JIM MATTOX 

Attorney General 

Supreme Court Building 

P. 0. BOX 12546 

Austin. TX. 78711. 2548 

51214752501 

Telex 9101874-1367 

Telecopier 5121475.0266 

1607 Main St., Suite 1400 

Dallas, TX. 75201-4709 

2141742.8944 

4624 Alberta Ave.. Suite 160 

El Paso. TX. 79905-2793 

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.~20 Dallas Ave.. Suite 202 

Houston. TX. 77002.6966 

713/650-0666 

806 Broadway. Suite 312 

Lubbock. TX. 79401-3479 

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McAllen, TX. 76501-1665 

512/682.4547 

200 Main Plaza, Suite 400 

San Antonio. TX. 76205-2797 

5121225.4191 

The Attorney General of Texas 

March 15, 1983 

Mr. Kenneth H. Ashworth 

Commissioner 

Coordinating Board 

Texas College and University System 

Opinion No. JM-13 

Re: Whether 

pledged by bank 

securities 

to eecure 

P. 0. Box 12788, Capitol Station 

Austin, Texas 78711 

deposit of junior college 

district funds may be placed 

for safekeeping with another 

bank 

Dear Commissioner Ashworth: 

You ask two questions regarding the safekeeping of securities 

pledged by depository banks to secure junior college district funds 

held by those depository banks. First, you ask: 

May a bank, chosen as a depository by a public 

junior college and pledging securities to cover 

the funds on deposit by the college, legally place 

those securities in safekeeping with another bank 

that is owned by the same holding company that 

owns a depository bank? 

Section 130.084 of the Texas Education Code provides: 

The board of trustees of junior college districts 

shall be governed in the establishment, management 

and control of the junior college by the general 

law governing the establishment, management and 

control of independent school districts insofar as 

the general law is applicable. 

The provisions of the Education Code relating to junior college 

districts, section 130.001, et seq., do not contain a provision 

relating to junior college district depositories. Thus, according to 

the express language of section 130.084, junior college districts are 

governed by the School Depository Act, section 23.71 et seq. of the 

Education Code. 

Section 23.79(c) of the Education Code permits a depository bank 

to deposit or pledge approved securities "with the school district, or 

with a trustee designated by the school district." No other provision 

in the School Depository Act makes reference to a trustee holding 

approved securities for a depository bank. 

p. 53 
Mr. Kenneth H. Ashworth - Page 2 (JM-13) 

“Designate” is not defined in the Education Code. Words that are 

not defined in a statute are given their ordinary significance unless 

they are words of art or words connected with a particular subject 

matter. V.T.C.S. art. 10, §l; National Life Company v. Stegall, 169 

S.W.2d 155, 157 (Tex. 1943). mDesignate” means to indicate or set 

apart for a purpose or duty. Black’s Law Dictionary 402 (5th ed. 

1979); Webster’s New Collegiate Dictionary 308 (1977). Thus, a school 

district may specify the trustee bank. 

The power to designate includes the power to approve or 

disapprove a trustee bank. Neither the School Depository Act nor any 

other statute of which we are aware prohibits a depository bank from 

placing for safekeeping pledged securities in another bank owned by 

the sane holding company that owns the depository bank. Thus, the 

answer to your first question is yes, g the bank in which the 

securities are to be placed is designated by the school district as 

the “trustee” bank. You also ask: 

If the answer to question (1) is yes, does section 

23.79(c), Texas Education Code, give the college 

the authority to direct the depository bank to 

place pledged securities in safekeeping with a 

bank independent of the holding company? 

We believe our discussion of your first question answers your 

second question. Section 23.79(c) of the Texas Education Code clearly 

provides that the school district has the authority to select the 

trustee or bank in which the pledged securities shall be kept. This 

interpretation is consistent with the remaining provisions of section 

23.79(c), which give the school district authority to designate the 

amount of approved securities and to approve the substitution of 

approved‘securities by the depository bank. 

SUMMARY 

With the approval of the junior college 

district, a depository bank holding public junior 

college funds may place for safekeeping its 

pledged securities with another bank that is owned 

by the same holding company as the depository 

bank. Section 23.79(c) of the Education Code 

authorizes a junior college district to direct the 

depository bank to place the pledged securities in 

safekeeping with a bank independent of the holding 

company. 

JIM MATTOX 

Attorney General of Texas 

p. 54 
Mr. Kenneth H. Ashworth - Page 3 (JM-13) 

TOM GREEN 

First Assistant Attorney General 

DAVID R. RICHARDS 

Executive Assistant Attorney General 

Prepared by Yolanda McKeeman 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Susan L. Garrison, Chairman 

Jon Bible 

Rick Gilpin 

Yolanda McKeeman 

Jim Moellinger 

p. 55