By Thompson H.B. No. 2270
75R4619 CAG-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to funds tendered into the registry of the court.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 117.001, Local Government Code, is
1-5 amended to read as follows:
1-6 Sec. 117.001. DEFINITIONS. In this chapter: [,]
1-7 (1) "Bank [bank]" means a banking corporation or
1-8 association, an individual banker, or a state or federal savings
1-9 and loan association or savings bank.
1-10 (2) "Clerk" means a county clerk, a district clerk, or
1-11 a county and district clerk.
1-12 (3) "Registry funds" means funds tendered to the clerk
1-13 for deposit into the registry of the court.
1-14 (4) "Separate account" means funds transferred from a
1-15 special account into a separate interest-bearing account.
1-16 (5) "Special account" means an account in a depository
1-17 in which registry funds are placed.
1-18 SECTION 2. Section 117.002, Local Government Code, is
1-19 amended to read as follows:
1-20 Sec. 117.002. TRANSFER OF UNCLAIMED FUNDS TO STATE
1-21 TREASURER. Any funds deposited under this chapter, except cash
1-22 bail bonds, that are presumed abandoned under Chapter 72, 73, or
1-23 75, Property Code, shall be reported and delivered by the county or
1-24 district clerk to the state treasurer without further action by any
2-1 court. The dormancy period for funds deposited under this chapter
2-2 begins on the later of:
2-3 (1) the date of entry of final judgment or order of
2-4 dismissal in the action in which the funds were deposited;
2-5 (2) the 18th birthday of the minor for whom the funds
2-6 were deposited; or
2-7 (3) a reasonable date established by rule by the state
2-8 treasurer to promote the public interest in disposing of unclaimed
2-9 funds.
2-10 SECTION 3. Sections 117.021(a) and (c), Local Government
2-11 Code, are amended to read as follows:
2-12 (a) The commissioners court of a county at its May regular
2-13 term after a general election for state and county officers shall
2-14 receive an application from a federally insured [any] bank or banks
2-15 in the county to be the depository for a special account [trust
2-16 funds] held by the county clerk and the district clerks. The
2-17 county shall contract with a federally insured bank or banks under
2-18 this section for a two-year or four-year contract term. The
2-19 contract may, if the clerk elects, include a provision that the
2-20 funds in a special account earn interest. A clerk's election that
2-21 an account earn interest must be made, in writing, to the
2-22 commissioners court not later than the 30th day before the date the
2-23 county gives notice under Section 117.022 and shall be entered in
2-24 the minutes of the court.
2-25 (c) A bank must file its application on or before 10 a.m. on
2-26 the first day of the term. The application must be accompanied by
2-27 a certified check or cashier's check for at least one-half of one
3-1 percent of the average daily balance of the registry [trust] funds
3-2 held by the county clerk and the district clerk [clerks] during the
3-3 preceding calendar year, as determined by the county clerk and the
3-4 district clerk on or before the 10th day before the date the
3-5 application is required to be filed. A certified check or
3-6 cashier's check that complies with this section is a good-faith
3-7 guarantee on the part of the applicant that if its application is
3-8 accepted it will execute the bond required under this subchapter.
3-9 If the bank selected as depository does not provide the bond, the
3-10 county shall retain the amount of the check as liquidated damages
3-11 and the county shall select another depository as provided by this
3-12 subchapter.
3-13 SECTION 4. Section 117.022, Local Government Code, is
3-14 amended to read as follows:
3-15 Sec. 117.022. NOTICE [NOT REQUIRED]. A county shall [is not
3-16 required to] advertise or give notice that the county will accept
3-17 applications to be the depository for registry [trust] funds held
3-18 by the county clerk and the district clerks in the same manner as
3-19 notice is required under Section 116.022.
3-20 SECTION 5. Section 117.023(a), Local Government Code, is
3-21 amended to read as follows:
3-22 (a) At 10 a.m. on the first day of each term at which the
3-23 commissioners court is required to receive applications to serve as
3-24 the depository for registry [trust] funds held by the county clerk
3-25 and the district clerks, the commissioners court shall enter the
3-26 applications in the minutes of the court and select a depository.
