Hon. Jesse James 

State Treasurer 

hustin, Texas 

Dear MrO James: 

Your request 

ter, i,s as follows: 

Opinion No. O-5820 

Re: Construction, of S.B, No. 8 of the 

Regular Session, 48th Legislature, amending Article 4740, R.C.S., and Incidental 

questions o 

for an opinion on the above subject mat- 

“According to the General and Special Laws of 

Texas, 48th Legislature, Regular Session, 1943, Life 

Insurance Companfe s - Deposits of Securities, Chapter 

s$$ S,B. NO. 8, Page 206, An Qct to amend Article 

Revised Civil. Statutes of 192Fa was passed 

which reads, fn part, as follows: 

“‘The physical delivery of such securities to the 

Board of Insurance Cimmissioners shall be sufficient 

without being accompanied by a written transfer of any 

lien securing themas 

Wince this Department holds, as custodian, securitfes for companies under the supervision of the State 

Board of Insurance Commissioners, as well as the State 

Bankfng Department) we kindly request your opinion on 

the followfng questions: 

“1 .D Is the above Act retroactive covering a.11 deposits made prior %o th.is amendment, or does it app1.y 

only to deposits made after the effective date of this 

law? 

“2 0 Has there been a simi.lar amendment enacted 

for Senate Bi.11 No. 165 removing the requirement of 

transfers of vendor’s l,ien or mortgage notes on deposits made by companies under the supervi,slon of the State 

Bmkfng Department? If so9 what is the effective date 

of said amendment? 

“3 Q Under any condition fn which transfer of 11en 

is required by law, does the endorsement written on the 

margin of vendor’s lien or mortgage notes ‘without recourse’ and signed by the company constitute a legal 

transfer of lien?” 
Hon. Jesse James, page 2 (O-5820) 

Article 4740 of the Revised Civil Statutes of 1925 

as amended.by S.B. No. 8 of the 48th Legislature at its Regdar 

Session, provides: 

“Any life insurance company now or which may hereafter be incor:2orated under the laws of this state may 

;Is-i;osit with the Board of Insurance Commissioners for 

t!;e common bene_“i.t of all the holders of its policies 

an annuity bonds, securities of the kinds in which, by 

the laws of this state, it is permitted to invest or 

loan its ca;sitil, surplus, and/or reserves, equa.1 to 

tlr 1c:al reserve on all its outstanding policfss in 

force e which securities shall be held by said 9oard of 

Insurance Comni.ssioners in trust for the purpl:!se and 

objects herein specified. The physical delivery of 

such securities to the Board of Insurance Commissioners shal,l be sufficient without being accompanied by a 

t:ritten transfer of any lien securing them. Any such 

company may deposit lawful money of the United States 

in lieu of the securities above referred to, or any 

portion thereof, and may also for the purposes of 

such deposit, convey to said l!oard of Insurance Commissioners in trust the real estate in which any portion 

of its said reserve may be lawfully invested. In such 

case, the Board of Insurance Commissioners shall hold 

the title thereto in trust until other securities in 

lieu thereof shall be deposited with it, whereupon it 

shall reconvey the same to such company. Said Board 

of Insurance Commissioners may cause any such securities or real estate to be appraised and valued prior 

.to their being deposited with, or conveyed to, it 9.n 

trust as aforesaid, the rea.sonable expense of such ap- 

>raisement or val,uation to be paid by the company. Under the ;:rovi,s-Ins of th.is Article, registered as well 

as unregistered United States Government securities may 

be deposited.” 

It is the general rule that legislative acts speak 

proL;)2”tivel.y ind not retrospectively, unless such retrospective 

featuae is c!~::.rly maniSest from the language of the Bill. We 

find nothing ii1 th;? above-quoted amendment that would take the 

case out of the ordinary rule. So that, your first question is 

answered that the Act is not retroactive so as to cover all deposits made prior to the effective date of the amendment, but that 

it applies on.1.y to deposits made after the effective date of the 

law. 

