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               THEATTOEENEY                  GENERAL.

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    Honorable James 0. Qerst              Opinion No. C-335
    Savings &Loan Commissioner
    1010 Lavaca                           Re:   Whether the operation
    Austin, Texas                               of certain facilities
                                                of a savings and loan
                                                assoclatlon   comes
                                                within the definition
                                                of an "agency" as that
                                                term Is defined in
                                                Rules and Regulations
                                                for Building and Loan
    Dear Mr. Gerst:                             Associations.
          Your request for an opinion asks whether the operation
    of certain facilities    of an association,   when considered
    in light of facts stated in an enclosed deposition,        comes
    within the definition    of "agency" as that term is defined
    in:   (1)    Section 3.1 of the Rules and Regulations    for
    Building and Loan Associations     adopted November 15, 1963;
    and (2)    the Rules and Regulations    for Building and Loan
    Associations    adopted January 27, 1958, and amended Novem-
    ber 5, 1960.
          "Agency" is defined in the Rules and Regulations
    adopted November 15, 1963, and in the Rules and Regula-
    tions adopted Jffnuary 29, 1958, and amended November 6,
    1960, as being    . . .any lawful arrangement whereby
    any business of an assoclatlon    is conducted other than
    by regularly  employed personnel of the association."
          The facts,   as stated in the deposition,       show that
    the association    has opened certain offices,      contending
    that the personnel    operating these offices     are "agents"
    of the association    within the meaning of that term as
    used in the Rules and Regulations.         The personnel who
    work at the offices    in question sign an employment con-
    tract with the assooiation      in which they are designated
    as "agents"   of  the association.     The facts,   as stated
    in the deposition,    indicate    no substantial   difference
    in the association's     treatment of the personnel who
    are designated as "agents" and the association's           treat-
    ment of the personnel designated as "employees."            The
    association   treats the "agents" and "employees" in a
    similar manner in the following       instances:
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Honorable     James 0. Gerst,    Page 2 (G-335)


        1.   The “agents”   receive   regular   monthly compensa-
tion.
     2. The “agents” are considered to be employees by
the association  for purposes of the association’s federal
income tax returns.

     3. The “agents”    are considered to be employees by
the association  for the purpose of the association’s un-
employment insurance.
     4. The “agents” participate    in the association’s
group medictl plan, and there is no distinction     between
the ‘agents     and the “employees” in the coverage extended
to participants.

     5. The “agents” are protected under the association’s
workman’s compensation insurance In the same manner that
“employees” are protected.
     6. The “agents” are paid a year-end            bonus based
on the same criteria which are considered           for the pay-
ment of a year-end bonus to “employees.”

      7. The “agents” do not have expenses In connection
with the operation of the offices    in question, as all
overhead is paid by the association.
     8. The “agents” are reimbursed for expenses they
incur while working for the association  in the same
manner that the “employees” are reimbursed.

      9. The association  deducts wlthholdlng and social
security  taxes from the compensation paid the “agents”
just as it does from the compensation of “employees.”
      10. The “agents” are required to turn time cards
In to the association  just as the “employees” are re-
quired to do.
     11.   The “agents”      have the same vacation     benefits
a8 “employees. ”
      12. The “agents” are under the direct control and
supervision   of the association In the performance of
their duties,   just as the “employees.”
     When the definition    of “agency” as stated In the
Rules and Regulations    Is applied to these facts, the
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Honorable      James 0. Gerst,    Page   3 (c-335)



question of whether the offices   opened by the association
are operating within the Rules and Regulations turns on
whether the personnel operating the offices   in question
are "regular employees" of the association.    If these
personnel are "regular employees" of the association,
the offices  are not being operated within the framework
of the Rules and Regulations.
       The only distinction     between the "agents" and other
employees of the asso$iation        is the employment contract
Figned b% the "agents       in which the personnel are called
  agents.     It is well settled      that a party to a contract
who is designated as an "agent" in the contract          is not
an "agent" merely because of such designation.           The
exact relationship     Is determined by the legal effect
of the provisions     of the contract.      2 Tex.Jur.2d 446,
Agency, Section 10. The contract in question is attached
to the deposition    as Exhibit     1, and it provides for regu-
lar compensation,    payment of all operating costs by the
association,    and control of the "agents" by the associa-
tion as to the procedures ,to follow in handling loans,
office    hoursEnd provisions    for time and termination     of
the relationship.
       Further evidence showing that there is no material
difference    between the personnel designated as "agents"
and those personnel designated as "employees" is found
in testimony of the association's       president on page 28
of the enclosed deposition      wherein the president of the
association    made the following   statements in response
to questioning:
          "Q. If the application   for a loan office
     is   granted, would there be anything required
     to   be done to the records of the association
     to   change these persons involved in the agencies
     to   be carried as employees?
            "A ~ Yes
            “Q.      What would have to be done?
        "A. These contracts           would have to be re-
     done, for one thing.
            “Q.      Insofar as your books and records,   pay-
     roll,         medical, anything of that sort--
             "A.     No

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Honorable     James 0. Gerst,     page 4 (C-335)


        “Q. --is        there   anything   that would have
     to be done?
            “A .   No, not that I know of.
         'IQ. And the difference   would simply be to
     dispose of the contract,    because then, they
     would be an employee, as you would see it, is
     that right?    - -
          "A .     Assuming we retained    them as employees."
      When all of the facts concerning the similarity      in
the treatment of 'Iagents" and "employees" by the associa-
tion are considered,    it is clear that the "agents" are
actually  regularly   employed personnel of the association.
Since, under the facts stated in the deposition     furnished
with your opinion request,     there is no material distinc-
tion made by the association     between "agents" and "regu-
lar employees,"    the operation of the facilities  in ques-
tion does not constitute     the oueration of an "agencv"
within the meaning of that term as defined in the Rules
and Regulations.

                           SUMMARY
                           -------
         The operation of certain savings and loan
     facilities   does not come within the meaning
     of "agency" as that term is defined in Sec-
     tion 3.1 of the Rules and Regulations     for
     Savings and Loan Associations    adopted November
     15, 1963, or The Rules and Regulations for
     EWildlng and Loan.Ass'ociations,   adopted Jan-
     uary 29, 1958, and amended November 6, 1960.

                                   Very truly   yours,
                                   WAGGONER CARR
                                   Attorney General      of Texas




JWF:ced


                                  -1597-
Honorable        James 0. Gerst,   Page 5 (C-335)


APPROVED:
OPINION COMMITTEE
W. V. Geppert,        Chairman
Joe R. Long
Paul Phy
W. 0. Shultz
Kerns   Taylor

APPROVED
       FOR THE ATTORNEY
                      GENERAL
BY: ROGERTYLER




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