-effective-date   financing
                 statement filed in this state may be terminated after the revision takes
                 effect by filing a termination statement in the office in which the
                pre-effective-date financing statement is filed, unless an initial
                financing statement that satisfies Section 9.706(c) has been filed in
                 the office spec$ed by the law of the jurisdiction governingperfection
                 as provided in Subchapter C [law governing perfection andpriority]
                 as the office in which to file a financing statement.

TEX. Bus. & COM. CODE ANN. § 9.707(a), (e) (V emon Supp. 2002) (emphasis added). Before turning
to your question, we briefly consider section 9.706 of the Act,* referenced in subsection (e) above.




       2Section 9.706 provides as follows:

       (a) The filing of an initial financing statement in the office specified in Section 9.501, as revised
       [county clerk for as-extracted collateral, timber to be cut, or fixture filing, otherwise Secretary of
       State], continues the effectiveness of a financing statement filed before the revision takes effect if:

                 (1) the filing of an initial financing statement in that office would be effective to
                 perfect a security interest under this chapter, as revised;

                 (2) the pre-effective-date financing statement was filed in an office in                   state
                 or another office in this state; and

                 (3) the initial fmancing    statement   satisfies Subsection    (c).

       (b) [additional   requirements       regarding    when   initial   statement     is filed   and   the duration      of
       effectiveness].

       (c) To be effective for purposes of Subsection        (a), an initial financing    statement must:

                 (1) satisfy the requirements of Subchapter        E, as revised [filing requirements],      for
                 an initial fmancing statement;

                (2) identify the pre-effective-date tinancing statement by indicating the office in
                which the fmancing statement was filed and providing the dates of filing and file
                                                                                                                        (continued...)
The Honorable Gwyn Shea - Page 3                                  (JC-0486)




above. This section deals with continuing the effectiveness of a pre-effective-date          financing
statement filed “in an office in another state or another office in this state” than the one required
under the revised provisions of the Act. See id. 5 9.706(a)(1),(2); see also id. 8 9.501. Subsection
(a) of section 9.706 provides that the effectiveness of such a pre-effective-date financing statement
may be continued by filing an initial financing statement in the office established under revised
section 9.501 of the Act for perfecting security interests in the collateral covered by the financing
statement. See id. $5 9.706(a), 501; see also infra p. 5-6. Subsection (c) of section 9.706 sets forth
requirements for the subsection (a) initial filing statement:       it must satisfy the revised filing
requirements; provide identifying information about the pre-effective-date filing statement, including
the other office in which it was filed; and it must indicate that the pre-effective-date     financing
statement remains effective. See TEX. BUS. & COM. CODEANN. 5 9.706(c) (Vernon Supp. 2002).

         You inform us that there is confusion regarding construction of the italicized language in
section 9.707(e): “the effectiveness of a pre-effective-date financing statement filed in this state may
be terminated after the revision takes effect byfiling a termination statement in the office in which
the pre-effective-date financing statement is filed.” See Request Letter, supra note 1, at 2. The
confusion is “whether a termination statement terminating a pre-effective-date financing statement
originally filed with the county filing officer should be filed with the county filing officer or with
the Office of the Secretary of State.” See id. We presume that an “initial financing statement that
satisfies Section 9.706(c)” has not been filed in the situation about which you ask. See id. You
suggest that the terminating statement should be filed in the office of the county clerk.3 See id. We
agree.

          A statute must be construed as written and, ifpossible, the legislative intent ascertained from
the statutory language.      See Morrison v. Ghan, 699 S.W.2d 205, 208 (Tex. 1985); see also
HorizonKMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 892 (Tex. 2000) (primary objective of
statutory construction is to determine and give effect to legislature’s intent). In doing so, like a
court, we must look first to the plain and common meaning of the statutory words. See Liberty Mut.
Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482,484 (Tex. 1998). When a statute is clear
and unambiguous, it is unnecessary to resort to rules of construction or extrinsic evidence to construe
it. See Cail v. Serv. Motors, Inc., 660 S. W.2d 8 14,8 15 (Tex. 1983). Instead, we must determine the
legislative intent from the plain and ordinary meaning of the words used in the statute. See id.




