What kind of bond does a Texas charity have to post to hold a raffle when it doesn't yet have the prize?

Texas AG Opinion JM-1277: What Bond Must a Charity Post to Hold a Raffle Without the Prize?

Plain-English summary

Texas legalized charitable raffles by a 1989 constitutional amendment and a companion statute, article 179f, V.T.C.S., effective January 1, 1990. One rule in that statute (section 3(j)) says a charity may not run a raffle unless it already owns or possesses the prize, or else "posts bond" with the county clerk for the full money value of the prize. The Harris County Attorney asked the Attorney General several practical questions about that bond requirement, because the statute never defines "bond."

First, does a bond from a surety company count? Yes. The Attorney General agreed that a bond executed by a surety company authorized to do business in Texas, in the full money value of the prize, satisfies section 3(j). Insurance Code article 7.19-1 provides that whenever the law requires a bond, it may be executed by a qualified surety company and public officers must accept it as meeting the requirement. So a surety bond in the required amount works.

Second, must the county clerk accept a "cash bond," meaning cash deposited in place of a bond? No. The Attorney General reasoned that the word "bond" ordinarily means a written obligatory instrument, and where the Legislature has meant to allow cash bonds elsewhere, it has said so explicitly and set up procedures for handling the cash. Article 179f has no such procedure for the county clerk, whose duties are ministerial. On top of that, if a charity already had the prize's full value in cash, it would not need to post a bond at all; it could just buy the prize. So the clerk may not accept a cash bond.

Third, what does "post" bond mean? The Attorney General looked to the dictionary meaning of "post" (to furnish to the proper authority) and concluded the requirement is met when an acceptable bond is furnished or delivered to the county clerk.

Fourth, must the clerk record the bond, and if so where? No. The only provision that might arguably require recording, Property Code section 12.001(a), covers instruments "concerning real or personal property." A raffle bond is required only when the charity does not have the prize in hand, so the bond does not concern specific, identified property in the way that recording provision contemplates. The clerk is not required to record an article 179f raffle bond.

Currency note

This opinion was issued in 1990, shortly after charitable raffles were first authorized in Texas. Article 179f has since been recodified into the Occupations Code and amended, and related insurance and property statutes have changed too. Treat this page as historical context, not current legal advice. A charity planning a raffle should confirm the current statute and any local clerk procedures before relying on this analysis.

Who this opinion affected (as of 1990)

Charitable organizations running raffles: The opinion told them they could satisfy the prize-bond requirement with a surety company bond for the full value of the prize when they did not yet have the prize in hand.

County clerks: The opinion clarified that a clerk was not required to accept a cash bond or to record an article 179f raffle bond, and that "posting" simply meant delivery of an acceptable bond to the clerk.

Surety companies: The opinion confirmed that surety bonds under Insurance Code article 7.19-1 were an accepted way to meet the raffle prize-bond requirement.

Common questions

Can a charity use a surety bond to cover a raffle prize it doesn't have yet?
Yes. The opinion concluded that a bond from a surety company authorized to do business in Texas, executed for the full money value of the prize, satisfies the bond requirement in article 179f, section 3(j).

Does the county clerk have to take cash instead of a bond?
No. The opinion held the clerk may not accept a "cash bond," because the Legislature provided no procedure for a clerk to handle such cash and a charity with the cash could simply buy the prize.

What does it mean to "post" the bond?
It means furnishing or delivering an acceptable bond to the county clerk. That is when the posting requirement is met.

Does the clerk have to record the raffle bond?
No. The opinion concluded the clerk is not required to record an article 179f raffle bond, because such a bond does not "concern real or personal property" the way the recording statute (Property Code section 12.001(a)) contemplates.

Background and statutory framework

Article 179f, V.T.C.S., authorized certain charitable organizations to conduct raffles and took effect January 1, 1990 (Acts 1989, 71st Leg., ch. 957, § 1, at 4022), contingent on the 1989 adoption of Texas Constitution article III, section 47(d), which the voters approved on November 7, 1989. Section 2(a)(8) defines a "raffle" as awarding one or more prizes by chance at a single occasion among a pool of persons who paid or promised a thing of value for a ticket. Section 3 imposes conditions on raffles, and section 3(j) provides that a raffle is not authorized unless the organization has the prize in its possession or ownership or posts bond with the county clerk of the county where the raffle is held for the full money value of the prize.

