The Attorney General of Texas 

October 30, 1980 

MARK WHITE 

Attorney General 

Honorable John P. Parsons Opinion No. MW-261 

Commissioner 

Credit Union Department 

914 East Anderson Lane 

Austin, Texas 78752 

Re: Whether a state chartered 

credit union may be licensed to 

make loans under the Texas Credit 

Code, and what rate of interest 

may be charged by the credit union 

on such lcans 

Dear Mr. Persons: 

You ask two questions concerning the applicability of the Texas Credit 

Code, article 5069, V.T.C.S., to the Texas Credit Union Act, article 2461, 

V.T.C.S. The first question you ask is: 

1. May a credit union chartered by the State of 

Texas obtain a license to operate as a regulated 

lender under the Texas Credit Code pursuant to 

article 5069-3.04, V.T.C.S., and write loans as 

permitted under Chapters 3 and 4 of the Texas 

Credit Code? 

Article 5069-3.04, V.T.C.S., provides: 

(1) Any bank, savings and loan association or 

credit union doing business under the laws of this 

State or of the United States shall receive a license 

upon notification to the Consumer Credit Commissioner of its intention to operate under the provisions 

of this Chapter. The Consumer Credit Commissioner 

shall forthwith issue a license to any such bank, 

savings and loan association or credit union. 

The Texas Credit Code is a general statute which clearly anticipates 

licensing credit unions for the purpose of transacting the type of business 

characterized by chapter 3 of the Texas Credit Code. Article 5069-3.04, 

V.T.C.S., is not limited by any provision in the Texas Credit Union Act, and 

permits a credit union to be issued a license under chapter 3 of the Texas 

Credit Code. 

p. 828 
Honorable John P. Parsons - Page Two (MW-261) 

The second question you ask is: 

2. If the credit union ls licensed pursuant to article 5069- 

3.04, V.T.C.S., may that credit union charge interest at the 

rates prescribed in chapters 3 and 4 of the Texas Credit Code, 

or is such credit union restricted to the rates set forth in the 

Texas Credit Union Act, article 2461-7.01, V.T.C.S.? 

Article 2461-7.01, V.T.C.S. (Credit Union Act), states: 

[Al credit union may make loans to members for such purposes 

and on such security and terms as the credit committee, credit 

manager, or loan officer approves, at rates of interest not 

exceeding one percent per month on the unpaid montw 

balance. Every loan must be evidenced by a written instrument. 

(Emphasis added). 

Chapters 3 and 4 of the Credit Code permit interest charges resulting in a total 

allowable interest rate in excess of the 12% per annum specified in the Credit Union 

Act. It is evident that the maximum interest rate permitted by the Credit Union Act 

is less than the maximum interest rate provided for by the Credit Code. 

The Credit Code is a general statute, &, it is a comprehensive code which 

classifies and reeulates loans and lenders. The Credit Union Act is a special statute, 

i.&., it applies &ly to that class of lenders &fined as credit unions. See Lower 

-.- Colorado River Authority v. l&Craw, 83 S.W. 2d 629 (Tex. 1935); Smith v. Davis, 426 

S.W. 2d 827 (Tex. 1968); Rodriguez v. Gonzales, 227 S.W. 2d 791 (Tex. 1950). It is a 

cardinal iule of statutory construction that a special statute prevails as an exception 

to a general statute if a conflict between the two exists. See International Fidelity 

Insurance Company of Newark, New Jersey v. Sheriff of Dallaounty, 476 S.W. 2d 115 

(Tex. Civ. App. - Beaumont 1972, writ rePd n.r.e.1; Cuellar v. State, 521 S.W. 2d 277 

(Tex. Crim. App. 1975). Since the Credit Union Act is complete within itself, it should 

not be swplemented with provisions of a separate and distinct act which are 

inconsistent with it. See Robertson v. State, 406 S.W. 2d 90 (Tex. Civ. App. - Fort 

Worth 1966, writ ref’d nx;). 

We find no Texas case which discumes the applicability of the interest rates 

allowed by the Credit Code to the Credit Union Act. The language of article 2461-7.01, 

V.T.C.S., is, however, duplicated in the Federal Credit Union Act at 12 U.S.C. section 

1757(5)(A)(vi), which states that the rate of interest charged by federal credit unions 

must not exceed “1 per centum per month cm the unpaid balance.” This statutory 

provision has been the subject of discussion by the courts in determining whether a 

federally chartered credit union may charge those rates of interest provided in the 

Texas Credit Code. An analogy can be drawn from those cases to the pending 

question. 

In Carreon v. San Antonio City Employees Federal Credit Union, 586 S.W. 2d 622 

(Tex. Civ. App. - Waco 1979, no writ), the court stated: 

p. 829 
Honorable John P. Parsons - Page Three (M+ 261) 

However, under the terms of 12 U.S.C.A. section 1757(5)(A)(vi) 

the rate of interest charged by federal credit unions must not 

exceed 1 per centum per month on the unpaid balance inclusive 

of all service charges.’ It is clear, therefore, that regardless of 

the fact that ‘credit unions’ are named in the opening sentence 

of Article 5069-4.01, federal credit unions may not charge the 

16% interest rate authorized therein. 

This view was re-stated in Brown v. Austin Area Teachers Federal Credit Union, 588 

S.W. 2d 629 (Tex. Civ. App. - Beaumont 1979, writ rePd n.r.e.). 

The issue considered by the court in Carreon, supra, parallels your second 

question and the language of the court may be paraphrased to resolve that question; 

under the terms of article 2461-7.01, V.T.C.S., the rate of interest charged by state 

credit unions must not exceed one percent per month on the unpaid monthly balance. 

It is clear, therefore, that regardless of the fact that “credit unions” may be licensed 

under article 5069-3.04, state credit unions may not charge a rate of interest in excess 

of one percent per month thereunder. 

SUMMARY 

A state chartered credit union may be licensed under the 

provisions of article 5069-3.04, V.T.C.S. (Texas Credit Code). A 

state chartered credit union licensed under the Texas Credit 

Code may not charge interest rates in excess of those 

authorized by article 2461-7.01, V.T.C.S. (Credit Union Act). 

A= 

MARK WHITE 

Attorney General of Texas 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

RICHARD E. GRAY III 

Executive Assistant Attorney General 

Prepared by Nancy Ricketts 

Assistant Attorney General 

p. 830 
Honorable John P. Parsons - Page Four (m-261) 

APPROVED: 

OPINION COMMlTTEE 

Susan Garrison, Acting Chairman 

Jon Bible 

Rick Gilpin 

Tom Pollan 

Nancy Ricketts 

p. 831