*
                                              OFTEXAS




        Han, J, ha. F8lk?st&                          Opinion No. V-1046,
        Commissioner
        Department   of BarM8g                        Re:   The leg#ity of a bank’s, main-
        Austin, Texas                                       taining deposit facilities in a
                                                            garage building attached   to a
                                                            bank buildirq by a tunnel be-
        Dear     Hr.    l?aIknax:                           low the street.

                           In your letter re*werting        our opinion retative   to the cq-
        tioned    matter      yau state that

                         “A bak poeertly       operating ia a bank house own-
                 ed by It desires    to construct     an appropx’iate     garage
                 buildin    on another lot directly acrass        the street from
                 its preseat   h&ins    house and the kra@e building is to
                 be psrmano#ly UJ rtxucturally           rttached    to the preeeti
                 kdr buitdi      by a Ural      suitable   fur peraa@ back and
                 farth, aad w s 11 c*n&ia    ti *&c-in     J4p&it     win&w    4r
                 windowd. l’

                           You have igluired whethtr    thi4 plan contrrvenee  AMel*
        XVI, Section        16, of the Texas Constitution,   or Chapter IX, Article 3,
        of the Texas        Banking Code of 1943.



.
                        “The l,@nlature    still          by pnsv,pl Irrro net&mire
                 t&t incovpaa;rtioa  d csrgrrate           Mtes    with banking rnd
                 dbWOUfltio&        pliVi!XaO4,   I , .




    .
                          Chapter ZX, ATtG~tca 3, 6f the Scns          krnlt%ng Ctdt   d 1*)3.
        emWed          ~a Article 343-7@3, V.C.S,,, prouidsa:

                         264 tPtat4, tmtiona1 u p&8&t bank shell engay#e
                 in bueir#tm in 18ec than me Ma,      nraiaitafn any bran&
                 office, or wh checks m receive depesits       excspt in #B
                 own t+nkitq hause. ”
    Ho,n. J, M. FaJkner,             Page      2 (V-1046)



                  The exact purpose of the foregoing Article is to ptohib-
    it branch banking,   This ie clearly indicated in its caption, where
    it is provided that it is:

                       ““Anact to accomplish    the constitutional directive
             enpressed       in Article XVI, Section 16, . ~ ~ . This Act
             ~ ~;‘.... prohibits branch banking, ~ o *”

                       It is said in Banks and Baokiq,            Zollman,   Pcrmawnt
    Ed&i&,        .volume 2, tictie*    1275, that:
              7
                    “‘Branch banks are not mere ‘teller’s   windows,’
             hmt mxc SQ many integral parts or office6 * sgencies
             *f d+count   belonging to the metker corporation.  ”

                      We do nat &ink what is proposed te be done by tht b~rdt
    fo quest&a       comes wait&a the conaCihutiona1 oz s&atutorp inbibitians
    lpplicabh       to branch bankin&

                    Three excellent annotations    en the constituent   elements
    ,of brarich,b~nking    art found in 30 A.L.R. 927, 50 A.L.R. 1340, and
     136 A.L.R. 491. A Kentucky cbst, which goes even further than we
     ecuAd attcmprt or need lo do lo lYASW’OTthis question,       is Marvin ~$I,
             cky Title, Tsust Co., 218 Ky* 133, 291 S.W. 17 (Ky. Ct. App.
            ; In Kantuclay; branch.balJrina    had been held unauthoriwd      WI-
     dar their dpplicabk      statute.’ In t&cast   cited, the question arode
    (10 tcthe authority of a licensed bank to open a stpratc          offict to
     receive    depoeits SUMIcash checks, and nothing more, for customers
     d tht principal bank. The Court siid:

                   “We bavt held that a bank organietd    under the
           ,:@w$ & this State has no rigki to establish a branch
           bank. 5zuner Y. Citizens’ I3ank, 134 Ky. 283, 120 S.W.
          ~345. B&h parties conctde the MPding fwrce of this o-
            pioioa, the centroverted   question being OS to whether
           app61166’6 plan to open office6 fclr the receipt of depes-
            it6 ad pplnrnt    of checks will corwtitute the estrblish-
.         .mirrt’Bd branch kahltr, PO that tbt case may ba said to
             hart3 uw         the dd&diirn         wf knki?A&   e6 e
                      I!
                      e *   We think the e o . dtfinition from Warrtn
                          0 ‘

             vr s-k,     6uprai pecu~iiarly apt; ‘Hsving a p&ace of busi-
             IDIWSrbe~e de-sits     am received 6nd paid out on checks,
             lcul whtke monty is 1tPsned upon recurity,      is t&e sub-
             @t@aCt        od the   bUBinW66     Ot 6 bWhk6r.

