Untitled Texas Attorney General Opinion

OFFICE OF THE AlTORNEY GENERAL OF TEXAS AUSTIN

Honorable TOXIC, Eiw~ stat0 AWlltOr end gtriO~O~0p Aumtlnl Torar Deer Sir:

a 0r thi8 dr- e u&laoooant8 te he8rurW in tha pap n baaed te rtate em- been lmrS.gnrd by 8tiia lq o ear t o ohua ve ark& hove #taOed general d.11 be lmwerod rep- v&ioh thrr.8p$mr ia SOUP

-lb this provlrionnan6rtory opal the Steta Tr66aurexW Xta four rht question evldentlg you #r* r8- ferrfng to Artlolr 4372, a8 aam by the I.2~4 Le&ir-

lature in 1931. sala article made4 aa lollo*.s: *The Treesurer ahall keep true accounts of the rfioa !pts and expanditurer of the pub- 110 -txmys 0: the 'Fres6ury. anC close his accwnts annus,llp on the Pat aey of Au,Tust, vlth the ?rop&r leiv.~l TC!UO~~TS for the nam, dlstln~.u:ehia~ batwoen the rtca2pt.t m2 dis- burtammts of’ each fl~scal ye)rr.* You arc advised that Artlole ~372 aakea it aanthtory upon the Stetc Trsasurtr to keep true au- oounts 0r tbs rectl.pta and exptnaiturae or ths public treasury. Your ettentlon is also celled to the feet that the Le.$fslature has not left ths matter of the katrlng of t&c sccoucts to tfm State Prceeurer'fi die- artticn entlxalg, but has pesssa uummous artloles troa time to time which detfno thr type at racordr aacl acccmnts to be kapt by 88ia state Treemurrr. In oonasctioh with your queetlol number 1, you have asked the. followlAg quartloaa: “2. Dosa the ~rOri8ion *true aocountr or . . . ax~eadfturee of mbl.ic mxmym * nwm that the State Treasurer nnaet lgtp a rsoord/or account discloelng only the number and stunt of State warraats Paid ,- by h&a (ISIState Traaeurar? Or daen ‘true aoeounts or exptn- “3. dltures Gf public liontya* man that the G,tsta Trtaaurdr must kae3: B record/or naoount att- ting out in detail the nuabcr ttna asouslt 0r east. state mrraat reeelvad ~(1 pid by &lm a8 Stste TraaaurerT

“L. iioca this statute raau that the Stata Txtaaurar mmt also keep a reaord/or aocount setting out tha person, aorporntlon, bcnk, eta., who piTi8Ated such wplrrant to him cs State Trashlurer and wha rsoalved pa?- ZQent theram?

"5. Gr doer this statute mean that be must alao keep an BCOOUat/Gf record showing

Eonorablo To:.\C. Tin&, 73~8 3

that ti‘e stat.* ha8 aischrf0a ite obli?atlon to the payee or .euch warrant?* In answer to the above quoted qutrtlons, you are advised that Article k3e2 or Vernon's Lnnotatrd Clvll St~~tutca, a8 emended by tke L2nB Legislature in 1531, ccmtrols the type 07 reglwter to be kept by the Statr Treasurer to show the iosueoce and poymbnt of warranta. said articla reads as rollons: *?ha Tressurrr S!XIX keep rs&ieters of warrent 8 lowed, on6 for eaob class of warranta. The Cz::ptrollor~ehalJ furnish lists of warrant.8 lbmod, which lists shall ba oosparaa with the rarrente nnd shall c.:nntftuts the Traacurar’r rea,lstars of wnrratita isstma. Tbb mounts of warrsnta lssurd aball br added by the Trsaourer and Fortd a~atmt the totals cf the warrent reg- lst~ss. The date or peymant of all wsrranta shall: be ata=peQ on tbe aborr regl8ters. The Trsraurcr shall krep e *warrant8 paid re@rrter.* In thir register the warrents shall be entered eaoh day arhmnpaid; the number and amount OS asoh warrant paid baixg entered. S~arrantr shell bo maped bf olaesra and separate tot.816 of warrants paid fmm aaot fund shall be ehown, es wall as the grand tctel of all warrant.8 p0ia raoh day. The Traes- urer shall furnish to tha Comptroller eaoh day a ccpy of the warroztta ytld register ehowiw the .~ : werrants ra 14. The Traestmer shell keep e rag- later of warrants cancelled, on whloh shall be entered the detalla of all warrants oancellaa.- It is tc be noted that tCe wwammta paid registera which the State Trrano~rsr !maet keep, under thasi;thority of the ebc9e quoted erticl4, mat state the number end mount cl each warrent paid. That iafor?ation concernhe eeah uer- rant is to be entered cn the 3x9 v:hen the warrant is paid. In other wor00, th2 Laglnl3ture has mt left thle matter up to $56 Qiscretlon of tfie Treasurer with the broad Uutr On said Treasurer to keep trus aaootmts and sxpen~lturae Of public amaps, but baa (r.ons furthpr 6~:: has stated syrclf- icell~r xhst iafonetion ehsll be co::tafned in the warrant8 piQ regSster. The Legislature haa not ptovfdad herein that t?lQrarrante paid rsgleter shbll lndioate tc what person or fim the warrant was actually Fald. Under

