. 1 ,

E IFTEXAS AGSTIN. TEXAS 78711 September 10, 1970

HonorableBruce Gibson Commissioner Credit Union Department 900 CongressAvenue Austin, Texas 78701

Dear Mr. Gibson: Opinion No. M-688 Re: Questions relative to whether the duties set forth in Article 2461, Sec. 12(b), (17), Vernon's Civil Statutes, are mandatory or permissive.
Reference is made to your letter in which you request an opinion from this office as to the captionedmatter. We quote from your letter, in part, as follows:

"Followingthe recodification of the Credit Union Laws of Texas which became effectiveMay 13, 1969, various Credit Unions under this Department'ssupervision have expressed concern as to the legal intent of a particularduty of the B,oard of Directors of their Credit Unions. You then request our opinion to the followingquestions: 

### (1)

(2)
(3) Is the duty set out under Articles 2461-12(b) and 2461-17, V. C. S., permissiveor mandatory? This is a new provision in the currentAct and, if mandatory, could result in a distincthardship on many of the smaller credit unions. ;f,;Fe answer to (1) above is 'permisthen are any of the subsections of Article 2461-12(b) also permissive? If the answer to (1) above is 'mandatory' then are any of the subsectionsof Article 2461-12(b)also mandatory?

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It is noted that Article 2461-12, Vernon's Civil Statutes, the Credit Union Act, pertains to the board of directorsof credit union organizations. It is comprisedof two subsections, with subsection (a) providing as follows:

"The board of directors shall have the general directionof the affairs, funds, and records of the Credit Union and shallmeet as often as nece,ssary, but not less than once each month." Subsection (b) provides: "It shall be the special duty of the directors to:. . .' Following this introductorylanguage are the enumeratedspecial duties of the board of directors, nineteen in number. Your questionsas heretoforequoted relate to these nineteen special duties of the board of directorsand can be thusly stated:Are these nineteen special duties of the board of directorsas enumerated in Article 2461-12(b)mandatory or permissive?

"There is no universal rule or absolute test by which directoryprovisions in a statute may in all circumstances be distinguishedfrom those which are mandatory. However, in the determination

of this question,as of every other question of statutoryconstruction,the prime object is to ascertain the legislativeintent." 82 c,J.s. 869, Statutes,Section 376. The crucial test necessarilyrequires the proper construction of the phrase9 "It shall be the special duty," and more specifically, the word "shall."

The Supreme Court of Texas, in the case of Chisholm v. 357+-E Bewle Mills, 287 S.W. 2d 943, (Tex. Sup. 1956), observed the owing w en confrontedwith our particularquestion.

"There is no absolute test by which it may be determined

whether a statutory provision is mandatory or directory. The fundamental rule is to ascertainand give effect to the legislativeintent. Although the word 'shall' is generally construedto be mandatory, it may be and frequentlyfs held to be merely dfrectory. In determining whether the Legislature

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intended the particularprovision to be mandatory or merely directory,consideration should be given to the entire act, its nature and object, and the consequencesthat would follow from each construction. Provisionswhich are not of the essence of the thing to be done, but which are included for the purpose of promoting the proper, orderly and prompt conduct of business, are not generallyregarded as mandatory." Applying this fundamental rule as laid down by the Supreme Court of Texas to the nineteen special duties of Article 2461-12(b), we reach the followingconclusions: Article 2461-12(b),Subsections G&Q ~~)l;la;~~co$;)I (a), (lo), (12) ana (13) are deemed by this Article 2461-12(b),Subsections (6), (7), (9), (ll), (l~;%~:s~16~, (17b, (18) and (19) appear to be permissiveor directoryprovis ens, ut could be considered mandatory under some particular facts and circumstances.

The mandatoryprovisionsread, in part, as follows: 

### ” (1) act upon applicationsfor membership.
. . 

### ” (2)

“(3)
” (4)

” (5) 11(a)

“(10)

"(12)
” (13) purchase a blanket fidelitybond.
. . determine from time to time the rate(s) of interestwhich shall be charged on loans.
. . declare dividends (if any) in the w and manner as provided by the bZaiK
. . - (parenthesisours) determine the rate(s) of interest to be paid on deposits.
. . fix from time to time the maximum amount. . . which may be loaned to any member.
. . authorize the employmentand compensation of such person. . .as may be necessary to carry on the business of the credit union; authorize the borrowing or lending of money to carry on the functionsof the credit unions; designatea depositoryor depositoriesfor the funds of the credit union." The permissiveor directoryprovisions involving the exerciseof judgmentor discretionunder the factual situation

