Untitled Texas Attorney General Opinion

THEATTORNEYGENERAL OF TEXAS

AUSTIN a~.T~xas

WILL WILSON ATTORNEY GENERAL A,pril 9, 1962

Honora.ble Jesse James Opinion No. WW-1303 Sta.te Treasurer of Texas Austin, Texas Re: Whether investment moneys received by building and loan associations which represent payments made upon shares of stock or share accounts come within the purview of Para.graph b of Section 1, Article 3272b, as enacted by the 57th Legislature, Third Dear Mr. James: Called Session.

We quote from your letter of March 19, 1962:

“Please advise this department by official opinion whether investment moneys received by building and loan associations which re,present payments made upon shares of stock or share accounts come within the purview of Pa.ragra,ph b of Section 1, Article 3272b, as enacted by the 57th Legislature, Third Called Session.”

Section 1 of Article 3272b, Vernon’s Civil Statutes, provides:

“Duties of Depositories of Dormant or Inactive Accounts. Every depository holding dormant &posits or inactive accounts of de,positors or owners whose existence and wherea.bouts are unknown to the depository, shall preserve intact the deposits and ac- counts so long as they remain in a dormant or inactive status.

“a. The term lde,pository’ as used in this Article means any bank, savings and loan asso- ciation, banking institution or organization which receives and holds for others deposits of money or its equivalent in banking practice or other personal property in this State, or in other States for residents last known to have resided in this State.

Honorable Jesse James, page 2 (W-1303)

The terms ‘dormant deposits’ and ‘in-

of this Article have continuously remained inactive for a period of more than one (1) year without credit or debit whatsoever through the act of the de,positor, either in ,person or through an authorized agent other than the depository itself. ‘Dormant deposits’ and ‘inactive accounts’ lose their status as such when a deposit is made by the de,positor, or a check is drawn or withdrawal is made there- from by such depositor, either in person or through an authorized agent other than the depository itself.” (Emphasis sup,plied)

It should be noted that the reference to “. . . any . . . savings and loan association . . .’ in Paragraph a of the statute includes building and loan association as these associations a.re alike in every respect, regardless of which name is used. Art. 342-205; Art. 881a-25, V.C.S. Accordingly, any reference in this opinion to one includes the other. By way of further predicate, we wish to point out that it is assumed the investment moneys mentioned in your request are “in this Sta.te, or in other states for residents last known to ha.ve resided in this State,” as re- quired by Paragraph a, and the investment moneys have been held for the requisite period of time to become “dormant” or “inactive” within the meaning of Paragraph b.

Adverting to the underscored language of Paragraph b, as quoted above, it is seen that our question, in essence, is whether the purchase of shares or share,,accounts in a savings and loan association amounts to a deposit of money . . . held by a de,pository for repayment to the de,posi- tor or creditor . . .” within the meaning of Paragraph b. A savings and loan association clearly falls within the general definition of a. “depository” in Paragraph a since these in- stitutions are expressly mentioned in that paragraph and they, beyond question, at least in reference to some funds (for ex- ample: unpaid dividends), receive and hold ,personal pro,perty for others. The problem arises from the use of the words “deposit” and “de,positor” in Pa.ragraph b, and the fact tha.t investments in a savings and loan association are, in contem- plation of the statutes governing these associations, not of

Honorable Jesse James, Page 3 (w-1303)

the same lega. charazter as deposits in a. bank. ,Observe for instance, Article 881a-27, V.C.S.,, which provides:

“No building and loan association shall carry or have upon its books at any time any demand, commercial or checking account, or any credit to be withdrawn upon the presen,tation of any negotiable check or dra.ft, and all invest- ment monies received by any such association shall ~represetit a ,payment made u,pon shares of stock or share accounts; provided, however, that s,uch associations ma.y accept money from members to be used for the purpose of paying taxes, as- sessments and insurance premiums on the property on which the a.ssocia.tion has a lien.”

The foregoing statute obviously has the effect of precluding savings and loan associations from carrying in- vestment moneys for shares or share accounts as “deposits”, as ,that term is ordinarily understood in bankins practice. The statute does not, however, employ the word deposit” to accomplish this purpose.

These investment moneys are unlike bank deposits in that the withdrawal of unmatured shares or share accounts is hedged about by various restrictions, both statutory and by’the by-laws of the associations, which afford the member something less than an absolute right to repayment on demand. Homestead Building & Loan Association v. Youngblood, 111 S.W. 2d 827 (Civ.App. 1937); Texas H0mestea.d Building & Loan Asso- ciation v. Kerr, 13 S.W. 1020 (Civ.App. 1890). See Articles 8Bla-36 V.C.S and 881a-46, V.C.S. For example, withdrawals of fund; in the:e associations are not allowed unless funds are available out of receipts and income for such purpose, and these associations are enjoined by statute from holding out as an inducement to buy shares that such funds may be withdrawn at a time certain upon notice of the shareholder’s intention to withdraw such funds. Art. 881a-46, V.C.S. Ap- parently,,however, matured shares may be withdrawn at any time after maturity, so long as the association is a solvent going concern. Art. 881a-48, V.C.S.

