                       The Attorney               General of Texas
                                        October   30, 1980
MARK WHITE
Attorney General


                   Honorable John P. Parsons                 Opinion No. MW-261
                   Commissioner
                   Credit Union Department                   Re: Whether a state chartered
                   914 East Anderson Lane                    credit union may be licensed to
                   Austin, Texas 78752                       make loans under the Texas Credit
                                                             Code, and what rate of interest
                                                             may be charged by the credit union
                                                             on such lcans

                   Dear Mr. Persons:

                        You ask two questions concerning the applicability of the Texas Credit
                   Code, article 5069, V.T.C.S., to the Texas Credit Union Act, article 2461,
                   V.T.C.S. The first question you ask is:

                              1. May a credit union chartered by the State of
                                 Texas obtain a license to operate as a regulated
                                 lender under the Texas Credit Code pursuant to
                                 article 5069-3.04, V.T.C.S., and write loans as
                                 permitted under Chapters 3 and 4 of the Texas
                                 Credit Code?

                   Article 5069-3.04, V.T.C.S., provides:

                                  (1) Any bank, savings and loan association or
                              credit union doing business under the laws of this
                              State or of the United States shall receive a license
                              upon notification     to the Consumer Credit Commis-
                              sioner of its intention to operate under the provisions
                              of this Chapter. The Consumer Credit Commissioner
                              shall forthwith issue a license to any such bank,
                              savings and loan association or credit union.

                          The Texas Credit Code is a general statute which clearly anticipates
                   licensing credit unions for the purpose of transacting the type of business
                   characterized   by chapter 3 of the Texas Credit Code. Article 5069-3.04,
                   V.T.C.S., is not limited by any provision in the Texas Credit Union Act, and
                   permits a credit union to be issued a license under chapter 3 of the Texas
                   Credit Code.




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Honorable John P. Parsons - Page Two        (MW-261)




     The second question you ask is:

               2. If the credit union ls licensed pursuant to article     5069-
           3.04, V.T.C.S., may that credit union charge interest        at the
           rates prescribed in chapters 3 and 4 of the Texas Credit      Code,
           or is such credit union restricted to the rates set forth     in the
           Texas Credit Union Act, article 2461-7.01, V.T.C.S.?

Article 2461-7.01, V.T.C.S. (Credit Union Act), states:

            [Al credit union may make loans to members for such purposes
            and on such security and terms as the credit committee, credit
            manager, or loan officer approves, at rates of interest not
            exceeding one percent per month on the unpaid montw
            balance. Every loan must be evidenced by a written instrument.
            (Emphasis added).

       Chapters 3 and 4 of the Credit Code permit interest charges resulting in a total
allowable interest rate in excess of the 12% per annum specified in the Credit Union
Act. It is evident that the maximum interest rate permitted by the Credit Union Act
is less than the maximum interest rate provided for by the Credit Code.

       The Credit Code is a general statute, &, it is a comprehensive code which
classifies and reeulates loans and lenders. The Credit Union Act is a special statute,
i.&., it applies &ly to that class of lenders &fined as credit unions. -.-   See Lower
Colorado River Authority v. l&Craw, 83 S.W. 2d 629 (Tex. 1935); Smith v. Davis, 426
S.W. 2d 827 (Tex. 1968); Rodriguez v. Gonzales, 227 S.W. 2d 791 (Tex. 1950). It is a
cardinal iule of statutory construction that a special statute prevails as an exception
to a general statute if a conflict between the two exists. See International Fidelity
Insurance Company of Newark, New Jersey v. Sheriff of Dallaounty,        476 S.W. 2d 115
(Tex. Civ. App. - Beaumont 1972, writ rePd n.r.e.1; Cuellar v. State, 521 S.W. 2d 277
(Tex. Crim. App. 1975). Since the Credit Union Act is complete within itself, it should
 not be swplemented       with provisions of a separate and distinct act which are
 inconsistent with it. See Robertson v. State, 406 S.W. 2d 90 (Tex. Civ. App. - Fort
 Worth 1966, writ ref’d nx;).

       We find no Texas case which discumes the applicability of the interest rates
allowed by the Credit Code to the Credit Union Act. The language of article 2461-7.01,
V.T.C.S., is, however, duplicated in the Federal Credit Union Act at 12 U.S.C. section
1757(5)(A)(vi), which states that the rate of interest charged by federal credit unions
must not exceed “1 per centum per month cm the unpaid balance.” This statutory
provision has been the subject of discussion by the courts in determining whether a
federally chartered credit union may charge those rates of interest provided in the
Texas Credit Code.       An analogy can be drawn from those cases to the pending
question.

      In Carreon v. San Antonio City Employees Federal Credit Union, 586 S.W. 2d 622
(Tex. Civ. App. - Waco 1979, no writ), the court stated:




                                           p. 829
Honorable John P. Parsons - Page Three         (M+ 261)




           However, under the terms of 12 U.S.C.A. section 1757(5)(A)(vi)
           the rate of interest charged by federal credit unions must not
           exceed 1 per centum per month on the unpaid balance inclusive
           of all service charges.’ It is clear, therefore, that regardless of
           the fact that ‘credit unions’ are named in the opening sentence
           of Article 5069-4.01, federal credit unions may not charge the
           16% interest rate authorized therein.

This view was re-stated in Brown v. Austin Area Teachers Federal Credit Union, 588
S.W. 2d 629 (Tex. Civ. App. - Beaumont 1979, writ rePd n.r.e.).

       The issue considered by the court in Carreon, supra, parallels your second
question and the language of the court may be paraphrased to resolve that question;
under the terms of article 2461-7.01, V.T.C.S., the rate of interest charged by state
credit unions must not exceed one percent per month on the unpaid monthly balance.
It is clear, therefore, that regardless of the fact that “credit unions” may be licensed
under article 5069-3.04, state credit unions may not charge a rate of interest in excess
of one percent per month thereunder.

                                    SUMMARY

                A state chartered credit union may be licensed under the
           provisions of article 5069-3.04, V.T.C.S. (Texas Credit Code). A
           state chartered credit union licensed under the Texas Credit
           Code may not charge interest rates in excess of those
           authorized by article 2461-7.01, V.T.C.S. (Credit Union Act).

                                          A=



                                                MARK      WHITE
                                                Attorney General of Texas

JOHN W. FAINTER, JR.
First Assistant Attorney General

RICHARD E. GRAY III
Executive Assistant Attorney General

Prepared by Nancy Ricketts
Assistant Attorney General




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Honorable John P. Parsons - Page Four   (m-261)




APPROVED:
OPINION COMMlTTEE

Susan Garrison, Acting Chairman
Jon Bible
Rick Gilpin
Tom Pollan
Nancy Ricketts




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