Because article 179f does not define "bond," the opinion addressed only whether a surety company bond qualifies, declining to give an all-inclusive definition. Insurance Code article 7.19-1 provides that whenever a bond is required by law, it may be executed by a surety company qualified in Texas and public officers must accept it, so a surety bond for the full prize value meets section 3(j). On cash bonds, the opinion noted that "bond" ordinarily means a written obligatory instrument, and that the Legislature has expressly allowed cash bonds in other statutes with procedures for the cash (for example, V.T.C.S. art. 179d, § 13a(b), for bingo equipment manufacturers, and Tax Code § 151.253, for sales tax permit security), while article 179f contains none, and Local Government Code sections 117.052 and 117.053 (governing a clerk's handling of funds deposited pending litigation) would not apply. It also cited Attorney General Opinion JM-215 (1984), addressing bond-type requirements under former V.T.C.S. art. 6686(a)(7) (later removed by Acts 1985, 69th Leg., ch. 465, § 5, at 1635). Given the clerk's ministerial duties and the practical point that a charity with the cash could just buy the prize, the clerk may not accept a cash bond.

On "posting," the opinion adopted the ordinary meaning of "post" (to furnish to the proper authority), so the requirement is met when an acceptable bond is furnished or delivered to the county clerk. On recording, the opinion found the only arguably applicable provision, Property Code section 12.001(a) (instruments "concerning real or personal property" may be recorded if acknowledged, sworn to, or proved), did not require recording a raffle bond, because such a bond is posted only when the charity lacks the prize and thus does not concern specific, identified property (comparing former V.T.C.S. art. 6626(a), which listed instruments subject to recording). The clerk therefore is not required to record an article 179f raffle bond.

Citations

Statutory authorities:

• V.T.C.S. art. 179f, § 2(a)(8) (definition of raffle); § 3 (conditions on raffles); § 3(j) (prize-possession or bond requirement)
• Acts 1989, 71st Leg., ch. 957, § 1, at 4022 (enacting article 179f)
• Tex. Const. art. III, § 47(d) (constitutional authorization for charitable raffles)
• Insurance Code art. 7.19-1 (acceptance of surety company bonds where a bond is required by law)
• Local Government Code §§ 117.052, 117.053 (county clerk handling of funds deposited pending litigation)
• V.T.C.S. art. 179d, § 13a(b) (cash-or-surety bond option for bingo equipment manufacturers)
• Tax Code § 151.253 (cash-or-surety security for sales tax permit)
• V.T.C.S. art. 6686(a)(7); Acts 1985, 69th Leg., ch. 465, § 5, at 1635 (former motor vehicle dealer bond requirement, later removed)
• Property Code § 12.001(a); former V.T.C.S. art. 6626(a) (recording of instruments concerning real or personal property)

Prior Attorney General opinion referenced:

• Attorney General Opinion JM-215 (1984) (type of bond acceptable under a statutory bond requirement)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-1277
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1990/jm1277.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

Honorable Mike Driscoll
Harris County Attorney
1001 Preston, Suite 634
Houston, Texas 77002

Opinion No. JM-1277

Re: What constitutes a "bond" for purposes of article 179f, V.T.C.S., which regulates charitable raffles, and related questions (RQ-2108)

Dear Mr. Driscoll:

Article 179f, V.T.C.S., provides for the conduct of raffles[Footnote 1] by certain charitable organizations. Article 179f was adopted in 1989, to be effective January 1, 1990. Acts 1989, 71st Leg., ch. 957, § 1, at 4022.[Footnote 2]

Section 3 of article 179f imposes various conditions on the conduct of raffles under the article. You ask about the scope of the language relating to the posting of bond in subsection (j) of section 3, which provides:

A raffle is not authorized under this article unless the organization has in its possession or ownership the prize that is to be offered in the raffle or posts bond with the county clerk of the county in which the raffle is to be held for the full amount of the money value of such a prize. (Emphasis added.)

You note that article 179f does not define the term "bond" and ask first "what qualifies as a 'bond'" for purposes of subsection (j), section 3. We can not here provide an all-inclusive definition of the term "bond" as it is used in subsection (j), where the legislature has not done so. In the brief you submitted with your request, you consider in connection with your first question only whether a bond issued by a surety company authorized to do business in this state would qualify as a "bond" under subsection (j). We will limit our response to your first question to that issue.

You suggest that a bond executed by a surety company authorized to do business in this state, as provided for in article 7.19-1 of the Insurance Code, would, if executed for "the full amount of the money value of [the] prize" in accordance with subsection (j), qualify as a bond under that subsection. We agree. Article 7.19-1 of the Insurance Code on its face provides that whenever any bond is required by law to be made, such bond may be executed by a surety company duly qualified to do business in this state and that all public officers shall accept such bond as complying with the requirements of such laws. Thus a bond executed by a surety company authorized to do business in this state in the amount required by section 3(j) of article 179f would meet the requirement of a "bond" under that subsection.

You next ask whether the county clerk must accept a "cash bond" under article 179f. You note that the existing statutes governing the county clerk's handling of cash sums to be held by the clerk would not apply to the clerk's handling of cash amounts deposited with the clerk in connection with the bond requirement of article 179f. See Local Gov't Code §§ 117.052 (clerk to place money deposited in court pending result of legal proceeding in depository trust fund account in name of clerk), 117.053 (any payment by clerk from trust fund account must be made under order of court in which funds were deposited). You argue that the absence of statutory provision for the county clerk's handling of a "cash bond" placed with the clerk under article 179f, section 3(j), indicates that the legislature did not contemplate that a clerk must accept a "cash bond" in satisfaction of the bond requirement of that provision.

