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                    THE       ATPBRNEY             GENERAL
                                    OF   TEXAS




                                     March 5, 1971
  Hon. Ward W. Markley                           Opinion No. M-*802
  County Attorney
  Jasper County Courthouse                    Ret Selection of a depository
  Jasper,         Texas   75951                   for county funds.
  bear Mr. Markley:
           Your           request   for an opinion aska the following two
  questions~:
                    Piret:
                 "I respectfilly request an opinion on
            whether or not the Comm$ssloners'Court can
            further conelder the .deelgnatlonof a -County
            Depoiiltory,ata special meeting after a De-
            pository was selected at the regular meeting
            InFebruary, and on that same date the regular
            meeting was adjourned."
                    Second:
                 Whether Item 2 of the bid of the First
            State Bank of Jasper Invalidated the bid of
            that bank.
            You state In your requeet that the CommlsslonersCourt
  at its regular meeting on February 8, 1971, opened bids for
 'designationof a county depoeltory and that two blda were received.
  After a dlscusalon, a motion was made, seconded, and adopted to
  accept the bid of the First State Bank of Jasper, and the regular
  meeting was adjourned. Subsequently,the CommlaslonersCourt called
  a special meeting for the purpose of reconsidering the bids and
  notice was Issued of thls,meetlng.
            Articles 2544, 2545 and ~46, Vernon'8 Civil Statutes,
  provide in part:
                 "Art. 2544. The CommlselonersCourt of
            each county Is hereby authorized and required
            at the February Regular Term thereof next

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Hon. Ward W. Markley, page 2     (M-802)




        following each general election to enter Into
        a contract with any banking corporation,associa-
        tion or individual banker In such county for the
        depositing of the public funds of such county in
        such bank or banks. Notice that such contracts
        will be made by the CommissionersCourt shall be
        published by and over the name of the County
        Judge, once each week for at least twenty (20)
        days before the commencement of such term In
        Bbme newspaper published In said county; . . .
             "Art. 2545. Any banking corporation,assocla-
        tlon or Individual banker In such county desiring
        to be designated as county depository shalltmake
        and deliver to the County Judge an application ap-
        plying for such funds and said application shall
        state the amount of paid up capital stock and
        permanent surplus of said bank and there shall
        be furnlshed~with sald~appllcatlona statement
        showing the ,flnanclalcondition of said bank
        at the date of said 'applicationwhich shall be
        delivered to the County Judge on or before the
        first day of the term of the CommissionersCourt
        at which the selection of the depositories 1s to
        be made . . .
             "Art. 2546, It shall be the duty of the Com-
        missioners Court at ten o'clock a.m. on the first
        day of each term at which banks are to be selected
        as county depositories, to consider all applications
        filed with the County Judge, cause such applications
        to be entered upon the minutes of the Court and to
        select those applicants that are acceptable and who
        offer the most favorable terms and conditions for
        the handling of such funds and having power to reject
        those whose management or condition, in the opinion
        of the Court, does not warrant!,placingof county
        funds In their possession. . .
          The statutes above quoted grant to the commissioners
court the authority to select county depositories and specifies
the procedures and prerequisites to such selection.
General's Opinions M-107 (1967),
V-1166 (1951), WW-33 (1957) and
Farmers Guaranty State Bank, 289


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lion.Ward W. Markley, page 3     (M-802)




