’

Honorable John H.Winters Department of Public Welfare Austin, Texas

Dear Sir:

We take from your letter of request the following factsunderlying the question of law involved: OpinionNo. V-612.

Re: The eligibilityfor Old-Age Assistance of an individualwho possessesa vendor's lien note secured by certain real property under the~facts submitted.

"The recipientwho is 89 years of age lives on her own farm,which is her separate and individualproperty. The farm consists of 172 acres of land. The appellant's daughter,who is 72 years of age and who is also a recipient of assistance, lives in the homewith her. The home is fairly inaccessibleand the appellanthas none of the conveniences. The appellant has several children. The appellantalso has one grandchild,who is the son of a~ deceased child. This grandson is reported to have assisted the appellant for a number of years; however, our records do not show any financial contribution from him. The recipienthas been receiving old age assistance continuously since 1936.

"On July 25, 1947 the appellant deeded the property in question to her grandson for $10 and other good and valuable consideration. The other good and valuable considerationconsisted of one promissory vendor's lien note in the principal sum of $2,000 bearing interest from date until-.

.’

Honorable John H. Xinters, Page 2 (V-612)

paid at the rate of l& payable to the appellant on or before five years after date
or upon the death of the payee,whichever is sooner. The grantor (ourrecipient) reserved full possession,benefit, and use of the propertyas well as the rents, issues,and profits for and during her natural life. It was expresslyagreed and stipulated in the deed that a Vendor's Lien was retaineduntil the note and interest had been fully paid. The grantee also agreed that so long as the note or any part of it remained unpaid that he would keep the improvements fully insured and thathe would pay the taxes.

"Therewas further covenant in the deed that should the grantee fail to pay the taxes or fail to keep the insurance in force that the appellant (ourrecipient) might declare the note due and payable and that suitmight be immediately institutedto collect the insuranceand the taxes and to foreclose the lien.

"When the needs of the appellant
were reviewed in Birch, 1948 the Department learned of the existenceof this deed and note. The Departmentmade inquiry about the potential salevalue of the d2,OOO note in order to make it immediately available formeeting the needs of the appellant. Local realtors and a banker in the community considered the note negotiable,and the appellant considered the note negotiable;therefore,
a denial of her grant was made on the basis that she had a $2,000note which could be sold and which would furnish the necessities of life for her for a period of at least two years.
When the appellant appealed the attorney for the grandson alleged that the appellantdid not have a resource on the basis that the note was made payable to the appellant and was not made payable to the appellant or order; therefore, it was non-negotiable. During thexonorable John H. Vinters, Page 3 (v-6121

process of the appeal the field worker, responsible for reviewing the needs of the appellant, took a copy of the deed and the note to local realtorsand one of them stated that if his attorney advised him that the note couldbe sold that he would buy it at a discount. The attorney informedhim that although there might be some questionabout its negotiability, there was no question but what it could be soldand that the person buying it would have a valid lien against the property. This person offered to buy the note for $1500.

"The attorney for the appellant and the grandson contendedthat the reason for the transfer of the property to the grandsonwas in order to reduce the appellant's estate to cash rather than having to dividethe property after her death, and further!that there was no intentionof qualifying for assistance or affecting the assistance grant by reason of the transfer. The Department did notmake a denial on the basis that the transferwas for the purpose of qualifying or increasing need, but the denial wasmade solelyon the basis that the appellanthad a resource in the note which was sufficient to meet her needs on a currentbasis.

"The Departmentheld that the appellant was ineligiblebecause the Department is required by law to consider all available resources, and it was considered that this resourceamounting to 41500.00 was available immediatelyfor her use if she chose to use it. The attorney for the appellant and her grandson contested the decisionon the basis that the grantee,who is the grandson, had the right to limit the negotiability of his note and that the appellant could not sell it."HonorableJohn H. Winters, Page 4 (V-612)

The Old-Age AssistanceAct, Acts of the 47th Legislature,Regular amended, is quoted by you as follows: House Bill Session, as611,

"SEC. 20. Old Age Assistance shall be given under the provisions of this Act to any needy person:

. . . "'(5) Who has not sufficient income or other resources to provide a reasonable subsistence compatiblewith health and decency

. . . Incomeand resources to be taken into consideration shallbe known to exist and shall be available to the applicant

. . .'

“‘(6) An applicant for old age assistance shall not be denied assistance because of the ownershipof a residenthomestead,as the term "resident homestead" is defined in the Constitutionand Laws of the State of Texas.'

"'SEC. 21. The amount of assistance wnich shallbe given under the provisions of triis Act to any individual as old age assistance shallbe determined by the State Department through its district or county agencies in the county or district in which the needy aged person resideswith due consideration to the incomeand other resources of such aged person and in accordance with the rules and regulations of the State Department

. . . .The amount of assistance given shall provide such agedperson with a reasonable subsistence compatiblewith decency and health, within the limitationsand provisions of the Constitutionof Texas as are now provided, or may hereafter be provided.'"

We think it is clear that the $2,000vendor's lien note described by you constitutesa resource available to the applicant proper to be taken into consideration by your Department. The question of whether such note is a negotiable instrument is of no importance in the consideration. The questionis whether it is a, ’

.

HonorableJohn H. Winters, Page 5 ('J-612)

resource for supportavailable as property ownedby the claimant. It undoubtedly is propertywhichmay be sold, and, being ownedby her, is available by sale. The law contemplatesonly thatyour Departmentwill ascertain and determine the reasonableamount that could be raised from such resourceby the reasonable effort of the recipient.

You state "the attorney (forthe recipient) told us that in the event it was held that the proceeds of this note are available immediately formeeting the needs of the appellant if she chooses to sell the note, then he plans to ask the Court to enter a permanent injunction prohibitingthe sale of the note in order to make the resourcenon-available legally." You then ask the legal effect of such action.

If sucha proceeding shouldbe undertakenby the recipient'sattorneywith her consentor knowledge and acquiescence, itwould appear to us that itwould be a violation of the law forbidding transfers or disposition of property for the purpose of qualifyinga recipient or increasinghis need.

iihere a recipient of aid under the Old Age AssistanceAct owns a vendor’s lien note (whethersuchnote be technicallynegotiable
or not) having a reasonablevalue, and such note may be soldby the recipient, it is a resource availableto such recipientto be consideredby the Department.
Any action by such recipientvoluntarily takenby court injunction forbiddingany sale of suchnote for the purpose of qualifying such applicant or increasingher need would render suchrecipient ineligibleunder the statute.

APPROVED:

. , Yours very truly,

ATTORNEY GENERAL OF TEXAS

BY
0S:b:erc Cb$e& Assistant