HBA-MPM S.B. 1740 77(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 1740
By: Cain
Business & Industry
5/3/2001
Engrossed



BACKGROUND AND PURPOSE 

Currently, many products deposited in public warehouses are handled by
electronic exchange so that in many cases there are no signatures. This
procedure has been an accepted practice by the parties and the transaction
is treated as if the documents were actually endorsed. However, bankruptcy
courts have held that a warehouseman's lien can only be secured through the
use of a properly endorsed paper receipt. Senate Bill 1740 provides that
electronically transmitted warehouse receipts ensure a warehouseman's lien.

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

Senate Bill 1740 amends the Business & Commerce Code to provide that a
warehouseman has a lien against the bailor on the goods deposited rather
than covered by a warehouse receipt or on the proceeds thereof in his
possession for charges for storage or transportation or certain other
expenses incurred in their sale pursuant to law.  The bill provides that if
a warehouse receipt is issued for the goods, the security interest is not
valid against a third person without notice to whom the receipt is duly
negotiated unless the maximum amount of the security interest is
conspicuously specified on the receipt.  

EFFECTIVE DATE

September 1, 2001.