. 

### PRICE DANIEL

ATTORnrEY

GENERAL 

### AUWTIN ii. -

February 4, 1950

Hon. Jesse James State Treasurer Austin, Texas Opinion No. V-997. Ret The procedure for handling funds ofunknown stockholders deposited in the State Treasury under Senate Bill 402; 51st Legislature, after dissolution ofdomestic 

### corDear Mr. James; porations.

Your request 

### for an opinion is as followsi *Please note 

### theenclosed file 

### withreference to a deposit of $2.749.75, which we have just made to 

### our **Susperse** Fund # 31 - Dissolution of Solvent Corpora**tiO8S.** “Heretofore deposits of this kind have been made as above to our Suspense~Account where it remains for a period of seiea years, after whit+ it is es&sated and transferred to General Revenue, *However, a new law was enacted by the 51st Legislature, Regular Session - see Chapter 576,

‘This deposit was made by Baker, Botts, Andrews and Parish of Houston 

### for the W-K-M Company of that city with **request** that itbe handled under the new law. “Under the new law itwould be escheated immediately. The **new** law also requires that the state advertise the amounts and owners 

### ofthe money being held by the state. “If this money is immediately escheated and de-

. posited in General Revenue, itwould require court action on the part of owners in order to get their maney from the state, Heretofore all that has been necessary was for 

### owners to furnish.proof of ownership.

“Pending your reply this money has been placed in Suspense. We should like very much to have you

### answer the following questions;“1. Can the cost ef..4&ertiring be taken out of thir deposit?
“2. Should thetnotsry r4main.in Suspense Accumt a reasonable l4ngtb #f tieri to see if any **@r+rt,**

‘VPall, is claimed by 4wn4r,s’? If so, how long s.h4uld itremain in Suspense udil~ it ic transferredto Gen- ~erqt~Revonue?

YYour’answ4r tt~,theee questions will be appre; CkUed,” 

### 2%~ statutc nscesrrry **for** 

### ustoconstrue in 

### order te .aaewr <your questions is &nrt4 Bill:;Wo,~4OL, Acts 51st ~Lejisb~~ two,-SLS:l949, ch. 576,,p. ll22, codified:as Article 1~395a,V.C.g., ~nQlf&r.ieas follows:

*S&ion 1. WA&r+, .intbs dissolution of 8corpor.etien and the distributiun Stite ass&e among its stockhutckrrs, 

### .astock&hi& editled toa distributive portion is Maown 

### or cannot:b4foimd, the pesi&nt e&d 

### direcUsra 

### or the malu~rsd the affairs 

### oftthe corporation at th4 time of its dissolution, 

### or thereceiver, as.

### thecase .m4y bt, shall depositor 

### .tranbicr such distributive 

### portion to the State 

### Treasury of tha State of,Texas and it In the evGt president and directors 

### or the managers ofthe affairs oftbe corporation at the time edits dissolutioa, 

### or the receiver, as the case may be, still determine thefair value of such distributive 

### portion and shall either set aside from the assets of the corporation cash ia an amount equal to such

### fak value and deposit s,uchcash ia theStat Treasury, or shall cause such distributive 

### portion tobe sold for cash at not 1486 than the fair value so determined in such **manner** as such president and directors or managers of the affairs of the corpoeatton at 

### thetime ofits dissolution, or the 

### receiver, as ths ca+e may be, shall dctermine, and shall deposit such carh in the State 

### Treasury. At the time of making any depowit with 

### the State 

### Treasury~as herein provided, the president and the directors or mamgers of the corporation&r affairs, or the 

### receive?, as the case may be, shall 

### file w(th the State Treasurer a written 

### report giving the name of the stockhold

### er, if known, his last **known** addrers, ths amount of the distributive portion and suchmth4r information as the State Treasurer may require. The 

### State T?easurer, upon the receipt ofany sue’hdeposit and the information herein provided 

### for, shall forthwith **cause** tobe wtsh4d.lHon. Jesse James, Page 3 (V-997 )

in one issue of a newspaper of general circulation in Travis County, Texas, a notice of the receipt of such deposit and the name ofthe stockholder entitled thereto, giving his last known address and the amount of the distributive nortion so denosited. The stockholder or other 

### person entitled toa: interest in any distributive portion deposited in the State 

### Treasury, as herem provided, shall have the **same** ?a hts with re aN to the recovery of the 

### samo as are pru+iaeU by 

### law for claim? ants of escheabd prdperty, except that where a disf?ibubve portion has been reduced to cash, as hereinabove~ provided, the rights of the stockholder or 

