Untitled Texas Attorney General Opinion

* OFTEXAS

Han, J, ha. F8lk?st& Opinion No. V-1046, Commissioner Department of BarM8g Re: The leg#ity of a bank’s, main- Austin, Texas taining deposit facilities in a garage building attached to a bank buildirq by a tunnel be- Dear Hr. l?aIknax: low the street.

In your letter re*werting our opinion retative to the cq- tioned matter yau state that

“A bak poeertly operating ia a bank house own- ed by It desires to construct an appropx’iate garage buildin on another lot directly acrass the street from its preseat h&ins house and the kra@e building is to be psrmano#ly UJ rtxucturally rttached to the preeeti kdr buitdi by a Ural suitable fur peraa@ back and farth, aad w s 11 c*n&ia ti *&c-in J4p&it win&w 4r windowd. l’

You have igluired whethtr thi4 plan contrrvenee AMel* XVI, Section 16, of the Texas Constitution, or Chapter IX, Article 3, of the Texas Banking Code of 1943.

. “The l,@nlature still by pnsv,pl Irrro net&mire t&t incovpaa;rtioa d csrgrrate Mtes with banking rnd dbWOUfltio& pliVi!XaO4, I , .

. Chapter ZX, ATtG~tca 3, 6f the Scns krnlt%ng Ctdt d 1*)3. emWed ~a Article 343-7@3, V.C.S,,, prouidsa:

264 tPtat4, tmtiona1 u p&8&t bank shell engay#e in bueir#tm in 18ec than me Ma, nraiaitafn any bran& office, or wh checks m receive depesits excspt in #B own t+nkitq hause. ”

Ho,n. J, M. FaJkner, Page 2 (V-1046)

The exact purpose of the foregoing Article is to ptohib- it branch banking, This ie clearly indicated in its caption, where it is provided that it is:

““Anact to accomplish the constitutional directive enpressed in Article XVI, Section 16, . ~ ~ . This Act ~ ~;‘.... prohibits branch banking, ~ o *”

It is said in Banks and Baokiq, Zollman, Pcrmawnt Ed&i&, .volume 2, tictie* 1275, that: 7 “‘Branch banks are not mere ‘teller’s windows,’ hmt mxc SQ many integral parts or office6 * sgencies *f d+count belonging to the metker corporation. ”

We do nat &ink what is proposed te be done by tht b~rdt fo quest&a comes wait&a the conaCihutiona1 oz s&atutorp inbibitians lpplicabh to branch bankin&

Three excellent annotations en the constituent elements ,of brarich,b~nking art found in 30 A.L.R. 927, 50 A.L.R. 1340, and 136 A.L.R. 491. A Kentucky cbst, which goes even further than we ecuAd attcmprt or need lo do lo lYASW’OTthis question, is Marvin ~$I, cky Title, Tsust Co., 218 Ky* 133, 291 S.W. 17 (Ky. Ct. App. ; In Kantuclay; branch.balJrina had been held unauthoriwd WI- dar their dpplicabk statute.’ In t&cast cited, the question arode (10 tcthe authority of a licensed bank to open a stpratc offict to receive depoeits SUMIcash checks, and nothing more, for customers d tht principal bank. The Court siid:

“We bavt held that a bank organietd under the ,:@w$ & this State has no rigki to establish a branch bank. 5zuner Y. Citizens’ I3ank, 134 Ky. 283, 120 S.W. ~345. B&h parties conctde the MPding fwrce of this o- pioioa, the centroverted question being OS to whether app61166’6 plan to open office6 fclr the receipt of depes- it6 ad pplnrnt of checks will corwtitute the estrblish- . .mirrt’Bd branch kahltr, PO that tbt case may ba said to hart3 uw the dd&diirn wf knki?A& e6 e I! e * We think the e o . dtfinition from Warrtn 0 ‘

vr s-k, 6uprai pecu~iiarly apt; ‘Hsving a p&ace of busi- IDIWSrbe~e de-sits am received 6nd paid out on checks, lcul whtke monty is 1tPsned upon recurity, is t&e sub- @t@aCt od the bUBinW66 Ot 6 bWhk6r.

