Honorable David W. Ratliff. Chairman

Senate Committee on Banking The Senate of the State of Texas State Capitol Austin, Texas Opinion No. M-849

Honorable Neal Solomon, Chairman House Committee on Banks and Banking State House of Representatives State Capitol Austin. Texas Re: Constitutionality of House Bill No. 566 andSenate Bill No. 409. nowpending in the 62nd Leg., R.S., 1971.

Gentlemen:

You request our opinion as to the constitutionality of House Bill No. 566, as itwould be amended by a proposed Committee Amendment, and Senate Bill No. 409. both nowpending before your respective Committees inthe 62nd Legislature, Regular Session, 1971.

The proposed Committee Amendment submitted byyou for our consideration would make House Bill No. 566 ’ read as follows:

‘IA BILL TO BE ENTITLED AN ACT amending Art. 342-903, Revised Civil Statutes of Texas, as amended, concerning the prohibition of Branch Banking; anddeclaring an emergency. ” BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: “Section 1. Art. 342-903, ‘Branch Banking Prohibited, ’ Revised Civil Statutes of Texas, 1925, as enacted by

1 Hereinafter referred to as H.B. 566.

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Hon. David W. Ratliff andHon. Neal Solomon, page 2 (M-849)
Chapter 123, Sec. 1, Acts 1959, 56th Legislature, as amended, is amended to read: “Art. 342-903. Branch Banking Prohibited. “No state, national or private bank shall engage inbusiness inmore than one place, maintain anybranch office, or caeh checks or receive deposits except in its ownbankinghouse. For purposes of this Article ‘banking house’ means the building inwhose offices the business of the bank is conducted andwhich is functionally one place of business, including (a) office or automobile drive-in facilities whose nearest wall is located within five hundred (500) feet of the nearest wall of the central building and is physically connected tothe central building by tunnel, passageway or hallway providing direct access between the central building andthe connected office or automobile drive-in facility or by pneumatic tube, closed circuit televi&m or other similar means of communication, and (b), inaddition, not more thanone (1) automobile drive-in facility whose nearest boundary is located within one thousand eight hundred fifty (1,850) feet of the nearest wall of the central building and is connected to the central building by tunnel, passageway or hallway providing direct access between the central building and.theconnected automobile driveinficility or by pneumatic ,tube, closed circuit television, or other similar means of communication. The entire bankinghouse shall for all purposes under the law be considered one integral banking house. “Section 2. Emergency Clause. The importance of this legislation andthe crowded condition ofthe calendar inboth houses create an emergency and an imperative public necessity that the Constitutional Rule requiring bills to be read onthree several days in each house be suspended, .andthe Rule is hereby suspended; andthatthis Act take effect andbe inforce from and after its passage, andit is so enacted. ‘I Senate Bill No. 409 reads as follows:lion. David W. Ratliff and Hon. Neal Solomon, page 3 (M-849)

” A BILL TO BE ENTITLED AN ACT amending Article 3, Subchapter IX, the Texas Banking Code of 1943, as amended (Article 342-903, Vernon’s Texas Civil Statutes), concerning the prohibition ofbranch banking: anddeclaring an emergency. ” BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: “Section I. Article 3, Subchapter IX, the Texas Banking Code of 1943, as amended (Article 342-903, Vernon’s Texas Civil Statutes), is amended to read as follows: “Article 3. Branch Banking Prohibited. “No state, national or private bank shall engage inbusiness inmore than one place, maintain anybranch office, or cash checks or receive deposits except in its ownbanking house. For purpose of this Article’lbanking house’ means the building inwhose offices the business of the bank is conducted andwhich is functionally one place of business, including office facilities whose nearest wall is located.within one thousand, eight hundred fifty (1,850) feet of,the nearest wall of the central building and is connected to the c’entral building by tunnel, passageway or hallway providing direct access between the central building andthe connected office facility or,by pneumatic tube, closed circuit television, or other similar means of communicat.ion: ‘,The entire banking house shall for all purposes under the law be considered one integral banking house. “Section 2. The importance qfthis legislation andthe crowded condition of the calendars inboth houses create an emergency andan imperat:ive public necesrity that the Constitutional Rule requiring bills to be read on three several days in each house be suspended and be inforce fr.tlrnandaf’t~er il:spassage, and it is so enacted.” .. The Bills as lrereinabove quoted propose t:tiamend Arl:icle 342-903, Vernon’s Civil Stal:utes, which now reads as follows:

