                                           AUWTIN ii. -
    PRICE DANIEL
    ATTORnrEY
          GENERAL


                                           February     4, 1950


       Hon. Jesse James                               Opinion   No. V-997.
       State Treasurer
       Austin, Texas                                  Ret   The procedure    for handling
                                                            funds of unknown stockhold-
                                                            ers deposited in the State
                                                            Treasury    under Senate Bill
                                                            402; 51st Legislature,   after
                                                            dissolution  of domestic cor-
        Dear   Mr.      James;                              porations.

                         Your    request    for an opinion is as followsi

                     *Please  note the enclosed file with reference to
               a deposit of $2.749.75, which we have just made to our
               Susperse Fund # 31 - Dissolution    of Solvent Corpora-
               tiO8S.
.

                       “Heretofore   deposits of this kind have been made
               as above to our Suspense~Account       where it remains for
               a period of seiea years, after whit+ it is es&sated     and
               transferred    to General   Revenue,

                       *However,  a new law was enacted              by the 51st Leg-
               islature,  Regular Session - see Chapter              576,

                      ‘This deposit was made by Baker, Botts, Andrews
               and Parish   of Houston for the W-K-M    Company of that
               city with request  that it be handled under the new law.

                        “Under the new law it would be escheated imme-
               diately.    The new law also requires  that the state adver-
               tise the amounts and owners of the money being held by
               the state.

                      “If this money is immediately    escheated and de-
                                                             .
               posited in General   Revenue, it would require   court ac-
               tion on the part of owners in order to get their maney
               from the state,   Heretofore  all that has been necessary
               was for owners to furnish.proof    of ownership.

                      “Pending your reply this money has been placed
               in Suspense.   We should like very much to have you an-
               swer the following questions;
              “1. Can the cost ef..4&ertiring          be taken out of
       thir deposit?

              “2. Should the tnotsry r4main.in Suspense Ac-
       cumt a reasonable    l4ngtb #f tieri to see if any @r+rt,
      ‘VP all, is claimed by 4wn4r,s’? If so, how long s.h4uld
       itremain   in Suspense udil~ it ic transferredto   Gen-
      ~erqt ~Revonue?

             YYour’answ4r        tt~,theee questions     will   be appre;
       CkUed,”

                2%~ statutc nscesrrry  for us to construe in order te
.aaewr    <your questions is &nrt4 Bill:;Wo,~4OL, Acts 51st ~Lejisb~~
 two,-SLS:l949,     ch. 576,,p. ll22, codified:as Article 1~395a, V.C.g.,
 ~nQlf&r.ieas follows:

                *S&ion    1. WA&r+,     .in tbs dissolution      of 8 corpo-
       r.etien and the distributiun       St ite ass&e      among its stock-
       hutckrrs, .a stock&hi&       editled     to a distributive     portion
       is Maown       or cannot:b4foimd,        the pesi&nt       e&d direc-
        Usra or the malu~rsd          the affairs     oft the corporation     at
        th4 time of its dissolution,      or the receiver, as. the case
       .m4y bt, shall depositor       .tranbicr such distributive         por-
        tion to the State Treasury of tha State of ,Texas and it
                                                                In the evGt
                                                                 president
        and directors    or the managers of the affairs oftbe cor-
        poration at the time ed its dissolutioa,          or the receiver,
        as the case may be, still determine the fair value of
        such distributive    portion and shall either set aside from
        the assets of the corporation        cash ia an amount equal
        to such fak value and deposit s,uch cash ia theStat                Treas-
        ury, or shall cause such distributive           portion to be sold
        for cash at not 1486 than the fair value so determined                in
        such manner     as such president and directors             or manag-
        ers of the affairs    of the corpoeatton at the time of its dis-
        solution, or the receiver, as ths ca+e may be, shall dcter-
        mine, and shall deposit such carh in the State Treasury.
       At the time of making any depowit with the State Treas-
        ury~as    herein provided, the president and the directors
        or mamgers      of the corporation&r        affairs,  or the receiv-
        e?, as the case may be, shall file w(th the State Treas-
        urer a written report giving the name of the stockhold-
        er, if known, his last known addrers,            ths amount of the
        distributive   portion and suchmth4r information              as the
        State Treasurer      may require.        The State T?easurer,        up-
        on the receipt of any sue’h deposit and the information
        herein provided for, shall forthwith cause to be wtsh4d.l
Hon. Jesse   James,   Page   3 (V-997   )




      in one issue of a newspaper of general circulation             in
      Travis County, Texas, a notice of the receipt of such
      deposit and the name of the stockholder          entitled there-
      to, giving his last known address and the amount of the
      distributive    nortion so denosited.     The stockholder       or
      other person entitled to a: interest in any distributive
      portion deposited in the State Treasury,          as herem pro-
      vided, shall have the same ?a hts with re aN to the re-
      covery of the samo as are pru+iaeU by law for claim?
      ants of escheabd       prdperty,  except that where a disf?ibu-
      bve portion has been reduced to cash, as hereinabove~
      provided,     the rights of the stockholder     or other person
      entitled to an interest in such distributive        portion shall
      be limited to the recwery        of such moneys so deposited.
      If a slistributive   portion is not deposited in the State
      Treasury     as herein provided,     the president and direc-
      tors of the corporation      or the managers      of its affairs,
      or the receiver,      as the case may be,. having control of
      the affairs    of the corporation   at the time of the disso-
      lution shall be jointly and severally       liable to the stock-
      holder or other person eatitled to an interast in a dis-
      tributive portion for the amount of such portion not so
      deposited.”
                                                                             ;
               ,The significant  portion of the foregoing      statute is that 3
part which provides      that the president,    directors   or managers    of
the dissolved    corporation    ” . . , shall deposit or transfer     such dis-
tributive portion to the State Trepsury        of the State of Texas and it
shall be deemed to be escheated property.”            If it was the intentio=
of .the Legislature    in the use of this phrase to praently        effect a
completed escheat of the property         to the State without affording due
process of law, we are of the opinion that the statute would be ua-
constitutional.

            The pertinent provision    of the Constitution        of this State
dealing with escheats is Section 1, Article  XIII, wherein        it is pro-
vided that:

                .*. . the Legislature   shall provide    a method.    . .
       for giving   effect to escheats;  . . .’

             It is stated in 17 Texas Jurisprudence         73, Escheat, Sec-
tion 3, with reference to the above constitutional        provision  that:

              “This provision    of the constitution does not author-
       ise the legislature   to create an eacheat-tlaat    would be
       a taking of property without due process      of law1 it sim-
       ply directs that provision be madb for a method of ascer-
       taining whether or not there has been one.*
Hon. Jesse       James,    Page   4 (V-   997)




                Section    8, Article     V Of the Constitution    Of Texar    also
provide6     that:

                “The District Court shall have original jurisdic-
         tion’in all suits in behalf of the State to recovsr . . ‘.
         SSChOatS...*


            Ths very early case of Caplen v. C&npto~~&7 S.W. 24
(Tex. Civ. App., 1893, error ref.), held that :

                “The coo*titution  (article 13, & 1) does not au-
         thorits the l6giSbtUre   to Create an secheat; it simply
         direct6 it to.prwide   a method for ascertaining   wheth-
         er  or not there ha6 been in any case an escheat.    No
         maa can be deprived of hi6 pro crty except by due
         ~0~~66 of law. Bill Of Rights, % 19.”

             Prom the 6bov6 it folbws   that if we CODstrUe the phrase
“shall be daemed to be crchated     property” which appears in the
stutute a6 ip60 tcto Fretting an es&eat,    we woul&bc compelled    to
hold the 6trtUt6 uncorutituttonal.

