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EP GENERAL
Honorable Zollie Stsakley %hion No. WW427
becrut4ry 6f state
Aw tin, Texas R e : Oo r ufle~tlo
o fk
l to r o lg a
lwKo d b ulkto 4 etM ta o ta -
mea twr tr
y uk r iuth o8th
Dear Sk: o fTo me.
This ‘Opinion is Lsswd in reapours to your latbr wlua%ln some
qUestion Is ralsed as to who&or or not a aatloaal b* located in a foreign
rotate caa~quallfy aa a trltamontary trustor in the 8tata of Trxas. This
oplnlo11wll1 be addisssad prlaeipally to ~JIOqwrtiar 6f athrthr or not a
national bank domiciled ,tn saothoti atab may act U terbmeatary trustee
of certda trwt~property located tn Texas. We do sot pus Upon tha qlres-
tbn of whether or not a national bank may come late the State ob’Texaa
to eatabllsh an sfflccl or’braach, or do a trust bw,lwsr. WhM eorUtltxtas
doing bUstws6 la Texas, IO aa to r-squire a cett&rea# of lsthority by a
forsip corporatton, is governed by the TSXM Bvrlaorr Corporation Act.
Artlcla 8.01, B(11) of that Act states:
“B. Without excluding othar actlvltlos wblch may
not con~tltute transactlag b&nerr in thb ICbto, u ford
corpor&t’loa shalt not be considered to bo tru6rc -frd%
wss la thu
lowfag actlvltia~:
Y
. . .
“(11) Exerclrhg the power8 of lwrrcatmr or *dmla-
lstrator of tha ertato of a noareridrat decndoat uadvr a-
clllary letters ‘Lsswd by a tourt of tbhlr St&w, or l xWCI#lmg
the powers of a trusta ua&r the will of a asmrtdont de-
cedent or under an inter vlvor trust created by e noarorl-
dent of thlr Stata, lf the axercKss of such wwk. h d@mr
cage, ‘kill not invo~vo actlvitbr Welch m&d k ~Wd to
coIuMtmts tlw traMsct1ag of lua~lawsr ln tbu 5tue ix tbr
cam0 cd a forelgth corpo*rtlon Mtinu 1s lt8 011 Sl**t,’
@mphasU add e d . I
It 1s omr rladerrtaadlng that the actlvltler ahlch tbo fbrrlp nrtloarl bank
dusiru to perform In thls State are’ not such as would eoa#tltxta traas-
actlng bushess, lf the corporatloa wara actlng In Its own right.
Hon. Zollie Steakley, page 2 (WW-627)
National banks were created under the Natlonal BankIng Act which
is set forth in Chapter 2, Sections 21 to 213, Title 12 U.S.C.A. Section 24
prescribed the powers of national banks but did not include any authority
to act ln a fiduciary capacity. The Federlvl Reserve Act, as amended
in 1918, Section 11(k), now Section 248(k). Title 12 U.S.C.A., conferred
upon the Board of Governors of the Federal Reserve System the power
-and authority to grant by special permit to national banks, the authority
to act in fiduciary capacities when not In contravention .of state law.
Pertinent parts of that Act read as follows:
‘The Board of Governors of the Federal Reserve
System shall be authorized and empowered:
“(k) To grant by special permit to national banks
applying therefor, when not ln contravention of State or
local law, the rlght to act as trustee. executor, adminis--
trator, registrar of stocks and bonds, goardlan of es’tates,
assignee, receiver, committee of estates of lunatics, or
in any other fid.uciary capacity in which State banks,
trust c,ompanies, or other corporations which come into
competition with national banks are permitted to act un-
der the laws of the State in which the national bank is
located,
*Whenever the laws of such State authorize or
permit the exercise of any or all of the foregoing powers
by State bapks, trust companies, or other corporations
which compete with national banks, the granthg to and
the exercise bf such powers by national banks shall not
be deemed to be in,contravention of State or local law
within the meaning of this chapter.”
Thus, the Federal statutes empower the Federal Reserve Board
to grant, by a special permit, to natfonal banks applying therefor, when
not in contravention of State or local law, the right to act as trustee,
administrator, executor, guardian, etc., or In any other fiduciary capacity
in which State banks, trust’companies, or other corpolations would come
lnto competition with national banks under the laws of the State In which
the national bank is located.