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Hon. David W. Ratliff andHon. Neal Solomon, page 4 (M-849)

“No state, national or private bank shall engage in business in more thanone place, maintain anybranch office, or cash checks or receive deposits except in its ownbanking house. For purposes of this Article,

‘banking house’ means the building inwhose offices the business of the bank is conducted andwhich is functionally **one** place of business, including 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 andthe connected office facility or bypneumatic tube or other similar carrier. The entire building house shall for all purposes under the law be considered one integral banking house. ‘I Only the first sentence of this Article appeared inthe statute prior to 1957. Inthat1.

#yearadditional provisions were added, andthese were amended in 1959 and 1963, making the Article to now read as quoted above.

This Office has never issued anopinion as to the constitutionality of the 1957 amendment or the 1963 amendment to Article 342-903, andnothing inthis present opinion is intended as a ruling thereon.

Article XVI,~ Section 16 of the Constitution of the State of **Texas,** reads as follows:

“The Legislature shall by general laws, authorize the incorporation of corporate bodies with banking and discounting privileges, and shall provide for a system of State supervision, regulation and control of such bodies which will adequately protect and secure the depositors andcreditors thereof. “No 6uch corporate body shall be chartered until all of the authorized capital stock has been subscribed and paid **for** infull in cash. Such body corporate shall not be authorized to engage inbusiness at more thanone place which shall be designated in its charter.

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“No foreign corporation, other thanthe national banks of the United States, shall be permitted to exercise banking or discounting privileges inthis State. ” (As amended Aug. 23, 1937. ) (Emphasis added. ) We are thus confronted with the question as towhether the Constitution of the State of Texas, which states ‘I.
. . Such body corporate shall notbe authorized to engage inbusiness atmore thanone place which shall be designated in its charter

. . .” is to be enlarged uponby authorizing a bank to operate a drive-in facility located five or six blocks away (1,850 feet) from its main banking house and connected each to the other by only pneumatic tube, closed circuit television, or other similar means of communication. Inother words, the basic question presented by the proposed legislation is whether the bills would authorize a bankto engage inbusiness at a place other thanthe “one place which shall be designated in its charter, 1’ as prohibited by the Constitution. It is clear that the “office facilities” authorized in S.B. 409 andtheir counterpart, the one additional drive-in facility authorized inthe proposed amendment to H.B. 566, would be engaged in the business of banking.

The business of banking or “banking house” has been defined by our Legislature, inthe past, andthere is no restriction inthe Constitution to prohibit the Legislature from defining the business or place of abanking house so long as it stays within Section 16of Article XVI.

Black’s Law Dictionary, Fourth Edition, defines a bank as “The house or place where the business of banking is carried on. ”

The Court quoted with approval the following definition of a bank in the case of Kaliski v. Gossett, 109 S.W. 2d 340, (Tex. Civ. App. 1937, error ref. ):

“ln the case of In re Prudence Company (C. C.A. ) 79 F. 2d 77, 79, we find the following definition of abank:

‘Strictly speaking the term bank implies a place for the deposit of money, as that is the most obvious purpose of such an institution. ’ ‘I Inthe case of Hewitt v. First Nat. Bank of SanAngelo, 113 Tex. 100, 252 S.W. 161 (1923). the Court said, with reference to the locale of a bank:

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“There are some transactions which abank can properly attend to only at its place of business. Thus abankhas vaults and safes, inwhich to safely keep its money, and books, inwhich it is necessary to enter its transactions with its customers, in order that it may knowthe state of their accounts. These being kept in the bank, anofficer has no right to receive deposits at aplace other than in thebanking house, and should he do so, he will be held to be the agent ofthe party delivering the funds tohim, and not of the bank. The same is true as to a check presented to a cashier ata place other than in the bank. He has no authority to accept it. He may have knownthat the customer hadfunds inthe bankwhen he left it, butthey may have been drawn outwithin five minutes thereafter. Itis for these obvious reasons that the law requires .national banks to have a place ofbusiness, andthat they are not authorized to transact their business elsewhere. U.S. R.S. 8 8 5136 and 5190; Autry v. Bank, 38 Fed. 883; **Morse** on Banking, 8 168; Bullard v. Randall, supra. ‘I (at pp. 162-163. ) Both Bills would change the allowed geographic separation between th central building andthe most distant automobile drive-in facility from 500t 1,850 feet, andwould allow the connection between them tobe limited to 11

. . . pneumatic tube, closed circuit television, or other similar means of communication
. . .“, thus doing away with all semblance of any other direct physical connection between these two components of the “banking house as defined inboth the House and Senate Bills.