3-27 SECTION 6. Section 117.025, Local Government Code, is
4-1 amended to read as follows:
4-2 Sec. 117.025. DESIGNATION OF DEPOSITORY. (a) After a bank
4-3 selected to be a depository under this subchapter qualifies under
4-4 Section 117.024 and is selected by the commissioners court, the
4-5 commissioners court shall by an order entered in its minutes
4-6 designate the bank or banks as the depository for the registry
4-7 [trust] funds.
4-8 (b) A designation under Subsection (a) is effective until
4-9 the designation and qualification of a successor depository or
4-10 until April 15 following the term in which a depository must be
4-11 selected under this subchapter, whichever is earlier. If the term
4-12 of a depository ends before the designation and qualification of a
4-13 successor, the depository shall pay to the clerk in whose name the
4-14 account is carried all registry [trust] funds due or on deposit.
4-15 (c) A designated depository shall provide security for the
4-16 funds deposited into the registry fund accounts in the same manner
4-17 as Subchapter C, Chapter 116.
4-18 SECTION 7. Section 117.026(a), Local Government Code, is
4-19 amended to read as follows:
4-20 (a) The commissioners court may select a federally insured
4-21 bank or banks located outside the county to serve as the depository
4-22 under this subchapter if:
4-23 (1) for any reason no bank located in the county
4-24 applies to be designated as the depository;
4-25 (2) an application is not made for the entire amount
4-26 of the registry [trust] funds;
4-27 (3) the commissioners court rejects all the
5-1 applications submitted;
5-2 (4) a depository selected by the commissioners court
5-3 fails to qualify;
5-4 (5) a depository becomes insolvent; or
5-5 (6) a new depository is selected because of the
5-6 failure of the regular depository to execute a new bond under
5-7 Section 117.057.
5-8 SECTION 8. Section 117.027, Local Government Code, is
5-9 amended to read as follows:
5-10 Sec. 117.027. FAILURE TO SELECT DEPOSITORY. If the
5-11 commissioners court has not selected a depository under this
5-12 subchapter, a clerk holding money, an evidence of debt, an
5-13 instrument of writing, or any other article deposited into [in] the
5-14 registry of the [clerk's] court pending the result of a legal
5-15 proceeding shall seal the article in a secure package and deposit
5-16 the package in an iron safe or a bank vault.
5-17 SECTION 9. Subchapter B, Chapter 117, Local Government Code,
5-18 is amended by adding Section 117.028 to read as follows:
5-19 Sec. 117.028. APPLICATION OF COUNTY DEPOSITORY LAW. Except
5-20 as otherwise expressly stated, the provisions of Chapter 116
5-21 relating to county depositories also apply to a depository selected
5-22 under this chapter.
5-23 SECTION 10. Section 117.052, Local Government Code, is
5-24 amended to read as follows:
5-25 Sec. 117.052. DEPOSITS OF REGISTRY [TRUST] FUNDS BY COUNTY
5-26 AND DISTRICT CLERKS. (a) If a depository has been selected under
5-27 Subchapter B, a county clerk or a district clerk who is to have for
6-1 more than three days legal custody of money deposited in the
6-2 registry of the court pending the result of a legal proceeding
6-3 shall deposit the money in the depository.
6-4 (b) The funds deposited shall be carried at the depository
6-5 selected under this chapter as a special [trust fund] account in
6-6 the name of the clerk making the deposit.
6-7 (c) A clerk is responsible for funds deposited into the
6-8 registry fund from the following sources:
6-9 (1) funds of minors, lunatics, idiots, or persons
6-10 determined to be non compos mentis;
6-11 (2) funds tendered in an interpleader action;
6-12 (3) funds paid in satisfaction of a judgment;
6-13 (4) child support funds held for more than three days;
6-14 (5) cash bonds;
6-15 (6) cash bail bonds;
6-16 (7) funds in an eminent domain proceeding; and
6-17 (8) any other funds tendered to the clerk for deposit
6-18 into the registry of the court.
