1-1 By: Ellis S.B. No. 1304
1-2 (In the Senate - Filed March 12, 1997; March 18, 1997, read
1-3 first time and referred to Committee on Jurisprudence;
1-4 April 10, 1997, reported favorably, as amended, by the following
1-5 vote: Yeas 6, Nays 0; April 10, 1997, sent to printer.)
1-6 COMMITTEE AMENDMENT NO. 1 By: Ellis
1-7 Amend S.B. No. 1304 by inserting the following new SECTION 3 on
1-8 line 18, page 2 of the bill and by renumbering each subsequent
1-9 SECTION of the bill appropriately:
1-10 "SECTION 3. Subchapter A, Chapter 117, Local Government
1-11 Code, is amended by adding Section 117.003 to read as follows:
1-12 Sec. 117.003. COMPLIANCE WITH FEDERAL TAX LAW FOR FUNDS HELD
1-13 UNDER THIS CHAPTER. (a) If any funds deposited under this chapter
1-14 are placed into an interest-bearing account, any person with a
1-15 taxable interest in funds deposited to such account must submit
1-16 appropriate tax forms and provide correct information to the
1-17 district or county clerk so that the interest earned on such funds
1-18 can be timely and appropriately reported to the Internal Revenue
1-19 Service. The information and forms provided to the district or
1-20 county clerk under this section is not subject to public disclosure
1-21 except to the extent necessary to effectuate compliance with
1-22 federal tax law requirements.
1-23 (b) The district or county clerk is authorized to pay any or
1-24 all of the interest earned on funds deposited under this chapter,
1-25 without court order, to the Internal Revenue Service to satisfy tax
1-26 withholding requirements."
1-27 COMMITTEE AMENDMENT NO. 2 By: Ellis
1-28 Amend S.B. No. 1304 by striking lines 28-29 on page 2 of the bill
1-29 and substituting the following:
1-30 "contract may, on request by the clerk and approval of the
1-31 commissioners court, include a provision that the funds in a
1-32 special account earn interest. A request from the clerk that"
1-33 COMMITTEE AMENDMENT NO. 3 By: Ellis
1-34 Amend S.B. No. 1304 by striking lines 21-25 on page 6 of the bill
1-35 and substituting the following:
1-36 (a) Money may be paid from the registry fund only on checks
1-37 or drafts signed by the district clerk on the written order of the
1-38 court with proper jurisdiction, except that the clerk may make a
1-39 payment without court order for unpaid court costs from a cash bond
1-40 deposited in connection with an appeal after the appellate court
1-41 issues its mandate in such appeal if the costs remain unpaid for 45
1-42 days after the mandate is issued.
1-43 A BILL TO BE ENTITLED
1-44 AN ACT
1-45 relating to funds tendered into the registry of the court.
1-46 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-47 SECTION 1. Section 117.001, Local Government Code, is
1-48 amended to read as follows:
1-49 Sec. 117.001. DEFINITIONS [DEFINITION]. In this chapter:
1-50 [,]
1-51 (1) "Bank [bank]" means a banking corporation or
1-52 association, an individual banker, or a state or federal savings
1-53 and loan association or savings bank.
1-54 (2) "Clerk" means a county clerk, a district clerk, or
1-55 a county and district clerk.
1-56 (3) "Registry funds" means funds tendered to the clerk
1-57 for deposit into the registry of the court.
1-58 (4) "Separate account" means funds transferred from a
1-59 special account into a separate interest-bearing account.
1-60 (5) "Special account" means an account in a depository
1-61 in which registry funds are placed.
1-62 SECTION 2. Section 117.002, Local Government Code, is
1-63 amended to read as follows:
1-64 Sec. 117.002. TRANSFER OF UNCLAIMED FUNDS TO STATE
2-1 TREASURER. Any funds deposited under this chapter, except cash
2-2 bail bonds, that are presumed abandoned under Chapter 72, 73, or
2-3 75, Property Code, shall be reported and delivered by the county or
2-4 district clerk to the state treasurer without further action by any
2-5 court. The dormancy period for funds deposited under this chapter
2-6 begins on the later of:
2-7 (1) the date of entry of final judgment or order of
2-8 dismissal in the action in which the funds were deposited;
2-9 (2) the 18th birthday of the minor for whom the funds
2-10 were deposited; or
2-11 (3) a reasonable date established by rule by the state
2-12 treasurer to promote the public interest in disposing of unclaimed
2-13 funds.
