Untitled Texas Attorney General Opinion

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DAN MORALES
ATTORNEY
GENERAL October 19,1993
Honorable BNIX Isaacks Opinion No. DM-264
Criminal District Attorney
Denton county Re: Whether the Denton County Bail
P.O. Box 2344 Bond Board is authorized to set a limit on
Denton, Texas 76202 the value amount of bonds which a
corporate surety may provide, and related
questions under article 2372~3, V.T.C.S.
(RQ-191)
Dear Mr. IsaacksI
You have requested an opinion on eight questions that relate to the authority of a
county bail-bond board to regulate corporate bail bondsmen and to regulate the sect&y
provided by applicants for bondsmen’s licenses. We will address these questions in the.
order that you asked them.
Fist, you ask the following: “What is the total [value of the bonds a corporate]
bondsman may execute?” This question is answered by Attorney General Opiion IM-799
(1987). In that opinion, this office concluded that a county bail-bond board may not limit
the total value of the bonds provided by a corporate bondsman. Section 6(g) of article
2372~3, V.T.C.S., restricts the value of the bail bonds a bondsman may execute to ten
times the value of the property held as security or in trust by the county bail-bond board
on behalf of the bondsman. However, section 7 of the same article states “Subsection (g)
of Section 6 does not apply to a corporate surety.” V.T.C.S. art. 2372p-3, 5 7(a).
Because the statute explicitly makes the only restriction on the value of the bonds a
bondsman may issue inapplicable to corporate bondsmen, there is no limit on the v&e of
the bonds a corporate bondsman may issue.
Is the irrevocable letter of credit the only security a corporation
must provide upon the bail bond board’s tentative approval of the
application, or must the corporation also do one of the following:
(1) deposit a minimum of 850,000 with the board in [the form ot] a
cashie-fs check, [certitlcate of deposit], or cash, or (2) [when the
county’s population is at least 250,000], execute deeds of real
property in trust to the board [that] exceed $50,000?
p. 1383
Honorable Bruce Isaacks - Page 2 (DM-264)
Your question arises from the language of article 2372~3. section 6(f), V.T.C.S., which
states as follows:
Upon notice from the board that the application has been
tentatively approved, the applicant shall then:
(1) deposit with the county treasurer of the county in which
the license is to be issued a cashier’s check, certificate of deposit,
cash, or cash equivalent in the amount indicated by the applicant
under Subdivision (5) of Subsection (a) of Section 6 of this Act,
but in no event less than $50,000 except in counties with
populations of less than 250,000 persons by the most recent
federal census, the amount for applicants in said counties shall be
$10,000 to be held in a special fund to be called the bail security
ibn& or
(2) execute in trust to the board deeds to the property listed
by the applicant under Subdivision (4) of Subsection (a) of
Section 6 of this Act, which property shall be valued in the
amount indicated on an appraisal by a real estate appraiser who
is a member in good standing of a nationally recognized
professional appraiser society or trade organization that has an
established code of ethics, education program, and professional
certitlcation program, but in no event less than S50,OOO
valuation, except in counties with populations of less than
250,000 persons by the most recent federal census, the amount
for applicants in said counties shall be $10,000, the condition of
the trust being that the property may be sold to satisfy any tinal
judgment forfeitures that may be made in bonds on which the
licensee is surety a&r such notice and upon such conditions as
are required by the Code of Criminal Procedure, 1965, as
amended, in bond forfeiture cases; the board shall file the deeds
of trust in the records of each county in which the property is
located, and the applicant shall pay the filing fees.
(3) If the licensee is a corporation, it shall furnish to the
sheriff an irrevocable letter of credit as a cash equivalent to
satisfy any final judgment of forfeiture that may be made on any
bonds on which the corporate licensee is surety.
Although this section is far from clear, we think it means that, instead of supplying
security in the form required by subdivisions (1) and (2) corporations must submit as
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Honorable BNCX.hacks - Page 3 (DM-264)
security an irrevocable letter of credit in compliance with subdivision (3).1 The general
structure of the section strongly suggests the legislature intended to give individuals who
are tentatively approved for a license two alternative ways to meet the security
requirements, but to require corporations to submit a letter of credit as security. Contrary
to the suggestion in a previous opinion from this office, we do not believe that subdivision
(3) requires a corporate bondsman to submit a letter of credit atIer a 6nal judgment of
forfeiture on a bail bond. See Attorney General Opinion lh4-1245 (1990) n. 4. The
preamble to the three subdivisions states that subsection 6(t) takes effect “[ulpon notice
from the board that the application has been tentatively approved.” This language
indicates that the entire section deals with security that must be posted at that time.
