Honorable P. Frank      Lake               Opinion No.   WW-1463
Secretary of State
Austin 11, Texas                           Re:   Whether the Secretary     of State
                                                 should accept and file the appli-
                                                 cation of a foreign national bank
                                                 for a certificate  of authority to
                                                 transact business in Texas under
                                                 the stated purpose clause.

Dear Mr.     Lake:

       You have requested the opinion of this office concerning your authority
to accept and file the application of a foreign national bank (the State National
Bank of Texarkana,    Arkansas)    for a certificate of authority to transact busi-
ness in Texas,   for the following purpose or purposes,      pursuant to the follow-
ing provisions  of Article   1513a, V. C..S. :

           “To act as trustee,  executor,    administrator,     or guardian
      when designated by any person,      corporation,   or court to do so,
      and as agent for the performance      of any lawful act including
      the right to receive deposits made by agencies        of the United
      States of America for the authorized account of any individual. ”

        While this precise question has not previously   been passed on by this
office,   Opinion No. WW-511,      dated October 6, 1958, held that the Secretary
of State should not accept and file an application from a foreign state bank for
a certificate   of authority to transact business in Texas by qualifyingunder
Article   1513a, because of the following provisions   of Article 342-902  of the
Banking Code of 1943:

           “It shall be unlawful    for any person, corporation,        firm,
      partnership,   association    or common law trust:

           “(1) To conduct a banking or trust business    or to hold
      out to the public that it is conducting a banking or trust
      business;  or

             “(2)   To use in its name,     stationery or advertising,     the
      term     ‘bank, ’ ‘bank and trust,   ’ ‘savings bank, ’ ‘certificate   of
Honorable   P.   Frank   Lake,   page 2    (WW- 1kw)




       deposit, ’ ‘trust’ or any other term or word calculated to
       deceive the public into the belief that such person,  cor-
       poration,  firm,   partnership, association, common law
       trust, or other group of persons is engaged in the banking
       or trust business.

            “Provided,   however,     that this Article shall not apply to
       (1) national banks;    (2) state banks;   (3) other corporations
       heretofore   or hereafter    organized under the laws of this state
       or of the United States to the extent that such corporations
       are authorized under their charter or the laws of this state
       or of the United States to conduct such business or to use such
       term; . . .‘I*

        Opinion No. WW-511    further held that Article   1513a operates to over-
ride or repeal by implication    those portions of Article 342-902   which would
prohibit foreign companies from doing a trust business in Texas or from using
in its name the word “trust, ” insofar as such foreign corporations      are con-
cerned.    This holding was based upon the basic purpose of Article 342-902
and its predecessors,    which is to prevent the public from being deceived into
believing that the entity involved was authorized by law to perform the activ-
ities indicated by its name.

       We emphasize      this reasoning   by the following   quotations   from   Opinion
No.   WW-511:

             “We call attention to the language in Section 2 that it is                .
       unlawful for ,any person,   etc. , ‘to use in its name. . . the
       term.   . . “trust” or any other term or word calculated to
       deceive the public into the belief ,that such person (etc. ). . .
       is engaged in the. . . trust business.    ’ We further call atten-
       tion to the language of the emergency      clause in Senate Bill
       343 of the 1957 Legislature    amending 342-902     as follows:

            “‘The fact that under existing law the people of this
            state are subject to misleading   advertising and other
            deceitful practices  calculated to deceive the public
            into the belief that certain unauthorized persons or



       *Emphases    throughout   are supplie,d.
Honorable   P.   Frank   Lake,   page 3   (WW-1463)



            groups of persons are under the strict supervision     of
            the State Banking Department,     when in fact the protec-
            tion afforded by strict supervision  does not exist,
            creates an emergency.    . . ’

             “It is apparent that the prohibition against using the name
       ‘trust’ is directly tied in with and a part of the prohibition against
       ‘conducting’ or to”hold out.. . that it is conducting’ a trust busi-
      ness.     The evil legislated  against in Section 2 of Article  342-902
      was the deception to the public which occurred when a company
      used the name ‘trust’ in its title when in fact it was not entitled
      to engage in the trust business.       That evil will not occur in the
      case of a foreign corporation      obtaining a permit under the terms
      of [Article    1513a] as such a corporation     would be authorized to
      engage in the trust business and would not be deceiving the pub-
      lic byusing the name ‘trust’ in its title. ”

By substituting the word “bank” for ,t’trust” in the mater~ial just quoted, it
becomes   obvious that the same reasoning applies to prevent the use of the
word “bank” by a foreign corporation      not authorized to engage in the bank-
ing business in Texas.      This result and the prohibition against it is succinctly
expressed   in the following paragraphs    quoted from Opinion No. WW-511:

            #I[Article 1513a] should be limited in its overriding effect
      to the subject matter above, there being no provision in [Article
      1513a] which would allow a foreign corporation     to come into the
      State and do a banking business.     The use of the term ‘bank’ in
      the title of such a corporation  would be deceptive and would
      violate Article 342-902.