              .Wa thinb tbi6 language, bawever,   is susceptible   of a dif-
ferent    interpretationwhich would uphold the validity of the act. We
are  required   to COMtXU6   a 6t6tute; where Word6 reasonably     admit
Of it, 60 a6 to give it effect, rather than to nullify it. TrU6te6S    of
Independrnt School District of Cle$wrae      v. Johnson County Demo-
crattc lCxecutive Wxrwnittec,     ILL Tex. 4g, 52 Y.W,Zd 71 (lY32).

             With the above rule of statutory      construction    in mind,
we will  xow cmuider    whetbar the phrase *Shall b6 deemed to be er-
che&tod propsrty” may bo rM6onably          accorded a meaning which
would obviate tb6 necessity    of declaring    this 6tatute uncoastitution-
61. It will suffice to note a few ca666 construing       similar   language.
hthOC66.     Of                  t in6ur6nce Corporation       v. Goorge-
                                                           court   cormtrued    the
                                                   elieve,*  t0 *6Upp06e.n
                                        v. schOo1 District No. 13 of
                                                   p. lY44) t&s courf
                                                   aped.” h Lumber-
ma116 Mu&d     CasttUy   Co. v. McIntyre,  21 S.E.Ld 446 (Gan942),
b    court Said t&at “deemed” is spnonymou6      With   “coauidered. n In
the case of Zimmerman      v. Zimmerman.     155 P.Zd 293 (Ore. Sup.1945),
tlaa court con6trued the word “dcemed’+as      used in a con6titutional
provision tblating to r66idenCe of one in the mhlltary service       or in
the employ of the United   States as creating only a disputable prs-’
sumption. Giving the sama effect to the word *deemed” in this stat-
ute, 86 applied in the foregoing cases, we think it may be said to
mean nothing more thea that the property eball be con6idcrcd as
..    ,




     Hon. P-esse James, Page       5 (V-   997 )



     escheated   property or in the light of es&rated     property,    rather than
     a6 a pOSithe adjudication     by the Legislature   that Said property    is
     actually escheated   to the-State by virtue of th6 term6 of tke act It-
     self.  Given this interpretation,   the phrase “deemed to be escheat-
     ed property*   does not render the act invaUdd. We assume,          as we
     must, that it was the intention of the Legislature      to pass a valid act,
     rather tham one in contravention     to the CoB6tftution~       ,

                   The remaining     portion of the statute which requires       our
     att6BtiOB   read6 a6 fODOW6:

                     “The Stockholder   or other p666On entttled to an
             interest fn any distributive   portion depOsited in the
             State Treasury,   a6 herein provtded, Shall have the
             same right6 with regard to the recovery      of the, same
             66 provided   by b%W for ~h~imaat6 of e6CheatSd prop-
             erty e a .R

                    The remedy provided uw3elp the es&eat        statutes    here
     referred    to is that contained.iB Article6 3286-3287,     V.C.S.,    as fol-    ,..
     lows:

                    Article   3286. “If any person appear6 after the
             death of the testator or intestate and claims any moa-
             ey or property    pafd into the treasury    under this Title,
             as heir, or .devisee, or legatee thereof, he may file a
             petition against   the State tn the District   Court of Travis
             Coumty, Tekas, stating the nature of hi6 claim and pray-
             ing that such money be paid to him. A copy of such pe-
             tition shall be served on th6 Attorney General of this
             State at least twenty (20) days previous      to the return
             day of the process.     Any such sutt shall be tnstbtuted
             witbfn four (4) years of the date Of the ffnal judgment
             escheating    such propePPy to the State, and not thereaf-
             ter.”

                    Article  328%. “bf the Court 6tkatl find that such
             person is exuitbed to recover    such money a6 heir, dev-
             bee,  legatee,  or legal representative,,    it shall make an
             order directing   the Comptrclber    to issue his Warrant
             on the Treasury    for the payment of the same, but with-
             out interest ‘or costs; a copy of which osder under the
             seal of the court shall be sufficient voucher for issuing
             sucln warrant.’