Honorable Tom C. King, Pete &

Artlole 4382 eaoh armant is to be set cut aeparetely In the warrent raid reggister as to the number of raid warrant an4 amount. %ltl Tr66sUrer's re&itW Of War- renta Issued In Zurnished hlrp by the Comptroller aster such varrenta sre Iseued. In this rcspctct It Is to h poil?tsd out that suah Warrant rsgiater, a oopy o: whioh tha Ccnptrollsr makes end furnish613 to the Treasurer, contains the information rsquired by Artlole 4359 as fol- low : *And such regloter shall consist of' en entry of the agaunt of the vsrrant, name of tha pags, epprcprlatlon to vhloh oharged, and such other inroraation ee may be daamd advisable by the Cos~troller.* A copy of thle warrant reglater Is kept by the Treasurer, end It In only wheu the warrant is eotually paid that th8 smue Is to be entered into the warrants paid rsgistrr. In this m(lnn6r ths Treasurer Iti protided wltha rroord xtilah shove When tha varl-ant was peid, and thereby when the atete has disoharged Its obl$Fatloa qa such warrant. The actual payment by the Traasurrr or tha varrent is under tht authority oi Artiol6 1371, Whioh pro- vides In part as rollowa: *The Treaeurer shall count6rsIgn end pay all varrants drawn by ths Coqtroller on ths Trsasury wh:oh era authorized by law . . .* Ey way Of 8mnn6ry, th6T6fOl.6, the Leglelature ha8 llOt b.?ft th@ qU68tiOn Of the type Of Vtirl-eZit r6&ist62' to be kept to the disoretion of the Stat6 TreaSUr6r tandsr the gcaaral prorlelon that he kssp trua accounte of the sxy.anditures of pub110 m~nuys. but th6 LC@#JlatUre -S eons further anti has epcclflcally dsflned t&is type of regleter to bs k6pt by the State Trcaeurar and the infomation to be coatolned In such rsglstar. It ts tha opinion of this dspertmnt that Article L38!2 must be strictly omplied with by the Stat6 Treasurer In ksepiug the registers and oooounts. “6. Certain banks, werraat oespanIsa, sad finance aaupaniee here follov6d the prsctiae or 16udIm ':!omsy to atats em~loyeee

iioncrable Ton C. King, Fqe 5

nW.c3 loans %re nacurcd by 6:: aesipment by tha enployse to t&a vmrrent coapany of all warraute due much em,~lo,pos by t.be stoto. Thm i:rr:o uead by 3oan Cw Coapsny ramIs a6 tollws: ** Pate 193- ;;0t6 $:w Date ~ed~l%uoe Vieaslrud front John Doe 7i Comyny the above aaount as an adranc6d payment tI \ f to me for ths purohase of 8 wsrrant or check $ ‘P due tm by the Stats at Texas or Fedsrol Government In the amount and for the prriod stated below. 1 htreby oesttiy that 1 have not &i~Qn 6n order or ae~l~ned raid warrant or aheck to any other lndirldual, firm or oorpora- tion. I hereby authorize delitsry oi said mrrrant or check to ths above Company, and author&t6 said Coqxny to 6ndOr66 6638 tor 166 Kh6n rcosivsd. The dlsoount on this Item Is to be on the full amunt or warrant or check. For value r%O6iV6d. Thl8 or- der la Irrevocable until tiio above eaount is fully paid, Including 10% attorn6y’e roes. ( ) Blue ( ) vh1ts

J Fxpsrls 6 .., .." . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . “This form Ie not aworn to before 6 notary publlo. *(a) Ia thle assI&msnt legal‘? *(b)~ U so, is it bind&w upon the Comptroller or Public Aooounts or 6 publla ofrlolal or anployeo

vri:c df.s^rribcteo such warrunt 60 thst upon tlra pr&antrrsent to him nf this as6Qnment be aucit. deliver to th6 naslgnar all vzwrants cr eny earrant in his ~ometiuton in w)iich the asclgor Is tmated payee?”

The instrument rhiah you mclaes 1~ on6 whit& the R~E~Oezplcpoe a1gr.a prior to the ioeuanas to him of his at&cc pay asrrant. The in8truwnt thursfore operates in tArOti&a9d in f8ct s8 a %Qhrp eZS.%&!UWRt, end LBURt br oon- aidrr~~d SC suoh. 'hl VOiiditr Cf- CiGOhifAStURiL8ntdSpSll6$ upcr, the assl~nebilitp.of th6 U,oLery of 8aid a-ployee, rhlch 6618ry th8 warrant repreasnta. It i8 t0 be pOiCt& Out that thei e~ri@3t8eEt Cal18 f@T the ~UrCh880 Or train8f6r of tr.o warrant or thank due the sapioyes. ml18 iastrumtrnt emi ths puestlon you cwkT&itczplatt, tb6reforta, that tba lrstrulnent Is an esnQnm6at of 6 wsrr6nt or check due the employeei because ot talery which .",a~ b6an earned. In thi8 c.ancttion it is to be pointed out thet the unearned malarp of a public officio1 aannot ht sr;aigned. 5 COl?FUS Juris 873 CoZtcin8 the fO~lUWiRg f8Z@Mg;e: "The r88aon for the rule is not 8 desire to protoot t&s private lntsreat of euch of- tiarrs, but i8 one of publlo policy, based on the neoaslsity of sacurine, the aftioiraoy oi ths publia service by lnmuritg tbst the fundo provided for its ~latananoo shall be received by those who nra to perrormthh work, at t&t periods appointed ror tholr paymtints. mhpplicntione of rule. The rula that an offfoar camat n&e a raiid asai@Imant by cntioPp6tion of his serlery or fe6s be born ap?litd to siawnyd-iff'arent c:aesee of offiaarn, including orzp offloers, naval orriosrs, superintendent in dapsrtmeo t of public cLariti66, assistant parlxmentarj ccunael for t&e treemurg fn EnglenS, clsrka in She United f?.tEtcE trst36Urg dO'?Oirt.aent, ?napeotora cf cuetwA3, xlel5. Osrr16r5, If@thouor ka6~6rs~ couc:y es06s3,'cr6, civctry treamrerr; I c14rkd or tha peach, clerks of wurt, nuotcre In charicory, re- cefvers, Cistrict ar proaeouiir*: attOrn8ya. sheriffs ) paica.?l8n, STUI5unioipal firan%n."

