Untitled Texas Attorney General Opinion ( 1963 )

Tam ATTWENSY GENERAL
OF TEXAS
December 20, 1963
Honorable Jesse James
State Treasurer of Texas
Capitol Statlon
Austin, Texas 78711
Opinion No. C-200
Re: Questions relating to the
effect of Article 4.08,
Texas Insurance Code
Dear Mr. James:
You have requested the opinion of this office 'regarding
Senate Bill 337, Acts 58th.Legislature, Regular Session
1963, chapter 333, page 865, which has been codified as
Article 4.08 of the Texas Insurance Code. The questions
which you ask are as follows:
"1 . Do the provisions of Section 13, Art. 4.08 ~Texas
Insurance Code, referred to above, exempt life insurance
companies which do business in Texas from the filing of
reports required by Article 3272a, R.C.S. for the period
between January 6, 1962 and August 23, 1963?
“2 . If your answer to question No. 1 is affirmative,
will the provisions of said Art. 4.08 Insurance Code,
nullify the reports that have been made ,to this office by
life insurance companies between January 6, 1962 land August
23, 1963, under the provisions of Article 3272a, R.C.S.,
even though Art. 4.08 Texas Insurance Code was not effective
until August 23, 1963?
"3. Do the provisions of said Art. 4.08 Texas Insurance
Code, exempt life Insurance companies from filing future
reports under the provision of Article 3272a, on all property
contemplated by Article 3272a, or only on such property
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Hon. Jesse James, page 2 (C-200)
that is defined in Section 3, Art. 4.08 Texas Insurance Code?
"4 . Under the provisions of Art. 4.08, I'exasInsurance
Code, are all insurance companies, including Texas Chartered
companies, required to report on unclaimed funds as defined~in
Section 3, only if, according to the records of the company,
the last known address of the person entitled to such funds
is within this State?
“5. Do the provisions of Art. 4.08 Texas'Insurance Code
cover 'unclaimed funds' as defined therein and~held by life
insurance'companies, on which there is no gecord of an address?"
Under the provisions of Section 1 of Article 3272a,
Vernon's Civil Statutes, every person holding property subject
to escheat upon the effective date of such Article tiasre-
quired to file a report thereof within sixty (60) days after
the effectFve date, and after filing such initial report, Is
required to file a report on an annual basis on'or before May
1st of each year. Article 3272a became effective on November
7, 1961, consequently, the dates upon which~reports have been
due under such Article are January 6, 1962, and May 1, 1.963.
Section'13 of Article 4.08, Texas Insurance Code, reads
as follows:..
"No other Statute of this State relating to
escheat or unclaimed funds now In force shall apply
to life.insurance companies, nor shall any such
Statute.hereafter enacted so apply unlessspecifi-
tally made applicable by Its terms; provided that.
Article 3272a, House Bill No. 5, Acts 'of the 57th
Legislature, First Called Session, shall be in force
as to personal property subject to escheat reported
or required to be reported by January 6, 1962, under
the terms of said Act and the provislons of Section
8 hereof shall be aoplicable in such cases."
Article 4.08 was passed by the House of Representatives
on a non-record vote and, as a consequence, did not'become
effective until 90 days after the adjournment of the Legis-
lature on May 24, 1963; i.e., August 23, 1963. Therefore
Section 13 of Article 4.08 was not in effect on May 1, 1963,
when annual reports were due to be filed under Article 3272a.
In fact, Article 4.08 had not even been enacted by the Legis-
lature on May 1, 1963, final passage in the House,having
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Hon. Jesse James, page 3 (C-200)
occurred on May 8, 1963. Therefore, all persons, including'
life insurance companies, holding'property subject to escheat
were obligated to report such property to the State Treasurer
of Texas under the provisions of Article 3272a on or before
May 1 , 1963, and, upon compliance by the State with the
provisions of Article 3272a relating to processing of such
reports and entry of judgment thereon, would be obligated
to tender such property to the custody of the State Treasurer
of Texas.
The primary question which we must answer Is whether
Section 13 of Article 4.08 effectively released life insurance
companies from the obligations which exi.stedunder Article
3272a on May 1 1963 and thereafter up untll.the date
Article 4.08 bkame effective.
The plain language of Section 13, of Article 4.08 pur-
ports to have the effect of so relieving life insurance com-
panies; however, this provision is, in our opinion. within
the prohibition of Article III, Section 55 of the Texas Con-
stitution, which provides as follows:
"The Legislature shall have no power to release
or extinguish, or to authorize the,releaslng or
extinguishing, in whole or in part, the lndebted-
ness, liability or obligation'of any corporation
or individual, to this State or to any county 'or
defined subdivision thereof, or other municipal
corporation therein, except delinquent taxes which
have been due for a period of at least ten years."
In so concluding, we rely uponstate v. Pioneer Oil
pgi$G&A, 292 S.W. 869 (Tex.Comm.App. 1927) as announcing
law to be applied in this case. In that case a'
taxing statute had been passed by the legislature, the terms
of which required that "the first report and payment required
under this act shall be made on or before May 25, 1923".