“#Cfrlkws that tht proposed plan does not fall viMa the itikibition ef tke Bruaer Case, au#a, (LS to t&e totablirhment of branch baak6, nm d-6 it conflict

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Hoa. Jo. M. Falkner, Page 3 (V-1040)

with th8t 0piAon tn any other paoticular, Baaks are the depositor l&e of moe t of the funds of the country, end the above decision is base.& on the prix%ciptW that they axe quasi public institutions established and regu- lated by statate. The safety of the funds is caseflilly guarded, and this calls far the exercise of discretion and direct control upon the part of the d&rectors and chief ofhors in the matter of Ibone, discounts, invest- moats, sad other like duties. Branch be&s in effect carsy aa the s&me bueinees as that conducted by the parent inetitalioa wi,thout being subject to the safe- pwsds thrown arolrmd the establishment and adminis- tration of tb# I&t&c, and therefore such brenches are oat mly unauthorized by the statate but impliedly inhib- tted by it. That opiaion, however, s~pressly recognices cbc r&g&t of a bnk to ‘have, as many duly lppcrinted a- ~#ents *S dtr neds require;~end theBe qents, bmong oth- m tblngs, may xeceive amt forward to it at its place of bunhers tha money d parsons who desire w deposit , w+$b it. ’

“In principle t&e same rule would apply to agents who merely receive deposits and pay out cheeks on de- mmd, dutisc that am incidental to the business, but which do net require special disctetion and business wzumen. Tfm peyling tdller et a bbnk should have a tech- ~%rwled#e of h&ndwriting and be able to detect forgeries and identify limtrPtsr6, and both he and tho recafvfng teller should be eccur&Le in their calculations. But: wither of these apots, COI\ loan money ‘or invest Fhe banktng funds, and the fact that these <minor duttes are carl’ied on at mbre than one place in tie wise affects For ill~uatr*tion: If a bank occu- Irlt, can it- doubted&at it can qstablioh en office for the receipt ment 81 c#ecks at each caner of i separate books at e&h place? ClearIy the installation of such ofl’lces in the bw l8iZg is incidetital to that busi- &~%a, an# such ah etran(ament wmino injurious effect up3 the fiMnCk1 m*mpment 0LDdcontra1 of the bank’s bwinas~, a& the officials char@ with these du- ties da not devote their etne to the drtaitc of Lhe receipt ef deposit c pyment of ehedm.~ o .‘I &mphsis sup- plied.)

##&hr.iep#i& that the propo8eil plan would not con- stitute a ‘%aWuch bsnk. ”

Article 342-9Q3,, V.C.S., in.additian to prohibiting b?&nch boeks, provides :

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Han, J, h4, Falkner, Page 4 (V-1046)

‘Al0 state, nationat or private bank sfbsll p I . c.ash checks or ‘receive’ deposits except in ite own bank- ,inghouse, ”

If the new structure, wheubuilt, becqmes a part of the ,,.Bujk’s ‘“banking house” tti the proposed pLn will not viblate the ;I@ovieions- of aaid Article. ;

T&a contamplatad new structure, although to be erect- ed across the 8~~4 from the original ‘@banking house,” will be physically joined thereto by a tunnel under the street, which you sfate will be suitable for, passage back and forth,, It is evident that besides being;‘joinad physically, the new structure, including the passageway,~~iII be in &ore proximity to the present’building. It will be used in oeamction with the ori&nal building and as a unit _LwilI be devoted to one general, common purpose. It is OUB opinion &+t tlae two ,@=ucturss will in seallty be one and when used in the .: inner pxoposed,wiLl constituttr the bnk’s “banki~ houee. ” To h$Stl that said Article Pequices deposits to be axade in a bank’s orig- ipl banking building, and not in an addition thereto would sacrifice fRe’~real spirit of the law to pure IitecalLm.

This opinion is macessarilpEtmited to the factual eitoa- tion presented.

SUMMARY

A uew ‘dtmchure erected acros~s the steeet Srom a~baakPs .?mWag base” sad connected therewith by a tubiml ‘s&able S&T passage back and forth and used-to receive depoits does not conlmavenc the provisions of ArtMa XVI, Section 16, of thtr Texas Constitution, nor of Artkc~ 341-903;V.C,S., relative to bsaacb bank&g or t*e mceiviag of depoeitr by a bank at a place other olmo~uq LenbkiIagrwuse,

Yours VeEy tmly,

PRICE DANIEL Attorney Ctnwal

APPROVEIT: -’ w. v,. Gepperi . Joe Greenhill Assistnut First Assistant

PrLe Daniel Attorney Genesal

WVG/mwb