TEEATTORNEYGENERAL
OF TEXAS
February 11, I!??!
Eon. J. lb Falkner, ComMasloner
&ate Department of Banking
Capftal Hatfonal Bank Bulldihg
hrttm; Taxas ,’
Opinion Ilo., w-22,
lie: Whether the proposed plan of the
Narshall IVatlonal Bank, Marshall,
Texas, to provide additional bank-
4 facilities i8 in violation of
Articla 342-903, V.C.S., Texas
Banking Cods of 1943.
Deer Slrr
You have asked our opinfon as to whether t&e pro-
posed plan of the Marshall National Bank, Marshall, Texas
to build and install drive-in facilities in the neti block
vest of the main bank building, approximately 185 feet rrom
the property line of the main bank to the property line OS
‘the drive-in bank violates the provisions of Article 3420
903, Vernonls Civil Statutsqthe Texas Banking Code of 1943.
IOU have indicated that it is your opinion that the proposed
plan aor8 violate 4rticlr 342-903.
Article 342-903, ‘V.C.S., provider as iollovsr
Vo state, nationPI or private bank shall:
engage irr business In more than one plaCe, main-
tain any branch office, or cash checks or,~receioe
aeporfts except in itr own bankine house.*
/ The.following is a rough aketch OS the proposed lo-
cation oi the rwv banking facillt iesr
’ $rREEr
Hon. J. M. Falkner, page 2 (WW-22)
You have indicated that the following transactions
are to be handled at the new facilities:
(1) The personal loan department of the Marehali
National Bank will be moved to then new drWe-In building and
all personal loans of $500 or less will be handled in the new
building. The $500 limit is only an approximate ,limit, and
loans that exceed that amount by a few dollars may also be
made at the drive-in.
(2) The drive-in ~113 have three teller stations
for accepting deposits, cashing checks, and accepting pay-
ments ,011‘notes.
,(3) %Jalk-in*1 as’we13 as Wrlve-inll service IS con-
templated at the’ new facilities, with additional employees
behind a counter on the inside of the drive-in building to
handle the walk-in customers.
(4) A fireproof night depository vault will be main-
tained at the drive-in.
(5) Cashier’s checka, bank drafts bank mcmsy order;
and’traveler’s checks will nqt be issued at &ho drive-in.
The bank has proposed the following method of opera-’
thonr
(1) The drive-in building will, be connected to the
main bank by two underground pneumatic tubea, each five inches
in diameter, which will carry up to five pounds.
:A21 The tellers will not send each item received to
the main bank immediately, but it ie contemplated that items
mey be transmltted’to the main bank at about fiiteed or twenty
minute intervals.
(3) A closed circuit TV will be installed between
the drive-in and bookkeeping and proof department in the main
bank.
,(4) Currency will be kept in the main bank vault
over-night. However, a fireproof vault with a silver chest till1
lazayintained at the drive-in, and silver will bg kept in that
.
(5) The personal loan department records will I be
maintained at the drive-in.
. ,
: ,.,?
,.,
:aon. J. No Falkner, page 3 (WW-22)
.,
(6) Records of tehers’ balances will be sent to the
main bank at closing e,ach day.
(7) Supplies n,eoessary for operation will be kept at.
the drive-in.
While the powers of a state bank ln Texas are enumer-
ated in,Article.342-301, V.C.S., most of the decisions through-
out the United States recognize that the ordinary essentlal’fe-
tures of the banking business are the power to accept deposits
of money repayable toe the order of the depositor, the discount-
ing of commercial paper, the lasuanc
the loaning of money upon security.
704, 23 L.&i.’ ‘Gil; 9 C.J.S. 31; 2011
Volume 1, Section 67.
Many of the decisions and authorities throughout the
United States recognize that not all of these banking functions
need be exercised in order to constitute an institution a bank.
The exercise of some of the functions of banking such as loan-
ing money, selling bonds, receiving deposits or cashing checks
may be sufficient to bring the institution within the regula-
tions aseed by the state relative to banks. gali v. Ooseett,
109 8. e .2d 340 (Tsx.Civ.App. 1937); Zollmann, &,c& and &A&&&
Volume 1, Sect ion 67. Three excellent annotations on the con-
stituent elements of branch banking are found in 30 A.L.R. 927,
$I A.L.R. 1340, and 136 A.L.R. 471. However, it is not necee-
sary for us to determine whether the plan of the Marshall ,Na-
tional Bank actually proposes a technical “branch bank” for
Article 342-903 is not limited to technical branch bar&&g.
As noted above, Article 342-903 provides that no state,
national or prlv.ate bank shall (1) engage in business in more
than one place, (2) maintain any branch office, nor (3) cash
checks or receive deposits except In its own banking house. Af-
ter a thorough and exhaustive review of the decisions of the
various state and federal courts and prior opinions of this of-
fice passing upon the question of “branch banking” and related
questions, we are in agreement with your conclusion that’ the pro?
posed plan of the Marshall Iiational Bank violates the provisions
of &ticle 342-903.
We are’ of the opinion that lf.~the proposed plan Is put
Into effect the Marshall National Bank would be engaged in buei-
ness in more than one place in violation of the statute.
Title 12, U.S.C.A. Sect ion 36? authorizes national
banks to establish and operage branches Iif such establishment
Ron. J. M. Falkner, page 4 (W-22)
and operation are at the time authorized to state banks by the
statute law of the state in question.” As the Texas Constitu-’
tlon, Section 16 of Article XVI, and Article 342-503, V.C.S.,
the Texas Banking Code of 1943, prohibit such aetlvity, the
Narshall National Bank, Marshall, Texas, is without authority
under federal law to provide the additional banking facilities,
and in doing so would violate the provisions of Article 342-
903, V.C.S.
This opinion is necessarily limited to the facts of
the situation as set out herein, which we understand to be un-
disputed fact 9.
The proposed plan of the Marshall National Bank,
Marshall, Texas, to construct additional banking fa-
cilities in the next block west of its main bank
would be in violation of Article 342-903, V.C.S., the
Texas,Banklng Code of 1943.
Yours very truly,
WILL WILSON
Attorney General of Texas
;yM~@+
Will D. Davis
Assistant
WDDrtib
APPROVE:
OPINION CODMITTS
BY II. Grady Chandler,
Chairman