R-940 

OFFICE OF 

THE ATTORNEY GENERAL 

December 2, 1947 

Hon. J. M. Faulkner, 

Ranking Commissioner, 

Austin, Texas 

Opinion No. V-445 

Re: Insured mortgage 

loans - Eligibility of 

for State banks. 

Dear Sir: 

Your request for an opinion by this department upon the above subject matter is accompanied by a 

letter from Mr. L. J. Cappleman, State Director, United States Department of Agriculture, Farmers’ Home Adminigistration, Dallas, Texas,~ from which we quote as fol- 

: 

“I am sending you a copy of,Section 

371, Title 12, United States Code, rihich 

provides for the making of insured mortgate loans through the Federal Reserve 

Aot. . . .” 

“We trust you will be able to give 

us your opinion within a short time and 

will notify the officers of the State 

banks of Texas concerning their eligibility, and we in turn will pass the information to our Supervisors in order that 

they may discuss the matter with bankers 

in their respeotive counties.” 

Artiole 342-504 (Vernon’s Codification) of 

the Texas Ranking Code defines the eligibility of real 

estate ‘loans or investments for State banks. The subject seourities are not there embraced. 

Artiole 342-511 of the Code, however, is as 

follows: 

“Any provisions of this Code to the 

aontrary notwithstanding, any State bank 

may make any loan or investment which 

suoh bank could.make were it operating as 

a national bank, and the making of suoh 

-‘loan or investment shall not constitute 
Hon. J. Id. Faulkner - Page 2 (V-445) 

a violation of any penal provision 

of the stxtutes of the State." 

In Opinion No. O-6809 by this Department under'date of September 15, 1945, addressed to Hon. H. A. 

Jan&son, Commissioner of Banking, this Department construed the last quoted article in the following language: 

"Article 342-511 above quoted 

clearly deals with the subject of eligible loans for investments for State 

banks, and therefore is in pari materia 

with the prior Articles 501, 502, 503, 

504, 505 and 506 of Chapter V--all dealing with the same subject, though for 

the most part ,by negation. The common 

subject to which all these Articles relate is eligibility of investments. Articles 511 and 507 have nothing in common-- that is to say, Article 511 does 

not deal with the question of limitation of liability of any one borrower, 

as does Article 507." 

In a later opinion, No. O-7098 addressed to 

Hon. L. S. Johnson, Banking Conunissioner, this Department 

again quoted - 511 and commented as fol$ows: 

"State Banks in Texas have only 

the powers conferred upon them by the 

statutes of the State and the charters 

under which they act, and have no powers beyond this from any other government or source. The Code is a comprehensive one and covers the whole field 

of the operation of such banks. It is 

familiar law in statutory construction 

that such a code should be construed 

in its entirety, as a whole, giving effect to every portion thereof as an integral part of the law governing the 

particular inquiry. Article 4 would, 

if standing alone, exclude the character of investments permitted by Article 

11. But it does not stand alone; on 

the contrary, Article 11 is as much a 

part of the law as any other part of 

the Code and is to be read in connection with Article 4 as though the same 

had been actually incorporated inthat 
Eon. J. ,Ih. Faulkner.? Page 3 W-445) 

Article as, indeed it is, a proviso." 

Such farm'mortgage insurance loans are eligible for national banks as we understand it. 

Fr?m what :':e have said it follows that the 

insured mortgage loans of Section 371, Title 12, United 

States Code, are eli(~r,ible investrlents for Texas State 

banks. 

SUMMARY 

Insured mortr,ace loans authorized by 

Section 371, Title 12, United States Code, 

are elig1bl.e for loans for investnent by 

Texas State yanks in virtue of Article 11, 

Chapter V, of the Texas F3ankinf: Code. 

Yours very truly, 

0S:wb 

ATTORhXY GXWRAL 

BY 

Assistant 

APPROVED: