Honorable II. A. Benson 

Savings & Loan Commissioner 

1010 Lavaca- Street 

Austin 1, Texas 

Opinion No. C-130 

Re: Scope and extent of the 

rule making authority. of 

the Savings and LoanCornmissioner under Articles 

342-205 and 852a, Vernon's 

Civtl Statutes, and relatDear Mr. Benson: ed question. 

You have requested the opinion of this office as to 

then proper Interpretationof the scope and extent of the 

rule-making power, if any, of the Savings and Loan Commlssioner, under the applicable statutes, and particularly the 

Texas Savin s and Loan Act(Acts 58th Legislature, Regular 

Session, 19 8 3, Chapter 113, page 269) codified as Article 

852a, Vernon's Civil Statutes. The Savings and Loan Act becomes effective on January 1, 1964. 

The office of Savings and Loan Commissioner is established by Article 342-205, Vernon's Civil Statutes. Subsection (d) thereof, the source of any rule-making power 

that the Commissioner may have, is quoted, together with subsections (e) and (g): 

"(d) Upon the appointment and quallflcation of a Savings and Loan Commissioner 

under this. Act such Savings and Loan Commissioner shall in person or by and through the 

Deputy Savings and Loan Commissioner, Savings 

and Loan Examiners, or other officers of the 

Savings and Loan Department, supervise and 

regulate, in accordance with the rules and 

regulations promulgated by the Savings and 

Loan Commissioner together with the Building 

and Loan Sectlon of the Finance Commission, 

all savings and loan associations doing business In this State (except Federal Savings 

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Hon. R. A. Benson, page 2 (C-130) 

and Loan Associationsorganized and existing 

under Federal Law), and he shall have and 

perform all of the duties and shall exercise 

all of the powers theretofore Imposed upon 

the Banking Commissioner and upon the Bullding and Loan Supervisor under and by virtue 

of the laws of this State with reference to 

savings and loan associations, and the Banking Commissioner shall be relieved of all 

responsibility and authority relating to the 

granting of charters and the regulation and 

supervision of such associations." (Emphasis 

supplied). 

"(e) The rule-making power of the Savings 

and Loan Commissioner and the Building and Loan 

Section of the Finance Commission shall not be 

exercised unless notice of the terms or substance 

of the proposed' rule or regulation or amendment 

to existing rules or regulations has been given 

to all associations subject to regulation hereunder by certified mall, and, if withintwenty 

(20) days after issuance if such notice, as many 

as five (5) associations request a hearing on 

such proposal, a public hearing shall be called 

by the Savings and Loan Commissioner at which 

any interested party may present evidence or 

argument relating to such proposal. After consideration of any relevant matter available from 

the files and records of the Banking Department 

or presented at any such hearing, any rule, regulation or amendment approved and adopted pursuant 

to such hearing shall be promulgated in written 

form and the effective date thereof fixed by the 

order of adoption and promulgation." 

"(g) The Savings and Loan Commissioner may 

call special meetings of the Building and Loan 

Section of the Finance Commission, and he shall 

preside at all meetings of the Building and Loan 

Section of the Finance Commission, but he shall 

not vote except In the case of a tie or when his 

vote is necessary for effective action; provided, 

however, that the Banking Commissioner shall preside at all meetings of the entire Finance Commission except as otherwise provided by law." 

(Emphasis supplied). 

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Hon. R. A. Benson, Page 3 (C-130) 

A careful examination of the quoted provisions reveals that 

the Savings and Loan Commissioner, acting alone, is granted 

no rule-making authority. Rules for the conduct of the savings and loan Industry are to be promulgated by "the Savings 

and Loan Commissioner together with the Bulldln and Loan Section of the Finance Commission." Subsection (g 7 delineates 

the relationship between the Commissioner and the Building 

and Loan Section In meetings of the Section; at which proposed rules and.~other matters muat be voted upon. The Commission-: 

er is to preside but-his gtven a vote only-.ln the case:of a‘tle 

"or when his vote~ls necessary for effective action," Inasmuch 

as the Building and Loan Section consists of the three Bulldlng and-Loan members of the Finance Commission (Art. 342-103, 

V.C.S.);there-should rarely be a tie vote. Further, It is the 

opinion of this office that 'the phrase "when his vote' Is necessary for effective action" refers to the ocbaslons-when the 

Commlsslonerls presence and vote Is necessary to constitute 

a quorum of the Building?iiidzn Section, for the statute 

makes clear that the Commissioner is to be considered an exofficio member of the Section, inasmuch as he Is given a ~vote 

in certain circumstances, and his presence Is necessary at all 

meetings of the Section. 

From the foregoing, it can be seen that Article 342- 

205 gives no rule-making power to the Commissioner, except lnsofar as he may at times participate In the voting held,by 

the Building and Loan Section upon such matters. 