Honorable Tom C. King, rake 7

TLe Suprem Court of Texas in tbe case of Stats Blatlone Bank or El Faso VS. Ylnk, 24 s. if. 256. held that thr above quoted rule applies in Teaaa, and stated as followa: (at pages 257-258) ". . . .The law pmridoa ooapenaa- tlo nror otricial lenlo a in order to enable the offioer to be free from the oarea O.r aaklng provlaion r0r his own rupport and that or hi8 rmily during the term of offloe, that he may devote his wsolo time to the dlachargr of the dutisa or his orrloe. Ir such orrlcer ia permlttea to arelgn Me arlary or reaa before earned., he as9 thus deprive hlm- self aEd melif 0r thls support, and to aeouro it he muat look to $0300 other source. thereby aeprlvlng the atats 0r the careful end thoup,htful attention that the publio lntereat demnds. A hunsry man 1s weak in the precrencs of temptation, no setter what may be his ability to with- stand it. in a sta to of IddepenUenoe. To deprive ruch an otrloer of the mana or daily support for hlmaalt and ramii~, while his bi;Pe aust be given to work in whhbohhe oau axpeot no relief, would. be * .~ a strong induonment to resort to aathods whloh, ir not dishonest, ma0uia at least be inconelstant with the yubllc good, end the dlgnitg of his OfflOe bs deatroped bT losing the rcspaot and conflbence or the pub110 . . . .* sea also tha cam of Villliaaa vs. Ford, 27 s. -2. 723. As to just whiah eaployeen are oonsldered pub110 officials under the holding of the Supreme Court of Texas lntha P’ln* oess, m:re, lo undecided in Tame. ‘i;e uan, however, see the extent towhioh the rule has bean axtended fn the quotation iron i Corpus Jurls, supra. The court ot Appeal8 0r tintu0ky, in th8 OOSO Or SOhIIiitt WJ. DOO~i43, 1LC 9. Wrn197,

XonorabLe Ton C. King, page 8

hsld the rule to apply to e rlremn. In eo holding the court derined the tam “public oftlceP eu it is usrd in this oonneotlon, ae rolloios: (et @age 198) “The word8 *rubllo ortloer, 1 ma ueed In theme oplnlomr, man one rho rondera a pub110 servloe; o sertloe ln uhlch the can- era1 pub110 ia lntersatea. For Ii It were not SO the reason for the rule would be wanting, ineemoh as all the opinions ex- prassly aeolars that the rule lo not adoptad for the benefit or the one rsnder- ing the service. Is a tlrenan n public ofrlaar nithln this raanlng?R The Supreme Court or Missouri ltteca+lad the rule to an aselgnment made by a post orrlce mall aar- rler. S8e State ve, Wllllamoa, 23 6. V. 1.054. The rule announced above, however, doer not apply to aalarlrs or *rages or tees or public of- riOera uhioh hava been earned, although the sans ars ,unoolleoted. The Court o? Civil kppeela OS Teme, in the case of Sager ve. Glty or lFao0, LO S. W. 549, writ or error reruard by the’Suprane Court, so held. Tha oourt stated 8% follows: *- ~; (at page 550) “r . . . %(I do not hold that an of- ficer cannot assign his earned fees or salary, beoause the right to do so would not produoe the ease results that wouLd follow the snrorced application Of much compensatloa to the payment of hle debts. If the money were in the treasury to pay tha oifloer for the services rendered, there would be no InUuoemeaf to sell him claln for less than its race valur; and, It the zoney were not on hand to po,y ror the services rendered, it might be neo- essary for the wrrioer to dlsoount his clalrP, in order to &et the maans to sup- port himself end f8~lly . . . ."

Honorsble Ton C. Klll;~, pegs 9

The ~a)r~eprlaalplo \‘a~)announced by the court of Civil kppsals of Texan ln the csss of Tho;apson va. Cu;u;;, et al, 35 3. 1. L12. The oourt atetrd as : /*It is 0lrarly Izaplird from thosa authorities and tbr others cite4 In sp- psllant*a brief tbt when thr official aerviors era perfomod, and thr salary or 1~4 earned en4 due, publlo polioy does not prohibit their arrlgnment . . .* Th6 Oalvcston Court o? Clv5.1 Appssls In thr oar4 of Bated vs. Flrrt Stste Bank in Csldwell, 105 S. 91. (26) 784, rrlt or error dismissed, bald thst a public oftloer’s fear ware sss~,aable after the nape ha4 bean eemrd, rsgsrdlese of the fact that they ha4 not been oollected Prom thr Stnte Comptroller, snd b state warrant for the 88ms had not been Issued. Ths holding In that case aonoenad fees of a tax colfraotor which had been ase&ned after thal had been eerneu, but prior to the lssuaaco ot a state warrant by the Coap- troller In paymsnt of the BBIOO. Yourma advlrrd, therefore, that the tmeernsd ealery of a pub110 cftloial Is unersignablr, bat that ths portion of hia we&m or sslary which has barn earned may be eral$nad prior to the tiao e warrant In payment of the sass 1s 145u4d. In this eonneotlon your atten- tion is again called to tha hat thst the parparted ln- ,’ strummt considered in this opinion r’roltda thet ths warrant or oheok la due the e~ployre. Your attention la further called to the fsot that where wa&es or salary were properly assIgnable because the ease had been eornsd, but e Warrant for tha mm had not 88 yet been issued, Artlolc 6165s. Section 6, Vernon’s Amotatrd Cl911 Statutes, would apply. Said article readi as follows: *Such bond when so aprrcsvsd by the county JuEgs eke11 be fitid, together with the said aft5davlt, in the County Clerk’s otfice in the County in which add loan broker is located end doing buslnese, an4 ths said bon4 shall be rsoordad at length by the County Clerk in a well bound

