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.