### other person entitled to**an** interest in such distributive portion shall be limited to the recwery of such moneys so deposited. If aslistributive portion is not deposited in the State Treasury as herein provided, the president and direc

### tors of the corporation or the managers 

### ofits 

### affairs,

or the 

### receiver, as the case may be,. having control of the affairs of the corporation at the time of the 

### dissolution shall bejointly and severally liable to the **stock** holder or other 

### person eatitled toan interast in a distributive portion 

### for the amount 

### ofsuch portion not so deposited.” ; ,The significant portion of the foregoing statute is that 3 part which provides that the president, directors or managers of the dissolved corporation ”

. . ,shall deposit or transfer such distributive portion to the State Trepsury of the State of Texas and it shall be deemed tobe escheated 

### property.” If itwas the intentio= of.the Legislature 

### in the **use** of this phrase to praently effect a completed escheat of the property to the State without affording due 

### process oflaw, we are ofthe 

### opinion that the statute would be uaconstitutional.

The pertinent provision of the Constitution of this State dealing with escheats is Section 1,Article XIII, wherein it is provided that:
.*.

.the Legislature shall provide a method.

. . 

### for giving effect toescheats;

. . .’ Itis stated in 17Texas Jurisprudence 73, Escheat, Section 3, with 

### reference to the above constitutional provision that:

“This 

### provision **of**the constitution does not authorise the legislature tocreate an eacheat-tlaat would be a taking of property without due process of law1 it 

### simply directs that provision be madb 

### for a method of ascer

### tainingwhether or not there has been one.*Hon. Jesse James, Page 4 **(V- 997)** 

Section 8, Article V Ofthe Constitution OfTexar also provide6 that:

“The District Court shall **have** original jurisdiction’in all suits in

### behalf oftheStateto **recovsr** 

### ..‘

. **SSChOatS...*** 

### Ths very early 

### case ofCaplen v. C&npto~~&7 S.W. 24 (Tex. Civ. App., 1893,error ref.), heldthat:

“The coo*titution (article 13, & 1)does not authorits the **l6giSbtUre** toCreate an secheat; it simply direct6 it to.prwide a method for ascertaining wheth**er** or not there ha6 been in any case an escheat. No 

### maa **can** 

### be deprived ofhi6 pro%**crty** 19.”except by due 

### ~0~~66 of law. Bill OfRights,
Prom the 6bov6 it **folbws** that if we CODstrUe the phrase “shall 

### be daemed tobe crchated 

### property” which appears in the stutute a6 ip60 tcto Fretting an es&eat, we woul&bc compelled to 

### holdthe

### 6trtUt6 uncorutituttonal.

.Wa thinb tbi6 language, bawever, is susceptible ofa dif**ferent interpretation**  

### which would uphold the validity ofthe act. **We**
**are** required **to COMtXU6**  **a 6t6tute;**  where Word6 reasonably admit Ofit, 60 a6 to give it effect, rather than tonullify it. **TrU6te6S** of Independrnt School District of **Cle$wrae** v. Johnson County Democrattc lCxecutive Wxrwnittec, ILL Tex. 4g, 52Y.W,Zd 71 (lY32).

**With the**  above 

### rule **of statutory**  construction in mind, we will xow cmuider whetbar the phrase *Shall b6 deemed tobe er

### che&todpropsrty” maybo rM6onably accorded a meaning which would obviate tb6 necessity of **declaring** this 6tatute uncoastitution61. **It**will suffice to note a few ca666 construing similar language. 

### hthOC66. Of **t**in6ur6nce Corporation v. Goorge**court cormtrued**  **the** elieve,* t0 *6Upp06e.n v. schOo1 District No. 13of

p. lY44) t&s

### courf **aped. ”**  h Lumberma116Mu&d CasttUy Co. v. McIntyre, 21 S.E.Ld 446 (Gan942), b **court** Said t&at “deemed” is **spnonymou6 With**  “coauidered. n In 

### the case of Zimmerman v. Zimmerman. 155P.Zd 293 (Ore. Sup.1945), tlaacourt con6trued theword “dcemed’+as **used** in a con6titutional 

### provision tblating to r66idenCe 

### ofoneinthemhlltary **service** 

### or in **the** 

### employ **of the**  **United** States as creating only a disputable prs-’ 

### sumption. Giving the sama effect to the word *deemed” in this statute, 

### 86applied intheforegoing cases, we thinkitmay **be** 

### said to mean nothing 

### more thea that the property eball be con6idcrcd as.. ,

Hon. P-esse 

### James, Page 5 (V- 997)

escheated property or in the light ofes&rated property, 

### rather than a6 a 

### pOSithe adjudication by the Legislature that Said property is actually escheated to the-State by virtue of th6term6 of tke act Itself. Given this interpretation, the phrase “deemed tobe escheated property* does not render the act invaUdd. We assume, as we must, that itwas the intention of the Legislature to pass a valid act, rather thamone in contravention to the CoB6tftution~ ,

