By Jones of Dallas H.B. No. 2541
74R2930 DWS-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to disclosure of certain records of a financial
1-3 institution.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 5, Chapter VII, The Texas Banking Code
1-6 (Article 342-705, Vernon's Texas Civil Statutes), is amended to
1-7 read as follows:
1-8 Art. 5. ADVERSE CLAIMS TO DEPOSITS--DISCLOSURE AS TO AMOUNT
1-9 DEPOSITED--SUBPOENAS AND PRODUCTION
1-10 Sec. 1. No financial institution shall be required to
1-11 recognize the claim of any third party to any deposit, or withhold
1-12 payment of any deposit to the depositor or to his order, unless and
1-13 until the financial institution is served with citation or other
1-14 appropriate process issuing out of a court of competent
1-15 jurisdiction in connection with a suit instituted by such third
1-16 party for the purpose of recovering or establishing an interest in
1-17 such deposit. A<; neither shall any> financial institution may not
1-18 <be required to> disclose to any person <or produce to third
1-19 parties, or permit third parties to examine> the amount deposited
1-20 by any customer <depositor> or other records pertaining to the
1-21 deposits, accounts, loans, or other transactions of a <depositor,
1-22 owner, borrower, or> customer unless the disclosure or production
1-23 is:
1-24 (1) compelled under law; or
2-1 (2) permitted by:
2-2 (A) express consent of the customer to whom the
2-3 records pertain; or
2-4 (B) Section 5 of this article <except (i) where
2-5 the depositor, owner, borrower, or customer as to whom the
2-6 information is to be disclosed is a proper or necessary party to a
2-7 proceeding in a court of competent jurisdiction in which event the
2-8 records pertaining to the deposits, accounts, loans, or other
2-9 financial institution transactions of such depositor, owner,
2-10 borrower, or customer shall be subject to disclosure or (ii) where
2-11 the financial institution itself is a proper or necessary party to
2-12 a proceeding in a court of competent jurisdiction, except that
2-13 records pertaining to the deposits, accounts, loans, or other
2-14 transactions of a depositor, owner, borrower, or customer may not
2-15 be disclosed unless the court orders and the financial institution
2-16 subsequently obtains the written consent of the depositor, owner,
2-17 borrower, or customer to whom the records pertain, or (iii) in
2-18 response to a subpoena issued by a legislative investigating
2-19 committee of the Legislature of Texas, or (iv) in response to a
2-20 request for examination of its records by the Attorney General of
2-21 Texas pursuant to Article 1302-5.01 et seq. of the Texas
2-22 Miscellaneous Corporation Laws Act>.
2-23 Sec. 2. Unless ordered otherwise by a court of competent
2-24 jurisdiction <and unless consent is required under Section (1)(ii)
2-25 of this article>, before disclosure<, production, or examination>
2-26 may be required under Section 1(1) of this article, the agency,
2-27 body, or party issuing or obtaining the order, subpoena, or request
3-1 compelling <for> the disclosure<, examination, or production of
3-2 records of deposits, accounts, loans, or other financial
3-3 institution records> shall (1) give notice of such order, subpoena,
3-4 or request to the <depositor or financial institution> customer in
3-5 the manner provided by Rule 21a, Texas Rules of Civil Procedure, at
3-6 least 10 days preceding the date when compliance with the order,
3-7 subpoena, or request is required, and (2) certify to the financial
3-8 institution (at the time the order, subpoena, or request is served
3-9 or delivered to the financial institution) that the <depositor or
3-10 financial institution> customer has been served with or has been
3-11 mailed a copy of the order, subpoena, or request as required
3-12 herein. A financial institution shall be entitled to recover from
3-13 the party seeking the material reasonable costs of reproduction,
3-14 postage, delivery, and other expenses which it incurs in complying
3-15 with orders, subpoenas, requests for the disclosure or<,> consent
3-16 to disclosure<, examination, or production> of <records of
3-17 deposits, accounts, loans, and other> financial institution
3-18 records. A <production,> disclosure<, or examination> under
3-19 Section 1<(i) or (ii)> of this article is not required until the
3-20 costs that the financial institution is entitled to recover under
3-21 this section have been paid to the financial institution in full or
3-22 until the party seeking the material has posted a cost bond in an
3-23 amount sufficient to ensure the recovery by the financial
3-24 institution of all of those costs and expenses. <The financial
3-25 institution may notify its customer or depositor (unless ordered
3-26 otherwise by a court of competent jurisdiction) of its receipt of
3-27 any subpoena, order, or request for production.>
4-1 Sec. 3. Each customer <or depositor> entitled to notice of
4-2 an order, subpoena, or request for disclosure<, examination, or
4-3 production> of <records of deposits or accounts or other> financial
4-4 institution records may, prior to the date specified therein for
4-5 disclosure, <examination, or production,> file in an appropriate
4-6 district court of the State of Texas a motion to quash the order,
4-7 subpoena, or request or for protective order and shall make
4-8 personal service of such motion on the party, agency, or body
4-9 issuing or obtaining such order, subpoena, or request and on the
4-10 financial institution prior to the date for disclosure<,
4-11 examination, or production>. Any motion to quash or for protection
4-12 shall be verified. Failure to file and serve such motion to quash
4-13 or for protection shall constitute consent for all purposes to
4-14 disclosure<, production, or examination> made pursuant to this
4-15 article. The court shall grant the order unless the court finds
4-16 that there is a compelling need for the disclosure.
