Tam ATTWENSY GENERAL 

OF TEXAS 

Honorable Jesse James 

State Treasurer of Texas 

December 20, 1963 

Capitol Statlon 

Austin, Texas 78711 

Opinion No. C-200 

Re: Questions relating to the 

effect of Article 4.08, 

Texas Insurance Code 

Dear Mr. James: 

You have requested the opinion of this office 'regarding 

Senate Bill 337, Acts 58th.Legislature, Regular Session 

1963, chapter 333, page 865, which has been codified as 

Article 4.08 of the Texas Insurance Code. The questions 

which you ask are as follows: 

"1 . Do the provisions of Section 13, Art. 4.08 ~Texas 

Insurance Code, referred to above, exempt life insurance 

companies which do business in Texas from the filing of 

reports required by Article 3272a, R.C.S. for the period 

between January 6, 1962 and August 23, 1963? 

“2 . If your answer to question No. 1 is affirmative, 

will the provisions of said Art. 4.08 Insurance Code, 

nullify the reports that have been made ,to this office by 

life insurance companies between January 6, 1962 land August 

23, 1963, under the provisions of Article 3272a, R.C.S., 

even though Art. 4.08 Texas Insurance Code was not effective 

until August 23, 1963? 

"3. Do the provisions of said Art. 4.08 Texas Insurance 

Code, exempt life Insurance companies from filing future 

reports under the provision of Article 3272a, on all property 

contemplated by Article 3272a, or only on such property 

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Hon. Jesse James, page 2 (C-200) 

that is defined in Section 3, Art. 4.08 Texas Insurance Code? 

"4 . Under the provisions of Art. 4.08, I'exas Insurance 

Code, are all insurance companies, including Texas Chartered 

companies, required to report on unclaimed funds as defined~in 

Section 3, only if, according to the records of the company, 

the last known address of the person entitled to such funds 

is within this State? 

“5. Do the provisions of Art. 4.08 Texas' Insurance Code 

cover 'unclaimed funds' as defined therein and~held by life 

insurance'companies, on which there is no gecord of an address?" 

Under the provisions of Section 1 of Article 3272a, 

Vernon's Civil Statutes, every person holding property subject 

to escheat upon the effective date of such Article tias required to file a report thereof within sixty (60) days after 

the effectFve date, and after filing such initial report, Is 

required to file a report on an annual basis on'or before May 

1st of each year. Article 3272a became effective on November 

7, 1961, consequently, the dates upon which~ reports have been 

due under such Article are January 6, 1962, and May 1, 1.963. 

Section'13 of Article 4.08, Texas Insurance Code, reads 

as follows:.. 

"No other Statute of this State relating to 

escheat or unclaimed funds now In force shall apply 

to life.insurance companies, nor shall any such 

Statute.hereafter enacted so apply unlessspecifitally made applicable by Its terms; provided that. 

Article 3272a, House Bill No. 5, Acts 'of the 57th 

Legislature, First Called Session, shall be in force 

as to personal property subject to escheat reported 

or required to be reported by January 6, 1962, under 

the terms of said Act and the provislons of Section 

8 hereof shall be aoplicable in such cases." 

Article 4.08 was passed by the House of Representatives 

on a non-record vote and, as a consequence, did not'become 

effective until 90 days after the adjournment of the Legislature on May 24, 1963; i.e., August 23, 1963. Therefore 

Section 13 of Article 4.08 was not in effect on May 1, 1963, 

when annual reports were due to be filed under Article 3272a. 

In fact, Article 4.08 had not even been enacted by the Legislature on May 1, 1963, final passage in the House,having 

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. . 

Hon. Jesse James, page 3 (C-200) 

occurred on May 8, 1963. Therefore, all persons, including' 

life insurance companies, holding'property subject to escheat 

were obligated to report such property to the State Treasurer 

of Texas under the provisions of Article 3272a on or before 

May 1 , 1963, and, upon compliance by the State with the 

provisions of Article 3272a relating to processing of such 

reports and entry of judgment thereon, would be obligated 

to tender such property to the custody of the State Treasurer 

of Texas. 

The primary question which we must answer Is whether 

Section 13 of Article 4.08 effectively released life insurance 

companies from the obligations which exi.sted under Article 

3272a on May 1 1963 and thereafter up untll.the date 

Article 4.08 bkame effective. 

The plain language of Section 13, of Article 4.08 purports to have the effect of so relieving life insurance companies; however, this provision is, in our opinion. within 

the prohibition of Article III, Section 55 of the Texas Constitution, which provides as follows: 

"The Legislature shall have no power to release 

or extinguish, or to authorize the,releaslng or 

extinguishing, in whole or in part, the lndebtedness, liability or obligation' of any corporation 

or individual, to this State or to any county 'or 

defined subdivision thereof, or other municipal 

corporation therein, except delinquent taxes which 

have been due for a period of at least ten years." 

In so concluding, we rely uponstate v. Pioneer Oil 

pgi$G&A, 292 S.W. 869 (Tex.Comm.App. 1927) as announcing 

law to be applied in this case. In that case a' 

taxing statute had been passed by the legislature, the terms 

of which required that "the first report and payment required 

under this act shall be made on or before May 25, 1923". 

This act became effective on April 1, 1923. Thereafter, the 

Legislature, in Called Session, enacted a statute covering 

the same subject matter and persons and therein repealed the 

prior statute. The second statute became effective June 1, 

1923. The Attorney General brought suit to recover taxes 

alleged to have accrued for the months of April and May 1923 

under the terms of the first statute. The Commission of 

Appeals held that the tax which fell due under the first 

statute could not be relinquished or extinguished by the 

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. . 

