E L~YYJXBRNEY GENERAL 

OFI'EXAS 

Honorable J. M. Falkner Opinion No.~~ M-02 

Commissioner, Department of 

Banking Re: Whether the Sharpstown State 

Austin, Texas Bank of Houston has the authority 

to purchase property, identified 

Dear Mr. Falkner: on submitted map as Building "F". 

In your letter to this office you have requested the opinion 

of the Attorney General as to whether the Sharpstown State Bank 

may, under the laws of Texas, purchase a building designated as 

Building "F" in the Sharpstown Shopping Center, Houston, Harris 

County, Texas. 

Building 'IF", as shown on the submitted map, consists of 

one single integrated structure, a portion of which is ten (10) 

stories high and a portion of which is two (2) stories high. 

Under the facts submitted, the Sharpstown State Bank presently 

leases a portion of the ten (10) story part of the said building 

for space in which to conduct its banking operations, other 

sections of the ten (10) story portion being rented to commercial 

tenants. Furthermore, the two (2) story portion of the structure 

is also currently rented to commercial tenants. 

Article 342-501, Vernon's Civil Statutes, provides, in 

part, that: 

"NO state bank shall, without prior written 

consent of the Banking Commissioner, invest 

an amount in excess of fifty per cent (5C$) 

of its capital and certified surplus in a 

domicile (including land and building) nor 

an amount in excess of fifteen per cent (15%) 

of its capital and certified surplus in its 

furniture and fixtures. o 0" 

From the facts submitted, 'this statute is not relevant, in 

that the Sharpstown State Bank would increase its capital and 

certified surplus in an amount equal to the cost of the new building, 

should such purchase be.deemed lawful. We next turn to Article 

342-502, Vernon's Civil Statutes, which provides, in part, that: 

- 365 - 
Honorable 3. M. Falkner, page 2 (M-82) 

"No state bank shall acauire real estate. 

other than its domicile, except in satisfactionor partial sat,isfaction of in- 

,debtedness,- OF in the ordinary course of 

the collection of loans and other obligations owing the bank, or for the use of 

the bank and future expansion of its banking 

house i o 0" (Emphasis Suppiled) 

In this regard, Judge Speer, i,n Law of Banks and Banking 

in Texas (1952), Section 102, characterizes the use of the bank 

building as follows: 

"Under the provisions of Article 3 of Chapter 

IX of the Banking Code it is the author's 

thought that some consideration should be 

given to the phrase in its own banking hou.se. 

"While the Constitution and Code have taken 

meticulous care in osder to prevent branch 

banking, and to confine the activities of 

banks t,o iheir own place of business and 

bank building, no a,ttempt has been made to 

define the character of the building. 

"Obviously the bank may acquire and,own a 

building of such architec%ural arrangement, 

and structural features,, and of such proportions 

and spaces as %he board in its sound business 

discretion thinks advantageous, and appropriatewithin the limitations of the investment PPOvisions. It is not required that the building 

be not beyond the bankks actual floor space 

requirements - present or prospective. Sound 

business discretion might and often does call 

for rental space and building conveniences 

beyond present requirements. 

'The true test would seem ~to be ,that so iong 

as there is archi%.ectural and substantial 

stru~ctural connection there is one banking 

house, and the various activit,ies of the bank 

may be carried on in any roomy, or space whatsoever as the board may authorize, Wheth.er 

such structure crosses 10% lines, or tunnels 

under, or spans over alley or street can make 

no difference. 

its parts.1 

The building includes all of 

- 366 - 
I . 

Honorable J. M. Falkner, page 3 (M- 82) 

'A comparatively recent opinion of the Attorney 

General supports the text where a garage for 

parking and deposit windows, situated on a lot 

across the street fr m the main building is 

connected by tunnel. E!!! 

1. Op. Atty. General No. O-2691. "If the property is being 

purchased by the bank for the good faith purpose of a banking 

house, the law is not concerned with the character of the building, its structural peculiarities, the number of stories, the 

number of separate rooms or offices, and the like; these are 

matters for the sound business discretion of the Board of Directors. 

