UNIFORM COMMERCIAL CODE

DISTRICTS ‑- SCHOOLS ‑- CONTRACTS ‑- UNIFORM COMMERCIAL CODE

It is not necessary to amend RCW 28A.58.550, relating to execution of executory conditional sales contracts by school districts, to bring that statute into conformity with the uniform commercial code.

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                                                              September 10, 1976

Honorable Gordon L. Walgren
State Senator, 23rd District
245 Fourth Street Building
Bremerton, Washington 98310                                                                                                               Cite as:  AGLO 1976 No. 55

Dear Sir:

            This is written in further response to your letter, previously acknowledged, requesting our opinion regarding the necessity or desirability of an amendment to RCW 28A.58.550 in order to bring it in conformity with the uniform commercial code.

                                                                     ANALYSIS

            RCW 28A.58.550 reads as follows:

            "Any school district may execute an executory conditional sales contract with any other municipal corporation, the state or any of its political subdivisions, the government of the United States or any private party for the purchaseof any real or personal property, or property rights, in connection with the exercise of any powers or duties which they now or hereafter are authorized to exercise, if the entire amount of the purchase price specified in such contract does not result in a total indebtedness in excess of the limitation authorized by chapter 39.36 RCW, as now or hereafter amended, to be incurred without the assent of the voters:  Provided, That if such a proposed contract would result in a total indebtedness in excess of the limitation authorized by chapter 39.36 RCW, as now or hereafter amended, to be incurred without the assent of the voters, a proposition in regard to whether or not such a contract may be executed shall be submitted to the voters for approval or rejection in the same manner that bond issues for capital purposes are submitted to the voters:  Provided further, That any school district may jointly with another school district execute contracts authorized by this section."  (Emphasis supplied.)

            In responding to your inquiry regarding the necessity  [[Orig. Op. Page 2]] or desirability for an amendment to this statute we should first note that, in point of fact, both RCW 28A.58.550 in its original form and the UCC were actually enacted at about the same time.  RCW 28A.58.550 originated as § 1, chapter 62, Laws of 1965, while the UCC, although it did not take effect until June 30, 1967, was adopted by the legislature through its enactment of chapter 157, Laws of 1965, Ex. Sess.

            A second point to be noted and emphasized in considering the question you have posed is that RCW 28A.58.550, supra, covers purchases by a school district of both personal and real property pursuant to an installment contract (referred to in the statute as an executory conditional sales contract) whereas so much of the uniform commercial code as deals with secured transactions only pertains to transactions involving personal property and fixtures.  See, RCW 62A-9-101 ‑ 507 [[62A.9-101 ‑ 62A.9-507]], encompassing Article 9 of the UCC.  Thus, if RCW 28A.58.550 was amended so as to authorize only the acquisition of property by a school district pursuant to a security transaction covered by Article 9, supra, the result would probably be to eliminate any ability of a school district to purchase real property under an installment contract.

            Conversely, however, it would be our opinion that if RCW 28A.58.550 was simply left alone, without any amendment, it would continue to authorize school districts to do everything which it was initially designed to permit them to do.  Insofar as installment purchases of real property are concerned, such purchases may still be consummated as before and the uniform commercial code is of no effect.  Likewise, although the code does have some impact upon the procedures to be followed by the seller in protecting his security interest, a school district will also still be able to purchase personal property "on time" pursuant to an executory conditional sales contract notwithstanding the enactment of the code.  This is so because the uniform commercial code has not done away with conditional sales contracts, perse, even in the case of personal property.  Instead, it has simply made such contracts subject to certain new procedural requirements with respect to the protection of the seller's security interest in the personalty which is covered by the contract.

            It is hoped that the foregoing explanation will be of some assistance to you.

Very truly yours,

SLADE GORTON
Attorney General

JOHN ENNIS
Assistant Attorney General