Article 342-114, Vernon's Civil Statutes, which remains 

in force under the new Texas Savings and Loan Act, reads in 

part as follows: 

"The Building and Loan Section, through 

resolution adopted by not less than two affirmative votes, may promulgate general rules 

and regulations not inconsistent with the 

Constitution and Statutes of this State, and 

from.time to time emend the same, which rules 

and regulations shall be applicable alike to 

all State assoclatlorrs. . .' 

In Southwestern Savings and Loan Association of Houston vs. 

Falkner, Tex. 331SW26917mO) . th T 

court mad?the foi6wing siatement, at pag& g&-E? 

Supreme 

"On January 29, 1958, the Building and 

Loan Section of the Finance Commission of 

Texas, acting pursuant to authority contained in Art. 342-114, Vernon's Ann.Tex.St., and 

-648- 
Hon. R. A. Benson, page 4 (C-130) 

respondent Commissioner promulgated certain 

Rules and Regulations governing the granting 

of charters to building and loan associations 

and the establishment of branch offices." (Emphasis supplied). 

Article 88la, Vernon's Civil Statutes, which was the center 

of controversy In the above case,; has been repealed by Artlcle 852a,-Vernon's Civil Statutes, the Texas Savings and Ioan 

Act. However, for our purposes the case is valid, inasmuch 

as neither the new Act nor Article 342-205 makes any addition 

to the rule-making power of the Commissioner. From the'quoted 

portion of the Southwestern Savings case, su ra It Is clear 

that the Supreme Court viewed the rule-mak ?-= ngpower as stemmlng from Article 342-114: The only effect of the' two subsequent statutes (Articles 342-205 and 852a) is. to add the Savings and Loan Commissioner as an ex-officio member of the 

Building and Loan Section of the Finance Commission. Any rules 

promulgated would thus be the joint action of the Section and 

the Commissioner, which accounts for the phraseology contained 

in many sections of the new Texas Savings and Loan Act. 

Article 342-205, in subsections (d) and (e) thereof, 

does not grant a rule-making power to either the Savings and 

Loan Commissioner or the Building and Loan Section, or the two 

acting together. References to rule-making power contained in 

those subsections are references only and not grants of power. 

Therefore any rule-making authority that may be exercised under 

Article 342-205 in relation to the Texas Savings and Loan Act 

would be invalid. The only statute that grants the rule-making 

power with regard to the savings and loan Industry Is Article 

342-114. The rule-making power vested therein is general in 

aature and it is required that the Building and Loan Section 

promulgate general rules and regulations not inconslstent wlih the Constitution and Statutes of this State, . . .'I 

In addition to the above general review of the scope and 

extent of the Commissioner's role In rule-making for the savings 

and loan industry, you also ask the following specific question: 

11 . . . Can the Building and Loan Section 

promulgate rules and regulations concerning 

additional offices, agencies and change of 

office location as has been done prior to January 1, 1964, even though there is no specific 

authorization for the implementation by rule 

and regulation of the establishment of addltlonal offices, agencies, or change of locations authorized under Section 2.13 ~of the New 

Act. ,&t. 852a, V.C.SJ." 

-64% 
, 

., - 

Hon. R. A. Benson, page 5 .(C-3.3> : 

By Section 2.13 of the Texas Savings and Loan Act, the Commissioner Is vested with the responsiblllty for decision In 

the above matters, but the Act is silent as to the respohslbllitg for the promulgation of specific rules and regulations. Since these rules and regulations are necessary to 

establish further criteria for the guidance of the Commissioner and the Industry, and we have already established 

that the Commissioner has no rule-making power in himself, 

we must turn to Article 342-114. That Act, with Its general 

grant of rule-making power to the Building and Loan Section, 

must control here, by the;slmple process of elimination. 

The Savings and Loan Commissioner participates In the rulemaking process, of course, In the manner previously outlined, 

but the promulgation of rules and regulations for the conduct 

of the savings and loan industry Is a function which the Leglslature has delegated to the Bulildlng and Loan Section of the 

Finance Commission. 

SUMMARY 

The Texas Savings and Loan Act (Art. 852a, 

V.C.S.), which goes into effect on January 1, 

1964, does not by Its terms grant any rulemaking authority to the Savings and Loan Commissioner. His participation In the rulemaking process for the savings and loan fndustry 1s only by virtue of his ef-officio membership in the Building and Loan Section of the 

Finance Commission, and by Art. 342-114, V.C.S., 

the said section has sole rule-making authority 

in this area. 

Art. 342-205, V.C.S., contains no grant of 

rule-making power to either the Savings and Loan 

Commissioner or the Building and Loan Section. 

Such general power stems from Art. X42-114, 

V.C.S., and can only be exercised In a manner 

consonant with the Constitution and existing 

statutes. 

Yours very truly, 

WAGGONER CARR 

Attorney General 

MLQ:ms 

BY 

Assistant 

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Hon. R. A. Benson, Page 6 (C-130) 

APPROVED: 

OPINION COMMITTEE 

W. V. Geppe?t, Chairman 

Milton Richardson 

John Reeves 

Dudley McCalla 

J. C. Davis 

APPROVED FOR THE ATTORNEY'GENERAL 

By: Stanton Stone 

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