**OFFICE OF**  **THE ATTORNEY**  **GENERAL OF**  **TEXAS AUSTIN** 

Eonorablo John ?. IfCmtlme,

### Commloaloner Dapmtmnt oi Dfmklng Austin, Tern8 Attentlonr li, 

### A.Janison i?ear S&c

lawv&ml hno olsl~n am?li partia:&ar at quotad p36Qugp&I-u;, ehrlres of the **me:~bare** plus the total onnh

dop3slts of?tho mxbore with the credit union leso my andcl1 outnttnnding obliflatlons and llebllitios of tk audit unILon.* 221, NO. 

### 5) (Aots 1939, L6th tag., p.
W'Tho -usation.hnn erlsan rs?ckrUing the laclolutlvo intent lncidest to tho loan llnlt of orodit tilonc, us tbt?len~u%~o uaod In Grtiola 

### ?1,84a **uhcm** ca~oidcrud In t&e 13ght of the loan timit roferonae undar Artiole 2477 ep?oara to bo auoh **44 oa**  plble of two or three oo~~ntruotlons. %fJare #ettlu~ out bslcm. the condensed balanaa uheat ot QIIQ of the ntnte ohnrtored 'arodI.t unions, andnil1 ap proolut~ **spt~cifL0 ad?%44**  **from y:u**  **al to**  **the loaft**  **limit** of YA

uuion whdm bulanaco &oat ia p1eeimvn. "Loami to :?anbore Cashon hand

### ana in banks FurnZture and Pixturso Total /teaate

Aaaounte Peyeble Total. llebllity oq?Ltal a/o ., 

### L?lLb,h66 57,643.V 685.4~

ordluafvs of net

mt UmTivideu,

### ?rofits Cueranty and/or Reserve 

### 12,697.60 Puna 

### e.403,50 Total Li*biLFtiaa 

## W&W~.~~

ë, l
404.50 

### 9195.939.14

173;000.98 X.637.06
174,63%04

2lU --lb) nC~&tal analriwnlua” 13. !wmil on.the sme

formla 110In (n) but the ce8h 8o:Jns~bs nnd Chcnmunt cl' th?p;nld-up n&mm WQ nob tnalzlcd 

### cwong tho 1l:~billtleo in tfio ~sub5mhond.

(01 "Capital and surplus" ie **th.o difforocoo**  obtslzml by doduota a subtrsl:and c33;)oaEd of alI, outztwdirq llabll.ltlos, lnoltiding woh iiQpBitS and th8a;nnWItoi^tha paid-up ubtxms, I'roz afAIu$nd bnaod on total 

### escot8.

(d) "Capital and f3wptu3”is’ bnecct on thn onme 

### rordla PIG

in (of abutthe omh dogonlts nnUthe mount oi the ~miu-up ahr,res me not inoludad nnotu tho liabllitiou. in 

### the oubtmtcnd.

.lionoral. Jolii ~~2. ilO.!dnns, Com&3nlonor, Page 5

rldiouloU9 results nlnco It is 173thomLZ0ol,ly LPpomlblo for the dlfforenco thoraby obtainailto ix cmra than zero, cad, in tho p..roat

nojorlty 0: 0~309, such dlfforonoe sill bo loos than 20ro. The nbeurdity of sunh n Co"ornti,a3.0furthr rovealad whunWQoonalder that Artiole 2464, V. A. C. z., ea acendod, Units borrmlna by a Credit ljnJ.on to 19; of *oapital and surplus", total imootronta to 25/,of thio mount, **ona** lndividanl lnvc5t~~ontoto 5; of this S~QU-0. IT thl0 fom.Ula wore to bo adopted, ROwould bo forced to my that a Credit Dnlon’e po%?erto land, to borrow, mid to invest are all masurod either byee tractional pert ofzero or by a fkaotionol pnrt of a aogative anoUr&,

?kploy~Mt of olthez formla (0)

### or (a)would a%om tobe prooluded by the fnot that aooh of t&ode fomrrloe %.?1- ploys ntctaleooota~~ **08** a ninucod 

### vheraaoArtiole 2@.2a, V. A. c. S., as msndod, apcoiflcol.lyr%quirao that tho&nuenu bo "the sp,~rog%t%of the paid-up sharoo ot thsmabors plus the total aao!~dopoaltcP. Althnurh the 

### term*oa~lt41 nn3 surplus" is aoF-atima usaQ a8 **synonymus** with **Vot*l** **as sstfP**  suoh usnp la yrooluded In this problen by the opooirlo Zanguege of the above-oitod atatuto.

Forclula(b) eiz~loysa ulnuend ahioh ooufom to the **atetutory** requlrenent but ueeo n oubtmhond **whloh** 8x1 **OlUdCi8** the **nnount ot**  **the @~id+i&~**  **shares** end the oaob, **doposit** from tho *outstanding obligations a~3 l.iabilitlos". In the bnlnnoo ohaet whioh you h%oesubtitta5, the sffaat of this axoluslon IP to m&e "aaaounte payable" the only iton in the oubtmlroml. Aamill be shown below, ~'0feel thnt %ccounta p,ayuble" **6x13** not **Oonstltutcj tha**  solo outottinafw liability of **tJ113** Unlonj omaoquontly,,we are likcralae Poroscl to reJeoO this **formlo.**

### AnCM bets~en ironthanhovc~,'tha **cllffloulty** 

### in thin probloz ocmtoro around the Uctomlnntlon of those items which **nsy** be **olnosod ae**  **~outatmdin~** obli@tions am?llnbllitlesw or the Union. Te shall oonsfdor the varloue pooslble itens In thls bolcnoo oh%& eoparatolyt~

