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S. B. No. 226As IntroducedAs Introduced
124th General Assembly | Regular Session | 2001-2002 |
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SENATORS Blessing, Robert Gardner, Goodman, Fingerhut, DiDonato, Mallory
A BILL
To amend sections 1309.109 and 3770.07 and to enact
sections
3770.10
to 3770.16 of the Revised Code
to
permit the
transfer of a lottery prize award upon
the prior
approval of a court, to establish
procedures for
application for such approval, and
to require each
transferee to obtain a certificate
of registration
from the Director of Commerce.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 1309.109 and 3770.07 be amended and
sections
3770.10, 3770.11, 3770.12, 3770.13, 3770.14, 3770.15,
and 3770.16 of the
Revised Code be enacted to
read as follows:
Sec. 1309.109. (A) Except as otherwise provided in
divisions
(C)
and (D) of this section, this chapter applies to: (1) A transaction, regardless of its form, that creates a
security interest in personal property or fixtures by contract; (2) An agricultural lien; (3) A sale of accounts, chattel paper, payment intangibles,
or
promissory notes; (5) A security interest arising under section 1302.42,
1302.49, division (C) of section
1302.85, or division (E) of
section 1310.54 of the Revised Code, as provided in
section
1309.110 of the Revised Code; and (6) A security interest arising under section 1304.20 or
1305.18
of the Revised Code. (B) The application of this chapter to a security interest
in a
secured obligation is not affected by the fact that the
obligation
is itself secured by a transaction or interest to which
this chapter does not
apply. (C) This chapter does not apply to the extent that: (1) A statute, regulation, or treaty of the United
States
preempts this chapter; or (2) The rights of a transferee beneficiary or nominated
person
under a letter of credit are independent and superior under
section
1305.13 of the Revised Code. (D) This chapter does not apply to: (1) A landlord's lien, other than an agricultural lien; (2)(a) A lien, not enumerated in division (D)(2) of this
section and other than an agricultural lien, given by
statute or
other rule of law for services or materials, including
any lien
created under any provision of Chapter 926., sections
1311.55 to
1311.57, sections 1311.71 to 1311.80, section 1701.66,
or Chapter
4585. of the Revised Code; (b) Notwithstanding division (D)(2)(a) of this section,
section
1309.333 of the Revised Code applies with respect to
priority of
the lien. (3) An assignment of a claim for wages, salary, or other
compensation of an employee; (4) A sale of accounts, chattel paper, payment intangibles,
or
promissory notes as part of a sale of the business out of which
they
arose; (5) An assignment of accounts, chattel paper, payment
intangibles, or promissory notes that is for the purpose of
collection
only; (6) An assignment of a right to payment under a contract to
an
assignee that is also obligated to perform under the contract; (7) An assignment of a single account, payment intangible,
or
promissory note to an assignee in full or partial satisfaction
of a
preexisting indebtedness; (8) A transfer of an interest in or an assignment of a claim
under a policy of insurance, other than an assignment by or to a
health-care provider of a health-care-insurance receivable and any
subsequent assignment of the right to payment, but
sections
1309.315 and 1309.322 of the Revised Code apply with
respect to
proceeds and priorities in proceeds; (9) An assignment of a right represented by a judgment,
other
than a judgment taken on a right to payment that was
collateral; (10) A right of recoupment or set-off, but: (a) Section 1309.340 of the Revised Code
applies with
respect to the
effectiveness of rights of recoupment or set-off
against deposit accounts; and (b) Section 1309.404 of the Revised Code
applies
with
respect to defenses or claims of an account debtor. (11) The creation or transfer of an interest in or lien on
real
property, including a lease or rents under a lease, except to
the extent that provision is made for: (a) Liens on real property in sections 1309.203
and
1309.308
of the Revised Code; (b) Fixtures in section 1309.334 of the
Revised
Code; (c) Fixture filings in sections 1309.501,
1309.502,
1309.512, 1309.516, and 1309.519 of the Revised Code; and (d) Security agreements covering personal and real property
in
section 1309.604 of the Revised Code. (12) An assignment of a claim arising in tort, other than a
commercial tort
claim, but
sections 1309.315 and 1309.322 of the
Revised Code
apply with
respect to proceeds and priorities in
proceeds; (13) An assignment of a deposit account in a consumer
transaction, but sections 1309.315 and 1309.322 of the
Revised
Code apply with respect to proceeds and
priorities in
proceeds; or (14) A transfer by a government, state, or governmental unit.
