January 23, 1970 

Hon. Jesse James Opinion No. M-563 

State Treasurer 

Treasury Department Re: Application of Articles 3272a 

Austin, Texas 78711 and 3272b, Vernon's Civil 

Statutes, to escheat status 

of dividends received by bank . . 

trust department when ownership of such dividends cannot 

Dear Mr. James: be determined. 

Your recent letter requesting the opinion of this 

oFfice concerning the referenced matter states, In part, as 

follows: 

-. 

‘We ask that you advise this office by 

official opinion on the questions and circumstances related herein. 

"The trust department of a bank chartered 

under the laws of the State of Texas buys and 

sells securities on behalf of Its trust accounts. 

These securities are usually registered In the 

name of a nominee who holds them for the trust 

department of the bank. Due to the lapse of time 

necessary for corporate stock transfer agents to 

effectuate the transfer of record ownership of 

securities that have been sold, on occasion the 

nominee receives dividend checks for dividends 

payable upon securities which have already been 

sold by the nominee on behalf of the trust department. The bank trust department is unable to allocate such dividends to any particular trust 

account or to trace the ownership of the securities 

upon which the dividends were paid. 

'Under these circumstances, your opinion is 

requested upon the following questions: 

"1. Are the dividends held by the trust 

department of the bank subject to being reported 

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Hon. Jesse James,:page 2 (M-563) 

as a dormant deposit or inactive account 

under the provisions of Article 3272b, Vernon's Civil Statutes? 

"2. Are the dividends held by the trust 

department of the bank SubJect to being reported 

as abandoned personal property under the provisions 

of Article 3272a, Vernon's Civil Statutes? 

“3 . In the event question 1 or 2 is answered in the affirmative, then would escheat 

of such dividends be defeated by the defense 

of limitations under the holding of Southern 

Pacific Transport Co. v. State, 380 S.W.2d 

12 ex.Civ.App. 

$&y'" 

b4 error ref.) and Cen- 

",;"htl:o;';;vSa;;;. 410 s.wz?dCi A lgbb n.r.e.)." 

We are authorized to assume that the bare legal title 

to the dividends when received was in the bank, with the equitable ' 

~~' and beneficial ownership thereto being unknown. 

. 

-- Section 1 of Article 3272a, Vernon's Civil Statutes, proIdes, in part, as follows: 

"Every person holding personal property subject to escheat . e . at the time of the effective 

date of this Act, shall, within sixty (60) days 

thereafter, file a report thereof with the State 

Treasurer I . . 

"(a) 'jhE,term, 'oerson' as used In this 

Article means atiifnml%l, co~??~~~n~%usiness 

-..-._. ---I 

assoc.&Ton, partnership, governmental or political 

subdivision or officer, public authority, estate, 

trust, .trustee, officer of a court, liquidator, 

two:(2) or more persons having a Qofnt or common 

interest, or any other legal, commercial, governmental or political entity, except banks, savings 

and loan associations, banking organizations or 

institutions, 

"(b) The term 'personal property' includes, 

out is not limited to, money, stocks, bonds and 

o%her securities, bills of exchange, claims for 

money 01' indebtedness and other written evidences 

of Indebtedness, dividends, deposlts, accrued 

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Hon. Jesse James, page 3 (~-563) 

interest, purchase payments;sums payable on 

certified, certificates of membership in a 

corporation or association, amounts due and 

payable under the terms of any insurance policy, 

security deposits, unclaimed refunds and deposits 

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, and whether held 

within this State, or without the State for a 

person or beneficiary whose last known residence 

was In this State." (Emphasis added.) 

Section 1 of Article 3272b, Vernon's Civil 

provide?, as follows: 

"Every depository holding dormant deposits 

or inactive accounts of depositors or owners 

. whose existence and whereabouts are unknown 

to the depository, shall preserve intact the 

deposits and a.ccounts so long as they remain 

in a dormant or Inactive status. 

Statutes, 

"The term 'depository' as used in this 

Article means any bank, savings and loan association, banking institution or organization 

which recel.ves and holds for others deposits _--.- 

EE+~*;~~!.~9!5!5~$~. g ggyay;;ce 

--. --. 

in other State-for resf=nts last known to 

have resided In this State. 

"b o The terms 'dormant deposits' and 'lnactive accounts' mean those demand, savings, or 

--_ - -deposits of money or its equivalent in banklng practice, Including but not limfted to sums 

due on certfffed checks, dividends, notes, accrued 

interest, or other evidences of Indebtedness, held 

by a depository for repayment to the depositor or 

creditor, or hfs order D . D 'Dormant deposits' 

and 'inactive accounts' lose thefr status as such 

when a dep0sl.t Is made by the depositor, or a 

check is drawn or withdrawal Is made therefrom 

by such depositor, either In person or through 

an authorized agent other than the depository 

Itself." (Emphasis added.) 

