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 

and Senate Bill No. 

409. now pending in 

the 62nd Leg., R. S., 

1971. 

Gentlemen: 

You request our opinion as to the constitutionality of House Bill No. 

566, as it would be amended by a proposed Committee Amendment, and 

Senate Bill No. 409. both now pending before your respective Committees 

in the 62nd Legislature, Regular Session, 197 1. 

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

‘I A BILL TO BE ENTITLED AN ACT amending Art. 

342-903, Revised Civil Statutes of Texas, as amended, 

concerning the prohibition of Branch Banking; and declaring 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. 

-4115- 
. 

Hon. David W. Ratliff and Hon. 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 in business in more than one place, maintain any branch office, 

or caeh checks or receive deposits except in its own banking house. For purposes of this Article ‘banking house’ 

means the building in whose offices the business of the 

bank is conducted and which 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 to the central building by tunnel, 

passageway or hallway providing direct access between 

the central building and the connected office or automobile 

drive-in facility or by pneumatic tube, closed circuit televi&m or other similar means of communication, and (b), 

in addition, not more than one (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 .the connected automobile drivein ficility or by pneumatic ,tube, closed circuit television, 

or other similar means of communication. The entire banking house shall for all purposes under the law be considered 

one integral banking house. 

“Section 2. Emergency Clause. The importance of this legislation and the crowded condition of the calendar in both houses 

create an emergency and an imperative public necessity that 

the Constitutional Rule requiring bills to be read on three several 

days in each house be suspended, .and the Rule is hereby suspended; and that this Act take effect and be in force from and 

after its passage, and it 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 of branch banking: and declaring 

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 in business in more than one place, maintain any branch office, 

or cash checks or receive deposits except in its own banking house. For purpose of this Article’lbanking house’ 

means the building in whose offices the business of the bank 

is conducted and which 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 and the 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 qf this legislation and the crowded 

condition of the calendars in both houses create an emergency 

and an imperat:ive public necesrity that the Constitutional Rule 

requiring bills to be read on three several days in each house 

be suspended and be in force fr.tlrn and af’t~er il:s passage, and 

it is so enacted.” . . 

The Bills as lrereinabove quoted propose t:ti amend Arl:icle 342-903, 

Vernon’s Civil Stal:utes, which now reads as follows: 

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. 

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

“No state, national or private bank shall engage in 

business in more than one place, maintain any branch 

office, or cash checks or receive deposits except in 

its own banking house. For purposes of this Article, 

‘banking house’ means the building in whose offices the 

business of the bank is conducted and which 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 and the connected office facility or 

by pneumatic 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 in the statute prior 

to 1957. In that 1. #year additional provisions were added, and these were 

amended in 1959 and 1963, making the Article to now read as quoted above. 

This Office has never issued an opinion as to the constitutionality of 

the 1957 amendment or the 1963 amendment to Article 342-903, and nothing 

in this 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 and creditors thereof. 

“No 6uch corporate body shall be chartered until all of 

the authorized capital stock has been subscribed and 

paid for in full in cash. Such body corporate shall not 

be authorized to engage in business at more than one 

place which shall be designated in its charter. 

-4118- 
Hon. David W. Ratliff and Hon. Neal Solomon, page 5 (M-849) 

“No foreign corporation, other than the national banks 

of the United States, shall be permitted to exercise banking or discounting privileges in this State. ” (As amended 

Aug. 23, 1937. ) (Emphasis added. ) 

We are thus confronted with the question as to whether the Constitution of the State of Texas, which states ‘I. . . Such body corporate shall 

not be authorized to engage in business at more than one place which shall 

be designated in its charter . . . ” is to be enlarged upon by 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. In other words, the basic question presented by the proposed 

legislation is whether the bills would authorize a bank to engage in business 

at a place other than the “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 and their counterpart, the one additional drive-in 

facility authorized in the 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, in the past, and there is no restriction in the Constitution to 

prohibit the Legislature from defining the business or place of a banking 

house so long as it stays within Section 16 of 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 a bank: 

‘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 

In the case of Hewitt v. First Nat. Bank of San Angelo, 113 Tex. 100, 

252 S. W. 161 (1923). the Court said, with reference to the locale of a bank: 

-4119- 
Hon. David v. Ratliff and Hon. Neal Solomon, page 6 (M-849) 

“There are some transactions which a bank can properly 

attend to only at its place of business. Thus a bank has 

vaults and safes, in which to safely keep its money, and 

books, in which it is necessary to enter its transactions 

with its customers, in order that it may know the state of 

their accounts. These being kept in the bank, an officer 

has no right to receive deposits at a place other than in 

the banking house, and should he do so, he will be held to 

be the agent of the party delivering the funds to him, and 

not of the bank. The same is true as to a check presented 

to a cashier at a place other than in the bank. He has no 

authority to accept it. He may have known that the customer 

had funds in the bank when he left it, but they may have been 

drawn out within five minutes thereafter. It is for these obvious reasons that the law requires .national banks to have a 

place of business, and that 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 and the most distant automobile drive-in facility from 500 t 

1,850 feet, and would allow the connection between them to be 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 in both the House and Senate Bills. 