          2(. . .continued)
                       (3) indicate that the pre-effective-date     financing   statement remains effective.

TEX. Bus.& COM. CODE ANN. $9.706              (Vernon Supp. 2002).

           3A   brief submitted on behalf of the Texas Association of Counties and the County & District Clerk’s
Association     of Texas also takes this position. See Brief from Rex Hall, Associate General Counsel, Texas Association
of Counties,     to Honorable John Comyn, Texas Attorney General (Nov. 19,200l) (on tile with Opinion Committee)
[hereinafter    TAC Brief).
The Honorable    Gwyn Shea - Page 4              (JC-0486)




         Section 9.707(e), by its plain terms, requires a termination statement to be filed in the office
in which the “pre-effective-date    financing statement” is filed unless an initial financing statement
relating to that pre-effective-date financing statement has been filed. A “pre-effective-date financing
statement” is a financing statement filed before July 1,2001, which is the effective date of the 1999
revisions to the Act. See TEX. BUS. & COM. CODEANN. 5 9.707(a), (e) (Vernon Supp. 2002); see
also 8 9.701 (“revision” means 1999 amendments to chapter 9 effective July 1,200l). To determine
in which office such a statement is filed, it is necessary to look at the chapter 9 provisions that
governed the appropriate filing office for financing statements filed before July 1,200l.

         Prior to July 1, 2001, under former section 9.401 of the Business and Commerce Code,
financing statements to perfect security interests in consumer goods, timber to be cut, minerals or
the like, and fixture filings were filed in the office of the county clerk; financing statements to
perfect security interests in all other items were filed in the office of the Secretary of State:

                 (a) The proper place to file in order to perfect a security interest is as
                follows:

                (1) when the collateral is consumer goods, then in the office of the
                County Clerk in the county of the debtor’s residence or if the debtor
                is not a resident of this state then in the office of the County Clerk in
                the county where the goods are kept.

                (2) when the collateral is timber to be cut or is minerals or the like
                (including oil and gas) or accounts subject to Subsection (e) of
                Section 9. IO3 [mineral interests], or when the financing statement is
                filed as a fixture filing (Section 9.3 13) and the collateral is goods
                which are or are to become fuctures, then in the office of the County
                Clerk in the county where a mortgage on the real estate would be
                filed or recorded;

                (3) in all other cases, in the office of the Secretary of State.

Act ofMay21,1985,69thLeg.,    R.S., ch. 914, $4 3,4,1985 Tex. Gen. Laws 3081,3082, amended
and renumbered by Act of May 17, 1999, 76th Leg., R.S., ch. 414, 5 1.01, 1999 Tex. Gen. Laws
2639,270O (emphasis added). See also TEX. BUS. & COM.CODEANN. 5 9.501 (Vernon Supp. 2002).

         Turning back to section 9.707(e) and your question, where a financing statement to terminate
a pre-effective-date   financing statement must be filed depends on where the pre-effective-date
financing statement was originally filed. A pre-effective-date financing statement was filed in the
office of the Secretary of State or the county clerk, depending on the type of collateral in which a
security interest was sought. A financing statement to terminate the pre-effective-date     financing
statement must be filed in the same office unless an initial financing statement has been filed in a
different office pursuant to the Act’s revised provisions. Accordingly, we conclude that if a pre-
The Honorable       Gwyn Shea - Page 5                   (JC-0486)




effective-date financing statement was originally filed in the office of the county clerk, then a
financing statement to terminate that original filing must also be filed in the county clerk’s office
unless an initial financing statement relating to the pre-effective-date financing statement has been
filed in the office of the Secretary of State.