The remaining 

### portion ofthe 

### statutewhich 

### requires our att6BtiOB 

### read6 a6 fODOW6:

“The Stockholder or other **p666On** entttled to an interest fn any distributive 

### portion depOsited in the State Treasury, a6 herein provtded, **Shall have**  **the** same right6 with regard tothe recovery of the,

### same **66** provided by **b%W**for ~h~imaat6 of e6CheatSd property ea.R 

### The remedy provided **uw3elp the**  es&eat **statutes** here 

### referred to is that contained.iB Article6 3286-3287, V.C.S., as fol- ,.. lows: Article **3286.** “If any person appear6 after the death of the testator or intestate and claims any moaey or property pafd into the treasury under this Title, as heir, or .devisee, or legatee thereof, he may file a petition **against** the State tnthe District Court of Travis Coumty, Tekas, stating the nature of hi6 claim and praying that such money be paid tohim. **A copy**  **of** such petition shall be served on th6Attorney General of this State at least twenty (20) days previous to the return day of the process. Any such sutt shall be tnstbtuted witbfn four (4) years of the date Ofthe ffnal judgment escheating such propePPy to the State, and not thereafter.” Article 328%. “bfthe Court 6tkatlfind that such person is exuitbed to recover such money a6 heir, devbee, **legatee,** or legal representative,, it shall make an order directing the Comptrclber to **issue** his **Warrant** on the Treasury for the payment of the same, but without interest ‘or costs; a copy ofwhich osder under the seal of the court shall be sufficient voucher for **issuing** suclnwarrant.’ Since the foregoing statutes with reference tothe 

### remedy in esch6at proceedings have, by the exp&Jt terms ofArticle 1395a, been adopted as the remedy for claimants offund6 deposited in the Treasury under such article, we believe itwill simplifyHon. J666e 

### James, page 6 (V-997 )



### opr problem ifwe recotutruct the two for,egotBg provisioB6 ofthe archeat statute to make th6m logically~applicable to claimants of funds 

### transferred to

### the Treasurer under Article 1395a. As recon6truCtOd they would read,r(pbstantiatty a6 

### foltowsi

**Articls** 

### 32868 “If any stockholder or other **person** entitled to &ainterest in any distributive portion deposited 

### intheState T?OaSUry appear6 ,aad claims any moa-, ey or property paid into the TrOaSu?y 

### under this Act, he may file,a petition against the **State** in the District hurt of **T?aViS** COUBty, TeXa6, Stating the BdUre of hi6 claim and pram **thbt** such money be paid tohim, A copyof s’uch

### patitfon shall be 

### served ontheAttorney General of this State at least twenty (28) days previous to~therOb?m day of the proce66. **Amy** sach suit shalt ‘

. be irutituted within four 

### (4)years of the date such 

### funds are:.deposited in the State Treasury, and not thereafter.” ? Article 32871 “If the oourt shall find that such stockhotder or Other person entitled toan interest in any 

### distributive portion so deposited is entitled to re**covsr** such money a6 a stockholder or other person entitled **to** an iatere~st in any distributive portion so deposited in the State Treasury, it shall make an order directing 

### the ~~omptrotter toissue his Warrant on the TrOaStUOr for 

### thepayment of

### ‘the**same,** 

### butwithoutipterest or costs$ a copy ofwhich 

### order user the Seal ofthecourt shall be sufficient voucher for issuance of such warrant,* We have made a pro riate 6UbStitUtiOB 

### for thewords

‘heir *, “legates”, ‘devisee , P UJ s title” and “the final judgment e6cheatiBg such property tothe State.* Of course, if the claimant is an heir, lOgat or devisee of a deceased stockholder OPOther person 

### ontitled to an interest in 

### suchfunds, then the use of the words %eir*, “legatee”, or ‘devisee’ a.6they 

### appear in the escheat 

### statutewouldbe applicable.

The case that affords us the best guide as tothe status of the funds 

### transferred to the State Treasury under 

### this statuteis Manioa v. Lockhart, State Treasurer, 131Tex. 175, 114S.W.Zd 216 

### 01936) 1 thi the court had before it the statute pertaining to funds &elaq~gct~~a estate, where the parties entitled thereto did not demand their share ofthe estate within six months after an or

### der approving the report of the commissioner6 ofpartition. The significant provision of the statute considered by the court directed that the funds in estate cases be paid to the State Treasurer, and not into the State TrOaSUry. The Court said1Hon. ;esse James, Page. 