2-14 SECTION 3. Subsections (a) and (c), Section 117.021, Local
2-15 Government Code, are amended to read as follows:
2-16 (a) The commissioners court of a county at its May regular
2-17 term after a general election for state and county officers shall
2-18 receive an application from a federally insured [any] bank or banks
2-19 in the county to be the depository for a special account [trust
2-20 funds] held by the county clerk and the district clerks. The
2-21 county shall contract with a federally insured bank or banks under
2-22 this section for a two-year or four-year contract term. The
2-23 contract may, if the clerk elects, include a provision that the
2-24 funds in a special account earn interest. A clerk's election that
2-25 an account earn interest must be made, in writing, to the
2-26 commissioners court not later than the 30th day before the date the
2-27 county gives notice under Section 117.022 and shall be entered in
2-28 the minutes of the court.
2-29 (c) A bank must file its application on or before 10 a.m. on
2-30 the first day of the term. The application must be accompanied by
2-31 a certified check or cashier's check for at least one-half of one
2-32 percent of the average daily balance of the registry [trust] funds
2-33 held by the county clerk and the district clerk [clerks] during the
2-34 preceding calendar year, as determined by the county clerk and the
2-35 district clerk on or before the 10th day before the date the
2-36 application is required to be filed. A certified check or
2-37 cashier's check that complies with this section is a good-faith
2-38 guarantee on the part of the applicant that if its application is
2-39 accepted it will execute the bond required under this subchapter.
2-40 If the bank selected as depository does not provide the bond, the
2-41 county shall retain the amount of the check as liquidated damages
2-42 and the county shall select another depository as provided by this
2-43 subchapter.
2-44 SECTION 4. Section 117.022, Local Government Code, is
2-45 amended to read as follows:
2-46 Sec. 117.022. NOTICE [NOT REQUIRED]. A county shall [is not
2-47 required to] advertise or give notice that the county will accept
2-48 applications to be the depository for registry [trust] funds held
2-49 by the county clerk and the district clerk in the same manner as
2-50 notice is required under Section 116.022 [clerks].
2-51 SECTION 5. Subsection (a), Section 117.023, Local Government
2-52 Code, is amended to read as follows:
2-53 (a) At 10 a.m. on the first day of each term at which the
2-54 commissioners court is required to receive applications to serve as
2-55 the depository for registry [trust] funds held by the county clerk
2-56 and the district clerk [clerks], the commissioners court shall
2-57 enter the applications in the minutes of the court and select a
2-58 depository.
2-59 SECTION 6. Section 117.025, Local Government Code, is
2-60 amended to read as follows:
2-61 Sec. 117.025. DESIGNATION OF DEPOSITORY. (a) After a bank
2-62 selected to be a depository under this subchapter qualifies under
2-63 Section 117.024 and is selected by the commissioners court, the
2-64 commissioners court shall by an order entered in its minutes
2-65 designate the bank or banks as the depository for the registry
2-66 [trust] funds.
2-67 (b) A designation under Subsection (a) is effective until
2-68 the designation and qualification of a successor depository or
2-69 until April 15 following the term in which a depository must be
3-1 selected under this subchapter, whichever is earlier. If the term
3-2 of a depository ends before the designation and qualification of a
3-3 successor, the depository shall pay to the clerk in whose name the
3-4 account is carried all registry [trust] funds due or on deposit.
3-5 (c) A designated depository shall provide security for the
3-6 funds deposited into the registry fund accounts in the same manner
3-7 as Subchapter C, Chapter 116.
