* United States District Judge Sarah S. Vance of the

Eastern District of Louisiana, sitting by designation.

1 United States Court of Appeals

Fifth Circuit



## FILED

May 1, 2003

Charles R. Fulbruge III

Clerk REVISED JUNE 27, 2003

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

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 a2

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 s ecurity

agreement, Comeric a 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 totaling3

$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 reli ef 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 relat ed 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 R ules of Bankruptcy Procedure. The bankruptcy court

thereafter preserved Exchanger’s claim for $71,878.45 o f 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

judgmen t in favor of Comerica. This final order was affirmed by

the district court. Exchanger timely appeals the district court’s

order.

II.4 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 o wing by

Exxon

. . . to Waterpoint International, LLC upon which Comerica

Bank-Texas claims a security interest and t o 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 receiva ble because banks and other lenders are

specifically exempted (under § 162.004 of the Code) from the

Chapter 162 tru st 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 R epublicbank 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 prot ection for subcontractors5

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

W aterpoint (in which Comerica claims a security interest) to the

trust fund provisions of the Code found in Chapter 162. S ee T EX

.

P ROP

. C ODE §§ 162.001-033 (Vernon 1995 & Supp. 2003). However, it

relies on a provision in the chap ter on mechanic’s and

materialman’s liens, Chapter 53, to support this claim. S ee 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, M echanics’

and Materialmen’s Liens in Texas

, 26 S W

. 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 T EX

. T ECH L. R EV

.6

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. M ICHAEL B AGGETT & B RIAN T HOMPSON M ORRIS

, T EXAS P RACTICE G UIDE

, Ch.

10:118 (2003). Article 16, Section 37, of the Texas Constitution

now provides th at “mechanics, artisans and materialmen of every

class, shall have a lien upon the bui ldings and articles made or

r epaired by them for the value of their labor done thereon, o r

material furnished therefor . . . .” T EX

. C ONST

. 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. S ee, 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. S ee 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. S ee 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 a7

subcontractor is a derivative claimant and, unlike a contractor,

has no consti tutional, common law, or contractual lien on the

property of the own er, a subcontractor’s lien rights are totally

dependent on compliance wit h 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 mecha nics’ 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. S ee, 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. S ee id. ; see also Youngblood

, supra

, at 6768

(“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.”).

Whi le 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

performto perfect this lien have to do with real property and

foreclosure secondarily and the trapping and retainage of funds for

t he benefit of derivative claimants primarily. S ee 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 priv ity 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 clai mant 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 under9

the trapping provisions of the Texas Property Code (§ 53.081) and

the general retainage provisions of t he 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 W ILLIAM V. D ORSANEO

III, T EXAS L ITIGATION G UIDE § 271.02 (2002). Thus, in contrast to an

original contractor, a subcontractor does not have an a bility 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. S ee 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 me chanics’ 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)) ; s ee also D ORSANEO

, 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. This10

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 Ch apter 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.” T E X

.

R EV

. C IV

. S TAT

. A NN

. art. 5464 (Vernon 1958)(repealed 1983) (current

version at T EX

. P ROP

. C ODE § 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 locat ed. I d. 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. I d. at 720. He

maintained that the preference rights afforded ma terialmen under

article 5464 did not require compliance with the statutes on lien

perfection because article 5464 did not say as much. I d. The

court rejected this argument, stating that “Art . 5464 provides a11

p reference only for subcontractors, laborers and materialmen wh o

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.” I d. 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. S ee T EX

. P ROP

. C ODE § 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

conf ormity with the interpretation of this section in L ebo v.

Dochen .”).

(2) Chapter 162 of the Texas Property Code

In contrast to the no tice 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 the1 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.

12 laborer’s compliance with the procedural requirements under Chapter

53. S ee 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.

T EX

. P ROP

. C ODE § 162.001. This provision was enacted to serve as a

special protection for subcontractors and materialmen in situations

where contractors or their assig nees 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 wo rk completed. The misapplication of

these trust funds is a criminal offense under the Code. S ee T EX

.

P ROP

. C ODE §§ 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 R epublicbank Dallas, N.A. v. Interkal, Inc.

, 691T EX

. P ROP

. C ODE § 162.004.

13

S.W.2d 605 (Tex. 1985), a bank which held a security interest in a

contractor’s accounts rec eivable brought an action against a

materialman claiming it had a superior right to funds held by the

contractor. I d. at 606. The materialman, who had furnished the

bleachers and stage equipment for the contractor to construct

gymnasium facilities for vari ous 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. I d. 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. I d.

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. S ee T EX

.

P ROP

. C ODE §§ 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.14

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 I nterkal is not persua sive.

Section 53.151 was not “enacted” in 1987; indeed, its roots stem

from Acts of 1889. T EX

. R EV

. C IV

. S TAT

. A NN

. 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 de bt is paid under the contract for

construction, the party for whose interest the

contract was recorded shall enter a relinquishment

showi ng 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 gar nish the money due the

original contractor from the owner to the prejudice

of the subcontractors

, mechanics, laborers, or

materialmen.

T EX

. P ROP

. C ODE § 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. S ee Tex. S.B. 748, 78th15

Leg., R.S. (1983) (“An ACT relating to adoption of nonsubstantive

revision of the statutes relating to property.”) (emphasis added).

The former article 5466, entitle d “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 e nter a relinquishment

showing a full compliance of said contract to the extent

of all money du e them from the original contractor or

builder on account of labor done or material furnished;

and the money due said or iginal 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.

T EX

. C IV

. S TAT

. A NN

. art. 5466 (Vernon 1958) (repealed 1983) (current

version at T EX

. P ROP

. C ODE § 53.151 (Vern on 1995 & Supp. 2003))

(emphasis added). Section 53.151 was itself amended in 1989.

U nder its new title, “Enforcement of Remedies Against Money Due

Original Contractor or Subcontractor,” the p rovision 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 d ue 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 princ i pal to

contract funds to the extent of any loss it suffers16 o r incurs. That priority does not excuse the

surety from paying any obligations that it may have

under its payment bonds.

T EX

. P ROP

. C ODE § 53.151 (Vernon 1995 & Supp. 2003).

Comparing the 1983 and the current versions of § 53.151, it is

clear that while the 1989 amen dments did add the phrase “and a

creditor of a subcontractor may not collect, enforce a s ecurity

interest against, garnish, or levy execution on the money due the

subcontractor” (emphasis added) to the 1983 version of § 5 3.151,

this additional phrase does not support Exchanger’s argument. Even

if we assume t hat § 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 t hat 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 I nterkal 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.

A dditionally, the framework of the Code belies Exchang er’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, we17

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 rec eivable 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 subcontract or 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 materialmen18

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 T EX

. P ROP

. C ODE § 53.026 (Vernon 1995 & Supp.

2003). The effect of the “sham contract” provision is to place

subcontractors in direct privity wi th the owner (as an original

contractor would have been) for the purposes of the mechanic’s lien

statutes. S ee Da-Col Paint Mfg. v. Am. Indem. Co.

, 517 S.W.2d 270,

2 73 (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 credit or 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 predecess o r to

§ 53.151, demonstrate the presumption (at least under article 5466)

that a derivative claimant must comply with the lien perfection

procedure s 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 fo r 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) (d iscussing article19

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 o f Exxon (as

envisioned in Chapter 53) without complyi ng 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 provi sions 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.