Court Opinion

ID: 4134191
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:47:07.958989+00
Date Added: 2024-06-11T14:22:45.523773
License: Public Domain

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            THEATTORNEY               GENERAL
                          OF TEXAS

                        September 17, 1969

 Honorable Jesse James         Opinion tie.M-476
 State Treasurer of Texas
 Drawer X                      Re:   Whether funds held in deposit
 Capitol Station                     by chain store for the purpose
 Austin, Texas 78711                 of paying its own money order
                                     type drafts but which drafts
                                     are not timely presented, are
 Dear Mr. James:                     subject to escheat laws.

           Your recent letter requesting the opinion of this office
 reads in part as follows:

           "A chain store has established a new money
      order service for its customers, and is in compli-
      ance with the State of Texas 'Sale of Checks Law'.
      Store prepares forms of money order type drafts on
      one of store's bank accounts which is established
      for this service. Store has not established a
      trust or agent accounts. Store sells what are,
      in fact, its own bank drafts drawn against its
      accounts and secured by its assets. The creation
      of the new bank account for these checks is for
      ease of record keeping only. Store fills in the
      date and amount and such other relevant information
      as may be necessary, when customer purchases the
      draft. Store gives the original to customer and
      retains a copy for its internal purposes. The
      payee is not named at the sale time. The drafts
      are serially numbered and appropriate records are
      kept on each draft issued. A service charge is
      made. Store deposits the purchase money in the
      aforesaid account. The deposit remains therein
      until the draft is presented for payment.

           "Store prints on the obverse of each draft,
      'Void unless Presented within SIXTY (60) days',
      or words to that effect. Store dishonors any
      items presented after more than 60 days from the
      date of purchase. Moreover, store asserts the four-
      year statute of limitations in any action brought

                            -2375-
Hon. Jesse   James, page 2   (M-476)

     to recover on any draft when said action is com-
     menced after four years from date of issuance.

           “Record copies retained by store at the time
     of issuance are used for identifying items over
     60 days old. When an item goes over 60 days,
     the record copies are given further processing
     and a separate account is established.   Funds
     equivalent to the face amount of the over-60-
     day items  are transferred from the active account
     for drafts to the account for items which will
     be dishonored.   For ease of operation, these
     changes appear on the books of store and do not
     involve a transfer of funds at the depository or
     the creation of a new bank account.

          "1. Are the funds which remain on deposit
     for those drafts which are not presented for pay-
     ment subject to the escheat law of the State of
     Texas?   (Article 3272a, Revised Civil Statutes)

          "If the above is answered in the affirmative,
     then the next question is:

          "2 . If subject to escheat laws and reported,
     is the affirmative defense of the Statute of Limita-
     tions available to the store so that proceeds would
     not be payable to the State upon demand, but only
     subject to being reported under the facts as pre-
     sented?"

          Article 3272a, Vernon's Civil Statutes, requires that
certain personal property be reported to the State Treasurer of
Texas as property subject to escheat. The personal property
covered by this article is defined in Section l(b) as follows:

          "The term 'personal property' includes, but
     is not limited to, money, stocks, bonds and
     other securities, bills of exchange, claims for
     money or indebtedness and other written evidences
     of indebtedness, dividends, deposits, accrued
     interest, purchase payments, sums payable on
     certified checks, certificates of membership in
     a corporation or association, amounts due and
     payable under the terms of any insurance policy,
     security deposits, unclaimed refunds and deposits

                             -2376-
    .

.       ’

            Hon. Jesse James, page 3 (M-476)

                 for utility or other services, funds to redeem
                 stocks and bonds, undistributed profits, dividends,
                 or other interests, production and proceeds from
                 oil, gas and other mineral estates, and all other
                 personal property and increments thereto, whether
                 tangible or intangible, and whether held within
                 this State, or without the State for a person
                 or beneficiary whose last known residence was
                 in this State."

                      Under the facts which you have presented, the chain
            store is indebted for the face amount of the drafts or money orders
            sold. The assets of the corporation secure the payment of this
            indebtedness.  The term "personal property", as defined above,
            clearly includes an indebtedness of this nature.

