Waterpoint Int'l LLC v. Comerica Bank-Texas ( 2003 )

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED JUNE 27, 2003
IN THE UNITED STATES COURT OF APPEALS May 1, 2003
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk
_____________________
No. 02-20755
_____________________
In The Matter Of: WATERPOINT INTERNATIONAL LLC
Debtor
--------------------------------
EXCHANGER CONTRACTORS INC
Appellant
v.
COMERICA BANK-TEXAS; WATERPOINT INTERNATIONAL LLC; ROBBYE
WALDRON, Chapter 7 Trustee
Appellees
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
_________________________________________________________________
Before KING, Chief Judge, and DAVIS, Circuit Judge, and VANCE,
District Judge.*
KING, Chief Judge:
Exchanger Contractors Inc., a subcontractor, was not paid by
its contractor, Waterpoint International LLC, for labor performed
by the subcontractor. In response, Exchanger Contractors sought a
*
United States District Judge Sarah S. Vance of the
Eastern District of Louisiana, sitting by designation.
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declaration regarding its rights (pursuant to trust fund provisions
of the Texas Property Code) to a portion of the receivable owing to
the contractor by the property owner. The contractor’s lender, who
holds a security interest in the contractor’s receivable from the
owner, countered. Because the trust fund provisions under which
Exchanger Contractors claims relief explicitly exempt banks and
other lenders from their reach, we affirm the district court’s
final order upholding the bankruptcy court’s summary judgment in
favor of the lender.
I.
FACTUAL AND PROCEDURAL HISTORY
In 1997, the debtor, Waterpoint International LLC
(“Waterpoint”), a construction contractor, executed a promissory
note payable to its lender, Comerica Bank-Texas (“Comerica”).
Pursuant to this note and the contemporaneously-signed security
agreement, Comerica acquired a valid security interest in
Waterpoint’s accounts receivable. Comerica duly perfected its
security interest in these accounts receivable.
Sometime before February 2000, Waterpoint contracted with
Exxon Mobil Corporation (“Exxon”) to construct certain improvements
to specific real property owned by Exxon. Waterpoint subcontracted
some of the labor necessary to complete the Exxon project to
Exchanger Contractors Inc. (“Exchanger”). Invoices document labor
performed by Exchanger for the benefit of Waterpoint totaling
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$71,878.45. However, Exchanger made no effort to comply with the
notice and filing provisions for perfecting a mechanic’s lien under
the Texas Property Code (the “Code”).
On July 5, 2000, before paying Exchanger for the labor
performed on the Exxon project, Waterpoint filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code. At
this time, Exxon still had, in its hands, money due Waterpoint for
the improvements to its real property.
On January 9, 2001, after seeking relief from the automatic
stay provisions of the Bankruptcy Code, Exchanger filed a
declaratory action in state court, seeking an adjudication of its
right to a portion of the funds owed Waterpoint by Exxon. Claiming
it was a core proceeding related to the administration of
Waterpoint’s estate, Comerica removed the action to federal
bankruptcy court pursuant to 28 U.S.C. § 1452 and Rule 9027 of the
Federal Rules of Bankruptcy Procedure. The bankruptcy court
thereafter preserved Exchanger’s claim for $71,878.45 of the
Waterpoint receivable, but authorized all of Waterpoint’s accounts
receivable to be paid to Comerica so that Exxon could be dismissed
from the action. The bankruptcy court then granted summary
judgment in favor of Comerica. This final order was affirmed by
the district court. Exchanger timely appeals the district court’s
order.
II.
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STANDARD OF REVIEW
On appeal in a bankruptcy case, we review de novo the
bankruptcy court’s decision to grant summary judgment in favor of
Comerica. See Mercer v. Mercer (In re Mercer), 246 F.3d 391, 402
(5th Cir. 2001) (en banc).
III.
COMPETING CLAIMS TO THE WATERPOINT RECEIVABLE
Exchanger’s declaratory judgment complaint requested that the
bankruptcy court “adjudicate its rights to receivables owing by
Exxon . . . to Waterpoint International, LLC upon which Comerica
Bank-Texas claims a security interest and to which [Exchanger]
claims a prior right by reason of Section 162 of the Property
Code.” Comerica countered that Exchanger has no valid claim to a
portion of the receivable because banks and other lenders are
specifically exempted (under § 162.004 of the Code) from the
Chapter 162 trust fund provisions under which Exchanger claims
relief. In support of this argument, Comerica proffered to the
bankruptcy court the plain language of § 162.004 of the Code and a
Texas Supreme Court case interpreting § 162.004 clearly to except
banks and other lenders from the trust fund provisions of the Code.