6-19 SECTION 11. Subchapter C, Chapter 117, Local Government
6-20 Code, is amended by adding Section 117.0521 to read as follows:
6-21 Sec. 117.0521. CUSTODIANSHIP. A clerk shall act only in a
6-22 custodial capacity in relation to a registry fund, a special
6-23 account, or a separate account. A clerk is not a trustee for the
6-24 beneficial owner and does not assume the duties, obligations, or
6-25 liabilities of a trustee for a beneficial owner.
6-26 SECTION 12. Section 117.053, Local Government Code, is
6-27 amended to read as follows:
7-1 Sec. 117.053. WITHDRAWAL OF FUNDS. (a) If a commissioners
7-2 court selects a new depository under Subchapter B, when the
7-3 depository qualifies, the county clerk and the district clerks
7-4 shall transfer the funds in a special account [trust funds] from
7-5 the old depository to the new depository, and the clerks may draw
7-6 checks on the accounts for this purpose.
7-7 (b) Except as provided by Subsection (a), a clerk may not
7-8 draw a check on special account [trust] funds held by a depository
7-9 except to pay a person entitled to the funds. The payment must be
7-10 made under an order of the court of proper jurisdiction in which
7-11 the funds were deposited except that an appeal bond shall be paid
7-12 without a written order of the court on receipt of mandate or
7-13 dismissal and funds deposited under Section 887, Texas Probate
7-14 Code, may be paid without a written order of the court. The clerk
7-15 shall place on the check the style and number of the proceeding in
7-16 which the money was deposited with the clerk.
7-17 (c) The clerk shall transfer any registry funds into a
7-18 separate account when directed to by a written order of a court of
7-19 proper jurisdiction or when the clerk is required to under Section
7-20 887, Texas Probate Code. The clerk shall transfer the funds into a
7-21 separate account in:
7-22 (1) interest-bearing deposits in a financial
7-23 institution doing business in this state that is insured by the
7-24 Federal Deposit Insurance Corporation;
7-25 (2) United States treasury bills;
7-26 (3) an eligible inter-local investment pool that meets
7-27 the requirements of Sections 2256.016, 2256.017, and 2256.019,
8-1 Government Code; or
8-2 (4) a no-load money market mutual fund, if the fund:
8-3 (A) is regulated by the Securities and Exchange
8-4 Commission;
8-5 (B) has a dollar weighted average stated
8-6 maturity of 90 days or fewer; and
8-7 (C) includes in its investment objectives the
8-8 maintenance of a stable net asset value of $1 for each share [A
8-9 depository shall release funds placed in time deposits under
8-10 Section 117.051 if the funds are required before maturity, but the
8-11 depository is not liable for interest earned on the amount
8-12 withdrawn].
8-13 SECTION 13. Section 117.054, Local Government Code, is
8-14 amended to read as follows:
8-15 Sec. 117.054. COUNTY EXPENSES PAID FROM INTEREST [ON TIME
8-16 DEPOSITS]. (a) If a special or separate account earns interest,
8-17 the clerk, at the time of withdrawal, shall pay in a manner
8-18 directed by a court with proper jurisdiction the original amount
8-19 deposited into the registry of the court and any interest credited
8-20 to the account in the manner calculated in Subsection (b) [A county
8-21 is entitled to receive a part of the interest earned on trust funds
8-22 placed in time deposits under Section 117.051. The amount received
8-23 by the county must be reasonably related to the accounting and
8-24 administrative expenses incurred by the county in handling the
8-25 funds].
