THE ATTORNEY GENERAL 

OF TEXAS 

February 1, 1960 

Honorable Robert 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 appropriation to 

the State Auditor for the 

cost of audit of the Liquidation Division of the Board 

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 then State 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 special 
Hon. Robert S. Calvert, page 2 (WW-7%) 

account to be maintained with the State 

Treasurer. L- These unclaimed funds constitute Trust Account 923,7 

"(f) Escheat. On receipt of satisfactory written and verified proof of 

ownership within two (2) years from the 

date such funds are so deposited with 

the State Treasurer, the Board shall 

certify such facts to the Comptroller 

of Public Accounts, who shall issue 

proper warrant therefor in favor of 

the oarties resoectivels entitled thereto drawn on the-state Treasurer. & 

such money remaining unclaimed with the 

Board for two (2) years shall automatically become the property of the Board." 

The last sentence of paragraph (f) has been 

underscored for emphasis. 

Section 1, Article XIII of the Texas Constitution-provides that: 

,I 

. . . the Legislature shall provide a method . . . for giving effect 

to escheats; . . ." 

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

"This provision of the constitution 

does not authorize the legislature to 

create an escheat--that would be a taking of property without due process of 

law; it simply directs that provision 

be made for a method of ascertaining 

whether or not there has been one." 

The early case of Caplen v. Compton, 27 S.W. 

24 (Tex. Civ. App., 1893, error ref.) held that: 

"The constitution (article 13, i3 1) 

does not authorize the legislature to 
Ron. Robert S. Calvert, page 3 (WW-795) 

create an escheat; it simply directs 

it to provide a method for ascertaining whether or not there has been in any 

case an escheat. No man can be deprived of his property except by 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 Insurance Code is construed as IDSO facto creating an escheat, then our opinion must be that paragraph (f) is unconstitutional. (See Op. Att. Gen. 

v-997, P. 3, 4). 

On page 1 of Attorney General's Opinion WW270, it is stated that "discovery", 'notice", 

inquest of office and the ultimate investiture in 

the State of the title and possession of ownerless 

property are all proper and necessary parts of all 

escheat laws. As the California court stated in 

Mathews v. Savings Union 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 deposit would pass to the 

state absolutely on the expiration of 

20 years, without compensation to 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 Insurance Code refers to money belonging to 

Rrivate individuals. It states unequivocally that 

Any such money remaining unclaimed with the Board for 

two (2) years shall automatically become the property 

of the Board.' This sentence is clear and easy to 

understand, and gives rise to only one interpretation - 
Hon.~Robert S. Calvert, page 4 (WW-795) 

that two years after the money of private individuals 

has been deposited with the State Treasurer, it automatically esc~heats to the State. (The Insurance Board 

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 

property without due process of law. 

It is, therefore, our opi.nion that the last sentence of paragraph (f) Escheat, Section 8, Article 

21;28 of the Insurance Code, underscored above, is unconstitutional. It necessarily follows that our answer to question No. 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 Treasurer may not 

clear funds from Trust Account 923, Insurance Companies Unclaimed Dividends 

Account, to the General Revenue Fund. 

The last sentence of paragraph (f) 

Escheat, Section 8, Article 21.28~of 

the Insurance Code is unconstitutional 

as a taking of private property without 

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: 'Leonard Passmore