See Republicbank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605(Tex. 1985). In response, Exchanger argued that in 1989, the Texas
Legislature amended § 53.151 of the Code specifically to overrule
Interkal in favor of increased protection for subcontractors
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regarding funds held in trust for their benefit.
To address the competing claims to a portion of the Waterpoint
receivable, we start with an overview of the relevant sections of
the Code as they relate to construction contracts.
A. Enforcing Rights under the Texas Property Code
Exchanger roots its claim to a portion of the funds owed to
Waterpoint (in which Comerica claims a security interest) to the
trust fund provisions of the Code found in Chapter 162. See TEX.
PROP. CODE §§ 162.001-033 (Vernon 1995 & Supp. 2003). However, it
relies on a provision in the chapter on mechanic’s and
materialman’s liens, Chapter 53, to support this claim. See id.
§ 53.151. A basic understanding of the underlying framework and
purpose behind both chapters is thus helpful.
(1) Chapter 53 of the Texas Property Code
The mechanic’s lien appeared in Texas in 1839 when the
Congress of the Republic enacted “[a]n Act for the Relief of Master
Builders and Mechanics of Texas.” Eldon L. Youngblood, Mechanics’
and Materialmen’s Liens in Texas, 26 SW. L. J. 665, 665 (1972). The
purpose of the mechanic’s lien is to secure payment for those who
furnish labor or materials in connection with the construction of
improvements to real property to the extent of the increased value
of those improvements to the owner’s property. Jeffrey A. Leonard
& Darren G. Woody, Texas Mechanic’s and Materialman’s Liens and the
Scope of the Preferential Lien on Removables, 15 TEX. TECH L. REV.
5
673, 674 (1984). In 1869, the right to a mechanic’s lien, even for
derivative claimants (e.g., subcontractors, mechanics or
materialmen who have not contracted directly with the owner of the
property to be improved), also became a constitutional right in
Texas. W. MICHAEL BAGGETT & BRIAN THOMPSON MORRIS, TEXAS PRACTICE GUIDE, Ch.
10:118 (2003). Article 16, Section 37, of the Texas Constitution
now provides that “mechanics, artisans and materialmen of every
class, shall have a lien upon the buildings and articles made or
repaired by them for the value of their labor done thereon, or
material furnished therefor . . . .” TEX. CONST. art. XVI, § 37.
However, as interpreted by the Texas Supreme Court, while the
constitutional right to a mechanic’s or materialman’s lien is
broad, the Texas Constitution creates a “self-executing” lien in
favor of only original or general contractors (those who contract
directly with the property owner or its agent), not derivative
claimants. See, e.g., First Nat’l Bank v. Lyon-Gray Lumber Co.,
217 S.W. 133, 135-36 (Tex. 1919). Persons not contracting directly
with the owner do not have a “self-executing” lien. See Cabintree,
Inc. v. Schneider, 728 S.W.2d 395, 396 (Tex. App.–Houston [1st
Dist.] 1986, writ ref’d). Instead, they must comply with the
statutory lien perfection requirements to be able to enforce their
rights to payment or, if necessary, foreclosure against the owner
and his property. See Thermo Tech, Inc. v. Goodyear Tire & Rubber
Co., 643 F.2d 1173, 1178 (5th Cir. Unit A 1981); First Nat’l Bank
v. Sledge, 653 S.W.2d 283, 285 (Tex. 1983) (“Because a
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subcontractor is a derivative claimant and, unlike a contractor,
has no constitutional, common law, or contractual lien on the
property of the owner, a subcontractor’s lien rights are totally
dependent on compliance with statutes authorizing the lien.”);
Hayek v. W. Steel Co., 478 S.W.2d 786, 790 (Tex. 1972).
