                         The Attorney                 General of Texas
                                              June    4.   1980
MARK WHITE
Attorney General


                   Honorable Warren G. Harding                    Opinion No. ~~-18 6
                   State Treasurer
                   P. 0. Box 12608, Capitol Station               Re: Whether        article     l581h,
                   Austin, Texas 78711                            V.T.C.S., relating     to unclaimed
                                                                  funds held by a county, is constitu-
                                                                  tional.

                   Dear Mr. Hard@

                          You ask whether article 1581h, V.T.C.S., is constitutional. This statute
                   applies to unclaimed funds in the custody cr control of a county or precinct
                   officer, including a court. The officer holding the funds is required to give
                   written notice to the owner that the funds will become county property if he
                   does not claim them within the time prescribed by law. Sec. 3. If the funds
                   are not claimed within four years after notice is given, they become the
                   property of the county. Sec. 4.

                          Article 1581h, V.T.C.S., vests ownership of the funds in the county
                   without any judicial proceedings       It is in the nature of an escheat statute,
                   because it provides for the transfer of unclaimed property to the county.
                   See State of Texas v. State of New Jersey, 379 U.S. 674 (1965). It, however,
                   mers      in a constitutionally significant way from the other Texas es&eat
                   statutes.    Article 3272, V.T.C.S., provides for the escheat of real estate
                   through a judicial proceeding. Branham v. Minear, 199 S.W.2d 841 (Tex. Civ.
                   App. - Eastland 1947, writ ref’d n.r.e.); Robinson v. State, 87 S.W.2d 297
                   (Tex. Civ. ADD. - El Paso 1935. writ dism’dl. Article 3272a. V.T.C.S.. which
                   applies to personal property, is custodial in nature.        State v. Liquidating
                   Trustees of Republic Petroleum Co., 510 S.W.2d 311 (Tex. 1974). See
                   Comment, 29 SW. L.J. 575 (1976). The state never actually takes title tothe
                   property, since the owner may claim the property or its-value at any time.
                   Sec. 6. Article 3272b, V.T.C.S., provides for the escheat of bank accounts,
                   also subject to future claims of owners. Article 4.08 of the Insurance Code
                   applies to unclaimed funds of life insurance companies.           Again, there is
                   provision for reimbursement when a claimant appears. Sec. 8.

                          Article 1581h, V.T.C.S., vests title to unclaimed property in the county
                   four years following notice to the owner. There is no judicial proceeding to
                   determine whether the facts exist which would support an escheat under
                   article 1581h, V.T.C.S., nor may the owner claim the property after four




                                                      P.   594
Honorable Warren G. Harding - Page Two         (NW-186 1




years have elapsed. In our opinion, article 1581h, V.T.C.S., deprives the owner of property
without &e process of law because it vests title in the county without a judicial
proceed@.

       The Supreme Court of California has stated that a judicial procedure is necessary to
perfect the escheat of an estate. State v. Savings Union Bank & Trust Co., 199 P. 26 (Cal.
19211. If a statute orovided for an immediate escheat without iudicial oroceedims it would
deprive the owner- of property without due process of law. Id. Sek also M&nheim v.
Superior Court of Los Angeles County, 478 P.2d 17 (Cal. 1970) (i&uiiUnited            States
Supreme Court has held that the state mav take custodv of unclaimed bank denosits end
later institute judicial proceedixs to estabiish conclusively that the property was actually
abandoned. Anderson National Bank v. Luckett, 321 U.S. 233 (1943). The court stated as
follows:

           The fundamental requirement of due process is an opportunity to be
           beard won such notice ‘and proceedings as are adequate to
           safeguard the right for which the constitutional    protection   is
           invoked.    If that is preserved, the demands of due process are
           fulfilled.. . .

              For this reason also it is not an indispensable requirement of due
           process that every procedure affecting the ownership or disposition
           of property be exclusively by judicial proceeding.           Statutory
           proceedings affecting property rights, which, by later resort to the
           courts, secure to adverse parties an opportunity to be heard,
           suitable to the occasion, do not deny due process.

Id. at 246-247, article 1581h, V.T.C.S., does not provide any judicial proceeding at’ any
pint to determine whether funds are actually unclaimed funds within its terms. Nor is
there any provision for determining whether a claimant who comes forward within four
years is the actual owner of the funds. In our opinion, article 1581h, V.T.C.S., would
unconstitutionally  deprive owners of property without due process of law, in violation of
the 14th amendment of the United States Constitution and article I, section 19 of the
Texas Constitution.

                                      SUMMARY

           Article 1581h, V.T.C.S., authorizes the county to take title to
           unclaimed property without a judicial proceeding.    It is therefore
           unconstitutional as permitting the deprivation of property without
           due process of law.




                                             MARK     WHITE
                                             Attorney General of Texas




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    Honorable Warren G. Harding - Page Three    (Mw-186)




    JOHN W. FAINTER, JR.
    First Assistant Attorney General

    TED L. HARTLEY
    Executive Assistant Attorney General

    Prepared by Susan Garrison
    Assistant Attorney General

    APPROVED:
    OPINION COMMITTEE

    C. Robert Heath, Chairman
    Jim Allison
    Jon Bible
    Susan Garrison
    Rick Gilpin
    Bruce Youngblood




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