Mr. William J. Murray, Jr OPINION NO. WW 1217 

Chairman, Railroad C&&ssion of Texas Re: 

Tribune Building 

Austin, Texas 

Dear Mr. Murray: 

What constitutes sufficient 

compliance with Article 1440, 

V.C.S. and Article 1054 V.P.C. 

requiring the payment of 

interest on utility customer's 

deposits. 

You have requested that this office reconsider a 

letter opinion written to Honorable W. S. Bussey, Chief Weights 

and Measures Division, Department of Agriculture, dated March 

26, 1936 and filed In Book 370 at page 937 In our opinion 

files. That opinion held that Article 1054 of the Penal Code 

made it mandatory for private utilities to pay the prescribed 

six per cent per annum Interest on meter deposits on the first 

day of January, of each year when service Is not discontinued 

sooner, whether demanded by the depositor or not, and that 

payment upon demand did not satisfy the requirements of the 

statute. 

Article 1054 of Vernon's Penal Code contains the 

identical language set forth in its companion civil statute,' 

which is Article 1440 Vernon's Civil Statutes, except for 

the addition of the last sentence containing penal provisions. 

Article 1440 is as follows: 

"Every person, firm, company, corporation, 

receiver, or trustee engaged In the furnishing of water, light, gas or telephone 

service which requires the payment on the 

part of the user of such service a deposit 

of money as a condition precedent to furnlshing such service, shall pay six per cent per 

annum on such deposit to the one making the 

same, or to his heirs or assigns, from the 

time of such deposit, the same to be paid 

on the first day of January of each year, or 

sooner If such service be,discontil,lued. 

When such service is discontinued, such 

deposit, together with any unpaid interest 

thereon, or such part of such deposit and 
Mr William J. Murray, Jr, page 2 (W 1217) 

unpaid interest not consumed in bills due 

for such service, shall be returned to 

such depositor, his heirs or legal representatives." 

As you point out In your request, the 1936 letter 

opinion referred to above applied a strict and literal interpretation of ,the statute In order to reach the ruling made. 

In order to determine the true sense of the Legislature, we think it Is helpful to quote the emergency clause 

of the original statute before its codification in 1925, 

which was Section 6 of House Bill 86, 38th Legislature: 

ne - 

---ET3 more revenue to properly malntai: 

State Government and the crowded condition 

of the calendar creates an emergency and lmperative public necessity, requiring that constltutlonal rule providing that bills shall be read 

on three days be suspended and the same Is 

hereby suspended and that this Act shall take 

effect and be in force from and after Its 

passage, and it is so enacted." (Emphasis added) 

From the foregoing, it is apparent that the primary 

concern of the Legislature was the fact that such deposits 

were not earning interest prior to the passage of the Act, and 

that during that period, many failures of such companies were 

occurring with no protection being afforded the depositors. 

A strict and literal Interpretation of Article 1054 

and Article 1440 would require that all such companies either 

seek out their depositors and tender payment on the first day 

of January of each year or that the depositors actually appear 

at the companies' offices on New Year's Day. 

New Year's Day Is a holiday, and many persons are 

away from the cities of their residence on that day. If 
Mr. William J. Murray, Jr., page 3 (WW 1217) 

payments were to be mailed they would not be delivered on New 

Year's Day, for this is a holiday for postal employees. It 

Is therefore clear that a strict and literal Interpretation 

of these laws would require something impossible of performance. We do not believe that the legislature so Intended. 

Sutherland on Statutory Construction at Section 

4706 gives the rule to be applled here: 

"The literal interpretation of words of an 

Act should not prevail If it creates a result contrary to the apparent intention of 

the Legislature and If words are sufficiently 

flexible to admit of a construction which 

will effectuate the legislative intention. 

The intention prevails over the letter, and the 

letter must If possible be read so as to conform to the spirit of the Act. 'While the intention of the Legislature must be ascertained 

from the words used to express ,it, the manifest 

reason and obvious purport of the law should not 

be sacrificed to a literal interpretation of 

such words.'" 