It is apparent that both Bills would provide for banking facilities at 

two widely separated and distinctly different locations with no directphysica 

connection between them except possibly a pneumatic 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 and a pneumatic tube across the street from the bank. The 

plaintiff life insurance company was seeking to cancel the Lease upon the grow 

among others, that the leased space constituted a br.anch bank within the prohibitions of Section 16 of Article XVI of the Constitution of Texas and Article 

-4120- 
Hon. David W. Ratliff and Hon. Neal Solomon, page 7 (M-849) 

342-903, Vernon’s Civil Statutes. The Court held that the leased premises 

were “nothing more than a part of the appellee bank. ” We concur in this 

holding. However, the Court went further and quoted 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 not be 

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 a bank may do business in only one place 

or location in one city or town. Within our knowledge 

no state bank is currently doing business in more than 

one place or location in one 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. ) 

It is. noted that in conformity with the Banking Commissioner’s interpretation of the Constitution and statutes, that no state bank has attempted 

to do business 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, and these banking institutions have uniformly 

and throughout the years adhered to this department practice pursuant to the 

Constitution and statutes. 

Both H. B. 566 and S. B. 409 have eliminated from the concept and 

definition of “banking house” the physical connection aspect of the statute, as 

it now exists, and au.ihorize a ‘banking house to ‘be connected only by closed 

circuit television or oth.er similar means of communication. 

If this office were to hold that: a “banking house” could be authorized 

to extend its place of business 500 feet. or 1, 850 feet from its main banking 

-4121- 
Hon. David W. Ratliff and Hon. Neal Solomon, page 8 (M-849) 

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 of the distance, would be compatible with the constitutional provisions. We cannot so conclude as a matter of law, because the Rills fail to 

provide sufficient factors and guidelines to support that conclusion. 

If these Bills were enacted into law, we would be required to give 

effect to the well settled rule of construction that, “an act of the Legislature 

is not to be declared unconstitutional unless plainly so. The presumption is 

that the Legislature acted in the light of the Constitution, with the intention 

to observe it rather than violate it. ‘I Maud v. Terre& 109 Tex. 97, 200 S.W. 

375, 376. Likewise, it was held in Watts v. Mann, 187 S. W. 2d 917 (Tex. Civ. 

App. 1945, error ref. ) that “. . . in no doubtful case will the judiciary 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 to harmonize the proposed statutes with the Constitution 

and to uphold their validity if there is any reasonable baeis or ground to do so. 

53 Tex. Jur. 2d 225, Statutes, Sec. 158. We must conclude that the constitutional concept and language that a bank shall not “engage in business at more 

than one 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 of the place or area is set out, and the 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 and harmonized 

with the Constitution and not be held to be unconstitutional, whereas, in a 

different case, under a quite dissimilar factual setting the Bills could not be 

constitutionally yeheld and could be declared unconstitutional in authorizing 

office facilities and the engaging of business in two different places in a city 

and connected only by closed circuit television or other similar means of 

communication. 

-4122- 
. . 

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” that which in fact 

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 that the 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 in vain 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 ” in the construction and application of 

our Constitution and the proposed statutes. Unfortunately, such matters will 

necessarily have to be tried in a court of law and finally passed upon by our 

Supreme Court before we’can write with any certainty on these matters. Since 

under the constitutional provision, which is self-enacting, the question of 

“one place” is constitutionally a mixed question of law and fact, any ultimate 

finding of “one’ place” under the Constitution must take into account all of the 

relevant facts and circumstances pertaining to the doing of the banking business at “one place. ” 

The long standing policy of this office prohibits our passing upon any 

hypothetical questions or any mixed questions of law and fact which might 

conceivably arise in applying the proposed statutes to any given state of facts. 

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 upon the 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 

and maintenance of its competitive position; (2) physical connection or lack of 

and the presence ,or absence of a pneumatic tube, tunnel or other passageway 

or connection between structures; (3) distance separating the main banking 

house and the “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 of these factors will be considered and none will be 

conclusive or controlling. Jackson v. First National Bank of Valdosta, 246 

-4123- 
,_ . 

Hon. David W. Ratliff and Hon. Neal Solomon, page 10 (M-849) 

F.Supp. 134. 139-140 (M.D. Ga. 1965, rev. on other 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 and Senate Bill 

No. 409, 62nd Legislature, Regular Session, 1971, purporting to expand the area or place of location of banks 

and the 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” in a city or town 

as contemplated by Article XVI, Section’ 16, Constitution 

of Texas. The constitutionality of the location of such 

facilities must depend upon the peculiar facts of each case 

and involve a hypothetical mixed question of law and fact, 

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 

-4124- 
Hon. David W. Ratliff and Hon. Neal Solomon, page 11 (M-849) 

ALFRED WALKER 

Executive Assistant 

MEADE F. GRIFFIN 

Staff Legal Assistant 

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