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Ron. Lee Brady, Commissioner Opinion No. O-2641
Department of Banking Re: Appropriation to State
Austin, Texas Banking Department - Senate
Bill 427, ,Acts 46th Legis-
Dear Sir: lature.
In your letter of ,August 16, 1940, you request the
opinion of this department upon the following question:
1. Are expenditures in the supervision of
any one class of corporation (under the supervi-
sion of the Banking Department), limited to fees
collected from that class of corporation?
2. Are expenditures under Item ‘7 (of the
appropriation to the State Banking Department
Senate Bill 427, Acts of the 46th Legislature 5,
under the sub-caption “Loan and Brokerage Divi-
sion” being a $19,000 appropriation labeled “Trav-
eling Expense, Banking Department” limited to the
payment of traveling expense incurred in loan and
brokerage companies, or may it be used to pay the
expense of travel in supervision of banks?
3. Is Item 8 (of the same appropriation) fol-
lowing Item 7 above mentioned, limited to the pay-
ment of premiums on bonds of employees charged with
supervision of loan and brokerage companies?
As you state, the Banking Department is charged with
the responsibility of supervising four distinct classes of fi-
nancial institutions, namely, banks, building and loan associa-
tions, loan and brokerage companies, and credit unions.
As to banks, Article 362, R.C.S., 1925, requires that
the expense of every general and special examination shall be
paid by the bank examined in such an amount as the commissioner
shall certify to be just and reasonable, and it further provides
that assessments therefor shall be made by the commissioner upon
the banks examined in proportion to the assets or resources held
by such banks upon the date of the examination, Article 363 re-
quires sums collected as examination fees from banks to be paid
by the commissioner directly into the State Treasury to the
credit of the general revenue fund.
-’ .
Hon. Lee Brady, page 2.
As to building and loan associations, Article 881a-
9, Vernon’s Revised Civil Statutes, requires the banking com-
missioner to collect from every domestic building and loan
association fees in lieu of examination fees, based upon gross
assets, in accordance with a fixed schedule. This article re-
quires the commissioner to assess enough against such associa-
tion to carry out the provisions of the building and loan as-
sociation act e This article further provides:
‘1. . . said fees when collected shall be placed
in a separate fund with the State Treasurer to be ex-
pended during the current year, or so much thereof as
may be necessary in carrying out the provisions of
this Act, and should there be an unexpended balance
at the end of the year, the Banking Commissioner of
Texas shall reduce the assessment for the succeeding
year so that the amount produced and paid in the State
Treasury, together with said unexpended balance in the
Treasury, will not exceed the amount appropriated for
the current year, to pay all necessary expenses of su-
pervising the operation and examining the business of
the corporations doing business under the provisions
of this Act, which funds shall be paid out upon requi-
sition made out and filed by the Banking Commissioner
of Texas, when the Comptroller shall issue warrants
therefor.”
As to the loan and brokerage companies Article 1524a,
Section 2, Vernon’s Revised Civil Statutes, requ i res such class
of corporations to pay the actual traveling expenses, hotel
bills, and all other actual expenses incident to such examina-
tion, and a fee not exceeding one-eighth of one per cent of its
actual paid-in capital.
By the provisions of Article 2465, Vernon’s Revised
Civil Statutes, credit unions are required to pay the expense
of each examination made of such credit union, but the statute
requires that no charge shall be made for services except trav-
eling, hotel and meal expenses and other actual expenses, and
requires that the credit unions shall be furnished with an item-
ized statement of such expenses.
The rider appended to the appro riation~ made to the
State Banking Department, by Senate Bill E27$ Acts of the 46th
Legislature, requires that “all appropriations herein made for
the State Banking Department shall be paid out of their receipts,
and the Commissioner shall reduce his expenditures so as not to
exceed the actual receipts collected.” Said rider further pro-
vide s :
Hon. Lee Brady, page 3
"For the purpose of enforcing the credit un-
ion laws of this State, all fees collected under
and by virtue of Chapter 11 Acts of the 41st Leg-
islature, and all unexpende 4 balances are hereby
appropriated to the Banking Department."
