Case Information
*1 OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN
GERALD C. MANN ATTORNEY GENERAL
Honorable Jesse James State Treasurer Austin, Texas
Opinion No. 0-4967 Re: Are the United States bonds, Series F, eligible as security for deposits made by companies operating under provisions of Senate Bill No. 135?
Dear Sir:
We have received and carefully considered your letter of November 12, 1942, requesting the opinion of this department on the above stated question. We quote from your letter as follows:
"We kindly ask an opinion from you as to whether or not United States Deffuse Bonds. Series F, are eligible as security for deposits made by companies operating under provisions of Senate Bill No. 135.
"Since this place of bonds can not be asked until ninety days after date of purchase and are also non transferable, would you consider this type of security sufficiently liquid to adequately protect the policyholders for whose benefit the deposit is being made?"
Senate Bill 135, Acts of the 46th Legislature, (Article 5068-1, Vernon's Annotated Civil Statutes) and since amended with certain respects with which we are not here concerned, is a comprehensive regulatory bill embracing the whole field of mutual insurance. Section
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Honorable Jasee Jeme - page 2
6 of Artiele 5068-1, Vernod's Annotated Civil Statutes, provides: "Each association, not already required by exiating laws to do so, shall place with the State Treasurer through the Board of Insurance Commissioners a deposit equal to the largeat risk asoumed on any one life or person, which may be in eash or in convertible aesuritles subjeet to approval by the Board. Such deposits shall be liable for the payment of all judgments against the association, and subjeot to garnishment after final judgment against the association. When such deposit be comes impounded or depleted, it shell at once be replenished by the association, and if not replenished immediately on demand by the Board, the association may be regarded as insolvent and dealt with as herainafter provided. "When any association shall desire to state in advertisements, letters, literature or otherwise, that it has made a deposit with the Board as required by law, it must also state in full the purpose of the deposit, the conditions under which it is made, and the axeot amount and ohereater thereof."
Seotion 13 of Article 5068-1, supra, reads as follows: "Sec. 13. It is the primary purpose of this Aot to aecura to the members of the association and their beneficiaries the full and prompt payzent of all olains according to the meximum benefit provided in their certificates. It is therefore required of all asocolations that all olains under certificates be paid in full within sixty (60) days after receipt of due proor of olains.
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Eonorable Jease James - page
"Written notiee of olain given to the asoociation shall be deonad due proof in the event the asoociation falls upon reoejpt of notice to furnish the olejment, within fifteen (15) degs, ouch forms as are ueually furnished by it for filing olains. "Any asoociation which shall beoone unable to pay ite valid olains in full within sixty ( 60 ) days after due proofs are reoolved, shall for the. purpose of this not be regarded as insolvent, and dealt with as is more fully provided hereinafter."
It appears from the two preceding provisions of the atatute that it was the legislative intent that the companies onbreod therein should at all times have on deposit with the state treasurer aseets readily convertible into oash, which the oourt rendering judgment against such depositing sompany night decree aubject to the payment thereof. It will be noted that 8 eotion 6, Article 5068-1, expresely provides: "Suoh deposits shall be liable for the payment of all the judgments against the asoociation, and subject to garnishnent as to final judgments against the asoociation."
We do not believe that the bonds in question, by reason of their non-transferable and withdrawal maturity features are sufficiently liquid within such reasonable time for the payment of judgment as was anticipated by the legislative. Therefore, we hold that the bonds in question cannot be deposited under 8eotion 6, Article 5068-1.
Trusting that the foregoing fully answers your inquiry, we are
Yours very truly ATTORNEY GENERAL OF TEJAS By Andell whilom Ardell willians Aselatant