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                                        The Attorney General of Texas
                                                                 July   19:     1982
    MARK WHITE
    Attorney General


                                      Eonarable   Stan Schlueter                                  Opinion    No.   k%A96
    Supreme Court Building
                                      Chairman
    P. 0. Box 12546
    AUS,,“, TX. 76711. 2546
                                      Committee on Financial     Institutions                     Re:     Construction          of    House
    5121475-2501                      Texas House of Representatives                              Bill   No. 1208
    Telex QlOl674~1M7                 P. 0. Box 2910
    Telecopier     5124475-0266       Austin,   Texas   78769


    1607 Main St., Suite 1400
                                      Dear Representative          Schlueter:
    Dallas. TX. 75201-4709
    2141742.6944                             You have requested    our opinion   regarding   the interpretation                            of
                                      House Bill    No. 1208,    passed    by the Sixty-seventh    Legislature                            and
                                      codified   as article  2529b-1.   V.T.C.S.  You first   ask:
    4624 Alberta    Ave.. Suite 160
    El Paso. TX. 79905.2793
    9151533.3481                                      May         securities        pledged  to   eecure    public
                                                  deposits          pursuant      to House   Bill   No.   1208   be
                                                  pledged        to the full      extent of market value?
    1220 Dallas Ave.. Suite 202
    Houston. TX. 770026966
    7131650~3666                      Section   2 of   article      2529b-1      clearly      states,    in pertinent        part:

                                                         Investment     securities       or any ownership         or
    606 Broadway, Suite 312                       beneficial     interest     [tlherein     shall    be eligible
    Lubbock. TX. 79401.3479
                                                  and lawful      security     for   all   deposits    of public
    606i747.5236
                                                  funds of the State of Texas and anv- uublic      .       anencv
                                                  to    the   extent      of   the    market    value    the;eof:
    4308 N. Tenth. Suite B                        (Emphasis added).
    McAllen. TX. 76501.1685
    51216824547
                                      Prior   to the enactment of this bill,              our laws           had differing     valuation
                                      rules    for    various     types    of    depositories.              One obvious      intent         of
    200 Main Plaza. Suite 400         article    2529b-1 was to remove those differences                        by stating    a uniform
    San Antonio. TX. 76205.2797       rule.      Texas     courts    have     long   recognized             a fundamental         rule      of
    512/225-4191
                                      statutory     construction.       set out in Mlngus v.                Kadane,    125 S.W.2d 630,
                                      631 (Tex.      Civ.    App. - Fort Worth 1939, writ                     dism’d    judgmt.      car.).
     An Equal Opportunity!            wherein the court cites          volume 59, page 910 of                Corpus Juris,      stating:
     Afflrmatl~e Action Employer
                                                   Where two legislative         acts are repugnant         to, or in
                                                   conflict     with,    each other,        the one last       passed,
                                                   being    the latest       expression       of   the legislative
                                                   will,    will,     although      it    contains    no repealing
                                                   clause,     govern,     control,      or prevail,       so as to
                                                   supercede      and impliedly       repeal    the earlier     act to
                                                   the extent of the repugnancy.




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Honorable     Stan Schlueter       - Page 2        W-496)




      Article   2529, V.T.C.S..    most recently    amended in 1967. see                       Acts
1967, 60th Leg.,     ch. 738, at 1991, enumerates       the securitieshat                          a
bank may pledge as security      for state    funds in order to qualify                        as a
state depository.     This statute    then provides   as follows:

              All    of such securities        may be accepted     by the
              [State    Depository]     Board,   provided  the aggregate
              amount thereof       is not less     than twenty per cent
              (20%) greater     than the total     amount of state funds
              that they secure;       provided   that the amount of all
              bonds and other obligations          offered as collateral
              shall    be determined     by the Board on the basis       of
              either     their   par or market value,       whichever    is
              less.

Article     2529b-1     was enacted        in 1981.       This statute        does    not   have    a
repealer     clause,    but section       3 provides      as follows:

                  The provisions  of this Act shall be cumulative
              of all other existing    laws, but shall     be full    and
              complete authority   for investment   securities      to be
              eligible   to secure public    funds without    reference
              to any other law.     (Emphasis added).

       Article      2529b-1      does     not    repeal     in toto       any prior        statutes
relating       to security       for public       deposits.       However,      considering        the
general       rule     followed       in   Mingus,      it     is   clear      that     any     prior
conflicting         statutory        provisions       regarding        valuation        of     pledge
securities        were     repealed      by the      enactment       of    this     statute.        It
provides     that “[i] nvestment securities...                shall be eligible         and lawful
security       for all      deposits     of public      funds...       to the extent          of the
market       value       thereof .‘I       E2.      “Investment          securities”         include
government       securities      and obligations        issued by a public           agency.       The
terms     “government        securities”        and “public        agency”      are    defined      in
section     1 of article       2529b-1.

       Consequently,       the securities         included    within     the definitions      of
“[l]nvestment       securities”        in the later         enacted    statute     are   lawful
security    for the deposit          of public      funds “to the extent        of.. . market
value. ”      Securities,       if     any,    that    are    not    included     within     the
definition     of “[iInvestment           securities”      inarticle       2529b-1    and that
are specifically        listed     in article       2529 are to be valued          at “either
their par or market value,             whichever     is less.”