The onIy.question 1s whether. or,‘not the laws of the State of Texas
prohibit a foreign corpbration’coming lhto this State to act’in a fiduciary
or trust capacity. There seem to be only hno stabites In the State of
Texas which relate to this question. The ftrst 1s Article 342-902 which
provldes:
Hon. Zullle Steal&y, page 3 (WW-627)
‘It &a11 be unIawfu1 fti w person; caipora-
tton, firm. partnership, asaoclatlon or common law
hut:
*(l) To eoaduct a banktug or trust bushes8
or to hold oat to the pnbIic that it ln conducting a banh-
lug or trast baa&mm;. . .
*Provided. however, that this Article hall
not apply to (1) nattonal banksI (2) state banks8 (3)
otharcorporatloas heretofore or hereafter organ-
iaed nnder the laws of thts stats or of the United
States to the extent that such corporations are au-
thorked undar thair charter or the laws of this
state or of the Unfted States to conduct such bnsl-
new or to use such terms. . .u
‘Since the Leglslatnre has been fit to exempt curporatlons organl%ed undar
the laws of the United States (12 U.S.C., Sac. 21)--to the extent that such
corporations are anthorlasd under the laws of the United States to act as
testamentary trustees on trust property located la Texas (12 U.S.C.. See;
248(k) )--from the prohlbftlon of Article 342-902. there appears to be no
Texas statute prohlbltlng a national bank, not domlclled ln Texas from
acting la the abovs mentioned capacity ie the Stats of Texas.
The only other s tatate which relates to the questlon of forefgn
corporathus coming to Texas to angaga la the tiwst,bustness as dis-
tlngulahed ,from trust functions 1s Article 1513a. This artlcIe prevldem:
“See. 2. Traat companies may be created,,
and any corporation, however created, may amend
itr charter h compliance herewith, or a fore1
corporation may obtaln a cartlflcate of author f”ty to
do bumhum Ln Texas for the followlng pnrpose:
“To act as trustee, executer, admbilstrator,
rdlan when designated by any person, corpo-
on; or court to do so, and aa agent for the per-
rat F”
Or
formance of any lawful act, 1ncIadiag the right to
receive depostta made by agencter of the United States
of Amerfca for the authorfwd account of any 1adlvldualI
to ret a* attorney-in-fact for reciprocal or lnter-lnsrr-
ance uxchaage.*
Hon. Zollie Steakley, page 4 (WW-627)
We do not feel that this particular statute is applicable to the
question raised, because the national bank involved here ts not desirous
of a certificate of authority to do a trust business in Texas, but wants
to act only as a testamentary trustee of a foreign trust with regard to
certain trust property Located in Texas.
Thus, current authority prevails that a national bank may go
outside its domicile to act in a trust capacity if the state to which it
desires to go does not expressly, or by necessary implication, prohibit
its entry. The prohibitive statute (Article 342-902, V.C.S.)has expressly
excluded ucorporations organized under the laws of the Unites States”,
of which a foreign national bank is one, thus indicating the necessary
tolerance, when read in conjunction with Article 8.01B (11). to authorize
their entry to perform certain trust functions. We do not pass on the
question of a fore@ corporation performing trust functions which would
constitute transacting business under the emphasised portion of Article,
8.01B(ll).
SUMMARY
National banks domiciled in a foreign
state may come into Texas to perform
fiduciary functions If a state bank in
the state of the national bank’s domi-
cile may act outside its borders in a
fiduciary capacity.
Texas law does not prohibit a foreign
national bank from coming into the
State to act as a testamentary trustee.
Very truly yours,
WILL WILSON
Attorney General of Texas
BY
C. Dean Davis
Ass is tant
CDD:j’g
Hon. Zoliie Steakley, page 5 (WW-627)
APPROVED:
OPINION COMMITTEE:
Geo. P. Blackburn. ChaIrman
C. K. Richards
Robert T. Lewis
Leonard Passmore
R.EVIEWED FOR THE ATTORNEY GENERAL
BY:
W. V. Geppert