Furthermore, we do not believe that section 6(f) can be read to require corporate
bondsmen to comply with either subdivision (1) or subdivision (2), along with subdivision
(3). To be eligible for a license as a bail bondsman, a corporation must be qua&d to
write fidelity, guaranty, and surety bonds under the Texas Insurance Code. See V.T.C.S.
art. 2372~3, 5 3(d)(2). A corporation qualified to write fidelity, guaranty, and surety
bonds must meet fairly stringent capitalization requirements. In addition, it must post
$50,000 in securities or cash with the State Treasurer as security. Ins. Code arts. 8.05,
15.06, 15.07. In light of this security requirement, we do not believe that the legislature
could have intended to require corporations to post more security than individuals to
qualify for a bail bondsman’s license.
Your third and fourth questions concern the irrevocable l&e-r of credit and are as
follows:
3. If the irrevocable &tter of credit is the only security ne3xsary for
a corporation to execute bonds, then how much money must the
letter of credit covef?
4. Must the letter of credit be of unlimited time or must the sheriff
accept a letter of credit with a time limit?
Reading the provisions of section 6(f) together, we conclude that, although
subdivision (3) requires a corporation to submit security in the form of a latter of credit,
subdivisions (1) and (2) dictate the amount of security that must be provided. In othe-r
words, in counties with populations of 250,000 or more, the credit amount must be at
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Honorable Bruce Isaacks - Page 4 (``-264)
least $5O,ooO, in counties with populations of less than 250,000, the credit amount must
be at least $10,000.
We also conclude that the sheriff must accept a letter of credit even though it has a
time limit. As a practical matter, few, if any, responsible financial institutions would issue
in irrevocable letter of credit for an unlimited time. Furthermore, nothing in the statute
permits the sheriff or a county bail-bond board to insist on a letter of credit for an
unliited time. Because the act expressly sets forth the requirements for obtaining a
license as a bail bondsman, wunty bail-bond boards lack the authority to impose
additional requirements on those seeking a bail-bondsman’s license. Dullus Coun@ Bail
Bond Board v. Stern, 771 S.W.Zd 577, 580 (Tex. App.-Dallas 1989, writ denied). If
wunty bail-bond boards lack this authority, county sheriffs must also lack this authority.
Therefore, the sheriffcsnnot insist on a letter of credit for an unlimited time.2
Your remaining questions concern the appraisal value of the real estate an
applicant intends to place in trust with the board. In particular. you ask
5. Does the Bail Bond Board have the authority to question the
appraisal value of the real estate the applicant intends to convey in
trust to the board?
6. Does the Bail Bond Board have the authority to obtain an
independent appraisal value of the real estate the applicant intends to
convey in trust to the board?
7. Does the Bail Bond Board have the authority to require the real
estate the applicant intends to place in trust with the Board be
located within the County of Denton, Texas?
8. Does the Bail Bond Board have the authority to require that the
renewal application for a license include a current m-appraisal of the
real estate the applicant intends to place in trust with the Board?
With respect to questions five and sii we conclude that the bail-bond board does
not have the authority to question the appraisal value of the real estate or to obtain an
independent appraisal of the real estate. As we mentioned above, county bail-bond boards
lack the authority to impose different or additional requirements for obtaining a
bondsman’s license. Srein, 771 S.W.2d at 580. With respect to the real estate that an
applicant intends to convey in trust to the board if the board grants the license, article
ZHowever.we also note that a corporatebondsmanmust have the appropriatesecurity on file
when it writesbail bonds.
p. 1386
Honorable BNCX Isaacks - Page 5 (DM-264)
2372~3 imposes two requirements.3 First, the applicant must list the property in his or
her application for the license. V.T.C.S. art. 2372~3. 8 6(a)(4). Second, after receiving
notice that the application has been tentatively approved, the applicant must
execute in trust to the board deeds to the property listed by the
applicant . . . which property shall be valued in the amount tndtcated
on an appraisal by a real estate appraiser who is a member in good
standing of a nationally recognized professional appraiser society or
trade organization that has an established code of ethics, educational
program, and professional certification program, but in no event less
than $50,000 valuation, except in counties with populations of less
than 250,000 persons. . the amount for applicants in said wunties
shallbe$10,000....