In Wood v. State, 133 Tex. 110, 126 S.W. 26 4 (1939), 

the Supreme Court of Texas said: 

"It is the settled law that statutes should 

be construed so as to carry out the legislative Intent, and when such Intent is once 

ascertained, it should be given effect, even 

though litera? meaning of the words used therein is not followed. Also, statutes should never 

be given 2 construction that leads to uncertainty, 

injustice, or confusion, if it is possible to 

construe them otherwise." 

The case of Commonwealth vs. Kentucky Power and Light 

=Y77 S.~W. 2d 395 [Ky 

somew at analogous stat&e, 

Ct A 1934) hlhi ld 

has beezPcalled t: o& a~~&~~on~ 

and is cited for the proposition that the Texas statutes are 

satisfied when Interest Is paid upon demand only. 

It is therefore necessary to examine the Kentucky law 

construed In Commonwealth vs. Kentucky Power and Light Company, 

suora, and comnare its wording with the Texas statutes. The 

Kentucky law there construed is codified as Sections 2223-l, 

2223-2, m. st. supp., 1933, and is quoted below: 
. 

Mr. William J. Murray, Jr., page 4 (WW 1217) 

"An Act to require a public utility to pay 

Interest at the rate of six (6) per cent 

annually on the amounts they exact as deposits as security for the payment of gas, 

electric and water accounts. 

"Be It enacted by the General Assembly of 

the Commonwealth of Kentucky: 

"Sec. 1. That public utilities, such as gas, 

electric and water companies shall be required to pay holders of certificates of 

deposits six (6) per cent annually on amounts 

exacted from patrons for gas, electric and 

water accounts. 

"Sec. 2. Failure to comply with the above 

Section shall subject the Utility Company 

violating said provisions to Indictment and 

prosecution and upon conviction to a fine 

of not less than One Hundred ($100.00) Dollars 

for each offense." 

The Kentucky court treated the obligation to pay annually 

as being analogous to a demand note, and held that It was not 

necessary for the company to seek out Its depositors each year 

and thrust upon them an interest payment. 

It should be noted, however, that the Kentucky law did 

not contain the specific directive that payment be made each year. 

For this reason, the Kentucky case is not in point. 

In this reconsideration of Letter Opinion of March 26, 

1936, referred to above, we have limited outselves to the first 

two questions answered. Those two answers and any other opinion 

in conflict herewith are expressly overruled and it Is the 

opinion of this office that Interest Is to be paid annually 

whether demanded by the depositor or not and that it Is not 

mandatory upon the persons, firms, etc., requiring service 

deposits, to pay the prescribed six per cent Interest on the 

first day of January of each year. 

We hold that payment may be made after the first day of 

January of each year on some date reasonably close to the first 

day of January and upon a regular business day. 
. 

Mr. William J. Murray, Jr., page 5 (WW 1217) 

SUMMARY 

Interest is to be paid annually whether demanded by the depositor or not. It is not mandatory that the persons, firms, etc., requiring 

service deposits, pay the prescribed six per 

cent interest onthe first day of January of each 

year. Such payments may be made upon a business 

day reasonably close to the first day of January. 

To the extent of its conflict with this opinion, 

Letter opinion to Hon. W. S, Bussey, Chief 

Weights and Measures Division, Department of 

Agriculture, dated March 26, 1936, filed in 

Book 370 at page 937. Attorney General's Opinion 

files and other oplnjorn .Ln conflict herewith, 

are overruled. 

Very truly yours 

WILL WILSON 

Attorney General 

Assistant 

HB/fb 

APPROVED: 

OPINION COMMITTEE 

Henry Braswell, Chairman 

J. C. Davis 

Vernon Teofan 

Pat Bailey 

Ben Harrison 

REVIEWED FOR THE ATTORNEY GENERAL 

By: Leonard Passmore