(E) The granting of a security interest in all or any part
of a lottery prize award by a prize winner for consideration is
also subject to sections 3770.10 to 3770.16 of the Revised Code.
Sec. 3770.07. (A)(1) Lottery prize awards shall be claimed
by the holder of the winning lottery ticket, or by the executor
or
administrator, or the trustee of a trust, of the
estate of a
deceased holder of a winning
ticket, in a manner to be determined
by the state lottery
commission, within one hundred eighty days
after the date on
which such prize award was announced if the
lottery game is an
on-line game, and within one hundred eighty
days after the close
of the game if the lottery game is an instant
game. Except as
otherwise provided in division (B) of this
section, if no valid
claim to the prize award is made within the
prescribed period,
the prize money or the cost of goods and
services awarded as
prizes, or if such goods or services are
resold by the
commission, the proceeds from such sale, shall be
returned to the
state lottery fund and distributed in accordance
with section
3770.06 of the Revised Code. (2) If a person entitled to a prize award is under eighteen
years of age, or is under some other legal disability, and the
prize money or the cost of goods or services awarded as a prize
exceeds one thousand dollars, the director shall order that
payment be made to the order of the legal guardian of such
winning
ticket holder. If the amount of the prize money or the
cost of
goods or services awarded as a prize is one thousand
dollars or
less, the director may order that payment be made to
the order of
the adult member, if any, of such winning ticket
holder's family
legally responsible for the care of such winning
person. (3) No right of any person to a prize award shall be the
subject of a security interest or used as collateral, except as
provided in sections 3770.10 to 3770.14 of the Revised Code. (4) No right of any person to a prize award shall be
assignable, or subject to garnishment, attachment, execution,
withholding, or deduction, except as follows: as provided in
sections 3119.80, 3119.81, 3121.02, 3121.03, and
3123.06 of the
Revised Code; when the
payment is to be made to the executor or
administrator or the
trustee of a trust of the estate of a winning
ticket holder; when
the award of a prize is disputed, any person
may be awarded a
prize award to which another has claimed title,
pursuant to the
order of a court of competent jurisdiction;
or
when the director
is to make a payment pursuant to section
3770.071 of the Revised
Code; or as provided in sections 3770.10
to 3770.14 of
the Revised Code. The commission shall adopt rules pursuant to section 3770.03
of the
Revised Code concerning the payment of prize awards
upon
the death of a prize winner. Upon the death of a prize winner,
the
remainder
of the prize winner's prize award, to the extent it
is not subject to a transfer agreement under sections 3770.10 to
3770.14 of the Revised Code, may be paid to the
executor,
administrator,
or trustee in the form of a discounted
lump sum
cash settlement. (5) No lottery prize award shall be awarded to or for any
officer or employee of the state lottery commission, any officer
or
employee of the auditor of state actively coordinating and
certifying
commission drawings, or any blood
relative or spouse of
such officer or employee of the commission or auditor
of state
living as a member
of such officer's or employee's household, nor
shall any such
employee, blood relative, or spouse attempt to
claim a lottery prize
award.
(6) The director may prohibit vendors to the commission and
their employees from being awarded a lottery prize award. (7) Upon the payment of
prize awards pursuant to this
section the director and the
commission are discharged from all
further liability therefor. (B) The commission may adopt rules governing the
disbursement of unclaimed prize awards as all or part of the
prize
award in a lottery and may, pursuant to those rules,
conduct the
lottery and disburse any such unclaimed prize awards.
Any lottery
in which all or any part of the prize award is paid
from unclaimed
prize awards shall be conducted in accordance with
all of the
other requirements of this chapter, including, but not
limited to,
the time and proof requirements for claiming awards
and the
disposition of unclaimed prize awards when the prescribed
period
for claiming the award has passed. A prize award or any
part of a
prize award that is paid from an unclaimed prize award
shall not
be reapplied toward the satisfaction of the requirement
of
division (A) of section 3770.06 of the Revised Code that at
least
fifty per cent of the total revenues from ticket sales be
disbursed for monetary prize awards, if such unclaimed prize
award
was previously applied toward the satisfaction of that
requirement. On or before the last day of January and July each
year, the commission shall report to the general assembly the
gross sales and net profits the commission obtained from the
unclaimed prize awards in lotteries conducted pursuant to this
division during the preceding two calendar quarters, including
the
amount of money produced by the games funded by the unclaimed
prize awards and the total revenue accruing to the state from the
prize award lotteries conducted pursuant to this division. There is hereby established in the state treasury the
unclaimed lottery prizes fund, to which all unclaimed prize
awards
shall be transferred. Any interest
which
that accrues on the
amounts in the fund shall become a part of the fund and shall be
subject to any rules adopted by the commission governing the
disbursement of unclaimed prize awards.