8-26 (b) The interest earned on a special account or a separate
8-27 account shall be paid in the following amounts:
9-1 (1) 10 percent of the interest shall be paid to the
9-2 general fund of the county to compensate the county for the
9-3 accounting and administrative expenses of maintaining the account;
9-4 and
9-5 (2) 90 percent of the interest shall be credited to
9-6 the special or separate account. [The county auditor on behalf of
9-7 the commissioners court or, if there is no county auditor, the
9-8 county treasurer shall deposit the amount of compensation in the
9-9 general fund of the county.]
9-10 SECTION 14. Section 117.055, Local Government Code, is
9-11 amended to read as follows:
9-12 Sec. 117.055. COUNTY EXPENSES PAID FROM FEES. (a) To
9-13 compensate the county for the accounting and administrative
9-14 expenses incurred in handling the registry [trust] funds that have
9-15 not earned interest, including funds in a special or separate
9-16 account, [for the benefit of litigants in civil proceedings,] the
9-17 clerk shall, at the time of withdrawal, deduct from the amount of
9-18 the withdrawal [county may collect from the nonprevailing party in
9-19 the litigation or from the party the court designates] a fee in an
9-20 amount equal to five percent of the withdrawal but that may not
9-21 exceed [set by the commissioners court, but not to exceed] $50.
9-22 [The fee is in addition to any fees the district clerk collects as
9-23 authorized by statute or court order.]
9-24 (b) A fee collected under this section [The county
9-25 treasurer] shall be deposited [deposit the fee] in the general fund
9-26 of the county.
9-27 SECTION 15. Section 117.057, Local Government Code, is
10-1 amended to read as follows:
10-2 Sec. 117.057. NEW BOND. (a) A commissioners court may
10-3 require a depository selected under Subchapter B to execute a new
10-4 bond whenever the commissioners court considers it necessary for
10-5 the protection of the county clerk's and the district clerks'
10-6 registry [trust] funds.
10-7 (b) If a depository does not file a new bond required by an
10-8 order of the commissioners court within five [15] days after the
10-9 date a copy of the order is served on the depository, the
10-10 commissioners court may select another depository in the manner
10-11 provided by Subchapter B.
10-12 SECTION 16. Section 117.058, Local Government Code, is
10-13 amended to read as follows:
10-14 Sec. 117.058. ACCOUNTING FOR AND DISBURSING REGISTRY [TRUST]
10-15 FUNDS IN COUNTIES WITH POPULATION OF 190,000 OR MORE. (a) This
10-16 section applies to a county with a population of 190,000 or more.
10-17 (b) If the commissioners court of a county provides a
10-18 depository for the registry [trust] funds of the county clerk or
10-19 the district clerk, those officers shall make reports under oath to
10-20 the county auditor to properly reflect all registry [trust] funds
10-21 received and disbursed by the officer, including all money
10-22 remaining on hand at the time of the report. The county auditor
10-23 shall prescribe the form and frequency of the report.
10-24 (c) Each check issued for the disbursement of the funds must
10-25 be issued in accordance with the laws providing for registry
10-26 [trust] fund depositories. Each check must be signed according to
10-27 procedure established by the county auditor [submitted to the
11-1 county auditor for countersignature] before delivery or payment.
11-2 [(d) The county auditor shall countersign the checks only on
11-3 written evidence of the order of the judge of the court in which
11-4 the funds have been deposited that authorizes the disbursement of
11-5 the funds.]
11-6 SECTION 17. Section 117.081, Local Government Code, is
11-7 amended to read as follows:
11-8 Sec. 117.081. LIABILITY OF COUNTY AND DISTRICT CLERKS.
11-9 (a) A county clerk or a district clerk is not responsible for a
11-10 loss of registry [trust] funds resulting from the failure or
11-11 negligence of a depository.
11-12 (b) This section does not release a county clerk or a
11-13 district clerk from:
11-14 (1) liability for a loss of registry [trust] funds
11-15 resulting from the clerk's official misconduct, negligence, or
11-16 misappropriation of the funds; or
11-17 (2) responsibility for keeping the registry [trust]
11-18 funds safe until the clerk deposits them in a depository selected
11-19 under Subchapter B.