                  Since the foregoing   statutes with reference    to the rem-
     edy in esch6at proceedings    have, by the exp&Jt terms of Article
     1395a, been adopted as the remedy for claimants        of fund6 deposit-
     ed in the Treasury   under such article, we believe it will simplify
Hon. J666e   James,   page   6 (V-997    )



opr problem if we recotutruct    the two for,egotBg provisioB6    of the
archeat statute to make th6m logically~applicable      to claimants   of
funds transferred to the Treasurer      under Article  1395a. As recon-
6truCtOd they would read,r(pbstantiatty    a6 foltowsi

             Articls   32868 “If any stockholder       or other person
      entitled to &a interest in any distributive       portion depos-
      ited in the State T?OaSUry appear6 ,aad claims any moa-,
      ey or property paid into the TrOaSu?y under this Act,
      he may file,a petition against the State in the District
      hurt    of T?aViS COUBty, TeXa6, Stating the BdUre           of hi6
      claim and pram          thbt such money be paid to him,        A
      copyof    s’uch patitfon shall be served on the Attorney
      General of this State at least twenty (28) days previous
      to~the rOb?m day of the proce66.          Amy sach suit shalt      ‘.
      be irutituted within four (4) years of the date such funds
      are:.deposited    in the State Treasury,      and not thereafter.”
           ?
             Article   32871 “If the oourt shall find that such
      stockhotder or Other person entitled to an interest in
      any distributive portion so deposited is entitled to re-
      covsr such money a6 a stockholder           or other person en-
      titled to an iatere~st in any distributive      portion so de-
      posited in the State Treasury,        it shall make an order
      directing the ~~omptrotter       to issue his Warrant    on the
      TrOaStUOr for the payment of ‘the same, but without ip-
      terest or costs$ a copy of which order user            the Seal
      of the court shall be sufficient voucher for issuance of
      such warrant,*

              We have made a pro riate 6UbStitUtiOB for the words
‘heir *, “legates”,   ‘devisee P, UJ s title” and “the final judgment
e6cheatiBg such property      to the State.*   Of course, if the claimant
is an heir, lOgat     or devisee of a deceased      stockholder OP Other
person ontitled to an interest      in such funds, then the use of the
words %eir*,     “legatee”,   or ‘devisee’   a.6 they appear in the escheat
statute would be applicable.

             The case that affords us the best guide as to the status
of the funds transferred    to the State Treasury  under this statute is
Manioa v. Lockhart,     State Treasurer,   131 Tex. 175, 114 S.W.Zd 216
01936) 1 thi           the court had before it the statute pertaining   to
funds &elaq~gct~~a       estate, where the parties entitled thereto did
not demand their share of the estate within six months after an or-
der approving the report of the commissioner6       of partition.  The
significant provision of the statute considered    by the court direct-
ed that the funds in estate cases be paid to the State Treasurer,      and
not into the State TrOaSUry.     The Court said1
Hon. ;esse   James,   Page. 7 (V-997)