book kept for tile t pur~:onri, TL<>t$.$Ct).rq$j- sigarnent of weg.49 3x contract provi4ing for the purohase oT !:a;!es, mortgages, i‘cwr of Attorney to oollcot or o%br tra12~iar of the ealary or vmgas of 0 mrriled ixm 6n4 each bill ot oale or chattel .aortgaEe u~an housetold or kitchen iurafturs cl H aarried aan shall be. said unless the rie.:;iebe msde end giran with the ~ooussnt of ttro wlf”e, on4 such consent shall be evidenced by the wife jofninp, in the assiFnment. mr,rt~aga, Fowr of Attorney to colL0ot, or other trscsfcr cf salary or wfqas on:3 the aifriing GP her nma thereto RIX! by her xepera+:e scknowled&- ment thereon, taken plnd rrrrrtlf5.d to by II Frcpcr offlosr, substent5ally fn the rao4e provided for the acLnow2e4gment of H wife In the conveyance of D howsetenC.n The above Q:,iOtsd article snu?d apply wkcre wages 37 eolary wr6 balng saalgned prior to the loeuaaaa of the wnrrent in paym6nt o,C 3~8 E~zL:E. t:r necaerlty it would sot a~@g u;hera t!ze *.wwrant V:&S Carrued ffir the eam, beoeuee then t&e aeze nwld not operets 06 E ceg,e eeeignment, but would operate aiu the trsnsfcr of a SCR- negotleble instTum6ut or a8 the CaSkiii?&-inOf the e.%- ~loyse’a rey chsck. IA order thrmt x4 z2y ha able *to ascerta5.r~ the validity of an aazignxent of a state warr:lnt, ?t is new- efsary to sefd exactly vit,at type 02 eai instrument such e u0+~at LB. The btet exg?eanisn a~ to the cL;-ratter cf R stn:e warmnt ~88 3z<!tl Sp fu:'ga %orrow of the Court of Crimdnel Appsulrp .:-f 3~3s In the mse of F&mar 0. rt.ota, 58 s. vi. (22,) 95. Tie oourt I3tnte4 as follor~s: Tfi4 V::6rlYIlit ISSUQd tg the StTttt? fOS '2,626.95 was nnt a nngotiable instrument in the aansa that it scsu34 have sntltled nn imocant purchaser of the warrant to acquire f?ms tie st:ite the aniwnt ototsd on the fuse rf’ the wsrrant, but auah pur- ch~x?iee w?wld aquiz-a z-in %ora thar, a ri@t tc: collect from the State tha ezwnt that MI owed the appellant, msaly, $,626.95. Lo authority tar t.he issurno8 of the war-

Honorable Toa C. King, ~"6;s 11

rant for th6 o?rAlnt stated in its race or to pay the full amcunt of such warmat eximtad. No purchaser of the wr:ant, whether In good faith or not, mild la&ally demand fro3 the state the ragment of mere then the amunt which xa8 owing. se6 EDOr. or Law Froo., vol. 11, r;. 531; volume 7, p. 818; volum 36 p. 895; Corpue Jurla, Vol. 59, & 8 406; Tar. JUT. vol. 11, Q. 6t?5, 8 118. T3pesklng or the negotiability of a werrant, in t%r saotlon of Corpus Jurls mentioned above, it la said: ‘It Is not, horetsr, a negotlablo lnstrumsnt In the mm84 of the law narchant 80 aa to shut out am against e bcne fide purohaeer ln- qulrlas 6~ to ite validity or preclude detanmr or sat-offs whioh aould be assorted as against tha orlglnal paysa. l * * A.6 ag9inst tha 8tptr ths soeigaar aoqulres no greater rQhte than the party to whoa the warrant was originally ltwued.* Vroa the Ssotlon of Texas SurZapru- denoe mentioned, tha fol.lowlng Is quoted: %hll.r warrants are in thr ordinary form of oo~merolal paper, they do not poeseas the quslltles of such paper; they are not negotiable lnatruments.’ . . .n *- .I Thdr8 oau be no question but that etste war- Cent.8 are not negotlclbls lnatruments as t&a 8asa were known under the lau of mrohants. Your attantIGn ie next called to Article 569 of the Eevieed Civil Gtetutas Gf T6xnal which reada as followsr "The obl@es or easlgnae ai any written lnetrument not negotiable by the law Gf zmrchsnte, zay by asalgn- msnt transfer all his lntrrast thara- in to another." !% era unable to find any reason why Art1010 569 would not fgply to state warrants. Under the author-

ltp of the above quoted article, it has been held that oredlt msnorandum may be assigned. See Rsd tbtor Co. v. Goad ‘Motor Co., 24 5. W. (2d) 67. It was alao held that tlar checks issued by en employer are assignable by en mployss. See Aldridge ‘Lumber Coaprnp ve. Graves, 131 S. W. g1.6, writ of error d-kalassd by the Bupenr Court.

