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Reps. Meacham, White and Allison appeared in the Chamber to inform the Senate that the House of Representatives had completed its business and was ready to adjourn Sine Die.

At 4:49 P.M., on motion of Senator MOORE, the Senate receded from business subject to the call of the Chair.

At 4:53 P.M., the Senate resumed.

S. 219 -- Senators Greg Smith, Leventis, Cork, Rankin, Thomas and Hayes: A BILL TO AMEND SECTION 16-25-70, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO ARRESTS IN DOMESTIC VIOLENCE CASES, SO AS TO REQUIRE THAT A PERSON WHO COMMITS OR THREATENS TO COMMIT AN ACT OF DOMESTIC VIOLENCE UPON A FAMILY OR HOUSEHOLD MEMBER MUST BE ARRESTED.

On motion of Senator STILWELL, with unanimous consent, the Report of the Committee of Conference was taken up for immediate consideration.

Senator STILWELL spoke on the report.

On motion of Senator STILWELL, with unanimous consent, Free Conference Powers were granted.

Whereupon, the PRESIDENT appointed Senators HOLLAND, MOORE and COURSON to the Committee of Free Conference on the part of the Senate and a message was sent to the House accordingly.

On motion of Senator STILWELL, the Report of the Committee of Free Conference to S. 219 was adopted as follows:

The COMMITTEE OF FREE CONFERENCE, to whom was referred:
S. 219 -- Senators Greg Smith, Leventis, Cork, Rankin, Thomas and Hayes: A BILL TO AMEND SECTION 16-25-70, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO ARRESTS IN DOMESTIC VIOLENCE CASES, SO AS TO REQUIRE THAT A PERSON WHO COMMITS OR THREATENS TO COMMIT AN ACT OF DOMESTIC VIOLENCE UPON A FAMILY OR HOUSEHOLD MEMBER MUST BE ARRESTED.
Beg leave to report that they have duly and carefully considered the same and recommend:

That the same do pass with the following amendments:

Amend the bill, as and if amended, by striking all after the enacting words and inserting therein the following:

SECTION 1. Section 20-4-40 of the 1976 Code is amended to read:

"Section 20-4-40. There is created an action known as a `Petition for an Order of Protection' in cases of abuse to a household member.

(a) A petition for relief under this section may be made by any household members in need of protection or by any household members on behalf of minor household members.

(b) A petition for relief must allege the existence of abuse to a household member. It must state the specific time, place, details of the abuse, and other facts and circumstances upon which relief is sought and must be verified.

(c) The petition must inform the respondent of the right to retain counsel.

(d) In a pending action for divorce or separate support and maintenance, the petition for relief shall be brought in the form of a

(e) The clerk of court must provide simplified forms which will facilitate the preparation and filing of a petition under this section by any person not represented by counsel, including motions and affidavits to proceed in forma pauperis. Notwithstanding any other provision of law, the clerk of court may not assess any fee for the filing of a petition for relief."

SECTION 2. Title 36 of the 1976 Code is amended by adding:

In the spring of 1995, the South Carolina Senate Judiciary Committee requested the South Carolina Law Institute to appoint a committee (the "Committee") to evaluate the impact of proposed uniform Article 4A on South Carolina law and to assist the Senate Judiciary Committee in considering Article 4A for adoption in South Carolina. The Committee was comprised of lawyers, professors, bankers, corporate users of wire transfer services, and a representative of the Office of the Consumer Advocate. The Reporter and a research assistant provided support to the Committee. After review of the uniform statute and the Official Comments thereto, versions of Article 4A adopted by other states, South Carolina statutory and common law, and scholarly commentary, the Committee unanimously recommended that South Carolina adopt the uniform version of Article 4A.
Uniformity Of Article 4A.

Funds transfers are effected across state lines and often through different funds transfer systems. If participants in a funds transfer are to be certain of their obligations and liabilities, uniformity of funds transfer rules is imperative.

Virtually all jurisdictions have adopted Article 4A without change from the proposed uniform statute. The Committee reviewed all non-uniform provisions enacted by other states and determined that most of the provisions were not substantive. The Committee found no reason to vary Article 4A from the uniform version and accordingly recommended that South Carolina adopt the uniform version of Article 4A.