Itis apparent that both Bills would provide for banking facilities at twowidely separated anddistinctly different locations with no directphysica connection between them except possibly apneumatic tube.

Great Plains Life Insurance Company v. First National Bank of Lubb( 316 S.W. 2d 98 (Tex. Civ. App. 1958, error ref. n. r. e. ), involved a suit on a contract whereby Great Plains Life Insurance Company leased certain space the First National Bank of Lubboc,k. The leased space was connected to the bank by a tunnel anda pneumatic tube across the street from the bank. The plaintiff life insurance company was seeking to cancel the Lease uponthe grow among others, thatthe leased space constituted a br.anchbankwithin the prohibitions of Section 16of Article XVI of the Constitution of Texas andArticle

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342-903, Vernon’s Civil Statutes. The Court held that the leased premises were “nothing more than apart ofthe appellee bank. ” We concur inthis holding. However, the Court went further andquoted with approval the Kentucky case of Marvin v. Kentucky Title Trust Co. , 291 S.W. 17, (Ky. Ct.App. 1927) where the Court declared:

II

. . . If such additional offices can be established at different points in the main building under the bank’s control, no good reason appears why they may notbe established elsewhere throughout the city of its location for the same purpose . . .‘I (at p. 18.) The Commissioner of the Department of Banking has advised this office that:

II

. . . it has been the long time departmental construction that abankmay do business inonly one place or location inone city or town. Within our knowledge no state bank is currently doing business in more than one place or location inone city or town. ” Departmental construction or practice pursuant to the provisions of the Constitution or statutes are to be given great weight. City National Bank of Austin v. Falkner, 428 S.W. 2d 429, (Tex. Civ. App. 1968, writ ref. n.r. e. ); Werlein v. Calvert, 460 S.W. 2d 398 (Tex. Sup. 1970. )

Itis. noted that in conformity with the Banking Commissioner’s interpretation of the Constitution and statutes, that no state bankhas attempted to dobusiness at more than one location by h aving a drive-in window, which has not physically connected with the main banking house, by a passageway, either tunnel or pneumatic tube, andthese banking institutions have uniformly andthroughout the years adhered to this department practice pursuant to the Constitution and statutes.

Both H.B. 566 andS.B. 409 have eliminated from the concept and definition of “banking house” the physical connection aspect of the statute, as it now exists, andau.ihorize a ‘bankinghouse to ‘be connected only by closed circuit television or oth.er similar means of communication.

Ifthis office were to hold that:a “banking house” could be authorized to extend its place ofbusiness 500 feet.or 1,850 feet from its main banking
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house, connected only by closed circuit television or other similar means of communication, **then** we would have to conclude that this manner of connectisa between the main banking house and its drive-in windows, or office facilities1 irrespective ofthe distance, would be compatible with the constitutional provisions. We cannot so conclude as amatter oflaw, because the Rills fail to provide sufficient factors and guidelines to support that conclusion.

Ifthese Bills were enacted into law, we would be required to give effect to thewell settled rule of construction that, “an act of the Legislature is notto be declared unconstitutional unless plainly so. The presumption is that the Legislature acted inthe light of the Constitution, with the intention to observe it rather thanviolate it. ‘I Maud v. Terre& 109 Tex. 97, 200 S.W. 375, 376. Likewise, itwas held inWatts v. Mann, 187 S.W. 2d 917 (Tex. Civ. App. 1945, error ref. )that “

. . . in no doubtful case will thejudiciary pronounce a legislative act to be contrary to the constitution
. . . ”

“Constitutional provisions may be read into a statute
. . , to remove uncertainties and in order to restrict literalism to proper bonds. ‘I 53 Tex. Jur. 2d 170, Statutes, Sec. 119. We are thu8 required toharmonize the proposed statutes with the Constitution andtoupholdtheir validity ifthere is any reasonable baeis or groundto doso. 53 Tex. Jur. 2d 225, Statutes, Sec. 158. We must conclude that the constitutional concept and language that a bank shall not “engage inbusiness at more thanone place” is subject to construction. The Constitution should be given a liberal construction to carry out its purpose and intent. 12 Tex. Jur. 2d 364.: Constitutional Law, Sec. 16. Great weight will be given to the legiela-’ tive conrtruction. 123 Tex. Jur. 2d 366, Sec. 20. No limitation as to the sine ofthe place or area is set out, andthe Legislature may thus interpret its meaning, subject to the ultimate determination of **a** court.

