PRICE DANIEL ATTORNEYGENERAL

Hon. C. H. Cavness State Auditor Austin, Texas September 22, 1950
Opinion No. V-1110
Re: Whether United States 

### 21% Treasury bonds, investment series A-1965, may be accepted by the State Treasurer for deposit under Article 4739, V.C.S., inview of certain provisions inthese bonds.
Dear Sir:
You have requested the opinion ofthis office onthe following matter:

“In our current audit ofthe accounts ofthe State Treasury Department we find certain United States Treasury bonds held by them as collateral security or to secure deposits ofpublic money but which have intheir terms certain provisions which may mean that they are not acceptable to the State for such purpcses.

“Attached hereto you will find acopy of one ofthese bonds ‘2*% Treasury Bond - Investment Series A-1965’ with the provisions about which we are concerned

. ..”

You ask whether this provision renders these bonds ineligible to be held by the Treasurer uas collateral security or to secure deposits ofpublic money.g.

Each bond provides on its face that “it is not acceptable to secure deposits ofpublic moneys, is not transferable, and may not be sold, discounted, hypothecated as collateral for aloan, or pledged as security for the performance of an obligation or for any other purpose.’

The United States Treasury Bonds here inquestion were deposited by aTexas insurance company with the Board of Insurance Commissioners inOctober, 1948. The bonds were approved by the Board ofInsurance Commissioners and are now on deposit inthe office ofthe State Treasurer, who is the custodianHon. C. H. Cavness, page 2(V-1110)

of such deposited securities. We have been advised by the Board ofInsurance Commissioners that the bonds were not deposited to secure deposits ofpublic money but were deposited under the provisions ofArticle 4739, Vernon’s Civil Statutes, which provides:

“Any life insurance company, accident insurance company, life and accident, health and accident, or life, health and accident insurance company, organized under the laws ofthis State, may at its option, deposit with the State Treasurer securities equal to the amount of its capital stock, and may, at its option, withdraw the same or any part thereof, first having deposited inthe treasury inlieu thereof other securities equal invalue tothose withdrawn.Any such securitie,?., before being sooriginally deposited or substituted, shall be approved by the Commissioner. When any such deposit is made, the Treasurer shall execute to the company making the deposit a receipt therefor, giving such description to such securities as will identify the same; and such company shall have the right to advertise such fact, or print acopy ofthe treasurer’s receipt onthe policies itmay issue; and the proper officers or agents ofeach insurance company making such deposit shall be permitted, at all reasonable times, to examine such securities and to detach coupons therefrom and to collect interest thereon, under such reasonable rules and regulations as may be prescribed by the Treasurer, and the Commissioner. Such deposit when made by any company shall thereafter be maintained as long as said company shall have outstanding any liability to its policy holders.

. ..*

Under this statute aTexas insurance company may, at its option, tender securities tothe Board of Insurance Commissioners for approval. and ifapproved, such securities are deposited with the Treasurer. The Treasurer has no control over such deposited securities except that he provides a safe depository wherein such securities are kept.

The title to these securities while ondeposit with the Treasurer remains inthe insurance company and neither the Treasurer nor the Board ofInsurance Commissioners has any authority to subject securities so deposited to the payment ofthe company’s indebtedness. We think the purpose ofthe statute is to enable insurance companies to obtain better financial standing by advertising the fact that securities equal to the amount oftheir capital stock are ondeposit with the Treasurer. Guaranty Life Ins. Co. ofHouston v. City ofAustin, 108Tex. 209, 190S.W. 189 (1916).Hon. C. H. Cavness, page 3(V-1110)

Therefore, it is apparent that such adeposit is not

“to secure deposits of public moneys,” or “pledged as security for the performance of an obligation or for any other purpose,” and the fact that securities are not transferable does not make the same ineligible for deposit with the Treasurer for the purposes ofthe statute when approved by the Board. Atty. Gen. Op. O-4054 (1941). Consequently, we conclude that the provisions to which you refer onthe face ofthe bonds do not prohibit aTexas insurance company from depositing such bonds with the State Treasurer pursuant toArticle 4739. SUMMARY United States Treasury Bonds, Investment Series A-1965, approved bythe Boaad ofInsurance Commissioners as provided inArticle 4739, may be accepted for deposit with the Treasurer as contemplated by that Article.
Yours very truly,
APPROVED: PRICE DANIEL Attornev General Willis E. Gresham Antitrust Division
Everett Hutchinson Executive Assistant Charles D. Mathews First Assistant Walton S. Roberts Assistant

WSR:”