3-8 SECTION 7. Subsection (a), Section 117.026, Local Government
3-9 Code, is amended to read as follows:
3-10 (a) The commissioners court may select a federally insured
3-11 bank or banks located outside the county to serve as the depository
3-12 under this subchapter if:
3-13 (1) for any reason no bank located in the county
3-14 applies to be designated as the depository;
3-15 (2) an application is not made for the entire amount
3-16 of the registry [trust] funds;
3-17 (3) the commissioners court rejects all the
3-18 applications submitted;
3-19 (4) a depository selected by the commissioners court
3-20 fails to qualify;
3-21 (5) a depository becomes insolvent; or
3-22 (6) a new depository is selected because of the
3-23 failure of the regular depository to execute a new bond under
3-24 Section 117.057.
3-25 SECTION 8. Section 117.027, Local Government Code, is
3-26 amended to read as follows:
3-27 Sec. 117.027. FAILURE TO SELECT DEPOSITORY. If the
3-28 commissioners court has not selected a depository under this
3-29 subchapter, a clerk holding money, an evidence of debt, an
3-30 instrument of writing, or any other article deposited into [in] the
3-31 registry of the [clerk's] court pending the result of a legal
3-32 proceeding shall seal the article in a secure package and deposit
3-33 the package in an iron safe or a bank vault.
3-34 SECTION 9. Subchapter B, Chapter 117, Local Government Code,
3-35 is amended by adding Section 117.028 to read as follows:
3-36 Sec. 117.028. APPLICATION OF COUNTY DEPOSITORY LAW. Except
3-37 as otherwise expressly stated, the provisions of Chapter 116
3-38 relating to county depositories also apply to a depository selected
3-39 under this chapter.
3-40 SECTION 10. Section 117.052, Local Government Code, is
3-41 amended to read as follows:
3-42 Sec. 117.052. DEPOSITS OF REGISTRY [TRUST] FUNDS BY COUNTY
3-43 AND DISTRICT CLERKS. (a) If a depository has been selected under
3-44 Subchapter B, a county clerk or a district clerk who is to have for
3-45 more than three days legal custody of money deposited in the
3-46 registry of the court pending the result of a legal proceeding
3-47 shall deposit the money in the depository.
3-48 (b) The funds deposited shall be carried at the depository
3-49 selected under this chapter as a special [trust fund] account in
3-50 the name of the clerk making the deposit.
3-51 (c) A clerk is responsible for funds deposited into the
3-52 registry fund from the following sources:
3-53 (1) funds of minors, lunatics, idiots, or persons
3-54 determined to be non compos mentis;
3-55 (2) funds tendered in an interpleader action;
3-56 (3) funds paid in satisfaction of a judgment;
3-57 (4) child support funds held for more than three days;
3-58 (5) cash bonds;
3-59 (6) cash bail bonds;
3-60 (7) funds in an eminent domain proceeding; and
3-61 (8) any other funds tendered to the clerk for deposit
3-62 into the registry of the court.
3-63 SECTION 11. Subchapter C, Chapter 117, Local Government
3-64 Code, is amended by adding Section 117.0521 to read as follows:
3-65 Sec. 117.0521. CUSTODIANSHIP. A clerk shall act only in a
3-66 custodial capacity in relation to a registry fund, a special
3-67 account, or a separate account. A clerk is not a trustee for the
3-68 beneficial owner and does not assume the duties, obligations, or
3-69 liabilities of a trustee for a beneficial owner.
4-1 SECTION 12. Section 117.053, Local Government Code, is
4-2 amended to read as follows:
4-3 Sec. 117.053. WITHDRAWAL OF FUNDS. (a) If a commissioners
4-4 court selects a new depository under Subchapter B, when the
4-5 depository qualifies, the county clerk and the district clerk
4-6 [clerks] shall transfer the funds in a special account [trust
4-7 funds] from the old depository to the new depository, and the
4-8 clerks may draw checks on the accounts for this purpose.