Like other Articles in the Uniform Commercial Code, the uniform version of Article 4A includes "Official Comments" addressing the purpose and meaning of the various sections and the policy considerations on which they are based. Because the Official Comments provide

At the time of the Committee's deliberations, no South Carolina statutory or case law dealt with funds transfers. Very few published opinions from other jurisdictions were available. Prior to the general enactment of Article 4A, courts decided funds transfer cases using various common law principles, or by analogy to Article 4 of the U.C.C. As a result, pre-Article 4A case law provides little guidance as to how a court would likely decide a funds transfer issue. For a discussion of how cases decided prior to the enactment of Article 4A might have been decided, see OKLA. STAT. ANN. tit. 12A, Section 4A (West Supp. 1995); Tony M. Davis, Comparing Article 4A with Existing Case Law on Funds Transfers: A Series of Case Studies, 42 ALA. L. REV. 823 (1991).

The enactment of Article 4A in South Carolina, although important to clarify national uniformity in regulation of funds transfers, should work little practical change in South Carolina law for two reasons. First, for funds transfer issues arising after 1989, it is likely that a South Carolina court would have looked to Article 4A for guidance. See, Manufacturas Int'l Ltda. v. Manufacturers Hanover Trust Co., 792 F.Supp. 180 (E.D.N.Y. 1992) (declining to apply Article 4A but discussing its provisions by analogy). Second, South Carolina banks using Fedwire as a funds transfer system have operated under Article 4A since January 1, 1991. Regulation J, which governs funds transfers through Fedwire, and which incorporated Article 4A as of that date, preempts inconsistent state law.1 ____________________ 1 Note, however, that not all parties to a Fedwire are governed by Regulation J and therefore, by Article 4A. Specifically, Regulation J applies to parties in privity with a Reserve Bank, beneficiaries that maintain or use an account at a Reserve Bank, and other parties in a funds transfer that have notice of the use of Fedwire and of the applicability of Regulation J to Fedwire. 12 C.F.R. Section 210.25(b)(2)(1992).

The National Conference of Commissioners on Uniform State laws and The American Law Institute have approved a new Article 4A to the Uniform Commercial Code. Comments that follow each of the sections of the statute are intended as official comments. They explain in detail the purpose and meaning of the various sections and the policy considerations on which they are based.
Description of transaction covered by Article 4A.

There are a number of mechanisms for making payments through the banking system. Most of these mechanisms are covered in whole or part by state or federal statutes. In terms of number of transactions, payments made by check or credit card are the most common payment methods. Payment by check is covered by Articles 3 and 4 of the UCC, and some aspects of payment by credit card are covered by federal law. In recent years electronic funds transfers have been increasingly common in consumer transactions. For example, in some cases a retail customer can pay for purchases by use of an access or debit card inserted in a terminal at the retail store that allows the bank account of the customer to be instantly debited. Some aspects of these point-of-sale transactions and other consumer payments that are effected electronically are covered by a federal statute, the Electronic Fund Transfer Act (EFTA). If any part of a funds transfer is covered by EFTA, the entire funds transfer is excluded from Article 4A.

Another type of payment, commonly referred to as a wholesale wire transfer, is the primary focus of Article 4A. Payments that are covered by Article 4A are overwhelmingly between business or financial institutions. The dollar volume of payments made by wire transfer far exceeds the dollar volume of payments made by other means. The volume of payments by wire transfer over the two principal wire payment systems -- the Federal Reserve wire transfer network (Fedwire) and the New York Clearing House Interbank Payments Systems (CHIPS) -- exceeds one trillion dollars per day. Most payments carried out by use of automated clearing houses are consumer payments covered by EFTA and therefore not covered by Article 4A. There is, however, a significant volume of non-consumer ACH payments that closely resemble wholesale wire transfers. These payments are also covered by Article 4A.

