The Attorney General of Texas
March 15, 1983
JIM MATTOX
Attorney General
Mr. Kenneth H. Ashworth Opinion No. JM-13
Supreme Court Building Commissioner
P. 0. BOX 12546
Coordinating Board Re: Whether securities
Austin. TX. 78711. 2548
51214752501
Texas College and University System pledged by bank to eecure
Telex 9101874-1367 P. 0. Box 12788, Capitol Station deposit of junior college
Telecopier 5121475.0266 Austin, Texas 78711 district funds may be placed
for safekeeping with another
bank
1607 Main St., Suite 1400
Dallas, TX. 75201-4709
2141742.8944 Dear Commissioner Ashworth:
You ask two questions regarding the safekeeping of securities
4624 Alberta Ave.. Suite 160
pledged by depository banks to secure junior college district funds
El Paso. TX. 79905-2793
91515334484
held by those depository banks. First, you ask:
r May a bank, chosen as a depository by a public
.~20 Dallas Ave.. Suite 202 junior college and pledging securities to cover
Houston. TX. 77002.6966
the funds on deposit by the college, legally place
713/650-0666
those securities in safekeeping with another bank
that is owned by the same holding company that
806 Broadway. Suite 312 owns a depository bank?
Lubbock. TX. 79401-3479
6061747-5236
Section 130.084 of the Texas Education Code provides:
4309 N. Tenth, Suite E The board of trustees of junior college districts
McAllen, TX. 76501-1665 shall be governed in the establishment, management
512/682.4547 and control of the junior college by the general
law governing the establishment, management and
200 Main Plaza, Suite 400
control of independent school districts insofar as
San Antonio. TX. 76205-2797 the general law is applicable.
5121225.4191
The provisions of the Education Code relating to junior college
districts, section 130.001, et seq., do not contain a provision
relating to junior college district depositories. Thus, according to
the express language of section 130.084, junior college districts are
governed by the School Depository Act, section 23.71 et seq. of the
Education Code.
Section 23.79(c) of the Education Code permits a depository bank
to deposit or pledge approved securities "with the school district, or
with a trustee designated by the school district." No other provision
in the School Depository Act makes reference to a trustee holding
approved securities for a depository bank.
p. 53
Mr. Kenneth H. Ashworth - Page 2 (JM-13)
“Designate” is not defined in the Education Code. Words that are
not defined in a statute are given their ordinary significance unless
they are words of art or words connected with a particular subject
matter. V.T.C.S. art. 10, §l; National Life Company v. Stegall, 169
S.W.2d 155, 157 (Tex. 1943). mDesignate” means to indicate or set
apart for a purpose or duty. Black’s Law Dictionary 402 (5th ed.
1979); Webster’s New Collegiate Dictionary 308 (1977). Thus, a school
district may specify the trustee bank.
The power to designate includes the power to approve or
disapprove a trustee bank. Neither the School Depository Act nor any
other statute of which we are aware prohibits a depository bank from
placing for safekeeping pledged securities in another bank owned by
the sane holding company that owns the depository bank. Thus, the
answer to your first question is yes, g the bank in which the
securities are to be placed is designated by the school district as
the “trustee” bank. You also ask:
If the answer to question (1) is yes, does section
23.79(c), Texas Education Code, give the college
the authority to direct the depository bank to
place pledged securities in safekeeping with a
bank independent of the holding company?
We believe our discussion of your first question answers your
second question. Section 23.79(c) of the Texas Education Code clearly
provides that the school district has the authority to select the
trustee or bank in which the pledged securities shall be kept. This
interpretation is consistent with the remaining provisions of section
23.79(c), which give the school district authority to designate the
amount of approved securities and to approve the substitution of
approved‘securities by the depository bank.
SUMMARY
With the approval of the junior college
district, a depository bank holding public junior
college funds may place for safekeeping its
pledged securities with another bank that is owned
by the same holding company as the depository
bank. Section 23.79(c) of the Education Code
authorizes a junior college district to direct the
depository bank to place the pledged securities in
safekeeping with a bank independent of the holding
company.
JIM MATTOX
Attorney General of Texas
p. 54
Mr. Kenneth H. Ashworth - Page 3 (JM-13)
TOM GREEN
First Assistant Attorney General
DAVID R. RICHARDS
Executive Assistant Attorney General
Prepared by Yolanda McKeeman
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Rick Gilpin
Yolanda McKeeman
Jim Moellinger
p. 55