Chapter 53 of the Texas Property Code, entitled “Mechanic’s,
Contractor’s, or Materialman’s Lien” and formerly known as the
Hardeman Act, controls the procedures for perfecting liens and the
relative priority of these liens once perfected. The Chapter is
divided into ten subchapters ranging from general lien provisions
and provisions relating to persons entitled to liens (subchapters
A and B) to procedures for perfecting liens (subchapter C), schemes
for funds being retained or withheld by owners for the benefit of
claimants (subchapters D and E), procedures for determining
priorities and preferences (subchapter F), procedures related to
the release of liens and foreclosure of mechanics’ liens
(subchapter G), and procedures related to bonds and liens in the
public works context (subchapters H, I and J). In general, the
chapter deals with relationships between a general contractor, the
owner of the real property and derivative claimants. See, e.g.,
Scarborough v. Victoria Bank & Trust Co., 250 S.W.2d 918, 922-23
(Tex. App.–San Antonio 1952, writ ref’d). It sets out procedures
for connecting a derivative claimant to the owner in order to give
the owner notice of the derivative claimant’s claim to money still
in the owner’s hands. See id.; see also Youngblood, supra, at 676
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(“In Texas, unlike many states, only an original contractor enjoys
a direct lien on the property; the subcontractor must rely on his
statutory rights to collect funds due from the owner to his
contractor. Consequently, once the owner has paid the full price
to his original contractor, if he has complied with the statutes
for doing so, no subcontractor can subject his property to a
lien.”).
While several of the provisions in Chapter 53 concern
procedures for foreclosing a mechanic’s lien on real property or
improvements, it is clear from the framework of Chapter 53 that a
mechanic’s lien and the necessary steps a subcontractor must
perform to perfect this lien have to do with real property and
foreclosure secondarily and the trapping and retainage of funds for
the benefit of derivative claimants primarily. See First Nat’l
Bank, 217 S.W. at 134; Gordon-Jones Const. Co. v. Welder, 201 S.W.
681, 684 (Tex. App. – San Antonio 1918, writ ref’d) (stating that,
while subcontractors “have no privity with the owner, whose
obligation is solely to the contractor,” they are “given a method
for [first] impounding funds payable by the owner to the
contractor” and then, if necessary, taking the owner’s property).
As provided by Chapter 53, if notice is given to the owner by the
derivative claimant and the derivative claimant’s lien is
perfected, the owner is liable to the derivative claimant and the
owner’s property is subject to a statutory lien to the extent the
owner should have withheld funds from the original contractor under
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the trapping provisions of the Texas Property Code (§ 53.081) and
the general retainage provisions of the Texas Property Code
(§§ 53.101-53.105). See Page v. Structural Wood Components Inc.,
102 S.W.3d 720, 721 (Tex. 2003) (stating that “Chapter 53 of the
Property Code permits a construction subcontractor to claim a lien
on funds retained by the owner” only if the subcontractor complies
with the notice and filing provisions in Chapter 53); Sledge, 653
S.W.2d at 286 (discussing the “two methods by which a subcontractor
can perfect a lien in the owner’s property” as (1) trapping and (2)
retainage); TDInds. v. NCNB Tex. Nat’l Bank, 837 S.W.2d 270, 272
(Tex. App.–Eastland 1992, no writ); see also 18 WILLIAM V. DORSANEO
III, TEXAS LITIGATION GUIDE § 271.02 (2002). Thus, in contrast to an
original contractor, a subcontractor does not have an ability to
enforce any right to funds owed a contractor by an owner if the
subcontractor does not comply with the notice and filing provisions
for perfection of his lien under the Code. See Pac. Indem. Co. v.
Bowles & Edens Supply Co., 290 S.W.2d 353, 357 (Tex. App. – Dallas
1956, writ ref’d n.r.e.) (stating that mechanics’ liens “are
incipient or inchoate until completed or perfected by compliance
with the statute, and are lost utterly if those acts required for
their completion be not done in the manner and within the time
required by statute”) (quoting Ball v. Davis, 18 S.W.2d 1063, 1064
(1929)); see also DORSANEO, supra, at § 271.02 (“Perfecting a lien
is a vital step in gaining almost all of the protection available
under the laws governing mechanic’s and materialmen’s liens. This
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is true even though the ultimate relief sought may not involve a
lien on the property.”).
In 1983, the Texas Legislature replaced the Hardeman Act with
the Code. In so doing, it made clear that a subcontractor’s
ability to enforce his lien rights under Chapter 53 requires
compliance with the lien perfection provisions in Chapter 53. For
example, before this 1983 codification, article 5464 of the Texas
Revised Civil Statutes (part of the Hardeman Act) provided that
“all subcontractors, laborers and materialmen . . . have preference
over other creditors of the principal contractor or builder.” TEX.
REV. CIV. STAT. ANN. art. 5464 (Vernon 1958)(repealed 1983) (current
version at TEX. PROP. CODE § 53.121 (Vernon 1995 & Supp. 2003)). In
Lebo v. Dochen, 310 S.W.2d 715 (Tex. App.–Austin 1958, writ ref’d
n.r.e.), certain mechanics and materialmen who had contracted with
a general contractor to perform a portion of the labor and to
provide a portion of the materials in the construction of a filling
station sought funds owed to the contractor from owners of the real
property on which the filling station was located. Id. at 719.