           It has been suggested that a termination statement may be filed only in the office of the
 Secretary of State. This interpretation is apparently premised on the view that “filing office” under
 the Act refers only to the office of the Secretary of State.4 This construction and its premise
 disregard the legislatively adopted language of section 9.707(e). See Bridgestone/Firestone,      Inc. v.
 Glyn-Jones, 878 S.W.2d 132, 133 (Tex. 1994) (statutory provision must be construed in context of
 entire statute of which it is part; every word of statute must be presumed to have been used or
 excluded for a purpose). Section 9.707(e) plainly states that a pre-effective-date financing statement
 may be terminated by filing “a termination statement in the office in which thepre-effective-date
financing statement isfiled, unless an initial financing statement that satisfies Section 9.706(c) has
 been filed.” TEX. BUS. & COM. CODEANN. 5 9.707 (e) (Vernon Supp. 2002) (emphasis added).
 Moreover, subsection (e) does not use the phrase “filing office.” See id. And, in any case, the terms
 “filing office” do not exclusively denote the office of the Secretary of State. “Filing office,” as
 defined in section 9.102(a)(37) of the Act, “means an office designated in Section 9.501 as the place
 to file a financing statement.” Id. 8 9.102(a)(37). Under section 9.501, the office of the county clerk
 is a designated place for filing certain financing statements:

                   (a) Except as otherwise provided in Subsection (b), if the local law of
                   this state governs perfection of a security interest or agricultural lien,
                   the office in which to file a financing statement to perfect the security
                   interest or agricultural lien is:

                            (1) the ofice designatedfor the filing or recording of
                            a record of a mortgage on the related real property,
                            if:

                                      (A) the collateral is as-extracted
                                      collateral or timber to be cut; or

                                      (B) the financing statement is filed as
                                      a Jixture filing and the collateral is
                                      goods that are or are to become
                                      fixtures; or




          4SeeTAC Brief, supra note 3, at 5 (“Those who disagree [with construction that termination statement must
be filed with county clerk if pre-effective-date   statement was originally filed there] appear to argue that ‘the office as
used in this section, must refer to ‘the filing office’ . . . which is the Secretary of State.“) (footnote omitted).
The Honorable Gwyn Shea - Page 6                (JC-0486)




                        (2) the ofJice of the Secretary of State, in all other
                        cases, including a case in which the collateral is goods
                        that are or are to become fixtures and the financing
                        statement is not filed as a fixture filing.

                (b) The office in which to file a financing statement to perfect a
                security interest in collateral, including fixtures, of a transmitting
                utility is the office of the Secretary of State. The financing statement
                also constitutes a fixture filing as to the collateral indicated in the
                financing statement that is or is to become fixtures.



Id. 9 9.501 (emphasis added). Financing statements to perfect security interests in “consumer goods”
are no longer filed in the office of the county clerk as they were prior to July 1,200l. Compare id.
with Act of May 21, 1985, 69th Leg., R.S., ch. 914, $5 3, 4, 1985 Tex. Gen. Laws 3081, 3082
(former section 9.401 of Business & Commerce Code). However, financing statements to perfect
security interests in “as-extracted collateral or timber to be cut” and fixture filing financing
statements are still filed in the office of the county clerk.

         Accordingly, we conclude that under section 9.707(e) of the Business and Commerce Code,
if a pre-effective-date financing statement was originally filed in the office of the county clerk, then
a financing statement to terminate that original filing must also be filed in the county clerk’s office
unless an initial financing statement relating to the pre-effective-date financing statement has been
filed in the office of the Secretary of State in accordance with the Act’s revised provisions.
The Honorable Gwyn Shea - Page 7               (JC-0486)




                                        SUMMARY

                         Under section 9.707(e) of the Business and Commerce Code,
               if a pre-effective-date financing statement was originally filed in the
               office of the county clerk, then a financing statement to terminate that
               original filing must also be filed in the county clerk’s office unless an
               initial financing statement relating to the pre-effective-date financing
               statement has been filed in the office of the Secretary of State in
               accordance with the revised provisions of chapter 9 of the Business
               and Commerce Code.




                                               JOHN     CORNYN
                                               Attorney General of Texas



HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN DENMON GUSKY
Chair, Opinion Committee

Sheela Rai
Assistant Attorney General, Opinion Committee
