’
Honorable John H. Winters
Department of Public Welfare
Austin, Texas Opinion No. V-612.
Re: The eligibility for
Old-Age Assistance
of an individual who
possesses a vendor's
lien note secured by
certain real proper-
ty under the ~facts
submitted.
Dear Sir:
We take from your letter of request the fol-
lowing facts underlying the question of law involved:
"The recipient who is 89 years of age
lives on her own farm, which is her sepa-
rate and individual property. The farm
consists of 172 acres of land. The appel-
lant's daughter, who is 72 years of age
and who is also a recipient of assistance,
lives in the home with her. The home is
fairly inaccessible and the appellant has
none of the conveniences. The appellant
has several children. The appellant also
has one grandchild, who is the son of a~
deceased child. This grandson is reported
to have assisted the appellant for a num-
ber of years; however, our records do not
show any financial contribution from him.
The recipient has been receiving old age
assistance continuously since 1936.
"On July 25, 1947 the appellant deeded
the property in question to her grandson
for $10 and other good and valuable con-
sideration. The other good and valuable
consideration consisted of one promissory
vendor's lien note in the principal sum of
$2,000 bearing interest from date until
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.’
Honorable John H. Xinters, Page 2 (V-612)
paid at the rate of l& payable to the ap-
pellant on or before five years after date
or upon the death of the payee, whichever
is sooner. The grantor (our recipient)
reserved full possession, benefit, and use
of the property as well as the rents, is-
sues, and profits for and during her nat-
ural life. It was expressly agreed and
stipulated in the deed that a Vendor's
Lien was retained until the note and in-
terest had been fully paid. The grantee
also agreed that so long as the note or
any part of it remained unpaid that he
would keep the improvements fully insured
and that he would pay the taxes.
"There was further covenant in the
deed that should the grantee fail to pay
the taxes or fail to keep the insurance
in force that the appellant (our recipi-
ent) might declare the note due and pay-
able and that suit might be immediately
instituted to collect the insurance and
the taxes and to foreclose the lien.
"When the needs of the appellant
were reviewed in Birch, 1948 the Depart-
ment learned of the existence of this
deed and note. The Department made in-
quiry about the potential sale value of
the d2,OOO note in order to make it im-
mediately available for meeting the needs
of the appellant. Local realtors and a
banker in the community considered the
note negotiable, and the appellant con-
sidered the note negotiable; therefore,
a denial of her grant was made on the
basis that she had a $2,000 note which
could be sold and which would furnish
the necessities of life for her for a
period of at least two years.
When the appellant appealed the
attorney for the grandson alleged that
the appellant did not have a resource
on the basis that the note was made pay-
able to the appellant and was not made
payable to the appellant or order; there-
fore, it was non-negotiable. During the
xonorable John H. Vinters, Page 3 (v-6121
process of the appeal the field worker,
responsible for reviewing the needs of
the appellant, took a copy of the deed
and the note to local realtors and one
of them stated that if his attorney ad-
vised him that the note could be sold
that he would buy it at a discount.
The attorney informed him that although
there might be some question about its
negotiability, there was no question
but what it could be sold and that the
person buying it would have a valid
lien against the property. This per-
son offered to buy the note for $1500.
"The attorney for the appellant
and the grandson contended that the
reason for the transfer of the proper-
ty to the grandson was in order to re-
duce the appellant's estate to cash
rather than having to divide the prop-
erty after her death, and further! that
there was no intention of qualifying
for assistance or affecting the assist-
ance grant by reason of the transfer.
The Department did not make a denial on
the basis that the transfer was for the
purpose of qualifying or increasing
need, but the denial was made solely on
the basis that the appellant had a re-
source in the note which was sufficient
to meet her needs on a current basis.
"The Department held that the ap-
pellant was ineligible because the De-
partment is required by law to consider
all available resources, and it was con-
sidered that this resource amounting to
41500.00 was available immediately for
her use if she chose to use it. The
attorney for the appellant and her grand-
son contested the decision on the basis
that the grantee, who is the grandson,
had the right to limit the negotiability
of his note and that the appellant could
not sell it."
Honorable John H. Winters, Page 4 (V-612)
The Old-Age Assistance Act, House Bill 611,
Acts of the 47th Legislature, Regular Session, as
amended, is quoted by you as follows:
"SEC. 20. Old Age Assistance shall
be given under the provisions of this
Act to any needy person: . . .
"'(5) Who has not sufficient in-
come or other resources to provide a
reasonable subsistence compatible with
health and decency . . . Income and re-
sources to be taken into consideration
shall be known to exist and shall be
available to the applicant . . .'
“‘(6) An applicant for old age
assistance shall not be denied assist-
ance because of the ownership of a
resident homestead, as the term "resi-
dent homestead" is defined in the Con-
stitution and Laws of the State of
Texas.'
"'SEC. 21. The amount of assist-
ance wnich shall be given under the
provisions of triisAct to any individ-
ual as old age assistance shall be de-
termined by the State Department through
its district or county agencies in the
county or district in which the needy
aged person resides with due considera-
tion to the income and other resources
of such aged person and in accordance
with the rules and regulations of the
State Department . . . . The amount of
assistance given shall provide such
aged person with a reasonable subsist-
ence compatible with decency and health,
within the limitations and provisions
of the Constitution of Texas as are now
provided, or may hereafter be provided.'"
We think it is clear that the $2,000 vendor's
lien note described by you constitutes a resource avail-
able to the applicant proper to be taken into consider-
ation by your Department. The question of whether such
note is a negotiable instrument is of no importance in
the consideration. The question is whether it is a
, ’
.
Honorable John H. Winters, Page 5 ('J-612)
resource for support available as property owned by the
claimant. It undoubtedly is property which may be sold,
and, being owned by her, is available by sale. The law
contemplates only that your Department will ascertain
and determine the reasonable amount that could be raised
from such resource by the reasonable effort of the re-
cipient.
You state "the attorney (for the recipient)
told us that in the event it was held that the proceeds
of this note are available immediately for meeting the
needs of the appellant if she chooses to sell the note,
then he plans to ask the Court to enter a permanent in-
junction prohibiting the sale of the note in order to
make the resource non-available legally." You then ask
the legal effect of such action.
If such a proceeding should be undertaken by
the recipient's attorney with her consent or knowledge
and acquiescence, it would appear to us that it would
be a violation of the law forbidding transfers or dis-
position of property for the purpose of qualifying a
recipient or increasing his need.
iiherea recipient of aid under the Old
Age Assistance Act owns a vendor’s lien note
(whether such note be technically negotiable
or not) having a reasonable value, and such
note may be sold by the recipient, it is a
resource available to such recipient to be
considered by the Department.
Any action by such recipient voluntari-
ly taken by court injunction forbidding any
sale of such note for the purpose of quali-
fying such applicant or increasing her need
would render such recipient ineligible under
the statute.
Yours very truly,
APPROVED: . , ATTORNEY GENERAL OF TEXAS
BY
Cb$e&
0S:b:erc Assistant