### E L~YYJXBRNEY GENERAL OFI'EXAS

Honorable J. M. Falkner Opinion No.~~ M-02 Commissioner,Department of Banking Re: Whether the SharpstownState Austin, Texas Bank of Houston has the authority to purchase property, identified Dear Mr. Falkner: on submittedmap 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 submittedmap, consists of one single integrated structure,a portion of which is ten (10) storieshigh and a portion of which is two (2) storieshigh. Under the facts submitted, the SharpstownState Bank presently leases a portion of the ten (10) storypart of the said building for space inwhich to conduct its banking operations, other sections of the ten (10) storyportion being rented to commercial tenants. Furthermore, the two (2) storyportion of the structure is also currently rented to commercialtenants. Article 342-501,Vernon's Civil Statutes,provides, in part, that:
"NO statebank shall,without prior written

consent of the Banking Commissioner, invest an amount in excess of fiftyper cent (5C$) of its capital and certified surplus in a domicile (includingland and building) nor an amount in excess of fifteenper cent (15%) of its capital and certified surplus in its furniture and fixtures. o 0"
From the facts submitted,'thisstatute 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 suchpurchase be.deemed lawful. We next turn to Article 342-502,Vernon's Civil Statutes,which provides, inpart, 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 collectionof loans and other obligations owing the bank, or for the use of the bank and future expansion of its banking house i o 0" (EmphasisSuppiled)
In this regard, Judge Speer, i,n Law of Banks and Banking in Texas (1952), Section 102, characterizesthe 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 shouldbe given to the phrase in its own banking hou.se. "While the Constitutionand Code have taken meticulous care in osder to prevent branch banking, and to confine the activities of banks t,oiheir 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%uralarrangement, and structural features,, and of suchproportions and spaces as %he board in its soundbusiness discretion thinks advantageous,and appropriatewithin the limitationsof the investmentPPOvisions. It is not required that the building be not beyond the bankks actual floor space requirements - present or prospective. Sound business discretionmight and often does call for rental space and building conveniences beyondpresent requirements.
'The true test would seem ~to be ,thatso iong as there is archi%.ectural and substantial stru~ctural

connectionthere is one banking house, and the various activit,ies of the bank may be carried on in any roomy, or spacewhatsoever as the board may authorize, Wheth.er such structurecrosses 10% lines, or tunnels under, or spans over alley or street can make no difference. its parts.1 The building includes all of

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### 366 -I

.

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

### 82)

'A comparativelyrecent opinion of theAttorney General supports the text where a garage for parking and depositwindows, situatedon a lot across the street frm the main building is connectedby tunnel. E!!!



### 1. Op. Atty. General No. O-2691. "If the property is being purchased by the bank for the good faithpurpose of a banking house, the law is not concernedwith the character of the building, its structuralpeculiarities, the number of stories, the number of separaterooms 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 buildingwhich had not been built to specifications for a bank, that would in all respectsbe exactly fitted to the demands of a bank purchasing the same. Indeed it might (bedifficult to constructa building to specifications suitednot only to the present needs but to the futureneeds 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 consistingof several, sometimesmany 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 faithpurpose of the acquisition or constructionof the building be to provide a banking house for the institution.' 

### 2. Op. Atty. General No.

### v-1046."The contemplatednew structure,although to be erected across the street from the original 'bankinghouse', will be physically joined thereto by a tunnel under the street,which you statewill 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 connectionwith the original building and as a unit will be devoted to one general commonpurpose. It is our opinion that the two structureswill in reality be one and when used in the manner proposed will constitute the bank's 'bankinghouse'. To hold that saidArticle requires deposits to be made in abank's original building, and not in an addition theretowould sacrificethe real spirit of the law to pure literalism."

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### 367

-. I

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

### 82)

Under the facts submitted, the entirebuilding is tied togetheras a unit with all~utilities, including gas, water, and electricityand air conditioning,being built into the entire structurewhich was constructedat the same time. The legislativehistory of Article 342-501, shows that the Legislature did not intendby the word "domicile" to limit the premises which could be owned by a state,bankmerely to those premises which'the bank itself occupies for quarters. Prior to 1925, Article 5l2,, Revised Civil Statutes,prohibited state banks from investingmore than fiftypercent (50s)of their capital or surplus in a "bankinghouse". Acts 1923, page 322. In 1925,wording of the Article was changed from "bankinghouse". to "domicile". This change clearly showed that the Legislature contemplatedthat 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 342-501permits the.acqulsitionby 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'sOpinion

### O-2691:

11 0 .Inmany instances -perhaps inmost instances - our better banks occupy their own buildings consistingof 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 thereforebe completely illogical to ho.ldthat a bank may acquire, as its domicile, excess vertical spacebut 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 limitatiorsinpurchasing the property identified on the submittedmap as Building 'IF"in the Sharpstown Center3Houston, Harris County, Texas, This opinion is necessarily limited to the factual situation presented to this office.

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### 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.