The funds transfer that is covered by Article 4A is not a complex transaction and can be illustrated by the following example which is used throughout the Prefatory Note as a basis for discussion. X, a debtor, wants to pay an obligation owed to Y. Instead of delivering to Y a negotiable instrument such as a check or some other writing such as a credit card slip that enables Y to obtain payment from a bank, X transmits an instruction to X's bank to credit a sum of money to the bank account of Y. In most cases X's bank and Y's bank are different banks. X's bank may carry out X's instruction by instructing Y's bank to credit Y's account in the amount that X requested. The instruction that X issues to its bank is a "payment order." X is the "sender" of the payment order and X's bank is the "receiving bank" with respect to X's order. Y is the "beneficiary" of X's order. When X's bank issues an instruction to Y's bank to carry out X's payment order, X's bank "executes" X's order. The instruction of X's bank to Y's bank is also a payment order. With respect to that order, X's bank is the sender, Y's bank is the receiving bank, and Y is the beneficiary. The entire series of transactions by which X pays Y is known as the "funds transfer." With respect to the funds transfer, X is the "originator," X's bank is the "originator's bank," Y is the "beneficiary" and Y's bank is the "beneficiary's bank." In more complex transactions there are one or more additional banks known as "intermediary banks" between X's bank and Y's bank. In the funds transfer the instruction contained in the payment order of X to its bank is carried out by a series of payment orders by each bank in the transmission chain to the next bank in the chain until Y's bank receives a payment order to make the credit to Y's account. In most cases, the payment order of each bank to the next bank in the chain is transmitted electronically, and often the payment order of X to its bank is also transmitted electronically, but the means of transmission does not have any legal significance. A payment order may be transmitted by any means, and in some cases the payment order is transmitted by a slow means such as first class mail. To reflect this fact, the broader term "funds transfer" rather

Funds transfers are divided into two categories determined by whether the instruction to pay is given by the person making payment or the person receiving payment. If the instruction is given by the person making the payment, the transfer is commonly referred to as a "credit transfer." If the instruction is given by the person receiving payment, the transfer is commonly referred to as a "debit transfer." Article 4A governs credit transfers and excludes debit transfers.
Why is Article 4A needed?

There is no comprehensive body of law that defines the rights and obligations that arise from wire transfers. Some aspects of wire transfers are governed by rules of the principal transfer systems. Transfers made by Fedwire are governed by Federal Reserve Regulation J and transfers over CHIPS are governed by the CHIPS rules. Transfers made by means of automated clearing houses are governed by uniform rules adopted by various associations of banks in various parts of the nation or by Federal Reserve rules or operating circulars. But the various funds transfer system rules apply to only limited aspects of wire transfer transactions. The resolution of the many issues that are not covered by funds transfer system rules depends on contracts of the parties, to the extent that they exist, or principles of law applicable to other payment mechanisms that might be applied by analogy. The result is a great deal of uncertainty. There is no consensus about the juridical nature of a wire transfer and consequently of the rights and obligations that are created. Article 4A is intended to provide the comprehensive body of law that we do not have today.
Characteristics of a funds transfer.

There are a number of characteristics of funds transfers covered by Article 4A that have influenced the drafting of the statute. The typical funds transfer involves a large amount of money. Multimillion dollar transactions are commonplace. The originator of the transfer and the beneficiary are typically sophisticated business or financial organizations. High speed is another predominant characteristic. Most funds transfers are completed on the same day, even in complex transactions in which there are several intermediary banks in the transmission chain. A funds transfer is a highly efficient substitute for payments made by the delivery of paper instruments. Another characteristic is extremely low cost. A transfer that involves many millions of dollars can be made for a price of a few dollars. Price does not normally vary very much or at all with the amount of the transfer. This system of pricing may not be feasible if the bank is exposed to very large liabilities in connection with the transaction.

Rights and obligations under Article 4A arise as the result of "acceptance" of a payment order by the bank to which the order is addressed. Section 4A-209. The effect of acceptance varies depending upon whether the payment order is issued to the beneficiary's bank or to a bank other than the beneficiary's bank. Acceptance by the beneficiary's bank is particularly important because it defines when the beneficiary's bank becomes obligated to the beneficiary to pay the amount of the payment order. Although Article 4A follows convention in using the term "funds transfer" to identify the payment from X to Y that is described above, no money or property right of X is actually transferred to Y. X pays Y by causing Y's bank to become indebted to Y in the amount of the payment. This debt arises when Y's bank accepts the payment order that X's bank issued to Y's bank to execute X's order. If the funds transfer was carried out by use of one or more intermediary banks between X's bank and Y's bank, Y's bank becomes indebted to Y when Y's bank accepts the payment order issued to it by an intermediary bank. The funds transfer is completed when this debt is incurred. Acceptance, the event that determines when the debt of Y's bank to Y arises, occurs (i) when