3n.m :.acount(ma-q3 Shnroo)r Xnoe credit Unions

. of tho kind uudor uo&idoration tire qorporntions (Artloles 2463 cm,d2464V. .A.~C. ii., as i2nol3aeu), their s.harfx-9are ~,ovorned by the prlnoiples .(Ienorally appl1cmbI.o to shcx6s ol! oarpornto 8tooL It lo well rao5&z%d that the holaor of siloh 0 ohare lo not in the aame .posltlon&I the holder Of LUIobligatioo or llnb~lity of a oorporation., The shareholder has 110IIonorttble John f. KaAdamo,Commissioner, Page 6

diroot intorost in or &lain to the assets of the oorporatlon. Although the offioors of the oorporation OWJoortain duties of loyalty andcure to tho rharoholdor, the corporation par . se oc:oo himnothing. Dos?lte the fact. that a shareholder does poasoso substantial riehtn to the surplus of a oorporation, once 

### aiviqendsare properly deolared, and 

### a08pit8the fact that ho is ontitled to a pro rata shtme of the corporate assets upon dissolution (see Artlole 2l+@, V. A. C. S., as smcndod), thwa ri&te are of aninohoato nature so lone as the organization I5 a goin5 oonoorn andso long as no spoolfio proporty has boon allocated for ths paymontof dividends. ~~oAlli.stor v. ~ollpoo Oil Company, 90S.3. (2d) 171, 176 (sup. Ct.); 10 TQX. Jur. 780-7S1, SOD. 152-153. Conaequontly tho oharos of Crodlt Unions donot oonstituto "obligations or liabilitiosw nndthe amountof ouoh shares is properly oxoluacd from the subtrahend in the rosolution of this problem.

**Depodts bv**  ?.ln,mharn t-m&fndividunl l.eaR,er Bnlanoos: Credit Unions are outhorizoci to rocoivo the oash dcpooits of their members (Artlclon 2462 and 2lt66, V. A. 0. S., a3txtwmded), and ouoh 

### dopdoitoapparontly are roooived not as cajital invostmonts by tha mmbborsbut as mere c7eposita oomporable to those reoeived by ordinary savings and oommercial banks. Such doponits are plainly direot obligations and liabilities of the rooeiving organization. Asauoh they should be included in the subtrahend under Artiolo 2484a. %8 have been infomod by a representative of your Oopartment that the "Individual 

### LOaS0r3alanccs" aooount of this companyroproscnts oash deposits bymamberswhioHhave been segregated from the general deposit oocount. Connoquently this account and the oash doposit aooount will be treated the S~JW for pwposos of this opinion. 30wish to noto, honeoar, that ne are not here passing on the status of the Individual LeQor Balances aocount when suoh sooount contains itoms other than segrogatad oosh doposits. The status of cuoh aooounts as oblir,atlo and the ncoeasity for their inelusion in the subtrahond is too patent to require difioussion.

Pot Unclividocl Profltsr Until dividend8 are lawtully deolared and a portion 04 the not profits Is nllocatsd 

### for the satisfaotion of suoh dooloration, nat profits **oomtitute** mwoly an aoorotion to the oapltal investment of the nhareh&de;~oua;3are to be traated ocoordin@.yr We 10Tex. Jur.

Consequently suoh profits donot reprosent obli&tions or~llablllties of the Union,. Ilotioe, however, that-- -<.ti

Honorable Cohn 6. Ko.U.oms, Coztixionor, l?age

### 7

divldendc Bccl::rod but unpaid nro direct obligations of the doclaricg orgudzation imdshould be ir,oiudea in the subtrahend.

ClKliTlIlty tlnd/oP KosorVe 7UnC: Theguaranty fund of a Credit Union is cstnblishod rud t~iaiut4lnoG under Artfole 24(32”to moot oontingonoies or losses in its business':. Altbautfi such funds erc reserves for possible liabilities, oblL:utions or losses, thqi in no oense represent "outstandingW obiigaticns or li.abillties; rather they cxxtitute a sagrot;Eet portion af surplus kept inviolate from fiividana dcolsrarL

. Thus, followln~ the dofinltion oontained In Artiole 

### 246413,

thei“ccipital ad ourplus" of the instant Credit TJnlon is obtained b.qa&&in.~the 05z3hc?ei!oslto (in0lubi.a~ lodger bolar;ccs) to t1\3a:!ouut of the paiil.-up sharas anil ded~lotlng tharofran ths SW of tiio'cash deposits (iooluciing ls3cer balancss) &id &ho 4CO0UiItQ :~aFutlo. Ten ocroont of the tiqure thus sbtnl.xd (10,: of :113,034.& or 

### C11,303&6)represents the loan limit of the Credit ihion under oonsiderati%.

Thel&n limit thus obtrlinod maysecununduly high in view of ttie faot thfit such iU19onshvovrsdly were ore~ted to proYido '!1;:05cratc Ibans* (Article 2451) and in view qf the EGllOra;\locnSsrlatis& Gfthe Articles ~OVeTiliI~~ the creation and operation of such 'Jnians. ?~orevnxr, the faot th%t the old~losn limit of $l,GOO vxls oh;U&qdin 1939 (see Artlcle 2477, suprs) td the present !'Tv;oI:ianr:roitDollars r;rton >,nr cent of the on,;itsl and.surnlus, nhiohovor siwll be the lrxp eP may~011 in:iioxte an inteilticn thr~ttho new1Mt bo ovan striotor thsn thnt'formerly ~nxvailin&. However, if such an intention wore aresent at the the that tho present loan limit was established, the languuge need to express it uao singularly inapt P3r that purpoee.

are Trmting that this Pully answers your inquiry, we
Yours vary truly