1.1                          A bill for an act
  1.2             relating to gambling; requiring the commissioner of 
  1.3             human services to take all actions necessary to 
  1.4             prevent the obtaining of certain public assistance 
  1.5             benefits through electronic benefits withdrawal or 
  1.6             warrant cashing at a gambling establishment; 
  1.7             prohibiting currency exchanges from cashing public 
  1.8             assistance warrants that bear certain restrictive 
  1.9             endorsements; amending Minnesota Statutes 1994, 
  1.10            sections 53A.09; and 336.3-206; proposing coding for 
  1.11            new law in Minnesota Statutes, chapter 256. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  Minnesota Statutes 1994, section 53A.09, is 
  1.14  amended to read: 
  1.15     53A.09 [POWERS; LIMITATIONS; PROHIBITIONS.] 
  1.16     Subdivision 1.  [DEPOSITS; ESCROW ACCOUNTS.] A currency 
  1.17  exchange may not accept money or currency for deposit, or act as 
  1.18  bailee or agent for persons, firms, partnerships, associations, 
  1.19  or corporations to hold money or currency in escrow for others 
  1.20  for any purpose.  However, a currency exchange may act as agent 
  1.21  for the issuer of money orders or travelers' checks. 
  1.22     Subd. 2.  [GAMBLING ESTABLISHMENTS.] A currency exchange 
  1.23  located on the premises of a gambling establishment as defined 
  1.24  in section 256.9831, subdivision 1, may not cash a warrant that 
  1.25  bears a restrictive endorsement under section 256.9831, 
  1.26  subdivision 3. 
  1.27     Sec. 2.  [256.9831] [BENEFITS; GAMBLING ESTABLISHMENTS.] 
  1.28     Subdivision 1.  [DEFINITION.] For purposes of this section, 
  2.1   "gambling establishment" means a bingo hall licensed under 
  2.2   section 349.164, a racetrack licensed under section 240.06 or 
  2.3   240.09, a casino operated under a tribal-state compact under 
  2.4   section 3.9221, or any other establishment that receives at 
  2.5   least 50 percent of its gross revenue from the conduct of 
  2.6   gambling. 
  2.7      Subd. 2.  [FINANCIAL TRANSACTION CARDS.] The commissioner 
  2.8   shall take all actions necessary to ensure that no person may 
  2.9   obtain benefits under sections 256.72 to 256.879 or chapter 256D 
  2.10  through the use of a financial transaction card, as defined in 
  2.11  section 609.821, subdivision 1, paragraph (a), at a terminal 
  2.12  located in or attached to a gambling establishment. 
  2.13     Subd. 3.  [WARRANTS.] The commissioner shall take all 
  2.14  actions necessary to ensure that warrants issued to pay benefits 
  2.15  under sections 256.72 to 256.879 or chapter 256D bear a 
  2.16  restrictive endorsement that prevents their being cashed in a 
  2.17  gambling establishment. 
  2.18     Sec. 3.  Minnesota Statutes 1994, section 336.3-206, is 
  2.19  amended to read: 
  2.20     336.3-206 [RESTRICTIVE ENDORSEMENT.] 
  2.21     (a) An endorsement limiting payment to a particular person 
  2.22  or otherwise prohibiting further transfer or negotiation of the 
  2.23  instrument is not effective to prevent further transfer or 
  2.24  negotiation of the instrument. 
  2.25     (b) An endorsement stating a condition to the right of the 
  2.26  endorsee to receive payment does not affect the right of the 
  2.27  endorsee to enforce the instrument.  A person paying the 
  2.28  instrument or taking it for value or collection may disregard 
  2.29  the condition, and the rights and liabilities of that person are 
  2.30  not affected by whether the condition has been fulfilled. 
  2.31     (c) If an instrument bears an endorsement (i) described in 
  2.32  section 336.4-201(b), or (ii) in blank or to a particular bank 
  2.33  using the words "for deposit," "for collection," or other words 
  2.34  indicating a purpose of having the instrument collected by a 
  2.35  bank for the endorser or for a particular account, the following 
  2.36  rules apply: 
  3.1      (1) A person, other than a bank, who purchases the 
  3.2   instrument when so endorsed converts the instrument unless the 
  3.3   amount paid for the instrument is received by the endorser or 
  3.4   applied consistently with the endorsement.  
  3.5      (2) A depositary bank that purchases the instrument or 
  3.6   takes it for collection when so endorsed converts the instrument 
  3.7   unless the amount paid by the bank with respect to the 
  3.8   instrument is received by the endorser or applied consistently 
  3.9   with the endorsement.  
  3.10     (3) A payor bank that is also the depositary bank or that 
  3.11  takes the instrument for immediate payment over the counter from 
  3.12  a person other than a collecting bank converts the instrument 
  3.13  unless the proceeds of the instrument are received by the 
  3.14  endorser or applied consistently with the endorsement.  
  3.15     (4) Except as otherwise provided in paragraph (3), a payor 
  3.16  bank or intermediary bank may disregard the endorsement and is 
  3.17  not liable if the proceeds of the instrument are not received by 
  3.18  the endorser or applied consistently with the endorsement.  
  3.19     (d) Except for an endorsement covered by subsection (c), if 
  3.20  an instrument bears an endorsement using words to the effect 
  3.21  that payment is to be made to the endorsee as agent, trustee, or 
  3.22  other fiduciary for the benefit of the endorser or another 
  3.23  person, the following rules apply: 
  3.24     (1) Unless there is notice of breach of fiduciary duty as 
  3.25  provided in section 336.3-307, a person who purchases the 
  3.26  instrument from the endorsee or takes the instrument from the 
  3.27  endorsee for collection or payment may pay the proceeds of 
  3.28  payment or the value given for the instrument to the endorsee 
  3.29  without regard to whether the endorsee violates a fiduciary duty 
  3.30  to the endorser. 
  3.31     (2) A subsequent transferee of the instrument or person who 
  3.32  pays the instrument is neither given notice nor otherwise 
  3.33  affected by the restriction in the endorsement unless the 
  3.34  transferee or payor knows that the fiduciary dealt with the 
  3.35  instrument or its proceeds in breach of fiduciary duty. 
  3.36     (e) The presence on an instrument of an endorsement to 
  4.1   which this section applies does not prevent a purchaser of the 
  4.2   instrument from becoming a holder in due course of the 
  4.3   instrument unless the purchaser is a converter under subsection 
  4.4   (c) or has notice or knowledge of breach of fiduciary duty as 
  4.5   stated in subsection (d). 
  4.6      (f) In an action to enforce the obligation of a party to 
  4.7   pay the instrument, the obligor has a defense if payment would 
  4.8   violate an endorsement to which this section applies and the 
  4.9   payment is not permitted by this section.  
  4.10     (g) Nothing in this section prohibits or limits the 
  4.11  effectiveness of a restrictive endorsement made under section 
  4.12  256.9831, subdivision 3.