                 TEEATTORNEYGENERAL
                                OF      TEXAS




                                     February 11, I!??!

    Eon. J. lb Falkner, ComMasloner
    &ate Department of Banking
    Capftal Hatfonal Bank Bulldihg
    hrttm;  Taxas ,’
                              Opinion Ilo., w-22,
                              lie:     Whether the proposed plan of the
                                       Narshall IVatlonal Bank, Marshall,
                                       Texas, to provide additional    bank-
                                       4    facilities i8 in violation   of
                                       Articla 342-903, V.C.S., Texas
                                       Banking Cods of 1943.
    Deer Slrr
                 You have asked our opinfon as to whether t&e pro-
    posed plan of the Marshall        National Bank, Marshall, Texas
     to build and install     drive-in    facilities   in the neti block
     vest of the main bank building,         approximately 185 feet rrom
     the property line of the main bank to the property line OS
    ‘the drive-in   bank violates      the provisions     of Article 3420
     903, Vernonls   Civil Statutsqthe        Texas Banking Code of 1943.
     IOU have indicated    that it is your opinion that the proposed
     plan aor8 violate    4rticlr    342-903.
                  Article   342-903,     ‘V.C.S.,       provider   as iollovsr
                   Vo state,   nationPI or private bank shall:
             engage irr business   In more than one plaCe, main-
             tain any branch office,    or cash checks or,~receioe
             aeporfts except in itr own bankine house.*
/                 The.following  is a rough aketch OS the proposed lo-
    cation     oi the rwv banking facillt iesr




      ’                                        $rREEr
Hon. J. M. Falkner,         page 2      (WW-22)


          You have indicated that the following                    transactions
are to be handled at the new facilities:
           (1)  The personal loan department of the Marehali
National Bank will be moved to then new drWe-In building and
all personal loans of $500 or less will be handled in the new
building.   The $500 limit   is only an approximate ,limit, and
loans that exceed that amount by a few dollars may also be
made at the drive-in.
               (2)     The drive-in   ~113 have three teller   stations
for accepting         deposits,   cashing checks, and accepting pay-
ments ,011‘notes.
          ,(3) %Jalk-in*1 as’we13 as Wrlve-inll   service IS con-
templated at the’ new facilities, with additional   employees
behind a counter on the inside of the drive-in    building to
handle the walk-in customers.
            (4)  A fireproof           night    depository     vault   will   be main-
tained   at the drive-in.
               (5)     Cashier’s  checka, bank drafts bank mcmsy order;
and’traveler’s         checks will nqt be issued at &ho drive-in.
             The bank has proposed             the following     method of opera-’
thonr
           (1) The drive-in  building will, be connected to the
main bank by two underground pneumatic tubea, each five inches
in diameter, which will carry up to five pounds.
          :A21 The tellers  will not send each item received to
the main bank immediately, but it ie contemplated that items
mey be transmltted’to  the main bank at about fiiteed  or twenty
minute intervals.
               (3) A     closed   circuit   TV will be installed between
the drive-in         and bookkeeping     and proof department in the main
bank.
            ,(4) Currency will be kept in the main bank vault
over-night.     However, a fireproof    vault with a silver chest till1
lazayintained    at the drive-in,    and silver will bg kept in that
       .

               (5)  The personal        loan department records          will I be
maintained      at the drive-in.
.      ,
                                                                                        : ,.,?




                                           ,.,



    :aon. J. No Falkner,    page 3   (WW-22)
        .,


                (6)   Records of tehers’         balances   will    be sent to the
    main bank at closing     e,ach day.
                (7)   Supplies   n,eoessary for     operation      will   be kept at.
    the drive-in.
               While the powers of a state bank ln Texas are enumer-
    ated in,Article.342-301,    V.C.S.,  most of the decisions   through-
    out the United States recognize     that the ordinary essentlal’fe-
    tures of the banking business are the power to accept deposits
    of money repayable toe the order of the depositor,      the discount-
    ing of commercial paper, the lasuanc
    the loaning of money upon security.
    704, 23 L.&i.’ ‘Gil; 9 C.J.S. 31; 2011
    Volume 1, Section 67.
                Many of the decisions   and authorities    throughout the
    United States recognize    that not all of these banking functions
    need be exercised    in order to constitute    an institution   a bank.
    The exercise   of some of the functions     of banking such as loan-
    ing money, selling bonds, receiving      deposits or cashing checks
    may be sufficient   to bring the institution     within the regula-
    tions    aseed by the state relative    to banks.    gali     v. Ooseett,
    109 8. e .2d 340 (Tsx.Civ.App.   1937); Zollmann, &,c& and &A&&&
    Volume 1, Sect ion 67.    Three excellent    annotations on the con-
    stituent   elements of branch banking are found in 30 A.L.R. 927,
    $I A.L.R. 1340, and 136 A.L.R. 471. However, it is not necee-
    sary for us to determine whether the plan of the Marshall ,Na-
    tional Bank actually    proposes a technical    “branch bank” for
    Article 342-903 is not limited to technical       branch bar&&g.
               As noted above, Article 342-903 provides that no state,
    national or prlv.ate bank shall (1) engage in business in more
    than one place,   (2) maintain any branch office,  nor (3) cash
    checks or receive deposits except In its own banking house.       Af-
    ter a thorough and exhaustive review of the decisions     of the
    various state and federal courts and prior opinions of this of-
    fice passing upon the question of “branch banking” and related
    questions,  we are in agreement with your conclusion   that’ the pro?
    posed plan of the Marshall Iiational Bank violates   the provisions
    of &ticle   342-903.
                We are’ of the opinion that lf.~the proposed plan Is put
    Into effect   the Marshall National Bank would be engaged in buei-
    ness in more than one place in violation      of the statute.
              Title 12, U.S.C.A.  Sect ion 36? authorizes national
    banks to establish and operage branches Iif such establishment
Ron. J. M. Falkner,   page 4   (W-22)


and operation are at the time authorized to state banks by the
statute law of the state in question.”     As the Texas Constitu-’
tlon, Section 16 of Article XVI, and Article 342-503, V.C.S.,
the Texas Banking Code of 1943, prohibit    such aetlvity,   the
Narshall National Bank, Marshall, Texas, is without authority
under federal law to provide the additional    banking facilities,
and in doing so would violate  the provisions   of Article 342-
903, V.C.S.
            This opinion is necessarily limited to the facts of
the situation   as set out herein, which we understand to be un-
disputed fact 9.


             The proposed plan of the Marshall National Bank,
     Marshall, Texas, to construct     additional banking fa-
     cilities    in the next block west of its main bank
     would be in violation    of Article 342-903, V.C.S.,   the
     Texas,Banklng Code of 1943.
                                   Yours very truly,
                                   WILL WILSON
                                   Attorney General    of Texas


                                   ;yM~@+
                                     Will D. Davis
                                      Assistant
     WDDrtib
     APPROVE:
     OPINION CODMITTS
     BY II. Grady Chandler,
        Chairman
