Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:The court determines whether Chapter 33 of the Texas Civil Practice and Remedies Code applies to a conversion action brought under Texas Business and Commerce Code �3.420. HOLDING:Affirmed. The court is faced with a conflict between a uniform code adopted by the Texas Legislature and Chapter 33. Applying Chapter 33 to a UCC-based conversion claim would undermine the UCC’s effect. “While we cannot say that the UCC’s comparative negligence scheme renders the proportionate responsibility statute meaningless, we cannot reconcile the two without doing violence to the UCC.” The UCC, a uniform code, must be “liberally construed and applied to promote its underlying purposes and policies.” Texas Business and Commerce Code �1.103(a). Those underlying purposes and policies are: “1. to simplify, clarify and modernize the law governing commercial transactions; 2. to permit the continued expansion of commercial practices through custom, usage and agreement of the parties; and 3. to make uniform the law among the various jurisdictions.” At the time Texas adopted Revised Article 3, 33 states had adopted it; today, it is the law in 48 states, the District of Columbia, and the Virgin Islands. Were the court to impose Texas’s proportionate responsibility scheme on Revised Article 3, parties litigating UCC-based conversion claims in Texas would face a unique liability scheme, overriding the UCC’s express purpose of furthering uniformity among the states. Additionally, the UCC is “carefully integrated and intended as a uniform codification of permanent character covering an entire ‘field’ of law, [and] is to be regarded as particularly resistant to implied repeal.” TEX. BUS. & COM. CODE � 1.104 cmt. 1. The court is careful not to interpret any statute that does not explicitly amend or modify the UCC as doing so impliedly. Revised Article 3 is more specific than Chapter 33. Revised Article 3 contains its own loss allocation scheme uniquely applicable to conversion claims involving negotiable instruments. That scheme includes proportionate responsibility principles and specific causes of action against the thief and the depositary bank, as contrasted with Chapter 33′s general proportionate responsibility scheme. Accordingly, Revised Article 3′s terms govern. UCC Revised Article 3, as adopted in Texas, represents a comprehensive legislative fault scheme singularly applicable to claims involving negotiable instruments. Its provisions are more specific than Chapter 33, and they were adopted by the same Legislature that amended Chapter 33 to provide for responsible third party liability. The court concludes that the Legislature did not intend to upset the UCC’s carefully balanced liability provisions by applying Chapter 33 to a UCC-based conversion claim. To hold otherwise would ignore the UCC itself and thwart its underlying purpose. OPINION:Wallace Jefferson, C.J., delivered the court’s opinion.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.