It would be difficult to find a building which had not been built 

to specifications for a bank, that would in all respects be exactly fitted to the demands of a bank purchasing the same. Indeed 

it might (be difficult to construct a building to specifications 

suited not only to the present needs but to the future needs of 

a bank undertaking to construct its own banking house. In the 

present case the surplus room, stories, offices and the like, it 

appears, may be profitably rented by the bank. We cannot close 

our eyes to the fact that in many instances - perhaps in most instances - our better banks occupy their own buildings consisting of 

several, sometimes many stories, and much, if not most of the floor 

space is not actually used by the bank in conducting its banking 

business but is rented out. There can be no valid objection to 

this if the major good faith purpose of the acquisition or construction of the building be to provide a banking house for the 

institution.' 

2. Op. Atty. General No. v-1046. "The contemplated new 

structure, although to be erected across the street from the 

original 'banking house', will be physically joined thereto by 

a tunnel under the street, which you state will be suitable for 

passage back and forth. It is evident that besides being joined 

physically, the new structure, including the passageway, will be 

in close proximity to the present building. It will be used in 

connection with the original building and as a unit will be devoted to one general common purpose. It is our opinion that the 

two structures will in reality be one and when used in the manner 

proposed will constitute the bank's 'banking house'. To hold that 

said Article requires deposits to be made in abank's original 

building, and not in an addition thereto would sacrifice the real 

spirit of the law to pure literalism." 

- 367 - 
. I 

Honorable J. M. Falkner, page 4 (M- 82) 

Under the facts submitted, the entire building is tied 

together as a unit with all~utilities, including gas, water, 

and electricity and air conditioning, being built into the 

entire structure which was constructed at the same time. 

The legislative history of Article 342-501, shows that the 

Legislature did not intend by the word "domicile" to limit the 

premises which could be owned by a state,bank merely to those 

premises which'the bank itself occupies for quarters. Prior to 

1925, Article 5l2,, Revised Civil Statutes, prohibited state 

banks from investing more than fifty percent (50s) of their 

capital or surplus in a "banking house". Acts 1923, page 322. 

In 1925, wording of the Article was changed from "banking house". 

to "domicile". This change clearly showed that the Legislature 

contemplated that the domicile of the bank could include an 

area greater than that required to house the banking facilities . 

themselves. 

From the foregoing it may be clearly seen that Article 

342-501 permits the.acqulsition by a bank of a domicile, but 

does not in any way attempt to limit the size of such structure 

to a building consisting solely of banking facilities. As pointed out In Attorney General's Opinion O-2691: 

11 0 .In many instances - perhaps in most 

instances - our better banks occupy their 

own buildings consisting of several, sometimes many stories, and much, if not most 

of the floor space is not actually used by 

the bank In conducting its banking business 

but is rented out 0 1 0" 

There is no vertical limitation to a banking domicile. It 

would therefore be completely illogical to ho.ld that a bank may 

acquire, as its domicile, excess vertical space but not acquire 

excess lateral space, A prohibitionagainst the acquisition of 

the one would of a necessity extend to a prohibition of the acquiring of the other, 

Therefore, it is the opinion of this office that the Sharpstown State Bank will be within legal limitatiorsin purchasing 

the property identified on the submitted map as Building 'IF" in 

the Sharpstown Center3 Houston, Harris County, Texas, 

This opinion is necessarily limited to the factual situation 

presented to this office. 

- 368 - 
Honorable J. M. Falkner, page 5 (M-62) 

SUMMARY -c---mThe Sharpstown State Bank will be within 

legal limitations inpurchasing the property identified as Building "F" in the 

Sharpstown Center, Houston, Harris County, 

Texas. 

CCM:lh 

Prepared by Charles M. Bardwsll 

Assistant Attorney General 

C. MARTIN 

ey General of Texas 

APPROVED: 

OPINION COMMITTEE 

Hawthorne Phillips, Chairman 

W. V. Geppert, Co-Chairman 

Ralph Rash 

Jack Sparks 

W. 0. Shultz 

Houghton Brownlee 

STAFF LEGAL ASSISTANT 

A. J. Carubbl, Jr.