Hon. Lee Brady, Commissioner Opinion No. O-2319
Department of Banking Re : May exeminers or offi-
Austin, Texas cials of the Banking Depart-
ment discuss with the Insur-
ance Department *s examiners
and examiners from the kttor-
ney General’s Department and
the Secretary of State’s Of-
fice matters contained in
Dear Mr. Brady: the reports mentioned?
Woebeg to acknowledge receipt of your letter re-
questing a legal opinion from this department upon the above
captioned question, your letter being as follows:
l’Simultaneous examin&ions have been made of
certain companies of this State by several of the
departments of the State government respectively
having supervision thereof. There is reason to
believe that these companies are affiliated either
through common stock ownership or otherwise, and
that there may be an exchange of assets or other
operations which make it difficult for one depart-
ment to intelligently examine the companies under
its supervision without information relative to
other companies which are not under its supervi-
sion. This department was one of the examining
departments.
‘IWe should like your opinion as to whether
or not examiners or officials of this department
could discuss with the examiners or officials of
other examining departments matters contained in
the reports of the different departments.
“We will appreciate your giving this your con-
sideration and advising us of your opinion.”
In the governmental scheme the State in the exer-
cise of the undeniable right of control or supervision of
its domestic corporations and other corporations doing busi-
ness in this State has conferred upon dii’ferent officers of
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1
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Hon. Lee Brady, page 2
the government the power of visitation and examination of
such institutions or corporations.
Notable illustrations of this authorized right of
visitation and examination are found in the following stat-
utes:
Article 1366 declares:
“Every corporation, domestic or foreign,
doing business in Texas, shall permit the At-
torney General or any of his authorized assist-
ants or representatives, to make examination of
all the books, accounts, records, minutes, let-
ters, memoranda, documents, checks, vouchers,
telegrams, constitution and by-laws, and other
records of said corporation as often as he may
deem necessary.”
Article 358 provides:
“The commissioner (Banking Commissioner) shall
cause each banking corporation incorporated under the
laws of this state, subject by law to examination, to
be thoroughly and fully examined at least every six
months and at such other times as the commissioner may
deem necessary.”
Article 881a-7 of the Building and Loan Associa-
tion Act (Vernon’s Civil Codification) provides:
Y-ie (the Banking Commissioner) ‘shall like-
wise appoint such building and loan examiners as
In his judgment may be necessary to examine at
proper and suitable intervals all building and
loan associations under his supervision0 . O”
Section 63 of the same Act further declares:
“Bvery foreign building and loan associa-
tion doing business in this state shall be subject
to the same examination as are building and loan
associations organized under the laws of this
state.”
The Board of Insurance Commissioners or some indi-
vidual commissioner of such board is authorized by several
statutes to examine or cause to be examined the various types
of insurance companies; notably, the following instances:
Hon. Lee Brady, page 3
Revised Civil Statutes Articles 4701, 4720 4769,
4801, 4806, 4859f, 486Ca, sub. 26, 4881, 4910, and 5030.
The Secretary of State in the administration of
the Securities Hct is authorized to make certain examina-
tions, illustrations of which authority are found in Articles
6COa and 6573a of Vernon’s Revised Civil Statutes.
These citations are by no means all inclusive of
the statutory authorization to examine, but they typify such
legislative intention of corporate control.
The obvious purpose of these and other similar stat-
utes is to afford to the State the opportunity to ascertain
the necessary facts to aid in the effective administration of
the laws controlling the institutions and corporations affect-
ed thereby. The information obtained by such visitations and
examinations and from the required statements or reports is
of course for the immediate aid to the particular officer or
functionary exercising the right of visitation or examina-
tion but mediately for the benefit of the State, whose serv-
ants such officers and functionaries are. They are a part
and parcel of the State’s plan ,for executing the laws of the
State. Each such visitation therefore is a part and parcel
of the general governmental plan or scheme of the State it-
self. As evidence of which the following excerpt from the
statutes will suffice.
,Article 1.369 of the statutes with respect to exam-
inations made by or under the authority of the Attorney Gen-
eral - which is the broadest power conferred upon any State
officer - declares:
“The .Attorney General, or his authorized as-~
sistants or representatives shall not make public,
or use said copies or any information derived in
the course of said examination of said records or
documents, except in the course of some judicial
proceedings in which the State is; a party, or in a
suit by the State to cancel the permit or forfeit
the charter of such corporation, or to collect pen-
alties for a violation of the laws of this State,
or for information of any officer of this State
charged with the enforcement of its laws.“’
It is here made clear that while the information
obtained by the Attorney General is for the immediate purposes
of that officer, nevertheless, it is for the ultimate use of
“any officer of this state charged with the enforcement of its
laws.”
