AN ACT
1-1 relating to funds tendered into the registry of the court.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Section 117.001, Local Government Code, is
1-4 amended to read as follows:
1-5 Sec. 117.001. DEFINITIONS [DEFINITION]. In this chapter:
1-6 [,]
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
2-1 district clerk to the state treasurer without further action by any
2-2 court. The dormancy period for funds deposited under this chapter
2-3 begins on the later of:
2-4 (1) the date of entry of final judgment or order of
2-5 dismissal in the action in which the funds were deposited;
2-6 (2) the 18th birthday of the minor for whom the funds
2-7 were deposited; or
2-8 (3) a reasonable date established by rule by the state
2-9 treasurer to promote the public interest in disposing of unclaimed
2-10 funds.
2-11 SECTION 3. Subchapter A, Chapter 117, Local Government Code,
2-12 is amended by adding Section 117.003 to read as follows:
2-13 Sec. 117.003. COMPLIANCE WITH FEDERAL TAX LAW FOR FUNDS HELD
2-14 UNDER THIS CHAPTER. (a) If any funds deposited under this chapter
2-15 are placed into an interest-bearing account, any person with a
2-16 taxable interest in funds deposited to such account must submit
2-17 appropriate tax forms and provide correct information to the
2-18 district or county clerk so that the interest earned on such funds
2-19 can be timely and appropriately reported to the Internal Revenue
2-20 Service. The information and forms provided to the district or
2-21 county clerk under this section are not subject to public
2-22 disclosure except to the extent necessary to effectuate compliance
2-23 with federal tax law requirements.
2-24 (b) The district or county clerk is authorized to pay any or
2-25 all of the interest earned on funds deposited under this chapter,
3-1 without court order, to the Internal Revenue Service to satisfy tax
3-2 withholding requirements.
3-3 SECTION 4. Subsections (a) and (c), Section 117.021, Local
3-4 Government Code, are amended to read as follows:
3-5 (a) The commissioners court of a county at its May regular
3-6 term after a general election for state and county officers shall
3-7 receive an application from a federally insured [any] bank or banks
3-8 in the county to be the depository for a special account [trust
3-9 funds] held by the county clerk and the district clerks. The
3-10 county shall contract with a federally insured bank or banks under
3-11 this section for a two-year or four-year contract term. The
3-12 contract may, on request by the clerk and approval of the
3-13 commissioners court, include a provision that the funds in a
3-14 special account earn interest. A request from the clerk that an
3-15 account earn interest must be made, in writing, to the
3-16 commissioners court not later than the 30th day before the date the
3-17 county gives notice under Section 117.022 and shall be entered in
3-18 the minutes of the court.
3-19 (c) A bank must file its application on or before 10 a.m. on
3-20 the first day of the term. The application must be accompanied by
3-21 a certified check or cashier's check for at least one-half of one
3-22 percent of the average daily balance of the registry [trust] funds
3-23 held by the county clerk and the district clerk [clerks] during the
3-24 preceding calendar year, as determined by the county clerk and the
3-25 district clerk on or before the 10th day before the date the
4-1 application is required to be filed. A certified check or
4-2 cashier's check that complies with this section is a good-faith
4-3 guarantee on the part of the applicant that if its application is
4-4 accepted it will execute the bond required under this subchapter.
4-5 If the bank selected as depository does not provide the bond, the
4-6 county shall retain the amount of the check as liquidated damages
4-7 and the county shall select another depository as provided by this
4-8 subchapter.
4-9 SECTION 5. Section 117.022, Local Government Code, is
4-10 amended to read as follows:
4-11 Sec. 117.022. NOTICE [NOT REQUIRED]. A county shall [is not
4-12 required to] advertise or give notice that the county will accept
4-13 applications to be the depository for registry [trust] funds held
4-14 by the county clerk and the district clerk in the same manner as
4-15 notice is required under Section 116.022 [clerks].
4-16 SECTION 6. Subsection (a), Section 117.023, Local Government
4-17 Code, is amended to read as follows:
4-18 (a) At 10 a.m. on the first day of each term at which the
4-19 commissioners court is required to receive applications to serve as
4-20 the depository for registry [trust] funds held by the county clerk
4-21 and the district clerk [clerks], the commissioners court shall
4-22 enter the applications in the minutes of the court and select a
4-23 depository.