              “A careful anatysis of ths objdcts sought to be
      attafned by the passage of these articles,         3644 to 3660.
      clearly   excludes the fdea that the money should be placed
      in the general revenue fund and be pub)ect to payment
      oaly by hgislatfve     approprfations.      Nor do we thfnk that
      ths p?wisions     of articles   4371 and 4386 of ths Revfsed
      Civil Statutes, as amended, Vernon’s Ann. Civ. St. arts.
      4371,4386,     control this case, or that the Legislature         in-
      tended, by the enactment of those two articles,          to amend
      or change the mode of procedure described, in articles
      3644 to,3660.     The clear purpose of the law; as we con-
      strue it, is that the treasurer       shall keep a record   of such
      funds, and be prepared       to pay claimants     the amounts due
      them when the law has been complied with, In other
      words, the State Treasurer        becomes a custodian or trus-
      tee by virtue of ths articles      of’the ‘statutes.  Smith et al.
      v. Paschal-    ef al., Tex. Corn. App. 1 S.W.Zd 1086/s;,’
                                                                   ,~ .~.
              Siinllar language is used in .thc statute tinder”+asidera-
tion, for it provides that the funds be paid .to the State Treasury      and
not into the State Treasury.     ‘Thus it is quis manifest that the Leg-
isla=     did not intend to treat these funds as e&heated       ~funds. The
fact that the Js8islature   saw ‘fit to adopt part of the eschedt statute
in providfng a remedy for claimants,       does not necessarily     mean that
the funds are escheated     to the State by the act itself and that the en-
                                                            ,’ ..,:*.,
tire escheat statute applies,
                                                     ,.
              It is ‘observed iaat’ in the statutes adoptea bye the Legis -
lature as the necessary procedora!          statutes (Arts. 3286-3287, V.C.S.)
quoted above, Article 3287 provides,          “but without inteiest   or costs,*’
which means without       interest or dosts to the State. Sin&e the Leg-
islature  in this act has directed that the State Treasurer         upon re-
ceipt of the funds shall advertise       in one issue of some newspaper of
general circulati6n.h       Travis   County that he has custody of the funds,
and prescribes     the’information     that the advertisement    shall,contain,
but makes no speciftc provision         as to compensation,    we think it may
be reasonably     inferred that thfs cost may be approprfately         taxed a-.
gainst the funds in the same manner that the cost is taxed against
es&sated    funds.    This provision of the statute in regard to adi+er-
tising is for the benefit of claimants        of the fund andnot the State,
hence it should,bear      the cost of any precautionary      measures    pre-
scribed by the Legislature        for the benefit of any bona fide claimants
to the fund,

              We therefore answer your first question in the ~affirma-
tive. That is, the coat of advertising is to be taxed against the funds
so deposited.

              Since the procedural   statute here adopted fixes a mfni-
mum period     of ‘time within which claimants   shall file ,suft, as fn ~.




                                         ‘,.
      ion.   Jesse James,   Pa& 8 (V-997    )



      es&eat     proceedings,  which under the statute fs four years from
      the date of the judgment, you should hold the funds, less the cost of
      advertising,    in suspense for a period of four years from the date
      of the receipt of the funds, If at the expiration of that period no
      suit has been filed as prescribed     in the procedural   statute adopted,
      the funds should then be transferred to the general revenue. Of
      course, ff in the intervening time a clafmant has filed suit as pre-
      scribed by statute and should prevail, the funds will be available
      without appropriation    by the Legislature    to pay claimants who have
      judicially   established their title to the funds.

                                      SUMMARY

                      Funds belonging to unlocated stockholders of dis-
              solved corporations paiq to the State Treasurer       as pro-
              vfded in Senate Bill No. 402, AC@ Slut Leg.,, R.S.’ 1949,
              ch. 576, p, 1122 (Art.‘l395a,    V.C.S.), should bekept in
              a *uspense account for a period of four years.from       the
              date deposited, unless the owner or. owners of such funds,.,
              establish title thereto before. the expiration of four years
              from the date of deposit,     Claimants   may establish own-.
              ershfp and title. to such funds within four year.6 from the
              date’transferrhd   to &theState Treasurer    in the same man-
              ner as provided by law ‘for establishing     ownership and
             ‘title to escheated funds.

                    The cost of advertising   by the State Treasurer  in
‘..          the manner prescribed     by Article  1395s should be charged,
             against the funds.

                                                        Yours very truly,

      APPROVED8                                         PRICE DANJEL
                                                       Attorney General
      ,w. v. Geppert
       Taxation Division

      Charles  D, Mathews
      Executive Assistant
                                                        By&ToCdAssistant

      LPL/mwb
