Tmz A~IRNEY GENERAL
OF’ TEXAS
GERALD C. MANN Au-. 11.TBxAn
x-m-
AITGENEY GENERAL
Honorable JCSEC James Overruled by O-7410 insofar
State Treasurer as it conflicts.
Austin, Texas
Dear Mr. James~: Opinion No. O-4535
Re: Assignment of vendor’s lien
notes to State Treasurer.
In your letter of April 10, 1942, you state the Southern Guaranty
Company, Ltd. has depoatted with the Board of Insurance Commissioners,
to be held by the State Treasurer, various vendor’s lien notes, under Article
No. 4982 of the Revised Civil Statutes.
You ask, ?Is it necessary for us to have assignment of lien cover-
ing thes,e notes; if so. should they be made to the ,State Treasurer or to the
Board of Insurance Commisaionere, and should they be placed on rec,ord in the
county where tha property his located 7*
These notes are evidently deposited with you under Article No. 4983,
rather than Article 4982, and our answer is based on this assumption.
Article.4982. of the Revised Statutes, relates to certain powers
that may be exercised by association of persons and corporations when~ it
~has complied with thenlaw.
Article 4983 provides that in or&r to qualify under Article 4982,
it is ngcessary for~the association or corporation to “Deposit with,the Stats
Treasurer $50,000.00 consisting of cash, treasury notes of the United States,
or government, state,,countB municipal or other bonds, notes ,or debentures,
secured by first mortgages or deeds of trust, or mortgages or de.eds of trust
on unincumbered re,al estate in Texas worth at least double the amount loaned
thereon, or such other first-class securities as the Commissioner may approve.”
Iu order that the vendor’s lien may be effective, it cs necessary
that if the note is assigned a,s collateral, the lien must also be transfe,rred in
writing, and be place,d of record. This is necessary in order to prevent the
Honorable Jesse James, Page 2 (O-4535)
lien securing the note from being released by the party to whom it is payab.le.
It takes an assignment of both the note and lien securing same to comply
with the provisions of Article 4983 of the statutes,.
We therefore answer your inqutry that before you accept the ven-
dor’s lien notes as a deposit under said’ statute, you should have a transfer
of the lien securing the notes made to you’as.State Treasurer, in trust, to be
held by you under the provisions of Article 4983. By placing said language in
~the transfer, it would be notice to any purchaser of the land against which the
notes may be lien that the State Treasurer was holding the notes in trust, and
. that before he could obtain a release he would be compelled to obtain a release
.fr.om the State Treasury,
If at any time the company depositing the notes with you desired to
.withdraw same and substitute other securities, then, as State Treasurer, you
rould either release the notes or retransfer the original notes and accept the
new ones in lieu~ thereof. if the new securities ‘were ~eligible as such under
said statute.
In addition to having the ,notes transferred to you, before the notes
are accepted an abstract should be furnished showing that the, notes are a first
lien on the land. You should then hold the abstract, together with the transfer
of the notes in your possession, after having first filed the tr~ansfer for record
in the county where the land is located.~ The expense incident to recording the
transfer of the notes should be borne by the depositor. Before you are author-
ized to accept any securities for deposit the same must be approved by the
Board of Insurance .Commi&ioners. It is the duty of said Board to appraise
the securities and pass upon the question as to whether the real estate secur-
ing the notes is worth at least double the amount of the notes. It is a,lso the
duty of said Board to~have ~the title examined and determine that the notes are
a first lien on the land. All of this expense is to be borne by.the depositor. t’
You~are advised that this Department has under consideration a
request~fr,om the Board ~of Insurance Commissioners as to whether the Southern
Guaranty Company, Ltd. is competent to qualify under Articles 4982 and 4983,
This opinion is not to be interpreted as answering said question. We are answ,r-,
ing your question at this time because of its importance as it relates to your
general duties under said statutes.
APPROVED APR 24, I942 Very truly yours
/s/ Grover Sellers
FIRST ASSISTANT ATTORNEY GENERAL OF TEXAS
ATTORNEY GENERAL By /s/ Geo. W. Barcus
GWB-MR:tiw Geo. W. Barcus, Assistant
APPROVED OPINION COMMITTEE
By /s/ BWB, Chairman