f -
T~~A~TORNEYGISNERAL
OF TEXAS
AUSTIN. .,?SXAS 78711
August 21, 1974
The Honorable Roy W. Mouer Opinion No. H- 376
Securities Commissioner
State Securities Board Re: Whether person making
704 State Finance Building secondary sale of savings
Austin, Texas association stock is required
to be registered as dealer
under Securities Act and
related questions.
Dear Mr. Mouer:
You have requested our opinion on the following questions regarding
permanent reserve fund stock issued by savings association:
1. Is a person or company making secondary
sales (i. e., sales other than by the issuer) of
savings association [permanent reserve fund]
stock required to be registered as a dealer or
salesman under The Securities Act, (Article
591-1, et seq., V. T. C.S.), if not otherwise
exempted from registration by Section 5 of
The Securities Act?
2. Are sales of sayings association [permanent
reserve fund] subject to the anti-fraud provisions
(Sections 23.A, 29. C, 32 and 33.A) of the Securities
Act?
Section 11. bl of Article 85Za, the Savings and Loan Association
Act, reads:
p. 1766
The Honorable Roy W. Mouer page 2 (H-376)
Savings associations, the officers, employees
or agents, savings accounts and the permanent
reserve stock thereof, and the sale issuance or
offering of savings accounts and permanent reserve
fund stock of any association or Federal savings and
loan association are hereby exempted from all pro-
visions of law of this State, other than this Act,
which provide for supervision, registration or regula-
tion in connection with the sale, issuance or offering
of securities, and the sale, issuance or offering of any
such accounts or stock shall be legal without any action
or approval whatsoever on the part of any official,
other than the Commissioner, authorized to license,
regulate, or supervise the sale, issuance or offering
of securities. (Emphasis added)
Your questions are prompted by an apparent conflict between this
provision of the Savings and Loan Act (Acts 1963, 58 Leg., ch. 113, p. 269)
and its caption.
The Texas Constitution, Art. 3, Section,5, requires that the title
or caption of a bill give notice of its contents. This provision insures
that the Legislature and the public will not be misled and inadvertently
allow the passage of unintended legislation.
The caption to the Savings and Loan Act reads in part:
. . . exempting savings accounts from securities
laws; . . . providing that outstanding shares, stock,
share accounts and i,nvestment certificates (excep_t
Permanent Reserve Fund Stock) shall be considered
as savings accounts; . . . (emphasis added).
Notwithstanding the emphasi,zed language, Section 11.01 also purports to
exempt reserve fund stock from the securities laws of the state. In our
opinion, the caption and a porti,on of Section 11.01 are in irreconcilable
conflict.
p. 1767
The Honorable Roy W. Mouer page 3 (H-376)
Only that part of the act in direct conflict with the title is void unless
the “invalid parts are inextricably interwoven in the texture of the Act so
as to render the entire Act invalid. ” Fletcher v. State, 439 S. W. 2d 656,
659 (Tex. 1969); Hayman Construction Co. v. American Indemnity Co..,
471 S. W. 2d 564 (Tex. 1971); State v. Blackwell, 500 S. W. 2d 97 (Tex.
Crim. 1973). The inclusion or exclusion of permanent reserve fund stock
in the exemption provision does not affect the rest of the Act.
,If having struck the unconstitutional part, the result ia broader
legislation than originally enacted, the whole act must fail. Texas-Louisiana
Power Co. v. City of Farmersville, 67 S. W. 2d 235 (Tex. Comm. App.
1933). In the present case the removal of permanent reserve fund stock
from the exemption of Section 11.01 results in narrower legislation. The
Act contains a severance clause. We think the courts would view the
caption defect as voiding only that which is in conflict with the caption,
but as not affecting the rest of the Act.
The Securities Act, Article 581-1, et seq., V. T. C. S., applies to
all transactions involving permanent reserve fund stock. Persons making
secondary sales of savings association permanent reserve fund stock may
be required to register thereunder, and the anti-fraud provisions of that
Act may be applied to such sales unless specifically exempted by Sections
5 and 6 of the Securities Act.
SUMMARY
Section 11.01 of the Savings and Loan Act, Article
852a, does not exempt savings and loan permanent
reserve fund stock from otherwise applicable provisions
of the Securities Act. Article 581-1, et seq., V. T. C.S.
Very truly yours.
p. 1768
The Honorable Roy W. Mouer page 4 (H-376)
APPROVED:
DAVID M . KENDALL, Chairman
Opinion Committee
p. 1769