Hon. Jesse James, page 4 (C-200) 

Legislature. The following quotations from the opinion, at 

the pages'indicated; are appropriate to our holding. 

Page 871: 

"If the statute first mentioned competently 

levied a,tax, that tax became due; and liability~ 

therefor matured, on May 25, 1923, in respectto the 

'first report and payment'. This is made plain by 

the terms of the act fixing that date for 'report 

and payment,' 

default. 

and providing~penalties, etc., for 

There is in the opinion of the Court of 

Civil Appeals a statement or implication to the 

effect that the claims 'were Inchoate because the 

reports had not been made; but, in our opinion, no 

such effect can be given the taxpayers' delinquency, 

for that would mean the citizenwho obeyed'the law 

would be disfavorably circumstanced as compared 

with the citizen who disobeyed. . . ." 

Page 872: 

11 .The general rule 'that when a'right-depends solely upon a statute whlch'is repealed the 

right ceases to exist,' must be taken with it6 own 

limitation. In the present case the right is not 

inchoate, for nothing remained to be done to 

mature the tax; and it does not 'depend solely' 

upon a 'statute which is repealed,' for, having 

once become a liability, its irrevocable nature 

finds source in the constitutional provision." 

Page 874: 

"Accordingly, we hold,~there became due and 

matured on May 25, 1923, a tax liability measured 

by the gallonage involved In all intrastate sales 

(excluding such, If any, as may have been made for 

purposes other than Immediate or ultimate 'consumption'), and this liability the Legislature did not 

(because it could not) release or extinguish by 

the repeal which took effect June 1, 1923." 

The rule Is tersely stated by the Supreme Court of Texas 

at page 742 in State,v. City of Austin, 160 Tex. 348, 331 

S.rl.2d 737 (1960): 

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_ 

. , 

Hon. Jesse James. page 5 (C-200) 

"After the occurrence of events which under the 

law then existing give rise to an obligation on 

the part of an individual or corporation to'the 

state, the Legislature has no power to release or 

diminish that obligation without consideration. . . .' 

We therefore hold that Section 13 of ~Artidle 4.08,'Texas 

Insurance Code, is unconstitutional in so far as It purports 

to extinguish the effect of Article 3272a upon life insurance 

companies prior to August 23, 1963. 

Your first question Is answered in the negative and you 

are advised that Section 13 oP Article 4.08, Texas Insurance 

Code, does no:: exempt' life insurance companies which do business in Texas from filing reports required by Article~3272a. 

Vernon's Civil Statutes for the period between January 6, 

1962 and August 23,, 1963. 

Since we have answered your first question ih the negative, it becomes unnecessary to answer your second question. 

The plain and unequivocal language of the first phrase 

of Sectlon~ 13 of ,Articl,e 4.'08 evinces the intent of the Legislature to exempt life Insurance companies from a,ll other 

statutes relating tom escheat or unclaimed funds. Due to the 

consitutional prohibition,which we discussed in regard to 

your first question, this exemption is effective from and 

after the effective date of Article 4.08.~ This exemption is 

without regard to the definition of unclaimed funds contained 

in Section 3 of Article 4.08 and such definition his not a' 

limitation upon the exemption. Therefore, in answer to your 

third question, you are advised that Section 13 of Article4.08 exempt life insurance companies from filing future reports 

under Article 3272a ,on all property, regardless of Its nature. 

The scope of Article 4.08 is set forth in Section 2 

thereof in the following language: 

"Sec. 2. Scope. - This Article shall apply to 

unclaimed funds, as defined in Section 3 hereof 

any life insurance company doing business in this 

of 

state where the last known address according to 

the records o person entitled 

to such funds 

(Emphasis added) 

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Hon. Jesse James, page 6 (C-200) 

We answer your fourth question by stating.that: unclaimed 

funds as defined in Section 3 of Article 4.08 are required to. 

be reported under Article 4.08 'only if the last known address, 

according to the records of the company, of the person entitled 

to such unclaimed funds is within the State of Texas. 

There being no provision for reporting unclaimed funds 

under Article 4.08 where the address of the person entitled 

to such funds is unknown and the scope of Article 4.08 being 

specifically limited by Section 2, you are advised, in answer 

to your fifth question, that such funds are not covered by 

Article 4.08. 

SUMMARY 

That portion of Section 13 of Article 4.08, Texas 

Insurance Code,~ which attempts to exempt life 

Insurance companies from the operation of Article 

3272a, Vernon's Civil Statutes, for the period 

between January 6, 1962 and the effective date 

of Article 4.08 on August 23, 1963 is unconstltuMona1 under Article III, Section 55 of the Texas 

Constitution; Article 4.08 exempts all life 

insurance companies from filing all reports required under Article 3272a from and after the 

effective date of Article 4.08; Article 4.08 required only the reporting of unclaimed funds where 

the last,known address of the person entitled to 

such funds la within the State of Texasand where 

there Is no record of an address, such funds need 

not be reported. 

Very truly yours. 

WAGGONER CARR 

Attorney General 

Assistant Attorney 

WOS:ml 

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Hon. Jesse James, page 7 (C-200) 

APPROVED: 

OPINION COMMITTEE 

W. V. Geppert, Chairman 

James Strock 

John Ree'ves 

J. C. Davis 

J. S. Bracewell 

APPROVED FOR THE ATTORNEY GENERAL 

By: H. Grady Chandler 

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