October 3, 1990

Honorable Ralph R. Wallace, III opinion No. JM-1228 Chairman Cultural & Historical Resources Re: Authority of an heirCommittee finder to receive compenTexas House of Representatives sation for expenses P. 0. Box 2910 (RQ-1997) Austin, Texas 78768-2910

Dear RepresentativeWallace:

You askwhether the PropertyCode prohibits compensation of reasonable expenses for private investigators who search for, locate, and assistmissing owners in recovering unclaimed assetsheld by the Treasury Department (hereinafter the department).
Title 6 of the Property Code governs unclaimed property in Texas. See uenerallv Property Code chs. 71 (escheat of prw=*y) I 72 (abandonment of personal property), 73 (inactive accountsheld by banking organizations), 74 (report, delivery, and claims process), 75 (Texas minerals). The state treasurer is charged with the administrationof this title andmay adopt rules necessary for its administration pursuant to section 74.701 of the code.

your question focuses on the language of section 74.507 of the Property Code,which reads:

A oerson who informsa potential claimant that the claimant may be entitled to claim property that is reportable to the State Treasurer under this chapter, that has been reported to the State Treasurer, or that is in the possession of the State Treasurer, or a person who files a claim under this subchapter for such property on behalf of a claimant,mav not contract for or receive from the claimant for services an amount that, exceeds 10 oercent of the value of the prooertv recovered. If the property involved ismineral proceeds, the amount for services may not includea portion of the underlying

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.HonorableRalph R. Wallace, III - **Page 2**  (JM-1228)

minerals or any production payment, overriding royalty,~

or similarpayment. (Emphasis added.)

A **brief** submitted in connectionwith this request suggests that the term "services"does not include wexpenses,w and that a private investigatormay, therefore, receive reasonable expenses in addition to ten percent of the value of the property recovered. We disagree.
Section 74.507 was originally enacted in 1961 as article 3272a, section 6(b), V.T.C.S., which contained essentiallythe **same** languageand provided inpart:

No personholding a power of attorney from
a claimant

. . . shall contract for or receive from the claimant forhis services an amount in excess of ten percent (10%) **of** the value of the property, recovered.

Acts 1961, 57th Leg., 1st C.S., ch. 21, 5 1, at 49. This sectionprovided further thatwhen a lawsuitwas instituted
on behalf of a claimant, the person holding the power of attorney could receiveup to 25 percent of the value of the property recovered. ;Lg, Article 3272awas amended in 1965 without affecting the language **of** section 6(b). See Acts 1965, 59th Leg., ch. 565, S 3, at 1233. With the enactment of the Property Code in 1983,a nonsubstantiverevision of the Texas statutes relating to real and personal property, article 3272a,V.T.C.S.,was repealed,and the provisions **of** section 6(b)were transferredwithout substantive change to section 72.506 of the code. m Acts 1983, 68th Leg., ch. 576, S 1, at 3603. t

In 1985, section 72.506was repealed and replaced by section 74.507,which provided in its entirety:

A person who informsa potential claimant that the claimant may be entitled to claimproperty in the possession of the State Treasurer or a person who files **a** claim under this subchapteron behalf of a claimantmay not contract for or receive **from** the claimant for services an amount that **exceeds** 10 percent **of** the value of the property **recovered.**

Acts 1985, 69th beg., ch. 230, 6 17, at 1138. The language allowing a person to receiveup to 25 percent of the value of the property **for** representinga claimant in a lawsuitwas

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.Honorable Ralph R. Wallace, III - Page 3 (JM-1228)

not carried forward. L In 1987 furtherrestrictionswere placed upon the amount an individual may receive for serviceswhen the property involved is mineral proceeds. &=;zzz 1987, 70th Leg., ch. 426, S 5, at 1985 (lOamount for may not include a portion of the underlying minerals or any production payment, overriding royalty, or similarpayment").

The department asserts that the public policy pronouncedby the legislature and the "basicunderpinning" of the unclaimed property statutes is the completepreservation of the corpus of unclaimed property until it is reunited with the rightful owners. Indeed, the emergency clause to the 1961 act adding article 3272a,V.T.C.S., stated:

The fact that the present laws m for the Drotection **of** a&&oned DroDertv. the *0 * 8 and thm escheat ofmev and Dersonal Dropertv belonaina to the State are inadeouate, and that there are large amounts ofmoney and personal property to which the State is entitled, and which **DroDertv** is subiect to &ass and diSsiDatiOn, create an emergency.

Acts 1961, 57th Leg., 1st C.S., ch. 21, 5 5, at 58 (emphasis added). Resides indicating the legislature#s desire to preserve unclaimed property for private owners, the emergency clause also reflects the legislature's intent to protect its interests in suchproperty. In 1961, the state could only take control of abandoned property through judicialproceedings, a rather costly and cumbersomeway to accomplish the purposes of the statute. Recognizing that "inmany instances the cost of citation by publication, court costs and travel expenseswould exceed the value of the property reported as abandoned," the 59th Legislature amended the statute. Acts 1965, 59th Leg., ch. 565, 0 8, at 1235. We think the legislature‘sactions to preserve the corpus of the propertyweremotivatedby a desire to protect the interest of both the state and any unknown owners. Stnte,v.z

Liauidatinu ru tees of ReD lit Petrol S.W.2d 311, 313-14 (zex:1974) (altE:ugh eum Co,, 510 article 3272a is commonly referred to as an escheat law. it is custodial in nature, and anyonemay file a claim for such property with the state treasurer):AttorneyGeneral OpinionMW-186 (1980) ("thestate never actually takes title to the property, since the ownermay claim the property or itsvalue at any time"); see also Uniform Unclaimed PropertyAct prefatory note, 8A U.L.A. 216 (1981) ("Notonly does the custodial type of statute more adequately preserve the owner's

