. . 

E RNEY GENERAL 

XAS 

June 30, 1969 

Honorable Jesse James Opinion No. M- 423 

State Treasurer 

Capitol Building Re: Whether Article 3272a, 

Austin, Texas 78711 V.C.S., authorizes the 

State Treasurer to exchange common stock that 

has escheated under said 

Dear Mr. James: Article. 

In your recent letter to this office you requested 

our opinion as to whether you have authority to exchange certain 

common stock which has escheated to the state pursuant to Article 

3272a, Vernon's Civil Statutes. 

The stock in question is 999 shares of AmerlcanAmicable Life Insurance Company. The Gulf Life Holding Company 

of Jacksonville, Florida, has made an exchange offer to AmericanAmicable stockholders whereby one share of Gulf Life Holding 

Company common stock will be issued for two and one-half shares 

of American-Amicable common stock. The prospectus in which Gulf 

Life made the exchange of'fer contains the following statement: 

'There is currently only a very 

limltei & very restricted ma'rket for AmericanAmicable Life Insurance Company Common Stock. 

You should consider carefully whether you wish 

to continue to hold stock in a company for which 

there is only a limited and restricted market, 

and with respect to which any market which does 

exist may be affected when we discontinue our 

present practice of continuing to accept shares 

of American-Amicable Life Insurance Company for 

exchange on a voluntary basis.'" 

The transaction about which you inquire does not arise 

from a merger or consolidation of the two corporations. It IS 

simply an offer on the part of Gulf Life Hold.ing Company to 

Issue one share of its stock for each two and one-half shares 

of American-Amicable stock tendered to it. 

The only authority whlch,the State Treasurer has with 

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

regard to the disposition of personal property, other than 

money, which has been delivered to him under Article 3272a, 

is found In Section 5 which reads as follows: 

"(a) All abandoned property other than 

money delivered to the State Treasurer under 

this Article which has been escheated and the 

title thereto vested In the State of Texas 

shall be sold by the State Treasurer to the 

highest bidder at public sale In whatever 

city in the State in his judgment affords the 

most favorable market for the property Involved. 

The State Treasurer may decline the highest bid 

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 sale held under this Section shall 

be preceded by a single publication of notice 

thereof at least three (3) weeks in advance of 

sale in an English language newspaper of general 

circulation in the county where the property Is 

to be sold, which shall be paid for at the rate 

provided in Article 29, Vernon's Civil Statutes. 

"(c) The purchaser at any sale conducted 

by the State Treasurer pursuant to this Section, 

shall receive title to the property purchased, 

free from all claims of the owner or prior holder 

thereof, and of all persons claiming through or 

under them. The State Treasurer shall execute 

all documents necessary to complete the transfer 

of title." 

It does not appear from your letter of request that 

the offer in question was received as a result of the procedures 

set forth in Section 5. However, in view of the facts before 

us, this does not become material because the transaction cannot 

be considered to be a sale. While It Is true that in its broadest sense a sale includes a 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 property belonging to 

one party is transferred to another and in return he receives 

property belonging to the other party without having placed an 

agreed monetary value on the properties, the transaction Is an 

exchange rather 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 transaction would constitute an exchange rather 

than a sale. We flnd no provision of Article 3272a which would 

authorize the State Treasurer to make an exchange of personal 

property delivered to him pursuant to said Article and therefore advise you that you cannot accept the offer made 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 

Prepared by W. 0. Shultz 

Asslstant Attorney 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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