      The Sixty-seventh        Legislature     also   passed    another     statute   with
similar  provisions.      House Bill No. 2050, entitled           the Bond Procedures
Act of 1981 and codified         as article     717k-6,    V.T.C.S..    was passed and
became effective     only days after       House Bill No. 1208.          House Bill No.
2050 has broader     definitions      of issuers    of public    securities      and those




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            Honorable      Stan   Schlueter   - Page 3         (MU-496)




            securities      eligible  to pledge against deposits  of                public    funds than
            House Bill       No. 1208,   but has the same valuation                  rule     wherein  it
            states:

                                   Said   bonds     also   are   eligible      to     secure
                           deposits     of any public     funds of the state         or any
                           political      subdivision     or   public     agency    of    the
                           state,     and are lawful     and sufficient      security     for
                           the deposits      to the extent     of their     market   value,
                           when accompanied       by any “nmatured coupons attached
                           to the bonds.       (Emphasis added).

            V.T.C.S.      art.    717k-6,    09. Thus. House Bill   No. 2050 reiterates               the
            legislature’s        will   that “market value”   be the rule for valuation                of
            eligible      securities     pledged to secure public  deposits.

                   Even though     article      2529b-1    now directs       the State       Depository
            Board to value pledged          securities     “to the extent       of the market value
            thereof ,‘I   the   board      retains     the    power    “to    reject     any and all
            collateral     or surety      bonds tendered       by a state       depository,      without
            assigning    any reason      therefor,”     and its action        in doing     so is final
            and not     subject     to    review.       V.T.C.S.     art.   2529.      Moreover,      any
            securities     pledged     by a depository           are  subject      to   the following
            provision   of article      2529. V.T.C.S.:

                               In the event the market value of the securities
                           pledged     by any depository         shall    decrease    to the
                           point      where     the    collateral        value     of    said
                           securities,      as fixed    by the Board,         is less    than
                           the    amount of       said   funds     on deposit       in   said
                           depository,       the Board      shall     require    additional
                           security     in order to equalize        such depreciation.

                   Your    second question      relates    to the      form of   such   securities.   You
            specifically       have asked:

                                  Are bonds,   fully  registered, registered   as to
                           principal   only and bonds registered     as to interest
                           only eligible     to secure deposits   under House Bill
                           No. 1208?

            The     term    “fully      registrable”        means,    with     reference     to   public
            securities,       that both the principal            and interest      of such securities
            are payable      only to the registered          owner thereof.        V.T.C.S.  art.   715b.
            §2(2).       Public    securities      may be issued       in a form that makes them
            either    unregistrable,        fully   registrable     or registrable      as to principal
            only.     -Id.  13.    See  also    V.T.C.S.    art.   717k-6,   94.

                  House Bill    No.       1208 contains         no limitations      on the    form of the
            investment  securities         eligible   to       secure public     deposits.      House Bill
            No. 2050 provides:



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Honorable   Stan Schlueter      - Page 4      (MW-496)




                   Sec. 4.      The governing     body of any issuer         is
            authorized     to issue bonds and the interest             coupons
            appertaining      thereto,      if  any,    in such      form or
            forms,    with provision       for registering        such bonds
            as to principal       or as to principal          and interest,
            or with provision        for changing      the form or forms
            of such bonds        and interest      coupons,      if any,     in
            such manner as shall        be specified      by the governing
            body    of   the   issuer     in the     resolution,        order,
            ordinance,      or other     proceedings       authorizing      the
            bonds.

                   Sec. 5.      The governing      body of any issuer         ia,
            authorized     to issue bonds constituting           a series     of
            any number of bonds,         or a single      bond, payable       in
            one stated amount or in stated            installments      to the
            bearer,    or to a registered       or a named payee, or to
            the order of,      or to the successors          or assigns     of,
            such registered       or named payee,        and provision      may
            be made for the conversion          of any bond or interest
            coupon,     upon request      or demand of the bearer...
            registrable      as to principal      or as to principal        and
            interest,     or into    fully    registered      bonds without
            interest      coupons,    or    into     any    other    form....
             (Emphasis added).

V.T.C.S.     art.   717k-6.  %%4. 5.   Thus, House Bill     No. 2050 is virtually
limitless      as to the form of the eligible     securities.       Such securities
are eligible        to be pledged     in bearer   form with       coupons   attached
registered       as to principal   or as to principal      and interest,     or into
fully    registered    bonds without   interest coupons,      or in any other form
authorized      by the governing   body of the issuer.

                                      SUMMARY

                 Securities      pledged      to secure     public     deposits
            pursuant     to article       2529b-1 may be pledged         to the
            full     extent     of    their     market   value.       They are
            eligible     to be pledged        in bearer form with coupons
            attached,       registered       as to principal         or as to
            principal      and interest,         or into   fully    registered
            bonds without         interest      coupons,   or in any other
            form authorized           by the governing           body   of    the
            issuer.

                                               M@

                                                    Attorney     General    of    Texas




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                  Honorable    Stan Schlueter   - Page 5       (t-w496)




                  JOHN W. FAINTER, JR.
                  First Assistant Attorney      General

                  RICHARD E. GRAY III
                  Executive Assistant     Attorney   General

                  Prepared    by Ladd D. Pat1110
                  Assistant    Attorney General

                  APPROVED:
                  OPINION COMMITTEE

                  Susan L. Garrison,     Chairman
                  Rick Gilpin
                  Patricia  Hinojosa
                  Ladd D. Pat1110




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