. 

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 of unknown stockholders deposited in the State 

Treasury under Senate Bill 

402; 51st Legislature, after 

dissolution of domestic corDear Mr. James; porations. 

Your request for an opinion is as followsi 

*Please note the enclosed file with reference to 

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

Susperse Fund # 31 - Dissolution of Solvent CorporatiO8S. 

“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 it be handled under the new law. 

“Under the new law it would be escheated immediately. The new law also requires that the state advertise the amounts and owners of the money being held by 

the state. 

“If this money is immediately escheated and de- 

. posited in General Revenue, it would 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 the tnotsry r4main.in Suspense Accumt a reasonable l4ngtb #f tieri to see if any @r+rt, 

‘VP all, 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 us to construe 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+, .in tbs dissolution of 8 corpor.etien and the distributiun St ite ass&e among its stockhutckrrs, .a stock&hi& editled to a distributive portion 

is Maown or cannot:b4foimd, the pesi&nt e&d direcUsra or the malu~rsd the affairs oft the corporation at 

th4 time of its dissolution, or the receiver, as. the case 

.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 of the affairs oftbe corporation at the time ed its dissolutioa, or the receiver, 

as the case may be, still determine the fair 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,uch cash ia theStat Treasury, or shall cause such distributive portion to be 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 the time of its 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 stockholder, 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 of any sue’h deposit and the information 

herein provided for, shall forthwith cause to be wtsh4d.l 
Hon. 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 of the stockholder entitled thereto, giving his last known address and the amount of the 

distributive nortion so denosited. The stockholder or 

other person entitled to a: 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 a slistributive portion is not deposited in the State 

Treasury as herein provided, the president and directors of the corporation or the managers of its affairs, 

or the receiver, as the case may be,. having control of 

the affairs of the corporation at the time of the dissolution shall be jointly and severally liable to the stockholder or other person eatitled to an interast in a distributive portion for the amount of such 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 to be escheated property.” If it was 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 of law, we are of the 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 to escheats; . . .’ 

It is stated in 17 Texas Jurisprudence 73, Escheat, Section 3, with reference to the above constitutional provision that: 

“This provision of the constitution does not authorise the legislature to create 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 ascertaining whether or not there has been one.* 
Hon. Jesse James, Page 4 (V- 997) 

Section 8, Article V Of the Constitution Of Texar also 

provide6 that: 

“The District Court shall have original jurisdiction’in all suits in behalf of the State to recovsr . . ‘. 

SSChOatS...* 

Ths very early case of Caplen v. C&npto~~&7 S.W. 24 

(Tex. Civ. App., 1893, error ref.), held that : 

“The coo*titution (article 13, & 1) does not authorits the l6giSbtUre to Create an secheat; it simply 

direct6 it to.prwide a method for ascertaining whether or not there ha6 been in any case an escheat. No 

maa can be deprived of hi6 pro 

% 

crty 

19.” 

except by due 

~0~~66 of law. Bill Of Rights, 

Prom the 6bov6 it folbws that if we CODstrUe the phrase 

“shall be daemed to be crchated property” which appears in the 

stutute a6 ip60 tcto Fretting an es&eat, we woul&bc compelled to 

hold the 6trtUt6 uncorutituttonal. 

.Wa thinb tbi6 language, bawever, is susceptible of a different interpretation which would uphold the validity of the act. We 

are required to COMtXU6 a 6t6tute; where Word6 reasonably admit 

Of it, 60 a6 to give it effect, rather than to nullify it. TrU6te6S of 

Independrnt School District of Cle$wrae v. Johnson County Democrattc lCxecutive Wxrwnittec, ILL Tex. 4g, 52 Y.W,Zd 71 (lY32). 

With the above rule of statutory construction in mind, 

we will xow cmuider whetbar the phrase *Shall b6 deemed to be erche&tod propsrty” may bo 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. Goorgecourt cormtrued the 

elieve,* t0 *6Upp06e.n 

v. schOo1 District No. 13 of 

p. lY44) t&s courf 

aped.” h Lumberma116 Mu&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. 155 P.Zd 293 (Ore. Sup.1945), 

tlaa court con6trued the word “dcemed’+as used in a con6titutional 

provision tblating to r66idenCe of one in the mhlltary 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, 86 applied in the foregoing cases, we think it may 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 of es&rated property, rather than 

a6 a pOSithe adjudication by the Legislature that Said property is 

actually escheated to the-State by virtue of th6 term6 of tke act Itself. Given this interpretation, the phrase “deemed to be escheated property* does not render the act invaUdd. We assume, as we 

must, that it was the intention of the Legislature to pass a valid act, 

rather tham one in contravention to the CoB6tftution~ , 

The remaining portion of the statute which 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 to the recovery of the, same 

66 provided by b%W for ~h~imaat6 of e6CheatSd property e a .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 tn the District Court of Travis 

Coumty, Tekas, stating the nature of hi6 claim and praying that such money be paid to him. A copy of such petition shall be served on th6 Attorney 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 Of the ffnal judgment 

escheating such propePPy to the State, and not thereafter.” 