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presented read.,

in part, as follows: 

### ” (6) "(7)


### ” (9) "(11) "(14)

"(15)
"(16)

"(17)

yla)

” (19) limit the number of shareswhich may be owned by a member.
. . fill vacanciesoccurringbetween annual meetings on a board of directors,credit committee,and audit committee.
. . authorize the investmentof funds of the credit union.
. . authorize the conveyanceof property; upon two-thirdsapproval, the board of directorsmay replace any or all members of the audit committee for failure to perform their duties until the next members'meeting.
. . authorizeand provide for the compensation of auditing assistancerequestedby the audit committee; suspend from his officialposition any officer or directorwho fails to attend regularmeetings.
. .or who otherwise fails to perform any of the duties required of him as an official; appoint from its own number an executive committee to exercise such authority as may be delegated to it by the board of directorsbetweenmeetings of the board of directors; perform or authorize any action consistent with this Act not specifically reserved.
. . for the members, and perform such other duties as the members may time to time require; appoint any committeesdeemed necessary. . .' Consideringthe purpose of each mandatoryprovision, it is our opinion these words when read with the prefatory language of the Article, "It shall be the special duty of the directors to", are an indicationthe Legislature meant such d ti fth B cl of Directors to be of an imperativenature. P%szkg to the';&- guage of Chisholm v. Bewley Mills, supra, these provisions are of the essence of the thing to be done.

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HonorableBruce Gibson,,Page5, (M- 688)

The permissiveor directoryprovisions,i.e., Article 2461-12(b , subsections (6), (7), (g), (lo), (ll), (12), (14) (s), (16 , (17), (18) ana (19) reflect a legislativeintent

I to confer upon the board of directorsa measure of discretion as to when, where.andhow such authority should be exercised; and dependingupon the particular facts presented they % be considered either permissiveor mandatory. See Chisholm v. Be;le; M;l;s, supra. Also, the case of Prosper Independent SC oo D s rict v. Collin County School Trustees, 51 w 2 (Tex. Civ. App. 1932 ff c A be noted as to the follokzg ~bs~%at%~ 9 s w * l 2d ;j;sh:uld

If . ,. .Generally,

the lodging of authority in any designatedboard or form carries with it the right of such board or form to determinewhether a proper case has arisen for the exercise of such power. . .' %~It is, noted that while in this case a writ of error was granted and the judgmentof the Court of Civil Appeals was affirmed, the opinion did not discuss the point under consideration.

It is important to observe that a statutoryprovisionmay be permissiveas to some matters and mandatory as to others, as pointed out in 50 American Jurisprudence39, Statutes, Section 18:

"There are even provisionswhich have been regarded as mandatorywhen involved in some proceedings,and directorywhen involved in others, or mandatory under some circumstances and directoryunder other circumstances." Since we have been presented no facts or'circumstences, our opinion cannot be construedas determiningthe proper characterizationof the statutoryprovisions under any and all circumstances or as applied to the facts of a particular case. The question of the constructionof statutoryprovisions as they may involved the "protectionof third persons" must sometimesbe considered;also, whether any "substantialrights depend on compliance with the particularprovisions and no injury can result from ignoring them," and whether "the legislativeintent can be accomplishedin a manner other thanthatprescribedwith substantially the same results." Such factors are sometimesa necessary part of statutory construction and must beg

applied to the facts See State v. Frisby, lo8 N.W. 2d 769, 773

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HonorableBruce Gibson, Page 6, (N- 688)

mandatoryprovisionson the board of directors of credit union organizations.

Article 2461-12 b),
4 Subsections (1 1, (16), (17)s (6 (18 , of the above Act, depending upon‘?%-facts presentedmay be mandatory orpermissiveprovisionson the board of directors of credit union organizations. 3) A characterization cannot be made under all facts and circumstances, and the facts and circumstances

will sometlmesbe determinative of a particular statutorycons A ruction.
s very truly,

ey General of Texas Prepared by Ray McGregor AssistantAttorney General APPROVED: OPINION COMMITTEE Kerns Taylor, Chairman W. E. Allen, Co-Chairman Jim Swearingen James Quick Jack Goodman Jack Sparks MEADE F. GRIFFIN Staff Legal Assistant AIFREDWAXER ExecutiveAssistant NOLA WHITE First Assistant

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