                  February 9, 1951.

Ron. C. E. Belk, Administrator
Texaa~State Board of Plumbing Ramlnem
Austin, Texas             Oplalon HO. v-1150.
                           Re:   Collateral~~8~cti~lt$~
                                                     of
                                 bahk depoaftb oi State
                                 Board of Plumbing Ex-
Dear Sir:                        aminers.
          You have requested an bplnlon on stv'eral
queatlona pertaining to collateral security for bank
depoalte of the State Board OS Plumblug RaPrlners;
The first question 16:
          Is the>Texas State Board of Plumbing Ex-'
aminers required by law to requliv that deposit8 .of
Its.funds be aecurti by'collateralpledged by bank8
where such f'undsare deposi.ted?                .
          Article 2529, V.C.S.,'yequlrefsthe State
Treasurer to secure collateralfor all state fUnUS
de@bbl.t&fw hti'lllb&i&s'whlchhave ~uallfled 88'
depo@torlea of such funds. Article 25117,V.C.Si,
requires bauks that are depoeltorlesoi Couhty Punde
t6 el.thi?r
          post a bond or'pledge collateral secizrl
tb secure"the deposits of such bouhty.' BFtlele'~25
                                                 2'0;.
V.C.S., 1s a similar etatute with referenae to Becur-
lng depoelte of incorporatedcitlee. Article 2832',
V.C~.S.)requires fuude of certain Independent school
districts to be secured by collateral. Article 7880-
113, V.C.S.,makes provisions for the aecur5ug of funds
04 water control and Improvementdistricts.
            Theae statutes are referred to in order to
show that In varloue Instances the Legislature has
epeclfloallyrequired the state agency or polltloal
eubdlvlalon Involved to secure either an lndemulty
bond or the pled@ug of'collateralasset8 by the de-
pository bank beftbreita fund8 could be deposited in
such bank.
          Article 6243-101, V.C.S., creates the Texas
State Board of'Plumbing Rxemlners; conaletlng oi slx
members appointed by the Governor, provides for the
BOnm C. E. helk; page 2   (V-l&O)


collectionof fees by the Board, and makes other
general provisions for the enforcementof various
plumbing regulations. All expense8 of the~Board
In enforcing such Act are to be paid out of fee8
collectedby the hoard, but Section 7 of the'Act
provides that no fee8 80 collected shall ever be
deposited In the General Fund of the State. 'go- -
where In Article 6243-101,V.C.S., Is there any've-
qulrement that the hoard obtain collateral'securltp
for Its deposits. In fact, the Legislature contem-
plated that the Board should never accumulate a
large balance of funds, since Section 7 further pro-
vides that .I?the fund8 remaining In the hands of'
the Hoard at the end of each year are In excea8 of-
the expenses of the Board, then the hoard &a&l re-
duce the amount of license fees. In view of this
latter proolelon and the absolute omlti.slon
                                           of any
requirement throughoutArtlcle.6243+j1, V.C.S.;
that collateral se~curltybe.fural@hedby' ; ~.pl-
tories of the hoard's fuads,~and lu ~vlevp"p&
                                         of   e -~
several statutes above cited speolflbil)yiequlr-
lng collateralIn many ln8tance~.,yve'are ,ofthe"
oplnlon thatthe Legislaturedid,not.ln~~nd:~t~ pe-
wire t&fitdepoalts of the State Bo~~.'of~:P:+~~i~iq
Examiners be secured by colla%er+.
         'Thls'brlngsus to-jrorijr
                                 other~que@tlonsi
whloh In sub+ance are a8 f0llow8~;
                                               .
          May the State Board of Pluiubig~Fxa*ip~..-
ers, a8 a matter of dlbcretlon,~eat& into aa 'agree-
ment with the depository bank, whether ,ltbea 's'tatb
or national bank;for the bank togeeb~e'depo:&ltuof
the Bxard's futids?
          In the first place; the member8 of the
State hoard of Plumbing Examluer8 are public offl-
cers of thla State and the Board is an agepep OS,
                       Phapmaceutloal ‘Asbfn’ t.
                        ex. Clv. App. 1936) Ih
                      tate hoard of Fha~m6io$tiere
held to be public officers,of this State.
           In the second place, the moneys collected
by.the Board are public money8. or funds of'the State,
ereozthoughnot required $0 be depoelted In the @en-
tial,Fundof the State. Cf. Game and Fish Com~ls-'
elon v. Talbott,  64 S.W.26 883 (4 Ct APPi I!391
 II      Forbes, 227 Pac. 768 (Cal: Su' 1924); St&r      W-.
v. $ogie; 157 P.2d 135 (Cola. silp.lgg,.         -
Hon. C. E. Belk, page 3    (V-1150).


