Untitled Texas Attorney General Opinion ( 1990 )

October 3, 1990
Honorable Ralph R. Wallace, III opinion No. JM-1228
Chairman
Cultural & Historical Resources Re: Authority of an heir-
Committee finder to receive compen-
Texas House of Representatives sation for expenses
P. 0. Box 2910 (RQ-1997)
Austin, Texas 78768-2910
Dear Representative Wallace:
You ask whether the Property Code prohibits compensa-
tion of reasonable expenses for private investigators who
search for, locate, and assist missing owners in recovering
unclaimed assets held by the Treasury Department (herein-
after the department).
Title 6 of the Property Code governs unclaimed property
in Texas. See uenerallv Property Code chs. 71 (escheat of
prw=*y) I 72 (abandonment of personal property), 73 (in-
active accounts held by banking organizations), 74 (report,
delivery, and claims process), 75 (Texas minerals). The
state treasurer is charged with the administration of this
title and may adopt rules necessary for its administration
pursuant to section 74.701 of the code.
your question focuses on the language of section 74.507
of the Property Code, which reads:
A oerson who informs a potential claimant
that the claimant may be entitled to claim
property that is reportable to the State
Treasurer under this chapter, that has been
reported to the State Treasurer, or that is
in the possession of the State Treasurer, or
a person who files a claim under this sub-
chapter for such property on behalf of a
claimant, mav not contract for or receive
from the claimant for services an amount that,
exceeds 10 oercent of the value of the
prooertv recovered. If the property involved
is mineral proceeds, the amount for services
may not include a portion of the underlying
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.
Honorable Ralph R. Wallace, III - Page 2 (JM-1228)
minerals or any production payment, over-
riding royalty,~or similar payment. (Emphasis
added.)
A brief submitted in connection with this request suggests
that the term "services" does not include wexpenses,w and
that a private investigator may, therefore, receive reason-
able expenses in addition to ten percent of the value of the
property recovered. We disagree.
Section 74.507 was originally enacted in 1961 as
article 3272a, section 6(b), V.T.C.S., which contained
essentially the same language and provided in part:
No person holding a power of attorney from
a claimant . . . shall contract for or
receive from the claimant for his services an
amount in excess of ten percent (10%) of the
value of the property,recovered.
Acts 1961, 57th Leg., 1st C.S., ch. 21, 5 1, at 49. This
section provided further that when a lawsuit was instituted
on behalf of a claimant, the person holding the power of
attorney could receive up to 25 percent of the value of the
property recovered. ;Lg, Article 3272a was amended in 1965
without affecting the language of section 6(b). See Acts
1965, 59th Leg., ch. 565, S 3, at 1233. With the enactment
of the Property Code in 1983, a nonsubstantive revision of
the Texas statutes relating to real and personal property,
article 3272a, V.T.C.S., was repealed, and the provisions of
section 6(b) were transferred without substantive change to
section 72.506 of the code. m Acts 1983, 68th Leg., ch.
576, S 1, at 3603. t
In 1985, section 72.506 was repealed and replaced by
section 74.507, which provided in its entirety:
A person who informs a potential claim-
ant that the claimant may be entitled to
claim property in the possession of the
State Treasurer or a person who files a
claim under this subchapter on behalf of a
claimant may not contract for or receive
from the claimant for services an amount
that exceeds 10 percent of the value of
the property recovered.
Acts 1985, 69th beg., ch. 230, 6 17, at 1138. The language
allowing a person to receive up to 25 percent of the value
of the property for representing a claimant in a lawsuit was
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Honorable Ralph R. Wallace, III - Page 3 (JM-1228)
not carried forward. L In 1987 further restrictions were
placed upon the amount an individual may receive for
services when the property involved is mineral proceeds.
&=;zzz 1987, 70th Leg., ch. 426, S 5, at 1985 (lOamountfor
may not include a portion of the underlying
minerals or any production payment, overriding royalty, or
similar payment").
The department asserts that the public policy pro-
nounced by the legislature and the "basic underpinning" of
the unclaimed property statutes is the complete preservation
of the corpus of unclaimed property until it is reunited
with the rightful owners. Indeed, the emergency clause to
the 1961 act adding article 3272a, V.T.C.S., stated:
The fact that the present laws m
for the Drotection of a&&oned DroDertv. the
*0 * 8
and thm escheat ofmev and Dersonal Dro-
pertv belonaina to the State are inadeouate,
and that there are large amounts of money and
personal property to which the State is
entitled, and which DroDertv is subiect to
&ass and diSsiDatiOn, create an emergency.
Acts 1961, 57th Leg., 1st C.S., ch. 21, 5 5, at 58 (emphasis
added). Resides indicating the legislature#s desire to
preserve unclaimed property for private owners, the
emergency clause also reflects the legislature's intent to
protect its interests in such property. In 1961, the state
could only take control of abandoned property through
judicial proceedings, a rather costly and cumbersome way to
accomplish the purposes of the statute. Recognizing that
"in many instances the cost of citation by publication,
court costs and travel expenses would exceed the value of
the property reported as abandoned," the 59th Legislature
amended the statute. Acts 1965, 59th Leg., ch. 565, 0 8, at
1235. We think the legislature‘s actions to preserve the
corpus of the property were motivated by a desire to protect
the interest of both the state and any unknown owners.