error ref.); Hurle v. Citizens National Bank, 229 S.W. 663
(Tex.Clv.App.1921: n.w.h )* Coffee v. Borger State Bank, 38
S.W.2d 187 (Tex.,Clv.App.
                        is&, n.w.h.J,
          In Attorney General's Opinion M-33, supra, It was
heldr
          "The purpose of the procedures prescribed
     by the statutes relating to the selectionof a
     county depository Is to secure to the county a
     safe, responsible depository for Its funds with
     a return of Interest for the use thereof. ~Tlme
     Is not of the essence in the accomplishmentof
     these ends; therefore, they should not be
     sacrificed to thenstrict compliancewith the
     time requirements of these statutes,"
          It was further held that It was wl.thlnthe discretion
of the commissioners court to defer the selection of the de-
pository to a day other than the ftist day of the February Term.
                ecky 'v. City of Yoakum, 35 S,W.2d..492(Tex.Clv.
App. 1931~)      52 S W 26 240 (Tex.Comm.App.1932), it was con-
tended that the deslgAa;lon of a city depository was void because
the designation was made during the month of June Instead of July
as required by Article 2559, and the notice of intention was given
by letter rather than publication. In upholding the designation
of the city depositdry the court there stated at 35 S.W.2d 498:
          "Article 2559 provides no penalty and Imposes
     no forfeiture in case of a non-compliancewith its
     literal provisioner There la no declaration In the
     act that, If the designation of a depository Is
     made at a time other than at a regular meeting In
     July of each year, as stated In the act, such
     designation should be void. . . . (T)he provisions
     of the statute declaring . . . the time for making
     such designation . . . is directory only and not
     mandatory . . . . (W)hen a formality is not abso-
     lutely necessary for the observance of justice,
     but, Is introduced to facilitate Its observance,
     Its omission, unless there Is an anfulling clause
     In the law, will not annul the act.




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Hon. Ward   W.   Markley, page 4     (M-802)


          It was held In Attorney ffeneral'sOpinion Number O-3837
(1941) that a contract between the bank and the county constltut-
lng the selection of a depository cannot be terminatedat will
by either party to the contract; therefore the bank selected as
a depository remains the county depository during the term of the
contract.
          In Attorney General's Opinion v-1166 (1951), It was
concluded that,
          "In selecting a depository for county
     funds, the commissioners'court may exercise
     its discretion in determining which appll-
     cants 'offerthe most favorable terms and
     conditions for the handling of such funds,'
     and Its action Is not subject to review un-
     less an abuse of discretion Is shown . . . .'
            In Attorney General's Opinion WW-33, the following ruling
was made:
          "The County Commissioners'Court may law-
     fully consider and accept the application of a
     Bank as a County Depository where the application
     did not contain a statement showing the financial
     condition of the bank but the President orally
     supplied such Information and subsequentlyaub-
     mltted It in proper written form on the date the
     applicationswere opened and consideredby the
     Court,"
          In Citizens State Bank of Roby v. MoCaln, 274 S.W.2d
184 (Tex.Clv.App.1955) It       h Id that h     there was no ap-
proval by the commlsslo~ers!%rteof secur~t~~~ furnished by a
bank followed by an order designating the bank as county de-
pository, there was no final designation or selection of the
bank as the county depository. See also Llnz v. Eastland County,
39 S.W.2d 599 (Tex. Comm. App. 1931).
     In view of the foregoing, you are advised that If the
commissionerscourt has made a selection of a bank as county de-
pository and has approved securities furnished by the bank, such




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    Hon. Ward W. Markley, page 5      (M-802)

