Untitled Texas Attorney General Opinion ( 1950 )

PRICE DANIEL
ATTORNEY GENERAL
September 22, 1950
Hon. C. H. Cavness Opinion No. V-1110
State Auditor
Austin, Texas Re: Whether United States
21% Treasury bonds, in-
vestment series A-1965,
may be accepted by the
State Treasurer for de-
posit under Article 4739,
V.C.S., in view of certain
provisions in these bonds.
Dear Sir:
You have requested the opinion of this office on the
following matter:
“In our current audit of the accounts of the
State Treasury Department we find certain United
States Treasury bonds held by them as collateral
security or to secure deposits of public money but
which have in their terms certain provisions which
may mean that they are not acceptable to the State
for such purpcses.
“Attached hereto you will find a copy of
one of these bonds ‘2*% Treasury Bond - Invest-
ment Series A-1965’ with the provisions about which
we are concerned . . .”
You ask whether this provision renders these bonds
ineligible to be held by the Treasurer uas collateral security or
to secure deposits of public money.g.
Each bond provides on its face that “it is not ac-
ceptable to secure deposits of public moneys, is not transferable,
and may not be sold, discounted, hypothecated as collateral for
a loan, or pledged as security for the performance of an obliga-
tion or for any other purpose.’
The United States Treasury Bonds here in question
were deposited by a Texas insurance company with the Board of
Insurance Commissioners in October, 1948. The bonds were ap-
proved by the Board of Insurance Commissioners and are now on
deposit in the office of the State Treasurer, who is the custodian
Hon. C. H. Cavness, page 2 (V-1110)
of such deposited securities. We have been advised by the Board
of Insurance Commissioners that the bonds were not deposited
to secure deposits of public money but were deposited under the
provisions of Article 4739, Vernon’s Civil Statutes, which provides:
“Any life insurance company, accident in-
surance company, life and accident, health and ac-
cident, or life, health and accident insurance com-
pany, organized under the laws of this State, may
at its option, deposit with the State Treasurer
securities equal to the amount of its capital stock,
and may, at its option, withdraw the same or any
part thereof, first having deposited in the treasury
in lieu thereof other securities equal invalue to those
withdrawn.Any such securitie,?., before being so orig-
inally deposited or substituted, shall be approved
by the Commissioner. When any such deposit is
made, the Treasurer shall execute to the company
making the deposit a receipt therefor, giving such
description to such securities as will identify the
same; and such company shall have the right to
advertise such fact, or print a copy of the treasurer’s
receipt on the policies it may issue; and the proper
officers or agents of each insurance company mak-
ing such deposit shall be permitted, at all reasonable
times, to examine such securities and to detach
coupons therefrom and to collect interest thereon,
under such reasonable rules and regulations as may
be prescribed by the Treasurer, and the Commissioner.
Such deposit when made by any company shall there-
after be maintained as long as said company shall
have outstanding any liability to its policy holders. . . .*
Under this statute a Texas insurance company may, at
its option, tender securities to the Board of Insurance Commis-
sioners for approval. and if approved, such securities are deposited
with the Treasurer. The Treasurer has no control over such de-
posited securities except that he provides a safe depository where-
in such securities are kept.
The title to these securities while on deposit with the
Treasurer remains in the insurance company and neither the
Treasurer nor the Board of Insurance Commissioners has any
authority to subject securities so deposited to the payment of the
company’s indebtedness. We think the purpose of the statute is to
enable insurance companies to obtain better financial standing by
advertising the fact that securities equal to the amount of their
capital stock are on deposit with the Treasurer. Guaranty Life Ins.
Co. of Houston v. City of Austin, 108 Tex. 209, 190 S.W. 189 (1916).
Hon. C. H. Cavness, page 3 (V-1110)
Therefore, it is apparent that such a deposit is not
“to secure deposits of public moneys,” or “pledged as security
for the performance of an obligation or for any other purpose,”
and the fact that securities are not transferable does not make
the same ineligible for deposit with the Treasurer for the pur-
poses of the statute when approved by the Board. Atty. Gen. Op.
O-4054 (1941). Consequently, we conclude that the provisions to
which you refer on the face of the bonds do not prohibit a Texas
insurance company from depositing such bonds with the State
Treasurer pursuant to Article 4739.
SUMMARY
United States Treasury Bonds, Investment
Series A-1965, approved by the Boaad of Insurance
Commissioners as provided in Article 4739, may be
accepted for deposit with the Treasurer as contem-
plated by that Article.
Yours very truly,
APPROVED: PRICE DANIEL
Attornev General
Willis E. Gresham
Antitrust Division
Everett Hutchinson Walton S. Roberts
Executive Assistant Assistant
Charles D. Mathews
First Assistant
WSR:”