The term "bond" ordinarily refers to an "obligatory instrument in writing." See 10 Tex. Jur. 3d Bonds and Undertakings § 1, and authorities cited therein. In numerous statutory bond requirements, the legislature has specified that cash bonds are acceptable. See, e.g., V.T.C.S. art. 179d, § 13a(b) (manufacturer of bingo equipment must give Alcoholic Beverage Commission "cash bond" or bond issued by surety company); Tax Code § 151.253 (security for sales tax permit application may be "cash bond" or bond from surety company); see also Attorney General Opinion JM-215 (1984) (Department of Highways and Public Transportation could not place limits on type of bond acceptable under article 6686(a)(7), V.T.C.S., which sets bond requirements for motor vehicle dealers).[Footnote 3]

We think that if the legislature had intended the term "bond" as used in article 179f to include a "cash bond," it would have given a clearer indication of such intent than we find in the sparse language of section 3(j), particularly as there are no statutory procedures for the county clerk's handling of the cash involved. If the county clerk, whose duties are ministerial in nature,[Footnote 4] had been intended to accept and handle cash bonds under article 179f, we think the legislature would have established procedures for his doing so. As a practical matter, if an article 179f organization had the monetary value of the prize available in cash, it would not ordinarily need to post a bond -- it could simply acquire the prize with such money. In response to your second question, it is our opinion that the county clerk may not accept a "cash bond" in satisfaction of the bond requirement of section 3(j) of article 179f.

You ask next what the term "post" bond in section 3(j) means. Webster's defines the term "post" when used with the word "bond" to mean "to furnish . . . to the proper authority." Webster's Third New Int'l Dictionary 1771 (4th ed. 1976). We think the requirement of "posting" in section 3(j) is met when an acceptable bond is furnished, or delivered, to the county clerk. See also 10 Tex. Jur. 3d Bonds and Undertakings § 9 (bond must be "delivered" to be effective).

You ask last whether the county clerk must record such bond, and, if so, in what county record the bond would be filed.

The only provision we find that might arguably authorize the recording of an article 179f raffle bond is section 12.001(a) of the Property Code, which provides:

An instrument concerning real or personal property may be recorded if it has been acknowledged, sworn to with a proper jurat, or proved according to law.

The ordinary meaning of the term "instrument" is quite broad. Black's defines "instrument" as "a formal or legal document in writing, such as a contract, deed, will, bond, or lease." Black's Law Dictionary 719 (5th ed. 1979). But even if an article 179f bond might be an "instrument," as that term is used in section 12.001(a), we do not think it would be one "concerning real or personal property" within the meaning of that provision. Such bond is required under section 3(j) of article 179f only when the organization conducting the raffle does not have the prize in its possession. Therefore such bond would not ordinarily "concern" specific, identified property of the sort which we think a section 12.001(a) instrument was intended to relate to. See former V.T.C.S. art. 6626(a) (provision codified without substantive change as section 12.001(a) of the Property Code, which enumerated as instruments subject to recording "deeds, mortgages, conveyances, deeds of trust, bonds for title, covenants, defeasances," etc.).

In response to your last question, it is our opinion that the county clerk is not required to record an article 179f raffle bond.

SUMMARY

A bond issued by a surety company authorized to do business in Texas under Insurance Code article 7.19-1, if executed for the full amount of the money value of the raffle prize, would satisfy the bond requirement of section 3(j) of article 179f, which relates to charitable raffles.

The county clerk may not accept a "cash bond" in fulfillment of the bond requirement of subsection (j).

The requirement in subsection (j) that an organization "post" bond is met when an acceptable bond is furnished or delivered to the county clerk.

The county clerk is not required to record an article 179f bond.

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by William Walker
Assistant Attorney General

Footnote 1: Section 2(a)(8) of article 179f provides: "'Raffle' means the awarding of one or more prizes by chance at a single occasion among a single pool or group of persons who have paid or promised a thing of value for a ticket that represents a chance to win a prize."

Footnote 2: The effectiveness of article 179f was contingent on the adoption of subsection (d) of section 47 of article III of the Texas Constitution, authorizing the legislature to provide for certain charitable raffles. The amendment adding subsection (d) to article III, section 47, was approved by the voters on November 7, 1989.

Footnote 3: The bond requirement in article 6686(a)(7) was removed at the next legislative session. Acts 1985, 69th Leg., ch. 465, § 5, at 1635.

Footnote 4: See Texas County and Special District Law § 10.6 (Texas Practice 1989) and authorities cited therein.