11-20 (c) After a county clerk or a district clerk deposits in a
11-21 depository selected under Subchapter B the registry [trust] funds
11-22 held by the clerk, the clerk is relieved of the responsibility for
11-23 keeping the funds secure [safe].
11-24 SECTION 18. Section 117.083, Local Government Code, is
11-25 amended to read as follows:
11-26 Sec. 117.083. LOSS OF REGISTRY [TRUST] FUNDS. If registry
11-27 [trust] funds held by a county clerk or a district clerk and
12-1 deposited by the county with a depository selected under Subchapter
12-2 B are lost for any reason, including a loss due to the insolvency
12-3 of the depository, the county is liable to the rightful owner of
12-4 the funds for the full amount of the funds due the owner.
12-5 SECTION 19. Section 117.084, Local Government Code, is
12-6 amended to read as follows:
12-7 Sec. 117.084. [FAILURE OF] DEPOSITORY TO PAY CHECK ON
12-8 PRESENTMENT. A depository selected under Subchapter B shall pay a
12-9 check drawn against funds deposited with the depository in a
12-10 special or separate account on presentation of the check if the
12-11 funds that are subject to the check are in the possession of the
12-12 depository [that does not pay a check under Section 117.056 shall
12-13 forfeit and pay to the holder 10 percent of the amount of the
12-14 check].
12-15 SECTION 20. Section 117.121(a), Local Government Code, is
12-16 amended to read as follows:
12-17 (a) Money may be paid from the registry fund only on checks
12-18 or drafts signed by the district clerk on the written order of the
12-19 court with proper jurisdiction, except that an appeal bond shall be
12-20 paid without a written order on the receipt of a mandate or a
12-21 dismissal.
12-22 SECTION 21. Section 142.004, Property Code, is amended by
12-23 amending the heading and Subsection (a) and adding Subsection (d)
12-24 to read as follows:
12-25 Sec. 142.004. INVESTMENT OF FUNDS [IN INSURED FINANCIAL
12-26 INSTITUTIONS]. (a) In a suit in which a minor or incapacitated
12-27 person who has no legal guardian is represented by a next friend,
13-1 any money recovered by the plaintiff, if not otherwise managed
13-2 under this chapter, may be invested:
13-3 (1) by the next friend [or the clerk of the court]
13-4 in[:]
13-5 [(1) savings accounts or certificates of a savings and
13-6 loan association domiciled in this state and insured by the
13-7 F.S.L.I.C.; or]
13-8 [(2)] interest-bearing time deposits in a financial
13-9 institution [bank] doing business in this state and insured by the
13-10 F.D.I.C.; or
13-11 (2) by the clerk of the court, on written order of the
13-12 court of proper jurisdiction, in:
13-13 (A) interest-bearing deposits in a financial
13-14 institution doing business in this state that is insured by the
13-15 Federal Deposit Insurance Corporation;
13-16 (B) United States treasury bills;
13-17 (C) an eligible inter-local investment pool that
13-18 meets the requirements of Sections 2256.016, 2256.017, and
13-19 2256.019, Government Code; or
13-20 (D) a no-load money market mutual fund, if the
13-21 fund:
13-22 (i) is regulated by the Securities and
13-23 Exchange Commission;
13-24 (ii) has a dollar weighted average stated
13-25 maturity of 90 days or fewer; and
13-26 (iii) includes in its investment
13-27 objectives the maintenance of a stable net asset value of $1 for
14-1 each share.
14-2 (d) Interest earned on an account invested by the clerk of
14-3 the court shall be paid in the same manner as interest earned on an
14-4 account under Chapter 117, Local Government Code.
14-5 SECTION 22. Section 51.605(c), Government Code, is amended
14-6 to read as follows:
14-7 (c) A clerk must annually [successfully] complete 20 hours
14-8 of continuing education courses, including at least three hours of
14-9 continuing education courses regarding registry funds handled under
14-10 Chapter 117, Local Government Code, in the performance of the
14-11 duties of office [at least one time in each 24-month period].
