THE ATTORNEY GENERAL OF TEXAS

February 1, 1960

HonorableRobert S. Calvert Comptroller of Public Accounts Austin, Texas Opinion No. WW-795
Re: Can the Comptroller and Treasurer clear funds from the Trust Account 923, Insurance Companies Unclaimed Dividends Account, funds with the State Treasurer, to the General Revenue Fund to pay the appropriationto the State Auditor for the cost of audit of the LiquiBoard dation Division of the Dear Mr. Calvert: of Insurance.

In your request for an opinion you asked questions. The first question is as follows: three

'Can the Comptrcller and Treasurer clear funds from the Trust Account 923, Insurance Companies Unclaimed Dividends Account, funds with thenState Treasurer, to the General Revenue Fund to pay the appropriation to the State Auditor for the cost of audit of the Liquidation Division of the Board of Insurance?' Paragraphs (ej and (f). of Se&l-on %j 4ri;~-?&. of the Insurance Code read as follows: "(e)Unclaimed Dividends. Unclaimed dividends on approved claims remaining in the receiver's hands after payment of the final dividend shall be delivered to the Board. Such funds shall be deposited by the Board in trust in a specialHon. Robert S. Calvert, page 2 (WW-7%)

account to be maintainedwith the State Treasurer. L-

These unclaimedfunds constitute Trust Account 923,7 "(f) Escheat. On receipt of satisfactorywritten and verified proof of ownershipwithin two (2)years from the date such funds are so depositedwith the State Treasurer,the Board shall certify such facts to the Comptroller of Public Accounts,who shall issue properwarrant therefor in favor of the oarties resoectivelsentitledthereto drawn on the-stateTreasurer. & such money remaining unclaimedwith the Board for two (2)years shall automatically become the propertyof the Board." The last sentence of paragraph (f)has been underscoredfor emphasis.

Section 1, Article XIII of the Texas Constitution-providesthat:

,I

. . . the Legislatureshall provide a method

. . . for giving effect to escheats;

. . ."
It is stated in 17 Tex. Sur. 73, Escheats, Section 3, with reference to the above constitutionalprovision, that:

"This provisionof the constitution does not authorize the legislatureto create an escheat--thatwould be a taking of propertywithout due processof law; it simply directsthat provision be made for a method of ascertaining whether or not therehas been one." The early case of Caplen v. Compton, 27 S.W. 24 (Tex.Civ. App., 1893, errorref.) held that:

"The constitution (article13, i31) does not authorize the legislaturetoRon.Robert S. Calvert, page 3 (WW-795)

create an escheat; it simply directs it to providea method for ascertainingwhether or not there has been in any case an escheat. No man can be deprived of his property exceptby due course of law. Bill of Rights, E119."
On the basis of these authorities, it appears that if paragraph (f), Section 8, Article 21.28 of the InsuranceCode is construedas IDSO facto creating an escheat, then our opinionmust be that paragraph (f) is unconstitutional. (SeeOp. Att. Gen. v-997, P. 3, 4).

On page 1 of Attorney General's OpinionWW270, it is statedthat "discovery", 'notice", inquestof office and the ultimate investiture in the State of the title and possessionof ownerless propertyare all proper and necessary parts of all escheatlaws. As the California court stated in Mathewsv. SavingsUnion Bank & Trust Co., 184 Pac. -418:
"A construction of Section 1273

of the Code of Civil Procedure and Section 15 of the Bank Act by which title to money on depositwould pass to the state absolutely on the expiration of 20 years,without compensationto the owner and without notice and hearing before his property should be taken, would be intolerable."
See also Standard O!l Company v. State of New Jersey 341 U.S. 428 433, quate notice: regarding the requirement of ade-'

Paragraph (f)Escheat, Section 8, Article 21.28 of the InsuranceCode refers to money belonging to Rrivate individuals. It states unequivocallythat Any suchmoney remaining unclaimedwith the Board for two (2)years shall automaticallybecome the property of the Board.' This sentence is clear and easy to understand,and gives rise to only one interpretation-Hon.~RobertS. Calvert, page 4 (WW-795)

that two years after the money of private individuals has been depositedwith the State Treasurer, it automatically esc~heats to the State. (The InsuranceBoard is an agency of the State.) No provision is made for notice orfor any kind of proceed'.ng to declare the money escheated. This is clearly a taking of private propertywithout due process of law.

It is, therefore,our opi.nionthat the last sentence of paragraph (f)Escheat, Section 8, Article 21;28 of the InsuranceCode, underscoredabove, is unconstitutional. It necessarily follows that our answer to questionNo. 1 is negative.

In view of this answer to question No. 1, there is no need to answer questions No. 2 and No. 3.

SUMMARY The Comptroller and Treasurermay not clear funds from Trust Account 923, Insurance CompaniesUnclaimed Dividends Account, to the GeneralRevenue Fund. The last sentence of paragraph (f) Escheat, Section 8, Article 21.28~of the InsuranceCode is unconstitutional as a taking of private propertywithout due course of law.

Very truly yours,
WILL WILSON Attorney General of Texas

PSP:ms
~APPROVED: By%&&$+~~~ Phocion S. ark III Assistant

OPINIGN COMMITTEE W. V: Geppert,;

Chairman Richard Wells L. P. Lollar James H. Rogers F. C. Jack Goodman REVIEWED FOR THE ATTORNEY GENERAL BY: 'LeonardPassmore