Sec. 3770.10. As used in sections
3770.10 to 3770.16 of the
Revised Code: (A) "Court of competent jurisdiction" means the court of
common pleas of Franklin county, the court of common pleas of the
county in which the prize winner resides, or a federal court
having jurisdiction over the lottery prize award. (B) "Discounted present value" means the
present value
of
the future payments of a lottery prize award that is determined
by
discounting those
payments to the present, using the most
recently
published
applicable federal rate for determining the
present
value of an annuity as issued by the
United
States
internal
revenue service and assuming daily compounding. (C) "Independent professional advice" means the
advice of an
attorney, a certified public accountant, an
actuary, or any other
licensed professional adviser if all of
the following apply: (1) The prize winner has engaged the services of the
licensed
professional adviser to render advice concerning the
legal
and other implications of a transfer of the lottery prize
award. (2) The licensed professional adviser is not affiliated
in
any manner with or compensated in any manner by the
transferee of
the
lottery prize award. (3) The compensation of the licensed professional adviser
is
not affected by whether or not a
transfer of a lottery prize
award
occurs. (D) "Prize winner" means any person that holds the right to
receive all or any part of a lottery prize award. (E) "Transfer" means a grant of a security interest in, or a
sale, assignment, pledge,
hypothecation, or any other form of
alienation or encumbrance of, all or any part of a lottery prize
award by a prize winner for
consideration. (F) "Transfer agreement" means the agreement that
provides
for the transfer of all or any part of a lottery prize award
from a prize winner to a transferee. (G) "Transferee" means a party acquiring or proposing to
acquire
all or any part of a lottery prize award through a
transfer.
Sec. 3770.11. Prior to the date
on which a prize winner
becomes obligated under a transfer
agreement, the transferee shall
provide to the prize winner a disclosure statement, in boldface
type of
the minimum size of fourteen points, setting forth all of
the
following: (A) The amounts and due
dates of the lottery prize award
payments
that would be transferred under the transfer agreement; (B) The aggregate amount
of the lottery prize award payments
described in division
(A) of this section; (C) The discounted present value of the lottery prize award
payments
described
in division (A) of
this section, calculated as
of the date the disclosure statement is provided to the prize
winner, and the amount
of the applicable
federal
rate used in
determining
the discounted
present value; (D) The gross amount payable to the prize winner in
exchange
for or as consideration for the transfer of the lottery
prize
award
payments described in division (A) of this section; (E) An itemized listing
of all brokers' commissions, service
charges, application fees,
processing fees, closing costs, filing
fees, administrative
fees, legal fees, notary fees, and other
commissions, fees,
costs, expenses, and charges payable by the
prize winner
or deductible from the gross amount otherwise payable
to the
prize winner as described in division
(D) of this section; (F) The net amount payable to the prize winner after
deduction from the gross amount payable to the prize winner as
described in division
(D) of this section of all commissions,
fees, costs, expenses, and
charges described in division (E) of
this section; (G) The quotient, expressed as a percentage,
obtained by
dividing the net amount payable to the prize winner as
described
in division (F) of
this section by the discounted present value of
the payments
described in division (C) of
this section.
Sec. 3770.12. A court of competent
jurisdiction may approve
a
transfer of a lottery prize award only in a final order that is
based on the express findings of the court,
and the express
findings shall
include all of the following: (A) The transferee has provided to the prize winner a
disclosure
statement that complies with section 3770.11 of the
Revised
Code, and the prize winner has confirmed the prize
winner's receipt of the
disclosure statement, as evidenced by the
prize winner's notarized signature on a
copy of the disclosure
statement. (B) The prize winner has established that the transfer is
fair and reasonable
and in the best interests of the prize winner. (C) The prize winner has received independent professional
advice
regarding the legal and other implications of the
transfer. (D) The transferee has given written notice of the
transferee's
name, address, and taxpayer identification number to
the state lottery commission and has filed a copy
of that notice
with the court
in which the application for approval of the
transfer was filed.
(E) The transferee holds a valid certificate of registration
issued under section 3770.15 of the Revised Code. (F) The transfer complies with all applicable requirements
of
the Revised Code and does not
contravene any applicable law.
(G) The transfer does not include or cover the amounts of
the lottery prize award that are required to be withheld or
deducted pursuant to section 3119.80, 3119.81, 3121.02, 3121.03,
3123.06, 3770.071, or 3770.072 of the Revised Code.