    selection may not be retracted by the commlsslonerec-t.:. On
    the other hand, If the commlsslonerscourt has not approved
    securities furnished by the bank, the selection on February 8,
    1971, Is not final and the commissionerscourt may postpone the
    selection of a depositoryuntil the date set by the court for
    the purpose of reconsideringthe bids In question., In the event
    the commissioners court did not make a final selection on February 8,
    1971, then you are advised that It is within the discretion of
    the commissionerscourt to determine which applicant offers the
    most favorable terms and conditions for handling county funds.
              In answer to your question concerning the validity of the
    bids submitted by the two banks making application, it Is our
    opinion that both the bids of the Flrst.StateBank of Jasper,
    Texas, and the First National Bank of Jasper, Texas, are valid ap-
    plicationa for depository for Jasper County funds for the biennium
    1971-72.. The legal notice given by the c~mmlsslonerscourt stated,
                 ."in awarding the contract the Commission&~'
             Court will consider the rate of interest the
             county will redelve on all accounts other than
             checking accounts and the amount of Interest the
             county will begcharged on any short term obll-
             gations the -county,maywish to Incur. Also, any
             addltlonal services offered by the.bank will beg
             considered."
              Both applicationsstate the rates of Interest each bank
    agrees to pay on time deposits. In addition, each bid furnishes
    additional Informationconcerning the amoupt of Interest the county
    will be charged on obligationsthe county may wlsh.to Incur.
    Neither bid, however, states in the appllcatldn the amount of paid
    up capital stock and permanent surplus of the bank, nor does the
    application contain a statement of the financial conditionsof the
    bank at the date of said application,all of which Is required In
    Article 2545. However, since no question Is raised on this matter,
    we assume that such Informationwas furnished the commissioners
    court by some other Instrument. In any event, such information
    may be ,supplledorally.and subsequentlysubmitted In proper written
    form. Attorney General's.OplnlonWw-33 (1957).
              The only question raised concerning the validity of the
    applications relates to Item 2 of the application by the First
    State Bank of Jasper, Texas. Item 2 reads as follows:
                  “2.  In the event the County finds It neces-
             sary to borrow funds, we agree to pu@zhaseyour
             lawfully Issued General Obllgatlon Time Warrants
             at an Interest rate according to the following
             schedule in a total amount up to $125,000.00
             and maturities not to exceed 5 years from date
             of Issue:
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Hon. Ward W. Markiey, page 6         (M-802)




              vFor Time Warrants which mature during the
         life of this contract: a total charge for Interest
         of 1 penny per Warrant.
              "For Time Warrants which mature at a date
         beyond the maturity of this contract: so long as
         The First State Bank, Jasper, Texas, remains as
         the exclusive Depository of all County funds,
         under this contract or subsequentcontracts, a
         total charge for Interest of 1 penny per Warrant
         will be made; should The First State Bank, Jasper,
         Texas, not remain as the exclusive Depository of
         all County funds, then lnterest.wlllbe charged
         only from the date which the exclusive Depository
         Agreement Is terminated to maturity of the Warrant
         at a simple Interest rate of 1.94s per annum.”
           It Is seen that Item 2 above quoted Is merely lnforma-
 tlon as to the amount of Interest which will be charged the county
 In the event It Issues ffeneralObligationTime Warrants. There-
 fore, Item 2 constitutes part of the Informationrequested.ln the
 legal notice uoted. This office concluded in Attorney General’s
              2 (1951) as follows8
 Opinion v-1.1.6
              "In selecting a depository for county funds,
         the commissioners’court may exercise Its discretion
         In determining which applicants 'offer the most
         favorable terms and conditions for the handling of
         such funds,’ and Its action 1s not subject to re-
         view unless an abuse of discretion Is shown."-
                         SUMMARY
              The two bids Involved In your request are
         valid applications for the county depository and
         It was within the discretion of the commissioners
         court to determine which applicant offers the most
         favorable terms and conditions for handling county
         fund8.
              If the commissioners court has made a selec-
         tion of a bank as county depository and the bank
         has qualified, such selection may not be retracted
         by the commissioners court. If a depository
         selection by the commissionerscourt Is not


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     Hon. Ward W. Markley, page 7        (M-802)




               final, such selection may be postponed for the
               reason that such selection need not be m&de on
               the first day of the February Term of the Com-
               missioners Court.




     Prepared by John Reeves
     Assistant Attorney General
     APPROVED:
     OPINION COMMITTEE
     Kerns Taylor, Chairman
     W. E. Allen, Co-Chairman
     William J. Craig
     Gordon Cass
     Roland Allen
     Ben Harrison
     NEADE F. GRIFFIN
     Staff Legal Assistant
     ALFRED WALKER
     Executive Assistant
     NOLA WHITE
     First Assistant




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