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interests,but, in addition, itmakes possible a substantial simplificationof procedure").
Since at least one purpose of the unclaimed property laws of Texas includes protection of unknown owners' interests, we must evaluate how that purpose is best accomplished. We have been provided samples of various "heirfinder"contracts that attempt to obtain up to 60 percent of the value of the property received by the claimant.1 Ifwe were to read the statute as authorizing a private investigatoror otherperson to receive ten percent of the value of the property plus expenses, there is no mechanism in place for determining the reasonableness of expenses. Therefore, we think that a construction of Property Code section 74.507 that would allow a private investigator or "heirfinder" to contract for expenses, potentially in excess of thevalue of the property,would **be** contrary to the enunciatedpublic policy and intent of the legislatureto preserve the unclaimed property for its
owner.
The department,as the state agency charged with the administrationof the Texas unclaimedproperty laws, has interpreted section 74.507 to mean that ten percent of the property'value is the total amount an individualmay receive for assisting a claimant in recovering assets held by the department. The department argues in itsbrief on this matter that "services" is a broad and comprehensive term, which encompasses not only one's personal services in completing an objective but also includes activities of others enlisted to accomplishthe goal. See. a Van es, 359 S.W.Zd 893, Zandtv. 895e96-'(Tex, 1962);Co. Mathews Constr Constr. co., 528 S.W.Zd 323, 326-27 (Tex.Civ. App. - Beaumont 1975,writ ref'd n.r.e.) (distinctionbetween %ervices" and "personal servi.cesl').

It is the department#sposition that the charge for services, d&L, personal services and incidental expenses,may not exceed ten percent of the value of the property recovered.

It is well established that the construction of a statuteby the agency chargedwith its administration is

1. In the' past threeyears, fifty-eight cases involving heirfinders attempting to charge fees far in excess of the statutory ten percent have been referred to the Consumer ProtectionDivision of this office.

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1 HonorableRalph R. Wallace, III - **Page** 5 (JM-1228)

:

.

entitled to greatweight. u carte Roloff, 510 S.W.2;,,;;3

(Tex.1974);Calvert

.Ka&~.8 427 S.W.2d 605 (Tex. Stanfordv. Butler, lzl S.W.2d' 269 (Tex.1944). It is no: required that the agencypublish formally adopted rules stating such interpretation: policy documents such as letters to affectedpersons or internalagencymemoranda may also evince an agency's interpretation of a particular matter. Southwest-AirlinesCo.v. B llock, 784 S.W.2d 563, 567 (Tex.ADD. - Austin 1990.no wri:). The "TexasTreasurv Unclaimed **Money** Fund Original Owner Claim Fdn~,~,the for+ the departmentprovides to individualswho wish to file a claimwith the department, states:

If someone informs or assists you in claiming these funds and asks for payment, STATE LAW LIMITSANY FEE TO NO MORE THAN 10% OF THE AMOUNT OFTHE CLAIM.

The department also provides to interested persons an informationalpamphlet entitled ,,Most CommonlyAsked Questions
on Heirfinding in Texas," which states on the firstpage:

PLEASENOTE: Expenses incurred as well as the servicesprovided are limited to one fee not to exceed 10percent of the value of the property recovered.

Another pamphlet distributed by the department, entitled "Money Search: Do You Have Cash in the Texas Treasury UnclaimedMoney Fund,,' states that "State law limits fees chargedby these private firms,tonomore than 10percent of the claim." We have also been providedwith a sample copy of the annual list of names of persons havingmoney in the UnclaimedMoney Fundwhich is publishedby the Treasury Department for distribution inmajor Texas newspapers. That published listing also states that a person reclaiming property "may not be charged more than 10 percent of the claim amount by anyonewho assists in claiming these funds."

We think that the department,s interpretationof the s+*+utn in questionhas been widelypublished and that the legislature*s failureto amend the statute is indicative of its approval of the department's interpretation. Direlco, In
.v. B llock 711 S.W.Zd 360, 363 (Tex. 19E6,wriy **ref ’** **ii** n.r.e.). APP. - Austin Although we have found no Texas
cases regarding this issue,we note that **similar** statutes with fee limitationshave been upheld in other states. See. Goodmanv. Gory 191 Cal. Rptr. 272 (App. We there&e conclude that' a private investigatoror 1983). other personwho assists a claimant in recovering assets held by

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the departmentpursuant to Property Code section 74.507 may not contract for or receive **from** the claimant an amount that exceeds ten percent of the value of the property recovered. The term nservices,,as used in this section includes expenses. Any other constructionof this provision, we think, would be contrary to the legislature's enunciated public policy, the intent of the legislature, and the interpretationof the agency charged with its administration.

SUMMARY

A person who assists a claimant in reovering assetspursuant to section 74.507 of the Property Codemay not receive an amount for services (including expenses) that exceeds ten percent of the value of the property recovered.

JIM MATTOX Attorney General of Texas

NARYKEZLER FirstAssistant Attorney General

Lou MCCREARY ExecutiveAssistantAttorney General

JUDG6 ZOLLIE STEAKLEY SpecialAssistantAttorney General

RENEA HICKS SpecialAssistantAttorney'General

RICK GILPIN Chairman, Opinion Committee
Preparedby Karen C. Gladney AssistantAttorney General

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