Th5.s dspartmsnt ruled in en opinion dated July 1, 1937, addressed to the Honoresbla George A. Sheppard, Comptroller of Fubllo Aeoounta, Hhlch opinion wes written by the Eonorabls SoOtt Gaines, Flr6t Aaeia- tant Attorney Cener al, that whlla W>te wnrrante are not nagotlablr lnstrumrnta, tha $838 my be aaslgnaa. Said o?lnion reade in part aa follows: “It is the ~41 Battled law of this State that Etate or oounty warranta are not negotiable inetrumenta but are NO- nep.otlablr lnstrumsnta r;lthin th6 law marohant but the title to aucb wsrrmnt may be transferred by endorsement anb de- livery, but an assignee would aoqulra no greater r1Rht.e than the garty to whoa the warrant wea origlnnlly ioaued. In other words, an ordinary State warrant drawn ayei-t the Stats Gsnoral Mvanue Fund .-in the hands of an ses&nee would bs eubjeot to the aazae defensss and off8ets whloh could be esssrted against the or- iginal payee. Spsrr v. Stata, 58 ?. X. (26) 95, 123 Tax. Cr. hip. 188; tit bt Belton v. Earria Trust and Ssvlngts 8ark, 273 6. W. 911, afflrsad 263 S. Laeator v. Lopez, 110 TOI . 186 ‘i’il;64’S. V:. 393; Galloway PD. Sheppard, ‘69 s. P;. (26) 4l7 (wit of error dimalsaed). “Therafore t anrst-.erlng ycur flrat queatlcn, you are reeljeotfully sdvlsad that a warrant drawn against the State General Rrvenue Fund is not (I negotiable instrument in the sense that tha law mar- chant would shut out as ctpaiast a bona fide puroheser lnquirlas 8s to ita vel- ldity or rrealuds defenses or set-offa

whlah cou?d ba asserted a;la:nst the or- l~lnal paycre. A4 o~vx!nrrt the state the aerf@nas aoqulres no prsatrr ri&ts thsn the- party to whom the warrant ‘was or- iginally issued. ln other words stats werraata are not negotiable instr~enta l’urthar then that title may be trans- Ierred by anQorsenrnt and delivery.” You Oomuwnt in your letter on the faot that the ions for the vaTrant sss&nment is not sworn to berore a notary public. You 6re advised that It la anneoaaeary t&t a written eesigmrhnt be morn to and ecltnowladged. Sea 6 Corpus Juris houndan 1099. You ore a6xt conoerned with wbcther or not aaah warrant asslgmant is binding upon th6 state aTent who delivers the warrnnt to the paye8. As a pneral rule, valid essl~nmente ere hindlng upon the debtor or peym, Then he la given mtloe or the aasifimtnt. This rule has been appllsd by the courta cf thla state to n sltustlon where a non-atgctlable instrument is transferred under Artlalc 569, mpra, sad it has been held that uadrr such artiole, If notice is clvta to thq debtcr. ho la bound theraby and has to deliver said rerrant to the esslcnee. Thie cono1uslcn lozlaally folloa;s frcm the statement of the court in the case ci Gulf C. k S. F. Fy. Co. v. Xldrtdgo, 80 s. 7:. 556, as follov:s:

l - *Article 309 of the !?evirad Statutes of 1895 provides that the seslgme of any instrument asntionsd in the precediw erticle my maintain an action thereon in hla own mm, but ha shall allow every dltrcount and clefsnae arc?lnat the same whtah it would have been subjrot to in tha hands of any 2rtvlous owner berore notice of the es.6ig.n- sent was given to the defendant. The pre- vious article referred to is artlale 308, which authorize8 e pledge6 or ase&nee of any lnstrmant not nagotlabla by the law narohant to transfer by aaaignment his inter- est to another. It is true that thsse pro- vialons of the statute tiss the expression %rltten lnstrtment*, but we are inclined

to the o:!iniol; tbst : L cm bt:. locksd to In corder $3 c?eta:r,f2e upori who9 the Sup- den r~.sGn to estotllrih the fact that rey- .mtnt V.-SE?lacu Yit2 orating ;q- ?:ith;iut cctlca nr tt;;6 rar3~xlant. T&5 btGtUt6 ~rooieae thnt tti~ nzol~nzsnt la ::sde subject to 211 ::f the ,:efe.lscs bsfcra ZIOtiCo Or the S$~i~nclWIt MS ,c.iven to the Cefcndant . The use of the OXpZ-4Z6iOn 'notlce of RaL'fGment v:as cfvcn Co the .; efendcnt' izplies that the Cefsndsnt mutt bo &iven notice of the asalpment in order to pre- clude him rroa sasertlr,: a settlemsnt tloda ?,,ith the ori,gi.nel creditor. The rule my pcsslbly be othsruioe 4th reftracce to negotiable Instruments. A debtor v&o settles cith the original creditor e nsn- negotiable claim, +lthcut notics thet it hae been trecsferred. ought to be yro- ttotsd; and we are Inclined to the opinlcn thet the burden of proof recta' upon the aanipnee to establish eom fact indlcatirdj that the debtor had notice at the ti?ne the oettle~ht ues zade with the origins1 creditor. . . .* The says eoccluaion my also be dram froa the langue@a of the %utrme Court $9 Texas in the cam L oft Sta;l2ord Coqreoa Cm;,eny VR. Farars 'L Yerchanta Katioml Bank, 143 2:. :':. llL2, El8 z=ollowe: "The rvcsi;lt v:aa cot *EirF:nable at Cow.c~n k:iv; and this ;.:urposa 7f Ikie Lezls- leture in ecacti~ tht article copied ?ZiQBto zlske such lnetrment scsiqabla, eo that the pc-~son to :::hc?a aucb inntrti- nents shosld be r.e:;able z&+ht asnign t.!is contreot, thus ;rlac.fnF. the so:ci,~ne4 in tLe place of the assignor. Eut th6 sani::nca :;f ruch contraat cwid not have suet? t!.e 7..:rsr thereof at cmmon Law, but Zust have used the mm of the origIna obll gee. TS enforce the right acquired under art?cle 3G8, the Ln&lelature enacted

Bomrabla Tos C. King, paps 15

artIel0 309, Reviaed Statee, Welch reads: ‘The aael~naa of any lnstmmant iasentloned in ths pracedl~ article may mintsin an action thcrron in his own name, but ha shall 0110~ every discount and defense agr.ainst the saoa rhloh it w~ald have bean subject to In the hands of any prevloua owner bofora notice of the aaslgmen: ma given to the defendant; and In order to hold th6 aes?@or es surety for the paymaut of the Inatrumnt, the evolgnas shall uea bus dIlL~ence to aollsot the mm. ". . .

wS~tIola 309 made it the duty of the bank, when It received the raoalpt, to give notice to the Cor,press Coz- yany of the transfer in order to hold the obl.lgor respon- sible to the asnlgnca. . . .

