Untitled Texas Attorney General Opinion

, I OFFICE OF THE AlTORNEY GENERAL OF TEXAS AUSTIN In emergoncl88 created thereby. lnajor 8chOOley eala the 6welwJr8 OS ,oomeof our 6tatas ~wera wer-ridlug the map- &tee of the Constitatlonmin regard to bruwheo for Btate baakm aml he jut wonder- ed If our own gweuwEent T88 QlOtheJfltith euch outllorlty. Honorable JuO. tie %GA&uks - pa@ 2 "Fhat we uuuld like to know is rmy l%xas State chartcred banks yrovidc check paying, deposit taldmg and exchange issuinq stations in hilitary Hcscrvations and Navy Yard~.~ As vc cvnstruc your letter, it requests our opinion upon the broad question stated In the captioned subject matter -- chat Is, .tbc authority of a State bank- in(5 corporati6n to eStabliSh a branch bank. As thus con- strumi, the questim should bc ansvcreclin the negative. Section 16 of hrtiolc SVI of the Constitution reads 06 ~fofl~ns: *The Legislature shall by general laws, authorize the incorporation of corporate bodIeswithbzuM.nganddiscountingprivi- leges, and shall prqride for P eystem of state supe.rvision, regulation and control of such bodie6 which vi11 adequately pro- tectand secure,the depositors sad credit- ors thereof. *PO such corporate body shall be char- tered until all of the authorized capital stock has been subscribed and paid for in full in cash. Suoh bo& OorDorate shall not be authorlssdto ema= @ business & Kethnn one -which shall be~dee&g- p 3dd)ln its c h a r ter” . l.* (mqlbsle cup- . The phrasing of your specific question quoted In the last paragraph of your letter rith respect to the par- ticular service of the setationss contemplated does not call for 8 different answer. JIalntoining such gstatious* would constltutc engaging *in business at more than one places, with.ln the meaning of Seotion 16 of tho Constitu- t1on. Und& all Of the~deoisions throughout the United States, the bueiness of rocepting deposits of'money for re- payment upon the order of the depositor constitutes the business of banklnq. It is perhaps the Only ueV3Pfriling ind,loium of the banblng fuuOtiOns mnr that the authority to issue ciroulatiry notes has been taken away from the Natlon- al assoclatlons. fiiomrablo Jolm Q. Lc~s&s - pa@ 3 The ordinary osscntial features of the banlbny business are, the ;rowOr to accept dCpO6itE of money ro- payable Lo the order of the depositor, the disc.ountinC of coxmz0rcial paper, arvl the ~wernmental authority to issue circula~Ang uGtO6, which last-nasff! power, as a?mvc atoted, I?rrSLOCI1 zllrGgatc?d. . Any hank may, vf course, perform other buslneso transactions, axi cvcn carry on to a degree other busi- nesscs, not cssentislly hanki~lg functions, when reasonably neocssary as an incidental power to perform: their eoscn- tlrl functions as bauldng InstitutiOns. The genernl rule is stated in 9 C.J.S.. Title -- B-6 A!iD DAM.WG, p. 31, MC. 3, as fGllW6: "As has been indioat'ti in Section 1, the principal attributesto the bau!z are the right to iseue xqotlable notes, to discount notes, aud t0 recoi7e deposits; amI a&i10 as a xatter of mdern practice banks usually exercise any'tuo or even all tlareo of these~functi.ons, it is not iwce~~ary thut t@y exer~isc them all, but an dmitltution exercising:any one or mom of these functions is a bank in the Stl-iCtCSt COllEIWCi;il 6elX5e.s I,atm in Lhc same motion that text declarcsc *Originully, the business of banhing consisted only of reoelving depoeits for safe keoplng, and web at the prOstmt tirna a bankls'primarily a plaoe for the dqmsit OS money, and the receiving of the s~oney of others Gn deposit IS a distinctive fOattWe of the business of bauklng.s ZGll~Wll cn kkanks and Banklnp;, Vol. 1, sec. 67% dcclarasc *The rery business of the honk is to &a00 a place where dcpo6its are received ani pai.& Gut and Khcro touoy is loanod on security * Not all these functions, hOrrever, seed be oxercisod In ardor to constitute an institution a bank. The orerolso of a single Honorable John CL. LcAdows - png0 4 function 4' baUlug, such as loting m~oy, sclllng bonds, Or issuing OWre.3cy nuy be sufficient tu ‘urin,:the iastitutlon'withln the ragulal;iJne passe.3 by the State re:aiLve to hmiks.’ lk la niisill Cc, commrclal sense, are of three Lirni~6, tc-wit* 1, or daposit j 2, o f dlscourt; 8, 6f drculatiou. Strictly sIu?ak- inF;, t:ie term ‘bank’ hpliC6 a plnce rGr thC dCpOC&t of XlGllej, aS that i6 the ,3,06t ObVi6U6 purpose of such au lnstltutlon~. Griglnally the buoi~~csc of bauldmg canuistcd Only In rc- CclVi~ dcpodtu, au& as bullion, pIatc axxi the likC, sor Safe keeping Until the CiCllO6it- cr s3czld ECC fit to dr.aw It cut for uua, but tho bueincss, in the pcj+ss of events, x66 eXteIdCX%, 3ti bankt?rS aS6UXWd to t%p.?OUnt bills .2x& note6 6.d tq loau money upon nort- .gagc, ?a= or other security, and at a btlll later period to lssuc notes or their own in- tertled as a clroulatlng currcnoy and a medium of exchange lnst0ad of gold 3x1~2silver. Ukiern bankers frequently aerd6e w ix0 or even aI three of those fimcti.ons,,but It is still tme that ZII institution ;n‘ohlbited from cxerclslxig any more than one CP those functiona in a bank in the strictest coaxerclel sense, and unless such a bank is brought wlthln the proviso under consideration, is equally eubject to taxation as if euthorizcd to nuake ascounts am1 isope circulatiion a6 well as to receive dep0slts.a -- George Oulton, Collector, t. The San Y'raucleao tiarings Unlori, 21 Law mt. (U.S.) 618. In KaUokl T. Goaeett, Banking Comdafiloner, 100 8. s. (2) MO, it iG FM%id: "hi the case of JIu rc ?rudencc Coupany, (C.C.A.) 79 F.(2) 17,79, WC find tbe follow- ing definition of a bank: 'Strictly speaklog, tho tern bauk itaplies a place for the deposit of money, as that Is the amst obrioua purpose or such an instltutlon.* Tha opinion contln- U6al *ktld all of tbo cases so far aa we aro advisoti, uiiich Lava constmti the words.~bank- Honorable John Q. kThdaui% - page 6 ing corpor8tion6,~ nu use3 In Lhc Unnls- ruptcy Act, hav0 regardel tl~e lccal power to rcxxive deposits az tU2 efi6cntlal tking.*" (i.aILny AuthoritiC hare CitCd) . 19.e ~.ullsLA Oasc held ‘that n stookimldcr in a kmrrle Plan tiauk wae not subject tc the supm-ad&O;; llabil- ity 4 the UXlstitutlOl? anti 6tatUtC!j, ‘JCC~USC oucfi so-ca)l- ed ;lorris'Plnn Unnkswcre not then antiioriz&3 to accept dc- posite . The very t!lln&s vhicb your suj.;,7estloncontemplates -- the depoeltin*; of 00llQy nni! cns?liny; oi' chcck3 -- me not present in &tic ..aliskl CasIl, Tot :&icil rexon it appears' the court held as It bil with respect to the stockholders* 1iaWlity. Tb0 Snprcmo Court r?fuscC a writ cf error in that cesc. Your quote1 suz:;cstion rroz :.njor Schooley and lxis~ iqlio;i recuest that we adopt it, to the effect that tha bmqnors of sane ,of tllc stctcv wart cvmri6iny. tlxz mandates of the Constituticrr. ir: re;;zrd 'cc br;.ixhc6 Car State banks, is not In !~Ocpin~,xIth ccnstituti.onal Wndates. 'TaS i6 n fret? :iti indepa&cnt. State, subject,onQ to the Constitution of rhe United States, and the mintcnasxc or our free i.nsti- tutions um? the perpetuity of' t:ic Union depend upon-tl:c prosorvaticn cf the right'of local self $ovcrnment, unimpaired to all the stateti.g --Bill 0r ItIghts, Ccnstftution, Article 1, Sco- tlon I. *The military shall at times ba subonlinate to the civil ;ruthoritics.* --secti 24, Article 1, COn6titutiOn. mNo il&t?r of suspCrJciilJglatfs iJ'!this Statt3 &I‘&11 bc CxcrOisCd S%CC]Jt by tl&C LO&SlutlWC.* --Section w, Article I, Coustitution. W course, the power of tm Legislature it6Clf to s&pend lau pertain6 Only to legislative acts ami not to con- etitutlonal provisions. The 6nthU6i68fiC nUgp?stiOn that any officer, or oven department of the Government, may BUS- penil the Constitution i'inds no,support in law. Honorable Jolm (?. Ldbkuis - page 6 In IZX purtc ldilligan (U.S.) IS Law Ed. p. 29S, it 1s said: a!krtiill rule can never cxi.sL where tilt courts arc apcn, 6.d in the .+x-oper ancl unob- structed cxcrciac of their jurisdictlon.g The court upheld the ri&t of ~;illlgnn tc th'c constituti6nnl writ of ?b,abeas corps upc.: tho principle aImounc~ed by it . Sour c,ucstion, therefore, is unewered as nbovc indicated . Very truly yours