By:  Elkins                                                       H.B. No. 3428



A BILL TO BE ENTITLED

AN ACT

relating to financial institution accounts, pledges of accounts, 
and garnishments.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Chapter 276, Finance Code, is amended to add a 
new Section 276.002, as follows:
	Sec. 276.002.  GARNISHMENTS OF FINANCIAL INSTITUTION 
ACCOUNTS.  With respect to any default judgment against a financial 
institution with respect to any pre-judgment or post-judgment 
garnishment or similar proceeding, the financial institution is not 
deemed to have on hand or to know of sufficient debts, assets, or 
personal effects of the debtor to satisfy the debtor's obligations 
to the garnishor or creditor.  Instead default judgment may be 
entered solely as to liability, but not as to damages, which shall 
be deemed undetermined.  Instead, the garnishor or creditor shall 
be required to establish by further service, process, discovery, 
and findings of fact by the by judge or jury as the case may be, the 
amount of actual damages proximately caused by the financial 
institution's failure to answer.  The court, for good cause shown, 
may award attorney's fees to the creditor related to the financial 
institution's failure to answer.
	SECTION 2.  Chapter 276, Finance Code, is amended to add a 
new Section 276.003, as follows:
	Sec 276.003.  PLEDGES OF FINANCIAL INSTITUTION ACCOUNTS.  
With respect to any extension of credit by a financial institution 
for a business, commercial, investment, or similar purpose, the 
obligor or account owner may use proceeds of the extension of credit 
for deposits, certificates of deposit, or other accounts, at the 
financial institution.  A determination by the obligor or owner 
that there are benefits to be received from using proceeds for 
deposits, certificates of deposit, or other accounts, at the 
financial institution, shall be deemed conclusive.  Nothing in this 
section may be construed negatively to imply a contrary rule for 
transactions not covered by this section.
	SECTION 3.  This Act takes effect September 1, 2005.