We assume that your reference to S.B. No. 165 in your 

second question is to S.B. No. 165, Chapter 165 of the 42d Legislature at its regular session in 1931. (Rev.Civ.Stat-Art. 1524a, 

Vernon’s Codification) o 
Hon. Jesse James, page 3 (O-5820) 

This Act does not purport to require transfers (actually) of the liens securing debts or obligations--sec,ur?.ties-- 

deposited with any corporate trustee in the manner they-in 

pointed out o 

There has been no ‘amendment of the Act in thi,s respect. 

In this connection, however, we will say thcst 1.t may 

have been the departmental practice of the Banking Commissioner 

in approving deposits \<ith trustees, under the terms of S.R. 

165 to require th;zt where~ liens were ,involved a writtei~ t,?:::~nsi‘er 

of the iien, as ;:‘e!.l as the notes or securities themselves, 

should be executed. Authority to tiake such requ.iremer:ts is implied from the statute requiring deposits, and such a prac;~Ice 

should be followed. See our Opinion 1Yc. O-4535. 

A lien upon property 1s such hds no legal existence in 

5::: -l?i.$z from the debt or obligation srcured thereby. So that, 

mything that would operate to transfer the note or other ,fhstrument evidencing the debt, would operate in law to transfer the 

equitable lien securing it. Such e+itable transfer, however, 

:!ould not be adeouste to meet the St&es s requirement of deposit, 

Yor it would not Lbe subject to regi,stration to protect the hol.ders of such securi.ties agaimt the supervening right of ah inno- 

:e,zt purchaser of the mortgaged prosert:. 

Yox ?:tllrL :i:;;?r:tion is answered in the negative. The 

~~‘yi;j~o:y cjc::.,;,:;it, upon :I, v$Tn,::.c;; *s lien or mortgage note of the words, 

“1.: 1 t;ho,- ;t recour;:f:“, has mthing t,o do with the cLuestim of the 

transf’::r 2 i: ‘.,!.:?n secmsing such note D It merely operates to 

~-mid 1i.ibiii.t:~ of th.: endorser as ,a guarantor of payfient, but 

1: does n~ot ,,f??ct the completeness of the transfer evid~enced~ by 

.the sigmture -, :’ the transferor. Hs :3bove explained, this transfer of ths not;. (as by endorsement) I:tould operate to trunsfe? 

the equitable title to the lien, bl:t not the legal. title. For 

these reasons, in order to transfer the legal. tit1.e to the lien, 

it should be done by a properly executed instrument of writing. 

We so heid in Cpini3n No. C-4525, dealing with a similar question of securities deposited with the Board of Insurance Comissiohers under nrticle 4982 of the Revised Civil Statutes. 

What we h:ive said about the registration of liens, however, refers only tc liens upon land. Chattel mortgage liens, 

however, while they may not be registered in the way that liens 

upon realty are registered, are nevertheless subject to the statutes regulating chattel mortgages u?on personal property generally, but with reference to automobiles, specifically, by compliance with the provisions of the Certificate of Title Act. 
Hon. Jesse James, page 4 (O-5820) 

These suggestions thus volunteered may be of little 

or no value in your particular inquiry, however, as the securities thus deposited, whether with a corporate trustee or with 

the State Treasurer, under the most recent amendment of the 

Statute (1937) have to be approved by the Banking Commissioner. 

The-principles applicable are discussed in Wood v. 

Sparks, 59 S.W. (2) 361, 63 S.W. (2) 1109. 

In oral explanations of your question No, 3, you have 

made it plain that your inquiry concerning the method of transferring liens securing deposit notes concerned liens securing 

deposits made by loan and brokerage companies under Senate Bill 

165. 

Trusting that what we have said fully answers your inquiries, we are 

Very truly yours 

ATTORNEY GENERAL OF TEXAS 

/s/ Ocie Speer 

BY Ocie Speer, Bssistant 

APPROVED FEB 21, 1944 

/s/ Grover Sellers 

ATTORNEY GENERALI OF TEXAS 

APPROVED: t&INI~AZ'NCOM4TTEE 

BY: 8 

OS-MR:wb