            “In answer to your first question we hold that a foreign cor-
      poration with the name ‘Bank’ in its title may not obtain a permit
      to transact business  in this State. ”

       The applicant considered   in this opinion, a foreign national bank, urges
that Opinion No. ,WW-511    does not apply to it because of the exemptions    con-
tained in the second paragraph of Section 2 of Article     342-902, quoted above.
We are of the opinion, however,     that this contention is without merit for the
reason that the exemptions   there listed apply only to national banks and other
corporations   organized under the laws of the United States, which are located
within the State of Texas,  and do not purport to exempt foreign corporations
Honorable   P.   Frank   Lake, page’4    (WW- 1463)




of this nature from the deceptive practices     prohibition contained in Section
2 of Article   342-902.  This   is apparent from  the following provisions of
Articles   342- 101 and 342-908:

            “This code provides a complete system of laws govern-
      ing the organization,  operation, supervision  and liquidation
      of state banks, and to the extent indicated by the context,
      governing private banks and national banks domiciled in this
      State;”

            “It is not the intention of the Legislature   in the enact-
      ment of this Code, to discriminate       bettieen state banks and
      national banks, and, to the extent that the State of Texas has
      power to legislate with reference      to national banks, each pro-
      vision of the Code shall apply alike to state banks and national
      banks domiciled in this State.      Acts 1943, 48th Leg.,    p. 165,
      ch. 97, subch. IX, art. 8. ‘I

Obviously,    the Legislature  intended to exempt from the prohibition of Article
342-902   national banks and other corporations     organized under the laws of
the United States, domiciled in this State, having the right to exercise    the
powers indicated by their names; but, equally obvious is the conclusion that
the Legislature    intended to prohibit any corporation from using any word or
any combination of words in its name which would tend to mislead the public
into believing that the corporation    was authorized by law to perform acts
which it in fact did not have the power to perform.in      Texas.

       Such an intent is supported by~opinion R-2076,     dated June 8, 1950,
which held that the Secretary   of.State was authorized to grant a charter to
the Bank Investment Company,       Inc. (organized under Article   1303b), since
the use of such name would not indicate to the public that the corporation      was
conducting a banking business.      Opinion No. .R-2076 held that Article 342-902
should not be given a literal construction    which would lead to absurd results s
and gave the following examples     of corporate names which might be in viola-
tion of the law under such a strict construction:    Cut Bank Refining Company;
Red Bank Refining Company of Illinois;      Bankers  Life Assurance   Company;
Bankers Life Company; and Dallas’ County Blood Bank.         However,    Opinion
R-2076   concluded as follows:

           “This opinion is not to be construed as holding that a
      charter or permit may be granted by the Secretary    of,State to
      any corporation  where the use of any of the forbidden words
              -




Honorable     P.   Frank   Lake,   page .5   (WW- 1463)




      in the corporate name would violate the provisions        of Article
      342-902  by enabling such corporation to hold itself      outs to the
      public as being engaged in a banking business.  11

       Since there is no provision   of law which authorizes  a foreign corpor-
ation to come into Texas and do a banking business,      we are oft the opinion
that you are prohibited,   by the terms of Article 342-902,   from accepting
and filing the application of a foreign national bank for a certificate  of
authority to transact business in Texas under the purpose clause of Article
1513a.

       Although the foregoing is sufficient to require your refusal of the
application,  we desire to reply to the applicant’s  contention that, having been
granted power to act as trustee,    exe,cutor, administrator,   guardian of estates
and in other fiduciary capacities   under 12 USCA 248(k), it may now come into
Texas and conduct a trust business under Article      1513a.   Title 12, USCA,
Section 248(k), reads,   in part, as follows:

              “The Board,of    Governors of the Federal   Reserve   System
      shall    be authorized   and empowered:

            l’(k) To grant by special permit to national banks apply-
      ing therefor,   when not in contravention    of state or local law,
      the right to act as trustee,   executor,  administrator,     regis-
      trar of stocks and bonds, guardian of estates,       assignee,    re-
      ceiver,    committee of estates of lunatics,    or in any other
      fiduciary capacity in which State banks, trust companies e or
      other corporations   which come into comoetition       with national
      banks are-permitted   to act under the laws of the State in which
      the national bank is located.

           “Whenever    the laws of such.State authorize or permit the
      exercise  of any or all of the foregoing powers by State banks,
      trust companies,    or other corporations  which compete with
      national banks, the granting to and the exercise   of such powers
      by national banks shall not be deemed to be in contravention
      of State or local law within the meaning of this chapter. ‘1

From a reading of this section,  it is apparent that the grant by the Board of
Governors is limited to the state ‘Iin which the national bank is located, ‘1 and
Honorable    P.   Frank   Lake,   page 6    (WW-I&3,)




therefore,   such a grant to a national bank located in Arkansas  cannot sup-
port its attempt to conduct a trust .business in Texas.   Boatmen’s  National
Bank of St. Louis v. Hughes,     385 Ill. 431, 53 N.E. 2d 403, 153 ALR 402
(1936).

       Since the applicant represents    that it desires to act in a fiduciary
capacity in the State of Texas  , we  direct  its attention to Section 105a of the
Texas Probate Code, (Acts 57th Leg.,        R.S.,   1961, Ch. 31, p. 46).



                                   SUMMARY

                  The Secretary   of State should not accept and
            file the application of a foreign national bank for a
            certificate  of authority to transact a trust business
            in Texas under the terms of Article     1513a, V. C.S.



                                               Yours    very truly,

                                              WILL WILSON
                                              Attorney General        of Texas



                                                                      A%%sb
                                                        Dudlev b. McCalla
                                                        Assistant Attorney   General


DDM:lmc

APPROVED:

OPINION     COMMITTEE:

W. V. Geppert,      Chairman
Bob E. Shannon
J. C. Davis
Arthur Sandlin

REVIEWED    FOR THE ATTORNEY               GENERAL
BY:  Leonard Passmore
