PRICE DANIEL 

ATTORNEY GENERAL 

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., in view of certain 

provisions in these bonds. 

Dear Sir: 

You have requested the opinion of this office on the 

following matter: 

“In our current audit of the accounts of the 

State Treasury Department we find certain United 

States Treasury bonds held by them as collateral 

security or to secure deposits of public money but 

which have in their terms certain provisions which 

may mean that they are not acceptable to the State 

for such purpcses. 

“Attached hereto you will find a copy of 

one of these 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 of public money.g. 

Each bond provides on its face that “it is not acceptable to secure deposits of public moneys, is not transferable, 

and may not be sold, discounted, hypothecated as collateral for 

a loan, or pledged as security for the performance of an obligation or for any other purpose.’ 

The United States Treasury Bonds here in question 

were deposited by a Texas insurance company with the Board of 

Insurance Commissioners in October, 1948. The bonds were approved by the Board of Insurance Commissioners and are now on 

deposit in the office of the State Treasurer, who is the custodian 
Hon. C. H. Cavness, page 2 (V-1110) 

of such deposited securities. We have been advised by the Board 

of Insurance Commissioners that the bonds were not deposited 

to secure deposits of public money but were deposited under the 

provisions of Article 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 of this 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 in the treasury 

in lieu thereof other securities equal invalue to those 

withdrawn.Any such securitie,?., before being so originally deposited or substituted, shall be approved 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 a copy of the treasurer’s 

receipt on the policies it may issue; and the proper 

officers or agents of each 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 a Texas insurance company may, at 

its option, tender securities to the Board of Insurance Commissioners for approval. and if approved, 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 on deposit with the 

Treasurer remains in the insurance company and neither the 

Treasurer nor the Board of Insurance Commissioners has any 

authority to subject securities so deposited to the payment of the 

company’s indebtedness. We think the purpose of the statute is to 

enable insurance companies to obtain better financial standing by 

advertising the fact that securities equal to the amount of their 

capital stock are on deposit with the Treasurer. Guaranty Life Ins. 

Co. of Houston v. City of Austin, 108 Tex. 209, 190 S.W. 189 (1916). 
Hon. C. H. Cavness, page 3 (V-1110) 

Therefore, it is apparent that such a deposit 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 of the statute when approved by the Board. Atty. Gen. Op. 

O-4054 (1941). Consequently, we conclude that the provisions to 

which you refer on the face of the bonds do not prohibit a Texas 

insurance company from depositing such bonds with the State 

Treasurer pursuant to Article 4739. 

SUMMARY 

United States Treasury Bonds, Investment 

Series A-1965, approved by the Boaad of Insurance 

Commissioners as provided in Article 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:”