Honorable David W. Ratliff. Chairman               Opinion No.    M-849
Senate Committee on Banking
The Senate of the State of Texas                   Re:    Constitutionality of
State Capitol                                             House Bill No. 566
Austin, Texas                                             and Senate Bill No.
                                                          409. now pending in
Honorable Neal Solomon, Chairman                          the 62nd Leg., R. S.,
House Committee on Banks and Banking                      1971.
State House of Representatives
State Capitol
Austin. Texas

Gentlemen:

        You request our opinion as to the constitutionality of House Bill No.
566, as it would be amended by a proposed Committee Amendment, and
Senate Bill No. 409. both now pending before your respective Committees
in the 62nd Legislature, Regular Session, 197 1.

        The proposed Committee Amendment submitted by you for our con-
sideration would make House Bill No. 566 ’ read as follows:

       ‘I A BILL TO BE ENTITLED AN ACT amending Art.
       342-903, Revised Civil Statutes of Texas, as amended,
       concerning the prohibition of Branch Banking; and de-
       claring an emergency.

       ” BE IT ENACTED BY THE LEGISLATURE                OF THE
       STATE OF TEXAS:

       “Section 1. Art. 342-903,   ‘Branch Banking Prohibited, ’
       Revised Civil Statutes of Texas, 1925, as enacted by


1      Hereinafter   referred   to as H. B. 566.



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    Hon. David W. Ratliff and Hon. Neal Solomon,     page 2       (M-849)



           Chapter 123, Sec. 1, Acts 1959,    56th Legislature,   as
           amended, is amended to read:

           “Art.   342-903.   Branch Banking Prohibited.

           “No state, national or private bank shall engage in busi-
           ness in more than one place, maintain any branch office,
           or caeh checks or receive deposits except in its own bank-
           ing house. For purposes of this Article ‘banking house’
           means the building in whose offices the business of the
           bank is conducted and which is functionally one place of
           business, including (a) office or automobile drive-in fa-
           cilities whose nearest wall is located within five hundred
           (500) feet of the nearest wall of the central building and is
           physically connected to the central building by tunnel,
           passageway or hallway providing direct access between
           the central building and the connected office or automobile
           drive-in facility or by pneumatic tube, closed circuit tele-
           vi&m or other similar means of communication, and (b),
           in addition, not more than one (1) automobile drive-in
           facility  whose nearest boundary is located within one thousand
           eight hundred fifty (1,850) feet of the nearest wall of the
           central building and is connected to the central building by
           tunnel, passageway or hallway providing direct access be-
           tween the central building and .the connected automobile drive-
           in ficility or by pneumatic ,tube, closed circuit television,
           or other similar means of communication.       The entire bank-
           ing house shall for all purposes under the law be considered
           one integral banking house.

           “Section 2. Emergency Clause.      The importance of this legis-
           lation and the crowded condition of the calendar in both houses
           create an emergency and an imperative public necessity that
           the Constitutional Rule requiring bills to be read on three several
           days in each house be suspended, .and the Rule is hereby sus-
           pended; and that this Act take effect and be in force from and
           after its passage, and it is so enacted. ‘I

           Senate Bill No. 409 reads as follows:
lion. David W. Ratliff and Hon. Neal Solomon,       page 3   (M-849)



       ” A BILL TO BE ENTITLED AN ACT amending Article
       3, Subchapter IX, the Texas Banking Code of 1943, as
       amended (Article 342-903,   Vernon’s Texas Civil Statutes),
       concerning the prohibition of branch banking: and declaring
       an emergency.

       ” BE IT ENACTED BY THE LEGISLATURE               OF THE
       STATE OF TEXAS:

       “Section I. Article 3, Subchapter IX, the Texas Bank-
       ing Code of 1943, as amended (Article 342-903, Vernon’s
       Texas Civil Statutes), is amended to read as follows:

       “Article   3.   Branch Banking Prohibited.

       “No state, national or private bank shall engage in busi-
       ness in more than one place, maintain any branch office,
       or cash checks or receive deposits except in its own bank-
       ing house. For purpose of this Article’lbanking house’
       means the building in whose offices the business of the bank
       is conducted and which is functionally one place of business,
       including office facilities whose nearest wall is located.with-
       in one thousand, eight hundred fifty (1,850) feet of,the near-
       est wall of the central building and is connected to the c’en-
       tral building by tunnel, passageway or hallway providing
       direct access between the central building and the connected
       office facility or,by pneumatic tube, closed circuit tele-
       vision, or other similar means of communicat.ion: ‘,The en-
       tire banking house shall for all purposes under the law be
       considered one integral banking house.

       “Section 2. The importance qf this legislation and the crowded
       condition of the calendars in both houses create an emergency
       and an imperat:ive public necesrity that the Constitutional Rule
       requiring bills to be read on three several days in each house
       be suspended and be in force fr.tlrn and af’t~eril:s passage, and
       it is so enacted.”                                          ..

       The Bills as lrereinabove quoted propose t:ti amend Arl:icle 342-903,
Vernon’s Civil Stal:utes, which now reads as follows:




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    Hon. David W. Ratliff and Hon. Neal Solomon,      page 4      (M-849)



           “No state, national or private bank shall engage in
           business in more than one place, maintain any branch
           office, or cash checks or receive deposits except in
           its own banking house.   For purposes of this Article,
           ‘banking house’ means the building in whose offices the
           business of the bank is conducted and which is function-
           ally one place of business, including office facilities
           whose nearest wall is located within five hundred (500)
           feet of the nearest wall of the central building and is
           physically connected to the central building by tunnel,
           passageway or hallway providing direct access between
           the central building and the connected office facility or
           by pneumatic tube or other similar carrier.     The entire
           building house shall for all purposes under the law be
           considered one integral banking house. ‘I

            Only the first sentence of this Article appeared in the statute prior
    to 1957. In that 1.#year additional provisions were added, and these were
    amended in 1959 and 1963, making the Article to now read as quoted above.

            This Office has never issued an opinion as to the constitutionality of
    the 1957 amendment or the 1963 amendment to Article 342-903, and nothing
    in this present opinion is intended as a ruling thereon.

            Article XVI,~ Section 16 of the Constitution of the State of Texas,   reads
    as follows:

           “The Legislature shall by general laws, authorize the
           incorporation of corporate bodies with banking and
           discounting privileges, and shall provide for a system
           of State supervision, regulation and control of such
           bodies which will adequately protect and secure the de-
           positors and creditors thereof.

           “No 6uch corporate body shall be chartered until all of
           the authorized capital stock has been subscribed and
           paid for in full in cash. Such body corporate shall not
           be authorized to engage in business at more than one
           place which shall be designated in its charter.




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Hon. David W. Ratliff and Hon. Neal Solomon,    page 5      (M-849)



       “No foreign corporation, other than the national banks
       of the United States, shall be permitted to exercise bank-
       ing or discounting privileges in this State. ” (As amended
       Aug. 23, 1937. ) (Emphasis added. )

         We are thus confronted with the question as to whether the Consti-
tution of the State of Texas, which states ‘I. . . Such body corporate shall
not be authorized to engage in business at more than one place which shall
be designated in its charter . . . ” is to be enlarged upon by authorizing a
bank to operate a drive-in facility located five or six blocks away (1,850
feet) from its main banking house and connected each to the other by only
pneumatic tube, closed circuit television, or other similar means of com-
munication.    In other words, the basic question presented by the proposed
legislation is whether the bills would authorize a bank to engage in business
at a place other than the “one place which shall be designated in its charter, 1’
as prohibited by the Constitution.   It is clear that the “office facilities”
authorized in S. B. 409 and their counterpart, the one additional drive-in
facility authorized in the proposed amendment to H. B. 566, would be en-
gaged in the business of banking.

        The business of banking or “banking house” has been defined by our
Legislature,  in the past, and there is no restriction in the Constitution to
prohibit the Legislature from defining the business or place of a banking
house so long as it stays within Section 16 of Article XVI.

       Black’s Law Dictionary, Fourth Edition, defines a bank as “The
house or place where the business of banking is carried on. ”

        The Court quoted with approval the following definition of a bank
in the case of Kaliski v. Gossett, 109 S. W. 2d 340, (Tex. Civ. App. 1937,
error ref. ):

       “ln the case of In re Prudence Company (C. C. A. ) 79
       F. 2d 77, 79, we find the following definition of a bank:
       ‘Strictly speaking the term bank implies a place for the
       deposit of money, as that is the most obvious purpose
       of such an institution. ’ ‘I

        In the case of Hewitt v. First Nat. Bank of San Angelo, 113 Tex. 100,
252 S. W. 161 (1923). the Court said, with reference to the locale of a bank:



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Hon. David v.   Ratliff and Hon. Neal Solomon,    page 6      (M-849)



       “There are some transactions which a bank can properly
       attend to only at its place of business. Thus a bank has
       vaults and safes, in which to safely keep its money, and
       books, in which it is necessary to enter its transactions
       with its customers, in order that it may know the state of
       their accounts.   These being kept in the bank, an officer
       has no right to receive deposits at a place other than in
       the banking house, and should he do so, he will be held to
       be the agent of the party delivering the funds to him, and
       not of the bank. The same is true as to a check presented
       to a cashier at a place other than in the bank. He has no
       authority to accept it. He may have known that the customer
       had funds in the bank when he left it, but they may have been
       drawn out within five minutes thereafter.     It is for these ob-
       vious reasons that the law requires .national banks to have a
       place of business, and that they are not authorized to trans-
       act their business elsewhere.     U.S. R. S. 8 8 5136 and 5190;
       Autry v. Bank, 38 Fed. 883; Morse on Banking, 8 168;
       Bullard v. Randall, supra. ‘I (at pp. 162-163. )

         Both Bills would change the allowed geographic separation between th
central building and the most distant automobile drive-in facility from 500 t
1,850 feet, and would allow the connection between them to be limited to
11. . . pneumatic tube, closed circuit television, or other similar means of
communication . . . “, thus doing away with all semblance of any other di-
rect physical connection between these two components of the “banking house
as defined in both the House and Senate Bills.

