Court Opinion

ID: 4136184
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:10:46.229942+00
Date Added: 2024-06-11T14:35:06.031844
License: Public Domain

THE    ATTORNEY            GENERAL
                     OF     TEXAS

                      February 1, 1960

Honorable Robert S. Calvert
Comptroller of Public Accounts
Austin, Texas
                    Opinion No. WW-795
                    Re:    Can the Comptroller and
                           Treasurer clear funds from
                           the Trust Account 923, In-
                           surance Companies Unclaim-
                           ed Dividends Account, funds
                           with the State Treasurer,
                           to the General Revenue Fund
                           to pay the appropriation to
                           the State Auditor for the
                           cost of audit of the Liqui-
                           dation Division of the Board
Dear Mr. Calvert:          of Insurance.
       In your request for an opinion you asked three
questions. The first question is as follows:
           'Can the Comptrcller and Treasurer
      clear funds from the Trust Account 923,
      Insurance Companies Unclaimed Dividends
      Account, funds with thenState Treasurer,
      to the General Revenue Fund to pay the
      appropriation to the State Auditor for
      the cost of audit of the Liquidation
      Division of the Board of Insurance?'
       Paragraphs (ej and (f).of Se&l-on %j 4ri;~-?&.
      of the Insurance Code read as follows:
            "(e) Unclaimed Dividends. Unclaim-
       ed dividends on approved claims remain-
       ing in the receiver's hands after payment
       of the final dividend shall be delivered
       to the Board. Such funds shall be de-
       posited by the Board in trust in a special
Hon. Robert S. Calvert, page 2 (WW-7%)

       account to be maintained with the State
       Treasurer. L-These unclaimed funds con-
       stitute Trust Account 923,7
          "(f) Escheat. On receipt of satis-
      factory written and verified proof of
      ownership within two (2) years from the
      date such funds are so deposited with
      the State Treasurer, the Board shall
      certify such facts to the Comptroller
      of Public Accounts, who shall issue
      proper warrant therefor in favor of
      the oarties resoectivels entitled there-
      to drawn on the-state Treasurer. &
      such money remaining unclaimed with the
      Board for two (2) years shall automati-
      cally become the property of the Board."
       The last sentence of paragraph (f) has been
underscored for emphasis.
       Section 1, Article XIII of the Texas Consti-
tution-provides that:
            ,I. . . the Legislature shall pro-
       vide a method . . . for giving effect
       to escheats; . . ."
       It is stated in 17 Tex. Sur. 73, Escheats, Sec-
tion 3, with reference to the above constitutional pro-
vision, that:
           "This provision of the constitution
      does not authorize the legislature to
      create an escheat--that would be a tak-
      ing of property without due process of
      law; it simply directs that provision
      be made for a method of ascertaining
      whether or not there has been one."
       The early case of Caplen v. Compton, 27 S.W.
24 (Tex. Civ. App., 1893, error ref.) held that:
            "The constitution (article 13, i31)
       does not authorize the legislature to
Ron. Robert S. Calvert, page 3 (WW-795)

       create an escheat; it simply directs
       it to provide a method for ascertain-
       ing whether or not there has been in any
       case an escheat. No man can be depriv-
       ed of his property except by due course
       of law. Bill of Rights, E119."

       On the basis of these authorities, it appears
that if paragraph (f), Section 8, Article 21.28 of
the Insurance Code is construed as IDSO facto creat-
ing an escheat, then our opinion must be that para-
graph (f) is unconstitutional. (See Op. Att. Gen.
v-997, P. 3, 4).
       On page 1 of Attorney General's Opinion WW-
270, it is stated that "discovery", 'notice",
 inquest of office and the ultimate investiture in
the State of the title and possession of ownerless
property are all proper and necessary parts of all
escheat laws. As the California court stated in
Mathews v. Savings Union Bank & Trust Co., 184 Pac.
-418:
           "A construction of Section 1273
      of the Code of Civil Procedure and Sec-
      tion 15 of the Bank Act by which title
      to money on deposit would pass to the
      state absolutely on the expiration of
      20 years, without compensation to the
      owner and without notice and hearing
      before his property should be taken,
      would be intolerable."
See also Standard O!l Company v. State of New Jersey
341 U.S. 428 433, regarding the requirement of ade-'
quate notice:
       Paragraph (f) Escheat, Section 8, Article 21.28
of the Insurance Code refers to money belonging to
Rrivate individuals. It states unequivocally that
 Any such money remaining unclaimed with the Board for
two (2) years shall automatically become the property
of the Board.' This sentence is clear and easy to
understand, and gives rise to only one interpretation -
Hon.~Robert S. Calvert, page 4 (WW-795)

that two years after the money of private individuals
has been deposited with the State Treasurer, it auto-
matically esc~heatsto the State. (The Insurance Board
is an agency of the State.) No provision is made for
notice orfor any kind of proceed'.ngto declare the
money escheated. This is clearly a taking of private
property without due process of law.
       It is, therefore, our opi.nionthat the last sen-
tence of paragraph (f) Escheat, Section 8, Article
21;28 of the Insurance Code, underscored above, is un-
constitutional. It necessarily follows that our ans-
wer to question No. 1 is negative.
       In view of this answer to question No. 1, there
is no need to answer questions No. 2 and No. 3.

                     SUMMARY
         The Comptroller and Treasurer may not
         clear funds from Trust Account 923, In-
         surance Companies Unclaimed Dividends
         Account, to the General Revenue Fund.
         The last sentence of paragraph (f)
         Escheat, Section 8, Article 21.28~of
         the Insurance Code is unconstitutional
         as a taking of private property without
         due course of law.
                        Very truly yours,
                        WILL WILSON
                        Attorney General of Texas

                        By%&&$+~~~
                            Phocion S.    ark III
PSP:ms                      Assistant
~APPROVED:
OPINIGN COMMITTEE
W. V: Geppert,;Chairman
Richard Wells
L. P. Lollar
James H. Rogers
F. C. Jack Goodman
REVIEWED FOR THE ATTORNEY GENERAL
BY: 'Leonard Passmore