.,   -




     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
