f - 

T~~A~TORNEYGISNERAL 

OF TEXAS 

AUSTIN. .,?SXAS 78711 

August 21, 1974 

The Honorable Roy W. Mouer 

Securities Commissioner 

State Securities Board 

704 State Finance Building 

Austin, Texas 

Opinion No. H- 376 

Re: Whether person making 

secondary sale of savings 

association stock is required 

to be registered as dealer 

under Securities Act and 

related questions. 

Dear Mr. Mouer: 

You have requested our opinion on the following questions regarding 

permanent reserve fund stock issued by savings association: 

1. Is a person or company making secondary 

sales (i. e., sales other than by the issuer) of 

savings association [permanent reserve fund] 

stock required to be registered as a dealer or 

salesman under The Securities Act, (Article 

591-1, et seq., V. T. C.S.), if not otherwise 

exempted from registration by Section 5 of 

The Securities Act? 

2. Are sales of sayings association [permanent 

reserve fund] subject to the anti-fraud provisions 

(Sections 23.A, 29. C, 32 and 33.A) of the Securities 

Act? 

Section 11. bl of Article 85Za, the Savings and Loan Association 

Act, reads: 

p. 1766 
The Honorable Roy W. Mouer page 2 (H-376) 

Savings associations, the officers, employees 

or agents, savings accounts and the permanent 

reserve stock thereof, and the sale issuance or 

offering of savings accounts and permanent reserve 

fund stock of any association or Federal savings and 

loan association are hereby exempted from all provisions of law of this State, other than this Act, 

which provide for supervision, registration or regulation in connection with the sale, issuance or offering 

of securities, and the sale, issuance or offering of any 

such accounts or stock shall be legal without any action 

or approval whatsoever on the part of any official, 

other than the Commissioner, authorized to license, 

regulate, or supervise the sale, issuance or offering 

of securities. (Emphasis added) 

Your questions are prompted by an apparent conflict between this 

provision of the Savings and Loan Act (Acts 1963, 58 Leg., ch. 113, p. 269) 

and its caption. 

The Texas Constitution, Art. 3, Section,5, requires that the title 

or caption of a bill give notice of its contents. This provision insures 

that the Legislature and the public will not be misled and inadvertently 

allow the passage of unintended legislation. 

The caption to the Savings and Loan Act reads in part: 

. . . exempting savings accounts from securities 

laws; . . . providing that outstanding shares, stock, 

share accounts and i,nvestment certificates (excep_t 

Permanent Reserve Fund Stock) shall be considered 

as savings accounts; . . . (emphasis added). 

Notwithstanding the emphasi,zed language, Section 11.01 also purports to 

exempt reserve fund stock from the securities laws of the state. In our 

opinion, the caption and a porti,on of Section 11.01 are in irreconcilable 

conflict. 

p. 1767 
The Honorable Roy W. Mouer page 3 (H-376) 

Only that part of the act in direct conflict with the title is void unless 

the “invalid parts are inextricably interwoven in the texture of the Act so 

as to render the entire Act invalid. ” Fletcher v. State, 439 S. W. 2d 656, 

659 (Tex. 1969); Hayman Construction Co. v. American Indemnity Co.., 

471 S. W. 2d 564 (Tex. 1971); State v. Blackwell, 500 S. W. 2d 97 (Tex. 

Crim. 1973). The inclusion or exclusion of permanent reserve fund stock 

in the exemption provision does not affect the rest of the Act. 

,If having struck the unconstitutional part, the result ia broader 

legislation than originally enacted, the whole act must fail. Texas-Louisiana 

Power Co. v. City of Farmersville, 67 S. W. 2d 235 (Tex. Comm. App. 

1933). In the present case the removal of permanent reserve fund stock 

from the exemption of Section 11.01 results in narrower legislation. The 

Act contains a severance clause. We think the courts would view the 

caption defect as voiding only that which is in conflict with the caption, 

but as not affecting the rest of the Act. 

The Securities Act, Article 581-1, et seq., V. T. C. S., applies to 

all transactions involving permanent reserve fund stock. Persons making 

secondary sales of savings association permanent reserve fund stock may 

be required to register thereunder, and the anti-fraud provisions of that 

Act may be applied to such sales unless specifically exempted by Sections 

5 and 6 of the Securities Act. 

SUMMARY 

Section 11.01 of the Savings and Loan Act, Article 

852a, does not exempt savings and loan permanent 

reserve fund stock from otherwise applicable provisions 

of the Securities Act. Article 581-1, et seq., V. T. C.S. 

Very truly yours. 

p. 1768 
The Honorable Roy W. Mouer page 4 (H-376) 

APPROVED: 

DAVID M . KENDALL, Chairman 

Opinion Committee 

p. 1769