          The case of Lover Colorado River Authorllq
v. Chemical Bank & Trust Co. le S W Z?d'p61(T
 I        1943) affirmed 184'Tex. 526 190 S.W%
k* considered
     App*      <he questlbn of ihether'or not a batik
co&d legally secure the fund8 belonging M‘the'Lower
Colorado River Authority by pledging part of Its at+
aets a8 collateral. Having determined that the Auth-
ority was an agency Of the State and that it8 ftilrd8
were public funds, the Court relied upon the prWl-
alone of Article 342-603, V.C.S., as authority for
a state bank,to pledge part of lts.asseta as secur-
ity for deposits of public funds. The pertinent
part of this article la:
            "Bo state bank ahall pledge;~or
       create any lien upon, any asset or In
       any vay secure the repayment of any de-
       posit except when apeclflcallyauthor-
       ized to do so by law, except that It-~
       may pledge it8 aSSet6 t0 secure a de-
       posit of or by the Whited States Gov-
       izrnment,the State of Texas; or aus
       agenag or ~nstrum~ntalltyof either.
       . . .
            In upholding the authority of a national
bank   in this respect, the COtWt said:
            "The National Banking Act, 12
       U.S.C.A. $ 90, authorizes national
       banks to secure deposits 'of a State
       or any political siibdlvl8lonthereof,'
       where the law of the State 1n which
       such benk le located authorices the
       pledge of securltleaby other banking
       lnati.tutlons.The Texas law author-
       izes such pledge of assets t? secure
       deposits of or by the United State8
       Government, the State of Texas, or 'my
       agency or lnatrumentalltyof either.
       Acts 1943, 48th Leg., p. 152, oh. 9'7,
       Sub. VI, Art. 3, Vernon's Ann. Clv.
            art. 342-603.”  (185 s.w.2d at


The Court then concluded:
Hon. C. E. Belk, page 4       (V-1150)


             "Being publlc~funds the pledge oft
        SUCh SeCUritieSby~t&   cotrustee to ee-
        cure the deposit thereof was clearly
        authorized by both State aud Federal,
        lavs." (185 S.W.2d at 468)
          For other cases on the authority of-& na-
tlonal bank to pledge lte assets as tiecuritgf&r?"
publle funds where the state law permits estatebanks
to do so see Cl    of Marion I. Sneeden, 291 U.S.
262, 1934); Lou&n    v. T own of Pelham 126 F.2d
714 tC.C,A. %d 1942 Fidelity & DepoLlt Co. of
Maryland -7.Xokrda,    F.2d 641 (C.C.A. 10th lg3).
          It Is our oplnion,,therefore,that the
Board may, In Its dlacretloa, enter'lnto an agree-
ment with a state or national bank for the bank to
secure deposit.6of the Board'sYfunds.



                                     .

             The TeXaS State Board of Plumblng-
        Examiners le not'rtiqulredby 1aWt.o Be-
        eve collateralfor Its funds f&rn~a
        depository bank. Hovever, the Board
        may, In Its dlecretlon,enter lute an
        agreement with a state or national bank
        for‘the bank tg secure deposit8 of the
        Board's funds.

APPROVED:                          Yours very truly,
Red McDaniel                         PRICE DARIRL
State Affairs Division             Attorney General
JeSSe    P.   LUtOll,   Jr.
Reviewing Assistant
Charles D. Mathews                   Clinton Foshee
Flret ASSistaut                           Asslatant

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