               TIEE ATT~RNEP    GENERAL
                       0F TIEKAS
                              Arrsrrx~,T~~~Am           W37'11


                                         September       12, 1973


The Honorable   Robert    E.       Stewart                   Opinion     No.   H-100
Commissioner
State Banking  Department                                    Re:    Whether    unmanned.
John H. Reagan   Building                                           automated,      Z4-hour
A.ustin, Texas                                                      bank facilities     violate
                                                                    the Texas Banking
Dear   Mr.    Stewart:                                              Code,   1943

         Your request       for an opinion from this office           on the question     involved,
notes that unmanned           automatic     te.ller machines       are now serving      Bank-
Americard        and Master      Charge     customers      in a number      of Texas banks.
Using special        magnetica:LLy-keyed         cards from the bank and a digit code,
the customer        can activate     the automated       teller at any hour on any day o.f
the week.       .With it he can:      (1) withdraw      cash from his bank checking,
savings    or other account        - up to a specified        amount;    (2) deposit   to his
checking     or savings      account;    (3) transfer     money from his checking           tohis
savings    account,      from his savings         to his checking     account,    or to either
from another        account;    and (4) make payments           to a credit    card account      with
cash,    check,     or money order,         or by deduction       from a checking      or savings
account.

       You further  advise   us that Mr.            Dale Alley,   Review   Bank Examiner    of
the State Banking   Department,     made           an examination    of the uses of the auto-
matic te,ller machines    and reported,            in pa’rt:

                        “The banks advertise      24 hour banking,    seven
                days a week including      b&days,     and the transactions
                handled   by the machines     are basically   the same at
                each bank.    Refer to the receipt     forms   for a detai,led
                listing of the transac,tions.

                        “Ai.though   each of th,e banks       empty the machines
                at different    times during the day,         all follow the same




                                             p.   454
The   Honorable      Robert     E,   Stewart,        page     2   (H-100)




                 procedure      as far as recording           the transactions
                 that occur     on holidays       and over the weekend.            The
                 machines      are equipped        with a dater and timer,
                 and all transactions          reflect   the date and time of
                 day that they occurred            on the bank’s      copy of the
                 transaction      slip.     Cash withdrawals          made through
                 the machine       are limited       to $100.00     during any one
                 day, while deposits          may be made for any amount.
                 AU transactions,          including     withdrawals      and depo-
                 sits that occur       after the regular        banking hours are
                 recorded      as of the next regular          business     day.     If
                 the maximum         amount possible         is withdrawn        on
                 Friday    after the c.lose of business,             on Saturday,
                 and. on Sunday,        the total amount ti:LL be entered
                 on the customer’s          account     as,if it has occurred         on
                 the following      Monday.         The same is true of all other
                 transactions.        Receipts      are issued      on each transac-
                 tion; however,         each receipt      contajns     a statement
                 to the effect &at all ,transactions             are subject      to proof
                 and verification.        ”

       Article     342-910a      reads,    in part,         as follows:

                 “Section    1. Legal Holidays        For Banks Or Trust
                 Companies.         Notwithstandi.ng    any existing      provisions
                 of law relative      to negotiable    or non-negotiable        instru-
                 ments or c0mmercia.l          paper,   but subject     to the pro-
                 visions   of Section     2 of this article,     only the fo.llowing
                 enumerated       days are declared       to be legal holidays
                 for -banking purposes        on which each bank or trust
                 company     in Texas &ll        remain     closed;   Saturdays,
                 Sundays,     January     1, the third Monday in February,
                 the Last Monday in May,          July 4, the first Monday
                 in September,       the second     and fourth Mondays         in
                 October,     the fourth Thursday        in November,        and
                 December       25.




                                                p.   455
The Honorable   Robert     E.   Stewart,        page   3   (H-100)




            “All such .legal holidays     shall be neither   business
            days nor banking days under the laws of this State
            or the United States,     and any act authorized,      re-
            quired    or permitted  to be performed      at or by any
            bank or trust company       on such days may be per-
            formed     on the next succeeding    business   day and no
            ,tiability or loss of right of any kind shall result
            therefrom     to any bank or trust company.

            “Set,.   2. A~lternative       Legal Holidays         For Banks Or
            Trust Companies.            Any bank or trust company
            may elect to designate          days on which it may close
            for general      banking purposes         pursuant       to the pro-
            visions    of this section,      instead     of Section      I of this
            article,    provided     that any bank or trust company
            which has elected         to be governed        by this section
            shall remain       closed    on the following        enumerated
            days,    which days are declared            to be legal holidays
            for banking purposes:           Sundays,       January      1, the
            third Monday in February,             the ,bst Monday           in May,
            July 4, the first Monday in September,                    the second
            and fourth Mondays          in October,       the fourth Thursday
            in November,         and December         25.    Wnen the dates
            January     I, Ju:ly 4 or December           25 fall on Saturday,
            then the Friday        immediately       preceding        such Saturday
            shall a:lso be a Legal holiday          for banking purposes
            on which each bank or trust company                    shall remain
            closed,    and when such dates fall1 on Sunday,                  then
            the Monday       next fol:lowing     each Sunday shall also be
            a legal holiday       for banking purposes           on which each
            bank or trust company           which has elected           to be gov-
            erned by this section         shall remain        c,losed.      Except
            as herein     provided,      any bank or trust company               doing
            business     in this State may, at its option,               elect to be
            governed      by this section      and c,lose for general           bank-
            ing purposes       either on Saturday         or on any other
            weekday      of any week in the year provided                 . . I .




