Request By:
Mr. Alvie Dee Langford
Fulton County Clerk
Hickman, Kentucky 42050
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You present the following question:
"Can a clerk legally file a UCC form or financing statement where there is 10, 12, or 14 commercial code numbers on one continuation and some are continuations on continuations without charging regular fees?"
Basically, your question is whether or not a group of continuation financing statements can be clustered, i.e., referred to by number in only one continuation form [Form UCC 3]. The answer is "no".
We concluded in OAG 77-67, copy enclosed, that, in considering the function of the continuation statement in continuing the effectiveness of the original financing statement, implicit in KRS 355.9-403 is the concept that the continuation statement is inextricably tied to the original financing statement to which it applies. Thus the index card of the original financing statement is the proper card to record the data about the continuation statement to which it relates, and the continuation statement should be properly attached to the original financing statement which it continues. In this situation obviously this one continuation form could not be attached to all of the financing statements to which it refers, each number referring to a distinctly separate document.
This cluster technique is an obvious attempt at economizing on the fees. But the attempt is a circumvention of the statutory intent that each continuation statement is a separate transaction. KRS 355.9-403(5) provides in part that the uniform fee for filing and indexing an original or a continuation statement shall be as provided for in KRS 64.012. Under KRS 64.012, the fee for "filing and indexing an original or continuation financing statement, and noting the security interest on the required receipt for one (1) motor vehicle is $6.00." (Emphasis added). Thus KRS 355.9-403 and 64.012 treat each continuation statement as a separate transaction. There are simply no provisions in the statutes for clustering the continuation statements in one instrument so as to avoid the proper statutory fee.
In connection with the overall meaning of KRS 355.9-403 [financing and continuation statements], we note that the court in Budget Marketing, Inc. v. Com. Ex. Rel. Stephens, Ky., 587 S.W.2d 245 (1979), wrote that "It is the duty of this court to draw all inferences and implications from the act as a whole . . ." Applying that to KRS 355.9-403, we think the logical and literal aspects dictate that each financing statement and its companion continuation statement stands as a separate transaction. Thus the cluster technique is impermissible; and such a clustered document cannot be legally filed.