14-12 SECTION 23. Section 2256.004, Government Code, is amended to
14-13 read as follows:
14-14 Sec. 2256.004. APPLICABILITY. This subchapter does not
14-15 apply to:
14-16 (1) a public retirement system as defined by Section
14-17 802.001;
14-18 (2) state funds invested as authorized by Section
14-19 404.024;
14-20 (3) an institution of higher education having total
14-21 endowments of at least $95 million in book value on May 1, 1995;
14-22 [or]
14-23 (4) funds invested by the Veterans' Land Board as
14-24 authorized by Chapter 161, 162, or 164, Natural Resources Code; or
14-25 (5) registry funds deposited with the county or
14-26 district clerk under Chapter 117, Local Government Code.
14-27 SECTION 24. Sections 117.051 and 117.082, Local Government
15-1 Code, are repealed.
15-2 SECTION 25. (a) This Act takes effect September 1, 1997.
15-3 (b) Sections 117.054 and 117.055, Local Government Code, as
15-4 amended by this Act, and Section 142.004, Property Code, as amended
15-5 by this Act, apply to all registry funds, special accounts, or
15-6 separate accounts, as defined by Section 117.001, Local Government
15-7 Code, as amended by this Act, held by a county clerk, a district
15-8 clerk, or a county and district clerk on the effective date of this
15-9 Act.
15-10 SECTION 26. The importance of this legislation and the
15-11 crowded condition of the calendars in both houses create an
15-12 emergency and an imperative public necessity that the
15-13 constitutional rule requiring bills to be read on three several
15-14 days in each house be suspended, and this rule is hereby suspended.
15-15 COMMITTEE AMENDMENT NO. 1
15-16 Amend House Bill 2270 on page 2, following line 9, by
15-17 inserting the following new Section 3 to read as follows and
15-18 renumbering subsequent Sections:
15-19 SECTION 3. Chapter 117, Local Government Code, is amended
15-20 by adding new Section 117.003 to read as follows:
15-21 Sec. 117.003. COMPLIANCE WITH FEDERAL TAX LAW FOR FUNDS HELD
15-22 UNDER THIS CHAPTER. (a) If any funds deposited under this chapter
15-23 are placed into an interest bearing account, any person with a
15-24 taxable interest in funds deposited to such account must submit
15-25 appropriate tax forms and provide correct information to the
15-26 district or county clerk so that the interest earned on such funds
15-27 can be timely and appropriately reported to the Internal Revenue
16-1 Service. The information and forms provided to the district or
16-2 county clerk under this section is not subject to public disclosure
16-3 except to the extent necessary to effectuate compliance with
16-4 federal tax law requirements.
16-5 (b) The district or county clerk is authorized to pay any or
16-6 all of the interest earned on funds deposited under this chapter,
16-7 without court order, to the Internal Revenue Service to satisfy tax
16-8 withholding requirements.
16-9 Hartnett
16-10 COMMITTEE AMENDMENT NO. 2
16-11 H.B. 2270 is amended by striking the language on lines 19-20
16-12 of page 2 of the bill and substituting the following:
16-13 contract may, upon request by the clerk and approval of the
16-14 commissioners court, include a provision that the funds in a
16-15 special account earn interest. A request from the clerk that
16-16 Hartnett
16-17 COMMITTEE AMENDMENT NO. 3
16-18 Amend House Bill 2270 on page 12 by striking lines 17 through
16-19 21 and substituting the following in lieu thereof:
16-20 (a) Money may be paid from the registry fund only on checks
16-21 or drafts signed by the district clerk on the written order of the
16-22 court with proper jurisdiction, except that the clerk may make a
16-23 payment without court order for unpaid court costs from a cash bond
16-24 deposited in connection with an appeal after the appellate court
16-25 issues its mandate in such appeal if the costs remain unpaid for 45
16-26 days after the mandate is issued.
16-27 Hartnett