Honorable Robert E. Stewart        Opinion No. M-915
Commiesloner
State Banking Department
John Ii.Reagan Building
Austin, Texas                      Re: Branch Banking; Machines
                                       for the purpose of perform-
                                       ing services (obtaining
Dear Hr. Stewart:                      cash) by automation.

       You have requested an opinion from this office which
reads as follows:
          II        -4
                    A Corporation, manufacturer of automated
       bank teller equipment, has submitted to this offlce 2
       the description and proposed use of a machine
       It Is referred to by the manufacturer as 'the auto-
       mation of tradltlonal~services performed by bank
       tellersI. A full memorandum and ~exhlblts are attached
       describing &he procedures resulting In (1)~wlthdrawals
       from         on the premises of the Issuing Bank and
       In (2>mdrawals     not made at the Issuing Bank.
         "Please advise us whether ln the proposed trans-
      actions both.on and away from'the drawee bank premises
      the bank Is e'waglng lwbusln&s     In moi%tban one
      place or iwcashlng checks outside Its noun banking
      house, *contrary .to the provisions of Article 16, Sec-
      tlon-~16-.ofthe Texas Constitution or'ArtXcle 342-903,
      Vernon'& Texas Civil Statutes.“.
       Article XVI, Section ,16 of the Constitution of Texas
reads as follows:




1-2   The name of the manufacturer, and the trade name of the
      machine are omitted throughout as shown by blank spaces
      where the context Indicates.
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Honorable Robert E. Stewart, page 2          (M-915)



         "The Legislature shall by general laws, authorize
      the Incorporation of corporate bodies with banking
      and discounting privileges, and shall provide for a
      system of State supervision, regulation and control
      of such bodies which will adequately protect and
      secure the depositors and creditors thereof.
         "No such corporate body shall be chartered until
      all of the authorized capital stock has been sub-
      scribed and paid for In full In cash. Such body
      corporate shall not be authorized to engage In
      business at more than one place which shall be des-
      ignated In its charter.
         "NO foreign corporation, other than the national
      banks of the United States, shall be permitted to
      exercise banking or dlscountln privileges In thls
      State. As amended Nov. 8, igOt; Aug. 23, 1937."
       A title 342-903, Vernon's Civil Statutes, as last
amended,5 reads in part as follows:
         "NO State, national or private bank shall engage
      in business in more than one place, maintain any
      branch office, or cash checks or receive deposits ex-
      cept In Its own banking house. For purposes of this
      article 'banking house' means the building In whose
      offices the business of the bank Is conducted and
      which is functionally one place of business, Including
      (a) office facilities whose nearest wall Is located
      within five hundred (500) feet of the nearest wall
      of the central building and Is physically connected
      to the central building by tunnel, passageway or
      hallway providing direct access between the central
      building and the connected office facility or b
      pneumatic tube or other similar carrier, and (b3 In
      addition, In a county having a population of at
      least 350,000 according to the last preceding federal
      census, If authorized in the manner hereinafter
      provided, not more than one (1) automobile drive-in
      facility whose nearest boundary Is located within
      one thousand eight hundred fifty (1,850) feet of the



                            1971, ch. 358,   P. 1352,

                             -4461-
Honorable Robert E. Stewart, page 3          (M-915)


       nearest wall of the central building but more than
       five hundred (500) feet therefrom and is connected
       to the central building by tunnel, passageway or
       hallway providing direct access between the central
       building and the connected automobile drive-in
       faclllty or by pneumatic tube or other similar
       carrier. The entire banking house shall for all
       purposes under the law be considered one Integral
       banking house. The term 'automobile drive-in facility'
       as herein used shall mean a facility offering banking
       services solely to persons who arrive at such facility
       In an automobile and remain therein during the trans-
       action of business with the bank. . . ."

       From the Information which has been furnished with your
request for an opinion, It Is reflected that the automated ma-
chines will be Installed and operated only on the premises where
the bank which makes the machine available Is authorized under
Its charter to engage In the banking business.
       It is set out In the documents furnished us with your
opinion request that the machines will be operated and used
as follows in dispensing cash to customers of each participating
bank.
          "A bank wouid enter Into agreements with other
      -banks whereby each of the banks would encode the
       bank identification cards of certain customers to 4
       enable such customers to obtain cash from a
       Installed on the premises of each of the par-t-
       lng banks. Each bank issuing ldentlflcatlon cards
       (the VIssulng Bank') would also enter into agree-
       ments with its customers providing that after money
       was dispensed to a customer the following would
       occur:
          "1, If the withdrawal was made from the         5
       on the premises of the Issuing Bank, the withdrawal:
       would be treated as any other checking account wlth-
       drawal by the customer by an appropriate debit to
       the customer's accou?t; or


4-5    See Footnote 2, supra.

                             -4462-
Honorable     Robert E. Stewart, page 4          W-915)


            "2. If the withdrawal was not made at the Is-
        suing Bank, (k%)the transaction would be tre~ated
        as the cashing of a check drawn on the Issuing Bank,
        (b) the bank at which cash had been dispensed (the
        'Dispensing Bank'.)would tranemgt the transaction
        slip prepared by the              through normal
        clearing channels to fhe Issuing Rank, (c) the
        Issuing Bank would debit the customer's account
        for the amount of money dispensed If .a sufficient
        balance was available, Andy (d) If the customer's
        checking account at the Issuing Bank contained ln-
        sufficient funds, the Issuing  Bank would return
        the transaction slip to the Dispensing Bank unpaid
        and the Dispensing-Bank would have to seek collec-
        tion from the customer.
           "In either case, the cash withdrawal Is the
        essential equivalent of cashing a check, drawn on
        the Issuing Bank, at either the Issuing Bank or a
        Dispensing Rank.
           "If the participating banks are members of a
        bank credit card association such as Master Charge
        or BankAmerlcard, the customer could be permitted
        to elect to have his withdrawal either 'credited'
        (sic) against his checking account at the Issuing
        Bank or treated as a cash advance under the rules
        of such credit card programs."
       It therefore appears from the facts submitted, that the
use and operation of an automated machine in the manner above
set out would be In conformity with normal banking  operations,
(such aspa bank teller would perform In cashing a check) and
the use of such automated .machines on the premises of partici-
pating banks would not be In violation of Article XVI Section
16 of the Constitution of Texas, supra, and Article  34%903,
supra.
                            SUHHARY
               The use of automated machines In dispensing
            cash, on the premises of a banking house, under



b           See Footnote 2, supra.

                                     -4463-
Honorable Robert E. Stewart, page 5          (M-915)


      the facts submitted, would not violate Article
      XVI, Section 16 of the Constitution of Texas or
      Article 342-903, Vernon's Civil Ststutes.
                              YoursZery   truly,




Prepared by John H. Banks
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
2. T. Fortescue
Dyer Moore
Jim Swearlngen
Jack Goodman
MEADE F. GRIFFIN
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
NOLA WHITE
First Assistant




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