“In Sraarlngan v. Lucklap It wee said: 'It me the duty of the aaa&nea of a non-naectiable note to promptly rotlfJr the maker of such trsoafar. It 18 even held that a transf 6r, a%ve as ber.waen the pays8 and the lndorsae, la not cmpleta until such notice ws given . . .* *. . .

“By a strong iicpllcation article 309, supra, euthorIzee the obllgor In a non-na&otlable contract to raoognlzs the oblleea aa ths owner of the pro;trt;l until notified of its aasigrlmsnt.” It la therefore the opinion of thla dapartaant th+t under be holdiwa of the above quoted casea and Artlols 569, If notice f an’askl@mnt or transfer Is brought to the attention of the tste spent whose duty it 1s to deliver the werrmt, than eel4 t&a egent Is bound thereby end mat pay the r!arrant to the 8SIgtU!J@J. In this respact you are edvlaod. hl:wevcr, thet when otlcs of an asalgnment la pr6%6ntsd to the yayin;: want, whlhh gzlgnmnt shows on ita face to be nn aanignment of unecrnad aal- r, or ra:zas 0r a public official, the ~-oyIc~ a6‘ent mat consider uch asalpment wa voi!l, and my not r:sy the saws to the asei@me. s pointed out by the Court cf Civil Ap?,ealo cf Texas in the case f s1111e v. Yaatharforcl Co,5praea Co., $16 s. -. 472, pnymsnt to an g~lgnee unc?ar B VOID ae~Ie,namat Is no pqment, and the fess are till oacollected fees cf cftlca so far as the eaployoa la concerned. gwevar, where the laatrusent rcrcltae ttnt the wor:~ant or check 1s us the azployee and there Is nothing lndlcqtlpl”, the same as being or unanrnsd salary, tba as-lgnment wuld have to be recognized ithln the ll~ltatlon of .irticla 6165~3-6, suym.

Eoaorabla Torn C. Xl~8, pita 16

“7. Xunt a warrant rroeivrd by a ww- rant company under such en nafilgnmant be an- domed by the payea or by some one leeally authorizad to endorna the ama for h1.mbafora tha State Treasurer is authorized to pay the aa%e to the holder thereof? “8. If 80, is the form hereinabove set out aufrlclsnt 80 aa to authorlza The John Doa Company to endorse a warrant received by thra by virtue of an aaslgnmant with thnt f ora?

“9. If this form authorleas’ thin oompany to endorse such rerrants for tha payaes thara- of, which of the following steps should be taken by Ths John Doa Company before t?;a Weta Treasurer la authorized to pay warrants pra- aantrd to him aa Stnta Trees-r by The John Doa Company If the mama of the payaa of auoh wsrrenta has bean sndoraad upon the mm by The John Doa Cospany: *(a) Marsly present such warranta for papant? -(a) File erlodIoally a sworn stato- ment that they lpTha John Dca Company) have written authorlzatlon for all warrants yra- + aantad within thnt period to endorse the paj+as’s name thereto?

“(0) keooap~ny aaoh warrant presentad for payment with a sworn atatament that The John Doa company is authorized to endorse the r;ayea’a nxde thereto?

-(d) Accozipany each warrant Fresentad for payment with the orie,inal/or a carbon copy of the f;r.n heretofore set out ale.nad by the payee of such warrant?” In these three quaetions you are concerned with the typa of information tha Ststa Treaeurer should ra- quira before he rays a at!ita \%arront to anyone but tha payaa therein. There can ba no question but that when

Honorable TOE C. zing, i:aca 17

an assigcae nsrely presents the warrant to the State Treaeurar without any other evidence that the sem he8 been properly eaiignea to him, the State Treasurer would be unauthorized to make paymmt on the warrant to the assl(;nea. This we8 the holding of the oourt in the cam of Attoyeo River Lllaber Co. v. Fayos, 122! S. ‘s?. 278. In aLscueelng non-negotiable instrumsnte the oourt stated as follows: . The cheeks In question n having none of ths'&mtial quellties of a negotiable lnetrumnt payable to bearer, the ners re 44tl no pm- session of then by the app8llae --T-=- sumution that she ia entitled to the rlzhts of iha~pemon to whom they wore issued.-The evldenoe failed to show that appellee had ao- qufr4a the right ana title 0r the original OvJner 0r said cheeks, and therefore rells to show that she was entitled to rscomr thereon. . . .* (Gc@arecorln~ ours) The 3iprs33 Court or Teree In the teas of Cragg v. Johnson, 37 Tex. 558, lc apeaklcg or a non-negotiable lnatrunett, said as tollows:

". . . A ;GsreI transfer by delivery xl11 not enable ths holder to rscover, without avsrrimnt end proof of such bone fide owner- .ship. . . ." Eowavsr, if tha warrent is endorsed by the peyse ii~a~~~ataiv4rea to the werrant oo~tpany, suoh endoreezent and dollvery would ba sutriclent to transfer said warrant. Your attention Is oelled to the feet that Ytate warrants read "my to the order or ." Ronorable Scott Coinerr In the opinion prsviouely wfroa, stated as r0ii0we: ". . . but the title to suoh weri.ent aay ba transferred by erdorxmmt and deliv??ry, . l .