                    “#Cfrlkws      that tht proposed plan does not fall
             viMa    the itikibition ef tke Bruaer Case, au#a, (LS to
             t&e totablirhment      of branch baak6, nm d-6    it conflict
                                                                                    .          .

                                             i
r



    Hoa. Jo. M. Falkner,       Page   3 (V-1040)



              with th8t 0piAon tn any other paoticular,        Baaks are
              the depositor l&e of moe t of the funds of the country,
              end the above decision is base.& on the prix%ciptW that
              they axe quasi public institutions established        and regu-
              lated by statate.    The safety of the funds is caseflilly
              guarded, and this calls far the exercise       of discretion
              and direct control upon the part of the d&rectors and
              chief ofhors     in the matter   of Ibone, discounts,    invest-
              moats, sad other like duties.       Branch be&s in effect
              carsy aa the s&me bueinees as that conducted by the
              parent inetitalioa    wi,thout being subject to the safe-
              pwsds thrown arolrmd the establishment         and adminis-
              tration of tb# I&t&c, and therefore      such brenches are
              oat mly unauthorized by the statate but impliedly inhib-
              tted by it. That opiaion, however, s~pressly         recognices
              cbc r&g&t of a bnk to ‘have, as many duly lppcrinted a-
              ~#ents *S dtr neds require;~end theBe qents,          bmong oth-
              m tblngs, may xeceive amt forward to it at its place of
              bunhers    tha money d parsons who desire         w deposit                  ,
              w+$b it. ’

                      “In principle t&e same rule would apply to agents
              who merely receive deposits and pay out cheeks on de-
              mmd, dutisc that am incidental             to the business,    but
              which do net require special disctetion             and business
              wzumen. Tfm peyling tdller et a bbnk should have a tech-
              ~%rwled#e            of h&ndwriting and be able to detect
              forgeries    and identify limtrPtsr6,       and both he and tho
              recafvfng    teller should be eccur&Le in their calculations.
              But: wither     of these apots,     COI\ loan money ‘or invest
              Fhe banktng funds, and the fact that these .       .

                                                                                      ._
                                                                                           .

    Han, J, h4, Falkner,     Page   4 (V-1046)




                   ‘Al0 state, nationat or private bank sfbsll p I .
            c.ash checks or ‘receive’ deposits except in ite own bank-
            ,inghouse, ”

                 If the new structure,   wheubuilt, becqmes a part of the
,,.Bujk’s   ‘“banking house” tti    the proposed pLn will not viblate the
   ;I@ovieions- of aaid Article.       ;

                  T&a contamplatad     new structure,    although to be erect-
   ed across    the 8~~4   from the original      ‘@banking house,” will be
   physically joined thereto by a tunnel under the street, which you
   sfate will be suitable for, passage back and forth,, It is evident that
   besides being;‘joinad physically,     the new structure,       including the
   passageway,~~iII    be in &ore proximity       to the present’building.      It
   will be used in oeamction     with the ori&nal      building and as a unit
_LwilI be devoted to one general, common purpose.              It is OUB opinion
   &+t tlae two ,@=ucturss will in seallty be one and when used in the
.: inner     pxoposed,wiLl constituttr    the bnk’s    “banki~      houee. ” To
   h$Stl that said Article  Pequices deposits to be axade in a bank’s orig-
   ipl banking building, and not in an addition thereto would sacrifice
   fRe’~real spirit of the law to pure IitecalLm.

                  This   opinion is macessarilpEtmited to the factual        eitoa-
    tion presented.

                                    SUMMARY

                   A uew ‘dtmchure erected acros~s the steeet Srom
            a~baakPs .?mWag      base”   sad connected therewith by a
            tubiml ‘s&able  S&T passage    back and forth   and used-to
            receive depoits    does not conlmavenc     the provisions   of
            ArtMa    XVI, Section   16, of thtr Texas Constitution,   nor
            of Artkc~ 341-903;V.C,S.,       relative to bsaacb bank&g
            or t*e mceiviag   of depoeitr    by a bank at   a place other
            olmo~uq LenbkiIagrwuse,

                                                      Yours    VeEy tmly,

                                                       PRICE DANIEL
                                                      Attorney Ctnwal


    APPROVEIT:
                                                      -’ w. v,. Gepperi .
    Joe Greenhill                                               Assistnut
    First Assistant

    PrLe    Daniel
    Attorney   Genesal


    WVG/mwb