Hon. Lee Brady, page 4
article 3352 of the Revised Civil Statutes, pre-
scribing the oath to be taken by the examiner and the con-
ditions of his bona, declares:
“Each examiner before entering upon the
duties of his appointment, shall take and file
in the office of the Secretary of State an oath
to support the constitution of this state, to
faithfully demean himself in office, to make
fair and impartial examinations, and that he
will not accept as present or emoluments any pay
directly or indirectly for the discharge of any
act in the line of his duty other than the remun-
eration fixed and accorded him by law, and that
he will not reveal the condition of any bank or
bank and trust company examined by him or any
information secured in the course of any examina-
tion of any bank or bank and trust company to
anyone except the commissioner. I1
Article 881a, Sub. lOa, with respect to the Bank-
ing Commissioner’s examinations of building and loan asso-
ciations, declares:
“Any regulatory or other public authority
or officer of this state required, authorized,
or permitted to examine any institution which
is a member of a Federal Home Loan Bank or which
is insured by Federal Savings and Loan Insurance
Corporation, may in lieu of making any such exam-
ination, accept an examination of any such insti-
tution made by the Federal Home Loan Bank Board,
a Federal Home Loan Bank, 01' Federal Savings and
Loan Insurance Corporation, or may examine any
such institution in conjunction with the Federal
Home Loan Bank Board, a Federal Home Loan Bank,
or Federal Savings and Loan Insurance Corporation.
any such regulatory or other public authority
or officer may make available to the Federal Home
Loan Bank Board, the Federal Home Loan Bank in
which an association holds membership, and Federal
Savings and Loan Insurance Corporation, any inform-
ation ftirnished to or obtained by and all or any
part of any report of any examination of any such
institution made by any such regulatory or other
public authority or officer.”
These statutes are sufficient to indicate the pub-
lic policy of the State with respect to such regulatory mea-
sures and to accentuate our statement above, that the
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Hon. Lee hrady, page 5.
examinations authorized by law are not for the exclusive bene-
fit of the particular officer making the examination, but in
a larger sense, are for the benefit qf the State and the pub-
lit interest.
While it is true that reports and statements and
information obtained by the State through authorized examina-
tions are privileged under the law, such rule of ,prQvilege
pertains only to the compulsory disclosure of such information
by the person - the officer - possessing the same to a person
or purpose other than that contemplated by the statutes under
which the information has been obtained.
Even this privilege to the officer is not for the
purpose of preventing any and all disclosures by him, but on
the contrary, rests largely in the discretion of the officer
himself having in mind the nature of the information and the
purpose for which the disclosure is sought.
In our Opinion No. o-52, we stated:
“It is therefore the opinion of this depart-
ment that:
“(11 The rule of privilege pertaining to
examiners t reports obtains with respect to insti-
tutions (banks) that are closed and actively en-
gaged in their corporate business at the time the
report is called for or the privilege invoked.
“(2) The rule of privilege pertaining to ex-
aminers’ reports applies to loan and brokerage com-
panies the same as to banking institutions.
“(3) The Banking Commissioner has discretion
in the manner of making public examiners’ reports
by giving copies thereof or permitting the inspec-
tion thereof, or in testifying or permitting exami-
ners to testify under his supervision and express
permission, limited only by his decision and dis-
cretion of whether or not the making public of such
information is to the public interest.”
In an exhaustive opinion by this department, written
by C. M. Cureton, First Assistant Attorney General, late Chief
Justice of our Supreme Court, addressed to the Commissioner of
Banking and Insurance, the conclusion was announced:
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Hon. Lee Hrady, page 6
"You have the authority in your discretion
to permit Mr. Goodnough (the examiner) to testi-
fy to any fact or facts obtained by him in the
course of his examination of this bank, when you
t&k that such disclosure would not be prejucli-
cial to public interest."
"The same rules would apply to the copies of
the examiners' report on file in your department,
or to any other information received by you in
your official capacity concerning the affairs of
this bank."
Upon these authorities and considerations, we are
of the opinion that where an officer such as mentioned by
you possesses any examination report or information as to
any institution or corporation in this State that would rea-
sonably be helpful to any other officer or department of the
Government in the exercise of a governmental power or func-
tion, it would be entirely within his power and authority to
cooperate with‘such officer or department of the State in
the manner indicated by your question. Such, we think, is
the established policy of the State.
Yours very truly
nTTORNEYGENERALOF TEX&S
By /s/ Ocie Spear
Ocie Speer, assistant
APPROVEDMAY 14, 1940
/s/ Gerald C. Mann
QTORNEY GENERALOF TEXAS
APPROVED: OPINION CUMMITTEE
BY: BhB, Chairman
0S:btrwb
Untitled Texas Attorney General Opinion
Combined Opinion