Hon. Jesse James             Opinion No. O-5820
State Treasurer              Re:    Construction,   of S.B, No. 8 of the
hustin,  Texas               Regular Session,      48th Legislature,    amend-
                             ing Article     4740, R.C.S.,   and Incidental
Dear MrO James:              questions o

             Your request    for   an opinion   on the   above   subject     mat-
ter,   i,s as follows:

             “According    to the General and Special        Laws of
       Texas, 48th Legislature,     Regular Session,        1943, Life
       Insurance   Companfe s - Deposits     of Securities,     Chapter
       s$$   S,B. NO. 8, Page 206, An Qct to amend Article
                Revised Civil. Statutes    of 192Fa was passed
       which reads,     fn part, as follows:

             “‘The physical  delivery    of such securities     to     the
       Board of Insurance   Cimmissioners     shall be sufficient
       without being accompanied      by a written  transfer    of     any
       lien securing  themas

             Wince   this Department holds,      as custodian,   securi-
       tfes for companies under the supervision         of the State
       Board of Insurance     Commissioners,    as well as the State
       Bankfng Department)     we kindly   request  your opinion    on
       the followfng    questions:

              “1 .D Is the above Act retroactive      covering  a.11 de-
       posits    made prior  %o th.is amendment, or does it app1.y
       only to deposits     made after  the effective     date of this
       law?

              “2 0 Has there been a simi.lar amendment enacted
       for Senate Bi.11 No. 165 removing the requirement       of
       transfers   of vendor’s   l,ien or mortgage notes on depos-
       its made by companies under the supervi,slon      of the State
       Bmkfng Department?      If so9 what is the effective     date
       of said amendment?

              “3 Q Under any condition   fn which transfer     of 11en
       is required    by law, does the endorsement written      on the
       margin of vendor’s     lien or mortgage notes   ‘without    re-
       course’    and signed by the company constitute     a legal
       transfer    of lien?”
Hon.   Jesse   James,     page   2    (O-5820)


           Article 4740 of the Revised Civil  Statutes   of 1925
as amended.by S.B. No. 8 of the 48th Legislature    at its Regdar
Session, provides:

               “Any life     insurance        company now or which may here-
       after be incor:2orated           under the laws of this state may
       ;Is-i;osit with the Board of Insurance                 Commissioners       for
       t!;e common bene_“i.t of all the holders                  of its policies
       an annuity bonds,           securities       of the kinds in which, by
       the laws of this state,              it is permitted        to invest      or
       loan its ca;sitil,         surplus,       and/or reserves,         equa.1 to
       tlr 1c:al      reserve     on all its outstanding             policfss     in
       force e which securities             shall be held by said 9oard of
       Insurance      Comni.ssioners        in trust for the purpl:!se and
       objects     herein    specified.          The physical       delivery    of
       such securities         to the Board of Insurance               Commission-
       ers shal,l be sufficient            without      being accompanied         by a
       t:ritten    transfer      of any lien        securing     them.     Any such
       company may deposit            lawful money of the United States
       in lieu of the securities                above referred       to, or any
       portion     thereof,      and may also          for the purposes        of
       such deposit,        convey to said l!oard of Insurance                 Commis-
       sioners     in trust the real estate               in which any portion
       of its said reserve            may be lawfully         invested.       In such
       case, the Board of Insurance                 Commissioners        shall hold
       the title      thereto      in trust until         other securities        in
       lieu thereof       shall be deposited            with it, whereupon it
       shall reconvey        the same to such company.                 Said Board
       of Insurance       Commissioners          may cause any such securi-
       ties or real estate            to be appraised         and valued prior
       .to their     being deposited          with,    or conveyed to, it 9.n
       trust     as aforesaid,        the rea.sonable        expense of such ap-
       >raisement       or val,uation       to be paid by the company.               Un-
       der the ;:rovi,s-Ins          of th.is Article,        registered      as well
       as unregistered        United States Government securities                     may
       be deposited.”

               It is the general        rule that legislative       acts speak
proL;)2”tivel.y       ind not retrospectively,        unless  such retrospective
featuae    is c!~::.rly     maniSest from the language        of the Bill.      We
find nothing        ii1 th;? above-quoted     amendment that would take the
case out of the ordinary           rule.     So that,    your first    question  is
answered that the Act is not retroactive                 so as to cover all depo-
sits made prior          to the effective     date of the amendment, but that
it applies       on.1.y to deposits     made after    the effective     date of the
law.