                                           p.   456
The Honorable    Robert    E.   Stewart,        page   4   (H-100)




            [Paragraphs   (a), (b) and (c) of $ 2 provide the
            method by which a bank may adopt and use the
            alternative legal holidays.   ]

                . . . .

            ” If any bank or trust company              elects    to close
            for general      banking purposes         on Saturday        or any
            other weekday         as herein provided,         it may, at its
            option,    remain      open on such day for the purpose
            of performing        limited    banking services.           Notice
            of election     to perform      limited    banking      services
            shall be contained         in the resolution       and notices,
            above provided,         with respect      to closing      for general
            banking purposes.           Limited     banking services          may
            include    such of the ordinary         and usual services
            provided     by the bank as the Board of Directors
            may determine,          except the following:          making loans,
            renewing      or extending      ,Loans, certifying        checks,
            issuing    cashier’s      checks,    and providing’access           to
            safety deposit       boxes or to property          he:ld in safe-
            keeping     by the bank.

            “Such day upon which such bank or trust company
            may elect to close for general           banking purposes
            shall with respert       to such institution     be treated    as
            a legal holiday    for all purposes        and not a business
            day; provided     that if such bank shall elect to perform
            ,limited banking services         on such day, the same
            sha,U not be deemed        a .legal holiday    for the perfor-
            mance    of :Limited banking services.           Any bank or
            trust. company     which elects      to close for general
            banking purposes        on Saturday~or      any other weekday
            but which elects      to perform      limited   banking   services
            shal,l not be subject~ed to any ,liabi,Lity or loss of rights
            for performing      ,Li,mited banki.ng services       or refusing
            to perform     any other     banking services       on such day,




                                           p.   457
--..-   _,.~.    .,..__.   _~




                The Honorable             Robert    E.   Stewart,        page   5   (H-100)




                                      “Sec.   3. Discrimination      Prohibited.    The provisions
                                      of Section   2 of this article  ahal be completely     per-
                                      missive    with each individual1 bank or trust company
                                      in this State.   . . .‘I (emphasis     added)

                                In the event that a bank adopts the allternative plan set out, it may
            remain                open six days,  of which one is for Limited banking purposes.

                   Long prior   to the enactment                         of the Banking       Code   of 1943,   A~rticle
            459,l specified the legal holidays,

                                             II
                                                 . . . on which al11 the pub:lic offices      of the
                                      .state may be closed       and shall be considered       and
                                      treated    as Sunday for al:1 purposes      regarding     the
                                      presenting      for the payment    of acceptance     and of
                                      protesting     for and giving notice of the dishonor         of
                                      bi,L:ls of exchange,     bank check8 and promissory
                                      notes placed       by the Law upon the footing     of bills
                                      of exchange,      “.

                    Apparently     banks had a question         as to their potential1 liabi,lity  in
            the event they closed       on commonly        celebrated     holidays which were not
            designated     as legal holidays.        Therefore,      in 1947, the Legislature
            adopted    thepredecessor     of A,rtic.le 342-910e      stating that this uncertainty
            as to Ihability created      an emergency.          (A.cts 1947, 50th Leg.,     p. 424,
            ch. 230).

                   The Act has been amended       from time to time since then, the last
            amendment    having been in 1971 (Acts .L97,1, 62nd Leg.,     ch. 108, p. 872)
            which stated as the fact creating     an emergency:     “The need for moderni-
            zation and clarification    of the Texas Banking    Code of ,1943, so that banks
            may better attract      and keep employees    to serve  their communi,ties.   . . . ”

                    It is apparent     that it was not the intent of the Legislature      in adopting
            the  present    provisions     of Artic,le  342-9,LOa to add restrictions   to hours
            during whi.ch a bank might conduc.t its business.            Quite to the contrary,     it
            is apparent     that the statute,     as it developed,   was developed    with the thought
            of freeing    banks from restriction        and to give to them an option concerning




                                                                    p.    458
The Honorable       Robert    E.   Stewart,        page   6   (H-100)




the days and hours upon which they would be open                        for business     and whether
they were to be open for general banking purposes                        or on,ly for   limited
banking  services.~

        There is no Federal        regulation  which          would assist.       The interpre-
tive ruling of the Bureauof        the Comptrol:ler           of the Currency,      12 C. F. R.,
g 7.7435,    states:

                “There    is no Federal       law governing      hollidays  for
                national   banks.      Loca:l counsel      should be consulted
                on the question      of possible    liability   under State laws
                affecting   the validity     of transactions      consummated
                on days designated        legal holidays      by State authorities
                and also on the question         of possible     liability if the
                bank remains       closed    on any day not designated         a
                ,legal holiday    by State authorities.       ”

        The validity   of using automated      machines   for banking     services,
including   the dispensing     of cash,   on the premises    of a bank has been upheld
in Attorney    General    Opinion M-915 (1971).       The main question      there was
whether    such an arrangement        wou:ld vio:late the constitutional1   prohibition
of branch    banking.    It was he:ld it would not.

