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 themanufacturer as 'theautomation of tradltlonal~servicesperformed by bank tellersI. A full memorandum and~exhlbltsare 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. "Pleaseadvise 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 Itsnounbanking house,*contrary .tothe 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. -4460-HonorableRobert E. Stewart, page 2 (M-915)

"The Legislature shall by general laws, authorize the Incorporation of corporate bodieswith banking and discounting privileges, and shall provide for a system of State supervision, regulationand control of such bodies which will adequatelyprotect 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 placewhich shall be designated In its charter.
"NO foreign corporation, other than the national banks of the United States, shallbe 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 'bankinghouse' 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 facilitywhose nearest boundary Is located within one thousand eight hundred fifty (1,850) feet of the

1971, ch. 358, P. 1352,

-4461-Honorable Robert E. Stewart, page 3 (M-915)

nearestwall of the central buildingbut more than five hundred (500) feet therefrom and is connected to the centralbuilding by tunnel,passageway or hallwayprovidingdirect access between the central buildingand the connected automobiledrive-in faclllty or by pneumatic tube or other similar carrier. The entire banking house shall for all purposesunder the law be considered one Integral banking house. The term 'automobiledrive-in facility' as herein used shall mean a facilityofferingbanking services solely to persons who arriveat such facility In an automobile and remain thereinduring the transaction of businesswith the bank.

. . ."
From the Informationwhich has been furnishedwith your request for an opinion, It Is reflected that the automatedmachines will be Installed and operated only on the premiseswhere the bank whichmakes the machine available Is authorized under Its charter to engage In the banking business.

It is set out In the documents furnishedus with your opinion request that the machines will be operatedand used as follows in dispensing cash to customers of each participating bank.
"Abank wouid enter Into agreementswith other -banks whereby each of the banks would encode the bank identificationcards of certain customers to 4 enable such customers to obtain cash from a Installedon the premises of each of the par-tlng banks. Each bank issuing ldentlflcatloncards (theVIssulngBank') would also enter into agreements with its customers providing thatafter money was dispensed to a customer the followingwould occur: "1, If thewithdrawal was made from the 5
on the premises of the Issuing Bank, thewithdrawal: would be treated as any other checkingaccount wlthdrawal by the customer by an appropriatedebit to the customer'saccou?t; or

4-5 See Footnote 2, supra.-4462-Honorable Robert E. Stewart, page 4 W-915)

"2
. If the withdrawal was not made at the Issuing Bank, (k%)the transactionwould be tre~ated as the cashing of a check drawn on the Issuing Bank, (b) the bank at which cash had been dispensed (the 'DispensingBank'.) would tranemgt the transaction slip preparedby the throughnormal clearingchannels to fhe IssuingRank, (c) the IssuingBank would debit the customer'saccount for the amount of money dispensed If .asufficient balancewas available, Andy(d) If the customer's checkingaccount at the Issuing Bank contained lnsufficientfunds, the Issuing Bank would return the transactionslip to the DispensingBank unpaid and theDispensing-Bankwould have to seek collection from the customer.
"In either case, the cash withdrawal Is the essentialequivalent of cashing a check, drawn on the IssuingBank, at either the IssuingBank or a DispensingRank. "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 thereforeappears from the facts submitted, that the use and operationof an automated machine in the manner above set out would be In conformity with normal banking operations, (such aspa bank teller would perform In cashing a check) and the use of suchautomated .machineson thepremises of participating bankswould not be In violation of Article XVI Section 16 of the Constitutionof 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-HonorableRobert E. Stewart, page 5 (M-915)

the facts submitted,would not violateArticle XVI, Section 16 of the Constitutionof Texas or Article 342-903,Vernon's Civil Ststutes. YoursZery truly,

Prepared by John H. Banks AssistantAttorney General APPROVED: OPINION COMMITTEE KernsTaylor, Chairman W. E. Allen, Co-Chairman 2. T. Fortescue Dyer Moore Jim Swearlngen Jack Goodman
MEADE F. GRIFFIN Staff Legal Assistant
ALFREDWALKER ExecutiveAssistant
NOLA WHITE First Assistant

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