As to the fees collected from building and loan
associations, it is to be observed that the Legislature has
required the creation of a separate fund for the deposit of
such fees, and it is clear that the Legislature contemplated
that such fees should be dedicated solely to defraying the
cost of administering the building and loan association law,
and, further, that the cost of administering the building
and loan association laws should be paid exclusively from
such separate funds. The appropriation bill passed by the
46th Legislature, confirms this observation by the use of
the following language in the rider appended to S.B. 427:
"Sec. 3. It is further provided that in the
event the Statutes of the State of Texas provide
that any amount, fees or funds herein appropriated
to be paid out of local or special fees or funds
that the same be so paid out of said local or sa 1 d
special fees or funds instead of being paid out of
the General Revenue Fund.N
It is thus clear that the fees collected from build-
ing and loan associations under Article 881a-9, since they are
available only for the payment of expenditures incurred in su-
pervising building and loan associations, cannot be taken into
consideration in determining the authority of the banking com-
missioner to make expenditures in the supervision of one of the
other classes of corporations. It is likewise clear that ex-
penditures in the supervision of building and loan associations
are limited to the fees collected from building and loan asso-
ciations.
The general law does not set apart and dedicate to the
payment of expenditures in the supervision of credit unions the
fees collected from credit unions. However, the legislature has,
by the rider above quoted, set those fees apart for the purpose
of enforcing the credit union laws of this State by appropria-
tion. It is therefore clear that such fees may not be taken into
consideration by the banking commissioner in determining the au-
thority to make expenditures in connection with the supervision
of another class of corporations. However, neither the general
law nor the appropriation bill indicates any intention on the
part of the Legislature to limit the expenditures to be made in
Hon. Lee Brady, page 4
the supervision of credit unions to the fees collected from
such credit unions. On the contrary, this was clearly not in-
tended by the Legislature, for it specifically provided that
the credit unions should not be assessed any fee for services
rendered in supervising them. We therefore hold that expendi-
tures in the supervision of credit unions are not limited to
the fees collected from that class of corporation, but that
the fees collected from credit unions under the article of the
statute above cited, may be used to measure only expenditures
incurred in the supervision of credit unions.
Fees collected by the Banking Department from banks
and loan and brokerage companies occupy a different status.
So also do the receipts of the Banking Department collected
otherwise than as examination fees or fees in lieu of examina-
tion fees from the corporations under the supervision of the
Banking Department. There is no dedication of the examination
fees collected from banks and loan and brokerage companies.
On the contrary, the statute provides or contemplates that they
shall be deposited in the General Revenue Fund. The examina-
tion fees from banks and loan and brokerage companies are not
impressed with a trust, to be used only for expenses incurred
in the supervision of such companies. On the contrary, these
charges merely represent a quid pro quo for services rendered,
and when the corporation has made the payment required by law,
it has no interest in the disposition made by the State of the
monies thus collected. The injustice which you point out in
your letter, that banks are thereby compelled to contribute to
the cost of supervision of loan and brokerage companies, or
vice versa, is more apparent than real. The law only permits
the commissioner to levy such assessments as will compensate
the State for the cost of examination. When the bank or loan
and grokerage company has paid the cost of the examination,
it has paid for the cost of the service rendered by the State
in supervising it. The fact that the money thus received by
the State may be devoted by the State to other State purposes
does not operate unfairly as to the bank or loan and brokerage
company, for the cost of supervision of loan and brokerage
companies has not been taken into consideration by the commis-
sioner in determining the amount of the assessment to be paid
by the bank, and vice versa.
\;e hold that the aggregate of the examination fees
collected by the Commissioner from banks and from loan and
brokerage companies, and the aggregate of the receipts collected
by the commissioner from charges other than those from examina-
tion fees or fees in lieu of examination fees from all of the
classes of corporations under the supervision of the Banking COP
missioner, may be taken into consideration in determining the
Hon. Lee Brady, page 5
authority of the commissioner to make expenditures in connec-
tion with the supervision of banks, loan and brokerage compan-
ies, and credit unions. Thus the cost of supervising banks is
not limited by the receipts collected from banks, the cost of
supervising loan and brokerage companies is hot limited to fees
collected from loan and brokerage companies, and the cost of
supervising credit unions is not limited to fees collected from
credit unions.
