Honorable Jno. '4. McBdama, 

comiss ioner 

Dapertmqmt of Banking 

Austin, Texaa 

Dear ?kr. &Adams: 

opinion Ho. o-5134 

Re: Whether or not reports, documents, instruments, or information in possession of ,tbe:~,~ 

Banking Commissioner of TV&& 

with respect to loan and brokerage companies doing busf?,::: 

ness in Texas are privileged 

matters. 

Yom request for, an opinion upon the above-captioned subject 

matter is as follows: 

“A suit has baen instituted >y the Securities and Exchange 

Commission against Investors Syndicate of America, Inc., and Investors 

Mutual, Inc., in the Federal Court at Mime&3lbs, Minnesota. The 

exact nature of the charges contained in the complaint have not been 

communicated to this Department. Representatives of the Securities and 

Exchange Conamission have presented themselves to this office requesting 

certain information relating to the business of these concerns within 

this State. These Representatives have requested amwers to the following: 

"1. Number of Investors in Texas holding debentures issued by Investors 

Syndicate. 

"2 . The amount of oUtstandi<& certificates In Texas. 

“3. The amount if any, of deposits made by the Invest&a Syndicate 

within this State to secure certific&es issued i&Texas. 

"4. The type of certificates sold in Texas or authorized to be sold. 

#The information which this Department has in its file is COIlIposed of annual statements filed by this condarq pursuant to the provisions of the statutes of this State, monthly statements submitted to 

the Department pursuant to the provisions contained in a trust agreement 

entered into by and between the Investors ,Z,yn$icate.ind the ,Guardian 

Trust Company, and the examination reports, which have been epared 

by examiners representing this Department making periodic examinations 

ss are required by law. A copy of such trust agreement is also on file 

in this office pursuant to the provisions of the statute and copies of 

the kinds of debentures issued are attached to and a part of this trust 

agreement. 
Honorable Jno. Q. &Adams, page 2 (o-5134) 

"In view of the requestvhich has been made and the facts above 

recited we desire to have your answers to the following questions: 

"1. Is the information contained in the foregoing documents 

on file in this department privileged or confidentail? 

"2. Would the Banking Commissioner be authorized under the 

law~to disclose to the representatives of the Securities and Exchange 

Commission anawera to the questions which they have propounded, the 

anawers to be compiled from the%uments and papers above described? 

"3. In the event that the Department should determine that the 

interest of the Securities and Exchange Commission and those of Texas 

investors are aonflicting would the Department be authorized to deny the 

representatives of the Securities and Exchangs Commission such information 

as it may desire?" 

"Th< question of the right of public inspection of the documants, 

papers, files, records and instruments whatsoever, constituting the files 

and archives of a State department is a const@&y recurring one, and 

ardses under a multiplicity of fact situations. In many iwtancer the 

Legislature has prescribed a privilege or qualified privilege with respect 

to such mattars, and in others it has not done ao. In all oases, however, 

there is present as a consideration the public interest involved in a 

disclosure with respect to such matters. 

Investors Syndicate of America, Inc. is a loan and brokerage 

companf, organiaed under tha laws of Minnesota, and doing business in 

Texas, under Article l52ka, Vernon’s Civil Statutes of Texas. This 

Article provides for examination of such corporations by the Banking 

Commission, (Sec.>), the publication by the corporation of certain 

statements, (Sec. &), a submleaion by the corporation to the Banking 

Commissioner for apqoval certain deposits of securities for its bonds, 

notes, certificates, debentures, and other obligations, and shall submit to the banking Commissioner for his approval specimen copies of such 

bonds, notes, certificates, debentures, or other obligations, to be 

offered for sale to the public, (Sec. 7), and requires the corporation's 

officers,, directors, employees and agents to execute certain fidelity 

bon&, (Sec. 3). 

The various provisiona of the Act are made to apply to foreign 

corporations having permission to do business in Texas, (Sec., 10). 

Wow, the statute, vhile authorizing the banking Commissioner 

to exam&e or cause to be examined such corporations, doas not in anywise deal with the question of the privilege of such examiner's reports. 

There is no statute, so far as we have been able to discover, that 

bears upon the privilege of examiner's reports, or upon the other statemants, instruments or information mentioned by you. So that, the matter 
Honorable Jno. 8. McAdams, page 3 (o-5134) 

must be determined according to general law, and in the light of public 

policy. 

In the absence of statute--the authoritative public policy of 

the State--no public officer should at any time do any act that would be 

harmful to the public interests. Such officer, therefore, is always 

clothed with a certain discretion in such matters as we are considering. 

Where no statute supervenes, and where no public interest could be prejudicially affected, there is no reason for denying the right of the 

public to inspect the records, files, documents, and the like archives 

of public offices or departments. Where there is reasonable probability 

of injury or hurt to the public interests, however, the custodian of such 

archives should deny the right of public inspection. 

We discussed these general principles in Opinion No. 0-4610, 

addressed to you, concerning a State bank in liquidation. 

We also discussed the principles applicable to situations 

where there were not pertinent statutes in Opinions Nos. o-2044, 

O-3755 and 0-3987, copies of which opinions we are handing you herewith. 

Article 3722 of the Revised Civil Statutes makas it the duty 

of certain public officers, including the Banking Commissioner, to 'furnish any person applying for the same with a copy of any paper, document 

or record in their offices, and with certificates under seal, certifying 

to any fact contained in the papers, documents or records of their 

office-.? This Article, however, is to be considered in the light of what 

wa have said with respect to privileged instruments or information. In 

other words, the statutory and other --tablished rules of privilega, and 

this statute of evidence (Art. 3722) must be considered together and not 

as being in anywise contradictory or inconsistent; each must be respected. 

In considering the question of the public interests involved in 

your present situation, .youwill of course bear in mind that the inquiry 

and request come from a department of the Government itself. 

You are thesefore respectfully advised that it is entirely 

within your official disbretion to supply the information requasted, or, 

if in that disoretion you th'nk it would be inimitable to the public 

interests; to deny such request. If you should exercise your discretion 

against granting the inspection, the matter would be subject to judicial 

review for any abuse of such discretion. 

APPROVED JCL 20, 1943 

Croover Sellers 

&lET ASSISTANT 

AlTORNEY CWERAL 

CS-WR:br 

Very truly yours 

All'ORWEY cTEmRAL OF TEXAS 

BY /s/ Ocie Speer 

@ie Speer 

Assistant 

EWCCLOSWE