4-24 SECTION 7. Section 117.025, Local Government Code, is
4-25 amended to read as follows:
5-1 Sec. 117.025. DESIGNATION OF DEPOSITORY. (a) After a bank
5-2 selected to be a depository under this subchapter qualifies under
5-3 Section 117.024 and is selected by the commissioners court, the
5-4 commissioners court shall by an order entered in its minutes
5-5 designate the bank or banks as the depository for the registry
5-6 [trust] funds.
5-7 (b) A designation under Subsection (a) is effective until
5-8 the designation and qualification of a successor depository or
5-9 until April 15 following the term in which a depository must be
5-10 selected under this subchapter, whichever is earlier. If the term
5-11 of a depository ends before the designation and qualification of a
5-12 successor, the depository shall pay to the clerk in whose name the
5-13 account is carried all registry [trust] funds due or on deposit.
5-14 (c) A designated depository shall provide security for the
5-15 funds deposited into the registry fund accounts in the same manner
5-16 as Subchapter C, Chapter 116.
5-17 SECTION 8. Subsection (a), Section 117.026, Local Government
5-18 Code, is amended to read as follows:
5-19 (a) The commissioners court may select a federally insured
5-20 bank or banks located outside the county to serve as the depository
5-21 under this subchapter if:
5-22 (1) for any reason no bank located in the county
5-23 applies to be designated as the depository;
5-24 (2) an application is not made for the entire amount
5-25 of the registry [trust] funds;
6-1 (3) the commissioners court rejects all the
6-2 applications submitted;
6-3 (4) a depository selected by the commissioners court
6-4 fails to qualify;
6-5 (5) a depository becomes insolvent; or
6-6 (6) a new depository is selected because of the
6-7 failure of the regular depository to execute a new bond under
6-8 Section 117.057.
6-9 SECTION 9. Section 117.027, Local Government Code, is
6-10 amended to read as follows:
6-11 Sec. 117.027. FAILURE TO SELECT DEPOSITORY. If the
6-12 commissioners court has not selected a depository under this
6-13 subchapter, a clerk holding money, an evidence of debt, an
6-14 instrument of writing, or any other article deposited into [in] the
6-15 registry of the [clerk's] court pending the result of a legal
6-16 proceeding shall seal the article in a secure package and deposit
6-17 the package in an iron safe or a bank vault.
6-18 SECTION 10. Subchapter B, Chapter 117, Local Government
6-19 Code, is amended by adding Section 117.028 to read as follows:
6-20 Sec. 117.028. APPLICATION OF COUNTY DEPOSITORY LAW. Except
6-21 as otherwise expressly stated, the provisions of Chapter 116
6-22 relating to county depositories also apply to a depository selected
6-23 under this chapter.
6-24 SECTION 11. Section 117.052, Local Government Code, is
6-25 amended to read as follows:
7-1 Sec. 117.052. DEPOSITS OF REGISTRY [TRUST] FUNDS BY COUNTY
7-2 AND DISTRICT CLERKS. (a) If a depository has been selected under
7-3 Subchapter B, a county clerk or a district clerk who is to have for
7-4 more than three days legal custody of money deposited in the
7-5 registry of the court pending the result of a legal proceeding
7-6 shall deposit the money in the depository.
7-7 (b) The funds deposited shall be carried at the depository
7-8 selected under this chapter as a special [trust fund] account in
7-9 the name of the clerk making the deposit.
7-10 (c) A clerk is responsible for funds deposited into the
7-11 registry fund from the following sources:
7-12 (1) funds of minors, lunatics, idiots, or persons
7-13 determined to be non compos mentis;
7-14 (2) funds tendered in an interpleader action;
7-15 (3) funds paid in satisfaction of a judgment;
7-16 (4) child support funds held for more than three days;
7-17 (5) cash bonds;
7-18 (6) cash bail bonds;
7-19 (7) funds in an eminent domain proceeding; and
7-20 (8) any other funds tendered to the clerk for deposit
7-21 into the registry of the court.
7-22 SECTION 12. Subchapter C, Chapter 117, Local Government
7-23 Code, is amended by adding Section 117.0521 to read as follows:
7-24 Sec. 117.0521. CUSTODIANSHIP. A clerk shall act only in a
7-25 custodial capacity in relation to a registry fund, a special
8-1 account, or a separate account. A clerk is not a trustee for the
8-2 beneficial owner and does not assume the duties, obligations, or
8-3 liabilities of a trustee for a beneficial owner.