Your second and third questions are, for convenience,
considered together*
Your appropriation is found under the general heading,
“State Banking Department”. The first division is merely styled
“Salaries” . The second division is styled “Maintenance and Mis-
cellaneous”. .The third division is styled “Building and Loan
Divi sionn . The fourth division is styled “Loan and Brokerage
Division” . Under the Loan and Brokerage heading we find items
r;I;eddL7io,"" 8 Item 6 is for the sum of $200.00 per an-
num for pr nt ng and*distributing law books; Item 7 of $19,000.-
“Traveling expense, Banking Department” ; and
Item 8 is $420.00 per annum for “Surety Bond Premiums”.
Referring to the appropriation made by the Legislature
for the Department of Banking for the fiscal biennium ending Aug-
ust 31, 1939 we find the same general pattern followed. In
that appropr f ation bill there was the heading under the general
he ading, ‘I Department of Banking”, of “Salaries”. Then there ap-
peared the heading called “Maintenance and Miscellaneous”. Un-
der the subheading, f*Maintenance and Miscellaneoustl of that ap-
propriation, there appeared Item 15 which was a lump sum appro-
priation of fees collected from building and loan associations
as an appropriation for expenses and salaries of the examiners
and other employees and expenses necessary in supervising build-
ing and loan associations. We find also Item 16, a similar lump
sum appropriation relative to the supervision of the loan and
brokerage companies; Item 17, an appropriation of all fees col-
lected under the credit union law for the supervision of credit
unions. Then, under that appropriation we find three items
similar to those to which we have above referred as appearing in
the appropriation for the present biennium. These items are
numbered 18, 19, and 20; Item 18 being in the sum of $300.00 per
annum for printing and distributing law books; Item 19, the sum
of $22,500.00 per annum for “Traveling Expenses of Commissioner,
Employees and all authorized representatives of the Banking
Departmen 4"j and Item 20, $450.00 per annum for “Surety Bond Pre-
miums”.
,Although the position of an appropriation with respect
to a particular heading may be of importance in determining the
intent of the Legislature it is not conclusive. A greater sig-
nificance must be attache b to the nature of the item.
X-ion. Lee Brady, page 6
In the appropriation for the preceding biennium,
it is clear that Items 18 and 20 were intended for the Bank-
ing Department as such, not for a particular division thereof.
>Je are of the opinion that the intent was the same with re-
spect to Items 6 and 8 under the heading "Loan and Brokerage
Division", and so hold.
With respect to Item 7, it appears on the face of
the item itself that it is for the "traveling expenses" of the
"Banking Department". The term "Banking Department" obviously
embraces more than one division of that department, so that,
in the absence of other considerations affecting construction,
the item :;,ould be construed as available for expenditure for
all divisions. L substantially similar item was found in Item
19 of the appropriation for the preceding biennium. By virtue
of the fact, however, th-At all expenses of supervising build-
ing and loan associations, credit unions, and loan and broker-
3Ee companies were specifically provided for by separate items
01 aparoprintion, it was clear that th& item was intended
only ?or traveling expenses incurred in supervising banks.
In this biennium we find an item of $5 000.00 separ-
ately provided for traveling expenses of the building and loan
division and we find a separate appropriation for enforcing
the Credit Union laws. Since an approi2riation not only pro-
vides money for a particular purpose, but limits the expendi-
ture for that purpose, it is clear that Item 7 is not intended
to be a-J;iilable for travelling expenses incurred in supervis-
ing building and loan associations and credit unions. It is,
however, available for all other traveling expenses of the
"Banking Department" in toto, which include, of course, trav-
eling expenses in supervising banks and loan and brokerage
companies.
APPROVEDAUG 27, 1940 Yours very truly
/s/ Grover Sellers
First &ssistant Attorney General /ATTORNEYGENERALOF TEXAS
APPRO?ED: OPIMION COKMITTEE By /s/ R. W. Fairchild
BY: BWB, CIlAIRKAi'~ Richard W. Fairchild,
Assistant
RWF:jm:wb
Untitled Texas Attorney General Opinion
Combined Opinion