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Hon. Jesse James, page 4 (M-563) 

In view of then fact that banks are specifically excepted from the provisions of Artlc'm'2a, and because 

dividends held by a bank's trust departmznt can reasonably 

be construed to be the equivalent of an inactive account 

in banking practice, we are of the opinion that dividends 

of the type described are subject to being reported under 

the provisions of Article 3272b, su ra. 

P 

See also Attorney 

General's Opinion No. WW-1303 (1962 , which holds that in- 

,vestment monies received by a building and loan association 

representing payments made upon shares of stock or share 

.'accounts are the functional equivalent of "deposits" and fall 

within the provisions of Article 3272b, supra. 

Accordingly, your first question is answered in the 

-. affirmative, and your second question Is answered in the negative. 

.- Ycdr third question relates to the effect of the statutes 

of limita+ions (Articles 5526 and 5527, Vernon's Civil Statutes) 

on the escheat of such dividends. 

_. ,~... -, :An action by the rightful owner against the bank trust 

'Cl~erdrtment to recover the dividends in the Instant situation 

( c ,ld be an action for money had and received, soundin in 

,sumpsit. Richter & Co. v. Light, 116 Atl. 600, 603 Corm. 

sup. 1922), In most cases, the statute of limitations governing 

an assumpsit situation Is Article 5526, Vernon's Civil Statutes; 

which provides for a two-year limitation on debts not evidenced 

by a written contract. 6 Tex.Jur.2d 556-57, Assumpsit, Sec. 10. 

Notwithstanding the foregoing, we are of the opinion 

that the Instant situation is governed by the Ranking Code of 

1943, in particular Article 342-707, Vernon's Civil Statutes, 

which, In part, provides that: 

"The contract of deposit between a bank 

and a depositor, whether evidenced by deposit 

tickets or otherwise shall be deemed a contract 

in writing within the purview of Article 5527 

of the Revised Civil Statutes of Texas. The 

cause of action on any such depository contract, 

other than a time deposit, shall not accrue until 

the bank has denied liability and given th d 

positorFotice theKeg. . . . (Emphasisea&d.) 

Thus, the four-year statute of limitations commences to 

after the bank has (a) denied Its . . liability to pay the 

run 

dividends to the rightful owner and (b) given notice of same to 

the rightful owner of,the dividends. 

\ -2691- 
Hon. Jesse James, page 5 (~-563) 

Texas courts have held that a plea by the holder of 

property subject to escheat that limitations has barred the 

claim of the Derson for whom the property is held is a valid 

defense to an‘escheat action by the State. Southern Pacific 

Trnnnnnrt ---.--r--- Co. --_ v. ._ State. ----~. 180 -- S.W.2d 121 (Tex.Civ.ADD. 

error ref' )* State v. Williamson-Dickie‘Mfg. 

19b4 

Co.,“399 S.W:2d 

568 (Tex.&t.ADD. lqbb, error-state v. El Paso 

Elec&ic~Co.. 462 S;W.2d 807 (Tex.Civ.ADD. 

n.r.e.); Central Power & 

(Tex.Civ.App. lgbb, error 

F?5, error ref. 

, 410 S.W.2d 18 

1 Oil co. v. 

ror ref. n.r.e.). 

I. 

State, 442-S.U.2d 457 (Tex.Civ.App. 1969, er 

-also Attorney General's Opinion No. M-476 (1969: 

Consequently, in answer to your third question, it is . . 

our opinion that the bank may validly assert the bar of limitations in an escheat action, provided the running of the bar of .- limitatrons asserted has commenced pursuant to the provisions of 

Article 342-707, supra. 

SUMMARY . 

-- (1) Under the facts presented, dividends held 

by a bank trust department are subject to being reported as an "inactive account" pursuant to the provisions of Article 3272b, Vernon's Civil Statutes. 

(2) A plea of the statute of limitations 

(Article 5526, Vernon's Civil Statutes) by the 

holder of such dividends would be a valid defense 

to an escheat action by the State, provided the 

running of the bar of limitations asserted has 

commenced pursuant to the provisions of Article 

342-707, supra. 

Prepared by Austin C. Bray, Jr. 

Assistant Attorney General 

-2692- 
Hon. Jesse James, page 6 (M-563) 

APPROVED: 

OPINION COMMITTEJZ 

Kerns Taylor, Chairman 

Alfred Walker, Co-Chal@man 

Ralph Rash 

John Reeves 

Jack Goodman 

Dyer Moore, Jr. 

,MEADE F. GRIFFIN 

-Staff Legal Assistant 

NOLAWHITE 

_,~ First Assistant 

_. 

-. .,.,~ 

-. 

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