The only obligation of the beneficiary's bank that results from acceptance of a payment order is to pay the amount of the order to the beneficiary. No obligation is owed to either the sender of the payment order accepted by the beneficiary's bank or to the originator of the funds transfer. The obligation created by acceptance by the beneficiary's bank is for the benefit of the beneficiary. The purpose of the sender's payment order is to effect payment by the originator to the beneficiary and that purpose is achieved when the beneficiary's bank accepts the payment order. Section 4A-405 states rules for determining when the obligation of the beneficiary's bank to the beneficiary has been paid.
Acceptance by a bank other than the beneficiary's bank.

In the funds transfer described above, what is the obligation of X's bank when it receives X's payment order? Funds transfers by a bank on behalf of its customer are made pursuant to an agreement or arrangement that may or may not be reduced to a formal document signed by the parties. It is probably true that in most cases there is either no express agreement or the agreement addresses only some aspects of the transaction. Substantial risk is involved in funds transfers and a bank may not be willing to give this service to all customers, and may not be willing to offer it to any customer unless certain safeguards against loss such as security procedures are in effect. Funds transfers often involve the giving of credit by the receiving bank to the customer, and that also may involve an agreement. These considerations are reflected in Article 4A by the principle that, in the absence of a contrary agreement, a receiving bank does not incur liability with respect to a payment order until it accepts it. If X and X's bank in the hypothetical case had an agreement that obliged the bank to act on X's payment orders and the bank failed to comply with the agreement, the bank can be held liable for breach of the agreement. But apart from any obligation arising by agreement, the bank does not incur any liability with respect to X's payment order until the bank accepts the order. X's payment order is treated by Article 4A as a request by X to the bank to take action that will cause X's payment order to be carried out. That request can be accepted by X's bank by "executing" X's payment order. Execution occurs when X's bank sends a payment order to Y's bank intended by X's bank to carry out the payment order of X. X's bank could also execute X's payment order by issuing a payment order to an intermediary bank instructing the intermediary bank to instruct Y's bank to make the credit to Y's account. In that case execution and

If a bank, other than the beneficiary's bank, accepts a payment order, the obligations and liabilities are owed to the originator of the funds transfer. Assume in the example stated above, that X's bank executes X's payment order by issuing a payment order to an intermediary bank that executes the order of X's bank by issuing a payment order to Y's bank. The obligations of X's bank with respect to execution are owed to X. The obligations of the intermediary bank with respect to execution are also owed to X. Section 4A-302 states standards with respect to the time and manner of execution of payment orders. Section 4A-305 states the measure of damages for improper execution. It also states that a receiving bank is liable for damages if it fails to execute a payment order that it was obliged by express agreement to execute. In each case consequential damages are not recoverable unless an express agreement of the receiving bank provides for them. The policy basis for this limitation is discussed in Comment 2 to Section 4A-305.

Error in the consummation of a funds transfer is not uncommon. There may be a discrepancy in the amount that the originator orders to be paid to the beneficiary and the amount that the beneficiary's bank is ordered to pay. For example, if the originator's payment order instructs payment of $100,000 and the payment order of the originator's bank instructs payment of $1,000,000, the originator's bank is entitled to receive only $100,000 from the originator and has the burden of recovering the additional $900,000 paid to the beneficiary by mistake. In some cases, the originator's bank or an intermediary bank instructs payment to a beneficiary other than the beneficiary stated in the originator's payment order. If the wrong beneficiary is paid, the bank that issued the erroneous payment order is not entitled to receive payment of the payment order that it executed and has the burden of recovering the mistaken payment. The originator is not obliged to pay its payment order. Section 4A-303 and Section 4A-207 state rules for determining the rights and obligations of the various parties to the funds transfer in these cases and in other typical cases in which error is made.

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