                            July 29, 1988




Honorable Mike Driscoll              Opinion No.   JM-935
Harris County Attorney
1001 Preston, Suite 634              Re: Whether a bondsman may
Houston, Texas 77002                 deposit with the      county
                                     treasurer an assignment   of
                                     an insurance policy      for
                                     purposes of complying   with
                                     article   2372p-3, V.T.C.S.
                                     (RQ-1435)

Dear Mr. Driscoll:

     YOU    ask:

           ._ May a bondsman,
                        .
                               or applicant, deposit with
           tne county treasurer     an asslgnmenc. ora an
           insurance policy as collateral     and comply
           with Article   2372~3-3, Vernon's Texas Civil
           Statutes?

     Article 2372p-3, V.T.C.S., governs the licensing and
regulation  of bail bondsmen.    Section 6(f) of article
2372p-3 provides:

               (f) UPon   notice from the    [county bail
           bond] board    that the application   has been
           tentatively    approved, the applicant    shall
           then:

               (1) deposit with the county treasurer   of
           the county in which the license is to be
           issued a cashier's     check, certificate   of
           deposit, cash, or cash ecuivalent      in the
           amount indicated bv the annlicant under Sub-
           division (5) of Subsection   la) of Section  6
           of this Act but in no event less than $50,000
           except in counties with populations of less
           than 250,000 persons by the most recent
           federal census., the amount for applicants  in
           said counties shall be $10,000 to be held   in




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        a special fund to be called the bail security
        fund.   (Emphasis added.)

     Article  3.49-1, section 2, of the Insurance        Code
permits any insured to transfer or assign any policy or any
right or interest therein, except as prahibited by the terms
of the policy,    to "any person, persons,      partnership,
association, corporation  or other legal entity,      or any
combination thereof" and provides  that such assignee   shall
have at all times an insurable interest in the life of such
person.

     Your question is prompted by the following facts:

           A bondsman who has a $100,000 Certificate
        of Deposit   (CD) deposited with the Harris
        County Treasurer as collateral on his license
        would like to withdraw that CD and replace it
        with an assignment of a life insurance policy
        with a cash value of at least the same
        amount.

The issue raised by these facts is whether the assignment of
a life insurance policy with the requisite cash value will
qualify as the cash ecuivalent of the amount required to be
deposited under article 2372p-3.

      An 1887 opinion of the Supreme Court of Texas       in
JZ 11 aa v. Mu-     4 S.W. 361   362 (Tex. 1887) defined the
t~rm"*Oeguivalent io cash" as hollows:

           It is not easy to conceive what          is
        intended to be embraced by the use of the
        words 'its equivalents;' but to be equivalent
        to cash must be something    commercially  as
        good as cash, or, as we take it, something
        that could readily be converted into cash at
        a fixed price.

     While we find no other Texas cases defining   "cash
eguivalent,"  or "equivalent to cash," in Thomnson
Thomnson, 236 S.W.2d 779, 790   (Tex. 1951), "cash" wz,
defined as follows:

           'Cash' is defined in Webster's New Inter-
        national Dictionary, 2nd Edition, Unabridged
        as \B.   A quantity  of money,  C. minted  or
        current coin. 2. Corn. a. money,   especially
        ready money;  strictly coin or specie, but
        also, less strictly, bank notes, siaht drafts




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Honorable Mike Driscoll - Page 3   (JM-935)




        or demand denosits at a bank.'      (Emphasis
        ours. ) This same authority gives the phrase
        'cash money* as a synonym      for the word
        'cash*.

           A similar certificate was construed in the
        case of -se     v. First National    Bank of
                   Tex. Civ:App.,  196 S.W.2d 48, 171
         . . . 516, writ refused, NHE, to be a
        it=EF-$
        negotiable  instrument,   and   not   to' be
        ambiguous.

     In some contexts, the word %ash"      has been given a
broad meaning.   For example,    in construing  a will, the
meaning of the word ncash*' has been given a broader meaning
when it was necessary to carry out the intent of the
testator and prevent from passing in intestacy a portion   of
his estate. In such instances the words "cash" and "money"
have been construed to "include all kinds of property,   real
and personal."  Flower v. Dort, 260 S.W.2d 685 (Tex. Civ.
APP - Ft. Worth 1953, writ ref'd n.r.e.).
     We conclude, however, that the legislature      clearly
intended that the phrase    "cash equivalent"  have a much
narrower definition in the instant statute. The definition
of "cash" in JCYhom~son would appear closer to what was
intended by the term %ash equivalent" in article 2372p-3.
We so conclude because it is clear that, whatever else the
legislature may have intended to embrace with the phrase
"cash equivalent," it certainly meant an instrument that is
readily convertible  to cash or may be converted    to cash
within a reasonable time and with reasonable effort.     The
question, then, is whether an assignee of a life insurance
policy who holds the policy merely as collateral    security
for a debt has the right to readily convert the policy,
i.e., to surrender  it and demand its then cash surrender
value. We conclude that he does not.

     In j a on'                                          co.,
127 S.W.2d 188 (Tex. 1939), szt aside on other arounds,   128
S.W.2d 790 (Tex. 1939), the court addressed the issue of
whether an assignee of a life insurance policy, who holds
same merely as collateral security    for a debt, has the
authority, by virtue of being such assignee, to surrender
such policy to the company issuing it and demand its cash
surrender value.   The court concluded   that he does not.
While noting that authorities   in other jurisdictions    are
divided on the issue, the court concluded that the better
rule was set forth in Cooley's Briefs on Insurance, 2d Ed.,
Vol:7, p. 6527:




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Honorable Mike Driscoll - Page 4     (JM-935)




          'JJl Dledaee  of an insurance policy,    who
       holdseit as collateral,   in the absence of a
       distinct provision permitting   its sale, has
       onlv the rlaht to collect. and &not         the
       riaht to sell or surrender it; and if the
       nledoee does wrongfully surrender the policy
       -tie debt is. satiefied-to the extent of th;
       value of the security surrendered.    (Emphasis
       added.)

127 S.W.2d at 191.

     The court held that, when an insured transfers a life
insurance policy as collateral  security, the assignee  does
not acquire   legal title.   The interest acquired   by the
assignee nis but a chose in action and is governed by the
same principles applicable to chases in action in general."
127 S.W.2d at 192. It "is not negotiable"     either by the
common law or statute.      The court concluded    that the
assignee has no authority to surrender the policy and demand
its cash surrender value without     the insured's   express
consent that the assignee surrender the policy. See 45 Tex.
Jur. 3d, Insurance Contracts and Coverage, 9 248.



           An assignment of a life insurance policy
        to the county treasurer does not constitute
        deposit of a "cash equivalent"    within   the
        meaning of article 2372p-3, section      6(f),
        where the assignor, bondsman or applicant has
        not also expressly    authorized  the County
        Treasurer to surrender the policy    for its
        cash value.

                                     Very I truly ye



                                     JIM     MATTOX
                                     Attorney General of Texas

MARYKELLER
First Assistant Attorney General

MU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General



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    Honorable Mike Driscoll - Page 5    (JM-935)




    RICK GILPIN
    Chairman, Opinion Committee

    Prepared by Tom G. Davis
    Assistant Attorney General




P




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