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# The Attorney General of Texas July 23, 1980
MARK WHITE Attorney General

Honorable WarrenG. Hard@ Treasurer of the State of Texas L.B.J. Buildhg Austin, Texas OpinionNo. MW-2 13 Re: Whetherthe Comptroller may initiate direct deposit procedures for payroll warrants by magnetic tape transfer service Dear Mr. Hard&: You have requested our opinion regard@ the direct deposit of payroll warrants issued to state employees. The Comptroller has announced his intention of initiating mqnetic tape transfer service to Austin banks **for** direct depcsit of payroll warrantsissuedto employees of his office. You ask a numberof questionsregard@ this pmctice, andvariationsthereof. Initially, we note that an indivi&al is at liberty to designate a bankas his egent foc,eollection purposes. A bankis expresslyempowered:

to act as [aI fiscal egent or transfer agent and in such Capacity to receive and disburse money and to transfer registered and countersigned certificates of stock, bandsor other evidences of indebtedness. Article 342-301(b),V.T.C.S. See Citizens National Bank of Dallas v. Hill, 505 S.W. 2d 246 (Tex. 1974). Furthermore, the bank,as agent, is empowered to endorse the warranton behalf of the indivi&al:

An indorsementmustbe written b or on behalf of the holder and on the instrument w on a paper 80 firmly affjxed thereto as to become a part thereof. Section 3.202(b),Texas Business & Commerce Code. A signature may be made by an rgent or other representative, and his authority to make it may be established es in other cases of representation. No particular form of appointment is necessary to establish such authority.

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Section 3.403(a), Texas Business & Commerce Code. Thus, the Comptroller would clearly be authorized, at the instruction of a state employee, to transfer the employee’s pay warrant directly to his designated bank. The bank, acting as the employee’s agent, wouldthendeposit the warrantin his account. We also believe that article 4350, V.T.C.S., contemplates the issmce of the warrantdirectly to the employee’s designatedbank:

No warrant shall be issued to any person indebted or owing delinquent taxes to the State, or to his agent or assignee, until such debt or taxes are paid (Emphasis added). See aLso Acts 1979, 66th Legislature, chapter 843, at 2606, (Comptroller authorized to transfer appropriation authorityandcash to reimbursecost of direct deposit of state employees’ claims). At the direction of the employee, the Comptroller may issue the empIoyee’spay warrantto his agent bank, and transfer the warrantdirectly to that bank. You next inquire about the issuance of a single pay warrant covering multiple employees, all of whom designatea particularbankas their depository. In our opinion, such a procedure would thwart the Comptroller’s ability to comply with various statutes. Article 4358, V.T.C.S., for example, requires that different classes of pay warrants be printed cn specific colors of paper and that the warrants be “serially numbered.” Certain information must be furnished cn the warrant, including designation of both the eppropriation and the fund from which the warrant is to be drawn,and the initials 

### of the person inthe Comptrollerk office compariw the warrant with the claim. Article 4365, V.T.C.S., ptovidw for the issuance of duplicate warrants in certain cases. We believe the thrust of these statutes is clear: The Comptroller must issue individual warrants to, or an behalf of, every employee receiving a salary. We note that your question and our response are restricted to the issuance of single paytoll warrants covering multiple employees. We do not suggest what result might attach to diffevent fact situations. The transfer of payroll warrant information on megnetic tape would also pose problems regardirg the requirement of indivi&al warrants. In our opinion, articles 4358and 4365 contemplate not merely individual warrants but “warrants” within a rather vrow range of meaning. The use of serial numberingand colored paper, and the provision for &pIicates are not concepts readily applied to msgnetic tape. it is pcasible that the Comptroller might furnish the bank with a magnetic tape reflecting the information contained on the individual warrantswritten for each employee, but be is not authorized to issue pay warrantsby 

### transfer of information solely cn megnetic tape. Although the statute&es not contemplate the technological advances which would facilitate the processing of the state’s payroll, it must be amended by the Legislatureif the state is to take complete advantageof avalable innovations. Finally, ycu ask about any liabilityyou mightincur by participating in any of the describedpractices. As we have indicated, a direct deposit procedure is not in itself in conflict with ~the

statute, so lcng as the warrantsare i&%&ally issued and conform to the traditional concept of a “warrant. ” If, however, the Treasurer participates in the issusnce of warrants by transfer of information on magnetic tape, or those covering multiple employees, we believe he mightstiject himself to liability.

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Article 4371,V.T.C.S., prohibits the payment of any money out of the Treasury

“except cn the warrantsof the Comptroller.” We believe such warrantsmustbe valid on their face in order to avoid the statutory prohibition. If they fait prima facie to comply with statutory requirements, they are invalid, and the Treasurer may not rely on them as the basis for the paymentof anymoney. Inaddition to liability on hisbond, under article 6003b, V.T.C.S., the Treasurer mightalso be in violation of article 4388a, V.T.C.S., which provides:

Any person who shall knowingly and willfully violate any provision of this Act shall be deemed guiity of a misdemeanor, and won conviction, shall be punishedby a fine of not less than Fifty Dollars ($50.00) nor more than Five Hundred Dollars ($500.00) or by imprisonmentin the countyjail for not less than 30 days nor more than six months, or by both such fins and imprisonment. SUMMARY The Comptroller is authorized, at the instruction of a state employee, to transfer the employeek pay warrantdirectly to his designatedbankfor deposit in his account. Again, at the employee’s direction, the Comptroller may issue the employee’s pay warrant in the name of his sgent bank and transfer it directly to the bank. The Comptroller may not issue a pay warrant covering multiple employees, and hs may not issue warrantssolely by means

### ofmagnetic tape. h%3d?u*

MARK 

### WHITE JOHNW. FAINTER,JR. First AssistantAttorney General Attorney General of Texas

TED L. HARTLEY Executive AssistantAttorney General Preparedby Rick Gilpin

‘AssistantAttorney General APPROVED: OPINION

CGMMHTEE C. Robert Heath, Chairman Susan Garrison Paul Gavia Rick Gilpin Tom Pollan Mitch Winnick

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