### 7(V-997)

“A careful anatysis ofths objdcts sought tobe attafned by the passage of these articles, 3644 to 3660. clearly excludes the fdea that the money should be placed in the general revenue 

### fundand be pub)ect to

### payment oaly by hgislatfve approprfations. Nor do we thfnk that ths p?wisions of articles 4371 and 4386 ofths Revfsed Civil Statutes, as amended, Vernon’s Ann. Civ. St. arts. 4371,4386, control this case, or that the Legislature intended, by the enactment of those two articles, to amend 

### or change the mode ofprocedure described, in

### articles 3644 

### to,3660. The clear purpose of the law; as we construe it, is that the treasurer shall keep a **record of**  such funds, and be prepared to pay claimants the amounts due them when the law has been complied with, In 

### other words, 

### the State 

### Treasurer becomes a custodian 

### or trustee by virtue of ths articles of’the ‘statutes. Smith et al. v. Paschal- ef al., Tex. Corn. App. 1S.W.Zd 1086/s;,’ ,~.~. 

### Siinllar language is used 

### in.thc statute 

### tinder”+asideration, 

### for it 

### provides that the funds be paid .tothe State Treasury and not into the State Treasury. ‘Thus 

### itis quis manifest that the Legisla= did not intend to treat these funds as e&heated ~funds. The fact that theJs8islature saw ‘fit to adopt part of the eschedt statute in providfng 

### aremedy for claimants, does not necessarily mean that the funds are escheated to the State by the act itself and that the entire escheat statute applies, ,’ ..,:*.,

,. It is ‘observed iaat’ in the statutes adoptea byethe Legis - lature as the 

### necessary procedora! statutes 

### (Arts. 3286-3287, V.C.S.) quoted above, 

### Article 3287provides, “but without inteiest 

### or costs,*’ which means **without** 

### interest or dosts tothe State. Sin&e the Legislature in

### this **act** 

### has directed that the State 

### Treasurer upon 

### receipt of the funds shall advertise in one issue of some 

### newspaper of 

### general circulati6n.h Travis County that he has custody of the funds, and prescribes the’information that the advertisement shall,contain, but makes no speciftc provision as to compensation, we think it may be

### reasonably inferred that thfs cost may be approprfately taxed a-. gainst 

### thefunds inthesame 

### manner thatthecost is taxed against es&sated funds. This 

### provision ofthe statute in regard to adi+ertising is for the benefit of claimants ofthe fund andnot the State, hence it should,bear the cost of any precautionary 

### measures prescribed by the Legislature for thebenefit 

### ofanybona fide claimants to the fund, 

### We therefore answer your first question in the ~affirmative. That is, the coat of advertising is tobe taxed against the funds so deposited.

### Since the procedural statute here adopted fixes a mfnimum period 

### of‘time within which claimants shall file ,suft, as fn ~.

‘,.

### ion. Jesse 

### James, Pa& 8(V-997 )

es&eat proceedings, which 

### under the statute fs 

### four years from the date ofthejudgment, you should hold the funds, less the cost of advertising, in **suspense** 

### for a **period** offour 

### yearsfrom the date 

### ofthe receipt of thefunds, If at the expiration of that period no suit has 

### beenfiled as prescribed in the procedural statute adopted, the funds should 

### thenbetransferred to

### the general revenue. 

### Of course, ff in the intervening time a clafmant has filed suit as prescribed by statute and should prevail, the

### fundswill be available without appropriation by the Legislature topay claimants who have judicially established their title tothe **funds.** 

### SUMMARY Funds belonging tounlocated 

### stockholders ofdissolved 

### corporations

### paiq tothe State 

### Treasurer as provfded in Senate Bill No. 402, AC@ Slut Leg.,, R.S.’ 1949, ch. 576, p, 1122 (Art.‘l395a, V.C.S.), should bekept in a *uspense account for a period offour years.from the date deposited, unless the 

### owner or.owners of such funds,., establish title thereto before. the expiration offour years from the date ofdeposit, Claimants may establish own-. ershfp and title.to such funds within four year.6 from the date’transferrhd to

### &theState 

### Treasurer inthe same manner as provided by law ‘for establishing ownership and

‘title to escheated funds.

‘

.. The cost ofadvertising by the State Treasurer 

### in

the manner prescribed by Article 1395s should be charged, against the

### funds. Yours very truly,
APPROVED8

,w. v. Geppert Taxation Division Charles D, Mathews Executive Assistant LPL/mwb PRICE DANJEL Attorney General 

# By &ToCd

Assistant