       It is apparent that both Bills would provide for banking facilities at
two widely separated and distinctly different locations with no directphysica
connection between them except possibly a pneumatic tube.

         Great Plains Life Insurance Company v. First National Bank of Lubb(
316 S. W. 2d 98 (Tex. Civ. App. 1958, error ref. n. r. e. ), involved a suit on a
contract whereby Great Plains Life Insurance Company leased certain space
the First National Bank of Lubboc,k. The leased space was connected to the
bank by a tunnel and a pneumatic tube across the street from the bank. The
plaintiff life insurance company was seeking to cancel the Lease upon the grow
among others, that the leased space constituted a br.anch bank within the pro-
hibitions of Section 16 of Article XVI of the Constitution of Texas and Article



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Hon. David W. Ratliff and Hon. Neal Solomon,     page 7       (M-849)



342-903,  Vernon’s Civil Statutes.  The Court held that the leased premises
were “nothing more than a part of the appellee bank. ” We concur in this
holding. However, the Court went further and quoted with approval the
Kentucky case of Marvin v. Kentucky Title Trust Co. , 291 S. W. 17, (Ky.
Ct. App. 1927) where the Court declared:

       II. . . If such additional offices can be established at
       different points in the main building under the bank’s
       control, no good reason appears why they may not be
       established elsewhere throughout the city of its loca-
       tion for the same purpose . . . ‘I (at p. 18.)

        The Commissioner    of the Department of Banking has advised this
office that:

       II. . . it has been the long time departmental con-
       struction that a bank may do business in only one place
       or location in one city or town. Within our knowledge
       no state bank is currently doing business in more than
       one place or location in one city or town. ”

        Departmental construction or practice pursuant to the provisions of
the Constitution or statutes are to be given great weight. City National Bank
of Austin v. Falkner, 428 S. W. 2d 429, (Tex. Civ. App. 1968, writ ref. n. r. e. );
Werlein v. Calvert, 460 S. W. 2d 398 (Tex. Sup. 1970. )

        It is. noted that in conformity with the Banking Commissioner’s    in-
terpretation of the Constitution and statutes, that no state bank has attempted
to do business at more than one location by h aving a drive-in window, which
has not physically connected with the main banking house, by a passageway,
either tunnel or pneumatic tube, and these banking institutions have uniformly
and throughout the years adhered to this department practice pursuant to the
Constitution and statutes.

         Both H. B. 566 and S. B. 409 have eliminated from the concept and
definition of “banking house” the physical connection aspect of the statute, as
it now exists, and au.ihorize a ‘banking house to ‘be connected only by closed
circuit television or oth.er similar means of communication.

        If this office were to hold that: a “banking house” could be authorized
to extend its place of business 500 feet. or 1, 850 feet from its main banking


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Hon. David W.   Ratliff and Hon. Neal Solomon,   page 8       (M-849)



house, connected only by closed circuit television or other similar means of
communication, then we would have to conclude that this manner of connectisa
between the main banking house and its drive-in windows, or office facilities1
irrespective of the distance, would be compatible with the constitutional pro-
visions.   We cannot so conclude as a matter of law, because the Rills fail to
provide sufficient factors and guidelines to support that conclusion.

        If these Bills were enacted into law, we would be required to give
effect to the well settled rule of construction that, “an act of the Legislature
is not to be declared unconstitutional unless plainly so. The presumption is
that the Legislature acted in the light of the Constitution, with the intention
to observe it rather than violate it. ‘I Maud v. Terre&     109 Tex. 97, 200 S.W.
375, 376. Likewise, it was held in Watts v. Mann, 187 S. W. 2d 917 (Tex. Civ.
App. 1945, error ref. ) that “. . . in no doubtful case will the judiciary pro-
nounce a legislative act to be contrary to the constitution . . . ”

       “Constitutional provisions may be read into a statute . . ,
       to remove uncertainties and in order to restrict literalism
       to proper bonds. ‘I 53 Tex. Jur. 2d 170, Statutes, Sec. 119.