This act became effective on April 1, 1923. Thereafter, the
Legislature, in Called Session, enacted a statute covering
the same subject matter and persons and therein repealed the
prior statute. The second statute became effective June 1,
1923. The Attorney General brought suit to recover taxes
alleged to have accrued for the months of April and May 1923
under the terms of the first statute. The Commission of
Appeals held that the tax which fell due under the first
statute could not be relinquished or extinguished by the
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Hon. Jesse James, page 4 (C-200)
Legislature. The following quotations from the opinion, at
the pages'indicated; are appropriate to our holding.
Page 871:
"If the statute first mentioned competently
levied a,tax, that tax became due; and liability~
therefor matured, on May 25, 1923, in respectto the
'first report and payment'. This is made plain by
the terms of the act fixing that date for 'report
and payment,' and providing~penalties, etc., for
default. There is in the opinion of the Court of
Civil Appeals a statement or implication to the
effect that the claims 'were Inchoate because the
reports had not been made; but, in our opinion, no
such effect can be given the taxpayers' delinquency,
for that would mean the citizenwho obeyed'the law
would be disfavorably circumstanced as compared
with the citizen who disobeyed. . . ."
Page 872:
11 .The general rule 'that when a'right-de-
pends solely upon a statute whlch'is repealed the
right ceases to exist,' must be taken with it6 own
limitation. In the present case the right is not
inchoate, for nothing remained to be done to
mature the tax; and it does not 'depend solely'
upon a 'statute which is repealed,' for, having
once become a liability, its irrevocable nature
finds source in the constitutional provision."
Page 874:
"Accordingly, we hold,~there became due and
matured on May 25, 1923, a tax liability measured
by the gallonage involved In all intrastate sales
(excluding such, If any, as may have been made for
purposes other than Immediate or ultimate 'consump-
tion'), and this liability the Legislature did not
(because it could not) release or extinguish by
the repeal which took effect June 1, 1923."
The rule Is tersely stated by the Supreme Court of Texas
at page 742 in State,v. City of Austin, 160 Tex. 348, 331
S.rl.2d737 (1960):
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Hon. Jesse James. page 5 (C-200)
"After the occurrence of events which under the
law then existing give rise to an obligation on
the part of an individual or corporation to'the
state, the Legislature has no power to release or
diminish that obligation without consideration. . . .'
We therefore hold that Section 13 of ~Artidle 4.08,'Texas
Insurance Code, is unconstitutional in so far as It purports
to extinguish the effect of Article 3272a upon life insurance
companies prior to August 23, 1963.
Your first question Is answered in the negative and you
are advised that Section 13 oP Article 4.08, Texas Insurance
Code, does no:: exempt' life insurance companies which do busi-
ness in Texas from filing reports required by Article~3272a.
Vernon's Civil Statutes for the period between January 6,
1962 and August 23,, 1963.
Since we have answered your first question ih the nega-
tive, it becomes unnecessary to answer your second question.
The plain and unequivocal language of the first phrase
of Sectlon~13 of ,Articl,e4.'08evinces the intent of the Legis-
lature to exempt life Insurance companies from a,ll other
statutes relating tomescheat or unclaimed funds.Due to the
consitutional prohibition,which we discussed in regard to
your first question, this exemption is effective from and
after the effective date of Article 4.08.~ This exemption is
without regard to the definition of unclaimed funds contained
in Section 3 of Article 4.08 and such definition his not a'
limitation upon the exemption. Therefore, in answer to your
third question, you are advised that Section 13 of Article-
4.08 exempt life insurance companies from filing future reports
under Article 3272a ,onall property, regardless of Its nature.
The scope of Article 4.08 is set forth in Section 2
thereof in the following language:
"Sec. 2. Scope. - This Article shall apply to
unclaimed funds, as defined in Section 3 hereof of
any life insurance company doing business in this
state where the last known address according to
the records o person entitled
to such funds
(Emphasis added)
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Hon. Jesse James, page 6 (C-200)
We answer your fourth question by stating.that: unclaimed
funds as defined in Section 3 of Article 4.08 are required to.
be reported under Article 4.08 'onlyif the last known address,
according to the records of the company, of the person entitled
to such unclaimed funds is within the State of Texas.
There being no provision for reporting unclaimed funds
under Article 4.08 where the address of the person entitled
to such funds is unknown and the scope of Article 4.08 being
specifically limited by Section 2, you are advised, in answer
to your fifth question, that such funds are not covered by
Article 4.08.
SUMMARY
That portion of Section 13 of Article 4.08, Texas
Insurance Code,~which attempts to exempt life
Insurance companies from the operation of Article
3272a, Vernon's Civil Statutes, for the period
between January 6, 1962 and the effective date
of Article 4.08 on August 23, 1963 is unconstltu-
Mona1 under Article III, Section 55 of the Texas
Constitution; Article 4.08 exempts all life
insurance companies from filing all reports re-
quired under Article 3272a from and after the
effective date of Article 4.08; Article 4.08 re-
quired only the reporting of unclaimed funds where
the last,known address of the person entitled to
such funds la within the State of Texasand where
there Is no record of an address, such funds need
not be reported.
Very truly yours.
WAGGONER CARR
Attorney General
Assistant Attorney
WOS:ml
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Hon. Jesse James, page 7 (C-200)
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
James Strock
John Ree'ves
J. C. Davis
J. S. Bracewell
APPROVED FOR THE ATTORNEY GENERAL
By: H. Grady Chandler
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