V.T.C.S. art. 2372~3,s 6(f)(2) (emphasis added). The Texas courts have interpreted this
provision as requiring an applicant to submit, along with the deed of trust, an appraisal in
the minimum amount required by the section and by an appraiser who has the
qualitications listed in the section. DallaLFCount Bail Bond Board v. Black, 833 S.W.2d
247, 249 (Tex. App.-Dallas 1992, no writ). If the applicant complies with these
requirements the applicant baa produced sufficient security to qualify for a bondsman
license, and the bail-bond board has no authority to require tiuther proof that the security
is adequate.
As you indicate, the same principle resolves your seventh question and leads to the
wnchrsion that the Denton County Bail Bond Board cannot require all real estate placed
in trust with the board by an applicant to be located in Denton County. Requiring that the
real estate be located in the county issuing the license would impose an additional burden
on the applicants in excess of the statutory requirements. See Bemr County Bat1 Bond
Board v. Lkckard, 604 S.W.2d 214 (Lx. Civ. App.-San Antonio 1980, no writ).
Although article 2372~3 does not explicitly say the property can be anywhere, it does
direct county bail-bond boards to file the deeds of trust in the counties where the property
is located. V.T.C.S. art. 2372~3, Q 6(t)(2). This directive implies that the legislature
expected some of the real estate to be located in wunties other than the county issuing the
license. The most recent legislature reinforced this conclusion tiuther by considering and
rejecting an amendment to article 2372p-3 that would have, among other things, explicitly
required the real estate to be located in the county issuing the license. See H.B. 477, 72d
Leg. (1991).
p. 1387
Honorable BNCC?Isaacks - Page 6 (DM-264)
In response to your last question, we wnclude that the bail-bond board not only
has the authotity to require, but also must require a renewal application to include a
current appraisal&m each tming unit and an appraisal by a real estate appraiser who has
the qualifications outlined in section 6(t)(2): Article 2372~3, section S(a), V.T.C.S.,
states that a renewal application must have the same form and content as an original
application for a license under the act. The act requires original applications to list the real
estate the applicant intends to convey in trust to the board. V.T.C.S. art. 2372~3,
5 6(a)(4). For each parcel of real estate listed in the application, the applicant must also
provide, among other information, the following:
current stat~from each tmjng untt with power to assess or
wllect taxes against the property. . . indicating the net value of the
property according to the current appraisal made by a real estate
appraiser....
Id. 5 6(a)(4)(B) (emphasis added). The act also requires a fhst-time applicant to provide
an appraisal of each parcel by an appraiser who has the qualifications listed in section
6(fx2). Id. 5 6(f)(2), us interpreted by Black, 833 S.W.2d at 249. Read together,
sections 6(a)(4)(B), 6(f)(2) and 8(a) require that a renewal application include a current
appraisal of the property from each taxing unit and an appraisal from a real estate
apprakr who meets the qualilications set out in section 6(f)(2), V.T.C.S.
SUMMARY
There is no limit on the vahre of the bonds a wrporate bail
bondsman may issue.
An irrevocable letter of credit is the only security a corporation
must provide when its application for a bail bondsman’s license is
tentatively approved by the county bail-bond board. In counties with
populations of 250,000 or more, the credit amount must be at least
$50,000; in counties with populations of less than 250,000, the credit
amount must be at least $10,000. The sheriff cannot, however, insist
on credit for an unhited time; the sheriff must accept a letter of
credit even though it has a time limit.
County bail-bond boards lack the authority to impose different
or additional requirements for obtaining a bail bondsman’s license..
Therefore, a county bail-bond board cannot question the appraisal
‘This conclusionassumesthatthebondsmanseekingtorenewhisorherLiaweusednal
license.
property BSsecurity to obtain the original
p. 1388
Honorable Bruce Isaacks - Page 7 (DM-264)
value or obtain an independent appraisal of the real estate an
applicant for a bail-bondsman’s license intends to convey in trust to
the board as security. In addition, a county bail-bond board cannot
require that the real estate be located in that county. On the other
hand, a board must require a renewal application to contain a current
appraisal of the real estate from each taxing unit and an appraisal
from a real estate appraiser who meets the qualiications set out in
article 2372~3, section 6(f)(2), V.T.C.S.
DAN MORALES
Attorney General of Texas
WILL PRYOR
Fii Assistant Attorney General
MARYKELLER
Deputy Attorney General for Litigation
RENEAHJCKS
State Solicitor
MADELEINE B. JOHNSON
Chair, Opiion Committee
Prepared by Margaret A Roll
Assistant Attorney General
p. 1389