4-17 Sec. 4. In this article:
4-18 (1) "Customer" means a person:
4-19 (A) who has an account with or is extended
4-20 credit by a financial institution;
4-21 (B) for whom a financial institution serves as a
4-22 trustee, custodian, or other representative; or
4-23 (C) who otherwise obtains a service from or
4-24 product of a financial institution.
4-25 (2) "Disclose" includes produce or allow examination.
4-26 (3) "Financial <"financial> institution" means a state
4-27 or national bank, state or federal savings and loan association,
5-1 <or> state or federal savings bank, state or federal credit union,
5-2 or lender licensed under Chapter 3, Title 79, Revised Statutes
5-3 (Article 5069-3.01 et seq., Vernon's Texas Civil Statutes),
5-4 maintaining an office, branch, or agency office in this state or
5-5 otherwise engaged in the business of lending money or extending
5-6 credit in this state.
5-7 (4) "Person" means an individual, firm, corporation,
5-8 governmental entity, or other legal entity.
5-9 (5) "Record" means an original or a copy of a record
5-10 or document held by a financial institution pertaining to a
5-11 customer of the financial institution.
5-12 Sec. 5. (a) This article does not restrict or apply to
5-13 amendment of a depository contract, addition of a new term or
5-14 provision to a depository contract, or disclosure <or production>
5-15 of <deposits or of records of accounts and other> financial
5-16 institution records if the amendment, addition, or disclosure is
5-17 made under or in substantial compliance with applicable federal
5-18 law, including regulations. This article does not restrict or
5-19 apply to the use or disclosure by a financial institution of
5-20 information or records pertaining to deposits, accounts, or
5-21 financial institution transactions if the use or disclosure is
5-22 necessary to carry out the financial institution's obligations to
5-23 the customer to whom the records pertain or <made in good faith in
5-24 the usual course of the financial business of the financial
5-25 institution,> is made by the financial institution in the course of
5-26 <the> litigation to which the financial institution and the
5-27 customer to whom the records pertain are both parties <affecting
6-1 its interests, or is made with express or implied consent of the
6-2 depositor or customer>. This article does not apply to the
6-3 investigation or prosecution of criminal offenses.
6-4 (b) Failure of the depositor or <bank> customer to receive a
6-5 notice given under this article respecting a depository contract or
6-6 a copy of a subpoena, request, or other order does not make the
6-7 notice, subpoena, request, or order ineffective if it was mailed or
6-8 served as provided by this article.
6-9 Sec. 6. (a) If a financial institution discloses records in
6-10 violation of this article, a customer to whom the records pertain
6-11 is entitled to recover from the financial institution damages
6-12 proximately caused by the disclosure. The financial institution is
6-13 not liable to the customer unless damages result from the
6-14 disclosure.
6-15 (b) The prevailing party in an action for damages under this
6-16 section is entitled to reasonable attorney's fees.
6-17 SECTION 2. The change in law made by this Act applies only
6-18 to a disclosure made on or after the effective date of this Act.
6-19 A disclosure made before the effective date of this Act is covered
6-20 by the law in effect when the disclosure was made, and the former
6-21 law is continued in effect for that purpose.
6-22 SECTION 3. This Act takes effect September 1, 1995.
6-23 SECTION 4. The importance of this legislation and the
6-24 crowded condition of the calendars in both houses create an
6-25 emergency and an imperative public necessity that the
6-26 constitutional rule requiring bills to be read on three several
6-27 days in each house be suspended, and this rule is hereby suspended.