8-4 SECTION 13. Section 117.053, Local Government Code, is
8-5 amended to read as follows:
8-6 Sec. 117.053. WITHDRAWAL OF FUNDS. (a) If a commissioners
8-7 court selects a new depository under Subchapter B, when the
8-8 depository qualifies, the county clerk and the district clerk
8-9 [clerks] shall transfer the funds in a special account [trust
8-10 funds] from the old depository to the new depository, and the
8-11 clerks may draw checks on the accounts for this purpose.
8-12 (b) Except as provided by Subsection (a), a clerk may not
8-13 draw a check on special account [trust] funds held by a depository
8-14 except to pay a person entitled to the funds. The payment must be
8-15 made under an order of the court of proper jurisdiction in which
8-16 the funds were deposited except that an appeal bond shall be paid
8-17 without a written order of the court on receipt of mandate or
8-18 dismissal and funds deposited under Section 887, Texas Probate
8-19 Code, may be paid without a written order of the court. The clerk
8-20 shall place on the check the style and number of the proceeding in
8-21 which the money was deposited with the clerk.
8-22 (c) The clerk shall transfer any registry funds into a
8-23 separate account when directed to by a written order of a court of
8-24 proper jurisdiction or when the clerk is required to under Section
8-25 887, Texas Probate Code. The clerk shall transfer the funds into a
9-1 separate account in:
9-2 (1) interest-bearing deposits in a financial
9-3 institution doing business in this state that is insured by the
9-4 Federal Deposit Insurance Corporation;
9-5 (2) United States treasury bills;
9-6 (3) an eligible interlocal investment pool that meets
9-7 the requirements of Sections 2256.016, 2256.017, and 2256.019,
9-8 Government Code; or
9-9 (4) a no-load money market mutual fund, if the fund:
9-10 (A) is regulated by the Securities and Exchange
9-11 Commission;
9-12 (B) has a dollar weighted average stated
9-13 maturity of 90 days or fewer; and
9-14 (C) includes in its investment objectives the
9-15 maintenance of a stable net asset value of $1 for each share [A
9-16 depository shall release funds placed in time deposits under
9-17 Section 117.051 if the funds are required before maturity, but the
9-18 depository is not liable for interest earned on the amount
9-19 withdrawn].
9-20 SECTION 14. Section 117.054, Local Government Code, is
9-21 amended to read as follows:
9-22 Sec. 117.054. COUNTY EXPENSES PAID FROM INTEREST [ON TIME
9-23 DEPOSITS]. (a) If a special or separate account earns interest,
9-24 the clerk, at the time of withdrawal, shall pay in a manner
9-25 directed by a court with proper jurisdiction the original amount
10-1 deposited into the registry of the court and any interest credited
10-2 to the account in the manner calculated in Subsection (b) [A county
10-3 is entitled to receive a part of the interest earned on trust funds
10-4 placed in time deposits under Section 117.051. The amount received
10-5 by the county must be reasonably related to the accounting and
10-6 administrative expenses incurred by the county in handling the
10-7 funds].
10-8 (b) The interest earned on a special account or a separate
10-9 account shall be paid in the following amounts:
10-10 (1) 10 percent of the interest shall be paid to the
10-11 general fund of the county to compensate the county for the
10-12 accounting and administrative expenses of maintaining the account;
10-13 and
10-14 (2) 90 percent of the interest shall be credited to
10-15 the special or separate account. [The county auditor on behalf of
10-16 the commissioners court or, if there is no county auditor, the
10-17 county treasurer shall deposit the amount of compensation in the
10-18 general fund of the county.]
10-19 SECTION 15. Section 117.055, Local Government Code, is
10-20 amended to read as follows:
10-21 Sec. 117.055. COUNTY EXPENSES PAID FROM FEES. (a) To
10-22 compensate the county for the accounting and administrative
10-23 expenses incurred in handling the registry [trust] funds that have
10-24 not earned interest, including funds in a special or separate
10-25 account, [for the benefit of litigants in civil proceedings,] the
11-1 clerk shall, at the time of withdrawal, deduct from the amount of
11-2 the withdrawal [county may collect from the nonprevailing party in
11-3 the litigation or from the party the court designates] a fee in an
11-4 amount equal to five percent of the withdrawal but that may not
11-5 exceed [set by the commissioners court, but not to exceed] $50.