One materialman argued that he should be afforded a preference over
other creditors under article 5464 regardless of whether he
complied with the provisions for lien perfection. Id. at 720. He
maintained that the preference rights afforded materialmen under
article 5464 did not require compliance with the statutes on lien
perfection because article 5464 did not say as much. Id. The
court rejected this argument, stating that “Art. 5464 provides a
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preference only for subcontractors, laborers and materialmen who
have liens . . . The Act deals exclusively with liens. It does not
purportedly put mechanics, etc. in a preferred class of creditors
except as they may comply with the procedure for establishing a
lien.” Id. To clarify that its intentions were in accord with
the Lebo court’s ruling, the 68th Legislature codified article 5464
(now § 53.121 under the Code) to state that the preference
addressed in article 5464 exists only to those persons who hold a
mechanic’s lien. See TEX. PROP. CODE § 53.121 revisor’s note (Vernon
1995 & Supp. 2003) (“The revised law adds the qualification that
the preference exists only as to those persons with a mechanic’s
lien in order to avoid having the reader assume this section grants
a general preference without regard to a lien. The addition is in
conformity with the interpretation of this section in Lebo v.
Dochen.”).
(2) Chapter 162 of the Texas Property Code
In contrast to the notice and filing requirements found in
Chapter 53 of the Code, Chapter 162 of the Code, entitled
“Construction Payments, Loan Receipts, and Misapplication of Trust
Funds,” provides that construction payments made to a contractor,
subcontractor, or to an officer, director, or agent of a
subcontractor or contractor pursuant to a construction contract for
the improvement of specific real property are deemed to be trust
funds held for the benefit of laborers without regard to the
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laborer’s compliance with the procedural requirements under Chapter
53. See McCoy v. Nelson Util. Serv., Inc., 736 S.W.2d 160, 164
(Tex. App.–Tyler 1987, writ ref’d n.r.e.). Specifically, § 162.001
states that:
An artisan, laborer, mechanic, contractor, subcontractor
or materialman who labors or furnishes labor or material
for the construction or repair of an improvement on
specific real property in this state is a beneficiary of
any trust funds paid or received in connection with the
improvement.
TEX. PROP. CODE § 162.001. This provision was enacted to serve as a
special protection for subcontractors and materialmen in situations
where contractors or their assignees refused to pay the
subcontractor or materialman for labor and materials. See McCoy,
736 S.W.2d at 164. The Code imposes fiduciary responsibilities on
contractors to ensure that subcontractors, mechanics and
materialmen are paid for work completed. The misapplication of
these trust funds is a criminal offense under the Code. See TEX.
PROP. CODE §§ 162.031-032 (Vernon 1995 & Supp. 2003).
However, § 162.004 clearly states that the provisions of
Chapter 162 do not apply to a “bank” or “other lender,” such as
Comerica.1 In Republicbank Dallas, N.A. v. Interkal, Inc., 691
1
Section 162.004 states, in relevant part, that:
(a) This chapter does not apply to:
(1) a bank, savings and loan, or other lender;
(2) a title company or other closing agent; or
(3) a corporate surety who issues a payment bond covering
the contract for the construction or repair of the
improvement.
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S.W.2d 605 (Tex. 1985), a bank which held a security interest in a
contractor’s accounts receivable brought an action against a
materialman claiming it had a superior right to funds held by the
contractor. Id. at 606. The materialman, who had furnished the
bleachers and stage equipment for the contractor to construct
gymnasium facilities for various schools, argued that he was
entitled to the funds because the contractor held them in trust for
his benefit. Id. Looking to the plain language of the Code, the
Texas Supreme Court disagreed. Id. at 607. Instead, it
interpreted § 162.004 as plainly stating that the trust fund
provisions of the Code do not apply to banks in any situation. Id.
Section 162.004 was codified in 1983 and amended in 1987,
after the Interkal case. However, as seen from the plain language
of the provision and as interpreted by the Texas Attorney General
in an Opinion issued in 1988, § 162.004, as amended in 1987,
retains the exemption for banks and other lenders from the trust
fund provisions of the Code. See Op. Tex. Att’y Gen. No. JM-945
(1988). Further, several of the trust fund provisions contained in
Chapter 162 underwent substantial modifications in 1997. See TEX.