4-9 (b) Except as provided by Subsection (a), a clerk may not
4-10 draw a check on special account [trust] funds held by a depository
4-11 except to pay a person entitled to the funds. The payment must be
4-12 made under an order of the court of proper jurisdiction in which
4-13 the funds were deposited except that an appeal bond shall be paid
4-14 without a written order of the court on receipt of mandate or
4-15 dismissal and funds deposited under Section 887, Texas Probate
4-16 Code, may be paid without a written order of the court. The clerk
4-17 shall place on the check the style and number of the proceeding in
4-18 which the money was deposited with the clerk.
4-19 (c) The clerk shall transfer any registry funds into a
4-20 separate account when directed to by a written order of a court of
4-21 proper jurisdiction or when the clerk is required to under Section
4-22 887, Texas Probate Code. The clerk shall transfer the funds into a
4-23 separate account in:
4-24 (1) interest-bearing deposits in a financial
4-25 institution doing business in this state that is insured by the
4-26 Federal Deposit Insurance Corporation;
4-27 (2) United States treasury bills;
4-28 (3) an eligible interlocal investment pool that meets
4-29 the requirements of Sections 2256.016, 2256.017, and 2256.019,
4-30 Government Code; or
4-31 (4) a no-load money market mutual fund, if the fund:
4-32 (A) is regulated by the Securities and Exchange
4-33 Commission;
4-34 (B) has a dollar weighted average stated
4-35 maturity of 90 days or fewer; and
4-36 (C) includes in its investment objectives the
4-37 maintenance of a stable net asset value of $1 for each share [A
4-38 depository shall release funds placed in time deposits under
4-39 Section 117.051 if the funds are required before maturity, but the
4-40 depository is not liable for interest earned on the amount
4-41 withdrawn].
4-42 SECTION 13. Section 117.054, Local Government Code, is
4-43 amended to read as follows:
4-44 Sec. 117.054. COUNTY EXPENSES PAID FROM INTEREST [ON TIME
4-45 DEPOSITS]. (a) If a special or separate account earns interest,
4-46 the clerk, at the time of withdrawal, shall pay in a manner
4-47 directed by a court with proper jurisdiction the original amount
4-48 deposited into the registry of the court and any interest credited
4-49 to the account in the manner calculated in Subsection (b) [A county
4-50 is entitled to receive a part of the interest earned on trust funds
4-51 placed in time deposits under Section 117.051. The amount received
4-52 by the county must be reasonably related to the accounting and
4-53 administrative expenses incurred by the county in handling the
4-54 funds].
4-55 (b) The interest earned on a special account or a separate
4-56 account shall be paid in the following amounts:
4-57 (1) 10 percent of the interest shall be paid to the
4-58 general fund of the county to compensate the county for the
4-59 accounting and administrative expenses of maintaining the account;
4-60 and
4-61 (2) 90 percent of the interest shall be credited to
4-62 the special or separate account. [The county auditor on behalf of
4-63 the commissioners court or, if there is no county auditor, the
4-64 county treasurer shall deposit the amount of compensation in the
4-65 general fund of the county.]
4-66 SECTION 14. Section 117.055, Local Government Code, is
4-67 amended to read as follows:
4-68 Sec. 117.055. COUNTY EXPENSES PAID FROM FEES. (a) To
4-69 compensate the county for the accounting and administrative
5-1 expenses incurred in handling the registry [trust] funds that have
5-2 not earned interest, including funds in a special or separate
5-3 account, [for the benefit of litigants in civil proceedings,] the
5-4 clerk shall, at the time of withdrawal, deduct from the amount of
5-5 the withdrawal [county may collect from the nonprevailing party in
5-6 the litigation or from the party the court designates] a fee in an
5-7 amount equal to five percent of the withdrawal but that may not
5-8 exceed [set by the commissioners court, but not to exceed] $50.
5-9 [The fee is in addition to any fees the district clerk collects as
5-10 authorized by statute or court order.]
5-11 (b) A fee collected under this section [The county
5-12 treasurer] shall be deposited [deposit the fee] in the general fund
5-13 of the county.
5-14 SECTION 15. Section 117.057, Local Government Code, is
5-15 amended to read as follows:
5-16 Sec. 117.057. NEW BOND. (a) A commissioners court may
5-17 require a depository selected under Subchapter B to execute a new
5-18 bond whenever the commissioners court considers it necessary for
5-19 the protection of the county clerk's and the district clerk's
5-20 [clerks'] registry [trust] funds.