11-6 [The fee is in addition to any fees the district clerk collects as
11-7 authorized by statute or court order.]
11-8 (b) A fee collected under this section [The county
11-9 treasurer] shall be deposited [deposit the fee] in the general fund
11-10 of the county.
11-11 SECTION 16. Section 117.057, Local Government Code, is
11-12 amended to read as follows:
11-13 Sec. 117.057. NEW BOND. (a) A commissioners court may
11-14 require a depository selected under Subchapter B to execute a new
11-15 bond whenever the commissioners court considers it necessary for
11-16 the protection of the county clerk's and the district clerk's
11-17 registry [clerks' trust] funds.
11-18 (b) If a depository does not file a new bond required by an
11-19 order of the commissioners court within five [15] days after the
11-20 date a copy of the order is served on the depository, the
11-21 commissioners court may select another depository in the manner
11-22 provided by Subchapter B.
11-23 SECTION 17. Section 117.058, Local Government Code, is
11-24 amended to read as follows:
11-25 Sec. 117.058. ACCOUNTING FOR AND DISBURSING REGISTRY [TRUST]
12-1 FUNDS IN COUNTIES WITH POPULATION OF 190,000 OR MORE. (a) This
12-2 section applies to a county with a population of 190,000 or more.
12-3 (b) If the commissioners court of a county provides a
12-4 depository for the registry [trust] funds of the county clerk or
12-5 the district clerk, those officers shall make reports under oath to
12-6 the county auditor to properly reflect all registry [trust] funds
12-7 received and disbursed by the officer, including all money
12-8 remaining on hand at the time of the report. The county auditor
12-9 shall prescribe the form and frequency of the report.
12-10 (c) Each check issued for the disbursement of the funds must
12-11 be issued in accordance with the laws providing for registry
12-12 [trust] fund depositories. Each check must be signed according to
12-13 procedure established by the county auditor [submitted to the
12-14 county auditor for countersignature] before delivery or payment.
12-15 [(d) The county auditor shall countersign the checks only on
12-16 written evidence of the order of the judge of the court in which
12-17 the funds have been deposited that authorizes the disbursement of
12-18 the funds.]
12-19 SECTION 18. Section 117.081, Local Government Code, is
12-20 amended to read as follows:
12-21 Sec. 117.081. LIABILITY OF COUNTY AND DISTRICT CLERKS.
12-22 (a) A county clerk or a district clerk is not responsible for a
12-23 loss of registry [trust] funds resulting from the failure or
12-24 negligence of a depository.
12-25 (b) This section does not release a county clerk or a
13-1 district clerk from:
13-2 (1) liability for a loss of registry [trust] funds
13-3 resulting from the clerk's official misconduct, negligence, or
13-4 misappropriation of the funds; or
13-5 (2) responsibility for keeping the registry [trust]
13-6 funds safe until the clerk deposits them in a depository selected
13-7 under Subchapter B.
13-8 (c) After a county clerk or a district clerk deposits in a
13-9 depository selected under Subchapter B the registry [trust] funds
13-10 held by the clerk, the clerk is relieved of the responsibility for
13-11 keeping the funds secure [safe].
13-12 SECTION 19. Section 117.083, Local Government Code, is
13-13 amended to read as follows:
13-14 Sec. 117.083. LOSS OF REGISTRY [TRUST] FUNDS. If registry
13-15 [trust] funds held by a county clerk or a district clerk and
13-16 deposited by the county with a depository selected under Subchapter
13-17 B are lost for any reason, including a loss due to the insolvency
13-18 of the depository, the county is liable to the rightful owner of
13-19 the funds for the full amount of the funds due the owner.
13-20 SECTION 20. Section 117.084, Local Government Code, is
13-21 amended to read as follows:
13-22 Sec. 117.084. [FAILURE OF] DEPOSITORY TO PAY CHECK ON
13-23 PRESENTMENT. A depository selected under Subchapter B shall pay a
13-24 check drawn against funds deposited with the depository in a
13-25 special or separate account on presentation of the check if the
14-1 funds that are subject to the check are in the possession of the
14-2 depository [that does not pay a check under Section 117.056 shall
14-3 forfeit and pay to the holder 10 percent of the amount of the
14-4 check].