Stnte,v.zLiauidatinu ru tees of ReD lit Petroleum Co,, 510
S.W.2d 311, 313-14 (zex: 1974) (altE:ugh article 3272a is
commonly referred to as an escheat law. it is custodial in
nature, and anyone may file a claim for such property with
the state treasurer): Attorney General Opinion MW-186 (1980)
("the state never actually takes title to the property,
since the owner may claim the property or its value at any
time"); see also Uniform Unclaimed Property Act prefatory
note, 8A U.L.A. 216 (1981) ("Not only does the custodial
type of statute more adequately preserve the owner's
p:6527
Honorable Ralph R. Wallace, III - Page 4 (JM-1228)
interests, but, in addition, it makes possible a substantial
simplification of procedure").
Since at least one purpose of the unclaimed property
laws of Texas includes protection of unknown owners'
interests, we must evaluate how that purpose is best
accomplished. We have been provided samples of various
"heirfinder" contracts that attempt to obtain up to 60
percent of the value of the property received by the
claimant.1 If we were to read the statute as authorizing a
private investigator or other person to receive ten percent
of the value of the property plus expenses, there is no
mechanism in place for determining the reasonableness of
expenses. Therefore, we think that a construction of
Property Code section 74.507 that would allow a private
investigator or "heirfinder" to contract for expenses,
potentially in excess of the value of the property, would be
contrary to the enunciated public policy and intent of the
legislature to preserve the unclaimed property for its
owner.
The department, as the state agency charged with the
administration of the Texas unclaimed property laws, has
interpreted section 74.507 to mean that ten percent of the
property'value is the total amount an individual may receive
for assisting a claimant in recovering assets held by the
department. The department argues in its brief on this
matter that "services" is a broad and comprehensive term,
which encompasses not only one's personal services in
completing an objective but also includes activities of
others enlisted to accomplish the goal. See. a Van
es,
Zandt v. 359 S.W.Zd 893, 895e96- ' (Tex,
1962); Co.
Mathews Constr Constr. co.,
528 S.W.Zd 323, 326-27 (Tex. Civ. App. - Beaumont 1975, writ
ref'd n.r.e.) (distinction between %ervices" and "personal
servi.cesl').It is the department#s position that the charge
for services, d&L, personal services and incidental
expenses, may not exceed ten percent of the value of the
property recovered.
It is well established that the construction of a
statute by the agency charged with its administration is
1. In the' past three years, fifty-eight cases in-
volving heirfinders attempting to charge fees far in excess
of the statutory ten percent have been referred to the
Consumer Protection Division of this office.
p. 6528
,
1 Honorable Ralph R. Wallace, III - Page 5 (JM-1228)
:
.
entitled to great weight. u carte Roloff, 510 S.W.2;,,;;3
(Tex. 1974); Calvert . Ka&~.8 427 S.W.2d 605 (Tex.
Stanford v. Butler, lzl S.W.2d' 269 (Tex. 1944). It is no:
required that the agency publish formally adopted rules
stating such interpretation: policy documents such as
letters to affected persons or internal agency memoranda may
also evince an agency's interpretation of a particular
matter. Southwest-Airlines Co. v. B llock, 784 S.W.2d 563,
567 (Tex. ADD. - Austin 1990. no wri:). The "Texas Treasurv
Unclaimed Money Fund Original Owner Claim Fdn~,~,the for+
the department provides to individuals who wish to file a
claim with the department, states:
If someone informs or assists you in
claiming these funds and asks for payment,
STATE LAW LIMITS ANY FEE TO NO MORE THAN 10%
OF THE AMOUNT OFTHE CLAIM.
The department also provides to interested persons an in-
formational pamphlet entitled ,,MostCommonly Asked Questions
on Heirfinding in Texas," which states on the first page:
PLEASE NOTE: Expenses incurred as well as
the services provided are limited to one
fee not to exceed 10 percent of the value
of the property recovered.
Another pamphlet distributed by the department, entitled
"Money Search: Do You Have Cash in the Texas Treasury
Unclaimed Money Fund,,' states that "State law limits fees
charged by these private firms,to no more than 10 percent of
the claim." We have also been provided with a sample copy
of the annual list of names of persons having money in the
Unclaimed Money Fund which is published by the Treasury
Department for distribution in major Texas newspapers. That
published listing also states that a person reclaiming
property "may not be charged more than 10 percent of the
claim amount by anyone who assists in claiming these funds."
We think that the department,s interpretation of the
s+*+utn in question has been widely published and that the
legislature*s failure to amend the statute is indicative of
its approval of the department's interpretation. Direlco,
I n . v. B llock 711 S.W.Zd 360, 363 (Tex. APP. - Austin
19E6, wriy ref’ii n.r.e.). Although we have found no Texas
cases regarding this issue, we note that similar statutes
with fee limitations have been upheld in other states.
See. Goodman v. Gory 191 Cal. Rptr. 272 (App. 1983).
We there&e conclude that' a private investigator or other
person who assists a claimant in recovering assets held by
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Honorable Ralph R. Wallace, III - Page 6 (JM-1228)
the department pursuant to Property Code section 74.507 may
not contract for or receive from the claimant an amount that
exceeds ten percent of the value of the property recovered.
The term nservices,, as used in this section includes
expenses. Any other construction of this provision, we
think, would be contrary to the legislature's enunciated
public policy, the intent of the legislature, and the
interpretation of the agency charged with its administra-
tion.
SUMMARY
A person who assists a claimant in re-
overing assets pursuant to section 74.507 of
the Property Code may not receive an amount
for services (including expenses) that
exceeds ten percent of the value of the
property recovered.
JIM MATTOX
Attorney General of Texas
NARYKEZLER
First Assistant Attorney General
Lou MCCREARY
Executive Assistant Attorney General
JUDG6 ZOLLIE STEAKLEY
Special Assistant Attorney General
RENEA HICKS
Special Assistant Attorney'General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Karen C. Gladney
Assistant Attorney General
p. 6530