       In answering   your questions  concerning     the use of such automated
machines    on a twenty-four  hour basis,   we   cannot   ignore the fact that for
many years    banks have used night depositories       available  for use seven
days a week,    24 hours a day.

        In view of the fact that the automated        machine    about which you inquire
does not result   in the entry of any transaction         upon the books of a bank unti,l
the next business     day, we assume       that all of its functions,   with the excep-
tion of the withdrawal     of a packet of cash,     could be performed        either  by use
of the ni.ght depository    to advise   the bank of transactions      desired     or by con-
ducting   one’s banking busi.ness     t:hrough the mails.

       Thus i.t would seem that the onl,y function served                    by the automated
machines   at this time which is new or novel or cannot                      otherwise  be performed




                                              p.   459
The   Honorable     Robert   E.   Stewart,        page   7   (H-100)




under existing procedures is that a customer     of a bank may withdraw      a
limited amount of cash by making a charge     against his account    by using
a card, just as he makes a charge  against   it when he cashes    a check.

         It is difficult   for us to conceive     that this alone wou1ld be sufficient
to render     the bank “open for business”.           No human discretion         is invo.lved.
There are no negotiations.           Only approved      customers      (those to whom cards
have been issued)        may make use of the service.           If this sort of an activity
is sufficient     to constitute   the bank “open”,      then what of the myriad         of other
activities    that take place in our large metropolitan            banks at night and on
holidays?       Is the bank open if, on a “closed”         day or legal hoyliday an
employee      feeds information      into a computer      which results      in the recording
of’~a t,ra,‘nsa:ction.on      a cu s tomer’s’accou~nt?           Is it open merely       because
its trust officers,      for example, may be available        to discuss      trust problems
with its customers?

        It is ouropinion        that for a bank to be open either generally             or in the
limited. sense      spelled    out in Article     342-910a    it must be open to the public
for physical      transactions      and the completion       of transactions       involving
more than the mechanical             dispensing     of packets    of money.      Reverting   to
the stated purpose         of the 19’71 amendment        to the A,ct “so that banks may
better    attract   and keep employees          to serve   their communities,        ” it is
obvious     that the automated        machine,     replacing     the need for an employee
at late hours      serves    much the same purpose.             At the same time they
fulfill  the needs of customers           who cannot conclude        al,1 their banking by
mail or in person         and’ make it.unnecessary           to require     employees     to
work longer hours and on week-ends.

        We would find it difficult    to distinguish   between   an automated
machine    dispensing    cash,  on the one hand, and a night depository        accept-
ing deposits    of cash,   on the other.    If one activity  results  in the bank being
considered     open then we think the other would also.

       We have found no Texas case directly       in point.    However,   Hewitt V.
First  National   Bank, 262 S. W. S61 (Tex.    1923) is helpful.   In that case, notice
to stop payment     of a check was given to a bank’s cashier     on Sunday which was
then, as now, a legal ho,liday.    Nevertheless,     the Supreme    Court held the
notice  to be valid,   s.aying:




                                             p.   460
The   Honorable     Robert    E.   Stewart,     page   8   (H-100)




                       “We do not think there is any merit in
               Appellee’s     contention     that the notice to Powell
               was. ineffectual     because     the same was given on
               Sunday.     It is true that Sunday is a legal holiday,
               and, with certain       exceptions,    it is unlawful    to
               labor that day. . ~ ~ But Powe:ll was not asked
               to perform      any Labor on Sunday.        Certain   infor-
               mation was imparted          to him, upon which he was
               requested     to act the next day. ”

      In our opinion,    the activities conducted            through     an automated,
unmanned   machine    are no less lawful.

        It is our opinion,      accordingly,    that the use of an unmanned,             auto-
mated,     24-hour   teller   machine     as described   in your request does            not
violate   the provisions      of the Texas Banking Code,        1943.

                                        SUMMARY

                       An automatic,       unmanned,     teller machine
               operating    24 hours per day, seven days per week
               which accepts      deposits    and transfers     of funds and
               dispenses    cash in limited      amounts     and in pre-
               p,repared   packets,    where all transactions         are
               recorded    as of the next regular       business     day, does
               not violate   Artic:le   342-9:lOa setting the legal ho:lidays
               for banks.




                                               A.ttorney   General     of Texas




                                          p.    461,
The   Honorable   Robert   E.   Stewart,    page      9   (H-100)




DAVID     M. KENDALL,       Chairman
Opinion    Committee




                                           p.   462
