, . 

The Attorney General of Texas 

July 23, 1980 

MARK WHITE 

Attorney General 

Honorable Warren G. Hard@ 

Treasurer of the State of Texas 

L.B.J. Buildhg 

Austin, Texas 

Opinion No. MW-2 13 

Re: Whether the 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 warrants issued to employees of his office. You ask 

a number of questions regard@ this pmctice, and variations thereof. 

Initially, we note that an indivi&al is at liberty to designate a bank as 

his egent foc,eollection purposes. A bank is expressly empowered: 

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, bands or 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 warrant on behalf of the indivi&al: 

An indorsement must be 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. 

‘p. 681 
. ‘Honorable Warren G. Herding - Page Two (Mw-213) 

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, would then deposit the warrant in his account. 

We also believe that article 4350, V.T.C.S., contemplates the issmce of the 

warrant directly to the employee’s designated bank: 

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 authority and cash to reimburse cost 

of direct deposit of state employees’ claims). At the direction of the employee, the 

Comptroller may issue the empIoyee’s pay warrant to his agent bank, and transfer the 

warrant directly to that bank. 

You next inquire about the issuance of a single pay warrant covering multiple 

employees, all of whom designate a particular bank as 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 in the 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 diff event 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 

4358 and 4365 contemplate not merely individual warrants but “warrants” within a 

rather vrow range of meaning. The use of serial numbering and 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 warrants written for each employee, but be 

is not authorized to issue pay warrants by 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 

Legislature if the state is to take complete advantage of avalable innovations. 

Finally, ycu ask about any liability you might incur by participating in any of the 

described practices. As we have indicated, a direct deposit procedure is not in itself in 

conflict with ~the statute, so lcng as the warrants are 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 might stiject himself to liability. 

p. 682, 
. 

Honorable Warren G. Harding - Page Three (NW-3131 

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

“except cn the warrants of the Comptroller.” We believe such warrants must be 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 payment of any money. In addition to liability on his bond, 

under article 6003b, V.T.C.S., the Treasurer might also 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 punished by a fine of not less than 

Fifty Dollars ($50.00) nor more than Five Hundred Dollars 

($500.00) or by imprisonment in the county jail 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 warrant directly 

to his designated bank for 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 

warrants solely by means of magnetic tape. 

h%3d?u* 

MARK WHITE 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

Attorney General of Texas 

TED L. HARTLEY 

Executive Assistant Attorney General 

Prepared by Rick Gilpin 

‘Assistant Attorney General 

APPROVED: 

OPINION CGMMHTEE 

C. Robert Heath, Chairman 

Susan Garrison 

Paul Gavia 

Rick Gilpin 

Tom Pollan 

Mitch Winnick 

p. 683