Request By:
Mr. J. U. "Bud" Grow
Simpson County Clerk
P.O. Box 268
Franklin, Kentucky 42134
Opinion
Opinion By: David L. Armstrong, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You have problems concerning the filing of financing statements. Question No. 1:
"The Small Business Adm. is loaning money to an individual here in Simpson County. The Kentucky title currently has one lien showing on the title face and the Small Business Adm. wants to file two more on the title. We have told them there is no provision on title space or computer space for recordation of more than two liens. Small Business insists that there is a provision for more than two. Please give your opinion on this question."
The Department of Vehicle Regulation of the Transportation Cabinet is directed, by KRS 186A.060, to develop a combined vehicle transaction record form to permit, as feasible, the recording of all information pertinent to registration or title of a vehicle. Subsection (14) of that statute requires that the registration-title form, in its lien information section, include spaces for showing of liens, not to exceed two (2), in the name of the applicant, owner or transferee. The form must have spaces for recording, as to a first and a second lien, the lienholder's name and mailing address, including zip code; and the county in which the financing statement is to be filed. KRS 186A.175(1) requires that each certificate of title must indicate, inter alia, the names and addresses of any lienholders, not exceeding two (2). KRS 186A.190(3) provides that no more than two (2) active financing statements as provided by KRS Chapter 355 may be recorded upon a certificate of title. See also subsection (4) as to allied data relating to lienholders. It provides that in recording the filing of a financing statement upon a certificate of title, the county clerk shall ensure that the certificate of title bears the lienholder's name, mailing address and zip code, the date the lien was filed, its file number and the county in which the financing statement is on file.
The Transportation Cabinet form of certificate of title now in use throughout Kentucky contains only a space for a first lienholder and a space for a second lienholder.
Of course the filing of financing statements required by KRS Chapter 355 (Uniform Commercial Code) relating to any motor vehicle registered or required to be registered in Kentucky must be carefully integrated with the statutes dealing with the licensing of motor vehicles (Chapter 186) and the automated motor vehicle registration system (Chapter 186A). Thus the lien involved in a financing statement filed in a clerk's office requires that the clerk note the lien information on the owner's copy and the clerk's copy of the certificate of title. KRS 186.045(2).
The Court of Appeals, in General Motors Acceptance Corporation v. Hodge, Ky., 485 S.W.2d 894 (1972), held that the failure of the clerk to place the lien on the registration receipt, as required by KRS 186.045, rendered the lien unenforceable as against a purchaser without notice. See KRS 186.045(5), providing in part:
"Once a security interest has been noted on the owner's copy of a certificate of registration and ownership or transfer receipt, no subsequent certificate of registration and ownership or transfer receipt may be issued by any county clerk free of such notation unless the owner's copy of the current receipt is presented to the clerk and it has noted thereon by the proper county clerk that the termination statement therefor has been filed. If this requirement is met, information relating to any security interest shown on the receipt as having been terminated may be omitted from the receipt to be issued by the clerk. "
It is our opinion that, under the current registration-title law relating to motor vehicles, the General Assembly by the above legislation has made provisions for showing not more than two (2) liens on the certificate of title.
Your second question reads:
"Are the federal agencies exempt from the legal process tax ($1.00) and library and archives fee ($2.00) for a total fee of $7.50 per financing statement or are they exempt from only the legal process tax ($1.00) for a fee total of $9.50 per financing statement? "
Under KRS 64.012, as amended in 1984, the clerk's fee for filing and indexing an original or continuation financing statement, and noting the security interest on the required receipt for one motor vehicle, is six dollars ($6.00).
The legal process tax, pursuant to KRS 142.010, as amended in 1984, on a financing statement is three dollars ($3.00) for each financing statement.
Thus the clerk's fee of six dollars ($6.00) for filing a financing statement plus three dollars ($3.00) for the legal process tax on the financing statement totals nine dollars ($9.00).
Your residual question is whether federal agencies are exempt from the legal process tax. You did not name any specific agencies.
The Congress has exempted various federal agencies from state taxation. For example, every federal land bank and every federal land bank association are exempt from state taxation, except taxes on real estate held by such agencies. 12 U.S.C. § 2055. Production Credit Associations are exempt from all taxation (except surtaxes, estate, inheritance, and gift taxes) imposed by a state. 12 U.S.C. § 2098. The Farmers Home Administration is exempt from the tax of KRS 142.010 by 42 U.S.C. § 1490h. Thus the answer to your second question depends upon specific exemption laws of the United States applicable to specifically designated federal agencies.