*$n other v:oras stats warrants are not negotiable instrumnto further than that title zay bs transferred by endor;erent and delivery."

In the cam of City of Belton v. ilerrie Trust end Savings &ink, 273 i. ":. 614, the court steted as r0ilows:

"That zunlolpsl warrasts are not r.c~stisblo lnstruxente withPc the law mrchnnt, Suxtbsr thah that title nry be trennforred by-%?%%- i-ent ar.d deliver , is well settled."

Yhs Y.aco Ccu:t of Clvll Apceols in the oam OS .:.00a V. Yparks, 4% 7:. 1,:. (~a) 142, stated 60 r0ii0wa: mEow4v4r, the rimre feOt tlxt the instru- zeht wao nonnegotiable In the eense that a pur- chavsr of nrsgotlable popes who buys ror a val- uable ooheideretlon eith,sut notloe, takes the earn free OS equities In ravor o?‘ the a&or, does not Atigste against a8 assignmht OS the obll~stlon evidmoed thereby by lndoreaztvnt and delivery of the lnstrumnt. .hethsr it be denoi&mtad a tote or not, it was the prlzary obllgi\tlan to pay mid was the svldenoe oS the debt. The fact tht it was trade payable to ,‘. T. ‘$a!issor order, evldenoes the Intention of the parties that title thereto should pass by Lndorsament and delivery of the Instrument, end such was th;! effect thereof. . . .n St is th% opli;ion of t&a dapartxmt,thereSore, that while e rtate warrant is, not E negotiable lnstruzcnt, the sasx nay bo transferred by ecdwearent bnfi delivery. xc anf3w0s to your q,uf?etloz nu3her 8, Vu?3 ere un- able to see any r6ason why the fo,rm which you include in your letter xould not bo aufficlsnt to authorize the ;ohn ;;tje Co~~ang to endoree a varrant racaived by them by virtue or ec a;aigm.snt. In your question nutiber B you ar? concerzed viith the authsrity of tLa Treaaurar ta rnw!;rzim on endarseamt isae hy a warrant cooprng In thm naze of the cajree under tte authority of the previously dincussjcd dower OS attxuey. There can to EO question but that when the Treasurer ~227s e warrant endorsed in tbls manner he Eoes so at h:s porll. Au pointed out by the court In the ease OS ";fll.lo v. tatheriord col;pr0ss co. ‘ 66 i.. i;. 472, pnyE.0ct to &xl as- ei;oee mdga void nsskoz.?;ont IG no payzx~~t at all. ~hsre- Sore, the T~~esurer should require ouuh iniorzutlon con- oerniog the nuthority to endorse pey(~s~3 nfU?ieon IYWrrsnt 88 he seeie will proteot him3eli. There o!in bc no qusn- t:on but that the m~l;od yoti s&Jsest in nwher 9 (d) - that of acompnyiu& each warrant with t!lo oriLxinal or a co~,y of the authorization - r..c~.Q.d be the rret,hoc¶ Chnt would

Honorable Ton C. King, psge 19

beat groteot the Treasurer. Eow*var, any of the Eethode you suggeet w(xll% be rrufficlant 1P in iact authority for the *a%ors*&ent hd baen given by the pay**. The .pro- blem which ttil8 question prosento is one of proof in ca8* of a conteet arising over a .ptxrtlcular warrant and not a problem of authority of the Treasurer, "10. If the fan: heretoSore 64t out is not sufrloisnt to authorize the John CO* Coqmp to endorm upon a atnte u-arrant the m&e of the payee, what steps would have to be t&en by that aonipany berore the S,t.ate Treasurer would be autt.orized to pay the sanie to The John: Co% Company? ::oul.d The ,John Eoe Con;pany hava to file with each state warrant upon presontsect ror payrkent, a 2ower of at- tortxy to endorse the ntir;eot the payee upon the a&e?- This departnsnt is unable to find any reason why the enclOSe% authorization would not be auftlclent to authorize the John Poe Colr;panp to enborae the state warrant in the n-6 of the payee. The enfforsement fe part of the written assignment plan and as ha* Seen previouuly stated, ouoh aoslgnJn%nt Goeo not have to be aoknowladged or be und*r oath. "11. If your answer to question ntmber five ie In the negative, is there.any stat- utory or constitutional prohibition whioh V?OUl%prevent the Stat8 Tr*a8UMr irOni re- quiring a power of attorney to be tiled and by so doing keep an acoouot/or record shoa- ing that the st.at% ha8 discharge% it8 ob- ligation to the payee of such state warrant? "12. Cr 1s there any statutory or Con- stitutional provision reqolrlng the State Treasurer to keep aooounte/or records ehowing that the state bee dlsoharged lte obllgatlon to the payee on a state warrant?" A8 prwiously pointed out in this opinion, Artiole 4382 requires that the state Treasurer register each warrant isher the saw is .pld in a wwarraaC paid reglater" and Paid register is to 8hW the number an% amOUnt of eaid warant. This is the record that tha l%glaLature has pro-lded for acd whloh shows that the stqte hes dl8oharged its o?J.igation on a partioular warrsnt. %iowever, there is nothing in Article 43e2 or in any other 8tatute or In