5-21 (b) If a depository does not file a new bond required by an
5-22 order of the commissioners court within five [15] days after the
5-23 date a copy of the order is served on the depository, the
5-24 commissioners court may select another depository in the manner
5-25 provided by Subchapter B.
5-26 SECTION 16. Section 117.058, Local Government Code, is
5-27 amended to read as follows:
5-28 Sec. 117.058. ACCOUNTING FOR AND DISBURSING REGISTRY [TRUST]
5-29 FUNDS IN COUNTIES WITH POPULATION OF 190,000 OR MORE. (a) This
5-30 section applies to a county with a population of 190,000 or more.
5-31 (b) If the commissioners court of a county provides a
5-32 depository for the registry [trust] funds of the county clerk or
5-33 the district clerk, those officers shall make reports under oath to
5-34 the county auditor to properly reflect all registry [trust] funds
5-35 received and disbursed by the officer, including all money
5-36 remaining on hand at the time of the report. The county auditor
5-37 shall prescribe the form and frequency of the report.
5-38 (c) Each check issued for the disbursement of the funds must
5-39 be issued in accordance with the laws providing for registry
5-40 [trust] fund depositories. Each check must be signed according to
5-41 procedure established by the county auditor [submitted to the
5-42 county auditor for countersignature] before delivery or payment.
5-43 [(d) The county auditor shall countersign the checks only on
5-44 written evidence of the order of the judge of the court in which
5-45 the funds have been deposited that authorizes the disbursement of
5-46 the funds.]
5-47 SECTION 17. Section 117.081, Local Government Code, is
5-48 amended to read as follows:
5-49 Sec. 117.081. LIABILITY OF COUNTY AND DISTRICT CLERKS.
5-50 (a) A county clerk or a district clerk is not responsible for a
5-51 loss of registry [trust] funds resulting from the failure or
5-52 negligence of a depository.
5-53 (b) This section does not release a county clerk or a
5-54 district clerk from:
5-55 (1) liability for a loss of registry [trust] funds
5-56 resulting from the clerk's official misconduct, negligence, or
5-57 misappropriation of the funds; or
5-58 (2) responsibility for keeping the registry [trust]
5-59 funds safe until the clerk deposits them in a depository selected
5-60 under Subchapter B.
5-61 (c) After a county clerk or a district clerk deposits in a
5-62 depository selected under Subchapter B the registry [trust] funds
5-63 held by the clerk, the clerk is relieved of the responsibility for
5-64 keeping the funds secure [safe].
5-65 SECTION 18. Section 117.083, Local Government Code, is
5-66 amended to read as follows:
5-67 Sec. 117.083. LOSS OF REGISTRY [TRUST] FUNDS. If registry
5-68 [trust] funds held by a county clerk or a district clerk and
5-69 deposited by the county with a depository selected under Subchapter
6-1 B are lost for any reason, including a loss due to the insolvency
6-2 of the depository, the county is liable to the rightful owner of
6-3 the funds for the full amount of the funds due the owner.
6-4 SECTION 19. Section 117.084, Local Government Code, is
6-5 amended to read as follows:
6-6 Sec. 117.084. [FAILURE OF] DEPOSITORY TO PAY CHECK ON
6-7 PRESENTMENT. A depository selected under Subchapter B shall pay a
6-8 check drawn against funds deposited with the depository in a
6-9 special or separate account on presentation of the check if the
6-10 funds that are subject to the check are in the possession of the
6-11 depository [that does not pay a check under Section 117.056 shall
6-12 forfeit and pay to the holder 10 percent of the amount of the
6-13 check].
6-14 SECTION 20. Subsection (a), Section 117.121, Local
6-15 Government Code, is amended to read as follows:
6-16 (a) Money may be paid from the registry fund only on checks
6-17 or drafts signed by the district clerk on the written order of the
6-18 court with proper jurisdiction, except that an appeal bond shall be
6-19 paid without a written order on the receipt of a mandate or a
6-20 dismissal.
