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E RNEY GENERAL XAS

June 30, 1969

Honorable Jesse James OpinionNo. M- 423 State Treasurer CapitolBuilding Re: Whether Article 3272a, Austin, Texas 78711 V.C.S., authorizes the State Treasurer to exchange common stock that has escheatedunder said Dear Mr. James: Article.

In your recent letter to this officeyou requested our opinion as to whether you have authority to exchange certain common stockwhich has escheated to the state pursuant to Article 3272a,Vernon's Civil Statutes.

The stock in question is 999 shares of AmerlcanAmicableLife Insurance Company. The Gulf Life Holding Company of Jacksonville,Florida, has made an exchange offer to AmericanAmicable stockholderswhereby one share of Gulf Life Holding Company common stockwill be issued for two and one-half shares of American-Amicablecommon stock. The prospectus in which Gulf Lifemade the exchange of'fer contains the following statement: 'Thereis currentlyonly a very limltei & very restrictedma'rketfor AmericanAmicable Life Insurance Company Common Stock. You should consider carefullywhether you wish to continue to hold stock in a company for which there is only a limitedand restrictedmarket, and with respect to which any market which does existmay be affectedwhen we discontinue our presentpractice of continuing to accept shares of American-AmicableLife Insurance Company for exchange on a voluntarybasis.'" The transactionabout which you inquiredoes not arise from a merger or consolidationof the two corporations. It IS simply an offer on thepart of Gulf Life Hold.ing Company to Issue one share of its stock for each two and one-half shares of American-Amicablestock tendered to it. The only authoritywhlch,the State Treasurerhas with -2114-. .I

Mr. Jesse James, page 2 (M-423)

regard to the disposition of personalproperty, other than money, which has been delivered to him under Article 3272a, is found In Section 5 which reads as follows:

"(a) All abandonedproperty other than money delivered to the State Treasurerunder this Articlewhich has been escheated and the title thereto vested In the State of Texas shallbe sold by the State Treasurer to the highest bidder at public sale In whatever city in the State in his judgmentaffords the most favorablemarket for the property Involved. The State Treasurermay decline the highestbid and reoffer such property for sale If he considers such bid insufficient. He need not offer any property for sale, If, In his opinion, the probable cost of sale is'in excess of the value of the property. "(b) Any saleheld under this Section shall be preceded by a singlepublication of notice thereof at least three (3) weeks in advance of sale in an English languagenewspaper of general circulation in the countywhere the property Is to be sold,which shallbe paid for at the rate provided in Article 29,Vernon's Civil Statutes. "(c) The purchaserat any sale conducted by the State Treasurer pursuant to this Section, shall receive title to the propertypurchased, free from all claims of the owner or prior holder thereof, and of all persons claiming through or under them. The StateTreasurer shall execute all documents necessary to complete the transfer of title."
It does not appear from your letter of request that the offer in questionwas received as a result of the procedures set forth in Section 5. However, in view of the facts before us, this does not becomematerial because the transaction cannot be considered to be a sale. While It Is true that in its broadest sense a sale includesa transfer of property from one person to another for a valuable consideration, there Is a distinction in law between a sale and an exchange. If propertybelonging to one party is transferred to another and in return he receives propertybelonging to the other partywithout havingplaced an agreedmonetary value on the properties, the transaction Is an exchangerather than a sale. 24 Tex.Jur.2d 433, Exchange of
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Mr. Jesse James, page 3 (M-423)

Property $2. As we understand the facts, the offer in question is made without regard to the value of the two stocks. In our opinion, the transactionwould constitutean exchange rather than a sale. We flnd no provision of Article 3272awhich would authorize the StateTreasurer to make an exchange of personal property delivered to him pursuant to saidArticle and therefore advise you thatyou cannotaccept the offermade by Gulf Life Holding Company.
SUMMARY Article 3272a,V.C.S., does not authorize the State Treasurer to exchange escheated corporate stock for stock of another corporation pursuant to an exchange offer. Such property may only be disposed of by following the sale procedures of Section 5 of Article 3272a.
Ve

Preparedby W. 0. Shultz AsslstantAttorney General
APPROVED: OPINION COMMITTEE
Kerns Taylor, Chairman George Kelton,Vice-Chairman Roy W. Mouer Michael Stork John Grace Arthur Sandlin Hawthorne Phillips, Executive Assistant

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