,   I




         OFFICE   OF   THE   AlTORNEY     GENERAL   OF   TEXAS

                                 AUSTIN




        In emergoncl88 created thereby.

             lnajor 8chOOley eala the 6welwJr8 OS
        ,oomeof our 6tatas ~wera wer-ridlug the map-
        &tee of the Constitatlonmin regard to
        bruwheo for Btate baakm aml he jut wonder-
        ed If our own gweuwEent T88 QlOtheJfltith
        euch outllorlty.
Honorable    JuO.   tie %GA&uks   - pa@    2




              "Fhat we uuuld like to know is rmy l%xas
        State chartcred  banks yrovidc check paying,
        deposit taldmg and exchange issuinq stations
        in hilitary Hcscrvations   and Navy Yard~.~


            As vc cvnstruc your letter, it requests our
opinion upon the broad question stated In the captioned
subject matter -- chat Is, .tbc authority   of a State bank-
in(5 corporati6n  to eStabliSh a branch bank.   As thus con-
strumi, the questim     should bc ansvcreclin the negative.

             Section    16 of hrtiolc     SVI   of the Constitution
reads    06 ~fofl~ns:

              *The Legislature    shall by general laws,
        authorize   the incorporation    of corporate
        bodIeswithbzuM.nganddiscountingprivi-
        leges, and shall prqride for P eystem of
        state supe.rvision, regulation     and control
        of such bodie6 which vi11 adequately       pro-
        tectand    secure,the  depositors   sad credit-
        ors thereof.

              *PO such corporate  body shall be char-
        tered until all of the authorized      capital
        stock has been subscribed    and paid for in
        full in cash.   Suoh bo&    OorDorate   shall
        not be authorlssdto    ema=    @   business    &
        Kethnn     one -which        shall be~dee&g-
        p 3dd)ln  its c h a r ter” . l.* (mqlbsle      cup-
                .

          The phrasing of your specific        question quoted In
the last paragraph   of your letter rith respect to the par-
ticular service of the setationss       contemplated   does not
call for 8 different    answer.    JIalntoining such gstatious*
would constltutc   engaging *in business      at more than one
places, with.ln the meaning     of Seotion 16 of tho Constitu-
t1on.

           Und&   all Of the~deoisions    throughout   the United
States, the bueiness   of rocepting   deposits   of'money  for re-
payment upon the order of the depositor       constitutes  the
business of banklnq.    It is perhaps    the Only ueV3Pfriling
ind,loium of the banblng fuuOtiOns     mnr that the authority     to
issue ciroulatiry   notes has been taken away from the Natlon-
al assoclatlons.
fiiomrablo   Jolm    Q. Lc~s&s    - pa@    3




           The ordinary osscntial   features  of the banlbny
business  are, the ;rowOr to accept dCpO6itE   of money ro-
payable  Lo the order of the depositor,    the disc.ountinC
of coxmz0rcial paper, arvl the ~wernmental    authority  to
issue circula~Ang   uGtO6, which last-nasff! power, as a?mvc
atoted, I?rrSLOCI1 zllrGgatc?d.    .

            Any hank may, vf course,    perform other buslneso
transactions,   axi cvcn carry   on to a degree other busi-
nesscs, not cssentislly    hanki~lg functions,  when reasonably
neocssary   as an incidental   power to perform: their eoscn-
tlrl functions   as bauldng InstitutiOns.

            The genernl rule is stated in 9 C.J.S..               Title     --
B-6    A!iD DAM.WG,   p. 31, MC. 3, as fGllW6:

            "As has been indioat'ti in Section 1,
      the principal attributesto     the bau!z are
      the right to iseue xqotlable      notes, to
      discount notes, aud t0 recoi7e deposits;
      amI a&i10 as a xatter of mdern      practice
      banks usually exercise    any'tuo or even
      all tlareo of these~functi.ons,   it is not
      iwce~~ary  thut t@y   exer~isc   them all,
      but an dmitltution exercising:any one or
      mom   of these functions   is a bank        in    the
      Stl-iCtCSt COllEIWCi;il 6elX5e.s

             I,atm    in   Lhc same   motion   that    text   declarcsc

            *Originully,   the business    of banhing
      consisted   only of reoelving    depoeits   for
      safe keoplng, and web      at the prOstmt tirna
      a bankls'primarily     a plaoe for the dqmsit
      OS money, and the receiving      of the s~oney of
      others Gn deposit IS a distinctive        fOattWe
      of the business    of bauklng.s

             ZGll~Wll cn kkanks and Banklnp;,         Vol.    1, sec. 67%
dcclarasc

             *The rery business   of the honk is to
      &a00 a place where dcpo6its     are received
      ani pai.& Gut and Khcro touoy is loanod on
      security * Not all these functions,      hOrrever,
      seed be oxercisod     In ardor to constitute   an
      institution    a bank.   The orerolso  of a single
Honorable          John     CL. LcAdows             - png0 4




     function 4' baUlug,       such as loting    m~oy,
     sclllng    bonds, Or issuing OWre.3cy nuy be
     sufficient     tu ‘urin,:the iastitutlon'withln
     the ragulal;iJne passe.3 by the State re:aiLve
     to hmiks.’