Article 328%. “bf the Court 6tkatl find 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 of which osder under the 

seal of the court shall be sufficient voucher for issuing 

sucln warrant.’ 

Since the foregoing statutes with reference to the remedy in esch6at proceedings have, by the exp&Jt terms of Article 

1395a, been adopted as the remedy for claimants of fund6 deposited in the Treasury under such article, we believe it will simplify 
Hon. J666e James, page 6 (V-997 ) 

opr problem if we recotutruct the two for,egotBg provisioB6 of the 

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 &a interest in any distributive portion deposited in the State 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 to him, A 

copyof s’uch patitfon shall be served on the Attorney 

General of this State at least twenty (28) days previous 

to~the rOb?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 to an interest in 

any distributive portion so deposited is entitled to recovsr 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 to issue his Warrant on the 

TrOaStUOr for the payment of ‘the same, but without ipterest or costs$ a copy of which order user the Seal 

of the court shall be sufficient voucher for issuance of 

such warrant,* 

We have made a pro riate 6UbStitUtiOB for the words 

‘heir *, “legates”, ‘devisee , 

P UJ s title” and “the final judgment 

e6cheatiBg such property to the State.* Of course, if the claimant 

is an heir, lOgat or devisee of a deceased stockholder OP Other 

person ontitled to an interest in such funds, then the use of the 

words %eir*, “legatee”, or ‘devisee’ a.6 they appear in the escheat 

statute would be applicable. 

The case that affords us the best guide as to the status 

of the funds transferred to the State Treasury under this statute is 

Manioa v. Lockhart, State Treasurer, 131 Tex. 175, 114 S.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 of the estate within six months after an order approving the report of the commissioner6 of partition. 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 said1 
Hon. ;esse James, Page. 7 (V-997) 

“A careful anatysis of ths objdcts sought to be 

attafned by the passage of these articles, 3644 to 3660. 

clearly excludes the fdea that the money should be placed 

in the general revenue fund and be pub)ect to payment 

oaly by hgislatfve approprfations. Nor do we thfnk that 

ths p?wisions of articles 4371 and 4386 of ths 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 of procedure 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. 1 S.W.Zd 1086/s;,’ 

,~ .~. 

Siinllar language is used in .thc statute tinder”+asideration, for it provides that the funds be paid .to the State Treasury and 

not into the State Treasury. ‘Thus it is quis manifest that the Legisla= did not intend to treat these funds as e&heated ~funds. The 

fact that the Js8islature saw ‘fit to adopt part of the eschedt statute 

in providfng a remedy 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 bye the Legis - 

lature as the necessary procedora! statutes (Arts. 3286-3287, V.C.S.) 

quoted above, Article 3287 provides, “but without inteiest or costs,*’ 

which means without interest or dosts to the 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 the funds in the same manner that the cost is taxed against 

es&sated funds. This provision of the statute in regard to adi+ertising is for the benefit of claimants of the fund andnot the State, 

hence it should,bear the cost of any precautionary measures prescribed by the Legislature for the benefit of any bona fide claimants 

to the fund, 

We therefore answer your first question in the ~affirmative. That is, the coat of advertising is to be 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 of the judgment, you should hold the funds, less the cost of 

advertising, in suspense for a period of four years from the date 

of the receipt of the funds, If at the expiration of that period no 

suit has been filed as prescribed in the procedural statute adopted, 

the funds should then be transferred to the general revenue. Of 

course, ff in the intervening time a clafmant has filed suit as prescribed by statute and should prevail, the funds will be available 

without appropriation by the Legislature to pay claimants who have 

judicially established their title to the funds. 

SUMMARY 

Funds belonging to unlocated stockholders of dissolved corporations paiq to the 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 of four years.from the 

date deposited, unless the owner or. owners of such funds,., 

establish title thereto before. the expiration of four years 

from the date of deposit, Claimants may establish own-. 

ershfp and title. to such funds within four year.6 from the 

date’transferrhd to &the State Treasurer in the same manner as provided by law ‘for establishing ownership and 

‘title to escheated funds. 

‘.. 

The cost of advertising 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