the Constltutton r:h:ch mwld prohibit the Ztote Treasurer from keeping a record Ehowing to whom a particular warrant wed >ald, nlthcu&h, OS previously pointed out, the sam% is fret rec;uired under Article i,JP2. In line with what bee bean previcuslp stated, the State Treaeurer would heve to reco~nlze ar. er:sQpmat of a state pp varrant rer.srd- less of the fact that t::e ssaignee did not fwnisb the Stcta Tre~surcr with the power of attorney eigne4 by the payae. There onn be no question but t!mt un3sr the de- cieions in this atate, end under Article 569, such a written ttseiezwnt aa is enolosed in your lettor aonld be auT?fcieat to aiwlgn ~oallblp a payee’s interest in a state pay warrent, an4 ouch nsalgnment wuld have to be recognized by the State Troesuror when the sma Is pre- sented to hi3 =ith proper and sufriclent evidence of tke tmnefcr. “13. If a0 statute nr 00nstltutlnnal ~rovislon rreocribes the .zanner xhereby e ~ovexnmental ,Functlon ie to be performed 2nd no 9ti:tut.s or constitutional provisicn 3rohibit.e t?x use of the most eff~iclant ,-nd business llks manner, shrul4n’t that mtthnd :f performInS such function be used so OS to best protect tho lntereot of the eta te:: !* Cndoubtedlg yaw Guestlo:: numbr,r 13 muat be azsvemd in ths cffiraative. ikcqavrr, 05 to Just what in t_?e most efficient and bmlnes3-lika msnn<:r of p:ar- ? fcminp, 3 ~ertixulnr funation~io c ~u63tioc which in this csae wuld rest within tha dlecrotion of the 5 t ”: f 3h,oi?Ur6r 80 long 05 !:s Octs within the wlea on9 lfaitatlone set 6own by the Legislature In the articlea dlncuhsed ~rsvioualg in this opinion. “14. !:ould the Stste Treasurer wx3 the sureties upon his official bond bo lloble to t.!w etete if payment was z%de \~f werrsnte proasnted for payment where e sworn stateasnt vrae tiled by the pr8sent:ng parson or corporetion that ttia rrcsontlng pareon had been nutborlzad to endorse thereon the naac. of the pzyse, if In fsct no such author- izatlc;n existed?”

"15. i'OUldthe per823 63 :xcocsGin~ztbC rarront for oayzmnt under siicha evxx e\eSe- wr?t b6 legally liabla to the st?t~:'~ Tne answer to your que5tlom a8 to tba liabil- itg of :he :'tateTre.esurerend the ye:'soncr+.emtlne the rorront mi@S depend in each lns?t%rreon tba racts or the pUrtlCUi%r CGSO, sad we preier not to atte-tptto lay down a eencral rule of 1%~ based oo a hypo:hetic%l puastlon under th*se circunstanotn. “16. If your a.nsw.:r to question Five 16 in t+hone@ativo, and your nnsw%r% to questlon Fourteen %nd Plftcen ara in the affixatlve, Uoen the ioct that a public offioia1 ana his ouretlen 1~1111.be 1~~.8llg !fable GG the st.at%for auoh publfc ofPicl%l~% non-fonsasca or nlaPeas%nce in the prformnca of R #overumntsl function or that scme beok or corporatlbn or perecn Hill be l%R"lly llaS1e to the aiate for breach of s warracty or for zisrepresentstlcns, juatifp lnefiXciant ~35 unhueinaoe-lika jxrtormncs Gl a ~ovnrnnextel function when sn efPicient and hu~insss-like mnnsr of pzrfoxxi~p,ouch E?vcr:im%cL%lfwiction is n:)t p?ohlbited by etztute cr comtitotion?"

;iven if ?2;e .?tateTreosbrcr or scrle5:z2kinc~ c3ccem :cre ~-:Sconollylinbie in 8 prtlool.~~ case, Chi% aould by . Justffy the Lteta Trfasurer's n.+t cc:s>!l.vln~ dth :o %.<iRmY ;be,Jew na to the tyT;e~4 warrant roz.-rintcr%ho is to kaep. .%ers CRP,be no qoe~tfoc but that the Ctste Trcsaurcr should iahere strictly to Cbc rule% CJf%‘I?& ::soyln$~cf verxant Qigister s ~.8 set out, by the ~~~gi~i~t~~r~,and 6130 ch0ula :dapjtsuch rula6 as i2e thinkS nscess~ry to st?tiElyhiwnelf Aat a rsli6 sssim-mmt or trensl‘erof %n e3oloyee's any ;srrent he% been aade before he Fiikerp%y%i%nten such % asrrant to c.%enot tbc Foyee therein.

"17. If ttieState Tmxxwrer s~:ould !:6ecnc record ahcwing,tlis t the Ot2t-ehas fuI?llled its otILT%ticn to the Tease of c 7xrror.tand dot?%not xguire persons rr,%antlrq>u;arr:lnt% ubich Mse ?.otbeen eodcrsed by the r;syeeunder %% %s!signm+nt to prssent neparote and actual uutboriza- tlcn t? endo: the sainain tha naas of

Ctete Treszu:?r in effect iAs pay6a, isn’t tlif! mklng such person a pcg111~a-Tentfsr the st:~te’i If 80, can he lcrolly do thls’~‘~ Under the eituotios you eecume i.nquggtlon number 17, the 5tat.eTreasurer is not mski~: such a parson as you describe a ~ayin& s::entfor the state, becmms suoh payment by the State Treesurer is for the purpose cf Cischarglng the s:ate*a liability on tAtiwarrant. The peyzientby the state ‘Yensurer is to the lndlvidusl as asslgnsc~or trans- fsrer of the peyea, nnd not to hi.?l OS DD agent to make pepent to the payas on the xarrsnt. The payment by the State Treasurer ie for the purpose of 3tschnrging tha stata’s liability under the mrrant in all cases, and it could not be sei,dthen t&t ths StrctoTrcscsure= wes aaklw$ a paying eg&?t out of the po:con to when he saya the Warrant. :l’e trust thet ths nbove discusaim of the qu66tions fropounastdin your lettar ~111.sotiaractorily ansnar your Inquiry.