*
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
. .
i
r
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