PROP. CODE §§ 162.001, .005, .006, .007, .032 cmt. (Vernon Supp.
1997). However no changes were made to § 162.004.
B. Consideration of Exchanger’s Argument
With this framework in mind, we address Exchanger’s argument.
TEX. PROP. CODE § 162.004.
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It contends that “[f]our years after the injustice of the Interkal
decision (light speed for a legislature), the Texas legislature
enacted § 53.151 of the Texas Property Code . . . effectively [to]
reverse[] Interkal by providing that a creditor may not execute on
trust fund money owed to a contractor or subcontractor.” For
several reasons, we cannot agree.
First, Exchanger’s effort to frame legislative conduct
regarding § 53.151 as responsive to Interkal is not persuasive.
Section 53.151 was not “enacted” in 1987; indeed, its roots stem
from Acts of 1889. TEX. REV. CIV. STAT. ANN. Art. 5466 cmt. (Vernon
1958). As stated, in 1983, the Texas Legislature replaced the
Hardeman Act with the Code. Section 53.151 under this new Code,
entitled “Relinquishment Following Contract Compliance; Garnishment
of Money Due Original Contractor,” stated, in full, that:
(a) When the debt is paid under the contract for
construction, the party for whose interest the
contract was recorded shall enter a relinquishment
showing full compliance with the contract to the
extent of all money due the party from the original
contractor on account of labor done or material
furnished.
(b) A creditor may not garnish the money due the
original contractor from the owner to the prejudice
of the subcontractors, mechanics, laborers, or
materialmen.
TEX. PROP. CODE § 53.151 (Vernon 1983) (emphasis added). This
codification of former article 5466 of the Hardeman Act did not
substantively change the rights afforded materialmen and
subcontractors under the Hardeman Act. See Tex. S.B. 748, 78th
14
Leg., R.S. (1983) (“An ACT relating to adoption of nonsubstantive
revision of the statutes relating to property.”) (emphasis added).
The former article 5466, entitled “Relinquishment entered,” had
provided that:
When the debt is paid under the contract for such
building or improvements, the party for whose interest
the contract was recorded shall enter a relinquishment
showing a full compliance of said contract to the extent
of all money due them from the original contractor or
builder on account of labor done or material furnished;
and the money due said original contractor or builder
from the person owning or having improvements made shall
not be garnished by other creditors to the prejudice of
such sub-contractors, mechanics, laborers or material
men.
TEX. CIV. STAT. ANN. art. 5466 (Vernon 1958) (repealed 1983) (current
version at TEX. PROP. CODE § 53.151 (Vernon 1995 & Supp. 2003))
(emphasis added). Section 53.151 was itself amended in 1989.
Under its new title, “Enforcement of Remedies Against Money Due
Original Contractor or Subcontractor,” the provision now states
that:
(a) A creditor of an original contractor may not
collect, enforce a security interest against,
garnish, or levy execution on the money due the
original contractor or the contractor’s surety from
the owner, and a creditor of a subcontractor may
not collect, enforce a security interest against,
garnish, or levy execution on the money due the
subcontractor, to the prejudice of the
subcontractors, mechanics, laborers, materialmen,
or their sureties.
(b) A surety issuing a payment bond or performance bond
in connection with the improvements has a priority
claim over other creditors of its principal to
contract funds to the extent of any loss it suffers
15
or incurs. That priority does not excuse the
surety from paying any obligations that it may have
under its payment bonds.
TEX. PROP. CODE § 53.151 (Vernon 1995 & Supp. 2003).
Comparing the 1983 and the current versions of § 53.151, it is
clear that while the 1989 amendments did add the phrase “and a
creditor of a subcontractor may not collect, enforce a security
interest against, garnish, or levy execution on the money due the
subcontractor” (emphasis added) to the 1983 version of § 53.151,
this additional phrase does not support Exchanger’s argument. Even
if we assume that § 53.151 speaks to funds held in trust for the
benefit of a subcontractor or a materialman (as argued by
Exchanger), the part of § 53.151 that would have been helpful to
the materialman in Interkal and would be helpful to Exchanger here
was a part of § 53.151 in 1983 and when Interkal was decided in
1985. Indeed, it was a part of article 5466 of the Hardeman Act.
The phrase stating that “[a] creditor of an original contractor may
not . . . garnish . . . the money due the original contractor . .
. from the owner . . . to the prejudice of the subcontractors,” is
simply not new. Exchanger’s argument that § 53.151 was amended to
overrule Interkal is thus difficult for us to accept.