In the technical legal sense a “deposit” is a bail- ment of goods to be kept for the deposltorwithoutreward and to be returned when he shall require it. 26~ C.J.S. 194, De- g,;;JsitSec. 1; Bouvier’s La.w Dictionary, Vol. l-A, p. 8&7, If the word has this meaning in the subject statute, investmint moneys for shares of stock in a savings and loan association cannot be said to fall within the purview of the statute. However, the word “deposit” has been aptly described as “a word of large and varied signification.’ 26~ C.J.S. 198,

Honorable Jesse James, page 4 (WW-1303)

Depositories, Sec. 1. Taklng the word, as we must, In the context of the subject statute, we believe that the Leglsla- ture intended to give It a broader meaning than 1s indicated by its strict legal definition.

It Is a matter of’ common knowledge that these lnvest- ments In savings and loan associations are called “deposits” by a large segment of the public. They are also often called “sav- ings” or “savings accounts” and are referred to as such In a great deal of the advertising sponsored by savings and loan as- sociations. The word “savings” or “savings account” connotes In common parlance a fund of money held for repayment to the person leaving such funds. Indeed, they are looked upon by the ,public In general as being comparable to savlnge accounts in banks and are, as a rule, regarded by the shareholders them- selves as being withdrawable on demand, As a matter of custom and ,practlce, the shares are vltrually payable on demand, It being the usual practice of savings and loan associations In this day and time to freely allow withdrawals of unmatured as well as matured shares. Therefore, It would not be surprising to find the Legislature referring to these investments aa “de- posits”, at least in leglslatlon which does not purport to be directed at savings and loan assoclatlona alone,

A further insight into the meaning oi the word “de- posit” In this particular context can be gained, we think, from examining the definition of the closely related word “depository” in Paragraph a. It 1s only logical that the Legislature would Intend a “deposit” in this Instance to be what Is placed In a “depository”, as deflFed in Paraffraph a. It 1s sufficient under the definition of depository in Para- graph a that any personal property be received and held by a savings and loan association or banking Institution for repay- ment to others. Nothing is said about the personal property being unconditionally repayable on demand, nor about the ln- stltutlon being required to return the exact amount left with the Institution, nor about the lnstltutlon being paid for the service, nor about the property being used or not used by the institution. Obviously, the payment of money to a savings and loan institution lor shares or share aocounts leaves ,personal property, money, with the Institution to be repayed to the shareholder under certain conditions. In short, the word “de- Kository” 1s not assigned a meaning which would make It a depository” in the strict or technical and legal sense. Hence, it seems to us that the Legislature would in this same statute intend the word “deposit” to be used In the same broad sense.

Further, the use of the word “account” in Paragraph b also indicates that moneys paid to a savings and loan asso- ciation for shares or share accounts are Intended to be covered by Article 327213. The federal statutes providing for the

Honorable Jesse James, ,page 5 (WW-1303)

Insurance of these funds by the Federal Savings and Loan In- surance Corporation employ the word "account" in referring to shares in a savings and loan institution. 12 U.S.C.A. 1724. And, the Texas statutes also employ the word "account" in referring to investments in savings and loan associations. Art, 881a, V.C.S. The view that the word "deposits" includes the lia- bilities of a savings and loan institution on withdrawable stock, whether running or paid u,p, is not without precedent. In Mer- chants & Mechanics Federal Savings and Loan Association v.vatt, 138 Ohio St. 457, 35 N.E.2d 631 (1941) it was held that the word "dek---_- nnni tin" ?n-_. the ._-- Ohio ~..-- statute -~~~~.~~ ,pl&ing a tax on deposits offinancial institutions Included payments for stock in the association.

For the foregoing reasons, your que~stion is answered in the affirmative.

SUMMARY

Investment moneys received by a. building and loan association which represent .payments made u~pon shares of stock or share accounts come within the purview of Paragraph b of Section 1, Article 327213, V.C.S.

Very truly yours,

WILL WILSON Attorney General of Texas

By Henry G. Braswell HGB:dsd Assistant

APPROVED: OPINION COMMITTEE W. V. Gep~pert, Chairman Morgan Nesbitt Dudley McCalla Frank Booth REVIEWEDFOR THE ATTORNEYGENERAL BY: Houghton Brownlee, Jr.