(H) Any amounts described in division (G) of this section
that are required to be withheld or deducted, as of the date of
the court order, will be offset by the commission first against
remaining payments due the prize winner and then against payments
due the transferee.
Sec. 3770.13. (A) A person shall file an application under
sections 3770.10 to 3770.14 of the Revised Code for the
approval
in advance of a transfer of a lottery prize award in
a court of
competent jurisdiction. (B) The following procedures shall apply to an application
for
the approval in advance by a court of
a transfer of a lottery
prize award under division (A) of this section: (1) Upon the filing of the application, the court
shall set
a
date and time for a hearing on the application and shall notify
the
transferee of the date, time, and place of the hearing. (2) Not less than fourteen days prior to the date set by the
court
for the hearing on an application filed pursuant to this
section, the
transferee shall file with the court
and shall serve
on the court and on the state lottery commission, in the manner
prescribed in the Rules of Civil Procedure for the
service of
process, a notice of the proposed transfer and
the application for
its approval in advance. The notice shall include all of
the
following: (a) A copy of the application; (b) A copy of the transfer agreement; (c) A copy of the disclosure statement provided by the
transferee pursuant to section 3770.11 of the Revised Code and
signed by the prize winner
pursuant to division (A) of section
3770.12 of the Revised Code; (d) Notification of the date, time, and place of the
hearing
on the application. (3) The commission shall not be required to appear in or be
named as a party to a hearing on the application, but may
intervene as of right in the proceeding. (4) At the conclusion of the hearing on an application under
this
section, the court
may grant or deny the approval of the
transfer. The court
shall enter its order accordingly. If the
court
grants the approval of the transfer, it shall include
in its
order all of the express findings specified in section 3770.12 of
the
Revised Code. If the court denies the
approval of the
transfer, it shall include in its order the
reasons for the
denial. (5) An order of the court made under division
(B)(4) of this
section is a final and appealable order.
Sec. 3770.14. (A) Upon receipt of a court order issued under
section 3770.12 of the Revised Code, the transferee shall provide
a certified copy of the court order to the director
of the state
lottery commission. Not later than ten days after receipt of the
certified copy of
the court order, the director shall acknowledge
to the transferee in writing the commission's intent to comply
with the court order in making future payments.
(B) The director shall make payments of the lottery prize
award
in accordance with the terms specified in the certified copy
of
the court order. The director may charge a processing
fee, in
an amount determined by the commission by rule pursuant to
section
3770.03 of the Revised Code, to cover any direct or indirect costs
associated
with making the prize award payments in accordance with
the terms specified in the certified copy of the court order. (C) Upon payment of the lottery prize award pursuant to
this section, the director and the commission are discharged from
all further liability therefor.
Sec. 3770.15. (A) Before a transferee may enter into a
transfer agreement
with a prize winner for the transfer of all or
any part of a
lottery prize award, the transferee shall submit an
application for a certificate of registration, along with a
registration fee of five hundred dollars, to the director of
commerce. The application shall be on a form prescribed by the
director and shall set forth all of the following: (1) The name and business address of the transferee and any
of the following that applies: (a) If the transferee is a general partnership, the names
and residence addresses of all of the partners; (b) If the transferee is a limited partnership that existed
prior to July 1, 1994, and that has not registered with the
secretary of state pursuant to Chapter 1782. of the Revised Code,
the name of the Ohio county in which its certificate of limited
partnership or application for registration as a foreign limited
partnership is filed; (c) If the transferee is a limited partnership to which
division (A)(1)(b) of this section does not apply, or is a
corporation, professional association, limited liability company,
or other entity, the form of the entity and the state under the
laws of which it was formed. (2) The general nature of the business conducted by the
transferee; (3) The length of time the transferee has conducted that
business; (4) The signature of the transferee or of an authorized
representative of the transferee. (B) Upon compliance with division (A) of this section, the
director shall issue a certificate of registration to the
transferee. Each certificate shall remain in force for two years
from
the date of issuance. After that time, a renewal certificate
may
be issued upon compliance with division (A) of this section. (C) Fees collected under this section shall be paid into the
state treasury to the credit of the division of administration
fund created under section 121.08 of the Revised Code.
Sec. 3770.16. The transfer of all or any part of a lottery
prize award under sections 3770.10 to 3770.14 of the Revised Code
is also subject to the applicable provisions of Chapter 1309. of
the Revised Code.
Section 2. That existing sections 1309.109 and 3770.07 of the
Revised Code
are hereby repealed.
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