Additionally, the framework of the Code belies Exchanger’s
contentions regarding the relationship between § 53.151 and Chapter
162. To accept Exchanger’s argument that § 53.151 was meant to
address funds held in trust for the benefit of subcontractors, we
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must creatively (and, we think, incorrectly) bridge Chapter 53 and
Chapter 162. Although both Chapter 53 and Chapter 162 (and their
respective antecedents) are designed to protect mechanics and
materialmen, the focus of each chapter is different. Chapter 53
controls procedures for perfecting mechanics’ and materialmen’s
liens, steps required to trap money (for the benefit of derivative
claimants) in the hands of the owner, procedures to alert an owner
that it should retain funds for the benefit of a derivative
claimant, and procedures for foreclosing a lien. In contrast,
Chapter 162 addresses the fiduciary duties of persons holding funds
in trust for the benefit of derivative claimants. The chapters
address different situations.
The upshot of Exchanger’s argument is that § 53.151 precludes
a creditor of a contractor from ever collecting the proceeds of an
account receivable in which the creditor has a security interest
when the owner has not first ensured that all derivative claimants
– regardless of their compliance with the provisions on lien
perfection – have been paid by the contractor. However, if it were
this easy for a subcontractor to trap a general contractor’s
receivable, there would be no need for the elaborate trapping and
retention schemes found in Chapter 53. These provisions are
designed to protect those subcontractors and materialmen who
provide adequate notice to the owner of their presence and their
rights to funds owed the contractor. Indeed, the Code even
contemplates a procedure to protect subcontractors and materialmen
17
from “sham contract” situations – e.g., where owners use an alter
ego original contractor in order to avoid being in privity with the
persons who actually perform the labor or provide the material for
the project. See TEX. PROP. CODE § 53.026 (Vernon 1995 & Supp.
2003). The effect of the “sham contract” provision is to place
subcontractors in direct privity with the owner (as an original
contractor would have been) for the purposes of the mechanic’s lien
statutes. See Da-Col Paint Mfg. v. Am. Indem. Co., 517 S.W.2d 270,
273 (Tex. 1974). Under Exchanger’s argument, these provisions
would be rendered a nullity, for there is no need for “sham
contract” provisions if no action can ever be taken with regard to
money owed a contractor by a creditor to the prejudice of a
subcontractor, regardless of the subcontractor’s compliance with
the notice and filing provisions of Chapter 53.
The courts interpreting article 5466, the predecessor to
§ 53.151, demonstrate the presumption (at least under article 5466)
that a derivative claimant must comply with the lien perfection
procedures in order to assert rights to funds held by the owner.
See, e.g., Youngstown Sheet & Tube Co. v. Lucey Prod. Co., 403 F.2d
135, 142 (5th Cir. 1968) (discussing (under the Hardeman Act) the
need for proof of a materialman’s compliance with the procedures
for lien perfection before liens can affix to an account receivable
of a debtor); Crutcher, Rolfs & Cummings, Inc. v. Big Three Welding
Equip. Co., 224 S.W.2d 884 (Tex. Civ. App.–Galveston 1949), rev’d
on other grounds, 229 S.W.2d 600 (Tex. 1950) (discussing article
18
5466 as referring to only funds subjected to mechanics’ and
materialmen’s liens); see also Baumann v. Cibolo Lumber Co., 226
S.W.2d 210, 212 (Tex. Civ. App.–San Antonio 1950, no writ) (same).
These cases further persuade us to reject Exchanger’s argument that
§ 53.151 was meant to overrule Interkal as inconsistent with the
framework and function of Chapters 53 and 162.
When faced with a situation where it could not go after funds
in the hands of Exxon directly (because it was not in contractual
privity with Exxon and failed to comply with the notice and filing
provisions of Chapter 53), Exchanger crafted an argument to “trap”
the Waterpoint receivable still in the hands of Exxon (as
envisioned in Chapter 53) without complying with the notice and
filing procedures for perfecting a lien under Chapter 53. While
perhaps rich in creativity, we find the argument lacking in merit.
CONCLUSION
Exchanger’s claim for relief is clearly based on the trust
fund provisions in Chapter 162 of the Code. However, the trust
fund provisions clearly exempt banks and other lenders from their
reach, and Exchanger’s argument that § 53.151 of Chapter 53 of the
Code somehow repealed this exemption in the trust fund provisions
is without merit. We therefore AFFIRM the judgment of the district
court, which in turn affirmed the judgment of the bankruptcy court.
19