                      Property covered by the statutes is required to be re-
            ported by the holder if it has remained unclaimed by the rightful
            owner for a period of seven years. It is therefore patent that
            at the time the statute requires a report to be filed the periods
            prescribed by the two and four year statutes of limitation (Arti-
            cles 5526, 5527, Vernon's Civil Statutes) would already have ex-
            pired; and in those instances where such statutes would afford
            the holder a valid defense to an action by the owner for recovery
            of the property, such defense would have accrued at the time the
            report is required. However, this fact does not foreclose the
            question of whether such property is nonetheless required to be
            reported.

                      It is a well settled principle in this State that the
            statutes of limitation do not destroy a debt but merely extinguish
            the remedy. Campbell v. Holt, 115 U.S. 620, 6 S. Ct. 209, 29 L. Ed.
483 (1885); Hays v. Cage, 2 Tex. 501 (1847); Livesay v. First
            National Bank, 57 S.W.26 86 (Tex.Comm.App. 1933); Central National
            Bank v. Latham, 22 S.W.2d 765 (Tex.Civ.App. 1931, error ref.).
            A olea of limitations is an affirmative defense and is not avail-
            abie unless specifically set forth in a party's pleadings: it is
            a defense that may be urged or waived.  Gillian v. Day, 179 S.W.2d
575 (Tex.Civ.App. 1944, error ref.); Travis County v. Matthews,
            235 S.W.2d 691 (Tex.Civ.App. 1950, error ref. n.r.e.); Gard v.
            G,    244 S.W.2d 884 (Tex.Civ.App. 1951, no writ); 37 Tex.Jur.2d
            379-382, Limitation of Actions 5193.

                      Our courts have held that a plea by the holder of per-
            sonal property that limitations has barred the claim of the per-
            son for whom the property is held is a valid defense to an escheat

                                      -2377-
.     -

    Hon. Jesse James, page 4 (M-476)

    action under Article 3272a in those instances where the nature of
    the obligation between the holder and absent owner is such that
    the limitation statutes are applicable.  Southern Pacific Trans-
    port Co. v. State, 380 S.W.Zd 123 (Tex.Civ.App. 1964, error ref.);
    State v. El Paso Electric Co., 402 S.W.2d 807 (Tex.Civ.App. 1966,

    Dickie Mfg. Co., 399 S.W.2d 568 (Tex.Civ.App. 1966, error ref.
    n.r.e.1.

              Assuming, as stated in your letter, that the chain store
    in question is acting in compliance with "The Sale of Checks Act"
    (Article 489d, Vernon's Civil Statutes), Section 12 of that act
    makes a seller of checks, regardless of their form, liable for
    their payment according to the negotiable instrument laws of this
    State. We express no opinion upon the efficacy of the seller's
    addition of the words "Void unless Presented within Sixty (60)
    days" to the checks which it sells. It is our opinion that checks
    sold pursuant to "The Sale of Checks Act" create an indebtedness
    evidenced by a contract in writing and an action to recover upon
    such indebtedness would be subject to the four year statute of
    limitations (Article 5527, Vernon's Civil Statutes).

              Because the defense of limitations is one that may be
    urged or waived at the election of the debtor, we have heretofore
    held in Attorney General's Opinions C-475 (1965) and WW-1232
    (1962) that a holder of property subject to Article 3272a is re-
    quired to file the report required by such article even though a
    plea of limitations, if asserted, would defeat the subsequent
    escheat of the property reported. We adhere to the holding of
    these prior opinions.

              You are hereby advised that in our opinion both of your
    questions must be answered in the affirmative.

                             SUMMARY

               An indebtedness created pursuant to "The Sale
          of Checks Act" (Article 489d, V.C.S.) is subject to
          Article 3272a, V.C.S., and must be reported to the
          State Treasurer even though the escheat of such
          property under Article 3272a would be precluded by

                              -   2378-
Hon. Jesse James, page 5 (M-476)

     a plea that such indebtedness had been barred by the
     four year statute of limitations (Article 5527, V.C.S.).

                                           eneral of Texas

Prepared by W. 0. Shultz
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Kerns Taylor, Chairman
George Kelton, Vice-Chairman
Roy W. Mouer
Fielding Early
James McCoy
Fisher A. Tyler

MSADE F. GRIFFIN
Staff Legal Assistant

HAWTHORNE PHILLIPS
Executive Assistant

NOLA WHITER
First Assistant

                         -   2379   -