We are thu8 required to harmonize the proposed statutes with the Constitution
and to uphold their validity if there is any reasonable baeis or ground to do so.
53 Tex. Jur. 2d 225, Statutes, Sec. 158. We must conclude that the constitu-
tional concept and language that a bank shall not “engage in business at more
than one place” is subject to construction.    The Constitution should be given
a liberal construction to carry out its purpose and intent. 12 Tex. Jur. 2d
364.: Constitutional Law, Sec. 16. Great weight will be given to the legiela-’
tive conrtruction.   123 Tex. Jur. 2d 366, Sec. 20. No limitation as to the
sine of the place or area is set out, and the Legislature may thus interpret
its meaning, subject to the ultimate determination of a court.

        In a given case, under the particular facts and circumstances de-
veloped, the proposed Bills might; conceivably be applied and harmonized
with the Constitution and not be held to be unconstitutional, whereas, in a
different case, under a quite dissimilar factual setting the Bills could not be
constitutionally yeheld and could be declared unconstitutional in authorizing
office facilities and the engaging of business in two different places in a city
and connected only by closed circuit television or other similar means of
communication.




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    Hon. David W. Ratliff and Hon. Neal Solomon,       page 9       (M-849)



             A court will look to substance and disregard form in each case in
    determining and applying the issues before it. A legislative declaration is
    without the magical quality to transform into “one place” that which in fact
    is not. Yet, we cannot say that the provision for a physically-connected
    facility within 1, 850 feet of the central building is plainly unconstitutional
    on its face: nor can we say that the provision for two facilities separated by
    a short distance and operated as one integral business unit, although con-
    nected by a closed-circuit    television, is plainly unconstitutional on its face.

            We have searched the authorities in vain to discover some substantial
    legal guidelines which might serve to give a simple “yes” or “no” answer to
    the meaning and extent of “one place ” in the construction and application of
    our Constitution and the proposed statutes.    Unfortunately, such matters will
    necessarily have to be tried in a court of law and finally passed upon by our
    Supreme Court before we’can write with any certainty on these matters.        Since
    under the constitutional provision, which is self-enacting,   the question of
    “one place” is constitutionally a mixed question of law and fact, any ultimate
    finding of “one’ place” under the Constitution must take into account all of the
    relevant facts and circumstances pertaining to the doing of the banking busi-
    ness at “one place. ”

             The long standing policy of this office prohibits our passing upon any
    hypothetical questions or any mixed questions of law and fact which might
    conceivably arise in applying the proposed statutes to any given state of facts.
    Attorney General Letter Opinion W. W. March 9, 1959; Attorney General
    Opinions Nos. M-195 (1968) and M-307 (1968. ) Since the constitutionality
    of the location of such facilities must depend or turn upon the particular facts
    of each case, we are unable to render a simple “yes” or “no” answer to the
    questions propounded.

            Among the factors to which a court will give consideration in deter-
    mining whether the doing of the banking business is at the main banking house
    or place of business are (1) unity of operation, as to customer convenience
    and maintenance of its competitive position; (2) physical connection or lack of
    and the presence ,or absence of a pneumatic tube, tunnel or other passageway
    or connection between structures; (3) distance separating the main banking
    house and the “drive-in facility;” (4) number of intervening structures; (5)
    economic effect of the “drive-in facility” on the balance of competition between
    the competing banks. All of these factors will be considered and none will be
    conclusive or controlling.  Jackson v. First National Bank of Valdosta, 246



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         Hon. David W. Ratliff and Hon. Neal Solomon,    page 10     (M-849)



         F.Supp. 134. 139-140 (M.D. Ga. 1965, rev. on other ground, 344 F. 2d 71);
         State v. First Nat. Bank of St. Louis, 249 S. W. 619, 621 (MO. Sup. 1923.)

                                          SUMMARY

                          Proposed House Bill No. 566 and Senate Bill
                No. 409, 62nd Legislature,     Regular Session, 1971, pur-
                porting to expand the area or place of location of banks
                and the operation of their drive-in facilities,   may or may
                not be upheld as constitutional by a court, depending upon
                the facts and circumstances in a given case and the various
                factors to be considered by a court in determining whether
                the bank is doing business in “one place” in a city or town
                as contemplated by Article XVI, Section’ 16, Constitution
                of Texas.    The constitutionality of the location of such
                facilities must depend upon the peculiar facts of each case
                and involve a hypothetical mixed question of law and fact,
                which this office has no authority to resolve.




                                                        eneral of Texas

         Prepared by Kerns Taylor
         Assistant Attorney General

         APPROVED:
         OPINION COMMITTEE

         W. E. Allen,   Acting Chairman

         Houghton Brownlee
         James Quick
         James Broadhurst
         V. F. Taylor
         Max Hamilton

         NOLA WHITE
         First Assiatant


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Hon. David W. Ratliff and Hon. Neal Solomon, page 11   (M-849)



ALFRED WALKER
Executive Assistant

MEADE F. GRIFFIN
Staff Legal Assistant




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