’ 

Honorable John H. Winters 

Department of Public Welfare 

Austin, Texas 

Dear Sir: 

We take from your letter of request the following facts underlying the question of law involved: 

Opinion No. V-612. 

Re: The eligibility for 

Old-Age Assistance 

of an individual who 

possesses a vendor's 

lien note secured by 

certain real property under the ~facts 

submitted. 

"The recipient who is 89 years of age 

lives on her own farm, which is her separate and individual property. 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 home with her. The home is 

fairly inaccessible and the appellant has 

none of the conveniences. The appellant 

has several children. The appellant also 

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 recipient has 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 

consideration consisted 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 (our recipient) 

reserved full possession, benefit, and use 

of the property as well as the rents, issues, and profits for and during her natural life. It was expressly agreed and 

stipulated in the deed that a Vendor's 

Lien was retained until 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 that he would pay the taxes. 

"There was 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 (our recipient) might declare the note due and payable and that suit might be immediately 

instituted to collect the insurance and 

the taxes and to foreclose the lien. 

"When the needs of the appellant 

were reviewed in Birch, 1948 the Department learned of the existence of this 

deed and note. The Department made inquiry about the potential sale value of 

the d2,OOO note in order to make it immediately available for meeting 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 $2,000 note 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 appellant did 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 the 
xonorable 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 realtors and one 

of them stated that if his attorney advised him that the note could be sold 

that he would buy it at a discount. 

The attorney informed him that although 

there might be some question about its 

negotiability, there was no question 

but what it could be sold and 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 contended that the 

reason for the transfer of the property to the grandson was in order to reduce the appellant's estate to cash 

rather than having to divide the property after her death, and further! that 

there was no intention of qualifying 

for assistance or affecting the assistance grant by reason of the transfer. 

The Department did not make a denial on 

the basis that the transfer was for the 

purpose of qualifying or increasing 

need, but the denial was made solely on 

the basis that the appellant had a resource in the note which was sufficient 

to meet her needs on a current basis. 

"The Department held that the appellant was ineligible because the Department is required by law to consider 

all available resources, and it was considered that this resource amounting to 

41500.00 was available immediately for 

her use if she chose to use it. The 

attorney for the appellant and her grandson contested the decision on 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." 
Honorable John H. Winters, Page 4 (V-612) 

The Old-Age Assistance Act, 

Acts of the 47th Legislature, Regular 

amended, is quoted by you as follows: 

House Bill 

Session, as 

611, 

"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 compatible with 

health and decency . . . Income and resources to be taken into consideration 

shall be 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 ownership of a 

resident homestead, as the term "resident homestead" is defined in the Constitution and Laws of the State of 

Texas.' 

"'SEC. 21. The amount of assistance wnich shall be given under the 

provisions of triis Act to any individual as old age assistance shall be determined by the State Department through 

its district or county agencies in the 

county or district in which the needy 

aged person resides with due consideration to the income and 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 

aged person with a reasonable subsistence compatible with decency and health, 

within the limitations and provisions 

of the Constitution of Texas as are now 

provided, or may hereafter be provided.'" 

We think it is clear that the $2,000 vendor's 

lien note described by you constitutes a 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 question is whether it is a 
, ’ 

. 

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

resource for support available as property owned by the 

claimant. It undoubtedly is property which may be sold, 

and, being owned by her, is available by sale. The law 

contemplates only that your Department will ascertain 

and determine the reasonable amount that could be raised 

from such resource by the reasonable effort of the recipient. 

You state "the attorney (for the recipient) 

told us that in the event it was held that the proceeds 

of this note are available immediately for meeting the 

needs of the appellant if she chooses to sell the note, 

then he plans to ask the Court to enter a permanent injunction prohibiting the sale of the note in order to 

make the resource non-available legally." You then ask 

the legal effect of such action. 

If such a proceeding should be undertaken by 

the recipient's attorney with her consent or knowledge 

and acquiescence, it would appear to us that it would 

be a violation of the law forbidding transfers or disposition of property for the purpose of qualifying a 

recipient or increasing his need. 

iihere a recipient of aid under the Old 

Age Assistance Act owns a vendor’s lien note 

(whether such note be technically negotiable 

or not) having a reasonable value, and such 

note may be sold by the recipient, it is a 

resource available to such recipient to be 

considered by the Department. 

Any action by such recipient voluntarily taken by court injunction forbidding any 

sale of such note for the purpose of qualifying such applicant or increasing her need 

would render such recipient ineligible under 

the statute. 

APPROVED: . , 

Yours very truly, 

ATTORNEY GENERAL OF TEXAS 

BY 

0S:b:erc 

Cb$e& 

Assistant