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### THEATTORNEY 

## GENERAL OF TEXAS

September 17, 1969

Honorable Jesse James State Treasurer of Texas Drawer X Capitol Station Austin, Texas 78711 Opinion tie. M-476
Re: Whether funds held indeposit by chain store for the purpose ofpaying its ownmoney order type drafts butwhich drafts arenot timely presented, are Dear Mr. James: subject to escheat laws.

Your recent letter requesting the opinion of this office reads inpart as follows:

"Achain store has established anew money order service for its customers, and is in compliance with the State of Texas 'Saleof Checks Law'. Store prepares forms ofmoney order typedrafts on one of store's bank accounts which is established for this service. Store has not established a trust or agent accounts. Store sellswhat are, in fact, its own bank drafts drawn against its accounts and secured by its assets. The creation of the new bank account for these checks is for ease of record keeping only. Store fills in the date and amount and such other relevant information asmay be necessary, when customer purchases the draft. Store gives the original to customer and retains a copy for its internal purposes. The payee isnot named at the sale time. The drafts are serially numbered and appropriate records are kept on each draft issued. A service charge is made. Store deposits thepurchase money in the aforesaid account. The deposit remains therein until thedraft ispresented forpayment. "Store prints on the obverse of each draft, 'Voidunless Presented within SIXTY (60)days', orwords to that effect. Store dishonors any items presented aftermore than 60days from the date of purchase. Moreover, store asserts the fouryear statute of limitations inany action brought



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to recover on anydraft when said action is commenced after fouryears from date of issuance. “Record copies retained by store at the time of issuance are used for identifying items over 60days old. When an item goes over 60days, the record copies are given further processing and a separate account is established. Funds equivalent to the face amount of the over-60- day items are transferred from the active account fordrafts to the account for items which will be dishonored. For ease of operation, these changes appear on thebooks of store anddo not involve a transfer of funds at the depository or the creation of anew bank account. "1. Are the fundswhich remain ondeposit for those drafts which are not presented forpayment subject to the escheat law of the State of Texas? (Article 3272a, Revised Civil Statutes) "If the above isanswered in the affirmative, then the next question is: "2
. If subject to escheat laws and reported, is the affirmative defense of the Statute of Limitations available to the store so that proceeds would not be payable to the State upon demand, but only subject tobeing reported under the facts aspresented?" Article 3272a, Vernon's Civil Statutes, requires that certain personal property be reported to the State Treasurer of Texas asproperty subject to escheat. The personal property covered by this article isdefined in Section l(b) as follows:

"The term 'personalproperty' includes, but isnot limited to,money, stocks, bonds and other securities, bills of exchange, claims for money or indebtedness and other written evidences of indebtedness, dividends, deposits, accrued interest, purchase payments, sums payable on certified checks, certificates ofmembership in a corporation or association, amounts due and payable under the terms of any insurance policy, security deposits, unclaimed refunds anddeposits

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Hon. Jesse James, page 3 (M-476)

for utility or other services, funds to redeem stocks and bonds, undistributed profits, dividends, or other interests, production and proceeds from oil, gas and other mineral estates, and all other personal property and increments thereto, whether tangible or intangible, andwhether held within this State, orwithout the State for aperson or beneficiary whose last known residence was in this State." Under the factswhich you have presented, the chain store is indebted for the face amount of the drafts ormoney orders sold. The assets of the corporation secure thepayment of this indebtedness. The term "personal property", asdefined above, clearly includes an indebtedness of this nature.

Property covered by the statutes isrequired tobe reported by the holder if ithas remained unclaimed by the rightful owner for aperiod of seven years. It is therefore patent that at the time the statute requires a report tobe filed theperiods prescribed by the two and fouryear statutes of limitation (Articles 5526, 5527,Vernon's Civil Statutes) would already have expired; and in those instances where such statutes would afford theholder avalid defense to an action by the owner for recovery of theproperty, suchdefense would have accrued at the time the report is required. However, this factdoes not foreclose the question ofwhether such property isnonetheless required tobe reported.
It is awell settled principle in this State that the statutes of limitation do not destroy adebt but merely extinguish the remedy. Campbell v. Holt, 115U.S. 620, 6 S.Ct. 209, 29L.Ed. 483 (1885);Hays v. Cage, 2Tex. 501 (1847);Livesay v. First National Bank, 57 S.W.26 86 (Tex.Comm.App. 1933); Central National Bank v. Latham, 22 S.W.2d 765 (Tex.Civ.App. 1931, error ref.). A olea of limitations is an affirmative defense and isnot availabie unless specifically set forth in aparty's pleadings: it is adefense that may be urged orwaived. Gillian v. Day, 179 S.W.2d 575 (Tex.Civ.App. 1944, error ref.); Travis County v. Matthews, 235 S.W.2d 691 (Tex.Civ.App. 1950, error ref. n.r.e.); Gard v. G, 244 S.W.2d 884 (Tex.Civ.App. 1951, nowrit); 37Tex.Jur.2d 379-382, Limitation ofActions 5193.

Our courts have held that aplea by the holder ofpersonal property that limitations has barred the claim of theperson forwhom theproperty isheld is avalid defense to an escheat

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Hon. Jesse James, page 4 (M-476)

action under Article 3272a in those instances where the nature of the obligation between theholder and absent owner is such that the limitation statutes are applicable. Southern Pacific Transport Co. v. State, 380 S.W.Zd 123 (Tex.Civ.App. 1964, error ref.); State v. El Paso Electric Co., 402 S.W.2d 807 (Tex.Civ.App. 1966,

Dickie Mfg. Co., 399 S.W.2d 568 (Tex.Civ.App. 1966, error ref. n.r.e.1. Assuming, as stated inyour letter, that the chain store inquestion isacting in compliance with "The Sale of Checks Act" (Article 489d,Vernon's Civil Statutes), Section 12of that act makes a seller of checks, regardless of their form, liable for their payment according to thenegotiable instrument laws of this State. We express no opinion upon the efficacy of the seller's addition of thewords "Voidunless Presented within Sixty (60) days" to the checks which it sells. It isour opinion that checks sold pursuant to "The Sale of Checks Act" create an indebtedness evidenced by a contract inwriting and an action to recover upon such indebtedness would be subject to the four year statute of limitations (Article 5527,Vernon's Civil Statutes).

Because the defense of limitations isone thatmay be urged orwaived at the election of the debtor, we have heretofore held inAttorney General's Opinions C-475 (1965)andWW-1232 (1962) that aholder of property subject toArticle 3272a isrequired to file the report required by such article even though a plea of limitations, if asserted, would defeat the subsequent escheat of the property reported. We adhere to the holding of these prior opinions.

You are hereby advised that in our opinion both ofyour questions must be answered in the affirmative. SUMMARY
An indebtedness created pursuant to "The Sale ofChecks Act" (Article 489d,V.C.S.) is subject to Article 3272a,V.C.S., andmust be reported to the State Treasurer even though the escheat of such property under Article 3272awould be precluded by

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-Hon. Jesse James, page 5 (M-476)

aplea that such indebtedness had been barred by the four year statute of limitations (Article 5527,V.C.S.).

eneral of Texas Prepared by W. 0. Shultz Assistant Attorney General APPROVED: OPINION COMMITTEE
Kerns Taylor, Chairman George Kelton, Vice-Chairman RoyW. Mouer Fielding Early James McCoy Fisher A. Tyler MSADE F. GRIFFIN Staff Legal Assistant
HAWTHORNE PHILLIPS Executive Assistant
NOLA WHITER First Assistant

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