6-21 SECTION 21. Section 142.004, Property Code, is amended by
6-22 amending the heading and Subsection (a) and adding Subsection (d)
6-23 to read as follows:
6-24 Sec. 142.004. INVESTMENT OF FUNDS [IN INSURED FINANCIAL
6-25 INSTITUTIONS]. (a) In a suit in which a minor or incapacitated
6-26 person who has no legal guardian is represented by a next friend,
6-27 any money recovered by the plaintiff, if not otherwise managed
6-28 under this chapter, may be invested:
6-29 (1) by the next friend [or the clerk of the court]
6-30 in[:]
6-31 [(1) savings accounts or certificates of a savings and
6-32 loan association domiciled in this state and insured by the
6-33 F.S.L.I.C.; or]
6-34 [(2)] interest-bearing time deposits in a financial
6-35 institution [bank] doing business in this state and insured by the
6-36 F.D.I.C.; or
6-37 (2) by the clerk of the court, on written order of the
6-38 court of proper jurisdiction, in:
6-39 (A) interest-bearing deposits in a financial
6-40 institution doing business in this state that is insured by the
6-41 Federal Deposit Insurance Corporation;
6-42 (B) United States treasury bills;
6-43 (C) an eligible interlocal investment pool that
6-44 meets the requirements of Sections 2256.016, 2256.017, and
6-45 2256.019, Government Code; or
6-46 (D) a no-load money market mutual fund, if the
6-47 fund:
6-48 (i) is regulated by the Securities and
6-49 Exchange Commission;
6-50 (ii) has a dollar weighted average stated
6-51 maturity of 90 days or fewer; and
6-52 (iii) includes in its investment
6-53 objectives the maintenance of a stable net asset value of $1 for
6-54 each share.
6-55 (d) Interest earned on an account invested by the clerk of
6-56 the court shall be paid in the same manner as interest earned on an
6-57 account under Chapter 117, Local Government Code.
6-58 SECTION 22. Subsection (c), Section 51.605, Government Code,
6-59 is amended to read as follows:
6-60 (c) A clerk must annually [successfully] complete 20 hours
6-61 of continuing education courses, including at least three hours of
6-62 continuing education courses regarding registry funds handled under
6-63 Chapter 117, Local Government Code, in the performance of the
6-64 duties of office [at least one time in each 24-month period].
6-65 SECTION 23. Section 2256.004, Government Code, is amended to
6-66 read as follows:
6-67 Sec. 2256.004. APPLICABILITY. This subchapter does not
6-68 apply to:
6-69 (1) a public retirement system as defined by Section
7-1 802.001;
7-2 (2) state funds invested as authorized by Section
7-3 404.024;
7-4 (3) an institution of higher education having total
7-5 endowments of at least $95 million in book value on May 1, 1995;
7-6 [or]
7-7 (4) funds invested by the Veterans' Land Board as
7-8 authorized by Chapter 161, 162, or 164, Natural Resources Code; or
7-9 (5) registry funds deposited with the county or
7-10 district clerk under Chapter 117, Local Government Code.
7-11 SECTION 24. Sections 117.051 and 117.082, Local Government
7-12 Code, are repealed.
7-13 SECTION 25. (a) This Act takes effect September 1, 1997.
7-14 (b) Sections 117.054 and 117.055, Local Government Code, as
7-15 amended by this Act, and Section 142.004, Property Code, as amended
7-16 by this Act, apply to all registry funds, special accounts, or
7-17 separate accounts, as defined by Section 117.001, Local Government
7-18 Code, as amended by this Act, held by a county clerk, a district
7-19 clerk, or a county and district clerk on the effective date of this
7-20 Act.
7-21 SECTION 26. The importance of this legislation and the
7-22 crowded condition of the calendars in both houses create an
7-23 emergency and an imperative public necessity that the
7-24 constitutional rule requiring bills to be read on three several
7-25 days in each house be suspended, and this rule is hereby suspended.
7-26 * * * * *