            We assume that your reference      to S.B. No. 165 in your
second question      is to S.B. No.   165, Chapter  165 of the 42d Legis-
lature   at its regular    session  in 1931.   (Rev.Civ.Stat-Art.  1524a,
Vernon’s   Codification)   o
Hon. Jesse      James,    page 3      (O-5820)


            This Act does not            purport to require     transfers     (actu-
ally)   of the liens securing            debts or obligations--sec,ur?.ties--
deposited   with any corporate            trustee  in the manner they-in
pointed   out o

              There    has been     no ‘amendment of the          Act in thi,s      respect.

           In this connection,        however, we will    say thcst 1.t may
have been the departmental       practice     of the Banking Commissioner
in approving   deposits    \<ith trustees,     under the terms of S.R.
165 to require   th;zt where~ liens     were ,involved   a writtei~ t,?:::~nsi‘er
of the iien,   as ;:‘e!.l as the notes or securities       themselves,
should be executed.       Authority    to tiake such requ.iremer:ts    is im-
plied  from the statute     requiring     deposits,   and such a prac;~Ice
should be followed.       See our Opinion 1Yc. O-4535.

                 A lien upon property     1s such hds no legal           existence     in
   5::: -l?i.$z from the debt or obligation          srcured    thereby.      So that,
 mything       that would operate      to transfer      the note or other ,fhstru-
ment evidencing          the debt, would operate        in law to transfer         the
 equitable      lien securing     it.   Such e+itable        transfer,     however,
:!ould not be adeouste to meet the St&es s requirement                      of deposit,
 Yor it would        not Lbe subject   to regi,stration      to protect      the hol.d-
 ers of such securi.ties         agaimt   the supervening        right of ah inno-
 :e,zt purchaser        of the mortgaged prosert:.

                   Yox ?:tllrL :i:;;?r:tion is answered in the negative.                 The
 ~~‘yi;j~o:y
         cjc::.,;,:;it,upon :I, v$Tn,::.c;;* s lien or mortgage note of the words,
“1.:1 t;ho,-;t recour;:f:“,        has mthing        t,o do with the cLuestim of the
transf’::r       2 i: ‘.,!.:?n secmsing such note D It merely operates                   to
~-mid 1i.ibiii.t:~           of th.: endorser        as ,a guarantor     of payfient,    but
1: does n~ot ,,f??ct              the completeness         of the transfer      evid~enced~ by
.the sigmture            -, :’ the transferor.          Hs :3bove explained,       this trans-
fer of ths not;. (as by endorsement)                       I:tould operate   to trunsfe?
the equitable            title     to the lien,        bl:t not the legal. title.        For
these reasons,             in order to transfer            the legal. tit1.e to the lien,
it should be done by a properly                      executed     instrument    of writing.
We so heid in Cpini3n No. C-4525,                       dealing    with a similar      ques-
tion of securities                deposited      with the Board of Insurance           Comis-
siohers       under nrticle          4982 of the Revised           Civil   Statutes.

            What we h:ive said about the registration              of liens,   how-
ever, refers    only tc liens     upon land.     Chattel mortgage liens,
however, while they may not be registered             in the way that liens
upon realty    are registered,      are nevertheless       subject   to the stat-
utes regulating     chattel    mortgages  u?on personal        property   gener-
ally,   but with reference      to automobiles,      specifically,      by com-
pliance   with the provisions       of the Certificate        of Title   Act.
Hon.   Jesse     James,    page    4     (O-5820)


             These suggestions   thus volunteered   may be of little
or no value in your particular       inquiry,  however,   as the securi-
ties   thus deposited,   whether with a corporate     trustee   or with
the State Treasurer,     under the most recent    amendment of the
Statute    (1937) have to be approved by the Banking Commissioner.

             The-principles applicable are discussed                      in Wood v.
Sparks,    59 S.W. (2) 361, 63 S.W. (2) 1109.

              In oral explanations  of your question    No, 3, you have
made it    plain that your inquiry   concerning   the method of trans-
ferring    liens   securing deposit notes concerned   liens  securing
deposits     made by loan and brokerage   companies under Senate Bill
165.

                Trusting    that       what we have    said   fully   answers   your   in-
quiries,       we are

                                                    Very truly    yours

                                                    ATTORNEYGENERALOF TEXAS

                                                    /s/ Ocie Speer
                                            BY      Ocie Speer, Bssistant

APPROVEDFEB 21, 1944
/s/ Grover Sellers
 ATTORNEYGENERALI  OF TEXAS

APPROVED: t&INI~AZ'NCOM4TTEE
BY:           8
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