Court Opinion

ID: 4137663
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:27:26.970571+00
Date Added: 2024-06-11T14:36:46.913927
License: Public Domain

PRICE   DANIEL
ATTORNEY GENERAL
                                     September      22,   1950

      Hon. C. H. Cavness                      Opinion     No.    V-1110
      State Auditor
      Austin, Texas                           Re:     Whether      United States
                                                      21% Treasury         bonds,    in-
                                                      vestment      series   A-1965,
                                                      may be accepted        by the
                                                      State Treasurer        for de-
                                                      posit under Article         4739,
                                                      V.C.S.,    in view of certain
                                                      provisions      in these bonds.

      Dear    Sir:

                       You have   requested   the opinion        of this     office   on the
      following      matter:

                       “In our current   audit of the accounts     of the
             State Treasury     Department     we find certain    United
             States   Treasury   bonds held by them as collateral
             security    or to secure  deposits    of public money    but
             which have in their terms       certain   provisions   which
             may mean that they are not acceptable           to the State
             for such purpcses.

                     “Attached   hereto   you will find a copy of
             one of these bonds ‘2*%      Treasury    Bond - Invest-
             ment Series   A-1965’    with the provisions   about which
             we are concerned     . . .”

                       You ask whether    this provision         renders       these bonds
      ineligible     to be held by the Treasurer      uas       collateral      security or
      to secure      deposits  of public money.g.

                   Each bond provides      on its face that “it is not ac-
      ceptable  to secure deposits    of public moneys,    is not transferable,
      and may not be sold, discounted,      hypothecated    as collateral   for
      a loan, or pledged  as security    for the performance     of an obliga-
      tion or for any other purpose.’

                     The United States Treasury      Bonds here in question
      were deposited     by a Texas    insurance  company     with the Board   of
      Insurance    Commissioners      in October,  1948.    The bonds were ap-
      proved   by the Board    of Insurance    Commissioners      and are now on
      deposit   in the office of the State Treasurer,      who is the custodian
Hon.   C. H. Cavness,         page    2 (V-1110)

of such deposited     securities.    We have been advised     by the Board
of Insurance    Commissioners       that the bonds were not deposited
to secure   deposits    of public money    but were deposited    under the
provisions   of Article    4739,  Vernon’s   Civil Statutes,  which provides:

                  “Any life insurance          company,        accident     in-
       surance     company,       life and accident,         health and ac-
       cident,    or life, health and accident             insurance      com-
       pany, organized         under the laws of this State, may
       at its option,     deposit     with the State Treasurer
       securities     equal to the amount           of its capital      stock,
       and may, at its option, withdraw               the same or any
       part thereof,      first having deposited            in the treasury
       in lieu thereof       other securities        equal invalue       to those
       withdrawn.Any        such securitie,?.,     before being so orig-
       inally deposited        or substituted,       shall be approved
       by the Commissioner.              When any such deposit              is
       made,    the Treasurer          shall execute       to the company
       making     the deposit      a receipt     therefor,      giving    such
       description     to such securities          as will identify        the
       same;    and such company            shall have the right to
       advertise     such fact, or print a copy of the treasurer’s
       receipt    on the policies        it may issue;        and the proper
       officers    or agents      of each insurance           company      mak-
       ing such deposit         shall be permitted,          at all reasonable
       times,    to examine       such securities         and to detach
       coupons     therefrom       and to collect       interest    thereon,
       under such reasonable             rules and regulations           as may
       be prescribed        by the Treasurer,          and the Commissioner.
       Such deposit      when made by any company                  shall there-
       after be maintained           as long as said company             shall
       have outstanding         any liability     to its policy holders.          . . .*

                Under this statute a Texas       insurance   company    may,   at
its option,   tender  securities     to the Board   of Insurance    Commis-
sioners   for approval.    and if approved,     such securities     are deposited
with the Treasurer.       The Treasurer       has no control    over such de-
posited   securities   except    that he provides    a safe depository    where-
in such securities     are kept.

                 The title to these     securities    while on deposit     with the
Treasurer       remains    in the insurance       company    and neither    the
Treasurer       nor the Board      of Insurance     Commissioners       has any
authority     to subject   securities    so deposited     to the payment      of the
company’s       indebtedness.      We think the purpose        of the statute    is to
enable    insurance     companies     to obtain better     financial  standing     by
advertising      the fact that securities      equal to the amount      of their
capital    stock are on deposit       with the Treasurer.        Guaranty     Life Ins.
Co. of Houston       v. City of Austin,     108 Tex. 209, 190 S.W. 189 (1916).
  Hon.    C.   H. Cavness,   page   3 (V-1110)

                 Therefore,     it is apparent     that such a deposit    is not
“to secure     deposits     of public moneys,”       or “pledged   as security
for the performance          of an obligation     or for any other purpose,”
and the fact that securities          are not transferable     does not make
the same     ineligible    for deposit    with the Treasurer      for the pur-
poses   of the statute when approved            by the Board.    Atty.  Gen. Op.
O-4054    (1941).    Consequently,      we conclude     that the provisions    to
which you refer       on the face of the bonds do not prohibit          a Texas
insurance     company     from depositing        such bonds with the State
Treasurer      pursuant     to Article    4739.

                               SUMMARY

                  United States   Treasury    Bonds,  Investment
        Series   A-1965,   approved   by the Boaad of Insurance
        Commissioners       as provided    in Article  4739, may be
        accepted    for deposit  with the Treasurer      as contem-
        plated by that Article.

                                        Yours      very   truly,

APPROVED:                                PRICE      DANIEL
                                        Attornev     General
Willis   E.    Gresham
Antitrust      Division

Everett   Hutchinson                         Walton       S. Roberts
Executive   Assistant                                        Assistant

Charles   D. Mathews
First  Assistant

WSR:”