Honorable Robert E. Stewart Opinion No. M-915 

Commiesloner 

State Banking Department 

John Ii. Reagan Building 

Austin, Texas Re: 

Dear Hr. Stewart: 

You have requested an opinion 

reads as follows: 

-4 

Branch Banking; Machines 

for the purpose of performing services (obtaining 

cash) by automation. 

from this office which 

II A Corporation, manufacturer of automated 

bank teller equipment, has submitted to this offlce 2 

the description and proposed use of a machine 

It Is referred to by the manufacturer as 'the automation of tradltlonal~services performed by bank 

tellersI. A full memorandum and ~exhlblts are attached 

describing &he procedures 

from 

resulting In (1)~wlthdrawals 

on the premises of the Issuing Bank and 

In (2>mdrawals not made at the Issuing Bank. 

"Please advise us whether ln the proposed transactions both.on and away from'the drawee bank premises 

the bank Is e'waglng lwbusln&s In moi%tban one 

place or iwcashlng checks outside Its noun banking 

house, *contrary .to the provisions of Article 16, Sectlon-~16-.of the Texas Constitution or'ArtXcle 342-903, 

Vernon'& Texas Civil Statutes.“. 

Article XVI, Section ,16 of the Constitution of Texas 

reads as follows: 

1-2 The name of the manufacturer, and the trade name of the 

machine are omitted throughout as shown by blank spaces 

where the context Indicates. 

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Honorable Robert E. Stewart, page 2 (M-915) 

"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 depositors and creditors thereof. 

"No such 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. 

"NO foreign corporation, other than the national 

banks of the United States, shall be permitted to 

exercise banking or dlscountln privileges In thls 

State. As amended Nov. 8, igOt; Aug. 23, 1937." 

A title 342-903, Vernon's Civil Statutes, as last 

amended, 5 reads in part as follows: 

"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 functionally one place of business, Including 

(a) 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 b 

pneumatic tube or other similar carrier, and (b 3 In 

addition, In a county having a population of at 

least 350,000 according to the last preceding federal 

census, If authorized in the manner hereinafter 

provided, 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 

1971, ch. 358, P. 1352, 

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Honorable Robert E. Stewart, page 3 (M-915) 

nearest wall of the central building but more than 

five hundred (500) feet therefrom and is connected 

to the central building by tunnel, passageway or 

hallway providing direct access between the central 

building and the connected automobile drive-in 

faclllty or by pneumatic tube or other similar 

carrier. The entire banking house shall for all 

purposes under the law be considered one Integral 

banking house. The term 'automobile drive-in facility' 

as herein used shall mean a facility offering banking 

services solely to persons who arrive at such facility 

In an automobile and remain therein during the transaction of business with the bank. . . ." 

From the Information which has been furnished with your 

request for an opinion, It Is reflected that the automated machines will be Installed and operated only on the premises where 

the bank which makes the machine available Is authorized under 

Its charter to engage In the banking business. 

It is set out In the documents furnished us with your 

opinion request that the machines will be operated and used 

as follows in dispensing cash to customers of each participating 

bank. 

"A bank wouid enter Into agreements with other 

-banks whereby each of the banks would encode the 

bank identification cards of certain customers to 4 

enable such customers to obtain cash from a 

Installed on the premises of each of the par-tlng banks. Each bank issuing ldentlflcatlon cards 

(the VIssulng Bank') would also enter into agreements with its customers providing that after money 

was dispensed to a customer the following would 

occur: 

"1, If the withdrawal was made from the 5 

on the premises of the Issuing Bank, the withdrawal: 

would be treated as any other checking account wlthdrawal by the customer by an appropriate debit to 

the customer's accou?t; or 

4-5 See Footnote 2, supra. 

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Honorable Robert E. Stewart, page 4 W-915) 

"2 . If the withdrawal was not made at the Issuing Bank, (k%) the transaction would be tre~ated 

as the cashing of a check drawn on the Issuing Bank, 

(b) the bank at which cash had been dispensed (the 

'Dispensing Bank'.) would tranemgt the transaction 

slip prepared by the through normal 

clearing channels to fhe Issuing Rank, (c) the 

Issuing Bank would debit the customer's account 

for the amount of money dispensed If .a sufficient 

balance was available, Andy (d) If the customer's 

checking account at the Issuing Bank contained lnsufficient funds, the Issuing Bank would return 

the transaction slip to the Dispensing Bank unpaid 

and the Dispensing-Bank would have to seek collection from the customer. 

"In either case, the cash withdrawal Is the 

essential equivalent of cashing a check, drawn on 

the Issuing Bank, at either the Issuing Bank or a 

Dispensing Rank. 

"If the participating banks are members of a 

bank credit card association such as Master Charge 

or BankAmerlcard, the customer could be permitted 

to elect to have his withdrawal either 'credited' 

(sic) against his checking account at the Issuing 

Bank or treated as a cash advance under the rules 

of such credit card programs." 

It therefore appears from the facts submitted, that the 

use and operation of an automated machine in the manner above 

set out would be In conformity with normal banking operations, 

(such asp a bank teller would perform In cashing a check) and 

the use of such automated .machines on the premises of participating banks would not be In violation of Article XVI Section 

16 of the Constitution of Texas, supra, and Article 34%903, 

supra. 

SUHHARY 

The use of automated machines In dispensing 

cash, on the premises of a banking house, under 

b See Footnote 2, supra. 

-4463- 
Honorable Robert E. Stewart, page 5 (M-915) 

the facts submitted, would not violate Article 

XVI, Section 16 of the Constitution of Texas or 

Article 342-903, Vernon's Civil Ststutes. 

YoursZery truly, 

Prepared by John H. Banks 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

W. E. Allen, Co-Chairman 

2. T. Fortescue 

Dyer Moore 

Jim Swearlngen 

Jack Goodman 

MEADE F. GRIFFIN 

Staff Legal Assistant 

ALFRED WALKER 

Executive Assistant 

NOLA WHITE 

First Assistant 

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