           lk la niisill Cc, commrclal         sense, are of
     three Lirni~6, tc-wit* 1, or daposit j 2, o f
     dlscourt;    8, 6f drculatiou.          Strictly sIu?ak-
     inF;, t:ie term ‘bank’     hpliC6     a plnce      rGr    thC
     dCpOC&t of XlGllej, aS that       i6  the   ,3,06t   ObVi6U6
     purpose of such au lnstltutlon~.            Griglnally
     the buoi~~csc of bauldmg canuistcd             Only In rc-
     CclVi~    dcpodtu,     au&     as bullion,      pIatc axxi
     the         likC,     sor         Safe    keeping        Until   the     CiCllO6it-
      cr s3czld ECC fit     to dr.aw It cut for uua, but
      tho bueincss, in the pcj+ss          of events, x66
      eXteIdCX%, 3ti bankt?rS aS6UXWd to t%p.?OUnt
     bills .2x& note6 6.d tq loau money upon nort-
     .gagc, ?a=    or other security,      and at a btlll
      later period to lssuc notes or their own in-
      tertled as a clroulatlng      currcnoy and a medium
      of exchange lnst0ad of gold 3x1~2silver.         Ukiern
      bankers frequently     aerd6e      w    ix0 or even aI
      three of those fimcti.ons,,but It is still tme
      that ZII institution     ;n‘ohlbited from cxerclslxig
      any more than one CP those functiona         in a bank
      in the strictest     coaxerclel    sense, and unless
      such a bank is brought wlthln the proviso under
      consideration,     is equally eubject to taxation
     as     if       euthorizcd               to   nuake   ascounts         am1   isope
     circulatiion                 a6
                      well as to receive dep0slts.a  --
     George Oulton, Collector,   t. The San Y'raucleao
     tiarings Unlori, 21 Law mt. (U.S.) 618.


          In KaUokl   T. Goaeett,                               Banking      Comdafiloner,
100 8. s. (2) MO,   it iG FM%id:

               "hi the case of JIu rc ?rudencc Coupany,
     (C.C.A.) 79 F.(2) 17,79, WC find tbe follow-
     ing definition       of a bank: 'Strictly   speaklog,
     tho tern bauk itaplies a place for the deposit
     of money, as that Is the amst obrioua purpose
     or such an instltutlon.*         Tha opinion contln-
     U6al       *ktld all of tbo cases so far aa we aro
     advisoti,     uiiich Lava constmti   the words.~bank-
Honorable           John    Q. kThdaui% - page      6




         ing corpor8tion6,~  nu use3 In Lhc Unnls-
         ruptcy Act, hav0 regardel  tl~e lccal power
         to rcxxive deposits  az tU2 efi6cntlal tking.*"
         (i.aILny    AuthoritiC     hare   CitCd)       .

             19.e ~.ullsLA Oasc held ‘that   n stookimldcr     in a
kmrrle   Plan tiauk wae not subject tc the supm-ad&O;;          llabil-
ity 4 the UXlstitutlOl? anti 6tatUtC!j,       ‘JCC~USC   oucfi so-ca)l-
ed ;lorris'Plnn Unnkswcre      not then antiioriz&3 to accept dc-
posite . The very t!lln&s vhicb your suj.;,7estloncontemplates
-- the depoeltin*; of 00llQy     nni! cns?liny; oi' chcck3 -- me     not
present in &tic ..aliskl CasIl, Tot :&icil      rexon   it appears'
the  court  held as It bil with respect        to the stockholders*
1iaWlity.       Tb0 Snprcmo  Court r?fuscC a writ cf error in
that     cesc.

           Your quote1  suz:;cstion rroz :.njor Schooley    and lxis~
iqlio;i recuest that we adopt it, to the effect that tha
bmqnors    of sane ,of tllc stctcv wart cvmri6iny.    tlxz mandates
of the Constituticrr. ir: re;;zrd 'cc br;.ixhc6 Car State banks,
is not In !~Ocpin~,xIth ccnstituti.onal Wndates.

                 'TaS    i6 n fret? :iti indepa&cnt.     State,
         subject,onQ       to the Constitution     of rhe United
         States, and the mintcnasxc         or our free i.nsti-
         tutions um? the perpetuity        of' t:ic Union depend
         upon-tl:c    prosorvaticn   cf the right'of     local
         self $ovcrnment,      unimpaired   to all the stateti.g
         --Bill 0r ItIghts,     Ccnstftution,    Article    1, Sco-
         tlon I.

              *The military  shall at times ba              subonlinate
         to the civil ;ruthoritics.* --secti                24, Article
         1, COn6titutiOn.

               mNo il&t?r of suspCrJciilJglatfs iJ'!this Statt3
         &I‘&11 bc CxcrOisCd  S%CC]Jt by tl&C LO&SlutlWC.*
         --Section  w, Article I, Coustitution.

            W course, the power of tm Legislature          it6Clf to
s&pend   lau pertain6    Only to legislative     acts ami not to con-
etitutlonal   provisions.     The 6nthU6i68fiC    nUgp?stiOn   that
any officer,   or oven department     of the Government,     may BUS-
penil the Constitution    i'inds no,support   in  law.
Honorable   Jolm    (?. Ldbkuis   - page    6




            In IZX purtc    ldilligan   (U.S.)      IS Law Ed. p. 29S,
it   1s said:


             a!krtiill rule can never cxi.sL where tilt
       courts arc apcn, 6.d in the .+x-oper ancl unob-
       structed   cxcrciac of their jurisdictlon.g

           The court       upheld the ri&t          of ~;illlgnn tc th'c
constituti6nnl  writ      of ?b,abeas corps        upc.: tho principle
aImounc~ed by it .

             Sour   c,ucstion, therefore,         is unewered   as nbovc
indicated   .


                                     Very       truly   yours