14-5 SECTION 21. Subsection (a), Section 117.121, Local
14-6 Government Code, is amended to read as follows:
14-7 (a) Money may be paid from the registry fund only on checks
14-8 or drafts signed by the district clerk on the written order of the
14-9 court with proper jurisdiction, except that the clerk may make a
14-10 payment without court order for unpaid court costs from a cash bond
14-11 deposited in connection with an appeal after the appellate court
14-12 issues its mandate in such appeal if the costs remain unpaid for 45
14-13 days after the mandate is issued.
14-14 SECTION 22. Section 142.004, Property Code, is amended by
14-15 amending the heading and Subsection (a) and adding Subsection (d)
14-16 to read as follows:
14-17 Sec. 142.004. INVESTMENT OF FUNDS [IN INSURED FINANCIAL
14-18 INSTITUTIONS]. (a) In a suit in which a minor or incapacitated
14-19 person who has no legal guardian is represented by a next friend,
14-20 any money recovered by the plaintiff, if not otherwise managed
14-21 under this chapter, may be invested:
14-22 (1) by the next friend [or the clerk of the court]
14-23 in[:]
14-24 [(1) savings accounts or certificates of a savings and
14-25 loan association domiciled in this state and insured by the
15-1 F.S.L.I.C.; or]
15-2 [(2)] interest-bearing time deposits in a financial
15-3 institution [bank] doing business in this state and insured by the
15-4 F.D.I.C.; or
15-5 (2) by the clerk of the court, on written order of the
15-6 court of proper jurisdiction, in:
15-7 (A) interest-bearing deposits in a financial
15-8 institution doing business in this state that is insured by the
15-9 Federal Deposit Insurance Corporation;
15-10 (B) United States treasury bills;
15-11 (C) an eligible interlocal investment pool that
15-12 meets the requirements of Sections 2256.016, 2256.017, and
15-13 2256.019, Government Code; or
15-14 (D) a no-load money market mutual fund, if the
15-15 fund:
15-16 (i) is regulated by the Securities and
15-17 Exchange Commission;
15-18 (ii) has a dollar weighted average stated
15-19 maturity of 90 days or fewer; and
15-20 (iii) includes in its investment
15-21 objectives the maintenance of a stable net asset value of $1 for
15-22 each share.
15-23 (d) Interest earned on an account invested by the clerk of
15-24 the court shall be paid in the same manner as interest earned on an
15-25 account under Chapter 117, Local Government Code.
16-1 SECTION 23. Subsection (c), Section 51.605, Government Code,
16-2 is amended to read as follows:
16-3 (c) A clerk must annually [successfully] complete 20 hours
16-4 of continuing education courses, including at least three hours of
16-5 continuing education courses regarding registry funds handled under
16-6 Chapter 117, Local Government Code, in the performance of the
16-7 duties of office [at least one time in each 24-month period].
16-8 SECTION 24. Section 2256.004, Government Code, is amended to
16-9 read as follows:
16-10 Sec. 2256.004. APPLICABILITY. This subchapter does not
16-11 apply to:
16-12 (1) a public retirement system as defined by Section
16-13 802.001;
16-14 (2) state funds invested as authorized by Section
16-15 404.024;
16-16 (3) an institution of higher education having total
16-17 endowments of at least $95 million in book value on May 1, 1995;
16-18 [or]
16-19 (4) funds invested by the Veterans' Land Board as
16-20 authorized by Chapter 161, 162, or 164, Natural Resources Code; or
16-21 (5) registry funds deposited with the county or
16-22 district clerk under Chapter 117, Local Government Code.
16-23 SECTION 25. Sections 117.051 and 117.082, Local Government
16-24 Code, are repealed.
16-25 SECTION 26. (a) This Act takes effect September 1, 1997.
17-1 (b) Sections 117.054 and 117.055, Local Government Code, as
17-2 amended by this Act, and Section 142.004, Property Code, as amended
17-3 by this Act, apply to all registry funds, special accounts, or
17-4 separate accounts, as defined by Section 117.001, Local Government
17-5 Code, as amended by this Act, held by a county clerk, a district
17-6 clerk, or a county and district clerk on the effective date of this
17-7 Act.
17-8 SECTION 27. The importance of this legislation and the
17-9 crowded condition of the calendars in both houses create an
17-10 emergency and an imperative public necessity that the
17-11 constitutional rule requiring bills to be read on three several
17-12 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1304 passed the Senate on
April 18, 1997, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1304 passed the House on
May 16, 1997, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor