                             January 23, 1970


          Hon. Jesse James                  Opinion No. M-563
          State Treasurer
          Treasury Department               Re:   Application of Articles 3272a
          Austin, Texas 78711                     and 3272b, Vernon's Civil
                                                  Statutes, to escheat status
..                                                of dividends received by bank
                                                  trust department when owner-
                                                  ship of such dividends cannot
          Dear Mr. James:                         be determined.

                    Your recent letter requesting the opinion of this
          oFfice concerning the referenced matter states, In part, as
          follows:
     -.
                    ‘We ask that you advise this office by
               official opinion on the questions and circum-
               stances related herein.
                    "The trust department of a bank chartered
               under the laws of the State of Texas buys and
               sells securities on behalf of Its trust accounts.
               These securities are usually registered In the
               name of a nominee who holds them for the trust
               department of the bank. Due to the lapse of time
               necessary for corporate stock transfer agents to
               effectuate the transfer of record ownership of
               securities that have been sold, on occasion the
               nominee receives dividend checks for dividends
               payable upon securities which have already been
               sold by the nominee on behalf of the trust depart-
               ment. The bank trust department is unable to al-
               locate such dividends to any particular trust
               account or to trace the ownership of the securities
               upon which the dividends were paid.
                    'Under these circumstances, your opinion is
               requested upon the following questions:
                    "1. Are the dividends held by the trust
               department of the bank subject to being reported

                                   -2688-
 Hon. Jesse James,:page 2 (M-563)


        as a dormant deposit or inactive account
        under the provisions of Article 3272b, Ver-
        non's Civil Statutes?

             "2. Are the dividends held by the trust
        department of the bank SubJect to being reported
        as abandoned personal property under the provisions
        of Article 3272a, Vernon's Civil Statutes?

              “3. In the event question 1 or 2 is an-
        swered in the affirmative, then would escheat
        of such dividends be defeated by the defense
        of limitations under the holding of Southern
        Pacific Transport Co. v. State, 380 S.W.2d
        12     ex.Civ.App.    b4 error ref.) and Cen-
        $&y'"         ",;"htl:o;';;vSa;;;.410 s.wz?d-
                 Ci A      lgbb            n.r.e.)."
            We are authorized to assume that the bare legal title
  to the dividends when received was in the bank, with the equitable      '
~~'
  and beneficial ownership thereto being unknown.
        .
--            Section 1 of Article 3272a, Vernon's Civil Statutes, pro-
     Ides, in part, as follows:
             "Every person holding personal property sub-
        ject to escheat . e . at the time of the effective
        date of this Act, shall, within sixty (60) days
        thereafter, file a report thereof with the State
        Treasurer I . .
              "(a) 'jhE,term,'oerson' as used In this
         Article means  atiifnml%l,
                  -..-._.
                       ---I             co~??~~~n~%usiness
         assoc.&Ton, partnership, governmental or political
         subdivision or officer, public authority, estate,
         trust, .trustee, officer of a court, liquidator,
         two:(2) or more persons having a Qofnt or common
         interest, or any other legal, commercial, govern-
         mental or political entity, except banks, savings
         and loan associations, banking organizations or
         institutions,
              "(b) The term 'personal property' includes,
         out is not limited to, money, stocks, bonds and
         o%her securities, bills of exchange, claims for
         money 01' indebtedness and other written evidences
         of Indebtedness, dividends, deposlts, accrued


                             -2689-
Hon. Jesse James, page 3 (~-563)


      interest, purchase payments;sums payable on
      certified, certificates of membership in a
      corporation or association, amounts due and
      payable under the terms of any insurance policy,
      security deposits, unclaimed refunds and deposits
      for utility or other services. funds to redeem
      stocks and-bonds, undistributed profits, dividends,
      or other interests, production and proceeds from
      oil, gas and other mineral estates, and all
      other personal property and increments thereto,
      whether tangible or Intangible, and whether held
      within this State, or without the State for a
      person or beneficiary whose last known residence
      was In this State." (Emphasis added.)
          Section 1 of Article 3272b, Vernon's Civil Statutes,
provide?,as follows:
           "Every depository holding dormant deposits
      or inactive accounts of depositors or owners
  .   whose existence and whereabouts are unknown
      to the depository, shall preserve intact the
      deposits and a.ccounts so long as they remain
      in a dormant or Inactive status.

           "The term 'depository' as used in this
      Article means any bank, savings and loan as-
      sociation, banking institution or organization
      which recel.ves_--.-
                      and holds for others deposits
      EE+~*;~~!.~9!5!5~$~.        g ggyay;;ce
             --. --.
      in other State-for resf=nts last known to
      have resided In this State.
           "b o The terms 'dormant deposits' and 'ln-
      active accounts'
                    --_mean
                       -    those demand, savings, or
      -deposits      of money or its equivalent in bank-
      lng practice, Including but not limfted to sums
      due on certfffed checks, dividends, notes, accrued
      interest, or other evidences of Indebtedness, held
      by a depository for repayment to the depositor or
      creditor, or hfs order D . D 'Dormant deposits'
      and 'inactive accounts' lose thefr status as such
      when a dep0sl.tIs made by the depositor, or a
      check is drawn or withdrawal Is made therefrom
      by such depositor, either In person or through
      an authorized agent other than the depository
      Itself." (Emphasis added.)

                          -2690-
      Hon. Jesse James, page 4 (M-563)


                  In view of thenfact that banks are specifically ex-
       cepted from the provisions of Artlc'm'2a,     and because
       dividends held by a bank's trust departmznt can reasonably
       be construed to be the equivalent of an inactive account
       in banking practice, we are of the opinion that dividends
       of the type described are subject to being reported under
       the provisions of Article 3272b, su ra. See also Attorney
       General's Opinion No. WW-1303 (1962P , which holds that in-
       ,vestment monies received by a building and loan association
       representing payments made upon shares of stock or share
      .'accounts are the functional equivalent of "deposits" and fall
       within the provisions of Article 3272b, supra.

 -.              Accordingly, your first question is answered in the
       affirmative, and your second question Is answered in the negative.
.-
                Ycdr third question relates to the effect of the statutes
    of limita+ions (Articles 5526 and 5527, Vernon's Civil Statutes)
    on the escheat of such dividends.
,~...
  -,         _. :An action by the rightful owner against the bank trust
    'Cl~erdrtmentto recover the dividends in the Instant situation
    ( c ,ld be an action for money had and received, soundin in
      ,sumpsit. Richter & Co. v. Light, 116 Atl. 600, 603 Corm.
    sup. 1922), In most cases, the statute of limitations governing
    an assumpsit situation Is Article 5526, Vernon's Civil Statutes;
    which provides for a two-year limitation on debts not evidenced
    by a written contract. 6 Tex.Jur.2d 556-57, Assumpsit, Sec. 10.
                 Notwithstanding the foregoing, we are of the opinion
       that the Instant situation is governed by the Ranking Code of
       1943, in particular Article 342-707, Vernon's Civil Statutes,
       which, In part, provides that:
                 "The contract of deposit between a bank
            and a depositor, whether evidenced by deposit
            tickets or otherwise shall be deemed a contract
            in writing within the purview of Article 5527
            of the Revised Civil Statutes of Texas. The
            cause of action on any such depository contract,
            other than a time deposit, shall not accrue until
            the bank has denied liability and given th d
            positorFotice theKeg.    . . .   (Emphasisea&d.)

       Thus, the four-year statute of limitations commences to run
       after the bank has (a) denied Its
                                       . .liability to pay the divi-
       dends to the rightful owner and (b) given notice of same to
       the rightful owner of,the dividends.


                             \   -2691-
           Hon. Jesse James, page 5 (~-563)


                          Texas courts  have held that a plea by the holder of
           property subject to escheat that limitations has barred the
           claim      of the Derson for whom the property is held is a valid
           defense to an‘escheat action by the State. Southern Pacific
           Trnnnnnrt
           ---.--r---     Co.
                          --_ v.
                              ._ State.
                                 ----~.  180
                                         --  S.W.2d 121 (Tex.Civ.ADD. 19b4
           error ref' )* State v. Williamson-Dickie‘Mfg. Co.,“399 S.W:2d
           568 (Tex.&t.ADD. lqbb, error-state                      v. El Paso
           Elec&ic~Co.. 462 S;W.2d 807 (Tex.Civ.ADD. F?5, error ref.
           n.r.e.); Central Power &                         , 410 S.W.2d 18
           (Tex.Civ.App. lgbb, error                         1 Oil co. v.
           State, 442-S.U.2d 457 (Tex.Civ.App. 1969, error ref. n.r.e.).
           -also         Attorney General's Opinion No. M-476 (1969: I.

 ..                  Consequently, in answer to your third question, it is
           our opinion that the bank may validly assert the bar of limita-
.-         tions in an escheat action, provided the running of the bar of
           limitatrons asserted has commenced pursuant to the provisions of
           Article 342-707, supra.

             .                    SUMMARY
      --              (1) Under the facts presented, dividends held
                 by a bank trust department are subject to being re-
                 ported as an "inactive account" pursuant to the pro-
                 visions of Article 3272b, Vernon's Civil Statutes.
                      (2) A plea of the statute of limitations
                 (Article 5526, Vernon's Civil Statutes) by the
                 holder of such dividends would be a valid defense
                 to an escheat action by the State, provided the
                 running of the bar of limitations asserted has
                 commenced pursuant to the provisions of Article
                 342-707, supra.




           Prepared by Austin C. Bray, Jr.
           Assistant Attorney General




                                       -2692-
     Hon. Jesse James, page 6 (M-563)


      APPROVED:
      OPINION COMMITTEJZ
      Kerns Taylor, Chairman
      Alfred Walker, Co-Chal@man
      Ralph Rash
      John Reeves
      Jack Goodman
      Dyer Moore, Jr.
     ,MEADE F. GRIFFIN
     -Staff Legal Assistant

   NOLAWHITE
_,~First Assistant




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