f          -




                       T~~A~TORNEYGISNERAL
                                          OF     TEXAS

                                     AUSTIN.     .,?SXAS      78711




                                                 August    21,   1974


    The Honorable Roy W. Mouer                                   Opinion   No.   H-   376
    Securities    Commissioner
    State Securities   Board                                     Re: Whether person making
    704 State Finance Building                                   secondary    sale of savings
    Austin,    Texas                                             association   stock is required
                                                                 to be registered   as dealer
                                                                 under Securities    Act and
                                                                 related questions.

    Dear Mr.        Mouer:

           You have requested our opinion on the following questions                        regarding
    permanent reserve fund stock issued by savings association:

                           1. Is a person or company making secondary
                           sales (i. e., sales other than by the issuer) of
                           savings association    [permanent reserve fund]
                           stock required to be registered    as a dealer or
                           salesman    under The Securities   Act, (Article
                           591-1, et seq.,   V. T. C.S.), if not otherwise
                           exempted from registration     by Section 5 of
                           The Securities   Act?

                           2. Are sales of sayings association    [permanent
                           reserve fund] subject to the anti-fraud   provisions
                           (Sections 23.A, 29. C, 32 and 33.A) of the Securities
                           Act?

                 Section   11. bl of Article   85Za,   the Savings      and Loan Association
    Act,       reads:




                                                  p.   1766
The Honorable   Roy W.    Mouer    page 2          (H-376)




                     Savings associations,    the officers, employees
                or agents,   savings accounts and the permanent
                reserve   stock thereof,   and the sale issuance  or
                offering of savings accounts and permanent reserve
                fund stock of any association     or Federal savings and
                loan association   are hereby exempted from all pro-
                visions of law of this State, other than this Act,
                which provide for supervision,      registration or regula-
                tion in connection with the sale, issuance or offering
                of securities, and the sale, issuance or offering of any
                such accounts or stock shall be legal without any action
                or approval whatsoever     on the part of any official,
                other than the Commissioner,       authorized to license,
                regulate,   or supervise  the sale, issuance or offering
                of securities.   (Emphasis added)

         Your questions are prompted by an apparent conflict between this
provision   of the Savings and Loan Act (Acts 1963, 58 Leg., ch. 113, p. 269)
and its caption.

        The Texas Constitution,    Art. 3, Section,5,   requires  that the title
or caption of a bill give notice of its contents.   This provision insures
that the Legislature  and the public will not be misled and inadvertently
allow the passage of unintended legislation.

        The caption   to the Savings   and Loan Act reads    in part:

                 . . . exempting savings accounts from securities
                 laws; . . . providing that outstanding shares,    stock,
                 share accounts and i,nvestment certificates   (excep_t
                 Permanent Reserve    Fund Stock) shall be considered
                 as savings accounts;  . . . (emphasis added).

Notwithstanding  the emphasi,zed language,    Section 11.01 also purports to
exempt reserve fund stock from the securities      laws of the state.   In our
opinion, the caption and a porti,on of Section 11.01 are in irreconcilable
conflict.




                                       p.   1767
The Honorable    Roy W.   Mouer    page 3    (H-376)




        Only that part of the act in direct conflict with the title is void unless
the “invalid parts are inextricably  interwoven in the texture of the Act so
as to render the entire Act invalid. ” Fletcher v. State,      439 S. W. 2d 656,
659 (Tex. 1969);   Hayman Construction     Co. v. American    Indemnity Co..,
471 S. W. 2d 564 (Tex. 1971); State v. Blackwell,    500 S. W. 2d 97 (Tex.
Crim.   1973).  The inclusion or exclusion of permanent reserve fund stock
in the exemption provision   does not affect the rest of the Act.

          ,If having struck the unconstitutional    part, the result ia broader
legislation    than originally  enacted,  the whole act must fail. Texas-Louisiana
Power Co. v. City of Farmersville,           67 S. W. 2d 235 (Tex. Comm. App.
1933).    In the present case the removal of permanent reserve fund stock
from the exemption of Section 11.01 results in narrower legislation.           The
Act contains a severance       clause.   We think the courts would view the
caption defect as voiding only that which is in conflict with the caption,
but as not affecting the rest of the Act.

         The Securities    Act, Article 581-1, et seq.,   V. T. C. S., applies to
all transactions   involving permanent reserve fund stock.        Persons   making
secondary    sales of savings association   permanent reserve fund stock may
be required to register     thereunder,  and the anti-fraud   provisions  of that
Act may be applied to such sales unless specifically        exempted by Sections
5 and 6 of the Securities    Act.

                                  SUMMARY

                    Section 11.01 of the Savings and Loan Act, Article
                852a, does not exempt savings and loan permanent
                reserve fund stock from otherwise applicable provisions
                of the Securities Act.   Article 581-1, et seq., V. T. C.S.

                                                  Very   truly yours.




                                     p.   1768
The Honorable   Roy W. Mouer   page 4          (H-376)




APPROVED:




DAVID M . KENDALL,      Chairman
Opinion Committee




                                   p.   1769
