Texas Lottery Commission v. First State Bank of DeQueen, Stone Street Capital, Inc., and Cletius L. Irvan

Summary

The Supreme Court of Texas held that the Texas Uniform Commercial Code provisions treating state lottery winnings as assignable accounts rendered conflicting Texas Lottery Act restrictions on assignment ineffective. The court also held that the Texas Lottery Commission was subject to suit under the Declaratory Judgments Act for a challenge to the validity and construction of statutes. The court affirmed the lower courts' judgments permitting assignment of the lottery winner's final two installment payments.

Holdings

1. The Declaratory Judgments Act waives governmental immunity to the extent necessary for a suit challenging the validity or construction of a statute, and the Texas Lottery Commission was a proper party to that challenge. The claim was not an ultra vires claim requiring suit against an individual government official.
2. Texas Uniform Commercial Code section 9.406(f) renders Texas Lottery Act sections 466.406 and 466.410 ineffective to the extent they prohibit or restrict assignment of lottery prize payments.
3. The Lottery Act's anti-assignment provisions do not establish a different rule for consumers within the meaning of UCC section 9.201(b), so the consumer exception does not preserve those restrictions.
4. When the UCC expressly and unambiguously specifies how conflicts with other statutes are resolved, courts may not resort to general statutory-construction canons to preserve the conflicting Lottery Act restrictions.

Questions Presented

1. Whether the Declaratory Judgments Act waives the Texas Lottery Commission's sovereign immunity for a statutory challenge seeking a declaration that Lottery Act provisions are ineffective.
2. Whether Texas Uniform Commercial Code sections 9.102 and 9.406 render Texas Lottery Act sections 466.406 and 466.410 ineffective to the extent they prohibit or restrict assignment of lottery prize payments.
3. Whether the UCC's consumer exception, statutory-construction canons, or the Commission's construction of the Lottery Act preserve the Lottery Act's anti-assignment restrictions.
4. Whether the court should disregard the UCC's effect because it could impair enforcement of child-support liens under the Lottery Act.

Disposition

affirmed