                      Tmz    A~IRNEY                  GENERAL
                                    OF’ TEXAS

 GERALD         C. MANN            Au-.      11.TBxAn
  x-m-
AITGENEY        GENERAL




 Honorable   JCSEC James                         Overruled    by O-7410 insofar
 State Treasurer                                 as it conflicts.
 Austin,  Texas

 Dear     Mr.   James~:                    Opinion   No. O-4535

                                           Re:   Assignment   of vendor’s    lien
                                                 notes to State Treasurer.

            In your letter of April 10, 1942, you state the Southern Guaranty
 Company, Ltd. has depoatted with the Board of Insurance Commissioners,
 to be held by the State Treasurer,  various vendor’s lien notes, under Article
 No. 4982 of the Revised Civil Statutes.

             You ask, ?Is it necessary     for us to have assignment    of lien cover-
 ing thes,e notes; if so. should they be   made to the ,State Treasurer     or to the
 Board of Insurance    Commisaionere,      and should they be placed on rec,ord in the
 county where tha property his located     7*

               These notes are evidently deposited with you under Article           No. 4983,
 rather    than Article 4982, and our answer is based on this assumption.

             Article.4982.   of the Revised Statutes,   relates to certain powers
 that may be exercised     by association  of persons   and corporations   when~ it
 ~has complied with thenlaw.

              Article 4983 provides     that in or&r     to qualify under Article  4982,
 it is ngcessary    for~the association    or corporation    to “Deposit with,the Stats
 Treasurer    $50,000.00 consisting      of cash, treasury    notes of the United States,
 or government,      state,,countB   municipal    or other bonds, notes ,or debentures,
 secured by first mortgages        or deeds of trust, or mortgages      or de.eds of trust
 on unincumbered       re,al estate in Texas worth at least double the amount loaned
 thereon, or such other first-class        securities   as the Commissioner     may approve.”


             Iu order that the vendor’s    lien may be effective,   it cs necessary
 that if the note is assigned a,s collateral,   the lien must also be transfe,rred  in
 writing, and be place,d of record.     This is necessary   in order to prevent the
 Honorable   Jesse   James,   Page   2 (O-4535)




 lien securing the note from being released     by the party to whom it is payab.le.
 It takes an assignment   of both the note and lien securing  same to comply
 with the provisions  of Article  4983 of the statutes,.

                 We therefore   answer your inqutry that before you accept the ven-
   dor’s lien notes as a deposit under said’ statute, you should have a transfer
   of the lien securing    the notes made to you’as.State   Treasurer,   in trust, to be
  held by you under the provisions      of Article 4983. By placing said language in
  ~the transfer,   it would be notice to any purchaser    of the land against which the
  notes may be lien that the State Treasurer       was holding the notes in trust, and
. that before he could obtain a release      he would be compelled to obtain a release
  .fr.om the State Treasury,

              If at any time the company depositing the notes with you desired to
 .withdraw same and substitute other securities,      then, as State Treasurer,   you
 rould either release     the notes or retransfer the original notes and accept the
 new ones in lieu~ thereof. if the new securities   ‘were ~eligible as such under
  said statute.

              In addition to having the ,notes transferred   to you, before the notes
 are accepted an abstract should be furnished       showing that the, notes are a first
 lien on the land.    You should then hold the abstract,   together with the transfer
 of the notes in your possession,    after having first filed the tr~ansfer for record
 in the county where the land is located.~ The expense incident to recording           the
 transfer   of the notes should be borne by the depositor.      Before you are author-
 ized to accept any securities    for deposit the same must be approved by the
 Board of Insurance .Commi&ioners.         It is the duty of said Board to appraise
 the securities   and pass upon the question as to whether the real estate secur-
 ing the notes is worth at least double the amount of the notes.        It is a,lso the
 duty of said Board to~have ~the title examined and determine        that the notes are
 a first lien on the land. All of this expense is to be borne by.the depositor.          t’

              You~are advised that this Department   has under consideration    a
 request~fr,om the Board ~of Insurance   Commissioners     as to whether the Southern
 Guaranty Company, Ltd. is competent to qualify under Articles        4982 and 4983,
 This opinion is not to be interpreted  as answering   said question.    We are answ,r-,
 ing your question at this time because of its importance     as it relates to your
 general duties under said statutes.

 APPROVED    APR 24, I942                               Very   truly yours
 /s/ Grover Sellers
 FIRST ASSISTANT                                  ATTORNEY    GENERAL        OF TEXAS
 ATTORNEY    GENERAL                              By /s/ Geo. W. Barcus
 GWB-MR:tiw                                              Geo. W. Barcus,     Assistant
 APPROVED    OPINION  COMMITTEE
 By /s/ BWB, Chairman
