Tmz A~IRNEY GENERAL 

GERALD C. MANN 

x-mAITGENEY GENERAL 

OF’ TEXAS 

Au-. 11. TBxAn 

Honorable JCSEC James 

State Treasurer 

Austin, Texas 

Dear Mr. James~: 

Overruled by O-7410 insofar 

as it conflicts. 

Opinion No. O-4535 

Re: Assignment of vendor’s lien 

notes to State Treasurer. 

In your letter of April 10, 1942, you state the Southern Guaranty 

Company, Ltd. has depoatted with the Board of Insurance Commissioners, 

to be held by the State Treasurer, various vendor’s lien notes, under Article 

No. 4982 of the Revised Civil Statutes. 

You ask, ?Is it necessary for us to have assignment of lien covering thes,e notes; if so. should they be made to the ,State Treasurer or to the 

Board of Insurance Commisaionere, and should they be placed on rec,ord in the 

county where tha property his located 7 * 

These notes are evidently deposited with you under Article No. 4983, 

rather than Article 4982, and our answer is based on this assumption. 

Article.4982. of the Revised Statutes, relates to certain powers 

that may be exercised by association of persons and corporations when~ it 

~has complied with then law. 

Article 4983 provides that in or&r to qualify under Article 4982, 

it is ngcessary for~the association or corporation to “Deposit with,the Stats 

Treasurer $50,000.00 consisting of cash, treasury notes of the United States, 

or government, state,,countB municipal or other bonds, notes ,or debentures, 

secured by first mortgages or deeds of trust, or mortgages or de.eds of trust 

on unincumbered re,al estate in Texas worth at least double the amount loaned 

thereon, or such other first-class securities as the Commissioner may approve.” 

Iu order that the vendor’s lien may be effective, it cs necessary 

that if the note is assigned a,s collateral, the lien must also be transfe,rred in 

writing, and be place,d of record. This is necessary in order to prevent the 
Honorable Jesse James, Page 2 (O-4535) 

lien securing the note from being released by the party to whom it is payab.le. 

It takes an assignment of both the note and lien securing same to comply 

with the provisions of Article 4983 of the statutes,. 

We therefore answer your inqutry that before you accept the vendor’s lien notes as a deposit under said’ statute, you should have a transfer 

of the lien securing the notes made to you’as.State Treasurer, in trust, to be 

held by you under the provisions of Article 4983. By placing said language in 

~the transfer, it would be notice to any purchaser of the land against which the 

notes may be lien that the State Treasurer was holding the notes in trust, and 

. that before he could obtain a release he would be compelled to obtain a release 

.fr.om the State Treasury, 

If at any time the company depositing the notes with you desired to 

.withdraw same and substitute other securities, then, as State Treasurer, you 

rould either release the notes or retransfer the original notes and accept the 

new ones in lieu~ thereof. if the new securities ‘were ~eligible as such under 

said statute. 

In addition to having the ,notes transferred to you, before the notes 

are accepted an abstract should be furnished showing that the, notes are a first 

lien on the land. You should then hold the abstract, together with the transfer 

of the notes in your possession, after having first filed the tr~ansfer for record 

in the county where the land is located.~ The expense incident to recording the 

transfer of the notes should be borne by the depositor. Before you are authorized to accept any securities for deposit the same must be approved by the 

Board of Insurance .Commi&ioners. It is the duty of said Board to appraise 

the securities and pass upon the question as to whether the real estate securing the notes is worth at least double the amount of the notes. It is a,lso the 

duty of said Board to~have ~the title examined and determine that the notes are 

a first lien on the land. All of this expense is to be borne by.the depositor. t’ 

You~are advised that this Department has under consideration a 

request~fr,om the Board ~of Insurance Commissioners as to whether the Southern 

Guaranty Company, Ltd. is competent to qualify under Articles 4982 and 4983, 

This opinion is not to be interpreted as answering said question. We are answ,r-, 

ing your question at this time because of its importance as it relates to your 

general duties under said statutes. 

APPROVED APR 24, I942 

/s/ Grover Sellers 

FIRST ASSISTANT 

ATTORNEY GENERAL 

GWB-MR:tiw 

APPROVED OPINION COMMITTEE 

By /s/ BWB, Chairman 

Very truly yours 

ATTORNEY GENERAL OF TEXAS 

By /s/ Geo. W. Barcus 

Geo. W. Barcus, Assistant