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Honorable James E. Jeffrey Opinion No. M-107

County Attorney Taylor County Courthouse Re: Whether a Commissioners Abilene, Texas Court is authorized to designate a bankas county depository under the fatts andcircumDear Mr. Jeffrey: stances presented

You have requested the opinion of this office regarding the above question. In this connection you have supplied the following facts:

“A certain bankdesires to be designated as a county depository to receive funds which will result from abona issue as a result of an election this year. Thebank could not file an application to qualify as a county depository at the February regular term because one of the members of the Commissioners Court is a director and owns stock in such bank. Weunderstand that Legislation wasenacted this year removing such inhibition in situations where a county official ownedless than lO$ of the stock in a bankseeking designation as a county depository. Themember of the Commissioners’ Court owns less than lO$ of the stock in the bank, and he is still a director

.” In examining the question you have posed, the following statutes, quoted in pertinent part, are applicable:

“Art. 2544. TheCommissioners Court of each county is hereby authorized and required at the February Regular Termthereof next following each general election to enter into a contract with any s,. banking corporation, association or individual banker in such county for the depositing of the public funds of such county in such bankor banks. Notice that such contracts will be madeby the Commissioners Court shall be published byand

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Hon. JamesE. Jeffrey, page 2, (M-107)

over the nameof the CountyJudge, once each weekfor at least twenty (20) days before the commencementof such term in somenewspaper published in said county;

. . . .”

“Art. 2545. Anybanking corporation, association or individual banker in such county desiring to be designated as county depository shall makeanddeliver to the County Judge anapplication applying for such funds andsaid application shall state the amount of paid upcapital stock andpermanent surplus of said bankand there shall be furnished with said application a statement showing the financial condition of said bank at the date of said application which shall be delivered to the CountyJudge on or before the first day of the term of the Commissioners Court at which the selection of the depositories is to bemade.

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“Art. 2546. It shall be the duty of the Commissioners Court at ten olclock. a. m. on the first day of each termat which banks are to be selected as county depositories, to consider all applications filed with the County Ju%e, cause such applications to be entered upon the minutes of the Court and to select those applicants that are acceptable andwho offer the’most favorable terms and conditions for the handling of such funds andhaving the power to reject those whosemanagementor condition, in the opinion of the Court, does not warrant placing of county funds in their possession.

. . . The statutes above quoted grant to the Commissioners Court the authority to select a county depository or depositories at a certain time and by following a specified procedure. This office has previously declined to approve any variation from the established procedure. Attorney General’s Opinion O-3832 (1941) expressed the view that a county mayproperly designate one or more banking institutions as County depositories, but only if such depositories are selected from “those banking institutions whohave regularly madeapplication in accordance with the statutes

.” Attorney General’s Opinion O-4451 (1942) cited Attorney General’s Opinion 0-3832 with approval, and declined to approve a plan,which called for variation of the depository rules established by statute.. *- -,

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Hon. JamesE. Jeffrey, page 3, (M-107)

Thecontention has been advanced that an’enactment of the 60th Legislature can be construed to makeit permissible for the particular bank involved in your question to become qualified as a county depository immediately. Thenewstatute in question is Acts, 60th Legislature, 1967, Chapter 179, Page 370, codified as Article 2529c, Vernon’s Civil Statutes. This Act provides, in essence, that a bankshall not be disqualified from becoming the depository for anypolitical subdivision by virtue of the fact that amemberof the Board or Commission selecting such depository holds ten percent or less of the bank’s outstanding capital stock. This Act went into effect as an emergency measure onMay12, 1967. Thesaid newstatute does not purport to amendor repeal any of the statutes controlling the selection of county depositories in this State. This Act by its terms overruled the commonlaw rule regarding conflicts of interest where the public official concerned with selecting the depository holds ten percent or less of the outstanding capital stock in the said depository. It is the view of this office that the said statute has the effect of making the bank in question immediately eligible for selection as a county depository, but such selection maynevertheless be made only at such time as a county depository mayproperly be selected by the county government. In answer to your specific question, you are advised that it is the opinion of this office that the Commissioners Court of a county does not have the authority to designate a bank other than the properly established county depository or depositories to receive special funds resulting from a county bona issue. SUMMARY ------- Under the stated facts, the Commissioners Court of a county does not have the authority to designate a bankas a county depository in addition to other qualified depositories to receive funds resulting from a county bona issue. truly yours,

Prepared by Malcolm L. Quick Assistant Attorney General

- 491-Hon. JamesE. Jeffrey, page 4, (M-107)

APPROVED: OPINIONCOMMITTEE HawthornePhillips, Chairman Kerns Taylor, Co-Chairman Jack Sparks Scott Garrison Marietta Payne John Duren A. J. Carubbl, Jr. Staff Legal Assistant

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