JOEN IA. BILL
.a-- CIENERAL August 10, 1977
Honorable Tom O'Connell Opinion No. H-1039
District Attorney
McKinney, Texas 75069 Re: Whether a bank's
service as county deposi-
tory constitutes branch
banking when the bank is
located outside the county
seat.
Dear Mr. O'Connell:
You have requested our opinion regarding the constitu-
tionality of article 2553, V.T.C.S. That statute provides:
If any depository selected by the Commis-
sioners Court be not located at the seat of
such county, said Commissioners Court may
in its discretion require said depository
to file with the county treasurer of such
county a statement designating~ the place
at said county seat where, and the person
by whom, all deposits may be received from
the treasurer for such depository, and
where and by whom all checks will be paid,
said person to be approved by the Commis-
sioners Court; and such depository shall
cause every check to be paid upon presen-
tation or upon presentation at the expira-
tion of the period of notice in the case
of "time deposits" at the place so desig-
nated so long as the said depository has
sufficient funds to the credit of said
county applicable to its payment.
It has been suggested that the designation of such a place
where "deposits may be received" and "all checks will be paid"
may contravene the constitutional prohibition against branch
banking. Article 16, section 16 of the Texas Constitution
provides, in pertinent part:
p. 4279
. .
Honorable Tom O'Connell - Page 2 w-1039)
The Legislature shall by general laws,
authorize the incorporation of corporate
bodies with banking and discounting priv-
ileges, and shall provide for a system of
State supervision, regulation and control
of such bodies which will adequately pro-
tect and secure the depositors and credi-
tors thereof.
. . .
Such body corporate shall not be autho-
rized to engage in business at more than
one place which shall be designated in
its charter.
See also article 342-903, V.T.C.S., which implements the con-
stitutional provision. By virtue of these provisions branch
banking is illegal in Texas.
In Great Plains Life Insurance Co. v. First National Bank
of Lubbock, 316 S.W.Zd 98 (Tex. Civ. App. -- Amarillo 1958, writ
ref'd n.r.,e.), the court held that a bank may provide drive-in
window service without running afoul of the constitutional
prohibition:
[A] branch bank . . . is a separate
entity and deposits made in a branch bank
are payable there and only there unless
the branch bank be closed on demand for
the payment by the depositor be refused,
then the demand for payment will be against
the mother bank. Branch banks are not
mere teller's windows.
Id. at 104. The court concluded that drive-in teller's
Gdows are "a part of [the] bank and are not branch banks. . . ."
Id. Likewise, in Letter Advisory No. 96 (19751, we held that
drive-in facilities might be connected to the main bank by
means of closed circuit television. In such an instance, the
bank's business continues to be conducted in "'one place'
within the meaning of section 16, so long as the drive-in
facility is limited to teller services." Id. at 3.
_
In our opinion, article 2553 does not authorize a bank
to engage in any activity beyond that approved in Great Plains,
supra. The statute requires only that the bank's facility
at the county seat receive deposits and pay checks -- services
generally available at a teller's window.
p. 4280
Honorable Tom O'Connell - Page 3 (H-1039)
Furthermore, it may be questioned whether the activities
described in article 2553 require a bank to "engage in busi-
ness," within the meaning of the constitutional prohibition.
The services authorized by the statute are limited to county
fiscal matters and are not available to the general public.
Finally, it is well established that every statute carries
a strong presumption of constitutionality and that all rea-
sonable doubts are to be resolved in favor of its validity.
Smith v. Davis, 426 S.W.2d 827, 831 (Tex. 1968); Ex parte
Smith, 441 S.W.Zd 544, 547 (Tex. Crim. App. 1969). A statute
should not be declared unconstitutional unless it is olainlv
invalid. Maud v. Terrell, 200 S.W. 375, 376 (Tex. 1918). We
believe'that the courts would harmonize the provisions of article
2553 with the requirements of article 16, section 16. Accord-
ingly, it is our opinion that a bank located outside a county
seat may designate a facility for receipt and payment of county
funds at the county seat, pursuant to article 2553, without
thereby violating the constitutional prohibition against branch
banking.
SUMMARY
A bank located outside a county seat may
designate a facility for receipt and payment
of county funds at the county seat, pursuant
to article 2553, V.T.C.S., without thereby
violating the constitutional prohibition
against branch banking.
"Attorney General of Texas
APPROVED:
C. ROBERT HEATH, Chairman
Opinion Committee
jst
p. 4281