In

### a given case, under the particular facts and circumstances developed, the proposed Bills might; conceivably be applied andharmonized with the Constitution and notbe held to be unconstitutional, whereas, ina different 

### case,under aquite dissimilar factual setting the Bills could notbe constitutionally yeheld and could be declared unconstitutional inauthorizing office facilities andthe engaging of business in two different places in a city and connected only by closed circuit television or other similar means of communication.

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Hon. David W. Ratliff and Hon. Neal Solomon, page 9 (M-849)

A court will look to substance and disregard form in each case in determining and applying the issues before it. **A** legislative declaration is without the magical quality to transform into “one place” thatwhich infact is not. Yet, we cannot say that the provision for a physically-connected facility within 1,850 feet of the central building is plainly unconstitutional on its face: nor can we say thatthe provision for two facilities separated by a short distance and operated as one integral business unit, although connected by a closed-circuit television, is plainly unconstitutional on its face.

We have searched the authorities invain to discover some substantial legal guidelines which might serve to give a simple “yes” or “no” answer to the meaning and extent of “one place ” inthe construction and application of our Constitution andthe proposed statutes. Unfortunately, such matters will necessarily have to be tried in a court of law andfinally passed uponby our Supreme Court before we’can write with any certainty onthese matters. Since under the constitutional provision, which is self-enacting, the question **of**

“one place” is constitutionally a mixed question of law andfact, any ultimate finding of “one’place” under the Constitution must take into account all ofthe relevant facts and circumstances pertaining to the doing ofthe banking business at “one place. ”

The long standing policy of this office prohibits our passing uponany hypothetical questions or anymixed questions of law andfact which might conceivably arise in applying the proposed statutes to any given state offacts. Attorney General Letter Opinion W. W. March 9, 1959; Attorney General Opinions Nos. M-195 (1968) and M-307 (1968. ) Since the constitutionality of the location of such facilities must depend or turn uponthe particular facts of each case, we are unable to render a simple “yes” or “no” answer to the questions propounded.

Among the factors to which a court will give consideration in determining whether the doing of the banking business is at the main banking house or place of business are (1) unity of operation, as to customer convenience andmaintenance of its competitive position; (2) physical connection or lack of and the presence ,or absence of apneumatic tube, tunnel or other passageway or connection between structures; (3) distance separating the main banking house andthe “drive-in facility;” (4) number of intervening structures; (5) economic effect of the “drive-in facility” on the balance of competition between the competing banks. All ofthese factors will be considered andnone will be conclusive or controlling. Jackson v. First National Bank of Valdosta, 246

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Hon. David W. Ratliff andHon. Neal Solomon, page 10 (M-849)
F.Supp. 134. 139-140 (M.D. Ga. 1965, rev. onother ground, 344 F. 2d 71); State v. First Nat. Bank of St. Louis, 249 S.W. 619, 621 (MO. Sup. 1923.) SUMMARY Proposed House Bill No. 566 andSenate Bill No. 409, 62nd Legislature, Regular Session, 1971, purporting to expand the area or place of location of banks andthe operation of their drive-in facilities, may or may not be upheld as constitutional by a court, depending upon the facts and circumstances in a given case and the various factors to be considered by a court in determining whether the bank is doing business in **“ one**  place” ina city or town as contemplated by Article XVI, Section’ 16, Constitution of Texas. The constitutionality of the location of such facilities must depend uponthe peculiar facts of each case and involve ahypothetical mixed question of law andfact, which this office has no authority to resolve.

eneral of Texas Prepared by Kerns Taylor Assistant Attorney General APPROVED: OPINION COMMITTEE W. E. Allen, Acting Chairman Houghton Brownlee James Quick James Broadhurst V. F. Taylor Max Hamilton NOLA WHITE First Assiatant
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ALFRED WALKER Executive Assistant MEADE F. GRIFFIN Staff Legal Assistant

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